EXHIBIT 10.33
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CREDIT AGREEMENT
dated as of
June 3, 2003
between
PACIFICARE HEALTH SYSTEMS, INC.
The SUBSIDIARY GUARANTORS Party Hereto
The LENDERS Party Hereto
JPMORGAN CHASE BANK,
as Administrative Agent
and
JPMORGAN CHASE BANK,
as Collateral Agent
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$300,000,000
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Joint Advisors, Co-Lead Arrangers and Joint Bookrunners
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Syndication Agent
CIBC WORLD MARKETS CORP.
and
▇▇▇▇▇ FARGO BANK, N.A.,
as Co-Documentation Agents
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.................................................................................. 1
SECTION 1.01. Defined Terms.............................................................................. 1
SECTION 1.02. Terms Generally............................................................................ 23
SECTION 1.03. Accounting Terms; GAAP..................................................................... 24
ARTICLE II THE CREDITS................................................................................. 24
SECTION 2.01. The Commitments............................................................................ 24
SECTION 2.02. Loans and Borrowings....................................................................... 25
SECTION 2.03. Requests for Borrowings.................................................................... 26
SECTION 2.04. Letters of Credit.......................................................................... 27
SECTION 2.05. Funding of Borrowings...................................................................... 31
SECTION 2.06. Interest Elections......................................................................... 32
SECTION 2.07. Termination and Reduction of the Commitments............................................... 33
SECTION 2.08. Repayment of Loans; Evidence of Debt....................................................... 34
SECTION 2.09. Prepayment of Loans........................................................................ 36
SECTION 2.10. Fees....................................................................................... 38
SECTION 2.11. Interest................................................................................... 39
SECTION 2.12. Alternate Rate of Interest................................................................. 40
SECTION 2.13. Increased Costs............................................................................ 41
SECTION 2.14. Break Funding Payments..................................................................... 42
SECTION 2.15. Taxes...................................................................................... 42
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs................................ 45
SECTION 2.17. Mitigation Obligations; Replacement of Lenders............................................. 47
ARTICLE III GUARANTEE.................................................................................. 47
SECTION 3.01. The Guarantee.............................................................................. 47
SECTION 3.02. Obligations Unconditional.................................................................. 48
SECTION 3.03. Reinstatement.............................................................................. 49
SECTION 3.04. Subrogation................................................................................ 49
SECTION 3.05. Remedies................................................................................... 49
SECTION 3.06. Instrument for the Payment of Money........................................................ 49
SECTION 3.07. Continuing Guarantee....................................................................... 49
SECTION 3.08. Rights of Contribution..................................................................... 50
SECTION 3.09. General Limitation on Guarantee Obligations; Limitation on
Guarantees of PHPA Subsidiary Guarantors.................................................. 50
SECTION 3.10. Release of Subsidiary Guarantor............................................................ 51
ARTICLE IV REPRESENTATIONS AND WARRANTIES.............................................................. 51
SECTION 4.01. Organization; Powers....................................................................... 51
SECTION 4.02. Authorization; Enforceability.............................................................. 51
SECTION 4.03. Governmental Approvals; No Conflicts....................................................... 52
SECTION 4.04. Financial Condition; No Material Adverse Change............................................ 52
SECTION 4.05. Properties................................................................................. 52
SECTION 4.06. Litigation and Environmental Matters....................................................... 53
SECTION 4.07. Compliance with Laws and Agreements........................................................ 53
SECTION 4.08. Investment and Holding Company Status...................................................... 54
SECTION 4.09. Taxes...................................................................................... 54
SECTION 4.10. ERISA...................................................................................... 54
SECTION 4.11. Disclosure................................................................................. 54
SECTION 4.12. Use of Credit.............................................................................. 54
SECTION 4.13. Indebtedness and Liens..................................................................... 54
SECTION 4.14. Subsidiaries and Investments............................................................... 55
SECTION 4.15. Perfection and Priority of Security Interests.............................................. 55
SECTION 4.16. Solvency................................................................................... 56
ARTICLE V CONDITIONS................................................................................... 56
SECTION 5.01. Effective Date............................................................................. 56
SECTION 5.02. Each Credit Event.......................................................................... 59
ARTICLE VI AFFIRMATIVE COVENANTS....................................................................... 59
SECTION 6.01. Financial Statements and Other Information................................................. 59
SECTION 6.02. Notices of Certain Events.................................................................. 61
SECTION 6.03. Existence; Conduct of Business............................................................. 62
SECTION 6.04. Payment of Obligations..................................................................... 63
SECTION 6.05. Maintenance of Properties; Insurance....................................................... 63
SECTION 6.06. Books and Records; Inspection Rights....................................................... 63
SECTION 6.07. Compliance with Laws....................................................................... 63
SECTION 6.08. Use of Proceeds and Letters of Credit...................................................... 64
SECTION 6.09. Certain Obligations Respecting Subsidiaries and Collateral; Further Assurances............. 64
ARTICLE VII NEGATIVE COVENANTS......................................................................... 68
SECTION 7.01. Indebtedness............................................................................... 68
SECTION 7.02. Liens...................................................................................... 70
SECTION 7.03. Fundamental Changes........................................................................ 72
SECTION 7.04. Dispositions............................................................................... 72
SECTION 7.05. Investments................................................................................ 73
SECTION 7.06. Restricted Payments........................................................................ 75
SECTION 7.07. Transactions with Affiliates............................................................... 76
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SECTION 7.08. Restrictive Agreements..................................................................... 77
SECTION 7.09. Certain Financial Covenants................................................................ 78
SECTION 7.10. Optional Payments, Redemptions or Repurchases.............................................. 78
SECTION 7.11. Modifications of Certain Documents......................................................... 79
ARTICLE VIII EVENTS OF DEFAULT......................................................................... 79
ARTICLE IX THE AGENTS.................................................................................. 82
ARTICLE X MISCELLANEOUS................................................................................ 85
SECTION 10.01. Notices................................................................................... 85
SECTION 10.02. Waivers; Amendments....................................................................... 86
SECTION 10.03. Expenses; Indemnity; Damage Waiver........................................................ 87
SECTION 10.04. Successors and Assigns.................................................................... 89
SECTION 10.05. Survival.................................................................................. 91
SECTION 10.06. Counterparts; Integration; Effectiveness.................................................. 92
SECTION 10.07. Severability.............................................................................. 92
SECTION 10.08. Right of Setoff........................................................................... 92
SECTION 10.09. Governing Law; Jurisdiction; Etc.......................................................... 92
SECTION 10.10. WAIVER OF JURY TRIAL...................................................................... 93
SECTION 10.11. Headings.................................................................................. 93
SECTION 10.12. Treatment of Certain Information; Confidentiality......................................... 93
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SCHEDULE 1.01 - Commitments
SCHEDULE 4.05(a) - Real Estate
SCHEDULE 4.06(a) - Litigation
SCHEDULE 4.06(b) - Environmental Matters
SCHEDULE 4.13(a) - Indebtedness
SCHEDULE 4.13(b) - Liens
SCHEDULE 4.14(a) - Subsidiaries
SCHEDULE 4.14(b) - Investments
SCHEDULE 7.04 - Dispositions
SCHEDULE 7.08 - Restrictive Agreements
EXHIBIT A - Form of Assignment and Assumption
EXHIBIT B - Form of Guarantee Assumption Agreement
EXHIBIT C - Form of Security Agreement
EXHIBIT D-1 - Form of Opinion of ▇▇▇▇▇▇ Godward LLP, Counsel to the Borrower
EXHIBIT D-2 - Form of Opinion of K&R Law Group LLP, Counsel to Certain
Subsidiary Guarantors
EXHIBIT D-3 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, Indiana Counsel to PHPA
EXHIBIT E - Form of Opinion of Special New York Counsel to the Agents
EXHIBIT F-1 - Form of Revolving Credit Note
EXHIBIT F-2 - Form of Term Loan Note
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CREDIT AGREEMENT dated as of June 3, 2003, between PACIFICARE
HEALTH SYSTEMS, INC., the SUBSIDIARY GUARANTORS party hereto, the LENDERS party
hereto, JPMORGAN CHASE BANK, as Administrative Agent, and JPMORGAN CHASE BANK,
as Collateral Agent.
The Borrower (as hereinafter defined) has requested that the
Lenders (as so defined) make loans and extend credit to it, under the guarantee
of the Subsidiary Guarantors (as so defined), in an aggregate principal or face
amount not exceeding $300,000,000 at any one time outstanding, and the Lenders
are prepared to extend such credit upon the terms and conditions hereof.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, for the Interest Period for any
Eurodollar Borrowing, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate for such Interest Period.
"Administrative Agent" means JPMCB, in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, the Administrative Agent and the
Collateral Agent.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate for such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the
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Federal Funds Effective Rate shall be effective from and including the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate, as
the case may be.
"Applicable Percentage" means (a) with respect to any
Revolving Credit Lender for purposes of Section 2.04 or in respect of any
indemnity claim under Section 10.03(c) arising out of an action or omission of
any Issuing Lender under this Agreement, the percentage of the total Revolving
Credit Commitments represented by such Revolving Credit Lender's Revolving
Credit Commitment, and (b) with respect to any Lender in respect of any
indemnity claim under Section 10.03(c) arising out of an action or omission of
either Agent under this Agreement, the percentage of the total Commitments or
Loans of both Classes hereunder represented by the aggregate amount of such
Lender's Commitments or Loans of both Classes hereunder. If the Revolving Credit
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Revolving Credit Commitments most recently in effect,
giving effect to any assignments.
"Applicable Rate" means, for any day, with respect to any ABR
Loan or Eurodollar Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "ABR Spread", "Eurodollar Spread or "Commitment Fee Rate",
respectively, based upon the ratings by S&P and ▇▇▇▇▇'▇, respectively,
applicable on such date to the Loans (each a "Rating"):
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Ratings ABR Eurodollar Commitment
(S&P/▇▇▇▇▇'▇) Spread Spread Fee Rate
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Category 1 > BB+ / Ba1 1.50% 2.50% 0.375%
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Category 2 BB+ / Ba1 1.75% 2.75% 0.375%
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Category 3 BB / Ba2 2.00% 3.00% 0.50%
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Category 4 BB- / Ba3 2.25% 3.25% 0.50%
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Category 5 B+ / B1 2.50% 3.50% 0.75%
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Category 6 < B+ / B1 2.75% 3.75% 0.75%
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For purposes of the foregoing, (a) if only one of S&P and
▇▇▇▇▇'▇ shall have in effect a Rating, the Applicable Rate shall be based on
such Rating (unless the other rating agency shall not have in effect a Rating by
reason of the circumstances referred to in the last sentence of this
definition); (b) if neither S&P nor ▇▇▇▇▇'▇ shall have in effect a Rating (other
than by reason of the circumstances referred to in the last sentence of this
definition), then each such rating agency shall be deemed to have established a
Rating in Category 6; (c) if the Ratings established or deemed to have been
established by S&P and ▇▇▇▇▇'▇ shall fall within different Categories, the
Applicable Rate shall be based on the higher of the two Ratings unless one of
the two Ratings is two or more Categories lower than the other, in which case
the Applicable Rate shall be determined by reference to the Category next below
that of the higher of the two
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Ratings; and (d) if the Ratings established or deemed to have been established
by S&P and ▇▇▇▇▇'▇ shall be changed (other than as a result of a change in the
rating system of S&P or ▇▇▇▇▇'▇), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change; provided that no reduction in the Applicable Rate
shall be effective for so long as an Event of Default shall have occurred and be
continuing. If the rating system of S&P or ▇▇▇▇▇'▇ shall change, or if either
such rating agency shall cease to be in the business of rating secured bank
loans, the Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
The Applicable Rate in effect on the Effective Date (i) in the
case of Revolving Credit Loans constituting an ABR Borrowing shall be 2.25% per
annum, (ii) in the case of Revolving Credit Loans constituting a Eurodollar
Borrowing shall be 3.25% per annum and (iii) with respect to commitment fees
shall be 0.50% per annum.
"Approved Fund" means any Person (other than a natural person)
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
"Assignment and Assumption" means an Assignment and Assumption
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means PacifiCare Health Systems, Inc., a Delaware
corporation.
"Borrowing" means (a) all ABR Loans of the same Class made,
converted or continued on the same date or (b) all Eurodollar Loans of the same
Class that have the same Interest Period.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day (a) that is not a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to remain closed and (b) if such day relates to a borrowing of,
a payment or prepayment of principal of or interest on, a continuation or
conversion of or into, or the Interest Period for, a Eurodollar Borrowing, or
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to a notice by the Borrower with respect to any such borrowing, payment,
prepayment, continuation, conversion, or Interest Period, that is also a day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Capital Expenditures" means, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) made by the Borrower or any of its Subsidiaries for fixed assets,
plant and equipment (including renewals, improvements, substitutions,
replacements and additions, but excluding repairs) during such period computed
in accordance with GAAP, provided that Capital Expenditures shall not include
for any period (a) the total cash consideration expended by the Borrower and its
Subsidiaries during such period to acquire (by purchase or otherwise) the
business, property or fixed assets, or the Equity Interests, of another Person
that, as a result of such acquisition, becomes a Subsidiary of the Borrower and
(b) with respect to any equipment purchased by the Borrower and its Subsidiaries
during any period simultaneously with the trade-in of existing equipment or with
the proceeds of insurance, the amount equal to the credit granted by the seller
of such equipment for the equipment being traded in or such insurance proceeds,
as applicable.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934, as amended, and the
rules of the SEC thereunder as in effect on the date hereof), of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; (b) during any period
of up to 24 consecutive months, commencing after the date of this Agreement,
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) directors of the
Borrower at the beginning of such period, (ii) nominated by Persons who were
directors of the Borrower at the beginning of such period nor (iii) appointed by
directors so nominated; or (c) the acquisition of direct or indirect Control of
the Borrower by any Person or group.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Lender (or, for purposes of Section 2.13(b), by any lending office
of such Lender or by such Lender's or such Issuing Lender's holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
Revolving Credit Loans or Term Loans and,
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when used in reference to any Commitment, refers to whether such Commitment is a
Revolving Credit Commitment or Term Loan Commitment.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all "Collateral" referred to in the
Security Documents and all other property that is or is intended to be subject
to any Lien in favor of the Collateral Agent for the benefit of the Secured
Parties under the Loan Documents.
"Collateral Agent" means JPMCB, in its capacity as collateral
agent for the Lenders hereunder and under the other Loan Document to which it is
a party.
"Commitment" means a Revolving Credit Commitment or Term Loan
Commitment, or any combination thereof (as the context requires).
"Consolidated EBITDA" means, for any period, the sum of (a)
Consolidated Net Income (or net loss) for such period, (b) interest expense, (c)
income tax expense, (d) depreciation expense and (e) amortization expense, in
each case of the Borrower and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP). For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a "Reference
Period") pursuant to any determination of the Consolidated Leverage Ratio, (x)
if at any time during such Reference Period the Borrower or any Subsidiary shall
have made any Material Disposition, the Consolidated EBITDA for such Reference
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) attributable to the property that is the subject of such Material
Disposition for such Reference Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Reference Period
and (y) if during such Reference Period the Borrower or any Subsidiary shall
have made a Material Acquisition, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect thereto as if such Material
Acquisition occurred on the first day of such Reference Period. As used in this
definition, "Material Acquisition" means any acquisition of property or series
of related acquisitions of property that (A) constitutes assets comprising all
or substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (B) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $30,000,000;
and "Material Disposition" means any Disposition of property or series of
related Dispositions of property that yields gross proceeds to the Borrower or
any of its Subsidiaries in excess of $30,000,000.
"Consolidated Fixed Charge Coverage Ratio" means, as at any
date of determination, the ratio of (a) Consolidated EBITDA for the period of
four fiscal quarters ending on or most recently ended prior to such date minus
the aggregate amount actually paid by the Borrower and its Subsidiaries during
such period on account of Capital Expenditures to (b) the sum of (i)
Consolidated Interest Expense for such period and (ii) Restricted Payments made
under Section 7.06(h) during such period.
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"Consolidated Interest Expense" means, for any period, all
interest expense of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio" means, as at any date of
determination, the ratio of (a) Consolidated Total Debt on such date to (b)
Consolidated EBITDA for the period of four fiscal quarters ending on or most
recently ended prior to such date.
"Consolidated Net Income" means, for any period, the net
income or loss of the Borrower and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) for such period; provided that there
shall be excluded (a) any non-cash net after-tax extraordinary gains or losses
(less all fees and expenses relating thereto) and (b) any non-cash net after-tax
gains or losses (less all fees and expenses relating thereto) attributable to
(i) asset dispositions other than in the ordinary course of business or (ii) the
impairment of long-lived assets.
"Consolidated Tangible Assets" means, at any date, the total
amount of assets (less applicable reserves and other properly deductible items)
after deducting therefrom all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangible assets of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Worth" means, at any date, all amounts that
would, in conformity with GAAP, be included on a consolidated balance sheet of
the Borrower and its Subsidiaries under stockholders' equity at such date.
"Consolidated Total Debt" means, at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such date, determined on a consolidated basis in accordance with GAAP (other
than obligations in respect of letters of credit, except to the extent of any
unreimbursed drawings thereunder).
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Debt Incurrence" means the incurrence of any Indebtedness by
the Borrower or any of its Subsidiaries after the Effective Date.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
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"Designated Subsidiaries" means, collectively, PacifiCare of
Arizona, Inc., Antero Health Plans, Inc., PacifiCare of Colorado, Inc.,
PacifiCare of Nevada, Inc., PacifiCare of Oklahoma, Inc., PacifiCare of Texas,
Inc., PacifiCare Health Insurance Company of Micronesia, Inc., PacifiCare Life
and Health Insurance Company, PacifiCare Life Assurance Company and PacifiCare
Dental of Colorado, Inc.
"Disposition" means any sale, assignment, transfer or other
disposition of any property (whether now owned or hereafter acquired) by the
Borrower or any of its Subsidiaries (including in connection with any
sale-leaseback transaction), but shall not include any Equity Issuance.
"Dollars" or "$" refers to lawful money of the United States
of America.
"Domestic Subsidiary" means any Subsidiary other than a
Foreign Subsidiary.
"Effective Date" means the date on which the conditions
specified in Section 5.01 are satisfied (or waived in accordance with Section
10.02).
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters, in any manner applicable to the
Borrower or any of its Subsidiaries or any property owned or operated by the
Borrower or any of its Subsidiaries.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means, with respect to any Person, shares
of capital stock or other ownership interests or any Equity Rights of such
Person.
"Equity Issuance" means (a) any issuance or sale by the
Borrower or any of its Subsidiaries after the Effective Date of (i) any of its
capital stock, (ii) any warrants or options exercisable in respect of its
capital stock (other than any warrants or options issued to directors, officers
or employees of the Borrower or any of its Subsidiaries pursuant to employee
benefit plans established in the ordinary course of business and any capital
stock of the Borrower issued upon the exercise of such warrants or options) or
(iii) any other security or instrument representing an Equity Interest (or the
right to obtain any Equity Interest) in the Borrower or any of its Subsidiaries
or (b) the receipt by the Borrower or any of its Subsidiaries after the
Effective
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Date of any capital contribution (whether or not evidenced by any equity
security issued by the recipient of such contribution); provided that Equity
Issuance shall not include (x) any such issuance or sale by any Subsidiary of
the Borrower to the Borrower or any wholly owned Subsidiary of the Borrower, (y)
any capital contribution by the Borrower or any wholly owned Subsidiary of the
Borrower to any Subsidiary of the Borrower or (z) any issuance of Equity
Interests that constitutes Indebtedness.
"Equity Rights" means, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any shareholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VIII.
"Excluded Debt Incurrence" means any Indebtedness permitted
under Section 7.01(a) through (g).
Credit Agreement
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"Excluded Disposition" means any Disposition permitted under
Section 7.04 (other than clause (j) thereof).
"Excluded Taxes" means, with respect to either Agent, any
Lender, any Issuing Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement or is attributable to such Foreign Lender's failure or
inability (other than as a result of a Change in Law) to comply with Section
2.15(e), except to the extent that such Foreign Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a).
"Existing Credit Agreement" means the Credit Agreement dated
as of August 20, 2001 among the Borrower, the lenders, issuing lender(s) and
swing line bank(s) party thereto and Bank of America, N.A., as collateral agent
and as administrative agent thereunder, as in effect on the date hereof.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means (a) the Vice President, Corporate
Development & Treasury, (b) the Vice President, Treasury, (c) the chief
financial officer or (d) the principal accounting officer, treasurer or
controller, in each case of the Borrower.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" means a Subsidiary of the Borrower
organized under the laws of a jurisdiction other than the United States or any
State thereof or the District of Columbia.
Credit Agreement
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"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, or of any other nation, or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Governmental Rules" means any law, rule, regulation,
ordinance, code, judgment, decree, directive, guideline, policy, or any similar
form of decision of, or any interpretation or administration of any of the
foregoing by, any Governmental Authority.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
or applicant in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation; provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guarantee is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Guarantee) or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder), as determined by such Person in good
faith.
"Guarantee Assumption Agreement" means a Guarantee Assumption
Agreement substantially in the form of Exhibit B by an entity that, pursuant to
Section 6.09(a), is required to become a "Subsidiary Guarantor" hereunder in
favor of the Administrative Agent for the benefit of the Lenders.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"HMO" means any Person that operates as a managed health care
organization.
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"HMO Event" means (a) the failure by the Borrower or any of
its HMO Subsidiaries to comply in any material respect with any of the terms and
provisions of any applicable HMO Regulation pertaining to the fiscal soundness,
solvency or financial condition of the Borrower or any of its HMO Subsidiaries
or (b) the assertion, after the Effective Date, by an HMO Regulator that is
taking or has taken administrative action against the Borrower or any of its HMO
Subsidiaries to revoke or modify any Governmental Approval of, or enforce the
fiscal soundness, solvency or financial provisions or requirements of such HMO
Regulations against, the Borrower or any of its HMO Subsidiaries, if such
failure, action, modification or enforcement would reasonably be expected to
have a Material Adverse Effect.
"HMO Regulations" means all Governmental Rules applicable to
any HMO Subsidiary under federal or state law and any regulations, orders and
directives promulgated or issued pursuant to the foregoing, including, without
limitation, regulations regarding total statutory capital levels.
"HMO Regulator" means any Person charged with the
administration, oversight or enforcement of an HMO Regulation, whether
primarily, secondarily or jointly.
"HMO Subsidiary" means any current or future Subsidiary of the
Borrower that is either an HMO or a regulated healthcare service contractor.
"Immaterial Subsidiary" has the meaning assigned to such term
in Section 6.09(a).
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding trade payables,
accrued expense and any such obligations incurred under ERISA, in each case in
the ordinary course of business), (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed
(provided that, if such Indebtedness of others is non-recourse to the credit of
such Person, then the amount of Indebtedness ascribed to such Person shall not
exceed the fair market value of the property securing such Indebtedness of
others), (f) all Guarantees by such Person of Indebtedness of others, (g) all
Capital Lease Obligations of such Person, (h) all obligations, contingent or
otherwise, of such Person as an account party or applicant in respect of letters
of credit and letters of guaranty, (i) all obligations, contingent or otherwise,
of such Person in respect of bankers' acceptances and (j) all obligations of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of Equity Interests in such Person or another Person or in any
related Equity Rights, valued, in the case of any Equity Interests that the
issuer thereof has undertaken to redeem at a fixed or determinable date or dates
(whether by operation of a sinking fund or otherwise), or upon the occurrence of
a condition not solely within the control of such issuer or that is redeemable
at the option of the holder thereof, at the greater of its voluntary or
Credit Agreement
- 12 -
involuntary liquidation preference plus accrued and unpaid dividends; provided
that Indebtedness shall not include (i) any commercial obligations or
commitments of the Borrower or any Subsidiary entered into in the ordinary
course of such Subsidiary's business and (ii) any obligations of the Borrower or
any Subsidiary arising from the endorsement of instruments in the ordinary
course of business. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Insurance Event" means (a) the failure by the Borrower or any
of its Insurance Subsidiaries to comply in any material respect with any of the
terms and provisions of any applicable Insurance Regulation pertaining to the
fiscal soundness, solvency or financial condition of the Borrower or any of its
Insurance Subsidiaries or (b) the assertion, after the Effective Date, by an
Insurance Regulator that is taking or has taken administrative action against
the Borrower or any of its Insurance Subsidiaries to revoke or modify any
consent or approval of, or enforce the fiscal soundness, solvency or financial
provisions or requirements of such Insurance Regulations against, the Borrower
or any of its Insurance Subsidiaries, if such failure, action, revocation,
modification or enforcement would reasonably be expected to have a Material
Adverse Effect.
"Insurance Regulations" means all Governmental Rules
applicable to any Insurance Subsidiary under federal or state law and any
regulations, orders and directives promulgated or issued pursuant to the
foregoing, including, without limitation, regulations regarding total statutory
capital levels.
"Insurance Regulator" means any Person charged with the
administration, oversight or enforcement of an Insurance Regulation, whether
primarily, secondarily or jointly.
"Insurance Subsidiary" means any current or future Subsidiary
of the Borrower that is doing business or is licensed under Insurance
Regulations to offer and sell indemnity health and life insurance (or required
to so qualify or to be so licensed).
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR
Loan, each Quarterly Date and (b) with respect to any Eurodollar Loan, the last
day of each Interest Period therefor and, in the case of any Interest Period of
more than three months' duration, each day prior to the last day of such
Interest Period that occurs at three-month intervals after the first day of such
Interest Period.
"Interest Period" means, for any Eurodollar Loan or Borrowing,
the period commencing on the date of such Loan or Borrowing and ending on the
numerically
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corresponding day in the calendar month that is one, two, three, six or (if
available to the Lenders with respect to the Class of such Loan) twelve months
thereafter, as specified in the applicable Borrowing Request or Interest
Election Request; provided that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Loan initially shall be the
date on which such Loan is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Loan, and the date of a
Borrowing comprising Loans that have been converted or continued shall be the
effective date of the most recent conversion or continuation of such Loans.
"Investment" means, for any Person: (a) the acquisition
(whether for cash, property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including any "short sale" or any sale of any securities at a time
when such securities are not owned by the Person entering into such sale); (b)
the making of any deposit with, or advance, loan or other extension of credit
to, any other Person (including the purchase of property from another Person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such Person), but excluding any trade receivables arising in
the ordinary course of business; (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; (d) the entering into of any Swap Agreement; or
(e) the acquisition of property of any other Person.
"Issuing Lender" means each of JPMCB and each other Lender
designated by the Borrower as an "Issuing Lender" hereunder that has agreed to
such designation and has been approved as an "Issuing Lender" hereunder by the
Administrative Agent (such approval not to be unreasonably withheld), each in
its capacity as an issuer of Letters of Credit hereunder, and their respective
successors in such capacity as provided in Section 2.04(j), in each case so long
as such Person shall remain an Issuing Lender hereunder.
"Joint Venture" means, with respect to any Person at any date,
a joint venture, partnership or other similar arrangement, whether in corporate,
partnership or other legal form, in which such Person is a party and owns or
controls, directly or indirectly, less than a majority of the Equity Interests
and the ordinary voting power at such date.
"JPMCB" means JPMorgan Chase Bank.
"LC Disbursement" means a payment made by an Issuing Lender
pursuant to a Letter of Credit.
Credit Agreement
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"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time. The LC Exposure of any Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 1.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.
"Letter of Credit" means any letter of credit issued pursuant
to this Agreement.
"Letter of Credit Documents" means, with respect to any Letter
of Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, the rate per annum determined on the basis of the rates for deposits
in Dollars for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on Page 3750 of the Telerate Service (or
on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Person
serving as the Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period. In the event that such rate
is not available at such time for any reason, then the LIBO Rate for such
Interest Period shall be the rate at which Dollar deposits of $5,000,000 and for
a maturity comparable to such Interest Period are offered by the principal
London office of the Person serving as the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means, collectively, this Agreement, the
promissory notes (if any) of the Borrower executed and delivered pursuant to
Section 2.08(g), the Letter of Credit Documents and the Security Documents.
Credit Agreement
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"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Margin Stock" means "margin stock" within the meaning of
Regulations T, U and X of the Board.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations or financial condition of the Borrower and
its Subsidiaries taken as a whole, (b) the ability of any Obligor to perform any
of its obligations under this Agreement or any of the other Loan Documents to
which it is a party or (c) the rights of or benefits available to the Lenders
under this Agreement or any of the other Loan Documents.
"Material HMO Subsidiary" means any HMO Subsidiary that is
also a Material Subsidiary.
"Material Indebtedness" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more Swap
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $30,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of any Person
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Person would be
required to pay if such Swap Agreement were terminated at such time.
"Material Insurance Subsidiary" means any Insurance Subsidiary
that is also a Material Subsidiary.
"Material Subsidiary" means, at any time, a Subsidiary of the
Borrower having assets in an amount equal to at least 5% of the amount of total
consolidated assets of the Borrower and its Subsidiaries (determined as of the
last day of the most recent fiscal quarter of the Borrower for which financial
statements of the Borrower have been furnished pursuant to Section 6.01) or
revenues in an amount equal to at least 5% of the amount of total consolidated
revenues of the Borrower and its Subsidiaries for the twelve-month period ending
on the last day of such fiscal quarter (determined as provided above).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Available Proceeds" means:
(a) in the case of any Disposition or Recovery Event, the
aggregate amount of all cash payments received by the Borrower and its
Subsidiaries directly or indirectly in connection therewith; provided
that Net Available Proceeds of any Disposition shall be net of (i) the
amount of any legal, title and recording tax expenses, commissions and
other fees and expenses paid by the Borrower and its Subsidiaries in
connection with such Disposition, (ii) any Federal, state and local
income or other taxes estimated to be
Credit Agreement
- 16 -
payable by the Borrower and its Subsidiaries as a result of such
Disposition (but only to the extent that such estimated taxes are in
fact paid to the relevant Federal, state or local governmental
authority within the period of six fiscal quarters following the fiscal
quarter in which such Disposition is consummated) and (iii) any payment
of the outstanding principal amount of, premium or penalty, if any, and
interest on any premium or Indebtedness by the Borrower or any of its
Subsidiaries to the extent that (x) such Indebtedness is secured by a
Lien on the property that is the subject of such Disposition and (y)
the transferee of (or holder of a Lien on) such property requires that
such Indebtedness be repaid as a condition to the purchase of such
property;
(b) in the case of any Equity Issuance, the aggregate amount
of all cash received by the Borrower and its Subsidiaries in respect of
such Equity Issuance net of reasonable expenses (including underwriting
discounts, commissions and reasonable legal fees and expenses) incurred
by the Borrower and its Subsidiaries in connection therewith; and
(c) in the case of any Debt Incurrence, the aggregate amount
of all cash received by the Borrower and its Subsidiaries in respect of
such Debt Incurrence net of reasonable expenses (including underwriting
discounts, commissions and reasonable legal fees and expenses) incurred
by the Borrower and its Subsidiaries in connection therewith;
provided that Net Available Proceeds shall not include (i) any Net Available
Proceeds received by a Foreign Subsidiary from any Disposition or Recovery Event
unless such Net Available Proceeds can be repatriated to the United States
without material tax liability to the Borrower and (ii) any Net Available
Proceeds received by any Subsidiary that is regulated by a Governmental
Authority from any Disposition in respect of an asset that was, immediately
prior to such Disposition, included for purposes of such Subsidiary's
calculation of "net worth" (or similar term) for purposes of, and as defined by,
the appropriate state Governmental Authority, but only to the extent such Net
Available Proceeds represent the value of such asset used in the calculation of
such net worth.
"Obligor" means the Borrower or any Subsidiary Guarantor.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Participant" has the meaning assigned to such term in Section
10.04.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Business" means any business conducted by the
Borrower and its subsidiaries on the Effective Date and any other business
related, ancillary or complementary (including any reasonable extension,
development or expansion) to any such business, including consumer services.
Credit Agreement
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"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 6.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's, supplier's and other like Liens imposed by
law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 6.04;
(c) Liens incurred or pledges and deposits made in the
ordinary course of business in compliance with workers' compensation,
unemployment insurance and other social security laws or regulations,
including any pledge or deposit securing letters of credit issued, and
deposits required by insurance companies or health maintenance
organizations under contracts entered into, in the ordinary course of
business;
(d) Liens incurred or cash deposits to secure the performance
of bids, trade contracts, leases, statutory or regulatory obligations,
warranty requirements, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like
nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VIII;
(f) easements, municipal and zoning restrictions, building
ordinances, rights-of-way and similar encumbrances, charges, title
defects or other title irregularities or other similar governmental
restrictions on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary;
(g) licenses, sublicenses, leases or subleases granted to
others that do not materially interfere with the ordinary course of
business of the Borrower and its Subsidiaries, taken as a whole;
(h) any interest or title of a lessor in the property (and the
proceeds, accession or products thereof) subject to any operating
lease; and
(i) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
Credit Agreement
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"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
▇▇▇▇▇'▇;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) of this
definition and entered into with a financial institution satisfying the
criteria described in clause (c) of this definition; and
(e) money market funds that (i) comply with the criteria set
forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii)
are rated AAA by S&P and Aaa by ▇▇▇▇▇'▇ and (iii) have portfolio assets
of at least $5,000,000,000.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"PHPA" means PacifiCare Health Plan Administrators, Inc., an
Indiana corporation.
"PHPA Subsidiary Guarantors" means each of Rx Solutions, Inc.,
PacificCare Behavioral Health, Inc. and Secure Horizons USA, Inc.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by JPMCB as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
Credit Agreement
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"Principal Payment Dates" means (a) the last Business Day of
each of March, June, September and December, commencing with the last Business
Day of September 2003 and ending with the last Business Day of March 2008, and
(b) the Term Loan Maturity Date.
"Quarterly Dates" means the last Business Day of March, June,
September and December in each year, the first of which shall be the first such
day after the date hereof.
"Recovery Event" means any settlement of or payment in respect
of any property or casualty insurance claim or any condemnation proceeding
relating to any property of the Borrower and its Subsidiaries.
"Register" has the meaning set forth in Section 10.04.
"Reinvestment Deferred Amount" means, with respect to any
Reinvestment Event, the aggregate Net Available Proceeds received by the
Borrower or any of its Subsidiaries in connection therewith that are not applied
to prepay the Loans and/or reduce the Commitments pursuant to Section 2.09(b) as
a result of the delivery of a Reinvestment Notice.
"Reinvestment Event" means any Disposition or Recovery Event
in respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice" means a written notice executed by a
Financial Officer stating that no Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Available
Proceeds of a Disposition or Recovery Event to reinvest in the business of the
Borrower and its Subsidiaries or to finance an acquisition permitted under
Section 7.05(o).
"Reinvestment Prepayment Amount" means, with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to reinvest
in the business of the Borrower and its Subsidiaries or to finance an
acquisition permitted under Section 7.05(o).
"Reinvestment Prepayment Date" means, with respect to any
Reinvestment Event, the earlier of (a) the date occurring 270 days after such
Reinvestment Event and (b) the date on which the Borrower shall have determined
not to, or shall have otherwise ceased to, reinvest in the business of the
Borrower and its Subsidiaries or finance an acquisition permitted under Section
7.05(o) with all or any portion of the relevant Reinvestment Deferred Amount.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents, trustees and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having
Revolving Credit Exposures, outstanding Term Loans and unused Commitments
representing more than 50% of the sum of the total Revolving Credit Exposures,
outstanding Term Loans and unused Commitments at such time.
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"Requirement of Law" means, as to any Person, the Certificate
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests of the Borrower or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Equity Interests of the Borrower or any of
its Subsidiaries or any option, warrant or other right to acquire any Equity
Interests of the Borrower or any of its Subsidiaries.
"Revolving Credit", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans constituting such
Borrowing, are made pursuant to Section 2.01(a).
"Revolving Credit Availability Period" means the period from
and including the Effective Date to but excluding the earlier of the Revolving
Credit Commitment Termination Date and the date of termination of the Revolving
Credit Commitments.
"Revolving Credit Commitment" means, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving Credit Loans
and to acquire participations in Letters of Credit hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender's Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.07 or 2.09(b) and (b) reduced or increased from time
to time pursuant to assignments by or to such Lender pursuant to Section 10.04.
The initial amount of each Lender's Revolving Credit Commitment is set forth on
Schedule 1.01, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Revolving Credit Commitment, as applicable. The initial
aggregate amount of the Lenders' Revolving Credit Commitments is $150,000,000.
"Revolving Credit Commitment Termination Date" means June 3,
2006.
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the sum of the outstanding principal amount of such Lender's
Revolving Credit Loans and its LC Exposure at such time.
"Revolving Credit Lender" means a Lender with a Revolving
Credit Commitment or, if the Revolving Credit Commitments have terminated or
expired, a Lender with Revolving Credit Exposure.
"Rule 144A" means Rule 144A of the Securities Act, as amended.
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"S&P" means Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SEC" means the United States Securities and Exchange
Commission, together with any successor agency responsible for the
administration and enforcement of the Securities Act and the Securities Exchange
Act of 1934, as amended from time to time.
"Secured Obligations" has the meaning assigned to such term
(or any comparable term) in the Security Agreements.
"Secured Parties" means the Agents, the Lenders and the
Issuing Lenders.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement,
substantially in the form of Exhibit C, between the Borrower, the other grantors
referred to therein and the Collateral Agent.
"Security Documents" means, collectively, the Security
Agreement, each other mortgage, pledge, assignment, security agreement and
security agreement supplement delivered pursuant to this Agreement and the other
Loan Documents and all Uniform Commercial Code financing statements required by
each such agreement to be filed with respect to the security interests in
personal property and fixtures created pursuant thereto.
"7% Senior Notes" means the 7% Senior Notes Due 2003 issued by
FHP International Corporation ("FHP") (and assumed by PHPA) pursuant to an
Indenture dated as of September 22, 1993 between PHPA (as successor to FHP) and
HSBC Bank USA, as trustee.
"Solvency" or "Solvent" means, when used with respect to any
Person, that, as of any date of determination, (a) the amount of the "present
fair saleable value" of the assets of such Person will, as of such date, exceed
the amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors,
(b) the present fair saleable value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the liability
of such Person on its debts as such debts become absolute and matured (taking
into account financing alternatives and potential asset sales reasonably
available to such Person), (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and (d)
such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at
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such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Statutory Reserve Rate" means, for the Interest Period for
any Eurodollar Borrowing, a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the
arithmetic mean, taken over each day in such Interest Period, of the aggregate
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board to
which the Person serving as the Administrative Agent is subject for eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent; provided
that in no event shall a Joint Venture to which such Person is a party be
considered to be a Subsidiary of such Person. Unless otherwise specified,
"Subsidiary" means a Subsidiary of the Borrower.
"Subsidiary Guarantor" means each of the Subsidiaries of the
Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the signature
pages hereto and each Subsidiary of the Borrower that becomes a "Subsidiary
Guarantor" after the date hereof pursuant to Section 6.09.
"Swap Agreement" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
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"10 3/4% Senior Notes" means the 10 3/4% Senior Notes due 2009
issued by the Borrower pursuant to an Indenture dated as of May 21, 2002 between
the Borrower, as Issuer, certain subsidiaries of the Borrower, as guarantors,
and State Street Bank and Trust Company of California, N.A., as trustee.
"Term", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are made
pursuant to Section 2.01(b).
"Term Loan Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make one or more Term Loans hereunder on
the Effective Date, expressed as an amount representing the maximum aggregate
principal amount of the Term Loans to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 10.04. The initial amount of each Lender's Term Loan
Commitment is set forth on Schedule 1.01. The initial aggregate amount of the
Lenders' Term Loan Commitments is $150,000,000.
"Term Loan Lender" means a Lender with a Term Loan Commitment
or an outstanding Term Loan.
"Term Loan Maturity Date" means June 3, 2008.
"3% Convertible Subordinated Debentures" means the 3%
Convertible Subordinated Debentures due 2032 issued by the Borrower pursuant to
an Indenture dated as of November 22, 2002 between the Borrower and State Street
Bank and Trust Company of California, N.A., as trustee.
"Transactions" means the execution, delivery and performance
by each Obligor of this Agreement and the other Loan Documents to which such
Obligor is intended to be a party, the borrowing of Loans, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans
constituting such Borrowing, is determined by reference to the Adjusted LIBO
Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word
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"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate or modify the effect
of any change occurring after the date hereof in GAAP or in the application or
interpretation thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. To enable the ready and consistent determination of
compliance with the covenants set forth in Article VII, the Borrower will not
change the last day of its fiscal year from December 31, or the last days of the
first three fiscal quarters in each of its fiscal years from March 31, June 30
and September 30, respectively.
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments.
(a) Revolving Credit Loans. Subject to the terms and
conditions set forth herein, each Revolving Credit Lender agrees to make
Revolving Credit Loans to the Borrower from time to time during the Revolving
Credit Availability Period in an aggregate principal amount that will not result
in (i) such Lender's Revolving Credit Exposure exceeding such Lender's Revolving
Credit Commitment or (ii) the total Revolving Credit Exposures exceeding the
total Revolving Credit Commitments. Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Credit Loans.
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(b) Term Loans. Subject to the terms and conditions set forth
herein, each Term Loan Lender agrees to make one or more Term Loans to the
Borrower on the Effective Date in a principal amount equal to its Term Loan
Commitment. Amounts prepaid or repaid in respect of Term Loans may not be
reborrowed.
SECTION 2.02. Loans and Borrowings.
(a) Obligations of Lenders. Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Type of Loans. Subject to Section 2.12, each Borrowing
shall be constituted entirely of ABR Loans or of Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement and no such Affiliate shall be deemed to be a Lender
hereunder for any purpose.
(c) Minimum Amounts; Limitation on Number of Borrowings. Each
Eurodollar Borrowing shall be in an aggregate amount of $5,000,000 or a larger
multiple of $500,000. Each ABR Borrowing shall be in an aggregate amount equal
to $1,000,000 or a larger multiple thereof; provided that an ABR Borrowing may
be in an aggregate amount that is equal to the entire unused balance of the
total Commitments of the applicable Class or (in the case of a Revolving Credit
ABR Borrowing) that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(f). Borrowings of more than one
Class and Type may be outstanding at the same time; provided that there shall
not at any time be more than a total of 10 Eurodollar Borrowings outstanding.
(d) Limitations on Interest Periods. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request (or
to elect to convert to or continue as a Eurodollar Borrowing): (i) any Revolving
Credit Borrowing if the Interest Period requested therefor would end after the
Revolving Credit Commitment Termination Date; (ii) any Term Borrowing if the
Interest Period requested therefor would end after the Term Loan Maturity Date;
or (iii) any Term Borrowing if the Interest Period requested therefor would
commence before and end after any Principal Payment Date unless, after giving
effect thereto, the aggregate principal amount of the Term Loans having Interest
Periods that end after such Principal Payment Date shall be equal to or less
than the aggregate principal amount of the Term Loans permitted to be
outstanding after giving effect to the payments of principal required to be made
on such Principal Payment Date.
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SECTION 2.03. Requests for Borrowings.
(a) Notice by the Borrower. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (i)
in the case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City
time, three Business Days before the date of the proposed Borrowing or (ii) in
the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, one
Business Day before the date of the proposed Borrowing; provided that any such
notice of a Revolving Credit ABR Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(f) may be given not later than
11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower.
(b) Content of Borrowing Requests. Each telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Credit Borrowing or Term Borrowing;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the Interest Period
therefor, which shall be a period contemplated by the definition of the
term "Interest Period" and permitted under Section 2.02(d); and
(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
(c) Notice by the Administrative Agent to the Lenders.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
(d) Failure to Elect. If no election as to the Type of a
Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.
If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period
of one month.
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SECTION 2.04. Letters of Credit.
(a) General. Subject to the terms and conditions set forth
herein, in addition to the Loans provided for in Section 2.01, the Borrower may
request any Issuing Lender to issue, at any time and from time to time during
the Revolving Credit Availability Period, Letters of Credit for its own account
in such form as is acceptable to such Issuing Lender in its reasonable
determination. Letters of Credit issued hereunder shall constitute utilization
of the Revolving Credit Commitments.
(b) Notice of Issuance, Amendment, Renewal or Extension. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the respective Issuing Lender) to an Issuing Lender
selected by it and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (d) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by the respective
Issuing Lender, the Borrower also shall submit a letter of credit application on
such Issuing Lender's standard form in connection with any request for a Letter
of Credit. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, an Issuing Lender relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.
(c) Limitations on Amounts. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the aggregate LC Exposure of all of the Issuing Lenders
(determined for these purposes without giving effect to the participations
therein of the Revolving Credit Lenders pursuant to paragraph (e) of this
Section) shall not exceed $50,000,000 and (ii) the total Revolving Credit
Exposures shall not exceed the total Revolving Credit Commitments.
(d) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the first anniversary of
the date of the issuance of such Letter of Credit and (ii) the date that is five
Business Days prior to the Revolving Credit Commitment Termination Date;
provided that any Letter of Credit with a one-year term may provide for
automatic renewal thereof for additional one-year periods (which shall in no
event extend beyond the date referred to in clause (ii) above).
(e) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) by any Issuing
Lender, and without any further action on the part of such Issuing Lender or the
Lenders, such Issuing Lender hereby grants to
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each Revolving Credit Lender, and each Revolving Credit Lender hereby acquires
from such Issuing Lender, a participation in such Letter of Credit equal to such
Revolving Credit Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. Each Revolving Credit Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments.
In consideration and in furtherance of the foregoing, each
Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for account of the respective Issuing Lender, such
Revolving Credit Lender's Applicable Percentage of each LC Disbursement made by
an Issuing Lender promptly upon the request of such Issuing Lender at any time
from the time of such LC Disbursement until such LC Disbursement is reimbursed
by the Borrower or at any time after any reimbursement payment is required to be
refunded to the Borrower for any reason. Such payment shall be made without any
offset, abatement, withholding or reduction whatsoever. Each such payment shall
be made in the same manner as provided in Section 2.05 with respect to Loans
made by such Revolving Credit Lender (and Section 2.05 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Credit Lenders), and the
Administrative Agent shall promptly pay to the respective Issuing Lender the
amounts so received by it from the Revolving Credit Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant to
the next following paragraph, the Administrative Agent shall distribute such
payment to the respective Issuing Lender or, to the extent that the Revolving
Credit Lenders have made payments pursuant to this paragraph to reimburse such
Issuing Lender, then to such Revolving Credit Lenders and such Issuing Lender as
their interests may appear. Any payment made by a Revolving Credit Lender
pursuant to this paragraph to reimburse an Issuing Lender for any LC
Disbursement shall not constitute a Loan and shall not relieve the Borrower of
its obligation to reimburse such LC Disbursement.
(f) Reimbursement. If an Issuing Lender shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
Issuing Lender in respect of such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than 1:00
p.m., New York City time, on (i) the Business Day that the Borrower receives
notice of such LC Disbursement, if such notice is received prior to 11:00 a.m.,
New York City time, or (ii) the Business Day immediately following the day that
the Borrower receives such notice, if such notice is not received prior to such
time, provided that, if such LC Disbursement is not less than $1,000,000, the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with a Revolving
Credit ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower's obligation to make such payment shall be discharged and replaced by
the resulting Revolving Credit ABR Borrowing.
If the Borrower fails to make such payment when due and shall
not have requested a Revolving Credit ABR Borrowing in accordance with Section
2.03, the Administrative Agent shall notify each Revolving Credit Lender of the
applicable
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LC Disbursement, the payment then due from the Borrower in respect thereof and
such Lender's Applicable Percentage thereof.
(g) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (f) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect, (iii) payment by the respective Issuing Lender under a Letter of
Credit against presentation of a draft or other document that does not comply
strictly with the terms of such Letter of Credit, (iv) any exchange, release or
non-perfection of any Collateral or other collateral, or any release or waiver
of, amendment to or consent to departure from the guarantee obligations of the
Subsidiary Guarantors under Article III and (v) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor any Issuing
Lender, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit by the respective Issuing Lender or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the
respective Issuing Lender; provided that the foregoing shall not be construed to
excuse an Issuing Lender from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by such Issuing Lender's gross
negligence or willful misconduct when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that:
(i) an Issuing Lender may accept documents that appear on
their face to be in substantial compliance with the terms of a Letter
of Credit without responsibility for further investigation, regardless
of any notice or information to the contrary, and may make payment upon
presentation of documents that appear on their face to be in
substantial compliance with the terms of such Letter of Credit;
(ii) an Issuing Lender shall have the right, in its sole
discretion, to decline to accept such documents and to make such
payment if such documents are not in strict compliance with the terms
of such Letter of Credit; and
(iii) this sentence shall establish the standard of care to be
exercised by an Issuing Lender when determining whether drafts and
other documents presented under a Letter of
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Credit comply with the terms thereof (and the parties hereto hereby
waive, to the extent permitted by applicable law, any standard of care
inconsistent with the foregoing).
(h) Disbursement Procedures. The Issuing Lender for any Letter
of Credit shall, within a reasonable time following its receipt thereof, examine
all documents purporting to represent a demand for payment under such Letter of
Credit. Such Issuing Lender shall promptly after such examination notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether such Issuing Lender has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse such
Issuing Lender and the Lenders with respect to any such LC Disbursement.
(i) Interim Interest. If the Issuing Lender for any Letter of
Credit shall make any LC Disbursement, then, unless the Borrower shall reimburse
such LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the
date such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Loans; provided that, if the Borrower fails to reimburse such LC Disbursement
when due pursuant to paragraph (f) of this Section, then Section 2.11(c) shall
apply. Interest accrued pursuant to this paragraph shall be for account of such
Issuing Lender, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (f) of this Section to reimburse such Issuing
Lender shall be for account of such Lender to the extent of such payment.
(j) Replacement of an Issuing Lender. Any Issuing Lender may
be replaced at any time by written agreement between the Borrower, the
Administrative Agent, the replaced Issuing Lender and the successor Issuing
Lender. The Administrative Agent shall notify the Lenders of any such
replacement of an Issuing Lender. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for account of the
replaced Issuing Lender pursuant to Section 2.10(b). From and after the
effective date of any such replacement, (i) the successor Issuing Lender shall
have all the rights and obligations of the replaced Issuing Lender under this
Agreement with respect to Letters of Credit to be issued by it thereafter and
(ii) references herein to the term "Issuing Lender" shall be deemed to include
such successor or any previous Issuing Lender, or such successor and all
previous Issuing Lenders, as the context shall require. After the replacement of
an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Lender under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of
Credit.
(k) Cash Collateralization. If either (i) an Event of Default
shall occur and be continuing and the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing more than 50% of the
total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, or (ii) the Borrower shall be required to provide cover for LC
Exposure pursuant to Section 2.09(b), the Borrower shall immediately deposit
into the Cash Collateral Account under (and as defined in) the Security
Agreement an amount in immediately
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available funds equal to, in the case of an Event of Default, the LC Exposure as
of such date plus any accrued and unpaid interest thereon and, in the case of
cover pursuant to Section 2.09(b), the amount required under Section 2.09(b);
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of
Article VIII. Such deposit shall be held by the Collateral Agent in such
collateral account as collateral in the first instance for the LC Exposure under
this Agreement and thereafter for the payment of the other Secured Obligations,
and for these purposes the Borrower hereby grants a security interest to the
Collateral Agent for the benefit of the Lenders in such collateral account and
in any financial assets (as defined in the Uniform Commercial Code) or other
property held therein.
(l) Reports by Issuing Lenders to Administrative Agent. On the
Business Day following each Quarterly Date, each Issuing Lender shall furnish to
the Administrative Agent a report setting forth (i) the issuance and expiration
dates, and the face amount, of each Letter of Credit issued by such Issuing
Lender during the most recently completed fiscal quarter, (ii) the aggregate
undrawn amount of all Letters of Credit issued by such Issuing Lender that are
outstanding as of such date and (iii) the aggregate amount of all LC
Disbursements made by such Issuing Lender that have not been reimbursed by or on
behalf of the Borrower prior to such date.
SECTION 2.05. Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
provided that Revolving Credit ABR Borrowings made to finance the reimbursement
of an LC Disbursement as provided in Section 2.04(f) shall be remitted by the
Administrative Agent to the respective Issuing Lender.
(b) Presumption by the Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption (but in its sole discretion), make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender agrees to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at the Federal Funds Effective Rate. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the
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Borrower agrees to pay the Administrative Agent forthwith such corresponding
amount together with interest thereon at the interest rate applicable to ABR
Loans for each day from and including the date such amount was made available to
the Borrower to but excluding the date of payment to the Administrative Agent.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing. Nothing in this
paragraph shall be deemed to relieve any Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights that the Borrower may have
against any Lender as a result of any default by such Lender hereunder.
SECTION 2.06. Interest Elections.
(a) Elections by the Borrower. The Loans constituting each
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have the Interest
Period specified in such Borrowing Request. Thereafter, the Borrower may elect
to convert such Borrowing to a Borrowing of a different Type or to continue such
Borrowing as a Borrowing of the same Type and, in the case of a Eurodollar
Borrowing, may elect the Interest Period therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans constituting such
Borrowing, and the Loans constituting each such portion shall be considered a
separate Borrowing.
(b) Notice of Elections. To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.
(c) Content of Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) of this paragraph shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
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(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period therefor after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period" and permitted under Section 2.02(d).
(d) Notice by the Administrative Agent to the Lenders.
Promptly following receipt of an Interest Election Request, the Administrative
Agent shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) Failure to Elect; Events of Default. If the Borrower fails
to deliver a timely and complete Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period therefor, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period the Borrower shall be deemed to have selected an Interest Period of one
month. Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period therefor.
SECTION 2.07. Termination and Reduction of the Commitments.
(a) Scheduled Termination. Unless previously terminated, the
Revolving Credit Commitments shall terminate on the Revolving Credit Commitment
Termination Date.
(b) Voluntary Termination or Reduction. The Borrower may at
any time terminate in whole, or from time to time reduce in part, the
Commitments of any Class; provided that (i) each reduction of the Commitments of
any Class pursuant to this Section shall be in an amount that is $2,000,000 or a
larger multiple of $1,000,000 and (ii) the Borrower shall not terminate or
reduce the Revolving Credit Commitments if, after giving effect to any
concurrent prepayment of the Revolving Credit Loans in accordance with Section
2.09, the total Revolving Credit Exposures would exceed the total Revolving
Credit Commitments.
(c) Notice of Voluntary Termination or Reduction. The Borrower
shall notify the Administrative Agent of any election to terminate or reduce the
Commitments of any Class under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable.
(d) Effect of Termination or Reduction. Any termination or
reduction of the Commitments of either Class shall be permanent. Each reduction
of the Commitments of either Class shall be made ratably among the Lenders in
accordance with their respective Commitments of such Class.
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SECTION 2.08. Repayment of Loans; Evidence of Debt.
(a) Repayment. The Borrower hereby unconditionally promises to
pay the Loans as follows:
(i) to the Administrative Agent for account of the Revolving
Credit Lenders the outstanding principal amount of the Revolving Credit
Loans on the Revolving Credit Commitment Termination Date, and
(ii) to the Administrative Agent for account of the Term Loan
Lenders the aggregate principal amount of the Term Loans in 20
consecutive quarterly installments, one such installment to be payable
on each Principal Payment Date, each in the aggregate principal amount
set forth below opposite the reference to such Principal Payment Date
(subject to adjustment pursuant to paragraph (b) of this Section):
Principal Payment Date
Falling in or on: Amount ($)
---------------------- ----------
September 2003 375,000
December 2003 375,000
March 2004 375,000
June 2004 375,000
September 2004 375,000
December 2004 375,000
March 2005 375,000
June 2005 375,000
September 2005 375,000
December 2005 375,000
March 2006 375,000
June 2006 375,000
September 2006 11,250,000
December 2006 11,250,000
March 2007 11,250,000
June 2007 11,250,000
September 2007 25,125,000
December 2007 25,125,000
March 2008 25,125,000
Term Loan Maturity Date 25,125,000
(b) Adjustment of Amortization Schedule. Any prepayment of a
Term Borrowing shall be applied to reduce the subsequent scheduled principal
installments of the
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Term Borrowings to be made pursuant to this Section (i) ratably, in the case of
a prepayment made pursuant to Section 2.09(b), or (ii) in direct order of
maturity, in the case of any other prepayment. To the extent not previously
paid, all Term Loans shall be due and payable on the Term Loan Maturity Date.
(c) Manner of Payment. Prior to any repayment of any
Borrowings of either Class hereunder (other than the payment in full of all
outstanding Borrowings of either Class on the scheduled date of such repayment),
the Borrower shall select the Borrowing or Borrowings of the applicable Class to
be paid and shall notify the Administrative Agent by telephone (confirmed by
telecopy) of such selection not later than 1:00 p.m., New York City time, three
Business Days in the case of any repayment of Eurodollar Borrowings and one
Business Day in the case of any repayment of ABR Borrowings, in each case before
the scheduled date of such repayment; provided that each repayment of Borrowings
of either Class shall be applied to repay any outstanding ABR Borrowings of such
Class before any other Borrowings of such Class. If the Borrower fails to make a
timely selection of the Borrowing or Borrowings to be repaid (in accordance with
the immediately preceding sentence) or prepaid (in accordance with Section
2.09(c)), such payment shall be applied, first, to pay any outstanding ABR
Borrowings of the applicable Class and, second, to other Borrowings of such
Class in the order of the remaining duration of their respective Interest
Periods (the Borrowing with the shortest remaining Interest Period to be repaid
first). Each payment of a Borrowing shall be applied ratably to the Loans
included in such Borrowing.
(d) Maintenance of Records by Lenders. Each Lender shall
maintain in accordance with its usual practice records evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.
(e) Maintenance of Records by the Administrative Agent. The
Administrative Agent shall maintain records in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and each Interest
Period therefor, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (iii)
the amount of any sum received by the Administrative Agent hereunder for account
of the Lenders and each Lender's share thereof.
(f) Effect of Entries. The entries made in the records
maintained pursuant to paragraph (d) or (e) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
such records or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
(g) Promissory Notes. Any Lender may request that Loans of
either Class made by it be evidenced by a promissory note. In such event, the
Borrower shall execute and deliver to such Lender a promissory note payable to
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in the form of Exhibit F-1 or F-2, as applicable, or such other form
reasonably approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment
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pursuant to Section 10.04) be represented by one or more promissory notes in
such form payable to the payee named therein (or, if such promissory note is a
registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans.
(a) Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to the requirements of this Section. Any prepayment of the Term Loans
pursuant to this paragraph shall be applied to the installments thereof in the
direct order of maturity.
(b) Mandatory Prepayments. The Borrower will prepay the Loans
(and/or provide cover for LC Exposure as specified in Section 2.04(k)), and/or
the Commitments shall be subject to automatic reduction, as follows:
(i) Equity Issuance. Upon any Equity Issuance, the Borrower
shall prepay the Term Loans in an aggregate amount equal to 50% of the
Net Available Proceeds thereof, such prepayment to be effected in each
case in the manner and to the extent specified in paragraph (iv) of
this Section; provided that, notwithstanding the foregoing, the
Borrower shall not be required to make a prepayment under this
paragraph (i):
(x) to the extent that the amount of such Net
Available Proceeds, when combined with the aggregate amount of
the Net Available Proceeds of all prior Equity Issuances
occurring after the Effective Date as to which a prepayment
has not yet been made under this paragraph (i) (other than any
such Equity Issuance as to which clause (y) or (z) of this
paragraph (i) applies), does not exceed $50,000,000;
(y) if at the time of such Equity Issuance the
Borrower's senior, unsecured, non-credit enhanced, long-term
indebtedness shall be rated at least BBB- by S&P and at least
Baa3 by ▇▇▇▇▇'▇ and each such rating agency shall have issued
a stable outlook with respect to such indebtedness; and
(z) if (i) the Borrower or any Subsidiary intends to
use such Net Available Proceeds to finance an acquisition that
is permitted by Section 7.05(o) and is identified at the time
of such Equity Issuance, (ii) the Borrower or such Subsidiary
enters into a definitive purchase agreement or similar
agreement providing for the terms and conditions of such
acquisition within 60 days after such Equity Issuance and
(iii) such Net Available Proceeds are held by the Borrower or
such Subsidiary in a segregated investment or other account
until so used to finance such acquisition (and the Borrower
hereby agrees that, in the event it shall (A) fail to enter
into (or cause such Subsidiary to enter into) such definitive
purchase agreement or similar agreement within 60 days after
such Equity Issuance, (B) fail to hold (or cause such
Subsidiary to hold) such Net Available Proceeds in such
segregated investment or other account or (C) determine not to
(or determine that such Subsidiary shall not) consummate such
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acquisition, it shall forthwith prepay the Term Loans in
accordance with this paragraph (i)).
(ii) Sale of Assets. If on any date the Borrower or any of its
Subsidiaries shall receive Net Available Proceeds from any Disposition
or any Recovery Event (x) in excess of $10,000,000 or (y) which, when
combined with the Net Available Proceeds of all other prior
Dispositions and Recovery Events occurring after the Effective Date as
to which a prepayment has not yet been made under this paragraph (ii)
(excluding Excluded Dispositions and any Disposition or Recovery Event
as to which a Reinvestment Notice shall have been given), are in excess
of $50,000,000, then the Borrower will prepay the Loans (and/or provide
cover for LC Exposure as specified in Section 2.04(k)), and the
Commitments shall be subject to automatic reduction, in an aggregate
amount equal to the portion of the Net Available Proceeds of such
Disposition or Recovery Event, as the case may be, in excess of
$10,000,000 (in the case of clause (x) above) or the portion of the Net
Available Proceeds of such Disposition or Recovery Event, as the case
may be, and such prior Dispositions and Recovery Events in excess of
$50,000,000 (in the case of clause (y) above), such prepayment and/or
reduction to be effected in each case in the manner and to the extent
specified in paragraph (iv) of this Section, provided that:
(A) notwithstanding the foregoing, the Borrower shall
not be required to make any prepayment, or reduce any
Commitments, under this paragraph if (I) on or prior to the
date of receipt of such Net Available Proceeds, the Borrower
shall have delivered a Reinvestment Notice with respect
thereto to the Administrative Agent or (II) such Disposition
is an Excluded Disposition;
(B) subject to clause (A) above, on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment
Event shall be applied to prepay the Loans and reduce the
Commitments in the manner and to the extent specified in
paragraph (iv) of this Section; and
(C) no later than five Business Days prior to the
anticipated occurrence of any Disposition (other than any
Excluded Disposition) or Recovery Event or, if the Borrower
shall deliver a Reinvestment Notice with respect to such
Disposition or Recovery Event as provided above, no later than
five Business Days after the occurrence of such Disposition or
Recovery Event, the Borrower will deliver to the
Administrative Agent a statement of a Financial Officer, in
form and detail satisfactory to the Administrative Agent,
setting forth the amount of the Net Available Proceeds of such
Disposition or Recovery Event (or, in the case of any such
statement delivered prior to the occurrence of such
Disposition or Recovery Event, the anticipated amount of the
Net Available Proceeds of such Disposition or Recovery Event)
and of all such prior Dispositions and Recovery Events
(excluding Excluded Dispositions and any Disposition or
Recovery Event as to which a Reinvestment Notice shall have
been given).
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(iii) Debt Incurrence. Upon any Debt Incurrence, the Borrower
shall prepay the Loans (and/or provide cover for LC Exposure as
specified in Section 2.04(k)), and the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to 50% of the Net
Available Proceeds thereof, such prepayment and/or reduction to be
effected in each case in the manner and to the extent specified in
clause (iv) of this paragraph, provided that, notwithstanding the
foregoing, the Borrower shall not be required to make a prepayment
under this paragraph (iii) to the extent that such Debt Incurrence is
an Excluded Debt Incurrence.
(iv) Application. Prepayments and/or reductions of Commitments
pursuant to this paragraph shall be applied, first, to prepay the Term
Loans and, second (but only in the case of clauses (ii) and (iii) of
this paragraph), after the payment in full of the Term Loans, to reduce
the aggregate amount of the Revolving Credit Commitments (and to the
extent that, after giving effect to such reduction, the total Revolving
Credit Exposures would exceed the total Revolving Credit Commitments,
the Borrower shall, first, prepay Revolving Credit Loans and, second,
provide cover for LC Exposure as specified in Section 2.04(k) in an
aggregate amount equal to such excess). Each such prepayment of the
Term Loans shall be applied ratably to the installments thereof.
(c) Notices, Etc. The Borrower shall notify the Administrative
Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Borrowing, not later than 1:00 p.m., New
York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Borrowing, not later than 1:00 p.m., New York City
time, one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment.
Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the relevant Lenders of the contents thereof.
Each optional partial prepayment of any Borrowing shall be in an aggregate
amount of $2,000,000 or a larger multiple of $1,000,000. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11 and shall be made in the manner specified in Section
2.08(c).
SECTION 2.10. Fees.
(a) Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for account of each Lender a commitment fee, which shall
accrue at the Applicable Rate on the average daily unused amount of the
Revolving Credit Commitment of such Lender during the period from and including
the Effective Date to but excluding the earlier of the date such Revolving
Credit Commitment terminates and the Revolving Credit Commitment Termination
Date. Commitment fees accrued through and including each Quarterly Date shall be
payable on the third Business Day following such Quarterly Date and on the
earlier of the date the Revolving Credit Commitments terminate and the Revolving
Credit Commitment Termination Date, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number
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of days elapsed (including the first day but excluding the last day). For
purposes of computing commitment fees, the Revolving Credit Commitment of a
Lender shall be deemed to be used to the extent of the outstanding Revolving
Credit Loans and LC Exposure of such Lender.
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to
the Administrative Agent for account of each Revolving Credit Lender a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at a rate per annum equal to the Applicable Rate applicable to
interest on Revolving Credit Eurodollar Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Credit Commitment terminates and the date on which such Lender ceases
to have any LC Exposure, and (ii) to the respective Issuing Lender a fronting
fee, which shall accrue at the rate of 0.125% per annum on the average daily
amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Revolving Credit Commitments and the date on which there ceases to be any LC
Exposure, as well as such Issuing Lender's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including each Quarterly Date shall be payable on the third Business Day
following such Quarterly Date, commencing on the first such date to occur after
the Effective Date; provided that all such fees shall be payable on the date on
which the Revolving Credit Commitments terminate and any such fees accruing
after the date on which the Revolving Credit Commitments terminate shall be
payable on demand. Any other fees payable to any Issuing Lender pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) Agent Fees. The Borrower agrees to pay to each Agent, for
its own account, fees payable in the amounts and at the times separately agreed
upon between the Borrower and such Agent.
(d) Payment of Fees. All fees payable hereunder shall be paid
on the dates due, in immediately available funds, to the Administrative Agent
(or to the respective Issuing Lender, in the case of fees payable to it) for
distribution, in the case of facility fees and participation fees, to the
Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances.
SECTION 2.11. Interest.
(a) ABR Loans. The Loans constituting each ABR Borrowing shall
bear interest at a rate per annum equal to (i) the Alternate Base Rate plus the
Applicable Rate (in the case of Revolving Credit Loans constituting an ABR
Borrowing) or (ii) the Alternate Base Rate plus 2.50% (in the case of Term Loans
constituting an ABR Borrowing).
(b) Eurodollar Loans. The Loans constituting each Eurodollar
Borrowing shall bear interest at a rate per annum equal to (i) the Adjusted LIBO
Rate for the Interest Period for
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such Borrowing plus the Applicable Rate (in the case of Revolving Credit Loans
constituting a Eurodollar Borrowing) or (ii) the Adjusted LIBO Rate for the
Interest Period for such Borrowing plus 3.50% (in the case of Term Loans
constituting a Eurodollar Borrowing).
(c) Default Interest. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration, by mandatory prepayment or otherwise, (i) each outstanding Loan
shall bear interest at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan as provided above and (ii) such overdue amount (other
than overdue principal on any Loan) shall bear interest, after as well as before
judgment, at a rate per annum equal to 2% plus the rate applicable to ABR Loans
as provided in paragraph (a) of this Section.
(d) Payment of Interest. Accrued interest on each Loan shall
be payable in arrears on each Interest Payment Date for such Loan and, in the
case of Revolving Credit Loans, upon termination of the Revolving Credit
Commitments; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of a Revolving Credit Loan that
is an ABR Loan prior to the Revolving Credit Commitment Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Borrowing prior to the end of the Interest Period
therefor, accrued interest on such Borrowing shall be payable on the effective
date of such conversion.
(e) Computation. All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of the Interest Period for any Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period; or
(b) if such Borrowing is of a particular Class of Loans, the
Administrative Agent is advised by the Required Lenders of such Class
that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or
maintaining their respective Loans included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent
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notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or the continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and such Borrowing (unless prepaid)
shall be continued as, or converted to, an ABR Borrowing and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made
as an ABR Borrowing.
SECTION 2.13. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or any Issuing Lender;
or
(ii) impose on any Lender or any Issuing Lender or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Lender of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or such
Issuing Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Lender, as the case may be,
such additional amount or amounts as will compensate such Lender or such Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.
(b) Capital Requirements. If any Lender or any Issuing Lender
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or such Issuing
Lender's capital or on the capital of such Lender's or such Issuing Lender's
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by such Issuing Lender, to a level below that which such Lender
or such Issuing Lender or such Lender's or such Issuing Lender's holding company
could have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Lender's policies and the policies of such Lender's or
such Issuing Lender's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or such Issuing Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Lender or such Lender's or such Issuing Lender's holding
company for any such reduction suffered.
(c) Certificates from Lenders. A certificate of a Lender or an
Issuing Lender setting forth the amount or amounts necessary to compensate such
Lender or such Issuing Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section
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shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or such Issuing Lender, as the case
may be, the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any
Lender or any Issuing Lender to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender's or such Issuing Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender or an Issuing Lender pursuant to this Section for any
increased costs or reductions incurred more than six months prior to the date
that such Lender or the Issuing Lender, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender's or such Issuing Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period therefor (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay any Loan
on the date specified in any notice delivered pursuant hereto (regardless of
whether such notice is permitted to be revocable under Section 2.09(c) and is
revoked in accordance herewith), or (d) the assignment as a result of a request
by the Borrower pursuant to Section 2.17(b) of any Eurodollar Loan other than on
the last day of an Interest Period therefor, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, the loss to any
Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount
of interest that such Lender would pay for a deposit equal to the principal
amount of such Loan for the period from the date of such payment, conversion,
failure or assignment to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, convert or continue, the
duration of the Interest Period that would have resulted from such borrowing,
conversion or continuation) if the interest rate payable on such deposit were
equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount
of interest that such Lender would earn on such principal amount for such period
if such Lender were to invest such principal amount for such period at the
interest rate that would be bid by such Lender (or an affiliate of such Lender)
for Dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the
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Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent, Lender or Issuing Lender
(as the case may be) receives 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 deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) Indemnification by the Borrower. The Borrower shall
indemnify each Agent, each Lender and each Issuing Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by such Agent, such
Lender or such Issuing Lender, as the case may be, and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or an Issuing
Lender, or by an Agent on its own behalf or on behalf of a Lender or an Issuing
Lender, shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. (i) Any Foreign Lender that is entitled
to an exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate.
(ii) Each Foreign Lender shall deliver to Administrative Agent
and to the Borrower, on or prior to the Effective Date (in the case of each
Lender party to this Agreement on such date) or on or prior to the effective
date of the Assignment and Assumption pursuant to which it becomes a Lender (in
the case of each other Lender), and at such other times as may be necessary in
the determination of the Borrower or Administrative Agent (each in the
reasonable exercise of its discretion), two original copies of Internal Revenue
Service Form W-8BEN or W-8ECI (or any successor forms) properly completed and
duly executed by such Lender, or, in the case of a Foreign Lender claiming
exemption from United States federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest," a form
W-8BEN, and, in the case of a Lender that has certified in writing to
Administrative Agent that it is
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not a "bank" (as defined in Section 881(c)(3)(A) of the Code), a certificate of
such Lender certifying that such Lender is not (i) a "bank" for purposes of
Section 881(c) of the Code, (ii) a ten-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower or (iii) a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code) in each case together with any other certificate or
statement of exemption required under the Code or the regulations issued
thereunder to establish that such Lender is not subject to United States
withholding tax with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
(iii) Each Foreign Lender hereby agrees, from time to time
after the initial delivery by such Lender of such forms, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence so delivered obsolete or inaccurate in any material respect, that such
Lender shall promptly (A) deliver to Administrative Agent and to the Borrower
two original copies of renewals, amendments or additional or successor forms,
properly completed and duly executed by such Lender, together with any other
certificate or statement of exemption required in order to confirm or establish
that such Lender is not subject to United States withholding tax with respect to
payments to such Lender under the Loan Documents and, if applicable, that such
Lender does not act for its own account with respect to any portion of such
payment, or (B) notify Administrative Agent and the Borrower of its inability to
deliver any such forms, certificates or other evidence.
(iv) The Borrower shall not be required to pay any additional
amount to any Foreign Lender under this paragraph (e), (A) with respect to any
Tax required to be deducted or withheld on the basis of the information,
certificates or statements of exemption such Lender chooses to transmit with an
Internal Revenue Service Form W-8IMY pursuant to this paragraph (e) or (B) if
such Lender shall have failed to satisfy the requirements of this paragraph (e);
provided that if such Lender shall have satisfied the requirements of this
paragraph (e) on the date such Lender became a Lender, nothing in this paragraph
(e) shall relieve the Borrower of its obligation to pay any amounts pursuant to
this paragraph (e) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof, such Lender is no
longer properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding hereunder.
(f) Tax Refunds. If an Agent or a Lender determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay over
such refund to the Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided that the Borrower, upon the request of such Agent or such
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Agent or such Lender in the event such Agent or such Lender
is required to repay such refund to such Governmental Authority. This Section
shall not be construed to require any
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Agent or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs.
(a) Payments by the Obligors. Each Obligor shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or under Section 2.13, 2.14 or 2.15,
or otherwise) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 1:00 p.m., New York City time, on the date when due,
in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, except as otherwise expressly provided in the relevant Loan
Document and except for payments to be made directly to an Issuing Lender as
expressly provided herein and payments pursuant to Sections 2.13, 2.14, 2.15 and
10.03, which shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension. All payments hereunder or
under any other Loan Document (except to the extent otherwise provided therein)
shall be made in Dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal and unreimbursed LC Disbursements then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c) Pro Rata Treatment. Except to the extent otherwise
provided herein: (i) each Borrowing of a particular Class shall be made from the
relevant Lenders, each payment of commitment fee under Section 2.10 shall be
made for account of the relevant Lenders, and each termination or reduction of
the amount of the Commitments of a particular Class under Section 2.07 shall be
applied to the respective Commitments of such Class of the relevant Lenders, pro
rata according to the amounts of their respective Commitments of such Class;
(ii) each Borrowing of any Class shall be allocated pro rata among the relevant
Lenders according to the amounts of their respective Commitments of such Class
(in the case of the making of Loans) or their respective Loans of such Class
that are to be included in such Borrowing (in the case of conversions and
continuations of Loans); (iii) each payment or prepayment of principal of
Revolving Credit Loans and Term Loans by the Borrower shall be made for account
of the relevant Lenders pro rata in accordance with the respective unpaid
principal amounts of the Loans of such Class held by them; and (iv) each payment
of interest on
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Revolving Credit Loans and Term Loans by the Borrower shall be made for account
of the relevant Lenders pro rata in accordance with the amounts of interest on
such Loans then due and payable to the respective Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon then due than the proportion received
by any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Obligor pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Obligor consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Obligor rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Obligor
in the amount of such participation.
(e) Presumptions of Payment. Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for account of the Lenders or an
Issuing Lender hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption (but in
its sole discretion), distribute to the Lenders or such Issuing Lender, as the
case may be, the amount due. In such event, if the Borrower has not in fact made
such payment, then each of the Lenders or such Issuing Lender, as the case may
be, severally agrees to repay to the Administrative Agent forthwith on demand
the amount so distributed to such Lender or such Issuing Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
Federal Funds Effective Rate.
(f) Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(e), 2.05(b) or 2.16(e), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
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SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.13, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for account of
any Lender pursuant to Section 2.15, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests
compensation under Section 2.13, if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.15, if a Revolving Credit Lender defaults in its
obligations to make a Revolving Credit Loan, or if a Lender refuses to consent
to any amendment, modification or waiver of this Agreement or any other Loan
Document that pursuant to Section 10.02 requires consent of 100% of the Lenders
directly affected thereby, then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.13 or payments required to be made
pursuant to Section 2.15, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
ARTICLE III
GUARANTEE
SECTION 3.01. The Guarantee. The Subsidiary Guarantors hereby
jointly and severally guarantee to each Lender and each Agent and their
respective successors and assigns
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the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the principal of and interest on the Loans made by the Lenders
to the Borrower and all other amounts from time to time owing to the Lenders or
the Agents by the Borrower under this Agreement and by any Obligor under any of
the other Loan Documents, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the "Guaranteed
Obligations"). The Subsidiary Guarantors hereby further jointly and severally
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Subsidiary Guarantors will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
SECTION 3.02. Obligations Unconditional. The obligations of
the Subsidiary Guarantors under Section 3.01 are absolute and unconditional,
joint and several, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section that the obligations of the Subsidiary
Guarantors hereunder shall be absolute and unconditional, joint and several,
under any and all circumstances (except for (i) payment in full of the
Guaranteed Obligations and (ii) with respect to any Subsidiary Guarantor, the
release of such Subsidiary Guarantor from its obligations under this Article III
in accordance with the terms hereof). Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Subsidiary Guarantors hereunder,
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or any other agreement or instrument referred to herein
shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement or any other agreement or instrument referred to herein shall
be waived or any other guarantee of any of the Guaranteed Obligations
or any security therefor shall be released or exchanged in whole or in
part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of,
either Agent or any Lender or Lenders as security for any of the
Guaranteed Obligations shall fail to be perfected.
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The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that either
Agent or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or any other agreement or instrument referred to
herein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
SECTION 3.03. Reinstatement. The obligations of the Subsidiary
Guarantors under this Article shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Subsidiary
Guarantors jointly and severally agree that they will indemnify each Agent and
each Lender on demand for all reasonable costs and expenses (including fees of
counsel) incurred by such Agent or such Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
SECTION 3.04. Subrogation. The Subsidiary Guarantors hereby
jointly and severally agree that until the payment and satisfaction in full of
all Guaranteed Obligations and the expiration and termination of the Commitments
of the Lenders under this Agreement they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in Section 3.01,
whether by subrogation or otherwise, against the Borrower or any other guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.
SECTION 3.05. Remedies. The Subsidiary Guarantors jointly and
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of the Borrower under this Agreement may be declared to be forthwith
due and payable as provided in Article VIII (and shall be deemed to have become
automatically due and payable in the circumstances provided in Article VIII) for
purposes of Section 3.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Subsidiary Guarantors
for purposes of Section 3.01.
SECTION 3.06. Instrument for the Payment of Money. Each
Subsidiary Guarantor hereby acknowledges that the guarantee in this Article
constitutes an instrument for the payment of money, and consents and agrees that
any Lender or either Agent, at its sole option, in the event of a dispute by
such Subsidiary Guarantor in the payment of any moneys due hereunder, shall have
the right to bring motion-action under New York CPLR Section 3213.
SECTION 3.07. Continuing Guarantee. The guarantee in this
Article is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.
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SECTION 3.08. Rights of Contribution. The Subsidiary
Guarantors hereby agree, as between themselves, that if any Subsidiary Guarantor
shall become an Excess Funding Guarantor (as defined below) by reason of the
payment by such Subsidiary Guarantor of any Guaranteed Obligations, each other
Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but
subject to the next sentence), pay to such Excess Funding Guarantor an amount
equal to such Subsidiary Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Subsidiary Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Subsidiary Guarantor under the other provisions of this
Article and such Excess Funding Guarantor shall not exercise any right or remedy
with respect to such excess until payment and satisfaction in full of all of
such obligations.
For purposes of this Section, (i) "Excess Funding Guarantor"
means, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has
paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) "Excess Payment" means, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Subsidiary Guarantor hereunder and any
obligations of any other Subsidiary Guarantor that have been Guaranteed by such
Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of the Subsidiary Guarantors exceeds the amount
of all the debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Subsidiary Guarantors hereunder and under the other Loan Documents) of all
of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary
Guarantor that is a party hereto on the Effective Date, as of the Effective
Date, and (B) with respect to any other Subsidiary Guarantor, as of the date
such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.
SECTION 3.09. General Limitation on Guarantee Obligations;
Limitation on Guarantees of PHPA Subsidiary Guarantors. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, either Agent or any other
Person, be automatically limited and reduced to the highest amount that is valid
and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding. In
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addition, at any time that there is any Indebtedness outstanding in respect of
the 7% Senior Notes, the obligations of the PHPA Subsidiary Guarantors, taken as
a whole, under Section 3.01 at any time, taking into account the provisions of
Section 3.08, shall be limited to the maximum amount from time to time permitted
by the terms and conditions of the 7% Senior Notes.
SECTION 3.10. Release of Subsidiary Guarantor. In the event
that all of the Equity Interests held by the Borrower or its Subsidiaries in any
Subsidiary Guarantor is sold or otherwise disposed of (except as permitted under
Section 7.03(a)(ii) or in connection with the enforcement of the Security
Documents by the Collateral Agent) or dissolved or liquidated in compliance with
the requirements of this Agreement (or such sale, other disposition, dissolution
or liquidation has been approved by the Required Lenders) and the proceeds
thereof have been applied to the extent required under Section 2.09(b)(ii), such
Subsidiary Guarantor shall, without further action, automatically be released
from the Guarantee in this Article and the Guaranteed Obligations and the
Guarantee in this Article shall, as to such Subsidiary Guarantor, terminate and
have no further force or effect (it being understood and agreed that the sale of
Equity Interests in one or more Persons that own, directly or indirectly, all of
such Equity Interests in any Subsidiary Guarantor shall be deemed to be a sale
of such Equity Interests in such Subsidiary Guarantor for the purposes of this
Section).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 4.01. Organization; Powers. Each of the Obligors and
the Material Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority (including all governmental licenses, permits and
other approvals, including all licenses, permits and approvals issued by the HMO
Regulators and the Insurance Regulators) to carry on its business as now
conducted and, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 4.02. Authorization; Enforceability. The Transactions
are within each Obligor's corporate powers and have been duly authorized by all
necessary corporate and, if required, by all necessary shareholder action. This
Agreement has been duly executed and delivered by each Obligor and constitutes,
and each of the other Loan Documents to which it is a party when executed and
delivered by such Obligor will constitute, a legal, valid and binding obligation
of such Obligor, enforceable against each Obligor in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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SECTION 4.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority (including any
HMO Regulator or Insurance Regulator), except for (i) such as have been obtained
or made and are in full force and effect and (ii) filings and recordings in
respect of the Liens created pursuant to the Security Documents, (b) will not
violate any Requirement of Law (including Regulation U or X of the Board or any
HMO Regulation or Insurance Regulation) applicable to the Borrower or any of its
Subsidiaries, (c) will not violate or result in a default under any material
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or assets, or give rise to a right thereunder to require any
payment to be made by any such Person, and (d) except for the Liens created
pursuant to the Security Documents, will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.04. Financial Condition; No Material Adverse Change.
(a) Financial Condition. The Borrower has heretofore furnished
to the Lenders its consolidated balance sheet and statements of income,
stockholders' equity and cash flows (i) as of and for the fiscal years ended
December 31, 2001 and December 31, 2002, in each case reported on by Ernst &
Young LLP, and (ii) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2003, certified by the chief financial officer of
the Borrower. Such financial statements present fairly, in all material
respects, the financial condition and results of operations and cash flows of
the Borrower and its Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) of the first
sentence of this paragraph.
(b) Projections. The Borrower has heretofore furnished to the
Lenders projections prepared by management of the Borrower of consolidated
balance sheets and statements of income and cash flows on a quarterly basis for
the fiscal year of the Borrower ending December 31, 2003 and on an annual basis
for each fiscal year of the Borrower through 2007.
(c) No Material Adverse Change. Since December 31, 2002, there
has been no development or event that has had or would reasonably be expected to
have a Material Adverse Effect.
SECTION 4.05. Properties.
(a) Property Generally. Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, subject only to Liens permitted
by Section 7.02 and except for minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes. Set forth on Schedule 4.05(a) is a
complete and accurate list of (i) all parcels of real property owned with a fair
market value in excess of $2,500,000 by the Borrower or any of its Subsidiaries,
showing as of the date hereof the street address, county or other relevant
jurisdiction, state, record owner and book and fair value thereof and (ii) all
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leases of real property with annual aggregate lease payments of $2,500,000 under
which the Borrower or any of its Subsidiaries is a party, showing as of the date
hereof the street address, county or other relevant jurisdiction, state, lessor,
lessee, expiration date and annual rental cost thereof.
(b) Intellectual Property. Each of the Borrower and its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Borrower and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
SECTION 4.06. Litigation and Environmental Matters.
(a) Actions, Suits and Proceedings. Except as disclosed in
Schedule 4.06(a), there are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority now pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or (ii) that
involve this Agreement or the Transactions.
(b) Environmental Matters. Except as disclosed in Schedule
4.06(b) and except with respect to any other matters that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
(c) Disclosed Matters. Since the date of this Agreement, there
has been no change in the status of the matters disclosed in Schedule 4.06(a) or
4.06(b) that, individually or in the aggregate, has had, or materially increased
the likelihood of, a Material Adverse Effect.
SECTION 4.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property (including
Regulations U and X of the Board and all Environmental Laws) and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, each of the Obligors and the Material Subsidiaries (a) is in
compliance with all material terms and provisions of the HMO Regulations and
Insurance Regulations pertaining to fiscal soundness, solvency or financial
condition and (b) has not received any assertion in writing by an HMO Regulator
or an Insurance Regulator that such regulator is taking administrative action
against any Obligor or Material Subsidiary to (i) revoke or modify any contract
of insurance, license, permit, certification, authorization, accreditation or
charter or (ii) enforce the fiscal soundness, solvency or financial provisions
or requirements of the HMO Regulations or
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Insurance Regulations against any Obligor or Material Subsidiary, except where
the failure to so comply, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect. No Default has occurred and
is continuing.
SECTION 4.08. Investment and Holding Company Status. Neither
the Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 4.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all Tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so would not
reasonably be expected to have in a Material Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, would reasonably be
expected to have a Material Adverse Effect.
SECTION 4.11. Disclosure. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Obligors to the Lenders in
connection with the negotiation of this Agreement and the other Loan Documents
or delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time (it being understood that such information is
subject to inherent uncertainties and contingencies, and that no assurances can
be given by the Borrower that any projections will be realized).
SECTION 4.12. Use of Credit. Neither the Borrower nor any of
its Subsidiaries is engaged principally, 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, and no part of the
proceeds of any extension of credit hereunder will be used to buy or carry any
Margin Stock.
SECTION 4.13. Indebtedness and Liens.
(a) Indebtedness. Schedule 4.13(a) is a complete and correct
list of each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other
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arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, the Borrower or any of its Subsidiaries outstanding on the date hereof the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $2,000,000, and the aggregate principal or face amount outstanding or
that may become outstanding under each such arrangement is correctly described
in Schedule 4.13(a).
(b) Liens. Schedule 4.13(b) is a complete and correct list of
each Lien on property of the Borrower or any of its Subsidiaries securing
Indebtedness of any Person outstanding on the date hereof the aggregate
principal or face amount of which equals or exceeds (or may equal or exceed)
$2,000,000, and the aggregate Indebtedness secured (or that may be secured) by
each such Lien and the property covered by each such Lien is correctly described
in Schedule 4.13(b).
SECTION 4.14. Subsidiaries and Investments.
(a) Subsidiaries. Set forth in Schedule 4.14(a) is a complete
and correct list of all of the Subsidiaries of the Borrower as of the date
hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary, (iii) the nature of the ownership interests held by each such
Person and the percentage of ownership of such Subsidiary represented by such
ownership interests and (iv) whether such Subsidiary constitutes a HMO
Subsidiary or an Insurance Subsidiary. Except as disclosed in Schedule 4.14(a),
(x) each of the Borrower and its Subsidiaries owns, free and clear of Liens
(other than Liens created pursuant to the Security Documents), and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Schedule 4.14(a), (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) Investments. Set forth in Schedule 4.14(b) is a complete
and correct list of each Investment which equals or exceeds $2,5000,000 (other
than Investments disclosed in Schedule 4.14(a) and other than Investments of the
types referred to in clauses (b), (d), (e), (f), (g), (k), (l), (m), (n) and (o)
of Section 7.05) held by the Borrower or any of its Subsidiaries in any Person
on the date hereof and, for each such Investment, (x) the identity of the Person
or Persons holding such Investment, (y) the nature of such Investment and (z)
the amount of such Investment. Except as disclosed in Schedule 4.14(b), each of
the Borrower and its Subsidiaries owns, free and clear of all Liens (other than
Liens created pursuant to the Security Documents), all such Investments.
SECTION 4.15. Perfection and Priority of Security Interests.
All filings and other actions necessary or desirable to perfect the security
interest in the Collateral created under the Security Documents have been duly
made or taken (other than filings or recordings to be made in connection with
the initial Loans hereunder) and are in full force and effect, and the Security
Documents create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid and, together with such filings, the delivery to the Collateral
Agent of the Pledged Stock and/or Pledged Debt (each as defined in the Security
Agreement) at or prior to the time of the
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execution and delivery of the applicable Security Document and the taking of
such other action required to be taken pursuant to Section 5.01 or 6.09,
perfected first priority (subject to Liens permitted under Section 7.02 that
have priority by operation of law) security interest in the Collateral, securing
the payment of the Secured Obligations. The Obligors are the legal and
beneficial owners of the Collateral free and clear of any Lien, except for the
liens and security interests created or permitted under the Loan Documents.
SECTION 4.16. Solvency. Each Obligor (other than any Obligor
that is an Immaterial Subsidiary) is, individually and together with its
Subsidiaries, Solvent.
ARTICLE V
CONDITIONS
SECTION 5.01. Effective Date. The obligations of the Lenders
to make Loans and of the Issuing Lenders to issue Letters of Credit hereunder
shall not become effective until the date on which the Administrative Agent
shall have received each of the following documents, each of which shall be
satisfactory to the Administrative Agent (and to the extent specified below, to
each Lender) in form and substance (or such condition shall have been waived in
accordance with Section 10.02):
(a) Executed Counterparts. From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this Agreement.
(b) Opinion of Counsel to the Obligors. A favorable written
opinion (addressed to the Administrative Agent and the Lenders and
dated the Effective Date) of each of (a) Cooley Godward LLP, counsel to
the Borrower, substantially in the form of Exhibit D-1, (b) K&R Law
Group LLP, counsel to certain Subsidiary Guarantors, substantially in
the form of Exhibit D-2, (c) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, Indiana Counsel to
PHPA, substantially in the form of Exhibit D-3, and (d) such other
counsel for the Obligors (if any) as the Administrative Agent shall
reasonably request, and in each case covering such other matters
relating to the Obligors, this Agreement, the other Loan Documents or
the Transactions as the Administrative Agent shall reasonably request
(and each Obligor hereby instructs such counsel to deliver such opinion
to the Lenders and the Administrative Agent).
(c) Opinion of Special New York Counsel to JPMCB. An opinion,
dated the Effective Date, of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
special New York counsel to the Agents, substantially in the form of
Exhibit E (and JPMCB hereby instructs such counsel to deliver such
opinion to the Lenders).
(d) Corporate Documents. Such documents and certificates as
the Administrative Agent or its counsel may reasonably request relating
to the organization, existence and
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good standing of each Obligor, the authorization of the Transactions
and any other legal matters relating to the Obligors, this Agreement,
the other Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(e) Officer's Certificate. A certificate, dated the Effective
Date and signed by the President or a Financial Officer of the
Borrower, confirming compliance with the conditions set forth in the
lettered clauses of the first sentence of Section 5.02.
(f) Security Agreement and Related Documents. The Security
Agreement, each duly executed and delivered by the parties thereto,
together with:
(i) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers
executed in blank and instruments evidencing the Pledged Debt
referred to therein indorsed in blank;
(ii) proper financing statements, to be filed under
the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security
interests created under the Security Agreement, covering the
Collateral described therein;
(iii) completed requests for information, dated on or
before the Effective Date, listing all effective financing
statements filed in the jurisdictions referred to in paragraph
(ii) above (and such other jurisdictions as the Administrative
Agent shall have requested) that name any Obligor as debtor,
together with copies of such other financing statements;
(iv) evidence of the completion of all other
recordings and filings of or with respect to the Security
Agreement that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the Liens created
thereby;
(v) copies of the Assigned Agreements referred to in
the Security Agreement, together with a consent to such
assignment, in substantially the form of the relevant exhibit
to the Security Agreement, duly executed by each party to such
Assigned Agreements other than the Obligors; and
(vi) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security
interests created under the Security Agreement has been taken
(including receipt of duly executed payoff letters and UCC-3
termination statements).
(g) Governmental and Third Party Approvals. All documents
evidencing necessary governmental and other third party approvals and
consents (including approvals and consents of any HMO Regulators and
Insurance Regulators), if any, with
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respect to the Transactions and each Loan Document to which any Obligor
is or is to be a party (other than approvals required to be sought
pursuant to Section 6.09(c)), all in form and substance satisfactory to
the Administrative Agent.
(h) Solvency Certificate. Certificates, in form and substance
satisfactory to the Administrative Agent, from the Borrower's Vice
President, Corporate Development and Treasury or the Borrower's Vice
President, Treasury attesting to the Solvency of each Obligor (other
than any Obligor that is an Immaterial Subsidiary) after giving effect
to the Transactions.
(i) Insurance. Evidence of insurance naming the Collateral
Agent as additional insured and loss payee with such responsible and
reputable insurance companies or associations, and in such amounts and
covering such risks, as is satisfactory to the Administrative Agent.
(j) Existing Credit Agreement. Evidence that (i) the principal
of and interest on, and all other amounts owing in respect of, the
outstanding loans under the Existing Credit Agreement (including any
contingent or other amounts payable in respect of letters of credit)
and all fees, expenses and other amounts owing by the Borrower or any
Subsidiary thereunder shall have been (or shall be simultaneously) paid
in full, (ii) any commitments to extend credit under the Existing
Credit Agreement shall have been canceled or terminated, (iii) all
letters of credit, if any, issued and outstanding under the Existing
Credit Agreement shall have been replaced and (iv) all Guarantees in
respect of, and all Liens securing, any obligation of the Borrower or
any Subsidiary in respect of the Existing Credit Agreement shall have
been released (or arrangements for such release satisfactory to the
Administrative Agent shall have been made).
(k) Other Documents. Such other documents as any Agent (or its
counsel) or any Lender may reasonably request.
The obligation of each Lender to make its initial extension of
credit hereunder is also subject to the payment by the Borrower of such fees as
the Borrower shall have agreed to pay to any Lender or either Agent in
connection herewith, including the reasonable fees and expenses of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special New York counsel to the Agents, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents and the extensions of credit hereunder
(to the extent that statements for such fees and expenses have been delivered to
the Borrower at least one Business Day prior to the Effective Date).
The Administrative Agent shall notify the Borrower and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Lenders to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) on or prior to 3:00 p.m., New York City time, on June
30, 2003 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
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SECTION 5.02. Each Credit Event. The obligation of each Lender
to make any Loan, and of each Issuing Lender to issue, amend, renew or extend
any Letter of Credit, is additionally subject to the satisfaction of the
following conditions:
(a) the representations and warranties of the Borrower set
forth in this Agreement, and of each Obligor in each of the other Loan
Documents to which it is a party, shall be true and correct on and as
of the date of such Loan or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable; and
(b) at the time of and immediately after giving effect to such
Loan or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be
continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in the preceding
sentence.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01. Financial Statements and Other Information. The
Borrower will furnish to each Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows of the Borrower and
its Subsidiaries as of the end of and for such year, setting forth in
each case in comparative form the figures for (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all reported
on by Ernst & Young LLP or other independent public accountants of
recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries as of the end of and for such year on a consolidated basis
in accordance with GAAP consistently applied (except, in terms of such
application, immaterial differences);
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(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, the consolidated
balance sheet and related statements of operations, stockholders'
equity and cash flows of the Borrower and its Subsidiaries as of the
end of and for such fiscal quarter and the then elapsed portion of such
fiscal year, setting forth in each case in comparative form the figures
for (or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all
certified by a Financial Officer as presenting fairly in all material
respects the financial condition and results of operations of the
Borrower and its Subsidiaries as of the end of and for such fiscal
quarter on a consolidated basis in accordance with GAAP consistently
applied (except, in terms of such application, immaterial differences),
subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) of this Section, a certificate of a Financial
Officer (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
7.01(c), (f) and (g), 7.02(n) and (o), 7.04(j), 7.05(a), (g), (h), (j),
(o) and (p), 7.06(e), (f), (g) and (h), 7.09 and 7.10(c), (iii) setting
forth for the most recently completed fiscal quarter (x) the aggregate
amount of the Net Available Proceeds of all prior Equity Issuances as
to which a prepayment has not yet been made under paragraph (i) of
Section 2.09(b) (other than any such Equity Issuance as to which clause
(y) or (z) of such paragraph applies) and (y) the aggregate amount of
the Net Available Proceeds of all Dispositions and Recovery Events as
to which a prepayment has not yet been made under paragraph (ii) of
Section 2.09(b) (other than any Excluded Dispositions or any
Disposition or Recovery Event as to which a Reinvestment Notice shall
have been given) and (iv) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited
financial statements referred to in Section 4.04 and, if any such
change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) as soon as available and in any event within 15 days after
the filing with the appropriate Governmental Authority for each fiscal
quarter and fiscal year of the Borrower, copies of financial reports of
the HMO Subsidiaries and Insurance Subsidiaries prepared in accordance
with statutory accounting principles;
(e) as soon as available and in any event within 15 days
before the end of each fiscal year of the Borrower, updated projections
prepared by management of the Borrower, in form satisfactory to the
Administrative Agent, of consolidated balance sheets and statements of
income and cash flows on a quarterly basis for the next succeeding
fiscal year of the Borrower.
(f) concurrently with any delivery of financial statements
under clause (a) of this Section, a certificate of the accounting firm
that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such
financial statements of any Default (which certificate may be limited
to the extent required by accounting rules or guidelines);
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(g) promptly after the same become publicly available, copies
of all periodic and other reports, periodic and other certifications of
the chief executive officer and chief financial officer of the
Borrower, proxy statements and other materials filed by the Borrower or
any of its Subsidiaries with the SEC, or with any HMO Regulators or
Insurance Regulators (other than routine, periodic reports or responses
filed with such HMO Regulators and Insurance Regulators) or distributed
by the Borrower to its shareholders generally;
(h) promptly after the furnishing thereof, to the extent not
provided pursuant hereto, copies of any statement or report furnished
to any holder of debt securities of any Obligor or of any of its
Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the
Lenders pursuant to this Section;
(i) promptly upon any change or modification to the investment
guidelines of the Borrower, copies of such modified investment
guidelines;
(j) within 30 days after the end of each fiscal year of the
Borrower, a perfection certification of the Borrower in form
satisfactory to the Administrative Agent with respect to the perfection
of the Liens created under the Security Documents; and
(k) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any of its Subsidiaries, or compliance
with the terms of this Agreement and the other Loan Documents, as the
Administrative Agent or any Lender may reasonably request.
SECTION 6.02. Notices of Certain Events. The Borrower will
furnish to each Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
(including any HMO Regulator or Insurance Regulator) against or
affecting any Obligor or any of its Subsidiaries, or any adverse change
in the status of the matters disclosed in Schedule 4.06(a) that,
individually or in the aggregate, has had, or has materially increased
the likelihood of, a Material Adverse Effect;
(c) the occurrence of any ERISA Event;
(d) the assertion of any Environmental Liability by any Person
against, or with respect to the activities of, the Borrower or any of
its Subsidiaries and any alleged violation of or non-compliance in any
material respect with any Environmental Laws or any permits, licenses
or authorizations;
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(e) receipt by the Borrower, any Material HMO Subsidiary or
any Material Insurance Subsidiary of any notice of loss of licensure,
loss of participation under any reimbursement program or loss of
applicable health care license or certificate of authority, or loss of
any permit, authorization, accreditation, or qualification or any
notice relating to the threatened loss of any of the foregoing, from
any Governmental Authority, HMO Regulator or Insurance Regulator;
(f) receipt by the Borrower, any Material HMO Subsidiary or
any Material Insurance Subsidiary of any other material deficiency
notices, compliance orders or adverse reports issued by any
Governmental Authority, HMO Regulator, Insurance Regulator or private
insurance company pursuant to a provider agreement that, if not
promptly complied with or cured, would reasonably be expected to result
in the suspension or forfeiture of any license, certification or
licensure necessary for such Material HMO Subsidiary or Material
Insurance Subsidiary to carry on its business as then conducted or the
termination of any insurance or reimbursement program available to any
Material HMO Subsidiary or any Material Insurance Subsidiary;
(g) receipt by the Borrower, any Material HMO Subsidiary or
any Material Insurance Subsidiary of any correspondence from any
Governmental Authority, HMO Regulator or Insurance Regulator that
asserts that the Borrower, any Material HMO Subsidiary or any Material
Insurance Subsidiary is not in substantial compliance with any HMO
Regulation or Insurance Regulation or that threatens the taking of any
material action against the Borrower, any Material HMO Subsidiary or
any Material Insurance Subsidiary under any HMO Regulation or any
Insurance Regulation; and
(h) any event or development that has had, or would reasonably
be expected to have, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.03. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business (including all licenses and certifications
required pursuant to any HMO Regulations or Insurance Regulations, all
certifications and authorizations necessary to ensure that each of the
Borrower's Subsidiaries is eligible for all reimbursements available under HMO
Regulations and Insurance Regulations to the extent applicable to HMOs and
insurance companies of their type, and all material licenses, permits,
authorization and qualifications required under HMO Regulations and Insurance
Regulations in connection with the ownership or operation of HMOs and insurance
companies); provided that (a) the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 7.03 or any
Disposition permitted under Section 7.04, (b) neither the Borrower nor any of
its Subsidiaries shall be required to preserve any such right, permit, license,
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approval, privilege or franchise if the management of the Borrower or such
Subsidiary shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any material respect
to the Borrower and its Subsidiaries taken as a whole and would not reasonably
be expected to have a Material Adverse Effect, (c) the Borrower may discontinue
any operation (including the dissolution of any Subsidiary) which the management
of the Borrower believes to be no longer in the best interest of the Borrower
and its Subsidiaries taken as a whole, provided that the Borrower shall not
discontinue or dissolve an Obligor, a Material Subsidiary, or any other
Subsidiary if (i) the assets of such other Subsidiary when aggregated with the
assets of all other Subsidiaries discontinued or dissolved pursuant to this
clause (c) would exceed 5% of the amount of total consolidated assets of the
Borrower and its Subsidiaries (determined as of the last day of the most recent
fiscal quarter of the Borrower ended prior to the date of the first
discontinuation or dissolution) or (ii) the revenue of such Subsidiary when
aggregated with the revenue of all other Subsidiaries discontinued or dissolved
pursuant to this clause (c) would exceed 5% of the amount of total consolidated
revenues of the Borrower and its Subsidiaries for the twelve-month period ending
on the last day of the most recent fiscal quarter of the Borrower ended prior to
the date of the first discontinuation or dissolution.
SECTION 6.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including tax
liabilities, that, if not paid, would reasonably be expected to have a Material
Adverse Effect before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest would not reasonably be
expected to have a Material Adverse Effect.
SECTION 6.05. Maintenance of Properties; Insurance. The
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
SECTION 6.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full and correct entries are made of all financial
transactions and the assets and liabilities of the Borrower and its Subsidiaries
in accordance with GAAP. The Borrower will, and will cause each of its
Subsidiaries to, permit any representatives designated by either Agent or any
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
SECTION 6.07. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property
(including ERISA, all Environmental Laws and all
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HMO Regulations and Insurance Regulations), except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
SECTION 6.08. Use of Proceeds and Letters of Credit. The
proceeds of the Loans made on the Effective Date will be used only to repay the
loans and all other amounts owing under the Existing Credit Agreement and to pay
related fees and expenses with respect to this Agreement and such repayment. In
addition, the proceeds of the Revolving Credit Loans made on or after the
Effective Date will be used for general corporate purposes of the Borrower and
its Subsidiaries, including acquisitions. No part of the proceeds of any Loan
will be used, whether directly or indirectly, for the purpose of "buying" or
"carrying" Margin Stock or for any purpose that entails a violation of any of
the Regulations of the Board, including Regulations U and X. Letters of Credit
will be issued only for general corporate purposes of the Borrower and its
Subsidiaries.
SECTION 6.09. Certain Obligations Respecting Subsidiaries and
Collateral; Further Assurances.
(a) Subsidiary Guarantors and Grantors. The Borrower will take
such action, and will cause each of its Subsidiaries to take such action, from
time to time as shall be necessary to ensure that all Subsidiaries of the
Borrower are "Subsidiary Guarantors" hereunder and "Grantors" under the Security
Agreement (or another Security Document); provided that, notwithstanding
anything herein to the contrary, the following Subsidiaries (other than the
Subsidiary Guarantors and Grantors (as defined in the Security Agreement) on the
Effective Date) shall not be required to be or become Subsidiary Guarantors
hereunder or Grantors under any Security Document (collectively, the "Excluded
Subsidiaries"):
(i) any Foreign Subsidiary;
(ii) any Domestic Subsidiary held, directly or indirectly, by
a Foreign Subsidiary;
(iii) any HMO Subsidiary or Insurance Subsidiary, to the
extent that such HMO Subsidiary or Insurance Subsidiary is not
permitted by applicable Governmental Rules to execute and deliver a
guarantee or to grant a security interest in its assets;
(iv) any Subsidiary formed or acquired after the Effective
Date having Consolidated EBITDA (determined for such Subsidiary on a
stand alone basis) that is less than $18,000,000, determined for the
period of four consecutive fiscal quarters ending on the last day of
the most recent fiscal year of the Borrower for which financial
statements of the Borrower shall have been furnished pursuant to
Section 6.01 (or, in the case of any such Subsidiary so acquired,
determined for a comparable period on the basis of financial
statements, if any, of such Subsidiary available to the Borrower at the
time of such acquisition) (each such Subsidiary under clause (iv) being
an "Immaterial Subsidiary"); and
(v) MedeMORPHUS Healthcare Solutions, Inc. and Union Health
Solutions, Inc. and their respective Subsidiaries.
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Without limiting the generality of the foregoing, in the event
that (x) the Borrower or any of its Subsidiaries shall form or acquire any new
Subsidiary that shall constitute a Subsidiary hereunder (other than an Excluded
Subsidiary) or at any time a Subsidiary that is not an Obligor shall cease to be
an Immaterial Subsidiary, (y) any Obligor shall acquire or have any real
property (with, in the case of any fee interest, a fair market value in excess
of $2,500,000 or, in the case of any leasehold interest, annual aggregate lease
payments in excess of $2,500,000) or personal property that, in the reasonable
judgment of the Collateral Agent, shall not already be subject to a perfected
first priority Lien under a Security Document (subject to Liens permitted under
Section 7.02) or (z) any change in Governmental Rules applicable to any HMO
Subsidiary or Insurance Subsidiary that is not an Immaterial Subsidiary shall
occur that would allow such Subsidiary to execute and deliver a guarantee or
grant a security interest in its assets, the Borrower will:
(A) in the case of any formation or acquisition of a new
Subsidiary or any Subsidiary ceasing to be an Immaterial Subsidiary
described in clause (x) above or any change in law applicable to any
such HMO Subsidiary or Insurance Subsidiary described in clause (z)
above, within 15 days after such formation, acquisition, cessation or
change in law, (I) cause such Subsidiary and each direct and indirect
parent of such Subsidiary (if it has not already done so) to become a
"Subsidiary Guarantor" hereunder pursuant to a Guarantee Assumption
Agreement and a "Grantor" under the Security Agreement (or other
Security Document), (II) furnish to the Collateral Agent a description
of the real and personal properties of such Subsidiary in detail
reasonably satisfactory to the Collateral Agent and (III) duly execute
and deliver, and cause such Subsidiary and the parent of such
Subsidiary (if it has not already done so) to duly execute and deliver,
to the Collateral Agent mortgages, pledges, assignments, security
agreement supplements and other security agreements, as specified by
and in form and substance reasonably satisfactory to the Collateral
Agent, securing payment of all of the obligations of such Subsidiary or
such parent, as the case may be;
(B) in the case of any property by an Obligor described in
clause (y) above, within 15 days after such acquisition or (with
respect to any real property interest described in such clause (y)) 30
days after request by the Administrative Agent, duly execute and
deliver, or cause such Obligor to duly execute and deliver, as
applicable, to the Collateral Agent mortgages, pledges, assignments,
security agreement supplements and other security agreements, as
specified by and in form and substance reasonably satisfactory to the
Collateral Agent, granting the Secured Parties a Lien in such property,
provided that the Borrower shall, and shall cause the other Obligors
to, notify the Administrative Agent promptly following the acquisition
of any such real property interest;
(C) within 30 days after such formation or acquisition of a
new Subsidiary, any Subsidiary ceasing to be an Immaterial Subsidiary,
such acquisition of property by any Obligor or such change in law
applicable to any such HMO Subsidiary or Insurance Subsidiary, take,
and cause such Subsidiary or such parent to take, whatever action
(including the recording of mortgages, the filing of Uniform Commercial
Code financing
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statements, the giving of notices and the endorsement of notices on
title documents) may be necessary or advisable in the opinion of the
Collateral Agent to vest in the Collateral Agent (or in any
representative of the Collateral Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the
mortgages, pledges, assignments, security agreement supplements,
intellectual property security agreement supplements and security
agreements delivered pursuant to this Section, enforceable against all
third parties in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles
of equity, regardless of whether considered in a proceeding in equity
or at law;
(D) within 60 days after such formation or acquisition of a
new Subsidiary, any Subsidiary ceasing to be an Immaterial Subsidiary
such acquisition of property by any Obligor or such change in law
applicable to any such HMO Subsidiary or Insurance Subsidiary, deliver
to the Collateral Agent, upon the reasonable request of the Collateral
Agent, (I) a signed copy of a favorable opinion, addressed to the
Collateral Agent and the other Secured Parties, of counsel for the
Obligors reasonably acceptable to the Collateral Agent as to (X) the
Guarantee Assumption Agreements, mortgages, pledges, assignments,
security agreement supplements, intellectual property security
agreement supplements and security agreements referred to in paragraphs
(A), (B) and (C) above, as applicable, being legal, valid and binding
obligations of each Obligor party thereto, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law, (Y) the
recordings, filings, notices, endorsements and other actions referred
to in paragraph (C) above being sufficient to create valid and
perfected Liens on the properties referred to therein and (Z) such
other matters as the Collateral Agent may reasonably request and (II)
such proof of corporate action, incumbency of officers, other opinions
of counsel and other documents as is consistent with those delivered by
each Obligor pursuant to Section 5.01 on the Effective Date or as
either Agent shall have requested; and
(E) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take all such
other action as the Collateral Agent may reasonably deem necessary or
desirable in order to obtain the full benefits of, or in order to
perfect and preserve the Liens of, the Guarantee Assumption Agreements,
any such mortgages, pledges, assignments, security agreement
supplements, intellectual property security agreement supplements
and/or security agreements.
Notwithstanding the foregoing:
(I) except as provided above in the event of a change in law,
no Subsidiary that is an entity regulated by a Governmental Authority
shall execute a Guarantee Assumption Agreement pursuant to paragraph
(A) above, nor shall any HMO Subsidiary or Insurance Subsidiary grant a
security interest in its assets pursuant to paragraph (C) or (D) above,
nor shall any action be taken with respect to the assets of any HMO
Subsidiary or any
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Insurance Subsidiary pursuant to paragraph (E) above, unless in the
reasonable judgment of the Borrower's counsel, such action would be
permitted to be taken under applicable Governmental Rules without
obtaining approvals from Governmental Authorities or incurring
regulatory restrictions on the operations of such Subsidiary that could
reasonably be expected to have a material adverse effect on such
Subsidiary;
(II) so long as the 7% Senior remain outstanding, any
Guarantee Assumption Agreement otherwise required to be executed
pursuant to this Section and any pledge, assignment, security agreement
supplement and other security agreement otherwise required to be
executed pursuant to this Section shall only be executed if permitted
by the terms and conditions of the 7% Senior Notes and, if executed,
the maximum obligations of each Subsidiary under such Guarantee
Assumption Agreement or the extent of the security interest under such
pledge, assignment, security agreement supplement or other security
agreement, as the case may be, shall only be as permitted by the 7%
Senior Notes, and any action otherwise required to be taken pursuant to
this Section shall only be taken if, and to the extent, permitted by
the terms and conditions of the 7% Senior Notes;
(III) except as provided above in the event of a change in
law, no stock of any HMO Subsidiary or any Insurance Subsidiary will be
pledged pursuant to this Section, nor shall any action be taken with
respect to the stock of any HMO Subsidiary or Insurance Subsidiary
pursuant to this Section, unless no approval is required from a
Governmental Authority or, if such approval is required, such approval
has been obtained;
(IV) no stock of any Domestic Subsidiary held by a Foreign
Subsidiary shall be pledged pursuant to this Section; and
(V) if the acquired property referred above consists of Equity
Interests in a Foreign Subsidiary held by a Domestic Subsidiary, only
66% of such Equity Interests shall be pledged in favor of the
Collateral Agent for the benefit of the Secured Parties pursuant to
this Section.
(b) 7% Senior Notes. Upon the prepayment, redemption,
purchase, defeasance or other satisfaction in full of the 7% Senior Notes or
upon any modification or amendment of the documents governing the terms and
conditions of the 7% Senior Notes which restrict the ability of any of the
Subsidiaries to guarantee or secure the obligations under the Loan Documents,
the Borrower shall cause each such Subsidiary to execute a Guarantee Assumption
Agreement and such mortgages, pledges, assignments, security agreement
supplements and other security agreements as shall be specified by and in form
and substance reasonably satisfactory to the Collateral Agent; provided that (i)
no Subsidiary that is regulated by a Governmental Authority shall execute a
Guarantee Assumption Agreement, nor shall any HMO Subsidiary or any Insurance
Subsidiary grant a security interest in its assets, unless in the reasonable
judgment of the Borrower's counsel, such Subsidiary would be permitted to do so
under applicable Governmental Rules without obtaining approvals from a
Governmental Authority or incurring regulatory restrictions on the operations of
such Subsidiary that could reasonably be expected to
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have a material adverse effect on such Subsidiary and (ii) no stock of any HMO
Subsidiary or any Insurance Subsidiary shall be pledged unless no approval is
required from a Governmental Authority.
(c) Requests for Governmental Approvals. The Borrower will,
and will cause each of its applicable Subsidiaries to, file, within 30 days
after the Effective Date, a request with the applicable Governmental Authority
for approval of the pledge of the capital stock of each Designated Subsidiary to
the Collateral Agent, for the benefit of the Lenders. Upon the submission of any
such filing to the applicable Governmental Authority, the Borrower and each such
Subsidiary shall use commercially reasonable efforts to obtain such approval and
shall provide the Collateral Agent, for the benefit of the Lenders, with monthly
reports documenting the status of each request for approval; provided that if
any such request for approval has been neither granted nor denied by the date
that is 180 days from the Effective Date, such request shall be deemed denied,
subject to the agreement of the Borrower and the Administrative Agent (any such
agreement not to be unreasonably withheld), and the Borrower shall be relieved
of its obligations under this paragraph. Upon obtaining any such approval for
the pledge of any such capital stock, the Borrower shall, and shall cause each
of its applicable Subsidiaries to, comply with the provisions of this Section to
create a valid perfected first priority Lien on such capital stock.
(d) Further Assurances. The Borrower will, and will cause each
of its Subsidiaries (other than Excluded Subsidiaries) to, take such action from
time to time as shall reasonably be requested by either Agent to effectuate the
purposes and objectives of this Agreement. Without limiting the generality of
the foregoing, the Borrower will, and will cause each other Obligor to, take
such action from time to time (including filing appropriate Uniform Commercial
Code financing statements and executing and delivering such assignments,
security agreements and other instruments) as shall be reasonably requested by
the Collateral Agent to create, in favor of the Collateral Agent for the benefit
of the Lenders, perfected security interests and Liens in substantially all of
the property of such Obligor as collateral security for its obligations
hereunder; provided that any such security interest or Lien shall be subject to
the relevant requirements of the Security Documents.
ARTICLE VII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
SECTION 7.01. Indebtedness. The Borrower will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:
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(a) Indebtedness created under the Loan Documents;
(b) Indebtedness existing on the date hereof (excluding,
however, following the making of the initial Loans hereunder, the
Indebtedness in respect of the Existing Credit Agreement) or any
extension, renewal, refinancing or replacement thereof that does not
increase the outstanding principal amount or shorten the maturity
thereof;
(c) unsecured, subordinated Indebtedness of the Borrower not
to exceed in the aggregate $150,000,000 at any time outstanding;
provided that (i) the proceeds of such Indebtedness shall be used only
for purposes of financing any acquisition permitted pursuant to Section
7.05(o) within twelve months of the issuance of such Indebtedness or
refinancing of any other Indebtedness permitted under this Section,
(ii) such Indebtedness shall not provide for any scheduled or mandatory
payments, prepayments, sinking fund or other repurchase or redemption
payments prior to the date which is six months after the Term Loan
Maturity Date, (iii) the other terms thereof (including subordination
provisions) shall not be more adverse to the interests of the Lenders
than those customarily found in subordinated debt of a similar type
issued by similar issuers under Rule 144A or in a public offering as
reasonably determined by the Administrative Agent and (iv) both before
and after giving effect to the issuance of such Indebtedness, no
Default shall have occurred and be continuing;
(d) (i) Indebtedness of the Borrower to any Subsidiary
Guarantor, (ii) Indebtedness of any Subsidiary Guarantor to the
Borrower or any other Subsidiary Guarantor, (iii) subordinated
Indebtedness of any Obligor to any Subsidiary that is not an Obligor so
long as such Indebtedness shall have terms and conditions (including
subordination provisions) satisfactory to the Administrative Agent and
(iv) Indebtedness of any Subsidiary that is not an Obligor to any
Obligor so long as such Indebtedness shall constitute Pledged Debt
(under and as defined in the Security Agreement), except where such
Subsidiary is an HMO Subsidiary or an Insurance Subsidiary and the
pledge of such Indebtedness is prohibited by applicable HMO Regulations
or Insurance Regulations, as the case may; provided that, for purposes
of this clause (d), for so long as the 7% Senior Notes are outstanding,
any Indebtedness of any Obligor to PHPA or any of its Subsidiaries
shall be subordinated to the obligations in respect of the Loan
Documents on terms satisfactory to the Administrative Agent;
(e) obligations of the Borrower in respect of Swap Agreements
permitted under Section 7.05(e) to the extent constituting
Indebtedness;
(f) Indebtedness of the Borrower or any Subsidiary as an
account party or applicant in respect of letters of credit (other than
Letters of Credit issued hereunder); provided that the undrawn amount
of such letters of credit shall not exceed in the aggregate $30,000,000
at any time outstanding; and
(g) other Indebtedness of the Borrower or any Subsidiary
(other than in respect of letters of credit) not to exceed in the
aggregate the greater of (i) $100,000,000 at any time and (ii) at the
time of incurrence of any such Indebtedness under this clause (g), 5%
of
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Consolidated Tangible Assets, determined as at the end of the
immediately preceding fiscal quarter of the Borrower; provided that (x)
the aggregate amount of such Indebtedness and other obligations secured
by Liens permitted under clauses (d) through (h) and clause (o) of
Section 7.02 shall not exceed the greater of (A) $50,000,000 at any
time and (B) at the time of incurrence of any such Indebtedness or
other obligations under this clause (g), 2% of Consolidated Tangible
Assets (determined as provided above), (y) if such Indebtedness is
newly issued Material Indebtedness and is either registered for public
sale under the Securities Act or exempt from registration thereunder
pursuant to Rule 144A, such Indebtedness shall have no maturity date or
scheduled principal amortization prior to the Revolving Credit
Commitment Termination Date and (z) if such Indebtedness is newly
issued Material Indebtedness and is neither registered for public sale
under the Securities Act nor exempt from registration thereunder
pursuant to Rule 144A, at the time of incurrence of such Indebtedness,
the Borrower and its Subsidiaries shall be in pro forma compliance with
any and all financial covenants set forth in, and the scheduled
principal amortization (if any) for, such Material Indebtedness (such
compliance to be determined based upon, and for the remaining period
of, the Borrower's financial projections most recently provided
hereunder).
SECTION 7.02. Liens. The Borrower will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(a) Liens created under the Loan Documents (and which, to the
extent required by the indenture for the 7% Senior Notes, may also
secure the 7% Senior Notes);
(b) Permitted Encumbrances;
(c) Liens on property of the Borrower or any of its
Subsidiaries existing on the date hereof (excluding, however, following
the making of the initial Loans hereunder, Liens securing Indebtedness
in respect of the Existing Credit Agreement);
(d) purchase money Liens upon or in real or personal property
acquired or held by the Borrower or any of its Subsidiaries in the
ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of
financing the acquisition, construction or improvement of any property
to be subject to such Liens, or Liens existing on any such property at
the time of acquisition thereof (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase
price), or extensions, renewals or replacements of any of the foregoing
for the same or a lesser amount; provided that (i) no such Lien shall
extend to or cover any property other than the property or equipment
being acquired, constructed or improved, and no such extension, renewal
or replacement shall extend to or cover property not theretofore
subject to the Lien being extended, renewed or replaced, and (ii) the
aggregate principal amount of the Indebtedness permitted by this clause
(d) shall not exceed the amount permitted under Section 7.01(d) at any
time outstanding;
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(e) Liens arising in respect of Capital Lease Obligations
permitted under Section 7.01(d); provided that no such Lien shall
extend to or cover any Collateral or property other than the property
subject to such Capital Lease Obligations;
(f) Liens on property of any Person which becomes a Subsidiary
of the Borrower after the Effective Date, provided that such Liens are
in existence at the time such entity becomes a Subsidiary and were not
created in anticipation of such event;
(g) Liens existing on property acquired by the Borrower or any
of its Subsidiaries at the time such property is so acquired (whether
or not the Indebtedness secured thereby shall have been assumed);
(h) Liens encumbering property or assets under construction
(and proceeds or products thereof) arising from progress or partial
payments by a customer of the Borrower or its Subsidiaries relating to
such property or assets;
(i) banker's Liens and similar Liens in respect of deposit
accounts, and Liens in favor of securities intermediaries in respect of
securities accounts securing fees and costs owing to such securities
intermediaries;
(j) Liens on insurance proceeds in favor of insurance
companies with respect to the financing of premiums;
(k) precautionary filings in respect of true leases;
(l) refinancings, renewals and replacements of Liens permitted
under clauses (a) through (k) of this Section 7.02, provided that (i)
the amount of the Indebtedness secured thereby is not increased and
(ii) such Liens do not extend to or cover any property or assets of the
Borrower and its Subsidiaries which immediately prior to such
refinancing, renewal or replacement were not subject to a Lien
permitted hereunder;
(m) Cash collateral securing, and in an amount not to exceed
the undrawn amount of, any letter of credit permitted under Section
7.01(f);
(n) Liens required by any regulation, or any order of or
arrangement with any regulatory body or agency, in an amount not to
exceed in the aggregate $25,000,000 at any time, so long as such Liens
do not secure Indebtedness, provided that any failure to comply with
this clause (n) shall not constitute an Event of Default hereunder
unless such non-compliance shall remain unremedied for a period of 45
days following the initial date of non-compliance herewith; and
(o) Liens on property securing Indebtedness or other
obligations (including obligations arising under Swap Agreements) of
the Borrower or any of its Subsidiaries not to exceed $50,000,000 in
the aggregate.
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SECTION 7.03. Fundamental Changes.
(a) Mergers, Consolidations, Etc. The Borrower will not, nor
will it permit any of its Subsidiaries to, enter into any transaction of merger
or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), except, so long as no Default shall have
occurred and be continuing:
(i) any Subsidiary may be merged or consolidated with or into
the Borrower; provided that the Borrower shall be the continuing or
surviving corporation thereof;
(ii) any Subsidiary may be merged or consolidated with or into
any other Subsidiary; provided that (A) the Person formed by such
merger or consolidation shall be a wholly owned Subsidiary and (B) in
the case of any such merger or consolidation to which a Subsidiary
Guarantor shall be a party, such Person shall be a Subsidiary Guarantor
at the time of such merger or consolidation;
(iii) in connection with any acquisition permitted under
Section 7.05(o), any Subsidiary may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate
with such Subsidiary;
(iv) in connection with any Disposition permitted under
Section 7.04, any Subsidiary may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate
with such Subsidiary; and
(v) any Subsidiary may be dissolved, liquidated or wound up
pursuant to Section 6.03.
(b) Lines of Business. The Borrower will not, nor will it
permit any of its Subsidiaries to, engage to any material extent in any business
other than the Permitted Business.
SECTION 7.04. Dispositions. The Borrower will not, nor will it
permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, any part of its
business or property, whether now owned or hereafter acquired (including
receivables and leasehold interests), except:
(a) the Borrower or any Subsidiary may sell, lease, transfer
or otherwise dispose of obsolete, worn-out or other property no longer
used or useful in its business;
(b) the Borrower or any Subsidiary may sell, lease, transfer
or otherwise dispose of any inventory or other property (including any
license of intellectual property) in the ordinary course of business;
(c) the Borrower or any Subsidiary may enter into any merger
or consolidation, and any Subsidiary may be dissolved, liquidated or
wound up, as permitted under Section 7.03(a);
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(d) the Borrower or any Subsidiary may make any Disposition
identified in Schedule 7.04;
(e) any Subsidiary may make any Disposition to the Borrower or
any other Subsidiary Guarantor (other than such Subsidiary), or any
Subsidiary that is not an Obligor may make any Disposition to any other
such Subsidiary;
(f) the capital stock of any Subsidiary may be issued, sold,
transferred or otherwise disposed of to the Borrower or any wholly
owned Subsidiary of the Borrower;
(h) the Borrower or any of its Subsidiaries may sell or
otherwise dispose of Permitted Investments or other Investments
permitted to be made under clause (c) of Section 7.05;
(h) the Borrower may make Dispositions of assets in connection
with its information technology contracts;
(i) the Borrower or any of its Subsidiaries may (i) transfer
condemned property to any Governmental Authority that has condemned the
same (whether by deed in lieu of condemnation or otherwise) and (ii)
transfer property that has been subject to a casualty loss to the
insurer of such property (or its designee) as part of an insurance
settlement; and
(j) the Borrower or any of its Subsidiaries may make any other
Disposition, provided that (i) the consideration received by the
Borrower or such Subsidiary shall at least equal the fair market value
of the property sold or disposed of and (ii) the aggregate amount of
Dispositions under this clause (j) shall not exceed $15,000,000 in any
fiscal year;
SECTION 7.05. Investments. The Borrower will not, nor will it
permit any of its Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) (i) equity Investments by the Borrower and its
Subsidiaries in the Borrower and its Subsidiaries outstanding on the
date hereof, (ii) additional equity Investments by the Borrower or any
Subsidiary in the Subsidiary Guarantors and (iii) additional equity
Investments in wholly owned Subsidiaries that are not Obligors in an
aggregate amount not to exceed $30,000,000; provided that the Borrower
shall be in pro forma compliance with the Consolidated Fixed Charge
Coverage Ratio after giving effect to any Investment made under this
clause (iii);
(b) Permitted Investments;
(c) Investments outstanding on the date hereof and identified
in Schedule 4.14(b);
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(d) Swap Agreements entered into in the ordinary course of the
Borrower's financial planning and not for speculative purposes, which
may include any such Swap Agreement to hedge increases or decreases in
interest rates or currency values;
(e) Investments consisting of intercompany Indebtedness
permitted under Section 7.01(e);
(f) operating deposit accounts with banks;
(g) loans, guarantees of loans and advances to employees or
consultants in the ordinary course of the business of the Borrower and
its Subsidiaries as presently conducted, and commission, entertainment,
relocation, payroll, travel and similar advances to cover matters in
the ordinary course of business that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP,
in an aggregate amount not to exceed $10,000,000 at any time
outstanding;
(h) loans or advances in the ordinary course of business to
physicians, hospitals or other providers of health care services in a
gross amount not to exceed $50,000,000 at any time outstanding;
(i) Investments received as consideration in connection with a
Disposition not prohibited by Section 7.04 to the extent not required
to prepay Loans pursuant to Section 2.09(b)(ii);
(j) stock, obligations or securities received in satisfaction
of judgments, the fair market value of which shall not exceed
$10,000,000 in the aggregate in any fiscal year of the Borrower;
(k) the endorsements of negotiable instruments for collection
or deposit in the ordinary course of business;
(l) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, healthcare providers, customers and suppliers;
(m) any security that (i) is of a type traded or quoted on any
exchange or recognized financial market, (ii) can be readily liquidated
or disposed of in such exchanges or markets, (iii) other than in the
case of equity securities, is rated by, and has no lower than an
"investment grade" rating from, any nationally recognized rating agency
and (iv) otherwise satisfies the Borrower's investment guidelines as
approved by its board of directors;
(n) any Guarantees under the Loan Documents;
(o) Investments consisting of the acquisition of any business,
and the related assets, of any other Person (whether by way of purchase
of assets or stock, by merger or
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consolidation or otherwise), provided that (i) the acquired business or
company is a Permitted Business; (ii) such acquisition (if by purchase
of assets, merger or consolidation) shall be effected in such manner so
that the acquired business, and the related assets, are owned either by
the Borrower or a Subsidiary of the Borrower and, if effected by merger
or consolidation involving the Borrower, the Borrower shall be the
continuing or surviving entity and, if effected by merger or
consolidation involving a Subsidiary Guarantor, the Person formed by
such merger or consolidation shall be a Subsidiary Guarantor; (iii)
after giving effect to such acquisition the Borrower shall be in pro
forma compliance with Section 7.09 (the determination of such
compliance to be calculated as at the end of and for the period of four
fiscal quarters most recently ended prior to the date of such
acquisition for which financial statements of the Borrower shall have
been delivered pursuant to Section 6.01, under the assumption that such
acquisition shall have occurred, and any Indebtedness in connection
therewith shall have been incurred, at the beginning of such period,
and under the assumption that interest for such period had been equal
to the actual weighted average interest rate in effect for the Loans
hereunder on the date of such acquisition) and, in the event that the
aggregate purchase price in respect of such acquisition shall exceed
$30,000,000, the Borrower shall have delivered to the Administrative
Agent a certificate of a Financial Officer showing calculations in
reasonable detail to demonstrate compliance with this clause (o); (iv)
after giving effect to such acquisition, the total Revolving Credit
Exposures shall not exceed 66 2/3% of the total Revolving Credit
Commitments; (v) to the extent required by Section 6.09, the Borrower
shall, and shall cause the acquired entity to, take each action
required to be taken by it pursuant to Section 6.09; and (vi) both
before and after giving effect to such acquisition, no Default shall
have occurred and be continuing; and
(p) other Investments in an aggregate amount invested not to
exceed the greater of (i) $50,000,000 and (ii) 2% of Consolidated
Tangible Assets, determined as at the end of the immediately preceding
fiscal quarter of the Borrower, plus in either case the net reduction
in any such Investments (but not exceeding the amount of such
Investments) resulting from distributions on or repayments of such
Investments or from the net cash proceeds or cash or Permitted
Investments from the Disposition of such Investments.
SECTION 7.06. Restricted Payments. The Borrower will not, nor
will it permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except:
(a) the Borrower may declare and pay dividends with respect to
its capital stock payable solely in additional shares of its common
stock;
(b) any Subsidiary may (i) declare and pay dividends to the
Borrower or to any other Subsidiary and (ii) accept capital
contributions from its parent to the extent permitted under Section
7.05(a);
(c) the Borrower may make payments or distributions to
dissenting stockholders pursuant to applicable law pursuant to or in
connection with a consolidation, merger or Disposition of the Borrower
permitted under Sections 7.03 and 7.04;
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(d) the Borrower may repurchase Equity Interests deemed to
occur upon the exercise of options or warrants if such Equity Interests
represent all or a portion of the exercise price thereof;
(e) (i) the Borrower or any Subsidiary may purchase,
repurchase, acquire, cancel or retire for value Equity Interests of the
Borrower or such Subsidiary from future, present or former employees,
officers, directors or consultants (or their estates or beneficiaries
under their estates) of the Borrower or any Subsidiary upon the death,
disability, retirement or termination of employment or service of such
employees, officers, directors or consultants or to the extent required
pursuant to employee benefit plans, employment agreements or other
arrangements with such employees, officers, directors or consultants
(or their estates or beneficiaries under their estates), in an
aggregate amount not to exceed $5,000,000, and (ii) so long as no
Default shall have occurred and be continuing, the Borrower or any
Subsidiary may purchase, repurchase, acquire, cancel or retire for
value restricted shares of its common stock from employees granted
under the Borrower's stock option plans solely for the purposes of
paying such employee's withholding tax obligations upon the vesting of
such shares;
(f) the Borrower may make payments of cash in lieu of issuance
of fractional shares upon the exercise of warrants or upon the
conversion or exchange of, or issuance of Equity Interests in lieu of
cash dividends on, any Equity Interests of the Borrower, which in the
aggregate do not exceed $5,000,000;
(g) the Borrower may redeem rights issued pursuant to an
anti-takeover plan in an aggregate amount not to exceed $1,500,000; and
(h) so long as no Default shall have occurred and be
continuing, the Borrower may declare and make cash dividends in respect
of its capital stock in an aggregate amount not to exceed $10,000,000
in any calendar year; provided that (i) at the time of the making of
such dividend, the Borrower shall have had positive operating income
(determined in accordance with GAAP) for the twelve-month period ending
on the last day of the most recent fiscal quarter of the Borrower for
which financial statements of the Borrower have been furnished pursuant
to Section 6.01 and (ii) after giving effect to such dividend, the
Borrower shall be in pro forma compliance with Section 7.09(c).
SECTION 7.07. Transactions with Affiliates. The Borrower will
not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except:
(a) transactions in the ordinary course of business on terms
no less favorable to the Borrower or such Subsidiary than could be
obtained in a comparable arm's-length transaction with a Person that is
not an Affiliate;
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(b) transactions between or among the Borrower and its
Subsidiaries not involving any other Affiliate;
(c) any Restricted Payment permitted under Section 7.06;
(d) transactions (i) approved by a majority of the
disinterested members of the board of directors of the Borrower or (ii)
for which the Borrower or any Subsidiary shall deliver to the
Administrative Agent a written opinion of a nationally recognized
investment banking, accounting, valuation or appraisal firm stating
that the transaction is fair to the Borrower or such Subsidiary from a
financial point of view;
(e) the payment of reasonable fees and compensation to
officers and directors of the Borrower or any of its Subsidiaries and
reasonable indemnification arrangements entered into by the Borrower or
any of its Subsidiaries, including any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant
to, or the funding of, employment arrangements, employee stock options
and employee stock ownership plans approved by the board of directors
of the Borrower;
(f) purchase of services from physicians, hospitals, claims
management or processing companies, pharmacy benefit management
companies and other health care or service providers in the ordinary
course of business on fair and reasonable terms;
(g) Investments permitted under Section 7.05; and
(h) any payments or other transactions pursuant to any tax
sharing agreement in effect on the Effective Date between the Borrower
and any other Person with which the Borrower files a consolidated tax
return or with which the Borrower is part of a consolidated group for
tax purposes.
SECTION 7.08. Restrictive Agreements. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary, except:
(i) restrictions and conditions imposed by any Governmental
Rule or by this Agreement;
(ii) restrictions and conditions existing on the date hereof
identified on Schedule 7.08 (but including any extension or renewal of,
or any amendment or modification expanding the scope of, any such
restriction or condition);
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(iii) customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale,
provided that (x) such restrictions and conditions apply only to the
Subsidiary that is to be sold and (y) such sale is permitted hereunder;
(iv) restrictions or conditions of the type referred to in
clause (a) of this Section imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such
Indebtedness;
(v) customary provisions in leases and other contracts of the
type referred to in clause (a) of this Section restricting the
assignment thereof; and
(vi) restrictions or conditions imposed by any agreement
relating to Indebtedness permitted under Section 7.01 or any agreement
in effect at the time any Person becomes a Subsidiary of the Borrower,
in each case to the extent that such restrictions or conditions are not
more restrictive than the restrictions or conditions under the
indenture for the 10 3/4% Senior Notes as in effect on the date
hereof.
SECTION 7.09. Certain Financial Covenants.
(a) Leverage Ratio. The Borrower will not permit the
Consolidated Leverage Ratio to exceed 2.75 to 1.0 at any time.
(b) Consolidated Net Worth. The Borrower will not permit its
Consolidated Net Worth at any time to be less than the sum of (a) $1,126,000,000
plus (b) 50% of Consolidated Net Income (if Consolidated Net Income is positive)
or zero (if Consolidated Net Income is negative) for each fiscal quarter ending
after the date hereof.
(c) Fixed Charge Coverage Ratio. The Borrower will not permit
the Consolidated Fixed Charge Coverage Ratio to be less than 2.0 to 1.0 as at
the last day of any fiscal quarter.
SECTION 7.10. Optional Payments, Redemptions or Repurchases.
The Borrower will not, nor will it permit any of its Subsidiaries to, purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or make any payment or prepayment of the
principal of or interest on, or any other amount owing in respect of, any
Indebtedness (other than the Indebtedness under the Loan Documents), except:
(a) regularly scheduled or required repayments or redemptions
of Indebtedness permitted under Section 7.01;
(b) the prepayment, redemption, purchase or repayment of the
7% Senior Notes by the Borrower, but only to the extent that (i) (x)
such prepayment, redemption, purchase or repayment is made solely with
the Net Available Proceeds of any Equity Issuance or any Debt
Incurrence, and (y) any amounts required to be prepaid pursuant to
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Section 2.09(b) in connection with such Equity Issuance or Debt
Incurrence shall have been paid in full or (ii) such prepayment,
redemption, purchase or repayment is made from funds held in the Debt
Repayment Collateral Account (as defined in the Security Agreement) in
accordance with the terms thereof; and
(c) the prepayment, redemption, purchase or repayment of the
10 3/4% Senior Notes by the Borrower in an aggregate amount not to
exceed $50,000,000, provided that (i) after giving effect to each such
prepayment, redemption, purchase or repayment, (x) the Consolidated
Fixed Charge Coverage Ratio (calculated on a pro forma basis as of the
last day of the most recently ended fiscal quarter for which financial
statements of the Borrower have been furnished pursuant to Section
6.01) shall not be less than 2.5 to 1.0 and (y) the total Revolving
Credit Exposures shall not exceed 66 2/3% of the total Revolving Credit
Commitments; and (ii) both before and after giving effect thereto, no
Default shall have occurred and be continuing.
SECTION 7.11. Modifications of Certain Documents. The Borrower
will not, nor will it permit any of its Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any charter
documents or by-laws of such Obligor or any of the provisions of any agreement,
instrument or other document evidencing or relating to the 3% Convertible
Subordinated Debentures, any other subordinated Indebtedness issued pursuant to
Section 7.01(c), the 7% Senior Notes or the 10 3/4% Senior Notes, in each case
without the prior consent of the Required Lenders or the Administrative Agent
(acting with the approval of the Required Lenders), except for any such
modification, supplement or waiver that would not reasonably be expected to be
materially adverse to the interests of the Lenders; provided that the Borrower
shall give the Administrative Agent not less than five Business Days' prior
written notice of any such modification, waiver or supplement (whether or not
any consent shall be required under this Section).
ARTICLE VIII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or under any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five or more
Business Days;
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(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any of its Subsidiaries in or in
connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any other Loan Document or
any amendment or modification hereof or thereof, shall prove to have
been incorrect in any material respect when made or furnished or deemed
made or furnished;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 6.02(a), 6.03
(with respect to any Obligor's existence), 6.08, 7.01, 7.02, 7.03(b) or
7.09;
(e) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article) or any other Loan
Document and such failure shall continue unremedied for (i) a period of
10 or more days (in the case of any such covenant, condition or
agreement contained in Section 6.01 or 6.09) or (ii) a period of 30 or
more days (in the case of any other such covenant, condition or
agreement), in each case after notice thereof from the Administrative
Agent (given at the request of any Lender) to the Borrower;
(f) the Borrower or any of its Subsidiaries shall fail to make
any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, when and as the same shall
become due and payable and such failure shall continue after the
applicable grace period, if any;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof (other than a regularly scheduled
required prepayment or redemption), prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any of its
Subsidiaries or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for a
period of 60 or more days or an order or decree approving or ordering
any of the foregoing shall be entered;
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(i) the Borrower or any of its Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) the Borrower or any of its Subsidiaries shall become
unable, admit in writing its inability or fail generally to pay its
debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $15,000,000 shall be rendered against the
Borrower or any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Borrower or any of its Subsidiaries to enforce any
such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, would reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$15,000,000;
(m) there shall have been asserted against the Borrower or any
of its Subsidiaries any claims or liabilities, whether accrued,
absolute or contingent, based on or arising from the generation,
storage, transport, handling or disposal of Hazardous Materials by the
Borrower or any of its Subsidiaries or predecessors that, in the
judgment of the Required Lenders, are reasonably likely to be
determined adversely to the Borrower or any of its Subsidiaries, and
the amount thereof (either individually or in the aggregate) would
reasonably be expected to have a Material Adverse Effect (insofar as
such amount is payable by the Borrower or any of its Subsidiaries but
after deducting any portion thereof that is reasonably expected to be
paid by other creditworthy Persons jointly and severally liable
therefor);
(n) a Change in Control shall occur;
(o) an HMO Event or Insurance Event shall have occurred and
remain unremedied beyond the applicable statutory grace period as the
HMO Regulator or Insurance Regulator, as the case may be, administering
the HMO Regulations or Insurance Regulations shall have imposed for the
cure of such HMO Event or Insurance Event or, if there is no such
statutory grace period, if an HMO Event or Insurance Event shall have
occurred and remain unremedied for 30 days after the occurrence
thereof;
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(p) the guarantee of any of the Subsidiary Guarantors under
Article III shall for whatever reason be terminated or cease to be in
full force and effect (other than in accordance with its terms and the
terms of this Agreement), or the validity or enforceability thereof
shall be contested by any Subsidiary Guarantor; or
(q) the Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein),
free and clear of all other Liens (other than Liens permitted under
Section 7.02 or under the respective Security Documents), or, except
for expiration in accordance with its terms, any of the Security
Documents shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested
by any Obligor;
then, and in every such event (other than an event with respect to any Obligor
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Obligors accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Obligor; and in case of any
event with respect to any Obligor described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Obligors accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Obligor.
ARTICLE IX
THE AGENTS
Each of the Lenders and the Issuing Lenders hereby irrevocably
appoints each Agent as its agent hereunder and under the other Loan Documents
and authorizes each Agent to take such actions on its behalf and to exercise
such powers as are delegated to such Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto.
Each of the Person serving as the Administrative Agent
hereunder and the Person serving as the Collateral Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the
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Administrative Agent or the Collateral Agent, as the case may be, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent or the Collateral
Agent, as the case may be, hereunder.
Neither Agent shall have any duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, (a) neither Agent shall be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) neither Agent shall have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that such Agent is required to exercise in writing by the Required Lenders (or,
to the extent required by this Agreement or any other Loan Document, all of the
Lenders), and (c) except as expressly set forth herein and in the other Loan
Documents, neither Agent shall have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or as Collateral Agent or any of its Affiliates in any
capacity. Neither Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or, to the extent
required by this Agreement or any other Loan Document, all of the Lenders) or in
the absence of its own gross negligence or willful misconduct. Each Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to such Agent by the Borrower or a Lender, and neither Agent
shall be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article V or
elsewhere herein or therein, other than to confirm receipt of items expressly
required to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and neither Agent
shall incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. Each Agent also
may rely upon any statement made to it orally or by telephone and believed by it
to be made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for an
Obligor), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent. Each Agent and any such sub-agent may perform any and all of its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of such Agent and any such sub-agent, and
shall
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apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent or Collateral Agent, as applicable.
Either Agent may resign at any time by notifying the Lenders,
the Issuing Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent's resignation shall
nonetheless become effective and (1) the retiring Agent shall be discharged from
its duties and obligations hereunder and (2) the Required Lenders shall perform
the duties of such Agent (and all payments and communications provided to be
made by, to or through such Agent shall instead be made by or to each Lender
directly) until such time as the Required Lenders appoint a successor agent as
provided for above in this paragraph. Upon the acceptance of its appointment as
Agent hereunder by a successor and, in the case of a successor Collateral Agent,
upon the execution and filing or recording of such financing statements, or
amendments thereto, and such amendments or supplements to the Security
Documents, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Security
Documents, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring (or retired) Agent, and
the retiring Agent shall be discharged from its duties and obligations hereunder
(if not already discharged therefrom as provided above in this paragraph). The
fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
Article and Section 10.03 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 Agent.
Each Lender acknowledges that it has, independently and
without reliance upon either Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon either Agent
or any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.
Notwithstanding anything herein to the contrary, the Joint
Advisors, Co-Lead Arrangers and Joint Bookrunners, the Syndication Agent and the
Co-Documentation Agents named on the cover page of this Agreement shall not have
any duties or liabilities under this Agreement, except in their capacity, if
any, as Lenders.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) of this Section), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(i) if to the Borrower or any Subsidiary Guarantor, to it at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of Vice
President, Corporate Development and Treasury (Telecopy No. (714)
▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇) or Vice President, Treasury
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇);
(ii) if to the Administrative Agent, to JPMorgan Chase Bank,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of
▇▇▇▇▇▇ ▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (713)
750-2242), with a copy to (x) JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (212)
▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇) and (y) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇);
(iii) if to the Collateral Agent, to JPMorgan Chase Bank, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of ▇▇▇▇
▇. ▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇),
with a copy to (x) JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇;
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇) and (y) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No.
(▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇;
(iv) if to JPMCB as an Issuing Lender, to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇
▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇), with
a copy to (x) JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; Telephone
No. (▇▇▇) ▇▇▇-▇▇▇▇) and (y) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No. (212)
▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇;
(v) if to any Lender (other than JPMCB) as an Issuing Lender,
to it at the address notified in writing to the Borrower and the
Administrative Agent; and
(vi) if to a Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder
may be delivered or furnished by electronic communications pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to Article
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II unless otherwise agreed by the Administrative Agent and the applicable
Lender. Either Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Without limiting the
foregoing, the Borrower may furnish to the Agents and the Lenders the financial
statements required to be furnished by it pursuant to Section 6.01(a) or 6.01(b)
by electronic communications pursuant to procedures approved by the
Administrative Agent.
(c) Any party hereto may change its address or telecopy number
for notices and other communications hereunder by notice to the other parties
hereto (or, in the case of any such change by a Lender, by notice to the
Borrower and the Administrative Agent). All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments.
(a) No Deemed Waivers; Remedies Cumulative. No failure or
delay by either Agent, any Issuing Lender or any Lender in exercising any right
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agents, the Issuing Lenders and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Obligor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan or issuance of a Letter of Credit shall not be construed as a waiver of
any Default, regardless of whether either Agent, any Lender or any Issuing
Lender may have had notice or knowledge of such Default at the time.
(b) Amendments. Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or
by the Borrower and the Administrative Agent with the consent of the Required
Lenders; provided that no such agreement shall
(i) increase any Commitment of any Lender without the written
consent of such Lender,
(ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender directly
affected thereby,
(iii) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any
fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of
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expiration of any Commitment, without the written consent of each
Lender directly affected thereby,
(iv) change Section 2.16(c) without the consent of each Lender
directly affected thereby,
(v) change any of the provisions of this Section or the
percentage in the definition of the term "Required Lenders" or any
other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written
consent of each Lender, or
(vi) release all or substantially all of the Subsidiary
Guarantors from their guarantee obligations under Article III without
the written consent of each Lender;
and provided further that (x) no such agreement shall amend, modify or otherwise
affect the rights or duties of either Agent or any Issuing Lender hereunder
without the prior written consent of such Agent or such Issuing Lender, as the
case may be, and (y) any modification or supplement of Article III shall require
the consent of each Subsidiary Guarantor.
Except as otherwise provided in this Section with respect to
this Agreement, either Agent may, with the prior consent of the Required Lenders
(but not otherwise), consent to any modification, supplement or waiver under any
of the Loan Documents, provided that, without the prior consent of each Lender,
neither Agent shall (except as provided herein or in the Security Documents)
release all or substantially all of the collateral or otherwise terminate all or
substantially all of the Liens under any Security Document providing for
collateral security.
Notwithstanding anything herein or in any other Loan Document
to the contrary, upon the occurrence of any Disposition of any Subsidiary that
is permitted hereunder or that is consented to by the Required Lenders or any
other transaction or event resulting in any Subsidiary ceasing to be a
Subsidiary of the Borrower, each Agent is hereby authorized to release, without
the prior consent of any Lender and at the request of the Borrower, any
Guarantee of such Subsidiary under Article III and any Liens on or Collateral
consisting of any of the property or capital stock of such Subsidiary. Each
Agent shall take any action reasonably requested by the Borrower (at the
Borrower's sole cost and expense) to effect any such release.
SECTION 10.03. Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Agents and their respective
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Agents, in connection with the syndication of the credit facilities
provided for herein, the preparation and administration of this Agreement and
the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by any Issuing Lender in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment
Credit Agreement
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thereunder, (iii) all out-of-pocket expenses incurred by either Agent, any
Issuing Lender or any Lender, including the reasonable fees, charges and
disbursements of any counsel for either Agent, any Issuing Lender or any Lender,
in connection with the enforcement or protection of its rights in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof and (iv) and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein.
(b) Indemnification by the Borrower. The Borrower shall
indemnify each Agent, each Issuing Lender and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee"), against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or
Letter of Credit or the use of the proceeds therefrom (including any refusal by
any Issuing Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related,
directly or indirectly, to the Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrower
fails to pay any amount required to be paid by it to an Agent or an Issuing
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to such Agent or such Issuing Lender, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against such Agent or such Issuing Lender in its capacity as such.
(d) Waiver of Consequential Damages, Etc. To the extent
permitted by applicable law, no Obligor shall assert, and each Obligor hereby
waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
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Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be
payable not later than 10 days after written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of an Issuing Lender that issues any Letter of Credit), except
that (i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Lender that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of the Agents, the Issuing Lenders and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b)(i) Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee; and
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment of (x) any Revolving
Credit Commitment to an assignee that is a Lender with a Revolving Credit
Commitment immediately prior to giving effect to such assignment or (y) all or
any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved
Fund.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 or, in the case of a Term Loan, $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
Credit Agreement
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(B) each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender's rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender's rights and
obligations in respect of one Class of Commitments or Loans;
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrower, the Agents, the Issuing Lenders and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Collateral Agent, any Issuing Lender and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
Credit Agreement
- 91 -
(c)(i) Any Lender may, without the consent of the Borrower,
the Administrative Agent or any Issuing Lender, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Agents, the Issuing Lenders and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(d) as though it were a
Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 2.13 or 2.15 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.15(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any such pledge or assignment to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 10.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that either Agent, any Issuing Lender or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of
Credit Agreement
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Sections 2.13, 2.14, 2.15, 3.03, 10.03, 10.12 and Article IX shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the Agents
constitute the entire contract between and among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 5.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
to this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of any Obligor against any of and all the
obligations of any Obligor now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(b) Submission to Jurisdiction. Each Obligor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and
Credit Agreement
- 93 -
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that either
Agent, any Issuing Lender or any Lender may otherwise have to bring any action
or proceeding relating to this Agreement against any Obligor or its properties
in the courts of any jurisdiction.
(c) Waiver of Venue. Each Obligor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices in
Section 10.01. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 10.12. Treatment of Certain Information;
Confidentiality.
(a) Treatment of Certain Information. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries (in connection with this Agreement or otherwise) by any Lender or
by one or more subsidiaries or affiliates of such Lender and the Borrower hereby
authorizes each Lender to share any information delivered to such Lender by the
Borrower and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of such Lender to enter into this Agreement, to any such subsidiary
or affiliate, it being
Credit Agreement
- 94 -
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of paragraph (b) of this Section as if it were
a Lender hereunder. Such authorization shall survive the repayment of the Loans,
the expiration or termination of the Letters of Credit and the Commitments or
the termination of this Agreement or any provision hereof.
(b) Confidentiality. Each of the Agents, the Issuing Lenders
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (i) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the
extent requested by any regulatory authority, (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (iv)
to any other party to this Agreement, (v) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this paragraph, (i) to
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (vii) to any direct or indirect
contractual counterparty in swap agreements or such contractual counteparty's
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section), (viii) with the consent of the Borrower or (ix) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this paragraph or (B) becomes available to either Agent, any Issuing Lender or
any Lender on a nonconfidential basis from a source other than an Obligor. For
the purposes of this paragraph, "Information" means all information received
from any Obligor relating to any Obligor or its business, other than any such
information that is available to either Agent, any Issuing Lender or any Lender
on a nonconfidential basis prior to disclosure by an Obligor; provided that, in
the case of information received from an Obligor after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Notwithstanding the foregoing, the Agents, the Lenders
and the Obligors (and each of their respective employees, representatives or
other agents) may disclose to any and all persons, without limitation of any
kind, the U.S. tax treatment and U.S. tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to such person relating to such tax
treatment or tax structure, other than any information for which nondisclosure
is reasonably necessary in order to comply with applicable securities laws, and
except that, with respect to any document or similar item that in either case
contains information concerning the U.S. tax treatment or U.S. tax structure of
such transactions as well as other information, this paragraph shall only apply
to such portions of the document or similar item that relate to such tax
treatment or tax structure.
Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
PACIFICARE HEALTH SYSTEMS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
& Chief Financial Officer
Credit Agreement
SUBSIDIARY GUARANTORS
PACIFICARE HEALTH PLAN
ADMINISTRATORS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
PACIFICARE eHOLDINGS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
SENIORCO, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
RxSOLUTIONS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
Credit Agreement
PACIFICARE BEHAVIORAL HEALTH, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
SECUREHORIZONS USA, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
Credit Agreement
LENDERS
JPMORGAN CHASE BANK,
Individually, as Administrative Agent
and as Collateral Agent
By /s/ ▇▇▇▇ ▇▇▇ ▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇
Title: Vice President
Credit Agreement
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
By /s/ ▇▇▇▇ ▇. Galbraih
-------------------------
Name: ▇▇▇▇ ▇. Galbraih
Title:
Credit Agreement
▇▇▇▇▇ FARGO BANK, N.A.
By /s/ Peitty Chou
--------------------
Name: Peitty Chou
Title: Vice President
Credit Agreement
CIBC INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Director
Credit Agreement
GMAC-RFC HEALTH CAPITAL
By /s/ Rossi ▇. ▇▇▇▇▇
-------------------------------
Name: Rossi ▇. ▇▇▇▇▇
Title: Executive Vice President
Credit Agreement
THE BANK OF NEW YORK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Credit Agreement
BANK OF THE WEST
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Credit Agreement
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By /s/ ▇.▇. ▇▇▇▇▇
------------------------
Name: ▇.▇. ▇▇▇▇▇
Title: Vice President
Credit Agreement
KZH CYPRESSTREE-1 LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Agent
Credit Agreement
KZH ING-2 LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Agent
Credit Agreement
KZH STERLING LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Agent
Credit Agreement
EXHIBIT A
Form of Assignment and Assumption
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the "Assignment and
Assumption") is dated as of the Effective Date set forth below and is entered
into by and between [Insert name of Assignor] (the "Assignor") and [Insert name
of Assignee] (the "Assignee"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.
For an agreed consideration, the Assignor hereby irrevocably
sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases
and assumes from the Assignor, subject to and in accordance with the Standard
Terms and Conditions and the Credit Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below (i) all of the Assignor's
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit, guarantees, and
swingline loans included in such facilities) and (ii) to the extent permitted to
be assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the "Assigned Interest"). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate/Approved Fund of [identify
Lender](1)]
3. Borrower: PacifiCare Health Systems, Inc.
4. Administrative Agent: JPMorgan Chase Bank, as the administrative agent
under the Credit Agreement
-----------------------------
(1) Select as applicable
Assignment and Agreement
- 2 -
5. Credit Agreement: The $300,000,000 Credit Agreement dated as of
June 3, 2003 between PacifiCare Health Systems,
Inc., the Subsidiary Guarantors party thereto,
the Lenders parties thereto, JPMorgan Chase Bank,
as Administrative Agent, and JPMorgan Chase Bank,
as Collateral Agent
6. Assigned Interest:
Aggregate Amount of
Commitment/Loans for all Amount of Commitment/Loans Percentage Assigned of
Facility Assigned(2) Lenders Assigned Commitment/Loans(3)
----------------------------------------------------------------------------------------------------------------
$ $ %
----------------------------------------------------------------------------------------------------------------
$ $ %
----------------------------------------------------------------------------------------------------------------
$ $ %
----------------------------------------------------------------------------------------------------------------
Effective Date: _____________ ___, 200__ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:______________________________
Name:
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:______________________________
Name:
Title:
-----------------------------------
(2) Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. "Revolving
Commitment," "Term Loan Commitment," etc.).
(3) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders thereunder.
Assignment and Assumption
- 3 -
[Consented to and](4) Accepted:
JPMORGAN CHASE BANK, as
Administrative Agent
By_________________________________
Name:
Title:
[Consented to:](5)
PACIFICARE HEALTH SYSTEMS, INC.
By_________________________________
Name:
Title:
------------------------------------
(4) To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
(5) To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.
Assignment and Assumption
ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that
(i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it satisfies the requirements, if any, specified in the Credit
Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2. Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the
Assignments and Assumption
- 2 -
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.
3. General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.
Assignment and Assumption
EXHIBIT B
Form of Guarantee Assumption Agreement
GUARANTEE ASSUMPTION AGREEMENT
GUARANTEE ASSUMPTION AGREEMENT dated as of ________ __, 200_
by [NAME OF ADDITIONAL SUBSIDIARY GUARANTOR], a ___________ corporation (the
"Additional Subsidiary Guarantor"), in favor of JPMorgan Chase Bank, as
administrative agent for the Lenders party to the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the
"Administrative Agent"), and as collateral agent under such Credit Agreement (in
such capacity, together with its successors in such capacity, the "Collateral
Agent").
PacifiCare Health Systems, Inc., a Delaware corporation, the
Subsidiary Guarantors party thereto, the Lenders party thereto, the
Administrative Agent and the Collateral Agent are parties to a Credit Agreement
dated as of June 3, 2003 (as modified and supplemented and in effect from time
to time, the "Credit Agreement"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement.
Pursuant to Section 6.09 of the Credit Agreement, the
Additional Subsidiary Guarantor hereby agrees to become a "Subsidiary Guarantor"
for all purposes of the Credit Agreement. Without limiting the foregoing, the
Additional Subsidiary Guarantor hereby, jointly and severally with the other
Subsidiary Guarantors, guarantees to each Lender and each Agent and their
respective successors and assigns the prompt payment in full when due (whether
at stated maturity, by acceleration or otherwise) of all Guaranteed Obligations
in the same manner and to the same extent as is provided in Article III of the
Credit Agreement and, if applicable, to the extent permitted by the 7% Senior
Notes. In addition, the Additional Subsidiary Guarantor hereby makes the
representations and warranties set forth in Sections 4.01, 4.02 and 4.03 of the
Credit Agreement with respect to itself and its obligations under this
Agreement, as if each reference in such Sections to the Loan Documents included
reference to this Agreement, and represents and warrants that, as of the date
hereof, that there are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived. The Additional Subsidiary
Guarantor hereby instructs its counsel to deliver the opinion referred to in
Section 6.09 of the Credit Agreement to the Collateral Agent.
Guarantee Assumption Agreement
- 2 -
IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has
caused this Guarantee Assumption Agreement to be duly executed and delivered as
of the day and year first above written.
[NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR]
By:____________________________
Name:
Title:
Accepted and agreed:
JPMORGAN CHASE BANK,
as Administrative Agent
By:____________________________
Name:
Title:
Guarantee Assumption Agreement
EXHIBIT C
Form of Security Agreement
[Attached]
Security Agreement
SECURITY AGREEMENT
Dated as of June 3, 2003
between
The Grantors referred to herein
as Grantors
and
JPMORGAN CHASE BANK
as Collateral Agent
T A B L E O F C O N T E N T S
SECTION PAGE
Section 1. Grant of Security...................................................................... 2
Section 2. Security for Obligations............................................................... 7
Section 3. Grantors Remain Liable................................................................. 8
Section 4. Delivery and Control of Security Collateral............................................ 8
Section 5. Establishment and Maintenance of the Collateral Accounts............................... 9
Section 6. Investing of Amounts in the Collateral Accounts........................................ 10
Section 7. Release of Amounts in the Collateral Accounts.......................................... 11
Section 8. Representations and Warranties......................................................... 11
Section 9. Further Assurances..................................................................... 15
Section 10. As to Equipment and Inventory.......................................................... 16
Section 11. Insurance.............................................................................. 17
Section 12. Place of Perfection; Records; Collection of Receivables................................ 18
Section 13. As to Intellectual Property Collateral................................................. 19
Section 14. Voting Rights; Dividends; Etc.......................................................... 20
Section 15. As to the Assigned Agreements.......................................................... 22
Section 16. Payments Under the Assigned Agreements................................................. 22
Section 17. Transfers and Other Liens; Additional Shares........................................... 22
Section 18. Collateral Agent Appointed Attorney-in-Fact............................................ 23
Section 19. Collateral Agent May Perform........................................................... 23
Section 20. The Collateral Agent's Duties.......................................................... 23
Section 21. Remedies............................................................................... 24
Section 22. Indemnity and Expenses................................................................. 27
Section 23. Amendments; Waivers; Additional Grantors; Etc.......................................... 27
Section 24. Notices; Etc........................................................................... 27
Section 25. Continuing Security Interest; Assignments under the Credit Agreement................... 28
Section 26. Release; Termination................................................................... 28
Section 27. Security Interest Absolute............................................................. 29
Section 28. Execution in Counterparts.............................................................. 30
Section 29. The Mortgages.......................................................................... 30
Section 30. Governing Law.......................................................................... 30
Section 31. Provisions Applicable to PHPA Collateral Prior to Repayment of 7% Senior Notes......... 30
- ii -
Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Chief Executive Office and Federal Tax Identification Number
Schedule V - Patents, Trademarks and Trade Names, Copyrights and Licenses
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Intellectual Property Security Agreement
Exhibit D - Form of Intellectual Property Security Agreement Supplement
- iii -
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of June 3, 2003 between PACIFICARE
HEALTH SYSTEMS, INC., a Delaware corporation (the "BORROWER"), the other Persons
listed on the signature pages hereof and the Additional Grantors (as defined in
Section 23) (the Borrower, the Persons so listed and the Additional Grantors
being, collectively, the "GRANTORS") and JPMORGAN CHASE BANK, as collateral
agent (together with any successor collateral agent appointed pursuant to
Article IX of the Credit Agreement (as defined herein), the "COLLATERAL AGENT")
for the Secured Parties (as defined in the Credit Agreement) and (to the extent
provided herein) the Secured Noteholders (as defined herein).
PRELIMINARY STATEMENTS
(1) The Borrower and certain of its subsidiaries have
entered into a Credit Agreement dated as of June 3, 2003 (as amended, amended
and restated, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT") with the Lenders, the Issuing Lenders, the Collateral Agent
and the Administrative Agent (each as defined therein).
(2) Pursuant to the Credit Agreement, the Grantors are
entering into this Agreement in order to grant to the Collateral Agent for the
ratable benefit of the Secured Parties (and, in the case of PHPA, of the Secured
Noteholders (as defined herein), subject to Section 31) a security interest in
all of their right, title and interest in and to the Collateral (as defined
herein) now owned or hereafter acquired.
(3) Each Grantor is the owner of the shares (the "INITIAL
PLEDGED SHARES") of stock set forth opposite such Grantor's name on and as
otherwise described in Part I of Schedule I hereto and issued by the
corporations and entities named therein and of the indebtedness (the "INITIAL
PLEDGED DEBT") set forth opposite such Grantor's name on and as otherwise
described in Part II of Schedule I hereto and issued by the obligors named
therein.
(4) It is a condition precedent to the making of Loans by
the Lenders, the issuance of Letters of Credit by any Issuing Lender under the
Credit Agreement that the Grantors shall have granted the assignment and
security interest and made the pledge and assignment contemplated by this
Agreement.
(5) One or more of the Lenders (and/or any affiliate of a
Lender) may enter into interest rate Swap Agreements from time to time after the
date hereof with the Borrower or any other Grantor (each such agreement with any
such person, a "SECURED INTEREST HEDGE AGREEMENT").
(6) Each Grantor will derive substantial direct and
indirect benefit from the transactions contemplated by the Loan Documents.
(7) PacifiCare Health Plan Administrators, Inc. ("PHPA"),
an Indiana corporation, has issued 7% Senior Notes due 2003 (as amended, amended
and restated, supplemented or otherwise modified and in effect on the date
hereof and as the same may be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to
Security Agreement
- 2 -
time pursuant to the terms thereof, the "7% SENIOR NOTES") pursuant to that
certain Indenture dated as of September 22, 1993 by and among PHPA (as successor
to FHP International Corporation) and HSBC Bank USA, as trustee thereunder (the
"7% SENIOR NOTES TRUSTEE") (as amended, supplemented or otherwise modified and
in effect on the date hereof and as the same may be further amended, modified,
extended, renewed, replaced, restated or supplemented from time to time pursuant
to the terms thereof, the "7% NOTES INDENTURE", together with the 7% Notes, the
"7% SENIOR NOTES AGREEMENTS"), and pursuant to the 7% Notes Indenture, PHPA has
agreed not to incur certain Liens (as defined therein) upon any of its property
or assets to secure certain Indebtedness (as defined therein) without making
effective provision whereby the obligations under the 7% Senior Notes Agreements
shall be secured equally and ratably with the Indebtedness secured by such Liens
for so long as such Indebtedness shall be so secured. The holders of the 7%
Senior Notes, together with the 7% Senior Notes Trustee, are herein referred to
as the "SECURED NOTEHOLDERS").
(8) Terms used herein and not otherwise defined herein
are used in this Agreement as defined in the Credit Agreement. Further, unless
otherwise defined in this Agreement or in the Credit Agreement, terms defined in
Article 8 or Article 9 of the Uniform Commercial Code in effect in the State of
New York ("N.Y. UNIFORM COMMERCIAL CODE") and/or in the Federal Book Entry
Regulations (as defined herein) are used in this Agreement as such terms are
defined in such Article 8 or 9 and/or the Federal Book Entry Regulations. "UCC"
means the Uniform Commercial Code as in effect, from time to time, in the state
of New York, provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "UCC" means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority. The term
"FEDERAL BOOK ENTRY REGULATIONS" means (a) the federal regulations contained in
Subpart B ("TREASURY/RESERVE AUTOMATED DEBT ENTRY SYSTEM (TRADES)") governing
book-entry securities consisting of U.S. Treasury bonds, notes and bills and
Subpart D ("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section
357.2, Section 357.10 through Section 357.14 and Section 357.41 through Section
357.44 and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and to induce the Lender (and any affiliate of a Lender) to enter into
a Secured Interest Hedge Agreements from time to time, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties
(and, in the case of PHPA, of the Secured Noteholders, subject to Section 31) as
follows:
Section 1. Grant of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties
(and, in the case of PHPA only and subject to Section 31, of the Secured
Noteholders), and hereby grants to the Collateral Agent for the ratable benefit
of the Secured Parties (and, in the case of PHPA only and subject to Section 31,
of the Secured Noteholders) a security interest in, such Grantor's right, title
and interest in and to the following, in each case, as to each type of property
described below, whether now
Security Agreement
- 3 -
owned or hereafter acquired by such Grantor, wherever located, and whether now
or hereafter existing or arising (collectively, the "COLLATERAL"):
(a) all equipment in all of its forms, all fixtures and
all parts thereof and all accessions thereto (any and all such
equipment, fixtures, parts and accessions being the "EQUIPMENT");
(b) all inventory in all of its forms (including, but not
limited to raw materials and work in process therefor, finished goods
thereof and materials used or consumed in the manufacture, production,
preparation or shipping thereof, goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an
interest or right as consignee) and goods that are returned to or
repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "INVENTORY");
(c) all accounts, chattel paper, instruments, deposit
accounts, general intangibles and other obligations of any kind,
whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all
security agreements, leases and other contracts securing or otherwise
relating to any such accounts, chattel paper, instruments, deposit
accounts, general intangibles or obligations (any and all such
accounts, chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in clause
(d), (e) or (f) below, being the "RECEIVABLES", and any and all such
security agreements, leases and other contracts being the "RELATED
CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Shares and the
certificates, if any, representing the Initial Pledged Shares,
and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial
Pledged Shares;
(ii) the Initial Pledged Debt and the
instruments, if any, evidencing the Initial Pledged Debt, and
all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial
Pledged Debt;
(iii) all additional shares of stock from
time to time acquired by such Grantor in any manner (other
than any shares held by such Grantor in any HMO Subsidiary or
Insurance Subsidiary to the extent such shares are not
required to be pledged under Section 6.09 of the Credit
Agreement) (such shares, together with the Initial Pledged
Shares, being the "PLEDGED SHARES"), and the certificates, if
any, representing such additional shares, and all dividends,
cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares;
Security Agreement
- 4 -
(iv) all additional indebtedness from
time to time owed to such Grantor (such indebtedness, together
with the Initial Pledged Debt, being the "PLEDGED DEBT") and
the instruments, if any, evidencing such indebtedness, and all
interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness; and
(v) all other investment property
(including, without limitation, all (A) securities, whether
certificated or uncertificated, (B) security entitlements, (C)
securities accounts, (D) commodity contracts and (E) commodity
accounts) in which such Grantor has now, or acquires from time
to time hereafter, any right, title or interest in any manner,
and the certificates or instruments, if any, representing or
evidencing such investment property, and all dividends,
interest, distributions, value, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of
such investment property;
(e) each of the agreements listed on Schedule II hereto,
in each case as such agreements may be amended, amended and restated,
supplemented or otherwise modified from time to time (collectively, the
"ASSIGNED AGREEMENTS"), including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements and (iv) the right of such
Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the "AGREEMENT COLLATERAL");
(f) the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Account, all
financial assets from time to time credited to the Collateral
Account (including, without limitation, all investment from
time to time credited to the Collateral Account), and all
dividends, interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such financial
assets;
(ii) the Debt Repayment Collateral
Account, all financial assets from time to time credited to
the Debt Repayment Collateral Account (including, without
limitation, all investments from time to time credited to the
Debt Repayment Collateral Account), and all dividends,
interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such financial assets;
(iii) any other cash collateral account
of such Grantor, all financial assets from time to time
credited thereto (including, without limitation, all
investments from time to time credited thereto), and all
dividends, interest,
Security Agreement
- 5 -
cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such financial assets;
(iv) all deposit accounts or any other
cash collateral of such Grantor from time to time, all funds
held therein and all certificates and instruments, if any,
from time to time representing or evidencing such deposit
accounts;
(v) all notes, certificates of deposit,
checks and other instruments from time to time delivered to or
otherwise possessed by the Collateral Agent for or on behalf
of such Grantor, including, without limitation, those
delivered or possessed in substitution for or in addition to
any or all of the then existing Account Collateral; and
(vi) all interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account
Collateral;
(g) the following (collectively, the "INTELLECTUAL
PROPERTY COLLATERAL"):
(i) all United States, international
and foreign patents, patent applications and statutory
invention registrations, including, without limitation, the
patents and patent applications set forth in Schedule V hereto
(as such Schedule V may be supplemented from time to time by
supplements to this Agreement, each such supplement being in
substantially the form of Exhibit D hereto (an "IP SECURITY
AGREEMENT SUPPLEMENT"), executed and delivered by such Grantor
to the Collateral Agent from time to time), together with all
reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, all inventions therein,
all rights therein provided by international treaties or
conventions and all improvements thereto, and all other rights
of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto (the "PATENTS");
(ii) all trademarks (including, without
limitation, service marks), certification marks, collective
marks, trade dress, logos, domain names, product
configurations, trade names, business names, corporate names
and other source identifiers, whether or not registered,
whether currently in use or not, including, without
limitation, all common law rights and registrations and
applications for registration thereof, including, without
limitation, the trademark registrations and trademark
applications set forth in Schedule V hereto (as such Schedule
V may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor
to the Collateral Agent from time to time), and all other
marks registered in the U.S. Patent and Trademark Office or in
any office or agency of any State or Territory of the United
States or any foreign country (but excluding any United States
intent-to-use trademark application prior to the filing and
acceptance of a Statement of Use or an
Security Agreement
- 6 -
Amendment to allege use in connection therewith to the extent
that a valid security interest may not be taken in such an
intent-to-use trademark application under applicable law), and
all rights therein provided by international treaties or
conventions, all reissues, extensions and renewals of any of
the foregoing, together in each case with the goodwill of the
business connected therewith and symbolized thereby, and all
rights corresponding thereto throughout the world and all
other rights of any kind whatsoever of such Grantor accruing
thereunder or pertaining thereto (the "TRADEMARKS");
(iii) all copyrights, copyright
applications, copyright registrations and like protections in
each work of authorship, whether statutory or common law,
whether published or unpublished, any renewals or extensions
thereof, all copyrights of works based on, incorporated in,
derived from, or relating to works covered by such copyrights,
including, without limitation, the copyright registrations and
copyright applications set forth in Schedule V hereto (as such
Schedule V may be supplemented from time to time by IP
Security Agreement Supplements executed and delivered by such
Grantor to the Collateral Agent from time to time), together
with all rights corresponding thereto throughout the world and
all other rights of any kind whatsoever of such Grantor
accruing thereunder or pertaining thereto (the "COPYRIGHTS");
(iv) all confidential and proprietary
information, including, without limitation, know-how, trade
secrets, manufacturing and production processes and
techniques, inventions, research and development information,
technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans and
customer and supplier lists and information (the "TRADE
SECRETS");
(v) all computer software programs and
databases (including, without limitation, source code, object
code and all related applications and data files), firmware,
and documentation and materials relating thereto, and all
rights with respect to the foregoing, together with any and
all options, warranties, service contracts, program services,
test rights, maintenance rights, improvement rights, renewal
rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the
foregoing (the "COMPUTER SOFTWARE");
(vi) all license agreements, permits,
authorizations and franchises, whether with respect to the
Patents, Trademarks, Copyrights, Trade Secrets or Computer
Software, or with respect to the patents, trademarks,
copyrights, trade secrets, computer software or other
proprietary right of any other Person, including, without
limitation, the material license agreements set forth in
Schedule V hereto (as such Schedule V may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Grantor to the Collateral Agent from time to
time), and all income, royalties and other payments now or
hereafter due and/or payable with respect thereto, subject, in
Security Agreement
- 7 -
each case, to the terms of such license agreements, permits,
authorizations and franchises, (the "LICENSES"); and
(vii) any and all claims for damages for
past, present and future infringement, misappropriation or
breach with respect to the Patents, Trademarks, Copyrights,
Trade Secrets, Computer Software or Licenses, with the right,
but not the obligation, to ▇▇▇ for and collect, or otherwise
recover, such damages;
(h) all proceeds of, collateral for and supporting
obligations relating to, any and all of the Collateral (including,
without limitation, proceeds, collateral and supporting obligations
that constitute property of the types described in clauses (a) through
(g) of this Section 1 and this clause (h)) and, to the extent not
otherwise included, all (i) payments under insurance (whether or not
the Collateral Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii)
cash.
Notwithstanding the foregoing provisions of this Section 1, the grant of a
security interest as provided herein shall not extend to, and the term
"Collateral" shall not include, as to any Grantor: (1) any accounts, contracts,
licenses or other general intangibles of such Grantor, or any permits,
instruments, or chattel paper of such Grantor, if and to the extent such
account, contract, license, general intangible, permit, instrument or chattel
paper contains restrictions on assignments and the creation of Liens, or under
which such an assignment or Lien would cause a default to occur under such
account, contract, license, general intangible, permit, instrument or chattel
paper (other than to the extent that any such term would be rendered ineffective
pursuant to Section 9-407 or 9-408 of Article 9 of the New York Uniform
Commercial Code); provided that immediately upon the ineffectiveness, lapse or
termination of any such provision, the Collateral shall include, and such
Grantor shall be deemed to have granted a security interest in, all such right,
title and interests as if such provision had never been in effect; (2) any
intent to use application at the U.S. Patent and Trademark Office with respect
to intellectual property to the extent an assignment for security purposes would
void the same; (3) more than 66% of the outstanding voting stock of any Foreign
Subsidiary; and (4) any governmental permit or franchise that prohibits Liens on
or collateral assignments of such permit or franchise.
Section 2. Security for Obligations. This Agreement secures,
in the case of each Grantor (other than PHPA), the payment of the following
obligations (collectively, the "SECURED OBLIGATIONS"): (a) all obligations of
such Grantor now or hereafter existing under the Loan Documents, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise, (b) all obligations of such
Grantor in respect of any Secured Interest Hedge Agreement and (c) all
obligations of such Grantor arising from any cash management services provided
to the Borrower or any of its Subsidiaries by any Lender (or any affiliate of a
Lender), provided that, so long as the 7% Senior Notes are outstanding, the
Secured Obligations of any of RxSolutions, Inc., PacifiCare Behavioral Health,
Inc. and SecureHorizons USA Inc. shall be limited to the maximum amount
permitted under the 7% Senior Notes Indenture. Without limiting the foregoing,
this Agreement secures, in the case of PHPA only (but subject to Section 31),
equally and ratably (i) the Secured Obligations of PHPA and (ii) all of the
obligations, whether matured or unmatured, contingent or liquidated of PHPA
arising out
Security Agreement
- 8 -
of or evidenced by the 7% Senior Notes Agreements, whether for principal,
interest, expenses, premiums, indemnities, fees or other amounts, whether or not
such obligations are due and payable at such time (all such obligations under
this clause (ii) being the "SECURED NOTE OBLIGATIONS").
Section 3. Grantors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in such Grantor's Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party or Secured Noteholder shall
have any obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement or any other Loan Document or any
other agreement, nor shall any Secured Party or Secured Noteholder be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
Section 4. Delivery and Control of Security Collateral. (a)
All certificates or instruments representing or evidencing Security Collateral
shall be delivered to and held by or on behalf of the Collateral Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Collateral Agent. The Collateral Agent
shall have the right, upon the occurrence and during the continuance of an Event
of Default, to transfer to or to register in the name of the Collateral Agent or
any of its nominees any or all of the Security Collateral, subject only to the
revocable rights specified in Section 14(a); provided that the exercise of any
such rights by the Collateral Agent with respect to Pledged Shares or Pledged
Debt issued by any HMO Subsidiary or Insurance Subsidiary shall be subject to
obtaining the prior written approval of the applicable HMO Regulator or
Insurance Regulator where such approval is required for the Collateral Agent to
exercise such rights under the applicable Governmental Rules. In addition, the
Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, to exchange certificates or instruments
representing or evidencing Security Collateral for certificates or instruments
of smaller or larger denominations.
(b) With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof either (i) to register the
Collateral Agent as the registered owner, for the purpose of security, of such
security or (ii) to agree in an authenticated record with such Grantor and the
Collateral Agent that such issuer will comply with instructions with respect to
such security originated by the Collateral Agent without further consent of such
Grantor, such authenticated record to be in form and substance reasonably
satisfactory to the Collateral Agent.
(c) With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes a security
entitlement, such Grantor will cause the securities intermediary with respect to
such security entitlement either (i) to identify in its records the Collateral
Agent as the entitlement holder of such security entitlement against such
securities intermediary or (ii) to agree in an authenticated record with such
Grantor and the
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Collateral Agent that such securities intermediary will comply with entitlement
orders (that is, notifications communicated to such securities intermediary
directing transfer or redemption of the financial asset to which such Grantor
has a security entitlement) originated by the Collateral Agent without further
consent of such Grantor, such authenticated record to be in form and substance
reasonably satisfactory to the Collateral Agent (such agreement being a
"SECURITIES ACCOUNT CONTROL AGREEMENT").
(d) With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes a commodity
contract, such Grantor shall cause the commodity intermediary with respect to
such commodity contract to agree in an authenticated record with such Grantor
and the Collateral Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the Collateral
Agent without further consent of such Grantor, such authenticated record to be
in form and substance reasonably satisfactory to the Collateral Agent (such
agreement being a "COMMODITY ACCOUNT CONTROL AGREEMENT", and all such
authenticated records, together with all Securities Account Control Agreements
being, collectively, "CONTROL AGREEMENTS").
(e) No Grantor will change or add any securities
intermediary or commodity intermediary that maintains any securities account or
commodity account in which any of the Collateral is credited or carried, or
change or add any such securities account or commodity account, in each case
without first complying with the above provisions of this Section 4 in order to
perfect the security interest granted hereunder in such Collateral.
The Collateral Agent shall not provide any directions to, or deliver any
instructions or entitlement orders to any issuer, securities intermediary or
commodity intermediary pursuant to this Section 4 unless an Event of Default has
occurred and is continuing. Furthermore, the Collateral Agent shall promptly
rescind such direction, instruction or entitlement order and notify such parties
at any time when no Event of Default has occurred and is continuing.
Section 5. Establishment and Maintenance of the Collateral
Accounts. (a) The Collateral Agent will cause to be established at a banking
institution to be selected by the Collateral Agent a cash collateral account
(the "CASH COLLATERAL ACCOUNT"), which (i) to the extent of all investment
property or financial assets (other than cash) shall be a "securities account"
(as defined in Section 8-501 of the UCC) in respect of which the Collateral
Agent shall be the "entitlement holder" (as defined in Section 8-102(a)(7) of
the UCC) and (ii) to the extent of any cash, shall be a deposit account and into
which there shall be deposited from time to time the cash proceeds of any of the
Collateral (including proceeds of insurance thereon) required to be delivered to
the Collateral Agent pursuant hereto and into which the Grantors may from time
to time deposit any additional amounts that any of them wishes to pledge to the
Collateral Agent for the benefit of the Secured Parties as additional collateral
security hereunder or that, as provided in Section 2.04(k) of the Credit
Agreement, they are required to pledge as additional collateral security
hereunder; provided that, so long as the 7% Senior Notes are outstanding, all
proceeds or other amounts in respect of the PHPA Collateral subject to the Lien
hereunder shall be deposited and held in the Shared Collateral Account under
(and as defined in) Section 31.
(b) As of the Effective Date, the Collateral Agent will
cause to be established and maintained at JPMorgan Chase Bank at its offices at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, New
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York 10017 (or such other offices of such bank as the Collateral Agent shall
approve) a cash collateral account (the "DEBT REPAYMENT COLLATERAL ACCOUNT" and,
together with the Cash Collateral Account, each a "COLLATERAL ACCOUNT" and
collectively the "COLLATERAL ACCOUNTS"), which (i) to the extent of all
investment property or financial assets (other than cash) shall be a "securities
account" (as defined in Section 8-501 of the UCC) in respect of which the
Collateral Agent shall be the "entitlement holder" (as defined in Section
8-102(a)(7) of the UCC) and (ii) to the extent of any cash, shall be a deposit
account and into which the Borrower shall deposit, not later than the Business
Day following the Effective Date, an amount equal to the aggregate outstanding
principal amount of the 7% Senior Notes as of such date. From time to time prior
to the repayment in full of the 7% Senior Notes, the Borrower shall ensure that
the credit balance of the Debt Repayment Collateral Account shall not be less
the aggregate principal amount of the 7% Senior Notes at any time outstanding.
(c) The balance from time to time in each Collateral
Account shall constitute part of the Collateral hereunder and shall not
constitute payment of the Secured Obligations until applied as hereinafter
provided. However, at any time following the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (and, if instructed
by the Administrative Agent or the Lenders as specified in Article IX of the
Credit Agreement, shall) in its (or their) discretion apply or cause to be
applied (subject to collection) the balance from time to time standing to the
credit of any Collateral Account to the payment of the Secured Obligations in
the manner specified in Section 21. The balance from time to time in any
Collateral Account shall be subject to withdrawal only as provided herein.
(d) So long as any Loan or any other obligation of any
Obligor under any Loan Document shall remain unpaid, any Letter of Credit shall
be outstanding or any Lender shall have any Commitment under the Credit
Agreement:
(i) the Borrower will maintain each Collateral Account
with the Collateral Agent or another commercial bank acceptable to the
Collateral Agent (the Collateral Agent or any bank with which such
Collateral Account is being maintained being a "COLLATERAL BANK").
(ii) it shall be a term and condition of each Collateral
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to such Collateral Account, and except as
otherwise provided by the provisions of Sections 7 and 21, that no
amount (including interest on investments credited thereto) will be
paid or released to or for the account of, or withdrawn by or for the
account of, the Borrower or any other Person from such Collateral
Account.
Section 6. Investing of Amounts in the Collateral Accounts.
The Collateral Agent will, subject to the provisions of Sections 7 and 21, from
time to time direct the applicable Collateral Bank to (a) invest amounts
received with respect to each Collateral Account in such Permitted Investments
credited to such Collateral Account, as the Borrower may select by notice to the
Collateral Agent (and, at any time following the occurrence and during the
continuance of an Event of Default, as the Collateral Agent may approve) and (b)
invest interest paid on the Permitted Investments referred to in clause (a)
above, and reinvest other proceeds of any such Permitted Investments that may
mature or be sold, in each case in such Permitted Investments
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credited to the respective Collateral Account, as the Borrower may select (and,
at any time following the occurrence and during the continuance of an Event of
Default, as the Collateral Agent may approve). Interest and proceeds that are
not invested or reinvested in Permitted Investments as provided above with
respect to any Collateral Account shall be deposited and held in such Collateral
Account. In addition, the Collateral Agent shall have the right at any time to
direct the applicable Collateral Bank to exchange such Permitted Investments for
similar Permitted Investments of smaller or larger determinations, or for other
Permitted Investments, credited to the respective Collateral Account.
Section 7. Release of Amounts in the Collateral Accounts. (a)
So long as no Event of Default shall have occurred and be continuing, the
Collateral Agent will direct the applicable Collateral Bank to pay and release
to the Borrower or at its order or, at the request of the Borrower, to the
Administrative Agent to be applied to the Secured Obligations of the Borrower
under the Loan Documents, such amount, if any, as is then on deposit in the Cash
Collateral Account, to the extent permitted to be released under the terms of
the Credit Agreement and the other Loan Documents.
(b) So long as no Default shall have occurred and be
continuing, the Collateral Agent shall, upon request of the Borrower by
irrevocable written notice that the Borrower shall repurchase or otherwise
acquire any 7% Senior Notes at a price not greater than par (which notice shall
specify the aggregate principal amount of the 7% Senior Notes being so
repurchased or acquired (and any accrued and unpaid interests and/or premium, if
any, payable in connection therewith), the identity of the Person or Persons
selling such 7% Senior Notes and the wire instructions of, and the aggregate
amount payable to, each such Person), direct the applicable Collateral Bank to
pay to and release to each such Person the amount specified in such notice from
the Debt Repayment Collateral Account (but in an aggregate amount not exceeding
the credit balance of the Debt Repayment Collateral Account on such date). So
long as no Default shall have occurred and be continuing, the Collateral Agent
shall, upon request of the Borrower by irrevocable written notice at least five
Business Days prior to the final maturity date of the 7% Senior Notes (which
notice shall specify the aggregate principal amount of the 7% Senior Notes then
outstanding, the aggregate amount of accrued and unpaid interest payable at
final maturity of the 7% Senior Notes and the wire instructions of the 7% Senior
Notes Trustee), direct the applicable Collateral Bank to pay to and release to
the 7% Senior Notes Trustee on such final maturity date the amount specified in
such notice (but in an aggregate amount not exceeding the credit balance of the
Debt Repayment Collateral Account on such date). Any funds remaining in the Debt
Repayment Collateral Account upon payment, repurchase or redemption in full of
the 7% Senior Notes shall be remitted to the Borrower upon its instructions.
Upon such payment, repurchase or redemption and the remittance in full, if any,
contemplated by the immediately preceding sentence, the Collateral Agent shall
cause the Debt Repayment Collateral Account to be closed.
Section 8. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Such Grantor's exact legal name, as defined in
Section 9-503(a) of the UCC, is correctly set forth on the signature
pages of this Agreement. Such Grantor is an organization of the type
specified on the signature pages of this Agreement and is
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organized under the laws of the jurisdiction specified on the signature
pages of this Agreement.
(b) All of the Equipment and Inventory (other than
Equipment and Inventory constituting mobile goods and Equipment and
Inventory in transit in the ordinary course of business) of such
Grantor are located at the places specified therefor in Schedule III
hereto, as such Schedule III may be amended from time to time pursuant
to Section 10(a). The chief executive office of such Grantor and the
original copies of each Assigned Agreement and Related Contract to
which such Grantor is a party and all originals of all chattel paper
that evidence Receivables of such Grantor, are located at the address
specified therefor in Schedule IV hereto, as such Schedule IV may be
amended from time to time pursuant to Section 12(a). The Grantor is
located (within the meaning of Section 9-307 of the UCC) in the state
or jurisdiction set forth in Schedule IV hereto. Such Grantor's federal
tax identification number is set forth opposite such Grantor's name in
Schedule IV hereto. All Security Collateral consisting of certificated
securities and instruments have been delivered to the Collateral Agent.
Copies of each Assigned Agreement and all originals of all chattel
paper that evidence Receivables have been delivered to the Collateral
Agent, in each case to the extent that delivery thereof to the
Collateral Agent is required under Section 4. None of the Receivables
or Agreement Collateral is evidenced by a promissory note or other
instrument that has not been delivered to the Collateral Agent.
(c) Such Grantor is the legal and beneficial owner of the
Collateral of such Grantor free and clear of any Lien, claim, option or
right of others, except for the security interests created under this
Agreement or permitted under the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all
or any part of such Collateral or listing such Grantor or any trade
name of such Grantor as debtor is on file in any recording office,
except such as may have been filed in favor of the Collateral Agent
relating to the Loan Documents or as otherwise permitted under the
Credit Agreement. Such Grantor has the trade names listed on Schedule V
hereto.
(d) Such Grantor has exclusive possession and control of
the Equipment and Inventory other than Inventory or Equipment stored at
any leased premises or warehouse (which leased premises or warehouse is
so indicated by an asterisk on Schedule III hereto, as such Schedule
III may be amended from time to time pursuant to Section 10(a)).
(e) The Pledged Shares pledged by such Grantor hereunder
have been duly authorized and validly issued and are fully paid and
non-assessable. The Pledged Debt issued by any Grantor and pledged by
such Grantor hereunder has been duly authorized, authenticated or
issued and delivered, is the legal, valid and binding obligation of
such Grantor, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law is evidenced by
one or more promissory notes (which notes have been delivered to the
Collateral Agent) and is not in default.
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(f) The Initial Pledged Shares constitute the percentage
of the issued and outstanding shares of stock of the issuers thereof
indicated on Schedule I hereto as of the date hereof. The Initial
Pledged Debt constitutes all of the outstanding indebtedness owed to
such Grantor by the issuers thereof and is outstanding, as of the date
hereof, in the principal amount indicated on Schedule I hereto as of
the date hereof.
(g) All of the investment property owned by such Grantor
as of the date hereof is listed on Schedule I hereto.
(h) The Assigned Agreements to which such Grantor is a
party, true and complete copies of which have been furnished to each
Secured Party, have been duly authorized, executed and delivered by all
parties thereto, have not been amended, amended and restated,
supplemented or otherwise modified, are in full force and effect and
are binding upon and enforceable against such Grantor, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding
in equity or at law. There exists no default under any Assigned
Agreement to which such Grantor is a party by any party thereto of
which such Grantor has actual knowledge. Other than the Grantors, each
party to the Assigned Agreements listed on Schedule II hereto which
requires such parties' consent for assignment and to which such Grantor
is a party has executed and delivered to such Grantor a consent, in
substantially the form of Exhibit B hereto or otherwise in form and
substance satisfactory to the Collateral Agent, to the assignment of
the Agreement Collateral to the Collateral Agent pursuant to this
Agreement.
(i) All filings and other actions necessary other than
the delivery of the original title certificates to motor vehicles or
reasonably desirable to perfect and protect the security interest in
the Collateral of such Grantor created under this Agreement have been
or are concurrently herewith being duly made or taken and are in full
force and effect, and this Agreement creates in favor of the Collateral
Agent for the benefit of the Secured Parties a valid and, together with
such filings and other actions, perfected first priority security
interest in the Collateral of such Grantor, securing the payment of the
Secured Obligations.
(j) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for (i) the grant by such
Grantor of the assignment, pledge and security interest granted
hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the
assignment, pledge and security interest created hereunder (including
the first priority nature of such assignment, pledge or security
interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code, which financing
statements upon due filing will be in full force and effect, the
recordation of the Intellectual Property Security Agreements referred
to in Section 13(f) with the U.S. Patent and Trademark Office and the
U.S. Copyright Office, and the actions described in Section 4 with
respect to the Security Collateral, and the delivery of the original
title certificates to motor vehicles or (iii) for the exercise by the
Collateral Agent of its voting or other rights provided for in this
Agreement or the
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remedies in respect of the Collateral pursuant to this Agreement,
except as may be required in connection with the disposition of any
portion of the Security Collateral by laws affecting the offering and
sale of securities generally and except as may be required in
connection with the exercise of any foreclosure, voting, assignment or
other rights or remedies in respect of the stock of any HMO Subsidiary
or Insurance Subsidiary, including, but not limited to, obtaining the
written approval of the applicable HMO Regulator or Insurance Regulator
prior to the exercise by the Collateral Agent of its foreclosure,
voting, assignment or other rights with respect to any Pledged Shares
or Pledged Debt issued by any HMO Subsidiary or Insurance Subsidiary or
any Assigned Agreement to which any HMO Subsidiary or Insurance
Subsidiary is a party.
(k) The Inventory that has been produced or distributed
by such Grantor has been produced in compliance with all material
requirements of applicable law, including, without limitation, the Fair
Labor Standards Act.
(l) As to itself and its Intellectual Property
Collateral:
(i) To the best of such Grantor's
knowledge, the rights of such Grantor in or to the
Intellectual Property Collateral do not conflict with,
misappropriate or infringe upon the intellectual property
rights of any third party, and no written claim has been
asserted that the use of such Intellectual Property Collateral
does or may infringe upon the intellectual property rights of
any third party.
(ii) Such Grantor is the exclusive owner
or non-exclusive licensee of the entire and unencumbered
right, title and interest in and to the Intellectual Property
Collateral and is entitled to use all such Intellectual
Property Collateral without limitation, subject only to the
license terms of the Licenses.
(iii) The Intellectual Property
Collateral set forth on Schedule V hereto includes all of the
patents, patent registrations, patent applications, trademark
registrations and applications, copyright registrations and
applications and Licenses owned by such Grantor.
(iv) The Intellectual Property
Collateral is subsisting and has not been adjudged invalid or
unenforceable in whole or part, and to the best of such
Grantor's knowledge, is valid and enforceable. Such Grantor is
not aware of any uses of any item of Intellectual Property
Collateral that would reasonably be expected to lead to such
item becoming invalid or unenforceable.
(v) Such Grantor has made or performed
all filings, recordings and other acts and has paid all
required fees and taxes to maintain and protect its interest
in each and every item of Intellectual Property Collateral in
full force and effect, and to protect and maintain its
interest therein including, without limitation, recordations
of any of its interests in the Patents and Trademarks with the
U.S. Patent and Trademark Office, except with respect to any
items of Intellectual Property Collateral which such Grantor,
in the reasonable exercise of its business judgment, deems not
be material to the ongoing business of such
Security Agreement
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Grantor. Such Grantor has used proper statutory notice in
connection with its use of each patent, trademark and
copyright of the Intellectual Property Collateral.
(vi) No action, suit, investigation,
litigation or proceeding has been asserted or is pending or
threatened against such Grantor (i) based upon or challenging
or seeking to deny or restrict the use of any of the
Intellectual Property Collateral, or (ii) alleging that any
services provided by, processes used by, or products
manufactured or sold by, such Grantor infringe upon or
misappropriate any material item of patent, trademark,
copyright or any other proprietary right of any third party.
To the best of such Grantor's knowledge, no Person is engaging
in any activity that infringes upon or misappropriates the
Intellectual Property Collateral or upon the rights of such
Grantor therein. Except as set forth on Schedule V hereto,
such Grantor has not granted any license, release, covenant
not to ▇▇▇, non-assertion assurance, or other right to any
Person with respect to any material part of the Intellectual
Property Collateral. The consummation of the transactions
contemplated by the Loan Documents and other related documents
will not result in the termination or material impairment of
any material item of the Intellectual Property Collateral.
(vii) With respect to each License
material to the business of such Grantor: (A) such License is
valid and binding and in full force and effect against such
Grantor and represents the entire agreement between the
respective licensor and licensee with respect to the subject
matter of such License; (B) such Grantor has not received any
notice of termination or cancellation under such License; (C)
such Grantor has not received any notice of a breach or
default under such License, which breach or default has not
been cured; (D) such Grantor has not granted to any other
third party any rights, adverse or otherwise, under such
License, other than pursuant to a License set forth in
Schedule V hereto; and (E) neither such Grantor nor to the
best of such Grantor's knowledge, any other party to such
License is in breach or default of such License in any
material respect, and no event has occurred that, with notice
or lapse of time or both, would constitute such a breach or
default or permit termination, modification or acceleration
under such License.
Section 9. Further Assurances. (a) Each Grantor agrees that
from time to time, at the expense of such Grantor, such Grantor will promptly
execute and deliver, or otherwise authenticate, all further instruments and
documents, and take all further action, that may be necessary or reasonably
desirable, or that the Collateral Agent may request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be
granted by such Grantor hereunder or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral of
such Grantor. Without limiting the generality of the foregoing, each Grantor
will promptly with respect to Collateral of such Grantor: (i) at the reasonable
request of the Collateral Agent, ▇▇▇▇ conspicuously each chattel paper included
in Receivables, each Assigned Agreement and each of its records pertaining to
such Collateral with a legend, in form and substance reasonably satisfactory to
the Collateral Agent, indicating that such chattel paper, Assigned Agreement or
Collateral is subject to the security interest granted hereby; provided that no
such legend shall be required if such Collateral
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is delivered to the Collateral Agent pursuant to clause (ii) below; (ii) if any
such Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; (iii) execute or authenticate and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or reasonably desirable, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
(iv) deliver and pledge to the Collateral Agent for benefit of the Secured
Parties certificates representing Security Collateral that constitutes
certificated securities, accompanied by undated stock or bond powers executed in
blank; and (v) deliver to the Collateral Agent evidence that all other action
that the Collateral Agent may deem reasonably necessary or reasonably desirable
in order to perfect and protect the security interest created by such Grantor
under this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent
to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral of such Grantor without
the signature of such Grantor where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor will furnish to the Collateral Agent
from time to time statements and schedules further identifying and describing
the Collateral of such Grantor and such other reports in connection with such
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
Section 10. As to Equipment and Inventory. (a) Each Grantor
will keep the Equipment and Inventory of such Grantor (other than Inventory sold
in the ordinary course of business, Equipment and Inventory constituting mobile
goods or Equipment and Inventory in transit in the ordinary course of such
Grantor's business) at the places therefor specified in Section 8(a) or, upon 30
days' prior written notice to the Collateral Agent, at such other places in a
jurisdiction where all action required by Section 9 shall have been taken with
respect to such Equipment and Inventory (and, upon the taking of such action in
such jurisdiction, Schedule III hereto shall be automatically amended to include
such other places).
(b) Each Grantor will cause the Equipment of such Grantor
(other than any Equipment not material to the business of such Grantor) to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and will forthwith, or in the case of any loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection therewith
that are necessary or reasonably desirable to such end.
(c) Each Grantor will pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including, without limitation, claims for labor, materials and
supplies) against, the Equipment and Inventory of such Grantor, except to the
extent payment thereof is not required by Section 6.04
Security Agreement
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of the Credit Agreement. In producing its Inventory, each Grantor will comply
with all requirements of applicable law, including, without limitation, the Fair
Labor Standards Act, except where any such noncompliance would not be reasonably
likely to result in a Material Adverse Effect.
Section 11. Insurance. (a) Each Grantor will, at its own
expense, maintain insurance with respect to the Equipment and Inventory of such
Grantor in such amounts, against such risks, in such form and with such
insurers, as is customary with companies of a similar size and line of business
and shall otherwise be reasonably satisfactory to the Collateral Agent. Each
policy of each Grantor for general liability insurance shall provide for the
Collateral Agent as additional insured, and each policy for property damage
insurance shall provide for all losses (except for losses of less than
$1,000,000 per occurrence) to be paid directly to the Collateral Agent. Each
such policy shall in addition (i) name such Grantor and the Collateral Agent as
insured parties thereunder (without any representation or warranty by or
obligation upon the Collateral Agent) as their interests may appear, (ii)
contain the agreement by the insurer that any loss thereunder shall be payable
to the Collateral Agent, (iii) provide that there shall be no recourse against
the Collateral Agent for payment of premiums or other amounts with respect
thereto and (iv) provide that at least 10 days' prior written notice of
cancellation shall be given to the Collateral Agent by the insurer. Each Grantor
will, if so requested by the Collateral Agent, deliver to the Collateral Agent
original or duplicate policies or certificates of such insurance provided by the
insurance companies and, as often as the Collateral Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Further, each Grantor will, at the request of the Collateral Agent,
duly execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 9 and use reasonable efforts to cause
the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance
maintained by any Grantor pursuant to this Section 11 may be paid directly to
the Person who shall have incurred liability covered by such insurance. In case
of any loss involving damage to Equipment or Inventory when subsection (c) of
this Section 11 is not applicable, the applicable Grantor will make or cause to
be made the necessary repairs to or replacements of such Equipment or Inventory,
and any proceeds of insurance properly received by or released to such Grantor
shall be used by such Grantor, except as otherwise required hereunder or by the
Credit Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
(c) So long as no Event of Default shall have occurred
and be continuing, all insurance payments received by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
will be released by the Collateral Agent to the applicable Grantor for the
repair, replacement or restoration thereof, subject to such terms and conditions
with respect to the release thereof as the Collateral Agent may reasonably
require. To the extent that (i) the amount of any such insurance payments
exceeds the cost of any such repair, replacement or restoration, or (ii) such
insurance payments are not otherwise required by the applicable Grantor to
complete any such repair, replacement or restoration required hereunder, the
Collateral Agent will not be required to release the amount thereof to such
Grantor and may hold or continue to hold such amount as additional security for
the Secured Obligations of such Grantor (except that the Collateral Agent will
direct the applicable Collateral Bank to release to such Grantor any such amount
if and to the extent that any prepayment of
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Loans is required under the Credit Agreement in connection with the receipt of
such amount and such prepayment has been made). Upon the occurrence and during
the continuance of any Event of Default, all insurance payments in respect of
such Equipment or Inventory shall be paid to the Collateral Agent and shall, in
the Collateral Agent's sole discretion, (i) be released to the applicable
Grantor to be applied as set forth in the first sentence of this subsection (c)
or (ii) be held as additional Collateral hereunder or applied as specified in
Section 21(b).
Section 12. Place of Perfection; Records; Collection of
Receivables. (a) Each Grantor will not change its name, type of legal entity,
federal tax identification number, organizational identification number or
location from those set forth in Section 8(a) and (b) of this Agreement without
first giving at least 30 days' advance written notice to the Collateral Agent
and taking all action required by the Collateral Agent for the purpose of
perfecting or protecting the liens granted by this Agreement. Each Grantor will
also keep the originals of the Assigned Agreements and Related Contracts to
which such Grantor is a party and all originals of all chattel paper that
evidence Receivables of such Grantor, at the location therefor specified in
Section 8(a) or, upon 30 days' prior written notice to the Collateral Agent, at
such other location in a jurisdiction where all actions required by Section 9
shall have been taken with respect to the Collateral of such Grantor (and, upon
the taking of such action in such jurisdiction, Schedule IV hereto shall be
automatically amended to include such other location). Each Grantor will hold
and preserve its records relating to the Collateral, the Assigned Agreements,
the Related Contracts and chattel paper and will permit representatives of the
Collateral Agent at any time during normal business hours and with reasonable
prior notice to inspect and make abstracts from such records and other
documents.
(b) Except as otherwise provided in this subsection (b),
each Grantor will continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Receivables and the Related Contracts. In
connection with such collections, such Grantor may take (and, at the Collateral
Agent's direction upon the occurrence and during the continuance of an Event of
Default, will take) such action as such Grantor or the Collateral Agent may deem
reasonably necessary or advisable to enforce collection of the Receivables and
the Related Contracts; provided that the Collateral Agent shall have the right
at any time, upon the occurrence and during the continuance of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the obligors (each individually, a "CONTRACT OBLIGOR" and collectively,
the "CONTRACT OBLIGORS") under any Receivables or Related Contracts of the
assignment of such Receivables or Related Contracts to the Collateral Agent and
to direct such Contract Obligors to make payment of all amounts due or to become
due to such Grantor thereunder directly to the Collateral Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables or Related Contracts, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. Upon the occurrence and during the continuance of an
Event of Default, (i) all amounts and proceeds (including instruments) received
by such Grantor in respect of the Receivables and the Related Contracts of such
Grantor shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary indorsement) to be held as cash collateral and shall be
applied as provided in Section 21(b) and (ii) such Grantor will not adjust,
settle or compromise the amount or payment of any Receivable, release wholly or
partly any Contract Obligor thereof, or allow any credit or
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discount thereon. No Grantor will permit or consent to the subordination of its
right to payment under any of the Receivables or the Related Contracts to any
other indebtedness or obligations of the Contract Obligor thereof.
Section 13. As to Intellectual Property Collateral. (a) With
respect to each item of its Intellectual Property Collateral (except with
respect to any items of Intellectual Property Collateral which such Grantor, in
its reasonable business judgment, deems not to be material to the ongoing
business of such Grantor), each Grantor agrees to take, at its expense, all
necessary steps, including, without limitation, in the U.S. Patent and Trademark
Office, the U.S. Copyright Office and any other governmental authority, to (i)
maintain the validity and enforceability of each such item of Intellectual
Property Collateral and maintain each such item of Intellectual Property
Collateral in full force and effect, and (ii) pursue the registration and
maintenance of each patent, trademark, or copyright registration or application,
now or hereafter included in the Intellectual Property Collateral of such
Grantor, including, without limitation, the payment of required fees and taxes,
the filing of responses to office actions issued by the U.S. Patent and
Trademark Office, the U.S. Copyright Office or other governmental authorities,
the filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional,
continuation, continuation-in-part, reissue and renewal applications or
extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings. No Grantor shall, without the written consent of
the Collateral Agent, discontinue use of or otherwise abandon any Intellectual
Property Collateral, or abandon any right to file an application for letters
patent, trademark, or copyright, unless such Grantor shall have previously
determined that such use or the pursuit or maintenance of such Intellectual
Property Collateral is no longer desirable in the conduct of such Grantor's
business and that the loss thereof would not be reasonably likely to have a
Material Adverse Effect, in which case, such Grantor will give prompt notice of
any such abandonment to the Collateral Agent.
(b) Except as provided in this Section regarding the
discontinuation of use or abandonment of any Intellectual Property Collateral,
each Grantor agrees promptly to notify the Collateral Agent if such Grantor
learns (i) that any item of the Intellectual Property Collateral may have become
abandoned, placed in the public domain, invalid or unenforceable, or of any
adverse determination or development regarding such Grantor's ownership of any
of the Intellectual Property Collateral or its right to register the same or to
keep and maintain and enforce the same, or (ii) of any adverse determination or
the institution of any proceeding (including, without limitation, the
institution of any proceeding in the U.S. Patent and Trademark Office or any
court) regarding any item of the Intellectual Property Collateral.
(c) In the event that any Grantor becomes aware that any
item of the Intellectual Property Collateral material to the business of such
Grantor is being infringed or misappropriated by a third party, such Grantor
shall promptly notify the Collateral Agent and shall take such actions, at its
expense, as such Grantor or the Collateral Agent deems reasonable and
appropriate under the circumstances to protect such Intellectual Property
Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation.
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(d) Each Grantor shall use proper statutory notice in
connection with its use of each item of its Intellectual Property Collateral.
Except with respect of any item of Intellectual Property Collateral, which such
Grantor, in the reasonable exercise of its business judgment, deems not to be
material to the ongoing business of such Grantor, no Grantor shall do or permit
any act or knowingly omit to do any act whereby any of its Intellectual Property
Collateral may lapse or become invalid or unenforceable or placed in the public
domain.
(e) Except with respect of any item of Intellectual
Property Collateral, which such Grantor, in the reasonable exercise of its
business judgment, deems not to be material to the ongoing business of such
Grantor, each Grantor shall take all steps which it or the Collateral Agent
deems reasonable and appropriate under the circumstances to preserve and protect
each item of its Intellectual Property Collateral, including, without
limitation, maintaining the quality of any and all products or services used or
provided in connection with any of the Trademarks, consistent with the quality
of the products and services as of the date hereof, and taking all steps
necessary to ensure that all licensed users of any of the Trademarks use such
consistent standards of quality.
(f) With respect to its Intellectual Property Collateral,
each Grantor agrees to execute an agreement, in substantially the form set forth
in Exhibit C hereto (an "INTELLECTUAL PROPERTY SECURITY AGREEMENT"), for
recording the security interest granted hereunder to the Collateral Agent in
such Intellectual Property Collateral with the U.S. Patent and Trademark Office,
the U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
(g) Each Grantor agrees that, should it obtain an
ownership interest in any item of the type set forth in Section 1(g) which is
not on the date hereof a part of the Intellectual Property Collateral (the
"AFTER-ACQUIRED INTELLECTUAL PROPERTY"), (i) the provisions of Section 1 shall
automatically apply thereto, (ii) any such After-Acquired Intellectual Property
and, in the case of trademarks, the goodwill of the business connected therewith
or symbolized thereby, shall automatically become part of the Intellectual
Property Collateral subject to the terms and conditions of this Agreement with
respect thereto, (iii) such Grantor shall give prompt written notice thereof to
the Collateral Agent in accordance herewith and (iv) such Grantor shall execute
and deliver to the Collateral Agent an IP Security Agreement Supplement covering
such After-Acquired Intellectual Property as "Additional Collateral" thereunder
and as defined therein, and shall record such IP Security Agreement Supplement
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such After-Acquired Intellectual Property.
Section 14. Voting Rights; Dividends; Etc. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Security
Collateral of such Grantor or any part thereof for any purpose;
provided that such Grantor will not exercise or refrain from exercising
any such right if such action would have a material adverse effect on
the value of the Security Collateral or any part thereof.
Security Agreement
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Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the
Security Collateral of such Grantor if and to the extent that the
payment thereof is not otherwise prohibited by the terms of the Loan
Documents; provided that any and all dividends, interest and other
distributions paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security Collateral
received after the date of the initial extension of credit under the
Credit Agreement, shall be, and shall be forthwith delivered to the
Collateral Agent to hold as, Security Collateral and shall, if received
by such Grantor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of such Grantor
and be forthwith delivered to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
(ii) The Collateral Agent will execute and deliver (or
cause to be executed and delivered) to each Grantor all such proxies
and other instruments as such Grantor may reasonably request for the
purpose of enabling such Grantor to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends or interest payments that it is authorized
to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) All rights of each Grantor (x) to exercise or refrain
from exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 14(a)(i) shall,
upon notice to such Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would
otherwise be authorized to receive and retain pursuant to Section
14(a)(ii) shall automatically cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting
and other consensual rights and to receive and hold as Security
Collateral such dividends, interest and other distributions, subject to
obtaining the approval of the applicable HMO Regulator or Insurance
Regulator prior to the exercise by the Collateral Agent of its
foreclosure, voting, assignment or other rights with respect to any
Pledged Shares issued by any HMO Subsidiary or Insurance Subsidiary
where such approval is required for the Collateral Agent to exercise
such rights under the applicable Governmental Rules.
(ii) All dividends, interest and other distributions that
are received by any Grantor contrary to the provisions of paragraph (i)
of this Section 14(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
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Section 15. As to the Assigned Agreements. (a) Each Grantor
will at its expense:
(i) perform and observe in all material respects, all
terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements to which it is a party
in full force and effect, enforce the Assigned Agreements to which it
is a party in accordance with the terms thereof and take all such
action to such end as may be reasonably requested from time to time by
the Collateral Agent; and
(ii) furnish to the Collateral Agent promptly upon receipt
thereof copies of all written notices, requests and other documents
received by such Grantor under or pursuant to the Assigned Agreements
to which it is a party, and from time to time (A) furnish to the
Collateral Agent such information and reports regarding the Assigned
Agreements and such other Collateral of such Grantor as the Collateral
Agent may reasonably request and (B) upon reasonable request of the
Collateral Agent make to each other party to any Assigned Agreement to
which it is a party such demands and requests for information and
reports or for action as such Grantor is entitled to make thereunder.
(b) Each Grantor hereby consents on its behalf and on
behalf of its Subsidiaries to the assignment and pledge, for security purposes,
to the Collateral Agent for benefit of the Secured Parties of each Assigned
Agreement to which it is a party.
Section 16. Payments Under the Assigned Agreements. All moneys
received or collected pursuant to any Assigned Agreement shall be (i) released
to the applicable Grantor so long as no Event of Default shall have occurred and
be continuing or (ii) if any Event of Default shall have occurred and be
continuing, applied as provided in Section 21(b), subject to obtaining the
approval of the applicable HMO Regulator or Insurance Regulator prior to the
exercise by the Collateral Agent of its foreclosure, voting, assignment or other
rights with respect to any Assigned Agreements to which any HMO Subsidiary or
Insurance Subsidiary is a party where such approval is required for the
Collateral Agent to exercise such rights under the applicable Governmental
Rules.
Section 17. Transfers and Other Liens; Additional Shares. (a)
Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement or permitted under the terms of the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each
issuer of the Pledged Shares pledged by such Grantor not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to such Grantor, and (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities.
Security Agreement
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Section 18. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to
the Collateral Agent pursuant to Section 11,
(b) to ask for, demand, collect, ▇▇▇ for, recover,
compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral,
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
or (b) above, and
(d) to file any claims or take any action or institute
any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce compliance with the terms and conditions of any Assigned
Agreement or the rights of the Collateral Agent with respect to any of
the Collateral.
Section 19. Collateral Agent May Perform. If any Grantor fails
to perform any agreement contained herein, the Collateral Agent may, as the
Collateral Agent deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 22(b).
Section 20. The Collateral Agent's Duties. (a) The powers
conferred on the Collateral Agent hereunder are solely to protect the Secured
Parties' interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not any Secured Party
has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
(b) Anything contained herein to the contrary
notwithstanding, the Collateral Agent may from time to time, when the Collateral
Agent deems it to be necessary, appoint one or more subagents (each a
"SUBAGENT") for the Collateral Agent hereunder with respect to all or any part
of the Collateral. In the event that the Collateral Agent so appoints any
Subagent with respect to any Collateral, (i) the assignment and pledge of such
Collateral and the security
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interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Agreement to have been made to such Subagent, in addition
to the Collateral Agent, for the ratable benefit of the Secured Parties, as
security for the Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
with respect to such Collateral, and (iii) the term "Collateral Agent," when
used herein in relation to any rights, powers, privileges, interests and
remedies of the Collateral Agent with respect to such Collateral, shall include
such Subagent; provided that no such Subagent shall be authorized to take any
action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent.
Section 21. Remedies. If any Event of Default shall have
occurred and be continuing:
(a) Subject to obtaining the approval of the applicable
HMO Regulator or Insurance Regulator prior to the exercise by the
Collateral Agent of its foreclosure, voting, assignment or other rights
with respect to any of the Pledged Shares or the Pledged Debt issued by
any HMO Subsidiary or Insurance Subsidiary or any Assigned Agreement to
which any HMO Subsidiary or Insurance Subsidiary is a party where such
approval is required under the applicable Governmental Rules, the
Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default
under the N.Y. Uniform Commercial Code (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may: (i)
require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place and time
to be designated by the Collateral Agent that is reasonably convenient
to both parties; (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable; (iii) occupy
any premises owned or leased by any of the Grantors where the
Collateral or any part thereof is assembled or located for a reasonable
period in order to effectuate its rights and remedies hereunder or
under law, without obligation to such Grantor in respect of such
occupation; and (iv) exercise any and all rights and remedies of any of
the Grantors under or in connection with the Assigned Agreements, the
Receivables and the Related Contracts or otherwise in respect of the
Collateral, including, without limitation, any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the
Receivables and the Related Contracts. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten days'
notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
Security Agreement
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(b) Any cash held by or on behalf of the Collateral Agent
and all cash proceeds received by or on behalf of the Collateral Agent
in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral (but subject to Section 31, in the
case of any PHPA Collateral (as defined therein)) may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Collateral Agent pursuant to
Section 22) in whole or in part by the Collateral Agent for the ratable
benefit of the Secured Parties against, all or any part of the Secured
Obligations, in the following manner:
(i) first, to the Agents for any
amounts owing to the Agents pursuant to Section 10.03(a) of
the Credit Agreement or otherwise under the Loan Documents,
ratably in accordance with such respective amounts then owing
to the Agents; and
(ii) second, to the payment in full of
the other Secured Obligations, in each case equally and
ratably in accordance with their respective amounts thereof
then due and owing or as the Secured Parties holding the same
may otherwise agree.
Any surplus of such cash or cash proceeds held by or on the behalf of
the Collateral Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the applicable Grantor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) Subject to obtaining the approval of the applicable
HMO Regulator or Insurance Regulator prior to the exercise by the
Collateral Agent of its foreclosure, assignment or other rights with
respect to any Assigned Agreement to which any HMO Subsidiary or
Insurance Subsidiary is a party where such approval is required under
the applicable Governmental Rules, all payments received by any Grantor
under or in connection with any Assigned Agreement or otherwise in
respect of the Collateral shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary indorsement).
(d) The Collateral Agent may, without notice to any
Grantor except as required by law and at any time or from time to time,
charge, set-off and otherwise apply all or any part of the Secured
Obligations against any funds held in the Collateral Account and the
Debt Repayment Collateral Account or in any deposit account of such
Grantor.
(e) In the event of any sale or other disposition of any
of the Intellectual Property Collateral of any Grantor, the goodwill of
the business connected with and symbolized by any Trademarks subject to
such sale or other disposition shall be included therein, and such
Grantor shall supply to the Collateral Agent or its designee such
Grantor's know-how and expertise, and documents and things relating to
any Intellectual Property Collateral subject to such sale or other
disposition, and such Grantor's customer
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lists and other records and documents relating to such Intellectual
Property Collateral and to the manufacture, distribution, advertising
and sale of products and services of such Grantor.
(f) If the Collateral Agent shall determine to exercise
its right to sell all or any of the Security Collateral of any Grantor
pursuant to this Section 21, each Grantor agrees that, upon request of
the Collateral Agent, such Grantor will, at its own expense:
(i) execute and deliver, and cause each
issuer of such Security Collateral contemplated to be sold and
the directors and officers thereof to execute and deliver, all
such instruments and documents, and do or cause to be done all
such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, reasonably advisable to
register such Security Collateral under the provisions of the
Securities Act of 1933 (as amended from time to time, the
"SECURITIES ACT"), to cause the registration statement
relating thereto to become effective and to remain effective
for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto
and to the related prospectus that, in the opinion of the
Collateral Agent, are necessary or reasonably advisable, all
in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(ii) use commercially reasonable efforts
to qualify the Security Collateral under the state securities
or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of such Security Collateral, as
requested by the Collateral Agent;
(iii) cause each such issuer of such
Security Collateral, other than a third party issuer of
Pledged Debt, to make available to its security holders, as
soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act;
(iv) provide the Collateral Agent with
such other information and projections as may be necessary or,
in the opinion of the Collateral Agent, reasonably advisable
to enable the Collateral Agent to effect the sale of such
Security Collateral; and
(v) do or cause to be done all such
other acts and things as may be necessary to make such sale of
such Security Collateral or any part thereof valid and binding
and in compliance with applicable law.
(g) The Collateral Agent is authorized, in connection
with any sale of the Security Collateral pursuant to this Section 21,
to deliver or otherwise disclose to any prospective purchaser of the
Security Collateral: (i) any registration statement or prospectus, and
all supplements and amendments thereto, prepared pursuant to subsection
(f)(i) above; (ii) any information and projections provided to it
pursuant to subsection (f)(iv) above; and (iii) any other information
in its possession relating to such Security Collateral.
Security Agreement
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Section 22. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless the Collateral Agent and each other
Secured Party, each Secured Noteholder and each of their respective Affiliates
and their respective officers, directors, employees, agents, trustees and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement and, with respect
to the Collateral Agent, any and all action taken or omitted to be taken by the
Collateral Agent under Section 31, whether for the benefit of the Secured
Parties or the Secured Noteholders), except to the extent such claim, damage,
loss, liability or expense resulted from such Indemnified Party's gross
negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of its counsel and of any experts
and agents, that the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral of such Grantor, (iii) the exercise or enforcement of any of the
rights of the Collateral Agent or the other Secured Parties hereunder or (iv)
the failure by such Grantor to perform or observe any of the provisions hereof.
Section 23. Amendments; Waivers; Additional Grantors; Etc. (a)
No amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral Agent
or any other Secured Party to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
(b) Upon the execution and delivery by any Person of a
security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to
as an "ADDITIONAL GRANTOR" and shall be and become a Grantor hereunder and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and (ii) the supplemental
schedules I, II, III, IV and V attached to each Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I, II,
III, IV and V, respectively, hereto, and the Collateral Agent may attach such
supplemental schedules to such Schedules; and each reference to such Schedules
shall mean and be a reference to such Schedules as supplemented pursuant to each
Security Agreement Supplement.
Section 24. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to, in the case of the Borrower or the Collateral Agent, addressed to it at its
address specified in the Credit Agreement and, in the case of each Grantor other
than the Borrower, addressed to it at its address set forth opposite such
Security Agreement
- 28 -
Grantor's name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall, when mailed, telegraphed, telecopied or telexed, be effective when
deposited in the mails, delivered to the telegraph company, telecopied or
confirmed by telex answerback, respectively, addressed as aforesaid; except that
notices and other communications to the Collateral Agent shall not be effective
until received by the Collateral Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.
Section 25. Continuing Security Interest; Assignments under
the Credit Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the latest
of (i) the payment in full in cash of the Secured Obligations, (ii) the
termination of all Commitments under the Credit Agreement and (iii) the
termination or expiration of all Letters of Credit and all Secured Interest
Hedge Agreements, (b) be binding upon each Grantor, its successors and assigns
and (c) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender or Issuing Lender may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement as permitted by Section 10.04 thereunder (including, without
limitation, all or any portion of its Commitments, the Loans owing to it, any
issued Letters of Credit and the promissory notes, if any, held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender or Issuing Lender herein or
otherwise, in each case as provided in Section 10.04 of the Credit Agreement.
Section 26. Release; Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any Grantor in
accordance with the terms of the Loan Documents (other than sales of Inventory
in the ordinary course of business), the security interest in such Collateral
shall, without further action, automatically be released and the Collateral
Agent will, at such Grantor's expense, promptly execute and deliver to such
Grantor such UCC termination statements or partial releases, as applicable, and
similar documents that are necessary to remove notice of such liens from public
records and return to such Grantor any Collateral, including any Pledged Shares,
that it has pledged to the Collateral Agent, all of the foregoing as such
Grantor shall reasonably request; provided that at the time of such request and
such release (i) no Default shall have occurred and be continuing, (ii) such
Grantor shall have delivered to the Collateral Agent, at least ten Business Days
(or such shorter time as the Collateral Agent shall agree to) prior to the date
of the proposed release, a written request for release describing the item of
Collateral and the material terms of the sale, lease, transfer or other
disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of
release for execution by the Collateral Agent and a certificate of such Grantor
to the effect that the transaction is in compliance with the Loan Documents and
as to such other matters as the Collateral Agent may reasonably request and
(iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied, or any payment to be made in connection therewith, in
accordance with Section 2.09 of the Credit Agreement shall, to
Security Agreement
- 29 -
the extent so required, be paid or made to, or in accordance with the
instructions of, the Collateral Agent when and as required under Section 2.09 of
the Credit Agreement.
(b) Upon the latest of (i) the payment in full in cash of
the Secured Obligations, (ii) the termination of all Commitments under the
Credit Agreement and (iii) the termination or expiration of all Letters of
Credit and all Secured Interest Hedge Agreements, provided that the security
interest of the Collateral Agent in the Collateral Account shall survive until
the termination or expiration of all Letters of Credit and all Secured Interest
Hedge Agreements, pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the applicable
Grantor. Upon any such termination, the Collateral Agent will, at the applicable
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
Section 27. Security Interest Absolute. The obligations of
each Grantor under this Agreement are independent of the Secured Obligations or
any other obligations of any other Obligor under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Obligor or whether such
Grantor or any other Obligor is joined in any such action or actions. All rights
of the Collateral Agent and the other Secured Parties and the pledge, assignment
and security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Secured Obligations or
any other obligations of any other Obligor under or in respect of the
Loan Documents or any other amendment or waiver of or any consent to
any departure from any Loan Document, including, without limitation,
any increase in the Secured Obligations resulting from the extension of
additional credit to any Obligor or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of
any Collateral or any other collateral, or any taking, release or
amendment or waiver of or consent to departure from any guaranty, for
all or any of the Secured Obligations;
(d) any manner of application of any Collateral or any
other collateral, or proceeds thereof, to all or any of the Secured
Obligations, or any manner of sale or other disposition of any
Collateral or any other collateral for all or any of the Secured
Obligations or any other obligations of any other Obligor under or in
respect of the Loan Documents or any other assets of any Obligor or any
of its Subsidiaries;
(e) any change, restructuring or termination of the
corporate structure or existence of any Obligor or any of its
Subsidiaries;
Security Agreement
- 30 -
(f) any failure of any Secured Party to disclose to any
Obligor any information relating to the business, condition (financial
or otherwise), operations, performance, assets, nature of assets,
liabilities or prospects of any other Obligor now or hereafter known to
such Secured Party (each Grantor waiving any duty on the part of the
Secured Parties to disclose such information);
(g) the failure of any other Person to execute this
Agreement or any other Security Document, guaranty or agreement or the
release or reduction of liability of any Grantor or other grantor or
surety with respect to the Secured Obligations; or
(h) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance
on any representation by any Secured Party that might otherwise
constitute a defense available to, or a discharge of, such Grantor or
any other Grantor or a third party grantor of a security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Obligor or otherwise, all as
though such payment had not been made.
Section 28. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
Section 29. The Mortgages. In the event that any of the
Collateral hereunder is also subject to a valid and enforceable Lien under the
terms of any Mortgage and the terms of such Mortgage are inconsistent with the
terms of this Agreement, then with respect to such Collateral, the terms of such
Mortgage shall be controlling in the case of fixtures and real estate leases,
letting and licenses of, and contracts and agreements relating to the lease of,
real property, and the terms of this Agreement shall be controlling in the case
of all other Collateral.
Section 30. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York.
Section 31. Provisions Applicable to PHPA Collateral Prior to
Repayment of 7% Senior Notes. Notwithstanding anything herein to the contrary,
so long as the 7% Senior Notes remain outstanding, the following provisions
shall apply to the Collateral of PHPA covered by the grant of the security
interests by PHPA under Section 1 (the "PHPA COLLATERAL"):
(a) The grant of such security interests by PHPA in the
PHPA Collateral shall be for the equal and ratable benefit of the Secured
Parties and the Secured Noteholders, provided that no Secured Noteholder shall
have any rights or interests in any Collateral of any Grantor (other than PHPA)
hereunder (including without limitation the Debt Repayment Collateral Account).
The provision of such equal and ratable security interests under this Agreement
is intended solely to comply with the provisions of the 7% Senior Notes
Indenture to secure the unpaid Secured Note Obligations arising thereunder,
equally and ratably with the Secured
Security Agreement
- 31 -
Obligations arising under the Credit Agreement. To the extent that the rights
and benefits herein conferred on the Secured Noteholders under any 7% Senior
Note Agreement shall be held to exceed the rights and benefits required so to be
conferred by such provisions of the 7% Senior Notes Indenture, such rights and
benefits shall be limited so as to provide to such Secured Noteholders only
those rights and benefits that are required by such provisions of the 7% Senior
Notes Indenture. Any and all rights not herein expressly given to the Secured
Noteholders under any 7% Senior Notes Agreement are expressly reserved to the
Secured Parties, it being understood that in the absence of a requirement to
provide equal and ratable security set forth in the 7% Senior Notes Indenture,
the provision of such equal and ratable security interests under this Agreement
would not have been accepted by the Secured Parties.
(b) If any cash proceeds of any of the PHPA Collateral
(including proceeds of insurance thereon) are delivered to the Collateral Agent
pursuant to this Agreement, the Collateral Agent will immediately cause to be
established at a banking institution to be selected by the Collateral Agent a
cash collateral account (the "SHARED COLLATERAL ACCOUNT") (which (i) to the
extent of all investment property or financial assets (other than cash) shall be
a "securities account" (as defined in Section 8-501 of the UCC) in respect of
which the Collateral Agent shall be the "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC) and (ii) to the extent of any cash, shall be a
deposit account), and shall deposit such proceeds in the Shared Collateral
Account for the equal and ratable benefit of the Secured Parties and the Secured
Noteholders as additional collateral security hereunder for the Secured
Obligations and the Secured Note Obligations. The funds, if any, in the Shared
Collateral Account will be invested in accordance with Section 6 and any
interest or earnings thereon will be deposited and held in the Shared Collateral
Account. The balance from time to time in the Shared Collateral Account shall
constitute part of the Collateral granted by PHPA hereunder and shall not
constitute payment of any of the Secured Obligations and/or the Secured Note
Obligations until applied as provided herein. So long as no Event of Default (as
defined in the Credit Agreement) shall have occurred and be continuing, the
Collateral Agent will from time to time pay and release to PHPA upon its
instructions or, at the request of PHPA, to the Administrative Agent to be
applied to the Secured Obligations of PHPA under the Loan Documents, such
amount, if any, as is then on deposit in the Shared Collateral Account, to the
extent permitted to be released under the terms of the Credit Agreement and this
Agreement. At any time following the occurrence and during the continuance of an
Actionable Default, upon notice thereof by the Required Representative that an
Actionable Default shall have occurred and be continuing, the Collateral Agent
shall apply or cause to be applied (subject to collection) the balance from time
to time standing to the credit of the Shared Collateral Account to the payment,
ratably, of the Secured Obligations and the Secured Note Obligations then
outstanding, after payment of any amount under clause first of Section 21.
Without limiting the foregoing, at any time following the occurrence and during
the continuance of an Event of Default (as defined in the Credit Agreement), the
Collateral Agent may (and, if instructed by the Administrative Agent or the
Lenders as specified in Article IX of the Credit Agreement, shall) in its (or
their) discretion apply or cause to be applied (subject to collection) the
balance from time to time standing to the credit of any Collateral Account to
the payment of the Secured Obligations and the Secured Note Obligations in the
manner specified in the immediately succeeding paragraph.
(c) With respect to the rights and remedies of the
Collateral Agent hereunder with respect to the PHPA Collateral, the Collateral
Agent shall take such action or omit to take
Security Agreement
- 32 -
such action as shall be instructed by any Required Representative (as defined
herein). Any cash held by or on behalf of the Collateral Agent and all cash
proceeds received by or on behalf of the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the PHPA
Collateral (including the balance from time to time standing to the credit of
the Shared Collateral Account) may, in the discretion of the Collateral Agent,
be applied (and, upon notice to the Collateral Agent from the relevant Required
Representative that an Actionable Default shall have occurred and be continuing,
shall be applied) in whole or in part by the Collateral Agent for the ratable
benefit of the Secured Parties and Secured Noteholders against, all or any part
of the Secured Obligations, in the following manner:
(i) first, to the Collateral Agent for
any amounts owing to it pursuant to this Agreement or
otherwise under the Loan Documents with respect to the PHPA
Collateral; and
(ii) second, to the payment in full of
the other Secured Obligations and the Secured Note
Obligations, in each case equally and ratably in accordance
with their respective amounts thereof then due and owing or as
the Secured Parties and the Secured Noteholders holding the
same may otherwise agree; provided that any such amounts in
respect of the PHPA Collateral shall be applied first to the
Secured Obligations, up to the maximum amount permitted by the
terms and conditions of the 7% Notes Indenture.
(d) For purposes of this Section 31, the following terms
shall have their respective defined meanings:
"ACTIONABLE DEFAULT" means (a) with respect to the Secured
Obligations, any Event of Default (as defined in the Credit Agreement)
shall have occurred and, as a result thereof, the Loans shall have been
accelerated or become automatically due and payable and (b) with
respect to the Secured Note Obligations, any Event of Default (as
defined in the 7% Notes Indentures) shall have occurred and, as a
result thereof, the 7% Senior Notes shall have been accelerated or
become automatically due and payable.
"REQUIRED REPRESENTATIVES" means (a) at any time that no
Actionable Default has occurred or is continuing, the Administrative
Agent acting in its own discretion or at the direction of the Required
Lenders at such time pursuant to the Credit Agreement or (b) at any
time that an Actionable Default with respect to the Secured Obligations
and/or the Secured Note Obligations has occurred and is continuing, the
Administrative Agent and/or the 7% Senior Notes Trustee, as applicable,
on behalf of themselves, the Secured Parties and the Secured
Noteholders that own or hold more than 50% of the sum of the aggregate
amount of the outstanding Secured Obligations and Secured Note
Obligations at such time.
(e) The Collateral Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (i) the Collateral Agent shall not be subject to
any fiduciary or other implied duties, regardless of whether a Default under and
as defined in the Credit Agreement or the 7% Senior Notes Indenture has occurred
and is continuing, (ii) the Collateral Agent shall not have any duty to take any
Security Agreement
- 33 -
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Collateral Agent is
required to exercise in writing by any Required Representative, and (iii) except
as expressly set forth in this Section 31, the Collateral Agent shall not have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Collateral Agent or any of
its Affiliates in any capacity. The Collateral Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of any
Required Representative or in the absence of its own gross negligence or willful
misconduct. The Collateral Agent shall be deemed not to have knowledge of any
Event of Default (or any event or condition which upon notice, lapse of time or
both would, unless cured or waived, become such an Event of Default) under and
as defined in the Credit Agreement or the 7% Senior Notes Indenture or an
Actionable Default thereunder, unless and until written notice thereof is given
to the Collateral Agent by the Administrative Agent (in the case of the Secured
Obligations) and the 7% Senior Notes Trustee (in the case of the 7% Senior Notes
Indenture), and the Collateral Agent shall not be responsible for or have any
duty to ascertain or inquire into (w) any statement, warranty or representation
made by PHPA, the Borrower or any of its other Subsidiaries in or in connection
with this Agreement or any other document entered into in connection herewith,
(x) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (y) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or (z) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document. The Collateral Agent shall be entitled to rely upon, and
the Collateral Agent shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person. The Collateral Agent also may rely upon any statement made to it orally
or by telephone and believed by it to be made by the proper Person, and shall
not incur any liability for relying thereon. The Collateral Agent may consult
with legal counsel (who may be counsel for PHPA or another Obligor), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. The Collateral Agent shall be fully justified
in failing or refusing to taken any action under this Section 31 unless it shall
first receive such advice or concurrence of the Required Representatives as it
deems appropriate or it shall first be indemnified to its satisfaction by
Secured Parties and/or the Secured Noteholders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
(f) The provisions of this Section 31 shall have no
further force and effect, and the benefits of the Secured Noteholders under this
Agreement shall cease, upon the repayment, redemption or repurchase of all of
the 7% Senior Notes.
Security Agreement
- 34 -
IN WITNESS WHEREOF, each Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
PACIFICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
PACIFICARE HEALTH PLAN
ADMINISTRATORS, INC.,
an Indiana corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
PACIFICARE eHOLDINGS, INC.,
a California corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
Security Agreement
- 35 -
SENIORCO, INC.,
a Delaware corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
RxSOLUTIONS, INC.,
a California corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
PACIFICARE BEHAVIORAL HEALTH,
INC.,
a Delaware corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
Security Agreement
- 36 -
SECUREHORIZONS USA, INC.,
a California corporation
By _______________________________
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
Security Agreement
- 37 -
IN WITNESS WHEREOF, the Collateral Agent has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
JPMORGAN CHASE BANK,
as Collateral Agent
By _______________________________
Name:
Title:
Security Agreement
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
___________, 200_
____________________________________'
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
____________________________________
____________________________________
Attn: ______________________________
PacifiCare Health Systems, Inc.
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of June
3, 2003 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among PacifiCare Health Systems,
Inc., a Delaware corporation, as the Borrower, certain subsidiaries of the
Borrowers, as guarantors, the Lenders party thereto, JPMorgan Chase Bank, as
collateral agent (together with any successor collateral agent appointed
pursuant to Article IX of the Credit Agreement, the "COLLATERAL AGENT"), and
JPMorgan Chase Bank, as administrative agent for the Lenders, and (ii) the
Security Agreement dated as of June 3, 2003 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT")
between the Grantors from time to time party thereto and the Collateral Agent
for the Secured Parties and (to the extent provided therein) the Secured
Noteholders. Terms defined in the Credit Agreement or the Security Agreement and
not otherwise defined herein are used herein as defined in the Credit Agreement
or the Security Agreement.
Section 1. Grant of Security. The undersigned hereby assigns
and pledges to the Collateral Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Collateral Agent for the ratable benefit of
the Secured Parties, a security interest in, all of its right, title and
interest in and to all of the Collateral of the undersigned, whether now owned
or hereafter acquired by the undersigned, wherever located and whether now or
hereafter existing or arising, including, without limitation, the property and
assets of the undersigned set forth on the attached supplemental schedules to
the Schedules to the Security Agreement.
Section 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by the undersigned
under this Security Agreement Supplement and the Security Agreement secures the
payment of all obligations of the
Security Agreement Supplement
undersigned now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
Section 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV and V to
Schedules I, II, III, IV and V, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.
Section 4. Representations and Warranties. The undersigned
hereby makes each representation and warranty set forth in Section 8 of the
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.
Section 5. Obligations Under the Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors. The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.
Section 6. Governing Law. This Security Agreement Supplement
shall be governed by, and construed in accordance with, the law of the State of
New York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By ___________________________
Title:
Address for notices:
______________________
______________________
______________________
Security Agreement Supplement
EXHIBIT B TO THE
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby (a) acknowledges notice of, and
consents to the terms and provisions of, the Security Agreement dated as of June
3, 2003 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "SECURITY AGREEMENT", the terms defined therein being
used herein as therein defined) between _________________, (the "GRANTOR"),
certain other grantors from time to time party thereto and JPMorgan Chase Bank,
as Collateral Agent (the "COLLATERAL AGENT") for the Secured Parties and (to the
extent provided therein) the Secured Noteholders referred to therein, (b)
consents in all respects to the pledge and assignment to the Collateral Agent of
all of the Grantor's right, title and interest in, to and under [insert
description of Assigned Agreement] (the "ASSIGNED AGREEMENT") pursuant to the
Security Agreement, (c) acknowledges that the Grantor has provided it with
notice of the right of the Collateral Agent in the exercise of its rights and
remedies under the Security Agreement to make all demands, give all notices,
take all actions and exercise all rights of the Grantor under the Assigned
Agreement, and (d) agrees with the Collateral Agent that:
(i) All payments made in respect of the paragraph above
shall be made by the undersigned irrespective of, and without deduction
for, any counterclaim, defense, recoupment or set-off and shall be
final, and the undersigned will not seek to recover from any Secured
Party for any reason any such payment once made;
(ii) The Collateral Agent or its designee shall be
entitled to exercise any and all rights and remedies of the Grantor
under the Assigned Agreement in accordance with the terms of the
Security Agreement, and the undersigned shall comply in all respects
with such exercise;
(iii) In the event of a default by the Grantor in the
performance of any of its obligations under the Assigned Agreement, or
upon the occurrence or non-occurrence of any event or condition under
the Assigned Agreement which would immediately or with the passage of
any applicable grace period or the giving of notice, or both, enable
the undersigned to terminate or suspend its obligations under the
Assigned Agreement, the undersigned shall not terminate the Assigned
Agreement until it first gives written notice thereof to the Collateral
Agent and permits the Grantor and the Collateral Agent the period of
time afforded to the Grantor under the Assigned Agreement to cure such
default; and
(iv) The undersigned shall deliver to the Collateral
Agent, concurrently with the delivery thereof to the Grantor, a copy of
each notice, request or demand given by the undersigned pursuant to the
Assigned Agreement.
(v) Except as specifically provided in this Consent and
Agreement, neither the Collateral Agent nor any other Secured Party
shall have any liability or obligation under the Assigned Agreement as
a result of this Consent and Agreement, the Security Agreement or
otherwise.
Consent and Agreement
- 2 -
This Consent and Agreement shall be binding upon the
undersigned and its successors and assigns, and shall inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Secured Parties and (to the extent provided in the Security Agreement) the
Secured Noteholders and their successors, transferees and assigns. This Consent
and Agreement shall be governed by and construed in accordance with the law of
the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this
Consent and Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By __________________________________
Name:
Title:
Consent and Agreement
EXHIBIT C TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"IP SECURITY AGREEMENT") dated as of June 3, 2003, is made by the Persons listed
on the signature pages hereof (collectively, the "GRANTORS") in favor of
JPMorgan Chase Bank ("JPMCB"), as collateral agent (the "COLLATERAL AGENT") for
the Secured Parties (as defined in the Credit Agreement referred to below) [and
(to the extent provided in the Security Agreement referred to below) the Secured
Noteholders](1).
WHEREAS, PacifiCare Health Systems, Inc., a Delaware
corporation, and certain of its subsidiaries have entered into a Credit
Agreement dated as of June 3, 2003 (as amended and restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), with JPMCB, as
Administrative Agent, the Collateral Agent, and the Lenders party thereto. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as defined in the Credit Agreement.
WHEREAS, as a condition precedent to the making of Loans by
the Lenders and the issuance of Letters of Credit by the Issuing Lenders under
the Credit Agreement, each Grantor has executed and delivered that certain
Security Agreement dated as of June 3, 2003 between the Grantors and the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT").
WHEREAS, under the terms of the Security Agreement, Grantors
have granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties [and (to the extent provided therein) the Secured Noteholders],
and have agreed as a condition thereof to execute this IP Security Agreement
covering such intellectual property for recording with the U.S. Patent and
Trademark Office, the United States Copyright Office and other governmental
authorities.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as
follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to
the Collateral Agent for the ratable benefit of the Secured Parties [and (to the
extent provided therein) the Secured Noteholders] a security interest in and to
all of such Grantor's right, title and interest in and to the following (the
"COLLATERAL"):
------------------------
(1) Insert only if this agreement is to be executed by PHPA.
Intellectual Property Security Agreement
(i) the United States, international, and
foreign patents, patent applications and patent licenses set
forth in Schedule A hereto (as such Schedule A may be
supplemented from time to time by supplements to the Security
Agreement and this IP Security Agreement, each such supplement
being in substantially the form of Exhibit D to the Security
Agreement (an "IP SECURITY AGREEMENT SUPPLEMENT"), executed
and delivered by such Grantor to the Collateral Agent from
time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "PATENTS");
(ii) the United States and foreign trademark and
service ▇▇▇▇ registrations, applications, and licenses set
forth in Schedule B hereto (as such Schedule B may be
supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time) (the "TRADEMARKS");
(iii) the copyrights, United States and foreign
copyright registrations and applications and copyright
licenses set forth in Schedule C hereto (as such Schedule C
may be supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time) (the "COPYRIGHTS");
(iv) any and all claims for damages for past,
present and future infringement, misappropriation or breach
with respect to the Patents, Trademarks and Copyrights, with
the right, but not the obligation, to ▇▇▇ for and collect, or
otherwise recover, such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by each Grantor
under this IP Security Agreement secures the payment of [(a)] the Secured
Obligations (as defined in the Security Agreement) of such Grantor now or
hereafter existing [and (b) (to the extent provided in the Security Agreement)
the Secured Note Obligations (as defined therein)], whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, premiums, penalties, fees, indemnifications, contract causes of
action, costs, expenses or otherwise.
SECTION 3. Recordation. Each Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer record this IP Security Agreement.
SECTION 4. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
Intellectual Property Security Agreement
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 5. Grants, Rights and Remedies. This IP Security
Agreement has been entered into in conjunction with the provisions of the
Security Agreement. Each Grantor does hereby acknowledge and confirm that the
grant of the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement shall be
governed by, and construed in accordance with, the law of the State of New York.
Intellectual Property Security Agreement
IN WITNESS WHEREOF, each Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
PACIFICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
By___________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
PACIFICARE HEALTH PLAN
ADMINISTRATORS, INC.,
an Indiana corporation
By____________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
PACIFICARE eHOLDINGS, INC.,
a California corporation
By_____________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Intellectual Property Security Agreement
SENIORCO, INC.,
a Delaware corporation
By______________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
RxSOLUTIONS, INC.,
a California corporation
By______________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
PACIFICARE BEHAVIORAL HEALTH, INC.,
a Delaware corporation
By______________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Intellectual Property Security Agreement
SECUREHORIZONS USA, INC.,
a California corporation
By_______________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Intellectual Property Security Agreement
IN WITNESS WHEREOF, the Collateral Agent has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
JPMORGAN CHASE BANK,
as Collateral Agent
By______________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Intellectual Property Security Agreement
EXHIBIT D TO THE
SECURITY AGREEMENt
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"IP SECURITY AGREEMENT Supplement") dated as of ___________, 200_, is made by
the Person listed on the signature page hereof (the "Grantor") in favor of
JPMorgan Chase Bank, ("JPMCB"), as collateral agent (the "COLLATERAL AGENT") for
the Secured Parties (as defined in the Credit Agreement referred to below) [and
(to the extent provided therein) the Secured Noteholders](1).
WHEREAS, PacifiCare Health Systems, Inc., a Delaware
corporation, and certain of its subsidiaries have entered into a Credit
Agreement dated as of June 3, 2003 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
with JPMCB, as Administrative Agent, the Collateral Agent, and the Lenders party
thereto. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as defined in the Credit Agreement.
WHEREAS, pursuant to the Credit Agreement, the Grantor and
certain other Persons have executed and delivered that certain Security
Agreement dated as of June 3, 2003 between the Grantor, such other Persons and
the Collateral Agent (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "SECURITY AGREEMENT"). To create a
short form version of the Security Agreement covering certain intellectual
property of the Grantor and such other Persons for recording with the U.S.
Patent and Trademark Office, the United States Copyright Office and other
governmental authorities, the Grantor and such other Persons have executed and
delivered that certain Intellectual Property Security Agreement made by the
Grantor and such other Persons to the Collateral Agent dated as of June 3, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "IP SECURITY AGREEMENT").
WHEREAS, under the terms of the Security Agreement and the IP
Security Agreement, the Grantor has granted a security interest in the
Additional Collateral (as defined in Section 1 below) of the Grantor to the
Collateral Agent for the ratable benefit of the Secured Parties [and (to the
extent provided therein) the Secured Noteholders] and has agreed as a condition
thereof to execute this IP Security Agreement Supplement for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as
follows:
----------------------------------
(1) Insert only if this supplement is to be executed by PHPA.
Intellectual Property Security Agreement Supplement
- 2 -
SECTION 1. Confirmation of Grant of Security. The Grantor
hereby acknowledges and confirms the grant of a security interest to the
Collateral Agent for the ratable benefit of the Secured Parties [and (to the
extent provided therein) the Secured Noteholders] under the Security Agreement
and the IP Security Agreement in and to all of the Grantor's right, title and
interest in and to the following (the "ADDITIONAL COLLATERAL"):
(i) The United States, international, and
foreign patents, patent applications, and patent licenses set
forth in Schedule A hereto, together with all reissues,
divisions, continuations, continuations-in-part, extensions
and reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "PATENTS");
(ii) The United States and foreign trademark and
service ▇▇▇▇ registrations, applications, and licenses set
forth in Schedule B hereto (the "TRADEMARKS");
(iii) The copyrights, United States and foreign
copyright registrations and applications and copyright
licenses set forth in Schedule C hereto (the "COPYRIGHTS");
(iv) any and all claims for damages for past,
present and future infringement, misappropriation or breach
with respect to the Patents, Trademarks and Copyrights, with
the right, but not the obligation, to ▇▇▇ for and collect, or
otherwise recover, such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Supplement to Security Agreement and IP Security
Agreement. Schedule V to the Security Agreement and Schedules A, B and C to the
IP Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.
SECTION 3. Recordation. The Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer to record this IP Security Agreement
Supplement.
SECTION 4. Governing Law. This IP Security Agreement
Supplement shall be governed by, and construed in accordance with, the law of
the State of New York.
Intellectual Property Security Agreement Supplement
- 3 -
IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
[NAME OF GRANTOR]
By_________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Intellectual Property Security Agreement Supplement
EXHIBIT D-1
Form of Opinion of Counsel to the Borrower
June 3, 2003
JPMorgan Chase Bank
In its capacity as Administrative Agent and
Collateral Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Lenders listed on SCHEDULE I
Attached to this opinion letter
RE: PACIFICARE HEALTH SYSTEMS, INC.
Ladies and Gentlemen:
We have acted as special transaction counsel for PacifiCare Health Systems,
Inc., a Delaware corporation (the "Company"), in connection with the credit
facilities in the aggregate principal amount of up to $300,000,000 pursuant to
the Credit Agreement, dated as of the date hereof (the "Agreement"), by and
among the Company, the Subsidiary Guarantors party thereto, the banks, financial
institutions and other institutional lenders party thereto (the "Lenders"), ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Bank ("JPMCB"), in its capacity as administrative agent for the
benefit of the Lenders (in such capacity, the "Administrative Agent") and JPMCB,
in its capacity as collateral agent for the benefit of the Secured Parties and
(to the extent provided therein) the Secured Noteholders (as defined in the
Security Agreement) (in such capacity, the "Collateral Agent"). The Company and
the Subsidiary Guarantors are sometimes referred to herein as the "Obligors" and
each individually as a "Obligor."
This opinion is furnished to you at the request and on behalf of the Company
pursuant to Section 5.01(b) of the Agreement. Capitalized terms used but not
defined herein have the meanings given them in the Agreement.
In connection with this opinion, we have examined the following documents:
(a) the Agreement;
(b) each separate Term Note and Revolving Credit Note,
each dated the date hereof, executed and delivered by the Company pursuant to
Section 2.08(g) of the Agreement, on the date hereof (collectively, the
"Notes");
Opinion of Counsel to the Borrower
- 2 -
(c) the Security Agreement, dated as of the date hereof
(the "Security Agreement"), by and between the Company and the Subsidiary
Guarantors party thereto, on the one hand, and the Collateral Agent, on the
other hand;
(d) the Intellectual Property Security Agreement, dated
as of the date hereof, by and between the Company and the Subsidiary Guarantors
party thereto, on the one hand, and the Collateral Agent, on the other hand; and
(e) (i) the UCC-1 financing statement naming the Company
as debtor and the Collateral Agent as secured party to be filed with the Uniform
Commercial Code Section of the Secretary of State of the State of Delaware (the
"Company Financing Statement"), (ii) the UCC-1 financing statement naming
PacifiCare eHoldings, Inc., a California corporation ("eHoldings"), as debtor
and the Collateral Agent as secured party to be filed with the Uniform
Commercial Code Division of the Secretary of State of the State of California
(the "eHoldings Financing Statement"), (iii) the UCC-1 financing statement
naming SeniorCo, Inc., a Delaware corporation ("SeniorCo"), as debtor and the
Collateral Agent as secured party to be filed with the Uniform Commercial Code
Section of the Secretary of State of the State of Delaware (the "SeniorCo
Financing Statement"), (iv) the UCC-1 financing statement naming Rx Solutions,
Inc., a California corporation ("Rx Solutions"), as debtor and the Collateral
Agent as secured party to be filed with the Uniform Commercial Code Division of
the Secretary of State of the State of California (the "Rx Solutions Financing
Statement"), (v) the UCC-1 financing statement naming PacifiCare Behavioral
Health, Inc., a Delaware corporation ("Behavioral Health"), as debtor and the
Collateral Agent as secured party to be filed with the Uniform Commercial Code
Section of the Secretary of State of the State of Delaware (the "Behavioral
Health Financing Statement"), and (vi) the UCC-1 financing statement naming
SecureHorizons, Inc., a California corporation ("SecureHorizons"), as debtor and
the Collateral Agent as secured party to be filed with the Uniform Commercial
Code Division of the Secretary of State of the State of California (the
"SecureHorizons Financing Statement" and, together with the Company Financing
Statement, the eHoldings Financing Statement, the SeniorCo Financing Statement,
the Rx Solutions Financing Statement and the Behavioral Health Financing
Statement, the "Financing Statements"), a copy of each of which UCC-1 financing
statements is attached to this opinion letter as ATTACHMENT A.
In addition, for purposes of rendering our opinions below, we have
examined the following:
(f) the Amended and Restated Certificate of Incorporation
of the Company as certified by the Secretary of State of the State of Delaware
on May 20, 2003;
(g) the Bylaws of the Company, as amended and certified
to us by an officer of such entity to be in full force and effect as of the date
of this opinion letter;
(h) the resolutions adopted by the Audit Committee of the
Board of Directors of the Company at a meeting on May 27, 2003 and as certified
to us by the Secretary of the Company not to have been amended, modified,
superseded or revoked since such date and to be in full force and effect as of
the date hereof;
Opinion of Counsel to the Borrower
- 3 -
(i) the Certificate of Status issued by the Secretary of
State of the State of Delaware, stating that the Company is a domestic
corporation in good standing in such state, dated June 2, 2003;
(j) the Certificate of Status issued by the Secretary of
State of the State of California stating that the Company is a foreign
corporation in good standing in such state, dated June 2, 2003;
(k) the certificate of tax good standing for the Company
issued by the Franchise Tax Board of the State of California, dated May 29,
2003;
Items (a) through (d) above are hereinafter from time to time collectively
referred to as the "Transaction Documents." Items (f) and (g) above are
hereinafter collectively referred to as the "Company Organizational Documents."
Items (i) through (k) above are hereinafter collectively referred to as the
"Good Standing Certificates."
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Transaction Documents by the various parties and upon originals
or copies certified to our satisfaction of such records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinions expressed below. Where we
render an opinion "to our knowledge" or concerning an item "known to us" or our
opinion otherwise refers to our knowledge, it is based solely upon (a) an
inquiry of attorneys currently within this firm who represent the Company in
connection with this transaction or who regularly perform substantive legal
services for the Company and (b) receipt of certificates executed by officers of
the Company covering such factual matters. We have made no further
investigation.
In rendering the opinions expressed below, we have assumed, without
investigation: (a) the genuineness and authenticity of all signatures on
original documents (other than the signatures of the Company on the Transaction
Documents); (b) the authenticity of all documents submitted to us as originals;
(c) the conformity to originals of all documents submitted to us as copies; (d)
the accuracy, completeness and authenticity of certificates of public officials;
(e) the due organization or formation, valid existence, good standing in the
jurisdiction of organization and the corporate or similar power to enter into,
and perform the Transaction Documents in accordance with their respective terms,
of all Persons party to any Transaction Document (except that such assumption is
not made as to the due incorporation, valid existence and good standing in the
State of Delaware and corporate power of the Company and as to the good standing
of the Company as a foreign corporation qualified to do business in the State of
California); (f) the due authorization, execution and delivery of all
Transaction Documents (except that such assumption is not made as to the due
authorization, execution and delivery by the Company of the Transaction
Documents) in each case where the authorization, execution and delivery thereof
by such parties are prerequisites to the effectiveness of such documents; (g)
the legal capacity of all individuals executing and delivering documents to so
execute and deliver; (h) that the Transaction Documents are valid and binding
obligations, enforceable in accordance with their respective terms against all
Persons party thereto (except that such assumption is not made as to each of the
Obligors with respect to the Transaction Documents to which each is a party);
and (i) there are no extrinsic agreements or understandings among the parties to
the Transaction
Opinion of Counsel to the Borrower
- 4 -
Documents that would modify or interpret the terms of the Transaction Documents
or the respective rights or obligations of the parties thereunder.
Our opinion in paragraph 1 below as to the good standing of the Company as a
domestic corporation in the State of Delaware and the Company as a foreign
corporation in the State of California is based solely upon our review of the
applicable Good Standing Certificates. We have made no further investigation.
Except with respect to our opinions expressed (i) in paragraph 3 below, in which
our opinion as to enforceability and binding effect of the Transaction Documents
is provided solely with respect to the laws of the State of New York, (ii) in
paragraphs 6, 8 and 9 below, in which our opinions in such paragraphs are based
solely upon our examination of the New York Uniform Commercial Code as set forth
in the 2003 Gold Book ▇▇▇▇▇▇ Pamphlet Edition (the "NYUCC") and (iii) in
paragraph 7 below with respect to the Financing Statements identified therein to
be filed with the filing office of the Secretary of State of the State of
Delaware, in which our opinion in such paragraph is based upon our examination
of the perfection requirements of the NYUCC and the Delaware Uniform Commercial
Code, our opinions are expressed only with respect to applicable federal laws of
the United States of America, the laws of the State of California and the
General Corporation Law of the State of Delaware. We express no opinion as to
whether the laws of any particular jurisdiction apply, and no opinion to the
extent that the laws of any jurisdiction other than those identified above are
applicable to the subject matter hereof.
In addition, we express no opinion herein with respect to the applicability or
effect of, or compliance with any pension, employee benefit or tax laws,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended, the Internal Revenue Code and the California Revenue and
Taxation Code, the Tax Laws of the State of New York or other similar laws,
statutes, acts, regulations or ordinances, or any decrees or decisional law with
respect thereto, or any banking, land use, environmental or similar law. We
further express no opinion herein with respect to the applicability or effect
of, or compliance with, any state or federal law, rule or regulation relating to
antitrust or limitations on corporate distributions, nor, except as provided in
our opinion in paragraph 11 below, as to compliance with any antifraud law, rule
or regulation relating to securities or the sale or issuance thereof.
In addition, we express no opinion herein with respect to the applicability or
effect of, or compliance with, any law, rule or regulation relating to, or any
consent, approvals, authorizations or orders of, and filings, registrations, and
qualifications required by, any federal, state or local regulatory body
governing, regulating or relating to health maintenance organizations, insurance
companies or third party administrators of health related benefits, federal
Medicare laws or the Health Insurance Portability and Accountability Act of
1996.
We have not made or undertaken to make any investigation of the state of title
to the Collateral described in the Transaction Documents and the Financing
Statements. We have assumed, without investigation, that the descriptions of the
personal property Collateral contained in the Transaction Documents are accurate
and sufficient within the meaning of Section 9-108 of the NYUCC to enable a
subsequent purchaser or mortgagee to identify such Collateral. With respect to
our opinions in paragraphs 6 through 9 below, with your further permission, we
have assumed, without investigation, that the applicable Obligor has rights, or
the power to transfer to a secured
Opinion of Counsel to the Borrower
- 5 -
party rights, in the Collateral in which it purports to create a security
interest under the Transaction Documents to which it is a party within the
meaning and for the purposes of Section 9-203(b)(2) of the NYUCC, and our
opinions expressed below are expressed only to the extent such Obligor has such
rights. We express no opinion with respect to the existence or nature of such
rights. We have further assumed that the Collateral Agent and the Lenders have
given value within the meaning of NYUCC Section 9-203(b)(1) and that none of the
Secured Parties or the Collateral Agent has any notice of an adverse claim or
knowledge that any security interest created by the Security Agreement in the
Collateral violates the rights of another secured party.
Except as expressly set forth in paragraphs 8 and 9 below, we express no opinion
as to the relative priority of any security interest, lien, charge or other
encumbrance created by or under any of the Transaction Documents, nor as to the
effect on the Collateral Agent's security interests for the Secured Parties and
the Secured Noteholders of any rights or interests, if any, entitled to
seniority thereto.
With respect to our opinion in paragraphs 6 through 9 below, we express no
opinion as to property and transactions excluded from coverage under Article 9
of the NYUCC, including pursuant to Section 9-109 thereof.
With regard to our opinion in paragraph 9 below, we have assumed that the
original promissory notes evidencing the Initial Pledged Debt (as defined in the
Security Agreement) each are instruments within the meaning of NYUCC Section
9-102(a)(47).
With regard to our opinion in paragraph 11 below, we have relied upon the
representations of the Company as to its intent, as the factual basis for the
Company's qualification for an exemption under Rule 3a-2 under the Investment
Company Act of 1940, as amended, and that certain SEC Order dated May 28, 2003
pursuant to Section 3(b)(2) of the Investment Company Act regarding certain of
the Company's Subsidiaries granting a temporary exemption from all provisions of
the Investment Company Act of 1940, as amended, and we have done no further
investigation.
We have assumed the due filing, at the time the Loans are initially made and
this opinion letter is issued, of (i) each of the Company Financing Statement,
the SeniorCo Financing Statement and the Behavioral Health Financing Statement
with the UCC Section of the Secretary of State of the State of Delaware and (ii)
each of the eHoldings Financing Statement, the Rx Solutions Financing Statement
and the SecureHorizons Financing Statement with the UCC Division of the
Secretary of State of the State of California.
On the basis of the foregoing, in reliance thereon, and with the foregoing
qualifications, we are of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has the corporate power to
enter into and perform its obligations under the Transaction Documents and to
own, lease and license its properties and to transact its business as currently
conducted. The Company is qualified as a foreign corporation to do business and
is in good standing in the State of California.
Opinion of Counsel to the Borrower
- 6 -
2. The execution, delivery and performance by the Company of each
of the Transaction Documents and the issuance by the Company of the Notes and
each other promissory note of the Company in accordance with Section 2.08(g) of
the Agreement and in the form of Exhibit F-1 or F-2 as required by Section
2.08(g) of the Agreement have been duly authorized by all requisite corporate
action on the part of the Company and do not require any further approval of its
directors or stockholders. The Company has duly executed and delivered each of
the Transaction Documents.
3. As to each Obligor, each of the Transaction Documents to which
such Obligor is a party constitutes, and each other promissory note of the
Company when executed and delivered by the Company for value in accordance with
Section 2.08(g) of the Agreement and in the form of Exhibit F-1 or F-2 as
required by Section 2.08(g) of the Agreement will constitute, a valid and
binding obligation of such Obligor, enforceable against such Obligor in
accordance with its terms.
4. No consents, approvals, authorizations, registrations,
declarations or filings are required to be obtained or made by the Company from
or with any federal or California governmental authority or pursuant to the
General Corporation Law of the State of Delaware in order for the Company to
execute, deliver or perform its obligations under the Transaction Documents,
except for such as have been obtained or made and are in full force and effect.
5. The execution and delivery by the Company of each of the
Transaction Documents, the issuance by the Company of the Notes and each other
promissory note of the Company in accordance with Section 2.08(g) of the
Agreement and in the form of Exhibit F-1 or F-2 as required by Section 2.08(g)
of the Agreement and the performance as of the Closing Date by the Company of
the Transaction Documents will not violate or contravene or be in conflict with,
or result in the imposition of any contractual pledge, security interest or
other encumbrance in or on any of the property of the Company pursuant to, or
require any consent or approval under, except for such as have been obtained or
made and are in full force and effect: (a) any provision of the Company
Organizational Documents; (b) any provision of the Delaware General Corporation
Law, or any provision of any federal or California law, rule or regulation
applicable to the Company in commercial transactions of the nature contemplated
by the Transaction Documents; or (c) any material term or condition of any
written agreement, contract, undertaking, indenture or instrument to which the
Company is a party and which has been represented to us by the Company to be
material to the business of the Company, in each case which is listed on
SCHEDULE II attached to this opinion letter.
6. The Security Agreement is sufficient to create a security
interest in favor of the Collateral Agent under the NYUCC in the personal
property Collateral identified and described therein.
7. Each of the Company Financing Statement, the SeniorCo
Financing Statement and the Behavioral Health Financing Statement is in form
sufficient for filing with the filing office of the Secretary of State of the
State of Delaware, and each of the eHoldings Financing Statement, the Rx
Solutions Financing Statement and the SecureHorizons Financing Statement is in
form sufficient for filing with the filing office of the Secretary of State of
the State of California. Upon the due filing of such Financing Statements with
the UCC Section of the
Opinion of Counsel to the Borrower
- 7 -
Secretary of State of the State of Delaware or the UCC Division of the Secretary
of State of the State of California, as applicable, the security interest of the
Collateral Agent for the Secured Parties in the personal property Collateral
identified and described in the Security Agreement and such Financing Statements
will be perfected to the extent that a security interest in such Collateral can
be perfected by the filing of a UCC-1 financing statement in such filing office.
8. The security interest granted by the Obligors party to the
Security Agreement has attached to the Obligors' rights in the original
certificates evidencing equity securities comprising Initial Pledged Shares, as
defined in the Security Agreement (the "Pledged Certificates"). Upon the
Collateral Agent's having "control" of the Pledged Certificates, within the
meaning of NYUCC Section 8-106, by taking delivery of the Pledged Certificates,
within the meaning of NYUCC Section 8-301, and maintaining continuous physical
possession thereof within the State of New York, the security interest granted
therein to the Collateral Agent will constitute a valid and perfected security
interest in the Initial Pledged Shares under NYUCC Section 9-313(a), entitled to
the priority provided by NYUCC Section 9-328(b)(1).
9. The security interest granted by the Obligors party to the
Security Agreement has attached to the Obligors' rights in the original
promissory notes evidencing the Initial Pledged Debt, as defined in the Security
Agreement (the "Pledged Notes"). Upon the Collateral Agent's taking and
maintaining continuous physical possession of the Pledged Notes within the State
of New York, the security interests granted by the Obligors therein to the
Collateral Agent will constitute a valid and perfected security interest under
NYUCC Section 9-313(a), entitled to the priority provided by NYUCC Section
9-330(d).
10. To our knowledge, there are no legal or governmental
proceedings pending or overtly threatened to which the Company is a party or to
which any of its properties is subject other than the actions, suits or
proceedings disclosed on Schedule 4.06(a) of the Agreement and proceedings that
would not have a Material Adverse Effect or otherwise purport to affect the
legality, validity or enforceability of any of the Transaction Documents.
11. (a) Neither the Company nor any Subsidiary Guarantor is an
"investment company", as such term is defined in the Investment Company Act of
1940, and (b) neither the Company nor any Subsidiary Guarantor is a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935.
The opinions expressed herein with respect to the laws of the State of New York
are subject to and limited by the following qualifications, assumptions,
limitations and exceptions:
(a) Our opinions are subject to the effect of the
limitations imposed by the NYUCC relating to or affecting the rights and
remedies available to secured creditors (e.g. NYUCC Sections 9-601 through 9-629
regarding the exercise of rights and remedies with respect to the personal
property Collateral).
(b) We express no opinion as to the enforceability of
"choice of forum" or "submission to jurisdiction" provisions contained in any of
the Transaction Documents.
Opinion of Counsel to the Borrower
- 8 -
(c) The legality, validity, binding nature and
enforceability of the Obligors' respective obligations under the Transaction
Documents may be subject to or limited by: (1) general equity principles and the
limitations on the availability of equitable relief, including, without
limitation, specific performance; (2) the effect of applicable bankruptcy,
insolvency, fraudulent transfer or conveyance, reorganization, arrangement,
dissolution, moratorium or other similar laws relating to or affecting
creditors' rights generally; (3) limitations created by or arising under statute
or case law on a debtor's or guarantor's ability to waive rights or benefits;
and (4) limitations imposed by law and public policy on indemnification or
exculpation.
Our opinions set forth above are limited to the matters expressly set forth in
this opinion letter, and no opinion has been implied, or may be inferred, beyond
the matters expressly stated. This opinion speaks only as to law and facts in
effect or existing as of the date hereof and we undertake no obligation or
responsibility to update or supplement this opinion to reflect any facts or
circumstances that may hereafter come to our attention or any changes in any law
which may hereafter occur.
This opinion letter is intended solely for the benefit of the addressees of this
letter and such other entities as shall become Lenders, Collateral Agents or
Administrative Agents under the Agreement pursuant to its terms, and is not to
be made available to or relied upon by any other Person, firm or entity without
our prior written consent (provided, that copies of this opinion letter may be
made available to the counsel, assignees, transferees, participants and
regulators of the addressees of this letter).
Very truly yours,
▇▇▇▇▇▇ Godward LLP
By___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Opinion of Counsel to the Borrower
EXHIBIT F-1
Form of Revolving Credit Note
PROMISSORY NOTE
$_______________ ____________, 200_
New York, New York
FOR VALUE RECEIVED, PACIFICARE HEALTH SYSTEMS, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to
__________________ (the "Lender") the principal sum of _______________ Dollars
($___________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Credit Loans made by the Lender to the
Borrower under the Credit Agreement), on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid principal
amount of each Revolving Credit Loan evidenced hereby for the period commencing
on the date of such Loan until such Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
immediately available funds at the office of JPMorgan ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Revolving Credit Loan made by the Lender to the
Borrower, and the date and amount of each continuation, conversion or payment
made on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of this Note, endorsed by the Lender on the
schedule attached hereto or any continuation thereof; provided that the failure
of the Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower to make a payment when due of any amount owing under
the Credit Agreement or hereunder in respect of the Revolving Credit Loans made
by the Lender.
This Note is one of the promissory notes referred to in the
Credit Agreement dated as of June 3, 2003 (as modified and supplemented and in
effect from time to time, the "Credit Agreement") between the Borrower, the
Subsidiary Guarantors party thereto, the lenders party thereto (including the
Lender), JPMorgan Chase Bank, as Administrative Agent, and JPMorgan Chase Bank,
as Collateral Agent, and evidences Revolving Credit Loans made by the Lender
thereunder. Terms used but not defined in this Note have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of Loans evidenced by this Note upon the occurrence of certain events
and for prepayments of Loans upon the terms and conditions specified therein.
Revolving Credit Note
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
PACIFICARE HEALTH SYSTEMS, INC.
By_______________________________
Name:
Title:
Revolving Credit Note
SCHEDULE OF REVOLVING CREDIT LOANS
This Note evidences Revolving Credit Loans made, continued or
converted under the within-described Credit Agreement to the Borrower, on the
dates, in the principal amounts, of the Types, bearing interest at the rates and
having Interest Periods (if applicable) of the durations set forth below,
subject to the continuations, conversions and payments and prepayments of
principal set forth below:
Amount Paid,
Principal Duration of Prepaid,
Amount of Type of Interest Interest Period Continued or Notation
Date Loan Loan Rate (if any) Converted Made by
---- ---- ---- ---- -------- --------- -------
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Revolving Credit Note
EXHIBIT F-2
Form of Term Loan Note
PROMISSORY NOTE
$_______________ ____________, 200_
New York, New York
FOR VALUE RECEIVED, PACIFICARE HEALTH SYSTEMS, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to
__________________ (the "Lender") the principal sum of _______________ Dollars
($___________), on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of the Term Loan
made by the Lender evidenced hereby for the period commencing on the date of
such Term Loan until such Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
immediately available funds at the office of JPMorgan ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of the Term Loan made by the Lender to the Borrower, and
the date and amount of each continuation, conversion or payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the schedule
attached hereto or any continuation thereof; provided that the failure of the
Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower to make a payment when due of any amount owing under
the Credit Agreement or hereunder in respect of the Term Loan made by the
Lender.
This Note is one of the promissory notes referred to in the
Credit Agreement dated as of June 3, 2003 (as modified and supplemented and in
effect from time to time, the "Credit Agreement") between the Borrower, the
Subsidiary Guarantors party thereto, the lenders party thereto (including the
Lender), JPMorgan Chase Bank, as Administrative Agent, and JPMorgan Chase Bank,
as Collateral Agent, and evidences the Term Loan made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of Loans evidenced by this Note upon the occurrence of certain events
and for prepayments of Loans upon the terms and conditions specified therein.
Term Loan Note
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
PACIFICARE HEALTH SYSTEMS, INC.
By_________________________
Name:
Title:
Term Loan Note
SCHEDULE TO TERM LOAN NOTE
This Note evidences a Term Loan made, continued or converted
under the within-described Credit Agreement to the Borrower, on the dates, in
the principal amounts, of the Types, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the continuations, conversions and payments and prepayments of principal set
forth below:
Amount Paid,
Principal Duration of Prepaid,
Amount of Type of Interest Interest Period Continued or Notation
Date Loan Loan Rate (if any) Converted Made by
---- ---- ---- ---- -------- --------- -------
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Term Loan Note