EXHIBIT 10(a)
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CREDIT AGREEMENT
dated as of
June 16, 1999
among
HANGER ORTHOPEDIC GROUP, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent, Collateral Agent and
Issuing Bank
BANKERS TRUST COMPANY,
as Syndication Agent
PARIBAS,
as Documentation Agent
---------------------------
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
SECTION 1.01. Defined Terms.............................................................................1
SECTION 1.02. Classification of Loans and Borrowings...................................................19
SECTION 1.03. Terms Generally..........................................................................19
SECTION 1.04. Accounting Terms; GAAP; Pro Forma Computations...........................................19
ARTICLE II THE CREDITS
SECTION 2.01. Commitments..............................................................................19
SECTION 2.02. Loans and Borrowings.....................................................................20
SECTION 2.03. Requests for Borrowings..................................................................20
SECTION 2.04. Letters of Credit........................................................................21
SECTION 2.05. Funding of Borrowings....................................................................24
SECTION 2.06. Interest Elections.......................................................................25
SECTION 2.07. Termination and Reduction of Commitments.................................................25
SECTION 2.08. Repayment of Loans; Evidence of Debt.....................................................26
SECTION 2.09. Amortization of Term Loans...............................................................27
SECTION 2.10. Prepayment of Loans......................................................................28
SECTION 2.11. Fees .................................................................................29
SECTION 2.12. Interest.................................................................................30
SECTION 2.13. Alternate Rate of Interest...............................................................30
SECTION 2.14. Increased Costs..........................................................................31
SECTION 2.15. Break Funding Payments...................................................................31
SECTION 2.16. Taxes .................................................................................32
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs..............................33
SECTION 2.18. Mitigation Obligations; Replacement of Lenders...........................................34
ARTICLE III REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers.....................................................................35
SECTION 3.02. Authorization; Enforceability............................................................35
SECTION 3.03. Governmental Approvals; No Conflicts.....................................................35
SECTION 3.04. Financial Condition; No Material Adverse Change..........................................35
SECTION 3.05. Properties...............................................................................36
SECTION 3.06. Litigation and Environmental Matters.....................................................36
SECTION 3.07. Compliance with Laws and Agreements......................................................36
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SECTION 3.08. Investment and Holding Company Status....................................................37
SECTION 3.09. Taxes .................................................................................37
SECTION 3.10. ERISA .................................................................................37
SECTION 3.11. Disclosure...............................................................................37
SECTION 3.12. Subsidiaries.............................................................................37
SECTION 3.13. Insurance................................................................................37
SECTION 3.14. Labor Matters............................................................................37
SECTION 3.15. Solvency.................................................................................38
SECTION 3.16. Senior Indebtedness......................................................................38
SECTION 3.17. Year 2000................................................................................38
SECTION 3.18. Intellectual Property....................................................................38
ARTICLE IV CONDITIONS
SECTION 4.01. Effective Date...........................................................................38
SECTION 4.02. Each Credit Event........................................................................41
ARTICLE V AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information...............................................42
SECTION 5.02. Notices of Material Events...............................................................43
SECTION 5.03. Information Regarding Collateral.........................................................44
SECTION 5.04. Existence; Conduct of Business...........................................................44
SECTION 5.05. Payment of Obligations...................................................................44
SECTION 5.06. Maintenance of Properties................................................................44
SECTION 5.07. Insurance................................................................................44
SECTION 5.08. Casualty and Condemnation................................................................45
SECTION 5.09. Books and Records; Inspection and Audit Rights...........................................45
SECTION 5.10. Compliance with Laws.....................................................................45
SECTION 5.11. Use of Proceeds and Letters of Credit....................................................45
SECTION 5.12. Additional Subsidiaries..................................................................45
SECTION 5.13. Further Assurances.......................................................................45
SECTION 5.14. Interest Rate Protection.................................................................46
ARTICLE VI NEGATIVE COVENANTS
SECTION 6.01. Indebtedness; Certain Equity Securities..................................................46
SECTION 6.02. Liens .................................................................................47
SECTION 6.03. Fundamental Changes......................................................................47
SECTION 6.04. Asset Sales..............................................................................48
SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions................................48
SECTION 6.06. Sale and Leaseback Transactions..........................................................49
SECTION 6.07. Hedging Agreements.......................................................................50
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SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness....................................50
SECTION 6.09. Transactions with Affiliates.............................................................50
SECTION 6.10. Restrictive Agreements...................................................................50
SECTION 6.11. Amendment of Material Documents..........................................................51
SECTION 6.12. Interest Expense Coverage Ratio..........................................................51
SECTION 6.13. Leverage Ratio...........................................................................51
SECTION 6.14. Consolidated Adjusted EBITDA Interest Coverage Ratio.....................................52
SECTION 6.15. Maximum Capital Expenditures.............................................................52
ARTICLE VII
EVENTS OF DEFAULT.......................................................................................52
ARTICLE VIII
THE ADMINISTRATIVE AGENT................................................................................54
ARTICLE IX MISCELLANEOUS
SECTION 9.01. Notices .................................................................................56
SECTION 9.02. Waivers; Amendments......................................................................56
SECTION 9.03. Expenses; Indemnity; Damage Waiver.......................................................57
SECTION 9.04. Successors and Assigns...................................................................58
SECTION 9.05. Survival.................................................................................60
SECTION 9.06. Counterparts; Integration; Effectiveness.................................................60
SECTION 9.07. Severability.............................................................................61
SECTION 9.08. Right of Setoff..........................................................................61
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process...............................61
SECTION 9.10. WAIVER OF JURY TRIAL.....................................................................61
SECTION 9.11. Headings.................................................................................62
SECTION 9.12. Confidentiality..........................................................................62
SECTION 9.13. Interest Rate Limitation.................................................................62
SECTION 9.14. Release of Liens and Guarantees..........................................................62
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SCHEDULES:
Schedule 1.01 -- Guarantors
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.05 -- Existing Investments
Schedule 6.10 -- Existing Restrictions
Schedule A -- Class I Mortgaged Property
Schedule B -- Mortgaged Property
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for
the Borrower
Exhibit B-2 -- Form of Opinion of local counsel for the Administrative Agent
Exhibit C -- Form of Perfection Certificate
Exhibit D -- Form of Guarantee Agreement
Exhibit E -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Borrowing Request
Exhibit I -- Form of Interest Election Request
Exhibit J -- Form of Administrative Questionnaire
Exhibit K -- Form of Permitted Seller Note
Exhibit L -- Form of Mortgage
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CREDIT AGREEMENT dated as of June 16, 1999,
among HANGER ORTHOPEDIC GROUP, INC., the LENDERS
party hereto, THE CHASE MANHATTAN BANK, as
Administrative Agent and Collateral Agent,
BANKERS TRUST COMPANY, as Syndication Agent and
PARIBAS as Documentation Agent.
Pursuant to or in connection with the Stock Purchase Agreement (such
term and each other capitalized term used and not otherwise defined herein
being used with the meaning assigned to it in Section 1.01), (a) the Borrower
will issue and sell to CCP and PNA, and CCP and PNA will purchase, the
Preferred Stock for an aggregate cash amount of $60,000,000, (b) the Borrower
will borrow the Term Loans and a principal amount not to exceed $20,000,000 of
the Revolving Loans under this Agreement, (c) the Borrower will issue not less
than $150,000,000 aggregate principal amount of the Subordinated Notes in a
public offering or in a Rule 144A or other private placement, (d) the Borrower
will contribute $406,000,000 to the equity of its wholly owned subsidiary
Hanger Prosthetics & Orthotics, Inc., which will lend such amount to
AcquisitionCo, (e) AcquisitionCo will acquire from the Seller for an aggregate
cash amount not to exceed $406,000,000 all the outstanding capital stock of,
and will then be merged with and into, NovaCare Orthotics & Prosthetic, Inc.,
a Delaware corporation and (f) the Borrower will pay fees and expenses
incurred in connection with the Effective Date Transactions in an aggregate
amount not to exceed $20,000,000.
The Borrower has requested the Lenders to extend credit in the form of
(a) Tranche A Term Loans on the Effective Date in an aggregate principal
amount not in excess of $100,000,000, (b) Tranche B Term Loans on the
Effective Date in an aggregate principal amount not in excess of $100,000,000,
(c) Revolving Loans at any time and from time to time on or after the
Effective Date and prior to the Revolving Maturity Date in an aggregate
principal amount at any time outstanding not in excess of $100,000,000 minus
the LC Exposure at such time and (d) Letters of Credit in an aggregate stated
amount at any time outstanding that will not result in the LC Exposure
exceeding $5,000,000. The proceeds of the Term Loans and of Revolving Loans
(the amount of which shall not exceed $20,000,000) made on the Effective Date
are to be used by the Borrower solely (i) to finance the Acquisition, (ii) to
refinance the Scheduled Indebtedness and (iii) to pay fees and expenses
related to the Effective Date Transactions. The proceeds of the remaining
Revolving Loans are to be used by the Borrower and its Subsidiaries to provide
working capital and for other general corporate purposes. The Letters of
Credit are to be used to support obligations incurred by the Borrower and its
Subsidiaries in the ordinary course of their businesses.
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:
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"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"ACQUISITION" means the purchase by AcquisitionCo from the Seller of all
the outstanding capital stock of NovaCare O&P and the subsequent merger of
AcquisitionCo with and into NovaCare O&P, all as provided in the Stock
Purchase Agreement. "ACQUISITION DOCUMENTS" means (a) the Stock Purchase
Agreement and (b) the Transition Services Agreement, the Subscriber Services
Agreement and the Escrow Agreement, each as defined in the Stock Purchase
Agreement.
"ACQUISITIONCO" means HPO Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of the Borrower.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing for
any Interest Period, 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.
"ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, 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 the Administrative Agent, the Collateral Agent, the
Syndication Agent and the Documentation Agent.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"APPLICABLE RATE" means, for any day (a) with respect to any Tranche B
Term Loan, (i) 2.50% per annum, in the case of an ABR Loan, or (ii) 3.50% per
annum, in the case of a Eurodollar Loan, and (b) with respect to any Revolving
Loan or Tranche A Term 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",
as the case may be, based upon the Leverage Ratio as of the most recent
determination date; PROVIDED that until the date that is 45 days after
December 31, 1999, the "Applicable Rate" for purposes of clause (b) shall be
the applicable rate per annum set forth below for Category 1:
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ABR EURODOLLAR COMMITMENT FEE
LEVERAGE RATIO: SPREAD SPREAD RATE
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CATEGORY 1
Greater than or equal to 1.50% 2.50% 0.50%
4.00 to 1.00
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CATEGORY 2
Greater than or equal to 3.50 1.25% 2.25% 0.50%
to 1.00 but less than
4.00 to 1.00
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CATEGORY 3
Greater than or equal to 3.00 1.00% 2.00% 0.375%
to 1.00 but less than
3.50 to 1.00
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CATEGORY 4
Less than 3.00 to 1.00 0.75% 1.75% 0.375%
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For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate
resulting from a change in the Leverage Ratio shall be effective during the
period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and
ending on the date immediately preceding the effective date of the next such
change; PROVIDED that the Leverage Ratio shall be deemed to be in Category 1
(a) at any time that an Event of Default has occurred and is continuing or (b)
at the option of the Administrative Agent or at the request of the Required
Lenders, if the Borrower fails to deliver the consolidated financial
statements required to be delivered by it pursuant to Section 5.01(a) or (b),
during the period from the expiration of the time for delivery thereof until
such consolidated financial statements are delivered.
"ARRANGER" means Chase Securities Inc.
"ASSESSMENT RATE" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; PROVIDED that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
4
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"BASE CD RATE" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER" means Hanger Orthopedic Group, Inc., a Delaware corporation.
"BORROWING" means Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"BORROWING REQUEST" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"BUSINESS DAY" means any day 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; PROVIDED that, when used in connection with a Eurodollar
Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London interbank market.
"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.
"CCP" means Chase Capital Partners, together with one of more of its
affiliated investment funds.
"CERTIFICATE OF DESIGNATIONS" means the certificate of designations
dated as of the Effective Date governing the Preferred Stock, substantially in
the form as described in the Offering Memorandum, with no changes therefrom
adverse to the Lenders.
"CHANGE IN CONTROL" means (a) the acquisition by any Person or group
(within the meaning of the Securities Exchange Act of 1934, as amended, and
the rules of the Securities and Exchange Commission thereunder as in effect on
the date hereof) of ownership, directly or indirectly, beneficially or of
record, by any Person of Equity Interests in the Borrower representing at
5
least 35% of the aggregate ordinary voting power or the aggregate equity
represented by the issued and outstanding Equity Interests in the Borrower;
(b) 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) nominated
by the board of directors of the Borrower nor (ii) appointed by directors so
nominated; (c) the acquisition of direct or indirect Control of the Borrower
by any Person or group; or (d) the occurrence of a "Change of Control"or
similar event, however denominated, under the Subordinated Note Documents, any
other instrument or agreement evidencing or governing Indebtedness or any
certificate of designations, instrument or agreement governing the Preferred
Stock or any other Equity Interests.
"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
the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office
of such Lender or by such Lender's or the Issuing Bank'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 comprising such Borrowing, are Revolving
Loans, Tranche A Term Loans or Tranche B Term Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a Revolving
Commitment, Tranche A Commitment or Tranche B Commitment.
"CLASS I MORTGAGE" means a mortgage, deed of trust, assignment of leases
and rents, leasehold mortgage or other security document granting a Lien on
any Class I Mortgaged Property to secure the Obligations. Each Class I
Mortgage shall be satisfactory in form and substance to the Collateral Agent,
substantially in the form of Exhibit L.
"CLASS I MORTGAGED PROPERTY" means, initially, each Mortgaged Property
identified on Schedule A, and each other Mortgaged Property on which any
manufacturing or distribution facility of a Loan Party is located or which has
a book or fair market value in excess of $750,000.
"CLOSING DATE" means the date this Agreement becomes effective pursuant
to Section 9.06.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means any and all "Collateral", as defined in any
applicable Security Document.
"COLLATERAL AGENT" means The Chase Manhattan Bank, in its capacity as
collateral agent for the Lenders hereunder.
"COLLATERAL AND GUARANTEE REQUIREMENT" means the requirement that:
(a) the Administrative Agent shall have received from each Loan
Party either (i) a counterpart of each of the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the Security
6
Documents duly executed and delivered on behalf of such Loan Party or
(ii) in the case of any Person that becomes a Loan Party after the
Effective Date, a supplement to the Guarantee Agreement, the Indemnity,
Subrogation and Contribution Agreement and each applicable Security
Document, as appropriate, in the form specified therein, duly executed
and delivered on behalf of such Loan Party;
(b) all outstanding Equity Interests of the Borrower and each
Subsidiary owned by or on behalf of any Loan Party shall have been
pledged pursuant to the Pledge Agreement (except that the Loan Parties
shall not be required to pledge more than 65% of the outstanding voting
Equity Interests of any Foreign Subsidiary) and the Administrative Agent
shall have received certificates or other instruments representing all
such Equity Interests, together with stock powers or other instruments
of transfer with respect thereto endorsed in blank;
(c) all Indebtedness in an aggregate principal amount exceeding
$250,000 of the Borrower and each Subsidiary that is owing to any Loan
Party shall be evidenced by a promissory note and shall have been
pledged pursuant to the Pledge Agreement and the Administrative Agent
shall have received all such promissory notes, together with instruments
of transfer with respect thereto endorsed in blank;
(d) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create
the Liens intended to be created by the Security Documents and perfect
such Liens to the extent required by, and with the priority required by,
the Security Documents, shall have been filed, registered or recorded or
delivered to the Administrative Agent for filing, registration or
recording;
(e) the Administrative Agent shall have received (i) counterparts
of a Mortgage with respect to each Mortgaged Property duly executed and
delivered by the record owner of such Mortgaged Property, (ii) a policy
or policies of title insurance issued by a nationally recognized title
insurance company insuring the Lien of each such Class I Mortgage as a
valid first Lien on the Class I Mortgaged Property described therein,
free of any other Liens except as expressly permitted by Section 6.02,
together with such endorsements, coinsurance and reinsurance as the
Administrative Agent or the Required Lenders may reasonably request, and
(iii) such surveys, abstracts, appraisals, legal opinions and other
documents as the Administrative Agent or the Required Lenders may
reasonably request with respect to any such Class I Mortgage or Class I
Mortgaged Property; and
(f) each Loan Party shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and
delivery of all Loan Documents to which it is a party, the performance
of its obligations thereunder and the granting by it of the Liens
thereunder.
"COMMITMENT" means a Revolving Commitment, Tranche A Commitment or
Tranche B Commitment, or any combination thereof (as the context requires).
7
"CONSOLIDATED ADJUSTED EBITDA" means Consolidated EBITDA minus
Consolidated Capital Expenditures for the period for which Consolidated EBITDA
is being calculated.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of
the Borrower and its consolidated Subsidiaries that are (or would be) set
forth in a consolidated statement of cash flows of the Borrower for such
period prepared in accordance with GAAP and (b) Capital Lease Obligations
incurred by the Borrower and its consolidated Subsidiaries during such period.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, the excess
of (a) the sum of (i) the interest expense (including imputed interest expense
in respect of Capital Lease Obligations) of the Borrower and the Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP,
(ii) any interest accrued during such period in respect of Indebtedness of the
Borrower or any Subsidiary that is required to be capitalized rather than
included in consolidated interest expense for such period in accordance with
GAAP, plus (iii) any cash payments made during such period in respect of
obligations referred to in clause (b)(iii) below that were amortized or
accrued in a previous period, minus (b) the sum of (i) interest income of the
Borrower and the Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP, (ii) to the extent included in such
consolidated interest expense for such period, non-cash amounts attributable
to amortization of financing costs paid in a previous period, plus (iii) to
the extent included in such consolidated interest expense for such period,
non-cash amounts attributable to amortization of debt discounts or accrued
interest payable in kind for such period. Anything contained in this
definition or elsewhere in this Agreement to the contrary notwithstanding, in
calculating Consolidated Cash Interest Expense for each of the periods ending
on December 31, 1999 and March 31, 2000, respectively, Consolidated Cash
Interest Expense shall be deemed to equal Consolidated Cash Interest Expense
for the period commencing on July 1, 1999, and ending on December 31, 1999 and
March 31, 2000, respectively.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income for
such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) consolidated interest
expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such
period, (iv) any extraordinary charges for such period and (v) solely in
determining Consolidated EBITDA for the periods ending December 31, 1999,
March 31, 2000 and June 30, 2000, $2,025,000, and minus (b) without
duplication and to the extent included in determining such Consolidated Net
Income, any extraordinary gains for such period, all determined on a
consolidated basis in accordance with GAAP. Anything contained in this
definition or elsewhere in this Agreement to the contrary notwithstanding, in
calculating Consolidated EBITDA (i) for any four-fiscal-quarter period that
includes the fiscal quarter ending September 30, 1999, Consolidated EBITDA for
such quarter shall be increased by an amount up to $15,000,000 of
restructuring and acquisition and integration expenses incurred in connection
with the Acquisition to the extent such costs have actually been paid by the
Loan Parties and not so included in Consolidated EBITDA in any prior quarter
and (ii) solely for purposes of calculating the Leverage Ratio, for each of
the periods ending on December 31, 1999 and March 31, 2000, respectively,
Consolidated EBITDA shall be deemed to equal Consolidated EBITDA for the
period commencing on July 1, 1999, and ending on (x) December 31, 1999, plus
8
$2,025,000 multiplied by 2 and (y) March 31, 2000, plus $2,025,000 multiplied
by 4/3, respectively. For purposes of calculating Consolidated EBITDA for any
period (each, a "REFERENCE PERIOD") in connection with determining compliance
with Sections 6.12, 6.13 and 6.14 for such period, if during such Reference
Period (or, in the case of pro forma calculations, during the period from the
last day of such Reference Period to and including the date as of which such
calculation is made) the Borrower or any Subsidiary shall have made a Material
Disposition or Material Acquisition (each as defined below), Consolidated
EBITDA for such Reference Period shall be calculated after giving pro forma
effect thereto as if such Material Disposition or Material Acquisition
occurred on the first day of such Reference Period (with the Reference Period
for the purposes of pro forma calculations being the most recent period of
four consecutive fiscal quarters for which the relevant financial information
is available); PROVIDED that such pro forma calculations shall give effect to
the terms of any employment agreement entered into in connection such Material
Disposition or Material Acquisition. As used in this definition, "Material
Acquisition" means any acquisition or series of related acquisitions permitted
under Section 6.05; and "Material Disposition" means any disposition of
property or series of related dispositions of property that involves assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the Equity Interests of a Subsidiary.
"CONSOLIDATED NET INCOME" means, for any period, the net income or loss
of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income of any Person (other than the Borrower) in which any
other Person (other than the Borrower or any Subsidiary or any director
holding qualifying shares in compliance with applicable law) owns an Equity
Interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of the Subsidiaries during
such period, and (b) the income or loss of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the
Borrower or any Subsidiary or the date that such Person's assets are acquired
by the Borrower or any Subsidiary.
"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.
"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.
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"DOLLARS" or "$" refers to lawful money of the United States of America.
"DOCUMENTATION AGENT" means Paribas.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
9
"EFFECTIVE DATE TRANSACTIONS" means the Transactions that have occurred,
or that are contemplated or required by this Agreement to have occurred, on or
before the Effective Date and prior to the initial Borrowing or issuance of a
Letter of Credit hereunder.
"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.
"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 shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a 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.
10
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising 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 VII.
"EXCESS CASH FLOW" means, for any fiscal year, the sum (without
duplication) of:
(a) the consolidated net income (or loss) of the Borrower and its
consolidated Subsidiaries for such fiscal year, adjusted to exclude any
gains or losses attributable to Prepayment Events; PLUS
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such consolidated net income (or loss)
for such fiscal year; PLUS
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such fiscal year plus (ii) the net amount, if
any, by which the consolidated deferred revenues and other consolidated
accrued long-term liability accounts of the Borrower and its
consolidated Subsidiaries increased during such fiscal year plus (iii)
the net amount, if any, by which the consolidated accrued long-term
asset accounts of the Borrower and its consolidated Subsidiaries
decreased during such fiscal year; MINUS
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such
fiscal year plus (iii) the net amount, if any, by which the consolidated
deferred revenues and other consolidated accrued long-term liability
accounts of the Borrower and its consolidated Subsidiaries decreased
during such fiscal year plus (iv) the net amount, if any, by which the
consolidated accrued long-term asset accounts of the Borrower and its
consolidated Subsidiaries increased during such fiscal year; MINUS
(e) the sum of (i) Capital Expenditures for such fiscal year
(except to the extent attributable to the incurrence of Capital Lease
Obligations or otherwise financed by incurring Long-Term Indebtedness)
PLUS (ii) cash consideration paid during such fiscal year to make
acquisitions or other capital investments (except to the extent financed
by incurring Long-Term Indebtedness) PLUS (iii) to the extent paid in
cash during such fiscal year, 50% of payments in respect of Permitted
Earn-Out Obligations; MINUS
(f) the aggregate principal amount of Long-Term Indebtedness
repaid or prepaid by the Borrower and its consolidated Subsidiaries
during such fiscal year, excluding (i) Indebtedness in respect of
Revolving Loans and Letters of Credit, (ii) Term Loans prepaid pursuant
to Section 2.10(c) or (d), and (iii) repayments or prepayments of
Long-Term Indebtedness financed by incurring other Long-Term
Indebtedness.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank 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
11
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 described in clause (a) above and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.18(b)), any withholding tax that (i) is in effect
and would apply to amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office), except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
any withholding tax pursuant to Section 2.16(a), or (ii) is attributable to
such Foreign Lender's failure to comply with Section 2.16(e).
"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 the chief financial officer, principal
accounting officer, treasurer or controller 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 any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, 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.
"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
12
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 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.
"GUARANTEE AGREEMENT" means the Guarantee Agreement substantially in the
form of Exhibit D among the Borrower, the Guarantors from time to time party
thereto and the Collateral Agent for the benefit of the Secured Parties, as
the same may be amended, modified or supplemented from time to time in
accordance with the provisions hereof.
"GUARANTORS" means each person listed on Schedule 1.01 and each other
person that becomes party to the Guarantee Agreement as a Guarantor, and the
permitted successors and assigns of each such person.
"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.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging
arrangement.
"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
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) al obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) 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, (g) all Guarantees by such
Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances. 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.
13
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means the Indemnity,
Subrogation and Contribution Agreement substantially in the form of Exhibit E
among the Borrower, the Subsidiary Loan Parties from time to time party
thereto and the Collateral Agent for the benefit of the Secured Parties, as
the same may be amended, modified or supplemented from time to time in
accordance with the provisions hereof.
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated May 1999 relating to the Borrower and the Transactions.
"INTELLECTUAL PROPERTY" shall have the meaning assigned to such term in
Section 3.18.
"INTEREST ELECTION REQUEST" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.06.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each
day prior to the last day of such Interest Period that occurs at intervals of
three months' duration after the first day of such Interest Period.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; PROVIDED, that (a) 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 (b) 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 Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"ISSUING BANK" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"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 Revolving
14
Lender at any time shall be its Applicable Percentage of the total LC Exposure
at such time.
"LENDERS" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that shall have ceased to be a party
hereto pursuant to an Assignment and Acceptance or Section 2.18.
"LETTER OF CREDIT" means any letter of credit issued pursuant to this
Agreement.
"LEVERAGE RATIO" means, on any date, the ratio of (a) Total Indebtedness
as of such date to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters of the Borrower ended on such date (or, if such date is not
the last day of a fiscal quarter, ended on the last day of the fiscal quarter
of the Borrower most recently ended prior to such date).
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market
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 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, as the rate
for dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
"LIBO RATE" with respect to such Eurodollar Borrowing 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 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 this Agreement, the Guarantee Agreement, the
Security Documents and the Indemnity, Subrogation and Contribution Agreement.
"LOAN PARTIES" means the Borrower and the Subsidiary Loan Parties.
"LOANS" means the loans made by the Lenders hereunder.
"LONG-TERM INDEBTEDNESS" means any Indebtedness that, in accordance with
GAAP, constitutes (or, when incurred, constituted) a long-term liability.
15
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise,
of the Borrower and the Subsidiaries taken as a whole, or of NovaCare O&P, (b)
the ability of any Loan Party to perform any of its obligations under any Loan
Document or (c) the rights of or benefits available to the Lenders under any
Loan Document.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the
\Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if
such Hedging Agreement were terminated at such time.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent, substantially in
the form of Exhibit L or the form of mortgage pursuant to the Paribas Credit
Agreement.
"MORTGAGED PROPERTY" means, initially, each real property (and the
improvements thereto) owned by a Loan Party, identified by the Collateral
Agent and listed on Schedule B, and each other parcel of real property (and
the improvements thereto) hereafter acquired by a Loan Party.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET PROCEEDS" means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect
of any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or
similar event, condemnation awards and similar payments, net of (b) the sum of
(i) all reasonable fees and out-of-pocket expenses paid by the Borrower and
the Subsidiaries to third parties (other than Affiliates) in connection with
such event, (ii) in the case of a sale, transfer or other disposition of an
asset (including pursuant to a sale and leaseback transaction or a casualty or
a condemnation or similar proceeding), the amount of all payments required to
be made by the Borrower and the Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise
subject to mandatory prepayment as a result of such event, (c) in the case of
any event described in clause (c) of the definition of "Prepayment Event," the
aggregate amount of such proceeds applied pursuant to Section 6.08(a)(iv), (d)
in the case of an issuance of common stock by the Borrower, if the Borrower
shall have delivered to the Administrative Agent calculations demonstrating
that the Leverage Ratio, calculated on a pro forma basis as of the end of and
for the most recent period of four fiscal quarters for which financial
statements shall have been delivered pursuant to Section 5.03(a) or (b),
giving effect to the application of the proceeds thereof (the "COMMON STOCK
PROCEEDS") as if such application had occurred at the beginning of such
period, does not exceed 2.50 to 1.00, the aggregate amount of such Common
16
Stock Proceeds that have been applied to the prepayment of the Subordinated
Notes, which amount shall not exceed 25% of the total of the aggregate amount
of such Common Stock Proceeds less the sum of (x) any portion of such Common
Stock Proceeds applied pursuant to Sectio 6.08(a)(iv) and (y) the aggregate
amount of such Common Stock Proceeds applied in any other manner permitted by
this Agreement and (e) the amount of all taxes paid (or reasonably estimated
to be payable) by the Borrower and the Subsidiaries, and the amount of any
reserves established by the Borrower and the Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower).
"NET WORKING CAPITAL" means, at any date, (a) the consolidated current
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working
Capital at any date may be a positive or negative number. Net Working Capital
increases when it becomes more positive or less negative and decreases when it
becomes less positive or more negative.
"NOVACARE O&P" means NovaCare Orthotics & Prosthetic, Inc., a Delaware
corporation and a wholly owned subsidiary of the Seller, and its subsidiaries,
taken as a whole.
"OBLIGATIONS" means (a) the due and punctual payment by the Borrower or
the applicable Loan Parties of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by the Borrower
under this Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties
under this Agreement and the other Loan Documents, (b) the due and punctual
payment and performance of all covenants, agreements, obligations and
liabilities of the Loan Parties, monetary or otherwise, under or pursuant to
this Agreement and the other Loan Documents and (c) the due and punctual
payment and performance of all obligations of the Borrower or any Subsidiary,
monetary or otherwise, under each Hedging Agreement entered into to limit
interest rate risk with a counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Agreement was entered into.
"OFFERING MEMORANDUM" means the offering memorandum dated June 9, 1999
relating to the Subordinated Notes.
"OTHER TAXES" means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
17
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PARIBAS CREDIT AGREEMENT" means the Credit Agreement dated as of
November 1, 1996, among the Borrower, JEH Acquisition Corporation, a Georgia
corporation, the lenders party thereto and Paribas, individually and as
administrative agent, as amended to the date hereof.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit C or
any other form approved by the Collateral Agent.
"PERMITTED EARN-OUT OBLIGATIONS" means obligations of the Borrower
incurred in connection with an acquisition permitted under Section 6.05(i)
which (a) are not secured or Guaranteed, (b) are payable solely by the
Borrower upon the passage of time or in the event certain future performance
goals are achieved by the business acquired in such acquisition and (c) arise
under written agreements specifying in each case an amount as the maximum
potential liability for the Borrower in respect thereof; PROVIDED, that the
Maximum Earn-Out Liability (as defined below) shall not exceed (i) $1,000,000
for any single acquisition (including all amounts payable over the term of the
agreement creating such Permitted Earn-Out Obligation) or (ii) $10,000,000 in
any fiscal year. For purposes hereof, the amount of any Permitted Earn-Out
Obligation shall be the maximum potential liability ("MAXIMUM EARN-OUT
LIABILITY") of the Borrower specified in the agreement creating such Permitted
Earn-Out Obligation.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen'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 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
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 VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
18
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary;
PROVIDED that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"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; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"PERMITTED SELLER NOTES" means notes issued by the Borrower to sellers
of stock or assets in one or more acquisitions permitted under Section 6.05,
which notes (i) shall be unsecured and not guaranteed by subsidiaries of the
Borrower, (ii) shall be subordinated to the Obligations on terms at least as
favorable to the Lenders as those set forth in Exhibit K hereto, (iii) shall
mature no earlier than the date that is six months after the Tranche B
Maturity Date and (iv) shall otherwise be in form and on terms satisfactory to
the Administrative Agent; PROVIDED, that Permitted Seller Notes in an
aggregate principal amount outstanding at any time not to exceed $15,000,000
shall be permitted (x) to be PARI PASSU with the Obligations or (y) to mature
earlier than the date that is six months after the Tranche B Maturity Date.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"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.
19
"PLEDGE AGREEMENT" means the Pledge Agreement substantially in the form
of Exhibit F among the Borrower, the Subsidiary Loan Parties from time to time
party thereto and the Collateral Agent for the benefit of the Secured Parties,
as the same may be amended, modified or supplemented from time to time in
accordance with the provisions hereof.
"PNA" means Paribas North America, Inc., an affiliate of Paribas.
"PREFERRED STOCK" means the 7% Redeemable Preferred Stock, par value
$0.01 per share, original issue price $1,000 a share, of the Borrower, issued
under the Certificate of Designations, substantially in the form as described
in the Offering Memorandum, with no changes therefrom adverse to the Lenders.
"PREPAYMENT EVENT" means:
(a) any sale, transfer or other disposition (including pursuant to
a sale and leaseback transaction) of any property or asset of the
Borrower or any Subsidiary, other than (i) dispositions described in
clauses (a) and (b) of Section 6.04 and (ii) other dispositions
resulting in aggregate Net Proceeds not exceeding $5,000,000 during any
fiscal year of the Borrower; or
(b) any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrower or any Subsidiary, but only to the
extent that the Net Proceeds therefrom (i) exceed $1,000,000 and (ii)
have not been applied to repair, restore or replace such property or
asset within 120 days after such event; or
(c) the issuance by the Borrower or any Subsidiary of any Equity
Interests, or the receipt by the Borrower or any Subsidiary of any
capital contribution, other than any such issuance of Equity Interests
to, or receipt of any such capital contribution from, the Borrower or a
Subsidiary, but only to the extent that the Net Proceeds therefrom
exceed $500,000; PROVIDED that any equity issuances shall not constitute
Prepayment Events to the extent the proceeds thereof are applied to
finance acquisitions permitted under Section 6.05 or make payments
pursuant to Section 6.08(a)(iv); or
(d) the incurrence by the Borrower or any Subsidiary of any
Indebtedness, other than the Subordinated Notes or other Indebtedness
described in clauses (iv), (vi), (vii), (viii) and (ix) of paragraph (a)
of Section 6.01.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank 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.
"PROJECTIONS" shall have the meaning set forth in Section 4.01(n).
"REGISTER" has the meaning set forth in Section 9.04.
20
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interests in
the Borrower or any Subsidiary, 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, cancelation or termination
of any Equity Interests in the Borrower or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in the Borrower or
any Subsidiary.
"REVOLVING AVAILABILITY PERIOD" means the period from and including the
Effective Date to but excluding the earlier of the date that is five Business
Days prior to the Revolving Maturity Date and the date of termination of the
Revolving Commitments.
"REVOLVING COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
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 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01 or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $100,000,000.
"REVOLVING EXPOSURE" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure at such time.
"REVOLVING LENDER" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"REVOLVING LOAN" means a Loan made pursuant to clause (c) of Section
2.01.
"REVOLVING MATURITY DATE" means the sixth anniversary of the Closing
Date.
"S&P" means Standard & Poor's.
"SCHEDULED INDEBTEDNESS" means (a) all Indebtedness incurred under the
Paribas Credit Agreement and (b) all Guarantees issued by NovaCare Orthotics
and Prosthetics, Inc. and its subsidiaries under the Credit Agreement dated as
of May 27, 1994, among NovaCare, Inc., a Delaware corporation, certain of its
subsidiaries, the lenders party thereto and PNC Bank, National Association, as
agent, as amended to the date hereof.
21
"SECURED PARTIES" means the Administrative Agent, the Collateral Agent,
each Lender, the Issuing Bank and each other person to which any of the
Obligations is owed.
"SECURITY AGREEMENT" means the Security Agreement substantially in the
form of Exhibit G among the Borrower, the Subsidiary Loan Parties from time to
time party thereto and the Collateral Agent for the benefit of the Secured
Parties, as the same may be amended, modified or supplemented from time to
time in accordance with the provisions hereof.
"SECURITY DOCUMENTS" means the Security Agreement, the Pledge Agreement,
the Mortgages and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.12 or 5.13 to secure any
of the Obligations.
"SELLER" means NovaCare, Inc., a Delaware corporation.
"STATUTORY RESERVE RATE" means 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 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 Administrative Agent is subject
(a) with respect to the Base CD Rate, for new negotiable nonpersonal time
deposits in dollars of over $100,000 with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, 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.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated
April 2, 1999, as amended as of May 19, 1999 by and among the Seller, NC
Resources, Inc., a Delaware corporation, the Borrower and AcquisitionCo.
"SUBORDINATED NOTES" means $150,000,000 aggregate principal amount of
the Borrower's Senior Subordinated Notes due 2009 to be issued by the Borrower
pursuant to the Subordinated Note Documents.
"SUBORDINATED NOTE DOCUMENTS" means the indenture providing for the
issuance of the Subordinated Notes substantially in the form as described in
the Offering Memorandum, with no changes therefrom adverse to the Lenders and
all other instruments, agreements and other documents evidencing or governing
the Subordinated Notes or providing for any Guarantee or other right in
respect thereof.
"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
22
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.
"SUBSIDIARY" means any subsidiary of the Borrower.
"SUBSIDIARY LOAN PARTY" means any Subsidiary that is not a Foreign
Subsidiary.
"SYNDICATION AGENT" means Bankers Trust Company.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LOANS" means Tranche A Term Loans and Tranche B Term Loans.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on
such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during
the week following such day) or, if such rate is not so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding
Business Day) by the Administrative Agent from three negotiable certificate of
deposit dealers of recognized standing selected by it.
"TOTAL INDEBTEDNESS" means, as of any date, the sum of (a) the aggregate
principal amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date, in the amount that would be reflected on a
balance sheet prepared as of such date on a consolidated basis in accordance
with GAAP, plus (b) the aggregate principal amount of Indebtedness of the
Borrower and the Subsidiaries outstanding as of such date that is not required
to be reflected on a balance sheet in accordance with GAAP, determined on a
consolidated basis.
"TRANCHE A COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche A Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum principal
amount of the Tranche A Term Loan 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 9.04. The initial amount of each Lender's
Tranche A Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Tranche A
Commitment, as applicable. The initial aggregate amount of the Lenders'
Tranche A Commitments is $100,000,000.
"TRANCHE A LENDER" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.
23
"TRANCHE A MATURITY DATE" means the sixth anniversary of the Closing
Date.
"TRANCHE A TERM LOAN" means a Loan made pursuant to clause (a) of
Section 2.01.
"TRANCHE B COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum principal
amount of the Tranche B Term Loan 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 9.04. The initial amount of each Lender's
Tranche B Commitment is set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Tranche A
Commitment, as applicable. The initial aggregate amount of the Lenders'
Tranche B Commitments is $100,000,000.
"TRANCHE B LENDER" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.
"TRANCHE B MATURITY DATE" means the date that is six months after the
seventh anniversary of the Closing Date.
"TRANCHE B TERM LOAN" means a Loan made pursuant to clause (b) of
Section 2.01.
"TRANSACTIONS" means the execution, delivery and performance by the Loan
Parties of the Loan Documents (including the creation of the Liens provided
for in the Security Documents), the Borrowings and issuances of Letters of
Credit hereunder, the use of the proceeds of such Borrowings and Letters of
Credit, the issuance and sale of the Preferred Stock, the issuance and sale of
the Subordinated Notes, the Acquisition and the other transactions
contemplated hereby and by the other Loan Documents.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary of which securities (except
for directors' qualifying shares) or other ownership interests representing
100% of the equity and 100% of the ordinary voting power are, at the time any
determination is being made, owned, controlled or held, directly or
indirectly, by the Borrower or one or more wholly owned subsidiaries of the
Borrower.
"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. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of
this Agreement, Loans may be classified and referred to by Class (E.G., a
"Revolving Loan") or by Type (E.G., a "Eurodollar Loan") or by Class and Type
24
(E.G., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a
"Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. 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 "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 1.04. ACCOUNTING TERMS; GAAP; PRO FORMA COMPUTATIONS. (a) 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
the effect of any change occurring after the date hereof in GAAP or in the
application 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.
(b) All pro forma computations required to be made hereunder giving
effect to any acquisition, investment, sale, disposition or similar event
shall reflect on a pro forma basis such event and, to the extent applicable,
the historical earnings and cash flows associated with the assets acquired or
disposed of and any related incurrence or reduction of Indebtedness, but shall
not take into account any projected synergies or similar benefits expected to
be realized as a result of such event.
25
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set forth
herein, each Lender agrees (a) to make a Tranche A Term Loan to the Borrower
on the Effective Date in a principal amount not exceeding its Tranche A
Commitment, (b) to make a Tranche B Term Loan to the Borrower on the Effective
Date in a principal amount not exceeding its Tranche B Commitment and (c) to
make Revolving Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts
repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. LOANS AND BORROWINGS. (a) 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) Each Revolving Borrowing and Term Borrowing shall be comprised
entirely of ABR Loans or 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.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000. At the time that each ABR Revolving Borrowing is made,
such Borrowing shall be in an aggregate amount that is not less than $500,000
and if greater, is an integral multiple of $1,000,000; PROVIDED that an ABR
Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type and Class 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) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, Tranche A Maturity Date or Tranche B
Maturity Date, as applicable.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving Borrowing
or Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
26
11:00 a.m., New York City time, one Business Day before the date of the
proposed Borrowing; PROVIDED that any such notice of an ABR Revolving
Borrowing to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.05(e) may be given not later than 10:00 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. Each such
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
Borrowing, Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such 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 initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; 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.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
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.
SECTION 2.04. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters
of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. 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, the
Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. 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 Issuing Bank) to the
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice
27
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 (c) 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 Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank's standard form in connection with any
request for a Letter of Credit. 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 LC Exposure shall not exceed $5,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each 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, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of
such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, 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 on the day of
receipt; PROVIDED that, if such LC Disbursement is not less than $5,000,000,
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 an
28
ABR Revolving 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 ABR Revolving Borrowing. If the Borrower fails
to make such payment when due, the Administrative Agent shall notify each
Revolving Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender
shall pay to the Administrative Agent its Applicable Percentage of the payment
then due from the Borrower, in the same manner as provided in Section 2.05
with respect to Loans made by such Lender (and Section 2.05 shall apply,
MUTATIS MUTANDIS, to the payment obligations of the Revolving Lenders), and
the Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Revolving Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a
Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement (other than the funding of ABR Revolving Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
29
(f) OBLIGATIONS ABSOLUTE. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) 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 this Agreement, 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 Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) 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, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
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 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 Issuing Bank; PROVIDED that the foregoing
shall not be construed to excuse the Issuing Bank 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 the Issuing Bank's failure to exercise care when determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand
for payment under a Letter of Credit. The Issuing Bank shall promptly notify
the Administrative Agent and the Borrower by telephone (confirmed by telecopy)
of such demand for payment and whether the Issuing Bank 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 the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank 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 Revolving
Loans; PROVIDED that, if the Borrower fails to reimburse such LC Disbursement
when due pursuant to paragraph (e) of this Section, then Sections 2.12(c) and
30
(d) shall apply. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after the
date of payment by any Revolving Lender pursuant to paragraph (e) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender
to the extent of such payment.
(i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay
all unpaid fees accrued for the account of the replaced Issuing Bank pursuant
to Section 2.11(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of
the Issuing Bank under this Agreement with respect to Letters of Credit to be
issued thereafter and (ii) references herein to the term "Issuing Bank" shall
be deemed to refer to such successor or to any previous Issuing Bank, or to
such successor and all previous Issuing Banks, as the context shall require.
After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank
shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank 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.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; 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 VII. The
Borrower also shall deposit cash collateral pursuant to this paragraph as and
to the extent required by Section 2.10(b), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base for purposes of determining compliance with Section
2.10(b). Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments
shall accumulate in such account. Moneys in such account shall be applied by
the Administrative Agent to reimburse the Issuing Bank for LC Disbursements
for which it has not been reimbursed and, to the extent not so applied, shall
be held for the satisfaction of the reimbursement obligations of the Borrower
for the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
31
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived. If the Borrower is required
to provide an amount of cash collateral hereunder pursuant to Section 2.10(b),
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower as and to the extent that, after giving effect to such return, the
Borrower would remain in compliance with Section 2.10(b) and no Default shall
have occurred and be continuing.
SECTION 2.05. FUNDING OF BORROWINGS. (a) 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 ABR Revolving Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.04(e)
shall be remitted by the Administrative Agent to the Issuing Bank.
(b) 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, 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 and the Borrower severally agree 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 (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods 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 comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.
(b) 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 Revolving Borrowing of the Type resulting from such election to
be made on the effective date of such election. Each such telephonic Interest
32
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) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and paragraph (f) of
this Section:
(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) below 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
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) 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) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. 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 applicable thereto.
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, (i) the Tranche A Commitments and Tranche B Commitments
shall terminate at 5:00 p.m., New York City time, on the Effective Date and
(ii) the Revolving Commitments shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments of any Class; PROVIDED that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
33
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.10,
the sum of the Revolving Exposures would exceed the total Revolving
Commitments.
(c) If any prepayment of Term Borrowings would be required pursuant to
Section 2.10 but cannot be made because there are no Term Borrowings
outstanding, or because the amount of the required prepayment exceeds the
outstanding amount of Term Borrowings, then, on the date that such prepayment
would be required, the Revolving Commitments shall be reduced by an aggregate
amount equal to the amount of the required prepayment, or the excess of such
amount over the outstanding amount of Term Borrowings, as the case may be.
(d) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section, or
any required reduction of the Revolving Commitments under paragraph (c) 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; PROVIDED that a notice
of termination of the Revolving Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by
notice to the Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied. Any termination or reduction of the
Commitments of any Class shall be permanent. Each reduction of the Commitments
of any Class shall be made ratably among the Lenders in accordance with their
respective Commitments of such Class.
SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
of such Lender on the Revolving Maturity Date and (ii) to the Administrative
Agent for the account of each Lender the then unpaid principal amount of each
Term Loan of such Lender as provided in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts 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.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (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 the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) 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 accounts 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.
34
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note,
to such payee and its registered assigns).
SECTION 2.09. AMORTIZATION OF TERM LOANS. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, the Borrower shall repay Tranche A
Term Borrowings in 22 consecutive quarterly installments, payable beginning
March 31, 2000 and on each successive date thereafter which is three months
after the preceding installment date, in the aggregate amount set forth below
for each installment:
INSTALLMENT AMOUNT
1-4 $2,500,000
5-22 $5,000,000
(b) Subject to adjustment pursuant to paragraph (d) of this Section, the
Borrower shall repay Tranche B Term Borrowings in 28 consecutive quarterly
installments, payable beginning March 31, 2000 and on each successive date
thereafter which is three months after the preceding installment date, in the
aggregate amount set forth below for each installment:
INSTALLMENT AMOUNT
1-22 $ 250,000
23-28 $15,750,000
(c) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date and (ii) all Tranche B
Term Loans shall be due and payable on the Tranche B Maturity Date.
(d) Any prepayment of a Term Borrowing of either Class shall be applied
to reduce the subsequent scheduled repayments of the Term Borrowings of such
Class to be made pursuant to this Section ratably; PROVIDED that any
prepayment made pursuant to Section 2.10(a) shall be applied, first, to reduce
the next scheduled repayment of the Term Borrowings of such Class to be made
pursuant to this Section unless and until such next scheduled repayment has
been eliminated as a result of reductions hereunder and, second, ratably.
(e) Prior to any repayment of any Term Borrowings of either Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment. Each repayment of a Borrowing shall be applied ratably to the Loans
included in the repaid Borrowing. Repayments of Term Borrowings shall be
accompanied by accrued interest on the amount repaid.
35
SECTION 2.10. PREPAYMENT OF LOANS. (a) 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.
(b) In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Administrative Agent pursuant to Section
2.04(j)) in an aggregate amount equal to such excess.
(c) In the event and on each occasion that any Net Proceeds are received
by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment
Event, the Borrower shall, immediately after such Net Proceeds are received,
prepay Term Borrowings in an aggregate amount equal to such Net Proceeds;
PROVIDED that, in the case of any event described in clause (a) of the
definition of the term Prepayment Event, if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that
the Borrower and the Subsidiaries intend to apply the Net Proceeds from such
event (or a portion thereof specified in such certificate), within 120 days
after receipt of such Net Proceeds, to acquire real property, equipment or
other tangible assets to be used in the business of the Borrower and the
Subsidiaries, and certifying that no Default has occurred and is continuing,
then no prepayment shall be required pursuant to this paragraph in respect of
the Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such
120-day period, at which time a prepayment shall be required in an amount
equal to such Net Proceeds that have not been so applied; PROVIDED FURTHER
that the Borrower shall not be permitted to make elections pursuant to the
immediately preceding proviso with respect to Net Proceeds in any fiscal year
aggregating in excess of $1,000,000.
(d) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2000 , the Borrower shall prepay Term
Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for such
fiscal year. Each prepayment pursuant to this paragraph shall be made on or
before the date on which financial statements are delivered pursuant to
Section 5.01 with respect to the fiscal year for which Excess Cash Flow is
being calculated (and in any event within 90 days after the end of such fiscal
year).
(e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section. In the event of any optional or mandatory
prepayment of Term Borrowings made at a time when Term Borrowings of both
Classes remain outstanding, the Borrower shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated between
the Tranche A Term Borrowings and Tranche B Term Borrowings pro rata based on
the aggregate principal amount of outstanding Borrowings of each such Class;
PROVIDED that any Tranche B Lender may elect, by notice to the Administrative
Agent by telephone (confirmed by telecopy) at least one Business Day prior to
the prepayment date, to decline all or any portion of any prepayment of its
Tranche B Term Loans pursuant to this Section (other than an optional
prepayment pursuant to paragraph (a) of this Section, which may not be
declined), in which case the aggregate amount of the prepayment that would
have been applied to prepay Tranche B Term Loans but was so declined shall be
applied to prepay Tranche A Term Borrowings and Tranche B Term Loans of
36
Lenders who accept prepayment of their Tranche B Term Loans pursuant to this
Section, on a pro rata basis based on their then respective outstanding
principal amounts.
(f) 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 11:00 a.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 11:00 a.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; PROVIDED that, if a notice of optional prepayment is given in
connection with a conditional notice of termination of the Revolving
Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.07. Promptly following receipt of any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required
amount of a mandatory prepayment. 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
2.12.
SECTION 2.11. FEES. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at
the Applicable Rate on the average daily unused amount of each Commitment of
such Lender during the period from and including the Closing Date to but
excluding the date on which such Commitment terminates. Accrued commitment
fees shall be payable in arrears (i) in the case of commitment fees in respect
of the Revolving Commitments, on the last day of March, June, September and
December of each year and on the date on which the Revolving Commitments
terminate, commencing on the first such date to occur after the Closing Date,
and (ii) in the case of commitment fees in respect of the Tranche A Term
Commitments and Tranche B Term Commitments, on the Effective Date or any
earlier date on which such Commitments terminate. All commitment 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). For purposes of computing commitment fees with respect to Revolving
Commitments, a Revolving Commitment of a Lender shall be deemed to be used to
the extent of the outstanding Revolving Loans and LC Exposure of such Lender.
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the Applicable Rate
used to determine the interest rates applicable to Eurodollar Revolving 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 Commitment terminates and the date on
37
which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank
a fronting fee, which shall accrue at the rate of 1/4 of 1% 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 Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank'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 the last day of March, June, September and
December of each year shall be payable on the third Business Day following
such last day, 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 Commitments terminate and any such fees accruing after the date on
which the Revolving Commitments terminate shall be payable on demand. Any
other fees payable to the Issuing Bank 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) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.12. INTEREST. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.
(c) 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 or otherwise,
such overdue amount shall bear interest, after as well as before judgment, at
a rate per annum equal to (i) in the case of overdue principal of any Loan, 2%
plus the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount, 2% plus
the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving 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 an ABR Revolving Loan prior to the end of the Revolving Availability
Period), 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 Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) 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
38
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 2.13. ALTERNATE RATE OF INTEREST. If prior to the commencement
of any Interest Period for a 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) the Administrative Agent is advised by the Required Lenders
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 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 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
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. INCREASED COSTS. (a) 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 the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank 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
Lender 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
the Issuing Bank 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 the Issuing Bank hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank 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 the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as a
39
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 the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but
for such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b)
of this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender or the Issuing Bank,
as the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation;
PROVIDED that the Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing
Bank, 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 the Issuing
Bank'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 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.15. 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 applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in
any notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.10(f) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.18, 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, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest which would have accrued on
the principal amount of such Loan had such event not occurred, at the Adjusted
LIBO Rate that would have been applicable to such Loan, for the period from
the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
40
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 2.16. TAXES. (a) 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 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 Administrative Agent, Lender or Issuing Bank (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) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent, such Lender or the Issuing Bank, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder or
under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
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 the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error. (d) 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) 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, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate, provided that
such Foreign Lender has received written notice from the Borrower advising it
of the availability of such exemption or reduction and supplying all
applicable documentation.
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
41
fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.14, 2.15 or 2.16, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such
time is expressly required, prior to 12:00 noon, 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 payments to be made directly to the
Issuing Bank as expressly provided herein and except that payments pursuant to
Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made
to the Persons specified therein. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document 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 under each Loan Document shall be
made in dollars.
(b) 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, towards payment of 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, towards payment
of 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) 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 Revolving Loans, Term Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans, Term Loans and
participations in LC Disbursements and accrued interest thereon 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 Revolving Loans, Term 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 Revolving Loans, Term
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 the Borrower 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). The Borrower 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 the Borrower rights of set-off and counterclaim with respect to such
42
participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) 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 the account of the Lenders or the Issuing Bank 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, distribute to the Lenders or the
Issuing Bank, 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 the
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank 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 greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(d) or (e), 2.05(b), 2.17(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations
under such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any
Lender requests compensation under Section 2.14, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, 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 2.14 or 2.16, 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) If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, 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 9.04), 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 (and, if a Revolving Commitment is being assigned, the Issuing Bank),
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
43
assignment resulting from a claim for compensation under Section 2.14 or
payments required to be made pursuant to Section 2.16, such assignment will
result in a material 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
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and its
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 to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every juris diction where such qualification
is required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by the
Borrower and constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of the Borrower or such Loan
Party (as the case may be), enforceable in accordance with its 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.
SECTION 3.03. 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, except such as have been obtained
or made and are in full force and effect and except filings necessary to
perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of
its Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any of its Subsidiaries, and (d)
will not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries, except Liens created under the Loan
Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) 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 year ended December 31, 1998, reported on by
PricewaterhouseCoopers LLP, independent public accountants, and (ii) as of and
for the fiscal quarter and the portion of the fiscal year ended March 31,
1999, certified by its chief financial officer. Such financial statements
44
present fairly, in all material respects, the financial position and results
of operations and cash flows of the Borrower and its consolidated 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) above. (b) The Borrower has heretofore
furnished to the Lenders its pro forma consolidated balance sheet as of March
31, 1999, prepared giving effect to the Effective Date Transactions as if the
Effective Date Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on the
same assumptions used to prepare the pro forma financial statements included
in the Information Memorandum (which assumptions are believed by the Borrower
to be reasonable), (ii) is based on the best information available to the
Borrower after due inquiry, (iii) accurately reflects all adjustments
necessary to give effect to the Effective Date Transactions and (iv) presents
fairly, in all material respects, the pro forma financial position of the
Borrower and its consolidated Subsidiaries as of March 31, 1999 as if the
Effective Date Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred to above or
the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of the
Borrower, its Subsidiaries or NovaCare O&P has, as of the Effective Date, any
material contingent liabilities, unusual long-term commitments or unrealized
losses.
(d) Since December 31, 1998, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. PROPERTIES. (a) 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 (including its Mortgaged Properties), 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.
(b) 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, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by the Borrower or any of its Subsidiaries as of the Effective
Date after giving effect to the Transactions.
(d) As of the Effective Date, neither the Borrower nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
45
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority 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, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in 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) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. 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 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, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. 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 3.09. 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) any Taxes that are being contested in good faith
by appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. 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, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.11. DISCLOSURE. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
46
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement, any other Loan Document or any other document delivered in
connection with the Transactions 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.
SECTION 3.12. SUBSIDIARIES. Schedule 3.12 sets forth the name of, and
the ownership interest of the Borrower in, each Subsidiary of the Borrower and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Effective Date.
SECTION 3.13. INSURANCE. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid. The Borrower believes that the insurance
maintained by or on behalf of the Borrower and its Subsidiaries is adequate.
SECTION 3.14. LABOR MATTERS. As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. The hours worked by and
payments made to employees of the Borrower and the Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters. All payments due from
the Borrower or any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Borrower or such Subsidiary. The consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which the Borrower or any Subsidiary is bound.
SECTION 3.15. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the
making of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. SENIOR INDEBTEDNESS. The Obligations constitute "Senior
Debt" under and as defined in the Subordinated Note Documents.
47
SECTION 3.17. YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the computer systems of
the Borrower and its Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
the Borrower's systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by October 31, 1999. The cost
to the Borrower and its Subsidiaries of such reprogramming and testing and of
the reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information systems
of the Borrower and its Subsidiaries are and, with ordinary course upgrading
and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrower to conduct its businesses without Material
Adverse Effect.
SECTION 3.18. INTELLECTUAL PROPERTY. The Borrower and each of its
Subsidiary owns, or is licensed to use, all patents, trademarks, tradenames,
service marks, copyrights, technology, know-how and processes (together with
all applications therefor and licenses granting rights therein, "INTELLECTUAL
PROPERTY") reasonably necessary for the conduct of its business as currently
conducted, except for those the failure to own or be licensed to use which
could not reasonably be expected to result in a Material Adverse Effect. To
the knowledge of the Borrower, (a) the use of Intellectual Property by the
Borrower and its Subsidiaries does not infringe on the rights of any person,
(b) no Intellectual Property of the Borrower or any of its Subsidiaries is
being infringed upon by any Person, and (c) no claim is pending or threatened
in writing challenging the use or the validity of any Intellectual Property of
the Borrower or any Subsidiary, except for infringements and claims referred
to in the foregoing clauses (a), (b) and (c) that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
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 of this Agreement) that such party has signed a
counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of each of (i) Freedman, Levy, ▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Borrower, substantially in the form of Exhibit
48
B-1 and (ii) local counsel for the Administrative Agent in each
jurisdiction where a Class I Mortgaged Property is located,
substantially in the form of Exhibit B-2, and, in the case of each such
opinion, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Administrative Agent or the
Required Lenders shall reasonably request. The Borrower hereby requests
such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions and
any other legal matters relating to the Loan Parties, the Loan Documents
or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President
or a Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Agents shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses
(including fees, charges and disbursements of counsel) required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan
Document.
(f) The Collateral and Guarantee Requirement shall have been
satisfied and the Administrative Agent shall have received a completed
Perfection Certificate dated the Effective Date and signed by an
executive officer or Financial Officer of the Borrower, together with
all attachments contemplated thereby, including the results of a search
of the Uniform Commercial Code (or equivalent) filings made with respect
to the Loan Parties in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory
to the Administrative Agent that the Liens indicated by such financing
statements (or similar documents) are permitted by Section 6.02 or have
been released.
(g) The Administrative Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in
effect.
(h) The Lenders shall be reasonably satisfied as to the amount and
nature of any environmental and employee health and safety exposures to
which the Borrower and its Subsidiaries may be subject after giving
effect to the Transactions, and with the plans of the Borrower and its
subsidiaries with respect thereto.
(i) The Borrower shall have received gross cash proceeds of not
less than $60,000,000 from the issuance and sale of the Preferred Stock.
The Administrative Agent shall have received copies of the Certificate
of Designations and related documents in connection with the Preferred
Stock substantially in the form as described in the Offering Memorandum,
certified by a Financial Officer as complete and correct.
49
(j) The Borrower shall have received gross cash proceeds of not
less than $150,000,000 from the issuance of the Subordinated Notes. The
Administrative Agent shall have received copies of the Subordinated Note
Documents substantially in the form as described in the Offering
Memorandum, certified by a Financial Officer as complete and correct.
(k) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the
Transactions shall have been obtained, and all applicable waiting
periods and appeal periods shall have expired, in each case without the
imposition of any burdensome conditions, and there shall be no
governmental or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose burdensome
conditions on the Transactions or the operations or business of the
Borrower and the Subsidiaries after giving effect to the Transactions.
The Acquisition and the other Effective Date Transactions shall have
been, or substantially simultaneously with the initial funding of Loans
on the Effective Date shall be, consummated in accordance with the
Acquisition Documents and applicable law, without any amendment to or
waiver of any material terms or conditions of the Acquisition Documents
not approved by the Required Lenders. The Administrative Agent shall
have received copies of the Acquisition Documents and all certificates,
opinions and other documents delivered thereunder, certified by a
Financial Officer as complete and correct.
(l) The Administrative Agent shall have received (i) audited
consolidated and consolidating balance sheets and related statements of
income, stockholders' equity and cash flows of the Borrower and its
Subsidiaries for the three fiscal years ended prior to the Effective
Date, (ii) unaudited consolidated and consolidating balance sheets and
related statements of income, stockholders' equity and cash flows of the
Borrower and its Subsidiaries for each fiscal quarter, if any, ending
after the end of the most recent fiscal year and at least 30 days prior
to the Effective Date (and, to the extent available and excluding
related statements of cash flows, for each month ending after the end of
the most recent such fiscal quarter and before the Effective Date),
(iii) audited consolidated and consolidating balance sheets and related
statements of income, stockholders' equity and cash flows of NovaCare
O&P for the three fiscal years ended prior to the Effective Date and
(iv) unaudited consolidated and consolidating balance sheets and related
statements of income, stockholders' equity and cash flows of NovaCare
O&P for each fiscal quarter, if any, ending after the end of the most
recent fiscal year and at least 30 days prior to the Effective Date
(and, to the extent available and excluding related statements of cash
flows, for each month ending after the end of the most recent such
fiscal quarter and before the Effective Date), each of which audited and
unaudited financial statements (x) shall be in form and scope
satisfactory to the Agents and (y) shall not be materially inconsistent
with the financial statements or the projections previously provided to
the Agents.
(m) The Administrative Agent shall have received a pro forma
consolidated balance sheet of the Borrower as of March 31, 1999,
reflecting all pro forma adjustments as if the Effective Date
Transactions had been consummated on such date, and such pro forma
consolidated balance sheet shall be consistent in all material respects
with the projections and other information previously provided to the
Lenders. After giving effect to the Effective Date Transactions, neither
50
the Borrower nor any of its Subsidiaries shall have outstanding any
shares of preferred stock or any Indebtedness, other than (i)
Indebtedness incurred under the Loan Documents, (ii) the Subordinated
Notes, (iii) existing subordinated notes of subsidiaries of NovaCare O&P
in an aggregate principal amount not to exceed $40,000,000, (iv)
existing subordinated indebtedness of the Borrower or its subsidiaries
in an aggregate principal amount not to exceed $15,600,000 and (v) the
Preferred Stock. The aggregate amount of fees and expenses (including
underwriting discounts and commissions) payable or otherwise borne by
the Borrower and its Subsidiaries in connection with the Effective Date
Transactions shall not exceed $20,000,000.
(n) The Administrative Agent shall have received management's
consolidated and consolidating financial projections for the Borrower
and its Subsidiaries for each of fiscal years 1999 through and including
2007, detailed on a quarter-by-quarter basis for fiscal years 1999 and
2000 (the "PROJECTIONS"), which projections shall reflect the
Transactions and include the written assumptions upon which such
projections are based. Such projections shall be reasonably satisfactory
in all respects to the Agents and shall be substantially similar in form
to the projections set forth in the Information Memorandum. The Lenders
shall be satisfied with the projected amounts and the achievability of
the synergies to be realized as a result of the Acquisition.
(o) The Administrative Agent shall have received a solvency
letter, in form and substance satisfactory to the Lenders, from
Valuation Research with respect to the solvency of the Borrower and its
subsidiaries on a consolidated basis after giving effect to the
Effective Date Transactions.
(p) There shall be no litigation or administrative proceeding that
has had or is reasonably likely to have a Material Adverse Effect, after
giving effect to the Transactions.
(q) The consummation of the Transactions shall not (a) violate any
applicable law, statute, rule or regulation or (b) conflict with, or
result in a default or event of default under, any material agreement of
the Borrower, any of the Subsidiaries or NovaCare O&P.
(r) The Lenders shall have received a certificate of a financial
officer of the Borrower with respect to the pro forma Consolidated
EBITDA of the Borrower and NovaCare O&P for the twelve month period
ending March 31, 1999, and such Consolidated EBITDA (calculated on a pro
forma basis to reflect acquisitions during such period) shall not be
less than $84,000,000.
(s) No event shall have occurred, and no condition or circumstance
shall exist, that in the judgment of the Required Lenders has had or is
reasonably likely to have a material adverse effect on the business,
operations, properties, assets, liabilities or condition (financial or
otherwise) of the Borrower and its subsidiaries, taken as a whole, or of
NovaCare O&P.
51
(t) The Scheduled Indebtedness shall have been or shall
simultaneously be repaid in full or released, all agreements and
instruments evidencing or governing such Indebtedness and all lending or
other commitments thereunder shall have been terminated and all Liens
securing such Indebtedness shall have been released, and the
Administrative Agent shall have received such evidence as it shall
reasonably have requested as to the satisfaction of such conditions.
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 Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on
July 31, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the
following conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing 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 paragraphs (a) and
(b) of this Section.
ARTICLE V
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:
52
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated and unaudited consolidating balance
sheet and related statements of income, stockholders' equity and cash
flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported
on by PricewaterhouseCoopers 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
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated and
consolidating balance sheet and related statements of income,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the
end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) within 45 days after the end of each of the first two fiscal
months of each fiscal quarter of the Borrower, its consolidated balance
sheet and related statements of income and stockholders' equity as of
the end of and for such fiscal month and the then elapsed portion of the
fiscal year, all certified by one of its Financial Officers as
presenting in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (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
6.12, 6.13, 6.14 and 6.15 and (iii) stating whether any change in GAAP
or in the application thereof has occurred since the date of the
Borrower's audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, 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
53
Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
(f) prior to the commencement of each fiscal year of the Borrower,
a detailed consolidated budget for such fiscal year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flows as of the end of and for such fiscal year and
setting forth the assumptions used for purposes of preparing such
budget) and, promptly when available, any significant revisions of such
budget;
(g) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally,
as the case may be; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender
may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Borrower will furnish to
the Administrative 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, investigation
or proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected
to result in liability of the Borrower and its Subsidiaries in an
aggregate amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be
expected to result in, 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 5.03. INFORMATION REGARDING COLLATERAL. (a) The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by
54
it is located (including the establishment of any such new office or
facility), (iii) in any Loan Party's identity or corporate structure or (iv)
in any Loan Party's Federal Taxpayer Identification Number. The Borrower
agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code
or otherwise that are required in order for the Administrative Agent to
continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral. The Borrower also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, the Borrower shall deliver to the Administrative Agent a certificate of
a Financial Officer and the General Counsel of the Borrower (i) setting forth
the information required pursuant to Section 1 of the Perfection Certificate
or confirming that there has been no change in such information since the date
of the Perfection Certificate delivered on the Effective Date or the date of
the most recent certificate delivered pursuant to this Section and (ii)
certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Documents for a period of
not less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period).
SECTION 5.04. 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, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its
business; PROVIDED that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. PAYMENT OF OBLIGATIONS. The Borrower will, and will cause
each of its Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, 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, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.06. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.
SECTION 5.07. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies (a) insurance in such amounts (with no greater risk retention) and
against such risks as are customarily maintained by companies of established
repute engaged in the same or similar businesses operating in the same or
55
similar locations and (b) all insurance required to be maintained pursuant to
the Security Documents. The Borrower will furnish to the Lenders, upon request
of the Administrative Agent, information in reasonable detail as to the
insurance so maintained.
SECTION 5.08. CASUALTY AND CONDEMNATION. (a) The Borrower (a) will
furnish to the Administrative Agent and the Lenders prompt written notice of
any casualty or other insured damage to any material portion of any Collateral
or the commencement of any action or proceeding for the taking of any
Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding and (b) will ensure that the
Net Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of this Agreement and the Security Documents.
SECTION 5.09. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative 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 5.10. 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, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of the
Borrowings hereunder and the Letters of Credit will be used only for the
purposes set forth in the preamble to this Agreement. No part of the proceeds
of any Loan or any Letter of Credit will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry any Margin Stock or to refinance any Indebtedness originally incurred
for such purpose, or for any other purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.
SECTION 5.12. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary is
formed or acquired after the Effective Date, the Borrower will, within three
Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Collateral and
Guarantee Requirement to be satisfied with respect to such Subsidiary (if it
is a Subsidiary Loan Party) and with respect to any Equity Interest in or
Indebtedness of such Subsidiary owned by or on behalf of any Loan Party.
SECTION 5.13. FURTHER ASSURANCES. (a) The Borrower will, and will cause
each Subsidiary Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), which may be required
under any applicable law, or which the Administrative Agent or the Required
Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied, all at the expense of the Loan
56
Parties. The Borrower also agrees to provide to the Administrative Agent, from
time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
(b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by the Borrower or any
Subsidiary Loan Party after the Effective Date (other than assets constituting
Collateral under the Security Documents that become subject to the Liens under
the Security Documents upon acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary
or reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at
the expense of the Loan Parties.
SECTION 5.14. INTEREST RATE PROTECTION. As promptly as practicable, and
in any event within 90 days after the Effective Date, the Borrower will enter
into, and thereafter for a period of not less than five years will maintain in
effect, one or more interest rate protection agreements on such terms and with
such parties as shall be reasonably satisfactory to the Administrative Agent,
the effect of which shall be to fix or limit the interest cost to the Borrower
with respect to at least 50% of the outstanding Long-Term Indebtedness of the
Borrower.
ARTICLE VI
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 have been reimbursed, the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01. INDEBTEDNESS; CERTAIN EQUITY SECURITIES. (a) The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or
permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Notes; PROVIDED that the aggregate principal
amount for all Indebtedness permitted by this clause (ii) and
outstanding at any time shall not exceed $150,000,000;
(iii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01, but not any extensions, renewals or replacements of any
such Indebtedness;
(iv) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary; PROVIDED that
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower
57
or any Subsidiary Loan Party shall be subject to Sections 6.05(d)(ii),
(e) and (f);
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary
and by any Subsidiary of Indebtedness of the Borrower or any other
Subsidiary; PROVIDED that Guarantees by the Borrower or any Subsidiary
Loan Party of Indebtedness of any Subsidiary that is not a Loan Party
shall be subject to Section 6.05;
(vi) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured
by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an
earlier maturity date or decreased weighted average life thereof;
PROVIDED that (a) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (b) the aggregate principal amount of Indebtedness
permitted by this clause (vi) shall not exceed $10,000,000 at any time
outstanding;
(vii) Indebtedness of any Person that becomes a Subsidiary after
the date hereof; PROVIDED that (a) such Indebtedness exists at the time
such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary and (b) the
aggregate principal amount of Indebtedness permitted by this clause
(vii) shall not exceed $5,000,000 at any time outstanding;
(viii) Permitted Seller Notes in an aggregate principal amount
outstanding at any time not to exceed $65,000,000; and
(ix) other unsecured Indebtedness in an aggregate principal amount
not exceeding $15,000,000 at any time outstanding; PROVIDED that the
aggregate principal amount of Indebtedness of the Borrower's
Subsidiaries permitted by this clause (ix) shall not exceed $5,000,000
at any time outstanding.
Notwithstanding the foregoing, the Borrower will not, and will not permit any
Subsidiary to, create, incur or assume any Indebtedness at any time, unless
such creation, incurrence or assumption is expressly permitted under the
Subordinated Note Documents at such time.
(b) The Borrower will not, and will not permit any Subsidiary to, issue
any preferred stock or other preferred Equity Interests other than (i) the
Preferred Stock and (ii) junior preferred stock; provided that the terms of
such junior preferred stock shall have been approved by the Required Lenders
or shall be no more adverse to the Borrower or the Lenders than the Preferred
Stock and shall be substantially similar to the non-voting common stock of the
Borrower, except with respect to liquidation rights.
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SECTION 6.02. LIENS. (a) The Borrower will not, and will not permit any
Subsidiary 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:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
PROVIDED that (i) such Lien shall not apply to any other property or
asset of the Borrower or any Subsidiary and (ii) such Lien shall secure
only those obligations which it secures on the date hereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; PROVIDED that
(A) such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Subsidiary, as the case may
be, (B) such Lien shall not apply to any other property or assets of the
Borrower or any Subsidiary and (c) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be; and
(v) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; PROVIDED that (A) such
security interests secure Indebtedness permitted by clause (vi) of
Section 6.01(a), (B) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (C)
the Indebtedness secured thereby does not exceed 80% of the cost of
acquiring, constructing or improving such fixed or capital assets and
(D) such security interests shall not apply to any other property or
assets of the Borrower or any Subsidiary.
SECTION 6.03. FUNDAMENTAL CHANGES. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate
or dissolve, except that if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing, (i) any
Subsidiary may merge into the Borrower in a transaction in which the Borrower
is the surviving corporation, (ii any Subsidiary may merge into another
Subsidiary in a transaction in which the surviving entity is a Subsidiary and
(if either party to such merger is a Subsidiary Loan Party) is a Subsidiary
Loan Party and (iii) any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the
Lenders; PROVIDED that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger, and any such merger
involving a Subsidiary that is not a Subsidiary Loan Party, shall not be
permitted unless also permitted by Section 6.05.
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(b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than orthotic and
prosthetic patient-care clinic management and the manufacture and distribution
of orthotic and prosthetic devices and patient-care products and business
activities incidental or reasonably related thereto.
SECTION 6.04. ASSET SALES. The Borrower will not, and will not permit
any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of any
asset, including any Equity Interest owned by it, nor will the Borrower permit
any of its Subsidiaries to issue any additional Equity Interest in such
Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business and dispositions of
obsolete inventory of NovaCare O&P having an aggregate book value not to
exceed $10,000,000 following the Borrower's initial inventory review of
NovaCare O&P in connection with the Acquisition;
(b) sales, transfers and dispositions to the Borrower or a
Subsidiary; PROVIDED that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in
compliance with Sections 6.05 and 6.09; and
(c) sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary) that are not permitted by any other
clause of this Section; PROVIDED that the aggregate fair market value of
all assets sold, transferred or otherwise disposed of in reliance upon
this clause (c) shall not exceed $5,000,000 during any fiscal year of
the Borrower and the Net Proceeds of each sale, transfer or disposition
are applied in a manner consistent with the other provisions of this
Agreement (including Section 2.10);
PROVIDED that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and solely for consideration consisting of (i) cash and (ii) non-cash
consideration in an aggregate amount for all such transactions after the
Effective Date not to exceed $500,000.
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SECTION 6.05. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.
The Borrower will not, and will not permit any of its Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any Equity
Interests in or evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or
make or permit to exist any investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit,
except:
(a) the Acquisition;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on
Schedule 6.05;
(d) investments by the Borrower and its Subsidiaries in Equity
Interests in their respective Subsidiaries; PROVIDED that (i) any such
Equity Interests held by a Loan Party shall be pledged pursuant to the
Pledge Agreement (subject to the limitations applicable to common stock
of a Foreign Subsidiary referred to in the definition of "Collateral and
Guarantee Requirement" in Section 1.01) and (ii) the aggregate amount of
investments by Loan Parties in, loans and advances by Loan Parties to
and Guarantees by Loan Parties of Indebtedness of Subsidiaries that are
not Loan Parties (including all such investments, loans, advances and
Guarantees existing on the Effective Date) shall not exceed $500,000 at
any time outstanding;
(e) loans or advances made by the Borrower to any Subsidiary or
made by any Subsidiary to the Borrower or any other Subsidiary; PROVIDED
that (i) any such loans and advances made by a Loan Party shall be
evidenced by a promissory note pledged pursuant to the Pledge Agreement
and (ii) the amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the
limitation set forth in clause (d) above;
(f) Guarantees constituting Indebtedness permitted by Section
6.01; PROVIDED that (i) a Subsidiary shall not Guarantee the
Subordinated Notes unless (A) such Subsidiary also has Guaranteed the
Obligations pursuant to the Guarantee Agreement, (B) such Guarantee of
the Subordinated Notes is subordinated to such Guarantee of the
Obligations on terms no less favorable to the Lenders than the
subordination provisions of the Subordinated Notes and (C) such
Guarantee of the Subordinated Notes provides for the release and
termination thereof, without action by any party, upon any release and
termination of such Guarantee of the Obligations, and (ii) the aggregate
principal amount of Indebtedness of Subsidiaries that are not Loan
Parties that is Guaranteed by any Loan Party shall be subject to the
limitation set forth in clause (d) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
61
(h) loans and advances made by the Borrower and the Subsidiaries
in the ordinary course of business consistent with past practices to
their respective employees for education-related expenses (including
tuition and room and board), moving, travel and emergency expenses and
other similar expenses, so long as the aggregate principal amount
thereof at any one time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not exceed
$2,500,000; and
(i) acquisitions by the Borrower or any Subsidiary of all or
substantially all of the assets of, or all the Equity Interests in, a
Person or division or line of business of a Person if (i) each
Subsidiary, if any, formed for the purpose of or resulting from such
acquisition shall be a Wholly Owned Subsidiary and a Loan Party, (ii)
the ownership by the Borrower or any Subsidiary of such Person or
business is consistent with the limitations of Section 6.03, (iii) no
Default or Event of Default results from the making of any such
acquisition, (iv) prior to the making of any such acquisition the
Borrower shall have delivered to the Administrative Agent calculations
demonstrating pro forma compliance with the covenants contained in
Sections 6.12, 6.13, 6.14 and 6.15 as of the end of and for the most
recent period of four fiscal quarters for which financial statements
shall have been delivered pursuant to Section 5.03(a) or (b), giving
effect to such acquisition, any related incurrence or repayment of
Indebtedness and the terms of any employment agreement entered into in
connection therewith as if they had occurred at the beginning of such
period and (v) the aggregate consideration (including the aggregate
principal amount of Permitted Seller Notes issued and Permitted Earn-Out
Obligations incurred) paid for acquisitions permitted under this clause
(i) after the Effective Date shall not exceed $150,000,000; PROVIDED,
that so long as the conditions in clause (iv) of this paragraph are
satisfied and the Leverage Ratio (calculated as set forth in clause (iv)
of this paragraph) does not exceed 2.50 to 1.00, the restriction set
forth in this clause (v) shall not apply.
Notwithstanding the foregoing, the Borrower will not, and will not permit any
Subsidiary to, enter into any transaction contemplated by this Section 6.05,
unless such transaction is expressly permitted under the Subordinated Note
Documents at such time.
SECTION 6.06. SALE AND LEASEBACK TRANSACTIONS. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred, except for any such sale of any fixed or capital assets
that is made for cash consideration in an amount not less than the cost of
such fixed or capital asset and is consummated within 90 days after the
Borrower or such Subsidiary acquires or completes the construction of such
fixed or capital asset.
SECTION 6.07. HEDGING AGREEMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any Hedging Agreement, other
than (a) Hedging Agreements required by Section 5.14 and (b) Hedging
Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
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SECTION 6.08. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS. (a)
The Borrower will not, and will not permit any Subsidiary to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except (i) the
Borrower may declare and pay dividends with respect to its capital stock
payable solely in additional shares of its common stock, (ii) Subsidiaries may
declare and pay dividends ratably with respect to their capital stock, (iii)
the Borrower may make Restricted Payments, not exceeding $1,000,000 during any
fiscal year, pursuant to and in accordance with stock option plans or other
benefit plans for management or employees of the Borrower and its Subsidiaries
and (iv) if no Default or Event of Default has occurred and is continuing, the
Borrower may repurchase shares of the Preferred Stock for, and may make
additional payments with, cash or Equity Interests in the Borrower pursuant to
the exercise by a holder of its put rights, or the exercise by the Borrower of
its call rights or any mandatory redemption, as applicable, in each case as
contemplated by the Certificate of Designations; PROVIDED that (x) to the
extent such Restricted Payments are made for Equity Interests other than
common stock, the terms of such Equity Interests shall have been approved by
the Required Lenders and (y) to the extent that such Restricted Payments are
made for cash, (A) such Restricted Payments may only be made with the cash
proceeds of an issuance of common stock of the Borrower and (B) prior to the
making of any such Restricted Payment, the Borrower shall have delivered to
the Administrative Agent calculations demonstrating pro forma compliance with
the covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 as of the end of
and for the most recent period of four fiscal quarters for which financial
statements shall have been delivered pursuant to Section 5.01(a), (b) or (c),
giving effect to such Restricted Payment as if it had occurred at the
beginning of such period. Notwithstanding the foregoing, the Borrower shall be
permitted to exchange shares of common stock for the Preferred Stock, as
contemplated by the Certificate of Designations, or exchange shares of common
stock for shares of another class of common stock.
(b) The Borrower will not, and will not permit any Subsidiary to, make
or agree to make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal
of or interest on any Indebtedness, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any Indebtedness, except:
(i) the payment of Indebtedness created under the Loan Documents;
and
(ii) regularly scheduled interest and principal payments as and
when due in respect of any Indebtedness and so long as no Default or
Event of Default has occurred and is continuing, any prepayment of the
Subordinated Notes pursuant to clause (c) of the definition of
"Prepayment Event" up to amount not to exceed the amount permitted to be
deducted from the calculation of Net Proceeds pursuant to clause (d) of
the definition of "Net Proceeds", in each case other than payments in
respect of the Subordinated Notes that are prohibited by the
subordination provisions thereof.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary 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 that
are at prices and on terms and conditions not less favorable to the Borrower
or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among the Borrower and
63
the Subsidiary Loan Parties not involving any other Affiliate, (c) any
Restricted Payment permitted by Section 6.08 and (d) with respect to the
Preferred Stock, the transactions contemplated by the Certificate of
Designations, the documents executed in connection with the sale of the
Preferred Stock and the Offering Memorandum.
SECTION 6.10. RESTRICTIVE AGREEMENTS. The Borrower will not, and will
not permit any Subsidiary 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; PROVIDED that
(i) the foregoing shall not apply to restrictions and conditions imposed by
law or by any Loan Document or Subordinated Note Document, (ii) the foregoing
shall not apply to restrictions and conditions existing on the date hereof
identified on Schedule 6.10 (but shall apply to any amendment or modification
expanding the scope of any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing
shall not apply to restrictions or conditions 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 and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS. The Borrower will not,
and will not permit any Subsidiary to, amend, modify or waive any of its
rights under any Subordinated Note Document or any document or instrument
evidencing or governing the Preferred Stock or other instrument or agreement
evidencing or governing Indebtedness or preferred stock, if any such
amendment, modification or waiver, taken together with any related amendments,
modifications or waivers, could reasonably be expected to be adverse to the
rights or interests of the Lenders (including by reducing the amount of any
prepayment required to be made hereunder).
SECTION 6.12. INTEREST EXPENSE COVERAGE RATIO. The Borrower will not
permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Cash Interest
Expense, in each case for any period of four consecutive fiscal quarters (or
such lesser number of fiscal quarters as shall have elapsed since June 30,
1999) ending during any period set forth below, commencing with the period of
four consecutive fiscal quarters (or such lesser number of fiscal quarters as
shall have elapsed since June 30, 1999) ending on December 31, 1999, to be
less than the ratio set forth below opposite such period:
PERIOD RATIO
Fiscal year ending December 31, 1999 2.25 to 1.00
Fiscal year ending December 31, 2000 2.50 to 1.00
Fiscal year ending December 31, 2001 2.75 to 1.00
Fiscal year ending December 31, 2002 3.00 to 1.00
Thereafter 3.00 to 1.00
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SECTION 6.13. LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio as of any date during any period set forth below, commencing with the
period of four consecutive fiscal quarters (or such lesser number of fiscal
quarters as shall have elapsed since June 30, 1999) ending on December 31,
1999, to exceed the ratio set forth opposite such period:
PERIOD RATIO
Fiscal year ending December 31, 1999 4.75 to 1.00
Fiscal year ending December 31, 2000 4.00 to 1.00
Fiscal year ending December 31, 2001 3.50 to 1.00
Fiscal year ending December 31, 2002 3.25 to 1.00
Thereafter 3.25 to 1.00
SECTION 6.14. CONSOLIDATED ADJUSTED EBITDA/ INTEREST COVERAGE RATIO. The
Borrower will not permit the ratio of (a) Consolidated Adjusted EBITDA to (b)
Consolidated Cash Interest Expense, in each case for any period of four
consecutive fiscal quarters (or such lesser number of fiscal quarters as shall
have elapsed since June 30, 1999) ending on any date during any period set
forth below, commencing with the period of four consecutive fiscal quarters
(or such lesser number of fiscal quarters as shall have elapsed since June 30,
1999) ending on December 31, 1999, to be less than the ratio set forth below
opposite such period:
PERIOD RATIO
Fiscal year ending December 31, 1999 2.00 to 1.00
Fiscal year ending December 31, 2000 2.25 to 1.00
Fiscal year ending December 31, 2001 2.50 to 1.00
Fiscal year ending December 31, 2002 2.50 to 1.00
Thereafter 2.50 to 1.00
SECTION 6.15. CAPITAL EXPENDITURES. The Borrower will not permit the
aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any fiscal year to exceed the amount set forth below as the
"BASE AMOUNT" for such fiscal year, PROVIDED that the amount of permitted
Capital Expenditures in any fiscal year shall be increased by an amount equal
to 50% of the total amount of unused permitted Capital Expenditures for the
immediately preceding year (but not including the amount of any unused Capital
Expenditures carried forward to such preceding year pursuant to this proviso):
FISCAL YEAR BASE AMOUNT
1999 $10,500,000
2000 $8,000,000
2001 $7,800,000
2002 $7,500,000
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2003 $7,900,000
2004 $8,400,000
2005 $8,900,000
2006 $9,400,000
2007 $9,900,000
ARTICLE VII
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 any other Loan Document
when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any
Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, shall
prove to have been incorrect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to
the existence of the Borrower) or 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender);
(f) the Borrower or any Subsidiary 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;
(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
66
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, 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 Subsidiary 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
Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall
be entered;
(i) the Borrower or any Subsidiary 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 Subsidiary 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 Subsidiary 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 $5,000,000 shall be rendered against the Borrower,
any Subsidiary 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 Subsidiary 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, could reasonably be expected to result in liability of
the Borrower and its Subsidiaries in an aggregate amount exceeding (i)
$1,000,000 in any year or (ii) $5,000,000 for all periods;
(m) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral, with the priority required
by the applicable Security Document, except (i) as a result of the sale
or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the
Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it
under the Pledge Agreement;
67
(n) any of the Security Documents shall cease to be or shall be
asserted by any Loan Party not to be in full force and effect;
(o) the Guarantee Agreement or the Indemnity, Subrogation and
Contribution Agreement shall cease to be or shall be asserted by any
Loan Party not to be in full force and effect; or
(p) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the
Borrower 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 out standing 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 Borrower 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 the Borrower; and in case of any event with respect to
the Borrower 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 Borrower 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 the Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated
to the Administrative Agent by the terms of the Loan Documents, together with
such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative 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 Administrative Agent, and such
bank 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 hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
68
Documents that the Administrative Agent is required to exercise in writing by
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the Administrative
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
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall not be deemed
not to have knowledge of any Default unless and until written notice thereof
is given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv)
the validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent. Any co-agents hereunder shall have no
obligations or liabilities pursuant to their capacity as co- agents.
The Administrative Agent shall be entitled to rely upon, and 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
Administrative 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 Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), 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 Administrative 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
the Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all 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
each Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor to the
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders, the Issuing Bank 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 Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
69
may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. Upon the acceptance of its appointment
as Administrative Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and
such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative 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 the Administrative 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
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, 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:
(a) if to the Borrower, to it at Hanger Orthopedic Group, Inc.,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of Chief
Executive Officer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (212)
552-7500);
(c) if to the Issuing Bank, to it at The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (212)
552-7500);
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
70
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. 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 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right
or power hereunder or under any other Loan Document 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 Administrative Agent, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party 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 the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or, in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by
the Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; PROVIDED that
no such agreement shall (i) increase the 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 affected
thereby, (iii) postpone the maturity of any Loan, or any scheduled date of
payment of the principal amount of any Term Loan under Section 2.09, or the
required date of reimbursement of any LC Disbursement, or any date for the
payment of any interest or fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected
thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the
pro rata sharing of payments required thereby, without the written consent of
each Lender, (v) change any of the provisions of this Section o the percentage
set forth in the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders
of any Class) required to waive, amend or modify any rights thereunder or make
any determination or grant any consent thereunder, without the written consent
of each Lender (or each Lender of such Class, as the case may be), (vi)
release any Subsidiary Loan Party from its Guarantee under the Guarantee
Agreement (except as expressly provided in the Guarantee Agreement), or limit
its liability in respect of such Guarantee, without the written consent of
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each Lender, (vii) release all or substantially all of the Collateral from the
Liens of the Security Documents, without the written consent of each Lender,
(viii) change any provisions of any Loan Document in a manner that by its
terms adversely affects the rights in respect of payments due to Lenders
holding Loans of any Class differently than those holding Loans of any other
Class, without the written consent of Lenders holding a majority in interest
of the outstanding Loans and unused Commitments of each affected Class or (ix)
change the rights of the Tranche B Lenders to decline mandatory prepayments as
provided in Section 2.10 without the written consent of Tranche B Lenders
holding a majority of the outstanding Tranche B Loans; PROVIDED FURTHER that
(a) no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent or the Issuing Bank without the prior
written consent of the Administrative Agent or the Issuing Bank, as the case
may be, and (b) any waiver, amendment or modification of this Agreement that
by its terms affects the rights or duties under this Agreement of the
Revolving Lenders (but not the Tranche A Lenders and Tranche B Lenders), the
Tranche A Lenders (but not the Revolving Lenders and Tranche B Lenders) or the
Tranche B Lenders (but not the Revolving Lenders and Tranche A Lenders) may be
effected by an agreement or agreements in writing entered into by the Borrower
and requisite percentage in interest of the affected Class of Lenders that
would be required to consent thereto under this Section if such Class of
Lenders were the only Class of Lenders hereunder at the time. Notwithstanding
the foregoing, any provision of this Agreement may be amended by an agreement
in writing entered into by the Borrower, the Required Lenders and the
Administrative Agent (and, if their rights or obligations are affected
thereby, the Issuing Bank) if (i) by the terms of such agreement the
Commitment of each Lender not consenting to the amendment provided for therein
shall terminate upon the effectiveness of such amendment and (ii) at the time
such amendment becomes effective, each Lender not consenting thereto receives
payment in full of the principal of and interest accrued on each Loan made by
it and all other amounts owing to it or accrued for its account under this
Agreement.
SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Arranger, 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 the Loan Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all out-of-pocket expenses incurred by
the Agents, the Issuing Bank or any Lender, including the fees, charges and
disbursements of any counsel for the Agents, the Issuing Bank or any Lender,
in connection with the enforcement or protection of its rights in connection
with the Loan Documents, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Arranger, the Agents, the Issuing
Bank 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 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 any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective
obligations thereunder 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 the Issuing Bank to honor
a demand for payment under a Letter of Credit if the documents presented in
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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 Mortgaged Property or any other property
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way 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 by final and nonappealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Arranger, the Agents or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Arranger, the Agents or the Issuing Bank, as the case may be, such Lender's
pro rata share (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 the
Arranger, the Agents or the Issuing Bank in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based upon its share
of the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and each 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 Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. 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 the Issuing Bank that issues any Letter of Credit), except that
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). 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 the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Arranger, the Agents, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) 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); PROVIDED that (i)
except in the case of an assignment to a Lender or an Affiliate of a Lender,
73
each of the Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure, the Issuing Bank) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) 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, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent,
(iii) 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, except that this clause (iii) 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, (iv)
the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; and
PROVIDED FURTHER that any consent of the Borrower otherwise required under
this paragraph shall not be required if an Event of Default under clause (h)
or (i) of Article VII has occurred and is continuing. Subject to acceptance
and recording thereof pursuant to paragraph (d) of this Section, from and
after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance 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 9.03). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph 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 (e) of this Section.
For the purposes of this Section 9.04(b), the term "Affiliate" shall be deemed
to include, with respect to an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and is
managed or advised by the same investment advisor as such investment fund or
by an Affiliate of such investment advisor.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy
of each Assignment and Acceptance 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 Administrative
Agent, the Issuing Bank 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 Issuing
Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
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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
Acceptance 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.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, 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 (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Issuing Bank 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 the Loan Documents and to approve any
amendment, modification or waiver of any provision of the Loan Documents;
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 9.02(b) that
affects such Participant. Subject to paragraph (f) 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 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.16(c) as though it were a Lender.
(f) 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.
(g) 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 pledge or assignment to secure obligations 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 9.05. SURVIVAL. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents 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 the Administrative Agent, the
75
Issuing Bank 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 Sections 2.13, 2.14, 2.15 and 9.03 and Article
VIII 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 9.06. 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, the
other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract 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 4.01, 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 of this Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 9.07. 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 9.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower against any of and all the obligations of the Borrower 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 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower 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
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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
any Loan Document, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and 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 or any other Loan Document shall affect any right
that the Administrative Agent, the Issuing Bank or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower 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 or any other Loan
Document 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) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. 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, ANY OTHER LOAN DOCUMENT 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 9.11. 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 9.12. CONFIDENTIALITY. Each of the Arranger, the Agents, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a)
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), (b) to the extent requested by any regulatory
77
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to
an agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (g)
with the consent of the Borrower, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, (i)
to any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees
to be bound by the provisions of this Section 9.12.) or (j) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section or (ii) becomes available to the Arranger, the Agents, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section, "INFORMATION" means all
information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Arranger,
the Agents, the Issuing Bank or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; PROVIDED that, in the case of information received
from the Borrower 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.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "CHARGES"), shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of
such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and
the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.
SECTION 9.14. RELEASE OF LIENS AND GUARANTEES. In the event that the
Borrower or any Subsidiary conveys, sells, leases, assigns, transfers or
otherwise disposes of all or any portion of any of the Equity Interests,
assets or property of the Borrower or any of the Subsidiaries in a transaction
not prohibited by Section 6.04, the Administrative Agent and the Collateral
Agent shall promptly (and the Lenders hereby authorize the Administrative
Agent and the Collateral Agent to) take such action and execute any such
documents as may be reasonably requested by the Borrower and at the Borrower's
expense to release any Liens created by any Loan Document in respect of such
Equity Interests, assets, property, including the release and satisfaction of
record of any mortgage or deed of trust granted in connection herewith, and,
in the case of a disposition of all or substantially all the Equity Interests
78
or assets of any Subsidiary Loan Party, terminate such Subsidiary Loan Party's
obligations under the Subsidiary Guarantee Agreement. In addition, the
Administrative Agent and the Collateral Agent agree to take such actions as
are reasonably requested by the Borrower and at the Borrower's expense to
terminate the Liens and security interests created by the Loan Documents when
all the Obligations are paid in full and all Letters of Credit and Commitments
are terminated. Any representation, warranty or covenant contained in any Loan
Document relating to any such Equity Interests, assets, property or Subsidiary
shall no longer be deemed to be made once such Equity Interests, assets or
property is conveyed, sold, leased, assigned, transferred or disposed of.
79
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.
HANGER ORTHOPEDIC GROUP, INC.,
individually and as Administrative Agent,
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY,
individually and as Syndication Agent,
By: /s/▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Principal
PARIBAS,
individually and as Documentation Agent,
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director, Merchant Banking Group
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
ABN AMRO BANK N.V.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
ALLSTATE LIFE INSURANCE COMPANY,
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
BANKBOSTON, N.A.
By: /s/▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
COMERICA BANK,
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: First Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK
INTERNATIONAL", NEW YORK BRANCH,
individually and as a co-agent,
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/▇▇▇▇▇ ▇. TACKLING
-----------------------------------
Name: ▇▇▇▇▇ ▇. Tackling
Title: Vice President-Credit Control
CREDIT LYONNAIS NEW YORK BRANCH,
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CYPRESSTREE INSTITUTIONAL FUND, LLC,
By: CypressTree Investment Management
Company, Inc. its Managing Member,
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Principal
DEBT STRATEGIES FUND III, INC.,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
By: /s/▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇
Title: Vice President
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: First Vice President
FIRST UNION NATIONAL BANK,
individually and as a co-agent,
By: /s/J. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: J. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
FLEET NATIONAL BANK,
By: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
FRANKLIN FLOATING RATE TRUST,
By: /s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ FINANCIAL, INC.,
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
KZH IV LLC,
By: /s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Agent
KZH CYPRESSTREE-1 LLC,
By: /s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Agent
KZH STERLING LLC,
By: /s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Agent
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING
RATE FUND II, INC.,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Agent
METROPOLITAN LIFE INSURANCE COMPANY,
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ PRIME
INCOME TRUST,
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
NATIONAL BANK OF CANADA, A
CANADIAN CHARTERED BANK,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President / Manager
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
NORTH AMERICAN SENIOR FLOATING
RATE FUND,
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Principal
PINEHURST TRADING, INC.,
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
PROVIDENT BANK OF MARYLAND,
By: /s/▇▇▇▇▇▇ M.A. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ M.A. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
SCOTIABANC, INC., individually and as a co-
agent,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Relationship Manager
SEQUILS I, LTD.,
By: TCW Advisors, Inc. as its Collateral
Manager
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SUMMIT BANK,
By: /s/▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
THE UNION BANK OF CALIFORNIA, N.A.,
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION,
By: /s/▇▇▇▇▇ ▇. ▇'▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇
Title: Vice President
USTRUST,
By: /s/▇▇▇▇▇ SHAGEL
-----------------------------------
Name: ▇▇▇▇▇ Shagel
Title: Vice President