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Exhibit 10.13
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AMENDED AND RESTATED
CREDIT AGREEMENT
By and Among
NEW AMERICAN HEALTHCARE CORPORATION,
as Borrower,
TORONTO DOMINION (TEXAS), INC.,
as Agent,
THE TORONTO-DOMINION BANK,
as Issuing Bank
and
THE FINANCIAL INSTITUTIONS PARTY HERETO
Dated as of January 30, 1998
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; ACCOUNTING TERMS 1
Section 1.1 Definitions ........................................................................1
Section 1.2 Accounting Terms ..................................................................22
ARTICLE 11 LOANS 22
Section 2.1 Revolving Credit ..................................................................22
Section 2.2 Interest and Fees .................................................................24
Section 2.3 Payments ..........................................................................28
Section 2.4 Waivers ...........................................................................32
Section 2.5 Application of Payments ...........................................................34
ARTICLE III LETTERS OF CREDIT 35
Section 3.1 Issuance of Letters of Credit .....................................................35
Section 3.2 Draws Under Letters of Credit .....................................................35
Section 3.3 Actions by Issuing Bank ...........................................................37
Section 3.4 Fees, Increased Costs, Indemnification, Expenses . ................................38
ARTICLE IV SECURITY DOCUMENTS 40
Section 4.1 Security Agreements; Mortgages; Stock Pledge Agreements;
Concentration Account Pledge Agreement .........................................40
Section 4.2 Subsidiary Guaranties .............................................................41
ARTICLE V CONDITIONS PRECEDENT 41
Section 5.1 Conditions to Commitment ..........................................................41
Section 5.2 Conditions to Each Loan ...........................................................46
Section 5.3 Conditions Precedent to Each Letter of Credit .....................................47
Section 5.4 Conditions for the Benefit of the Agent and the Banks . ...........................47
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER 48
Section 6.1 Due Organization ..................................................................48
Section 6.2 Organization, Standing and Qualification of Subsidiaries . ........................48
Section 6.3 Absence of Certain Activities .....................................................49
Section 6.4 Requisite Power ...................................................................49
Section 6.5 Authorization .....................................................................49
Section 6.6 Officer Authorization .............................................................49
Section 6.7 Binding Nature ....................................................................49
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Section 6.8 No Conflict .......................................................................50
Section 6.9 No Event of Default ...............................................................50
Section 6.10 Financial Statements ..............................................................50
Section 6.11 No Adverse Change .................................................................51
Section 6.12 Real Property .....................................................................51
Section 6.13 Equipment .........................................................................51
Section 6.14 Contracts .........................................................................51
Section 6.15 Intellectual Property .............................................................51
Section 6.16 Litigation ........................................................................52
Section 6.17 Tax Returns and Tax Matters .......................................................52
Section 6.18 Employee Benefits .................................................................52
Section 6.19 Environmental Matters .............................................................54
Section 6.20 Insurance .........................................................................55
Section 6.21 Compliance with Laws ..............................................................55
Section 6.22 Statutory Regulation ..............................................................55
Section 6.23 Use of Proceeds; Regulation U .....................................................55
Section 6.24 Solvency ..........................................................................55
Section 6.25 Fiscal Year .......................................................................56
Section 6.26 Health Care Related Matters .......................................................56
Section 6.27 Related Agreements ................................................................56
ARTICLE VII AFFIRMATIVE COVENANTS 57
Section 7.1 Accounting Records ................................................................57
Section 7.2 Financial Statements and Notices ..................................................57
Section 7.3 Inspection of Property Books and Records ..........................................61
Section 7.4 Maintenance of Existence, Licenses, Permits, Etc ..................................61
Section 7.5 Tax Returns .......................................................................62
Section 7.6 Qualifications To Do Business .....................................................62
Section 7.7 Compliance with Laws ..............................................................62
Section 7.8 Compliance with Agreements ........................................................62
Section 7.9 Insurance .........................................................................62
Section 7.10 Facilities ........................................................................62
Section 7.11 Taxes and Other Liabilities .......................................................63
Section 7.12 Governmental Approvals ............................................................63
Section 7.13 Compliance with Governmental Approvals and Governmental
Requirements ......................................................................63
Section 7.14 Compliance with Environmental Laws ................................................63
Section 7.15 Prevent Contamination .............................................................63
Section 7.16 Tax Qualification .................................................................64
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Section 7.17 Funding ...........................................................................64
Section 7.18 Financial Tests; Calculation Assumptions ..........................................64
Section 7.19 Health Care Related Matters .......................................................68
Section 7.20 Concentration Account .............................................................69
Section 7.21 Operating Leases ..................................................................69
Section 7.22 Subsidiary Control Documents ......................................................69
ARTICLE VIII NEGATIVE COVENANTS 70
Section 8.1 Mergers ...........................................................................70
Section 8.2 Change of Business ................................................................70
Section 8.3 Distributions .....................................................................70
Section 8.4 Accounting Policies ...............................................................71
Section 8.5 Investments .......................................................................71
Section 8.6 Liens .............................................................................71
Section 8.7 Guaranties ........................................................................71
Section 8.8 Indebtedness ......................................................................71
Section 8.9 Sale of Assets ....................................................................72
Section 8.10 Sale-Leaseback Transactions .......................................................72
Section 8.11 Capital Expenditures ..............................................................73
Section 8.12 Transactions with Affiliates ......................................................73
Section 8.13 Restrictive Agreements ............................................................73
Section 8.14 Prepayments .......................................................................73
Section 8.15 Certain ERISA Payments ............................................................73
Section 8.16 Compliance with ERISA .............................................................73
Section 8.17 Creation of Subsidiaries ..........................................................74
Section 8.18 Fundamental Changes ...............................................................74
ARTICLE IX EVENTS OF DEFAULT 74
Section 9.1 Events of Default .................................................................74
Section 9.2 Remedies ..........................................................................77
ARTICLE X THE AGENT 79
Section 10.1 Appointment and Authorization .....................................................79
Section 10.2 Delegation of Duties ..............................................................79
Section 10.3 Liability of Agent ................................................................79
Section 10.4 Reliance by Agent .................................................................80
Section 10.5 Notice of Default .................................................................80
Section 10.6 Credit Decision ...................................................................81
Section 10.7 Indemnification ...................................................................81
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Section 10.8 Agent in Individual Capacity ......................................................82
Section 10.9 Successor Agent ................................................................. 82
ARTICLE XI MISCELLANEOUS 82
Section 11.1 Successors and Assigns and Sale of Interests ......................................82
Section 11.2 No Implied Waiver .................................................................84
Section 11.3 Amendments and Waivers ............................................................84
Section 11.4 Remedies Cumulative ...............................................................85
Section 11.5 Severability ......................................................................85
Section 11.6 Costs, Expenses and Attorneys' Fees ...............................................85
Section 11.7 General Indemnification ...........................................................86
Section 11.8 Environmental Indemnification .....................................................86
Section 11.9 Notices ...........................................................................87
Section 11.10 Entire Agreement ..................................................................88
Section 11.11 Governing Law and Consent to Jurisdiction .........................................88
Section 11.12 Counterparts ......................................................................89
Section 11.13 Waiver Of Jury Trial ..............................................................89
Section 11.14 Headings ..........................................................................89
Section 11.15 Effect of Amendment and Restatement ...............................................89
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EXHIBITS
Exhibit 2.1 (c) Form of Request for Loan
Exhibit 2.1 (d)- 1 Form of Promissory Note
Exhibit 2.l(d)-2 Form of Subsidiary Note
Exhibit 3.1 (b) Request for Issuance of Letter of Credit
Exhibit 4.1-1 Form of Security Agreement
Exhibit 4.1-2 Form of Subsidiary Security Agreement
Exhibit 4.1-3 Form of Stock Pledge Agreement
Exhibit 4.1-4 Form of Concentration Account Pledge Agreement
Exhibit 4.2-1 Form of Subsidiary Guaranty
Exhibit 4.2-2 Form of Subsidiary Guaranty for Partially
Owned Subsidiaries
Exhibit 11. 1 Form of Assignment and Acceptance
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SCHEDULES
Schedule 5.1 (i) Litigation
Schedule 6.2 List of Subsidiaries
Schedule 6.15 Intellectual Property
Schedule 6.18(i) ERISA Title IV Benefit Plans
Schedule 6.18(ii) Other Benefit Plans
Schedule 6.20 List of Insurance Policies
Schedule 6.21 Exceptions to Compliance with Laws
Schedule 6.26 Health Care Related Matters
Schedule 7.20 Bank Accounts
Schedule 8.5 Borrower's Corporate Investment Policy
Schedule 8.6 List of Existing Permitted Encumbrances
Schedule 8.8 List of Existing Indebtedness
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
January 30, 1998, by and among NEW AMERICAN HEALTHCARE CORPORATION, a Tennessee
corporation (the "Borrower"), TORONTO DOMINION (TEXAS), INC., as agent for the
financial institutions party hereto (in such capacity, the "Agent"), THE
TORONTO-DOMINION BANK, as Issuing Bank (in such capacity, the "Issuing Bank"),
and THE FINANCIAL INSTITUTIONS PARTY TO THIS AGREEMENT (collectively, the
"Banks"; individually, a "Bank") and amends and restates in its entirety that
certain Credit Agreement dated as of September 30, 1996 by and among the
Borrower, the Agent, the Issuing Bank and the Banks, as amended.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS
SECTION 1.1 DEFINITIONS.
In addition to any terms defined elsewhere in this Agreement, the
following terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"ACCELERATION" means that the Loans (i) shall not have been paid at the
Final Maturity Date or (ii) shall have become due and payable prior to the Final
Maturity Date pursuant to SECTION 9.2 hereof.
"ACCOUNT" means any right to payment, whether or not it has been earned
by performance, for goods sold or leased or for services rendered in the
ordinary course of business which is not evidenced by an instrument (except as
part of chattel paper).
"AFFECTED BANK" has the meaning specified in SECTION 2.2(G) hereof.
"AFFILIATE" means, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the outstanding
Capital Stock having ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person, or (iii) each of such
Person's officers, directors, joint venturers and partners. For the purpose of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct
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or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" has the meaning specified in the heading to this Agreement.
"Agent's Fee Letter" means the letter from the Borrower to the Agent,
dated January 30, 1998, whereby the Borrower agrees to pay to the Agent the fees
specified therein for the Agent's performance of its responsibilities under this
Agreement.
"AGENT-RELATED PERSONS" has the meaning set forth in SECTION 10.3
hereof.
"AGGREGATE CREDIT OBLIGATIONS" means, as of any particular time, the
sum of (a) the aggregate principal amount of all Loans then outstanding, plus
(b) the aggregate amount of all Letter of Credit Obligations then outstanding.
"AGREEMENT" or "Credit Agreement" means this Amended and Restated
Credit Agreement, as may be from time to time further amended, modified or
supplemented.
"APPLICABLE LAW" shall mean, in respect of any Person, all provisions
of constitutions, statutes, rules, regulations, and orders of governmental
bodies or regulatory agencies applicable to such Person, and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it is bound.
"APPRAISED VALUE" means, with respect to any real property to be
subjected to the Lien of a Mortgage, the value of such real property as
determined by an appraisal performed by an independent appraiser in accordance
with Applicable Law as of a date not more than ninety (90) days prior to the
date upon which such real property shall be so subjected to such Lien.
"ASSIGNEE" has the meaning specified in SECTION 11.1(B) hereof.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION
11.1(B) hereof.
"ASSIGNOR" has the meaning specified in SECTION 11.1(B) hereof.
"AUTHORIZED REPRESENTATIVES" shall mean those officers, employees or
other persons designated by the Borrower in a certificate delivered to the Agent
as being authorized to request any Borrowing, to make any interest rate
designation on behalf of the Borrower hereunder, or to give the Agent any other
notice hereunder which is required or contemplated by the terms hereof.
"AVAILABLE COMMITMENT AMOUNT" means, as of any particular time, (a) the
Total Commitment Amount, minus (b) the Aggregate Credit Obligations then
outstanding.
"BANK INDEMNITEES" has the meaning set forth in SECTION 11.7 hereof.
"BANK" OR "BANKS" has the meaning specified in the heading of this
Agreement and any successors thereto.
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"Banking Day" means a day other than a Saturday or a Sunday when
commercial banks are open for business in Houston, Texas and New York, New York
and, with respect to LIBOR Loans, when commercial banks are open for business in
London, England.
"Banks' Closing Fee Letter" means the letter dated January 30, 1998
from the Banks to the Borrower and accepted by the Borrower, whereby the
Borrower agrees to pay the upfront closing fees of the Banks specified therein.
"BASE LIBOR" shall mean, for any Interest Period pertaining to a LIBOR
Loan, the rate per annum at which the Agent or any Affiliate thereof is offered
dollar deposits in the interbank Eurodollar market at approximately 11:00 a.m.
(London time) two (2) Banking Days prior to the beginning of the Interest Period
for such Loan, for delivery on the first day thereof for the number of months
comprised therein and in an amount equal to the amount of the LIBOR Loan to be
outstanding during such Interest Period.
"Base Rate" means on any day the greater of the rate (rounded upwards
if necessary to the nearest whole one-sixteenth of one percent (0.0625%)) equal
to (a) the Prime Rate in effect on that day or (b) the Federal Funds Rate in
effect on that day, plus (in either, case) the applicable margin based upon the
Borrower's ratio of Funded Indebtedness to EBITDA as calculated in accordance
with SECTION 7.18(A)(I) as follows:
Funded Applicable
Indebtedness/EBITDA Margin (bps)
------------------- ------------
> 5.0 100.00
-
> 4.5 < 5.0 75.00
-
> 4.0 < 4.5 50.00
-
> 3.5 < 4.0 25.00
-
> 3.0 < 3.5 0
-
> 2.5 < 3.0 0
-
< 2.5 0
"Base Rate Loans" means all Loans bearing interest at the Base Rate.
"Borrower" has the meaning specified in the heading to this Agreement.
"Borrowing" means an extension of a Loan by the Banks to the Borrower
pursuant to ARTICLE II hereof.
"CAPITAL EXPENDITURE" means any expenditure for the maintenance of
existing physical plants, furniture, fixtures and equipment and any other
expenditure that would be capitalized on the balance sheet of the Borrower
(consolidated with its Subsidiaries) as of the end of that period, in conformity
with GAAP, other than payment of the purchase price of any fixed assets in
connection with a Permitted Acquisition.
"CAPITAL STOCK" shall mean, as applied to any Person, any Capital Stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights,
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conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"CAPITALIZED LEASE" means any lease, under which the obligation of the
lessee is required by GAAP to be shown as a liability on the financial
statements of the lessee.
"CAPITALIZED LEASE OBLIGATION" means any lease obligation that, in
accordance with GAAP, is required to be shown as a liability on the financial
statements of the lessee. The amount of a Capitalized Lease Obligation shall be
the amount required by GAAP so to be shown.
"CASH MANAGEMENT POLICY" means the cash management policy of the
Borrower as in effect on the date hereof.
"CHANGE OF CONTROL" means the occurrence of any of the following
events: (a) all or substantially all of the assets of the Borrower are sold,
leased, exchanged or otherwise transferred to any Person or group of Persons
acting in concert as a partnership or other group; (b) the Borrower is merged or
consolidated with or into another corporation with the effect that either (i)
the common stockholders immediately prior to such merger or consolidation hold
directly or indirectly less than a majority of the ordinary voting power of the
outstanding securities of the surviving corporation of such merger or the
corporation resulting from such consolidation (the "new corporation") or (ii)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and designees of ▇▇▇▇▇ ▇▇▇▇▇▇ constitute
less than a majority of the directors of such surviving corporation or new
corporation; or (c) a Person or group (as such term is used in Rule 13d-5 under
the Securities Exchange Act of 1934) of Persons shall, as a result of a tender
or exchange offer, open market purchases, merger, privately negotiated purchases
or otherwise, have become, directly or indirectly, the beneficial owner (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of
securities having twenty-five percent (25%) or more of the ordinary voting power
of the then outstanding securities of the Borrower.
"CLOSING DATE" means the date on which all of the conditions set forth
in SECTION 5.1 hereof have been satisfied or waived.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means, collectively, all of the assets and property
constituting collateral under the Security Agreements, the Concentration Account
Pledge Agreement, the Stock Pledge Agreements, the Mortgages or any document or
instrument executed pursuant thereto or under any of the other Loan Documents.
"COLLATERAL DOCUMENTS" means the Security Agreements, the Concentration
Account Pledge Agreement, the Stock Pledge Agreements, the Mortgages and any
other documents or instruments executed pursuant thereto.
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"COMMITMENT" means the obligation of the Banks severally to extend
Loans to the Borrower pursuant to the terms and conditions of SECTION 2.1
hereof.
"COMMITMENT AMOUNT" means, with respect to each Bank, an amount equal
to such Bank's Commitment Percentage multiplied by the Total Commitment Amount.
"COMMITMENT FEE" shall mean the fee provided for in SECTION 2.2(c)
hereof.
"COMMITMENT PERCENTAGE" means the aggregate of the percentage set forth
after each Bank's signature at the end of this Agreement, plus the aggregate of
any Commitment Percentages thereafter acquired by such Bank as the Assignee and
minus any Commitment Percentages assigned by such Bank as the Assignor, and, as
to any new Bank, the aggregate of any Commitment Percentages acquired by such
new Bank as the Assignee less any Commitment Percentages assigned by such new
bank as Assignor.
"CONCENTRATION ACCOUNT" means an account with a financial institution
acceptable to the Agent into which substantially all cash receipts of the
Borrower and its Subsidiaries are deposited and with respect to which a Lien has
been placed on such account by the Agent on behalf of the Banks. As of the date
hereof, the Concentration Account is Account Number ▇▇▇▇▇▇▇▇▇▇ maintained at
NationsBank of Tennessee, N.A., Nashville, Tennessee, in the name of the
Borrower.
"CONCENTRATION ACCOUNT PLEDGE AGREEMENT" means the Amended and Restated
Concentration Account Pledge Agreement to be executed and delivered by the
Borrower in accordance with SECTION 4.1 hereof.
"CONSOLIDATED CAPITAL EXPENDITURES" means the aggregate Capital
Expenditures of the Borrower and its Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, gross
consolidated interest expense for the period (including all commissions,
discounts, fees and other charges in connection with standby letters of credit
and similar instruments and such portion of payments under Capitalized Leases as
may be characterized as interest expense in accordance with GAAP) for the
Borrower and its Subsidiaries; plus the portion of the up-front costs and
expenses for Rate Contracts (to the extent not included in gross interest
expense) fairly allocated to such Rate Contracts as expenses for such period;
all as determined in accordance with GAAP.
"CONSOLIDATED LIABILITIES" means all liabilities of the Borrower and
its Subsidiaries that would, in accordance with GAAP, be required to be included
as liabilities on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP; provided, however, that in determining Consolidated Net
Income, there shall not be included in gross revenues any earnings of, and
dividends payable to, the Borrower or any of
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its Subsidiaries in a currency which at the time may not be converted into
Dollars under the laws of the nation issuing such currency.
"CONSOLIDATED NET REVENUE" means the net revenue of the Borrower and
its Subsidiaries on a consolidated basis.
"CONTROLLED GROUP" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b) or (c) of the Code.
"DAYS SALES OUTSTANDING" means, as of any calculation date, (i)
Receivables divided by (ii) (a) Net Revenues for the three-month period ended on
the calculation date divided by (b) ninety (90).
"DEFAULT RATE" means the Prime Rate plus two percent (2.0%) per annum.
"DOLLARS" and "$" mean United States Dollars.
"DISTRIBUTION" means any dividend (in cash, securities or any other
form of property) on, or other payment or distribution on account of, any Equity
Interests of a Person.
"EBITDA" means, for any period, the sum of (a) Consolidated Net Income
for such period, plus (b) to the extent deducted in determining such
Consolidated Net Income, (i) extraordinary charges, (ii) consolidated
depreciation, amortization and interest (including the portion of payments under
any Capitalized Lease that may be characterized as interest) and (iii) federal,
state, local and foreign income taxes, minus (c) to the extent included in
determining such Consolidated Net Income, extraordinary gains.
"EBITDAR" means, for any period, the sum of (a) the Consolidated Net
Income for such period, plus (b) to the extent deducted in determining such
Consolidated Net Income, (i) extraordinary charges, (ii) consolidated
depreciation, amortization and interest (including the portion of payments under
a Capitalized Lease that may be characterized as interest), (iii) federal,
state, local and foreign income taxes and (iv) consolidated operating lease rent
expense for the Borrower and its Subsidiaries, minus (c) to the extent included
in determining such Consolidated Net Income, extraordinary gains.
"EMPLOYEE BENEFIT PLAN" means any Pension Plan or any other employee
benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or any
member of the Controlled Group maintains, or to which it makes or is obligated
to make contributions.
"ENVIRONMENTAL CLAIM" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive
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relief, or other type of relief, resulting from or based upon (a) the presence,
placement, discharge, emission or release (including intentional and
unintentional, negligent and nonnegligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in or from property, whether or not owned by the
Borrower or any of its Subsidiaries, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" means any applicable Governmental Requirement
pertaining to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof), public or employee
health or safety or any other environmental matter, including, without
limitation, the following laws as the same may be amended from time to time:
(1) Clean Air Act (42 U.S.C. ss. 7401, et seq.);
(2) Clean Water Act (33 U.S.C. ss. 1251, et seq.);
(3) Resource Conservation and Recovery Act (42 U.S.C. ss. 6901,
et seq.)
(4) Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ss. 9601, et seq.);
(5) Safe Drinking Water Act (42 U.S.C. ss. 300f, et seq.);
(6) Toxic Substances Control Act (15 U.S.C. ss. 2601, et seq.);
(7) Rivers and Harbors Act (33 U.S.C. ss. 401, et seq.);
(8) Endangered Species Act (16 U.S.C. ss. 1531, et seq.); and
(9) Occupational Safety and Health Act (29 U.S.C. ss. 651, et
seq.);
together with any other applicable foreign or domestic laws (federal, state,
provincial or local) relating to emissions, discharges, releases or threatened
releases of any Hazardous Substance into ambient air, land, surface water,
groundwater, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, discharge or handling of any Hazardous Substance.
"ENVIRONMENTAL REPORT" means an environmental review and audit report
with respect to real property which is prepared by a consultant acceptable to
the Agent not more than ninety (90) days prior to the acquisition of such
property and which is satisfactory in all respects to the Agent.
"EQUITY INTERESTS" with respect to any Person shall mean indicia of
ownership generally entitling the holder to direct the management or policies of
such Person or to receive distributions of profits, including, without
limitation, shares of Capital Stock (in the case of a
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corporation), partnership interests (in the case of a general, limited or
limited liability partnership) or membership interests (in the case of a limited
liability company).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATED GROUP" means any entity that, together with the
Borrower or other member of the Controlled Group, is treated as a single
employer under Section 414(m) of the Code.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 9.1 hereof.
"EXCESS CASH FLOW" means, for any fiscal year, Consolidated Net Income
(or loss) (excluding extraordinary gains and extraordinary losses) for such
fiscal year, plus (a) the sum of (i) depreciation and amortization for such
fiscal year, (ii) the non-cash portion, if any, of Interest Expense and (iii) an
amount equal to a decrease in consolidated working capital during such fiscal
year, minus (b) an amount equal to (i) Consolidated Capital Expenditures for
such fiscal year, (ii) the aggregate principal amount of all Indebtedness
required by its terms to be repaid during such fiscal year, (iii) the amount of
all taxes paid during such fiscal year, to the extent not deducted in
determining such Consolidated Net Income, (iv) an amount equal to any increase
in consolidated working capital during such fiscal year and (v) the aggregate
principal amount of Indebtedness hereunder voluntarily prepaid during such
fiscal year.
"EXCLUDED LEASES" means any lease (a) which has annual aggregate rental
payments of One Hundred Thousand Dollars ($100,000) or less, or (b) the loss of
which would not have a material adverse effect on the operation of the acute
care facilities of the Borrower and its Subsidiaries, or (c) for which there
does not exist any economic value between the market value of the space and the
rental payments made thereunder.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in H.
15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate for such day is not yet published in
either H. 15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic mean of the rates for the last transaction in overnight
federal funds arranged prior to 9:00 a.m., New York City time, on that day by
each of three leading brokers of federal funds transactions in New York City,
selected by the Agent.
"FINAL MATURITY DATE" means December 31, 2003.
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"FUNDED INDEBTEDNESS" means, without duplication, all obligations,
liabilities and indebtedness of the Borrower and its Subsidiaries of the types
described in clauses (a) through (e) of the definition of Indebtedness.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"GOVERNMENTAL APPROVALS" means any consent, right, exemption,
concession, permit, license, authorization, certificate, order, franchise,
determination or approval of any federal, state, provincial, municipal or
governmental department, commission, board, bureau, agency or instrumentality
required for the ownership of or activities of the Borrower or any of its
Subsidiaries or any other Person in connection with the business of the Borrower
or any of its Subsidiaries.
"GOVERNMENTAL AUTHORITY" means any nation, state, province or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GOVERNMENTAL REQUIREMENT" means all legal requirements in effect from
time to time, including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determinations, approvals,
notices, demand letters, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, and all instruments of record, foreseen or unforeseen, ordinary or
extraordinary, including, but not limited to, any change in any law or
regulation or the interpretation thereof by any foreign or domestic governmental
or other authority (whether or not having the force of law), relating now or at
any time heretofore or hereafter to the business or operations of the Borrower
or any of its Subsidiaries or to any of the property owned, leased or used by
the Borrower or any of its Subsidiaries, including, without limitation, the
development, design, construction, acquisition, start-up, ownership and
operation and maintenance of property.
"GUARANTY" OR "GUARANTEED," as applied to an obligation (each a
"primary obligation"), means (a) any guaranty, direct or indirect, in any
manner, of any part or all of such primary obligation, and (b) any agreement,
direct or indirect, contingent or otherwise, the practical effect of which is to
assure in any way the payment or performance (or payment of damages in the event
of non-performance) of any part or all of such primary obligation, including,
without limiting the foregoing, any reimbursement obligations as to amounts
drawn down by beneficiaries of outstanding letters of credit, and any obligation
of any Person, whether or not contingent, (i) to purchase any such primary
obligation or any property or asset constituting direct or indirect security
therefor, (ii) to advance or supply funds (A) for the purchase or payment of
such primary obligation or (B) to maintain working capital, equity
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capital or the net worth, cash flow, solvency or other balance sheet or income
statement condition of any other Person, (iii) to purchase property, assets,
securities or services primarily for the purpose of assuring the owner or holder
of any primary obligation of the ability of the primary obligor with respect to
such primary obligation to make payment thereof or (iv) otherwise to assure or
hold harmless the owner or holder of such primary obligation against loss in
respect thereof.
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, toxic or
hazardous substance, material, constituent or waste as such terms are defined in
or pursuant to any Environmental Law.
"HAZARDOUS WASTE FACILITY PERMIT" means any permit, license or other
governmental authorization relating to the storage, treatment or disposal of any
Hazardous Substance required pursuant to any Environmental Law.
"HCFA" means the Health Care Financing Administration of HHS and any
Person succeeding to the functions thereof.
"HEALTH FACILITY LICENSE" shall mean a license or permit under
Applicable Law to provide any nursing, medical or other health related services
or any combination of such services.
"HHS" means the United States Department of Health and Human Services
and any Person succeeding to the functions thereof.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious interest
rate, if any, that at any applicable time may be contracted for, taken,
reserved, charged or received on any Loan or on the other amounts which may be
owing to any Bank pursuant to this Agreement under the laws applicable to such
Bank and this transaction.
"INCIPIENT DEFAULT" has the meaning set forth in Section 5.1(e) hereof.
"INDEBTEDNESS" of any Person means, without duplication (a) any
obligation for borrowed money; (b) any obligation evidenced by bonds,
debentures, notes or other similar instruments; (c) any obligation to pay the
deferred purchase price of property or services (other than in the ordinary
course of business); (d) any Capitalized Lease Obligation; (e) any obligation or
liability of others secured by a Lien on property owned by such Person, whether
or not such obligation or liability is assumed; (f) any obligation under any
Rate Contract; (g) any Guaranty; and (h) any other obligation or liability which
is required by GAAP to be shown as part of the Consolidated Liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors or (b) any general assignment for the
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benefit of creditors, composition, marshalling of assets for creditors or other
similar arrangement.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in SECTION
6.15 hereof.
"INTEREST COVERAGE RATIO" means the ratio of (a) EBITDAR minus the
Maintenance Capital Expenditure Limit, to (b) Interest Expense plus consolidated
operating lease rent expense of the Borrower and its Subsidiaries.
"INTEREST EXPENSE" means, for any period, the cash interest expense and
letter of credit fee expense of the Borrower and its Subsidiaries determined on
a consolidated basis for such period.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, a period from
the borrowing date with respect to such Loan (or the date of the expiration of
the then current Interest Period with respect to such Loan) to a date up to one
(1), two (2), three (3) or six (6) months thereafter, subject to the following:
(a) if any Interest Period would otherwise end on a day which is not a
Banking Day, that Interest Period shall be extended to the next succeeding
Banking Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Banking Day;
(b) any Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to SUBPARAGRAPH (A) above) end on the last day
of such calendar month; and
(c) any Interest Period that would otherwise extend beyond the Final
Maturity Date shall end on the Final Maturity Date or, if the Final Maturity
Date shall not be a Banking Day, on the next preceding Banking Day.
"INVENTORY" means all goods intended for sale or lease or furnished or
to be furnished under contracts of service or used or consumed in the business
of the Borrower or any of its Subsidiaries, including, without limitation, all
raw materials, work in process and finished goods or materials, together with
all supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertisement, sale or
finishing of such goods, and all documents of title or documents representing,
covering or evidencing any of the foregoing.
"INVESTMENT," as applied to any Person, means any direct or indirect
ownership or purchase or other acquisition by that Person of any Capital Stock,
equity interest, obligations or other securities, or of a beneficial interest in
any Capital Stock, equity interest, obligations or other securities, or all or
substantially all of the assets of any other Person (including any Subsidiary),
or any direct or indirect loan, advance (other than advances to officers and
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by that
Person to any other Person,
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including all indebtedness and accounts receivable from that other Person which
are not current assets or did not arise from sales to that other Person in the
ordinary course of business.
"ISSUING BANK" shall mean The Toronto-Dominion Bank and any other
Person which The Toronto-Dominion Bank may hereafter designate as the successor
Issuing Bank pursuant to an Assignment and Acceptance or otherwise.
"JCAHO" means the Joint Commission on Accreditation of Healthcare
Organizations.
"KEY CONTRACTS" has the meaning set forth in SECTION 6.14 hereof.
"LETTER OF CREDIT" means a Letter of Credit issued by Issuing Bank on
behalf or for the account of the Borrower from time to time in accordance with
ARTICLE III hereof.
"LETTER OF CREDIT COMMITMENT" means the obligation of the Issuing Bank
to issue Letters of Credit on behalf of the Banks from time to time in an
aggregate face amount not to exceed Five Million Dollars ($5,000,000). The Banks
shall participate in such Letters of Credit in an amount equal to their
respective Commitment Percentages.
"LETTER OF CREDIT FEE" means the fee provided for in Section 3.4(a)
hereof.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, the sum of (a) an
amount equal to the aggregate undrawn and unexpired amount (including the amount
to which any such Letter of Credit can be reinstated pursuant to the terms
thereof) of the then outstanding Letters of Credit and (b) an amount equal to
the aggregate outstanding and unreimbursed drawings on any Letters of Credit.
"LETTER OF CREDIT RESERVE ACCOUNT" means any account maintained by the
Agent for the benefit of the Issuing Bank, the proceeds of which shall be
applied as provided SECTION 9.2(D) hereof.
"LIBOR LOAN" means any Loan bearing interest at the LIBOR Rate.
"LIBOR RATE" means the rate (rounded upwards if necessary to the
nearest whole one-sixteenth of one percent (0.0625%)) equal to (a) the product
of Base LIBOR times Statutory Reserves, plus (b) the applicable LIBOR margin
based upon the Borrower's ratio of Funded Indebtedness to EBITDA as calculated
in accordance with SECTION 7.18(A)(I) as follows:
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Funded Indebtedness/EBITDA LIBOR (bps)
-------------------------- -----------
> 5.0 250.00
-
> 4.5 < 5.0 225.00
-
> 4.0 < 4.5 200.00
-
> 3.5 < 4.0 175.00
-
> 3.0 < 3.5 150.00
-
> 2.5 < 3.0 125.00
-
< 2.5 100.00
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capitalized Lease,
any financing lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable law,
but excluding therefrom any financing statement filed by a lessor under an
operating lease not intended as security) and any contingent or other agreement
to provide any of the foregoing.
"LOAN" has the meaning set forth in SECTION 2.1(A) hereof (including
any and all Base Rate Loans and LIBOR Loans), and "LOANS" means all such Loans
at any time outstanding.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary Notes,
the Security Agreements, the Mortgages, the Subsidiary Guaranties, the Stock
Pledge Agreements, the Concentration Account Pledge Agreement, reimbursement
agreements relating to Letters of Credit, Rate Contracts under which any of the
Agent or the Banks (or any Affiliate of the Agent or a Bank) is the
counterparty, the Agent's Fee Letter, the Banks' Closing Fee Letter and all
other agreements, instruments and documents (including, without limitation,
security agreements, loan agreements, notes, fee agreements, guaranties,
mortgages, deeds of trust, subordination agreements, pledges, assignments of
intellectual property, powers of attorney, consents, assignments, contracts,
notices, leases, financing statements, certificates, reports, notices and all
other writings) heretofore, now or hereafter executed by, on behalf of or for
the benefit of the Borrower or any of its Subsidiaries and delivered to the
Agent, the Issuing Bank or any of the Banks pursuant to or in connection with
this Agreement or the transactions contemplated hereby, together with all
amendments, modifications and supplements thereto.
"LOAN REQUEST" has the meaning set forth in SECTION 2.1(C) hereof.
"MAINTENANCE CAPITAL EXPENDITURE LIMIT" means an amount equal to One
Hundred Thousand Dollars ($100,000) multiplied by the aggregate number of acute
care facilities owned by the Borrower and its Subsidiaries.
"MAJORITY BANKS" means at any time Banks holding at least sixty-six and
two-thirds percent (66-2/3%) of the then aggregate outstanding principal amount
of the Loans, or, if no
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such principal amount is then outstanding, Banks having at least sixty-six and
two-thirds percent (66-2/3%) of the Commitment Percentages.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in (a)
the business, assets, operations, prospects or financial condition of the
Borrower and its Subsidiaries considered as a whole, (b) the collective ability
of the Borrower and its Subsidiaries to pay the Obligations in accordance with
their terms, or (c) the security interests or liens of the Agent, the Issuing
Bank and the Banks in or on the Collateral or the priority of such security
interests or liens.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, or financial condition of the Borrower and its
Subsidiaries considered as a whole, (b) the collective ability of the Borrower
and its Subsidiaries to pay the Obligations in accordance with their terms, or
(c) the security interests or liens of the Agent, the Issuing Bank and the Banks
in or on the Collateral or the priority of such security interests or liens.
"MATURITY" means any date on which a Loan or any portion thereof
becomes due and payable whether as stated, by virtue of mandatory prepayment, by
Acceleration or otherwise.
"MEDICAID CERTIFICATION" shall mean the certification by the applicable
state Medicaid agency or its successor that a facility complies with all the
requirements for participation set forth in the Medicaid Regulations.
"MEDICAID PROVIDER AGREEMENT" shall mean an agreement entered into with
a state Medicaid agency or its successor or other such entity administering the
Medicaid program pursuant to which the agency agrees to pay for covered services
provided by a facility to eligible Medicaid recipients in accordance with the
terms of such agreement and the Medicaid Regulations.
"MEDICAID REGULATIONS" shall mean collectively (a) all Federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the Social
Security Act (42 U.S.C. ▇▇.▇▇. 1396, et seq .); (b) all applicable provisions of
all federal rules, regulations, manuals, final orders and administrative,
reimbursement and other guidelines of all Governmental Authorities (whether or
not having the force of law) promulgated pursuant to or in connection with the
statutes described in clause (a) above; (c) all state statutes and regulations
and plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (a) and (b) above; and (d) all applicable
provisions of all rules, regulations, manuals, final orders and administrative,
reimbursement and other applicable guidelines of all Governmental Authorities
(whether or not having the force of law) promulgated pursuant to or in
connection with any of the foregoing.
"MEDICARE CERTIFICATION" shall mean certification by HCFA or a state
agency or entity under contract with HCFA that a facility complies with all the
applicable requirements for participation set forth in the Medicare Regulations.
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"MEDICARE PROVIDER AGREEMENT" shall mean an agreement entered into with
HCFA or a state agency under contract with HCFA under which HCFA agrees to pay
for covered services provided by a facility to Medicare beneficiaries in
accordance with the terms of such agreement and the Medicare Regulations.
"MEDICARE REGULATIONS" shall mean collectively all Federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act (42 U.S.C. ▇▇.▇▇. 1395, et seq.),
together with all applicable provisions of all rules, regulations, manuals,
final orders and administrative, reimbursement and other applicable guidelines
of all Governmental Authorities, including HHS, HCFA or the Office of the
Inspector General of HHS, or any Person succeeding to the functions of any of
the foregoing (whether or not having the force of law).
"MINORITY HOLDERS" means the holders (other than the Borrower or any
Wholly-Owned Subsidiary) of Equity Interests in a Partial Subsidiary.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.
"MORTGAGES" means the mortgages, leasehold mortgages, deeds of trust or
other similar instruments, in form satisfactory to the Agent, to be executed and
delivered by the Borrower, its Subsidiaries and their respective Subsidiaries in
accordance with SECTION 4.1 hereof.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) and to which the Borrower or any other member of
the Controlled Group makes, is obligated to make or at any time since December
31, 1988 has made or been obligated to make contributions.
"Net Assets" means, with respect to the Borrower on a consolidated
basis, the aggregate amount of all items categorized as assets on the
consolidated balance sheet of the Borrower under GAAP.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or
other disposition of assets or securities by the Borrower or any of its
Subsidiaries, the aggregate amount of cash received for such assets or
securities, net of reasonable and customary transaction costs properly
attributable to such transaction and payable by the Borrower or such Subsidiary
in connection with such sale, lease, transfer or other disposition of assets or
securities, including, without limitation, sales commissions.
"NET REVENUES" means gross revenues of the Borrower on a consolidated
basis with its Subsidiaries less contractual adjustments thereto.
"NET WORTH" means, at any time, with respect to the Borrower on a
consolidated basis, the excess of Net Assets over Indebtedness.
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"NOTES" has the meaning set forth in Section 2.1(d)(i) hereof.
"OBLIGATIONS" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing to the Agent or the Banks by the
Borrower or any of its Subsidiaries of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or any of the other Loan Documents, whether or not for the
payment of money, arising by reason of an extension of credit, absolute or
contingent, due or to become due, now existing or hereafter arising, including
all principal, interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Borrower or any of its
Subsidiaries under this Agreement or any other Loan Document.
"ORIGINAL AGREEMENT" means that certain Credit Agreement dated as of
September 30, 1996, by and among the Borrower, the Agent, the Issuing Bank and
the Banks, as amended.
"ORIGINAL CLOSING DATE" means the date on which the obligation of the
Banks to undertake the Commitment occurred under the Original Agreement.
"ORIGINAL MORTGAGES" shall have the meaning set forth in SECTION 4.1
(B).
"ORIGINAL NOTES" means those promissory notes evidencing the Borrower's
obligations to repay all loans made by the Banks pursuant to the Original
Agreement.
"PARTIAL SUBSIDIARY" shall mean any Subsidiary which is not a
Wholly-Owned Subsidiary.
"PARTICIPANT" has the meaning set forth in SECTION 11.1(E) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
to all or any part of such corporation's functions under ERISA.
"PENSION PLAN" means any Multiemployer Plan or any other employee
pension benefit plan (as defined in Section 3(2) of ERISA) that is subject to
Title IV of ERISA and which the Borrower or any member of the Controlled Group
maintains, or to which it makes, is obligated to make or at any time during the
preceding five calendar years has made or has been obligated to make
contributions.
"PERMITTED ACQUISITIONS" means any acquisition by the Borrower or one
of its Subsidiaries of all or substantially all of the Capital Stock of a
corporation, all or substantially all of the ownership interests in any
partnership or joint venture, all or substantially all of the operating assets
of any Person, or assets which constitute all or substantially all of the assets
of a division or a separate or separable line of business, provided that:
(i) the Borrower or its Subsidiary, as the case may be, is the
surviving entity in any acquisition involving a merger, reorganization
or recapitalization;
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(ii) the corporation, partnership, operating assets or line of
business acquired is in a line of business consistent with the business
plan of the Borrower and its then current Subsidiaries;
(iii) no Event of Default or Incipient Default shall exist at
the time of such acquisition or would result on a pro forma basis after
completion of such acquisition;
(iv) not less than ten (10) days prior to such acquisition,
the Agent shall have received an Environmental Report with respect to
any real property to be so acquired;
(v) contemporaneously with the closing of such acquisition,
the Agent shall have received such documents and instruments as may be
necessary to grant or confirm to the Agent a Lien on or security
interest in all of the assets so acquired and all proceeds and revenues
therefrom, including, one or more Mortgages with respect to any real
property or leasehold interest in real property so acquired and (in
case a Subsidiary is created or acquired in connection with such
Permitted Acquisition) a Stock Pledge Agreement (or addendum to a
previously executed Stock Pledge Agreement), a Subsidiary Guaranty, a
Security Agreement and (to the extent applicable) a Subsidiary Note,
and shall have received a title insurance policy with respect to any
real property so acquired which is substantially similar to the title
insurance policies delivered pursuant to SECTION 5.10)(ii)(B) hereof
and, to the extent applicable, landlord's waivers from landlords in any
ground leases so acquired which shall be in form and substance
satisfactory to the Agent;
(vi) the Agent shall have received a certificate of an
Authorized Representative (to be delivered to the Agent not less than
ten (10) days prior to such acquisition) setting forth in reasonable
detail the calculations necessary to show compliance with the financial
ratios set forth in SECTION 7.18 hereof for the twelve (12) months
immediately preceding the date of the acquisition, assuming that the
proposed acquisition had occurred on the first day of the first month
of such twelve (12) month period; provided, however, EBITDA of any
acute care facility or related business previously acquired by the
Borrower or any of its Subsidiaries without the approval of the Banks
holding at least seventy-five percent (75%) of the then outstanding
principal amount of the Loans or, if no such principal amount is then
outstanding, the Banks having at least seventy-five percent (75 %) of
the Commitment Percentages, shall not be taken into account for
purposes of calculating the ratio of Funded Indebtedness TO EBITDA
PURSUANT TO SECTION 7.18(a)(i) hereof unless agreed to by the aforesaid
percentage of Banks. For purposes of calculating EBITDA pursuant to
this SUBPARAGRAPH (vi), with the prior consent of the Agent (which
consent shall not be unreasonably withheld), any expenses (and other
items) that will be immediately realized upon consummation of the
acquisition (or immediately thereafter) may be excluded from
calculation of EBITDA;
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(vii) not less than ten (10) days prior to such acquisition,
the Agent shall have received historical and pro forma financial
statements for the entity or line of business to be acquired;
(viii) the Agent and the Banks shall have had the opportunity
to conduct an inspection of the entity or line of business to be
acquired; and
(ix) any such acquisition with a Purchase Price in excess of
Twelve Million Five Hundred Thousand Dollars ($12,500,000), or in which
the Borrower acquires less than One Hundred Percent (100%) of the
Equity Interests, shall be approved by the Agent, and any such
acquisition with a Purchase Price in excess of Twenty Million Dollars
($20,000,000) shall be approved by the Majority Banks; provided,
however, that in the event that the Purchase Price of acquisitions in
any twelve (12) month period exceed Thirty-Million Dollars
($30,000,000) in the aggregate, then all subsequent acquisitions shall
be approved by the Majority Banks; provided, further, that in the event
that no portion of the purchase price to be paid in connection with
such acquisition is to be funded with the proceeds of any Loan, this
SUBPARAGRAPH (ix) SHALL not be applicable to such acquisition; such
documentation provided PURSUANT TO SUBPARAGRAPHS (iv), (vi) AND (vii)
above to be delivered to the Agent not less than ten (10) days prior to
such acquisition).
"PERMITTED ENCUMBRANCES" means: (a) carriers', warehousemen's,
mechanics', landlords, materialmen, suppliers', tax, assessment, governmental
and other like liens and charges arising in the ordinary course of business
securing obligations that are not incurred in connection with the obtaining of
any advance or credit and which are not more than thirty (30) days overdue, or
are being contested in good faith by appropriate proceedings, provided that, in
accordance with GAAP, adequate reserves have been established; (b) liens arising
in connection with worker's compensation, unemployment insurance, appeal and
release bonds and progress payments under government contracts; (c) judgment
liens with respect to which execution has been stayed, or the appeal period for
which has not expired, or the payment of which is covered in full by insurance
(as certified by an Authorized Representative; (d) zoning restrictions,
easements, licenses or other restrictions on the use of real property, so long
as the same do not materially impair the use of such real property by the
Borrower or any of its Subsidiaries or the value thereof to the owner of such
real property; (e) any lien existing or arising by operation of law in the
ordinary course of business, such as a "banker's lien" or similar right of
offset; (f) liens on the property of the Borrower or any of its Subsidiaries
securing (i) the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) obligations on surety and appeal
bonds, and (iii) other obligations of a like nature incurred in the ordinary
course of business, provided that all such Liens in the aggregate have no
reasonable likelihood of causing a Material Adverse Effect; (g) liens covering
equipment (including liens in favor of a lessor under a Capitalized Lease),
whether or not such equipment was purchased or leased by the Borrower or any of
its Subsidiaries or assumed in connection with a Permitted Acquisition, which
liens secure purchase money financing for such equipment, provided that any such
lien covers only the equipment so acquired; (h) liens identified on SCHEDULE 8.6
attached hereto; (i) liens and security
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26
interests securing payment of the Obligations granted pursuant to any of the
Loan Documents; (j) liens encumbering assets (other than receivables) acquired
(whether directly through the purchase of assets or by acquisition of the
Capital Stock of a corporation or ownership interests in a partnership or joint
venture) in a Permitted Acquisition which were not incurred or created in
connection with or in contemplation of such Permitted Acquisition, provided that
the aggregate book value of any assets subject to liens permitted by this clause
(j) shall not exceed five percent (5%) of the Borrower's total assets; (k) any
renewals or extensions of any of the liens referred to in any of the foregoing
clauses (g), (h), (i), or (j), provided that by any such renewal or extension no
lien is extended to additional property and that no monetary amount secured by
any such lien is increased; (l) any other lien or security interest securing
payment of a determinable amount which is not overdue and which, when added to
all other liens covered by this clause (l), does not exceed One Million Dollars
($1,000,000); and (m) liens in favor of any Wholly-Owned Subsidiary of Borrower,
provided such Subsidiary has executed an intercreditor agreement subordinating
such liens to the liens of the Banks and otherwise in form and substance
acceptable to the Agent in its sole discretion.
"PERMITTED PURPOSES" means the purposes for which Loans may be used or
Letters of Credit issued. The Permitted Purposes are as follows: (a) to make
Permitted Acquisitions; and (b) to provide funds for general corporate purposes,
including (but not limited to) initial and ongoing working capital, the
completion of any construction or development projects at acute care facilities
or related businesses acquired by the Borrower or any of its Subsidiaries which
are in progress on the date of acquisition, and capital improvements to acute
care facilities or related businesses acquired by the Borrower or any of its
Subsidiaries which are made after the date of acquisition; provided that (y) the
outstanding aggregate principal amount of all Loans made for working capital
purposes shall not exceed Ten Million Dollars ($10,000,000) and (z) the
aggregate face amount of all Letters of Credit shall not exceed Five Million
Dollars ($5,000,000) at any one time, as certified by the Borrower as a
condition for the making of any Loan for working capital purposes or the
issuance of any Letter of Credit.
"PERSON" means any individual, corporation, partnership, trust,
association or other entity or organization, including any government, political
subdivision, agency or instrumentality thereof.
"PRIME RATE" shall be the rate most recently announced by The
Toronto-Dominion Bank as its "Prime Rate." Prime Rate is a base rate which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto, and is evidenced by the reporting thereof
after its announcement in such internal publication or publications as the Agent
may designate. Any change in the interest rate resulting from a change in such
Prime Rate shall become effective as of 12:01 a.m. of the Banking Day on which
each change in Prime Rate is announced by The Toronto-Dominion Bank.
"PURCHASE PRICE" as used in the definition of Permitted Acquisitions,
means (i) cash paid to the seller in consideration of such acquisition, (ii)
long-term indebtedness of the seller assumed by the Borrower or its Subsidiary
in consideration of such acquisition, (iii) initial
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working capital and (iv) initial capital expenditures identified as such on the
purchase date and made within twelve months of such date.
"RATE CONTRACTS" means interest rate and currency swap agreements, cap,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.
"RECEIVABLES" shall mean any right to payment, whether or not it has
been earned by performance, for goods sold or leased or for services rendered in
the ordinary course of business, after adjustment for estimated settlements with
third party payors.
"REPLACEMENT BANK" has the meaning set forth in SECTION 2.2(G) hereof.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of thirty (30) days notice to the PBGC is waived under
applicable regulations. In addition, a Reportable Event means a withdrawal from
a plan described in Section 4063 of ERISA or a cessation of operations described
in Section 4062(e) of ERISA, if such withdrawal or cessation could reasonably be
expected to result in a liability of the Borrower or member of the Controlled
Group to the PBGC, to a trustee or to a Multiemployer Plan in an aggregate
amount of One Million Dollars ($1,000,000) or more.
"RESPONSIBLE OFFICER" means the Borrower's Chief Executive Officer,
Senior Vice President, Finance and Administration, or Treasurer.
"REVOLVING TERMINATION DATE" means December 31, 2000 or such earlier
date, if any, that the Total Commitment Amount is reduced to zero pursuant to
Section 2.1(b) hereof.
"S&P" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, and any successor thereto that is a nationally recognized rating
agency.
"SALE-LEASEBACK TRANSACTION" means an arrangement relating to property
now owned or hereafter acquired whereby the Borrower or one of its Subsidiaries
transfers such property to a Person and the Borrower or one of its Subsidiaries
leases it from such Person.
"Security Agreements" means the Amended and Restated Security
Agreement to be executed and delivered by the Borrower and the Security
Agreements to be executed and delivered by its Subsidiaries and their respective
Subsidiaries in accordance with Section 4.1 hereof.
"SENIOR INDEBTEDNESS" means all Funded Indebtedness other than the
▇▇▇▇▇ ▇▇▇▇▇▇ Subdebt.
"SOLVENT" means, when used with respect to any Person, that at the
time of determination:
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(i) the fair value of its assets (both at fair valuation and
at present fair salable value) is in excess of the total amount of all
of its debts and liabilities, including contingent, subordinated,
unmatured and unliquidated liabilities; and
(ii) it is then able to pay its debts as they become due; and
(iii) it owns property having a value (both at fair valuation
and at present fair salable value) in excess of the total amount
required to pay its debts; and
(iv) it has capital sufficient to carry on its business.
"STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one (1) and the denominator of which is the
number one (1) minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or supplemental
reserves, and expressed as a decimal) established by the Federal Reserve Board
or any other United States banking authority to which the Agent or any Bank is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Federal
Reserve Board). Such reserve percentages shall include, without limitation,
those imposed under said Regulation D. LIBOR Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to the Banks under said
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"STOCK PLEDGE AGREEMENTS" means the Amended and Restated Stock Pledge
Agreements to be executed and delivered by the Borrower and its Subsidiaries in
accordance with SECTION 4.1 hereof.
"SUBSIDIARY" of a Person means any corporation, partnership, joint
venture, association or other business entity of which such Person now or
hereafter owns, directly or indirectly, securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other governing body thereof. References herein to Subsidiaries of the Borrower
shall, unless otherwise specifically provided, include any Subsidiaries of the
Borrower's Subsidiaries, whether now or hereafter acquired.
"SUBSIDIARY GUARANTIES" means the Guaranty Agreements to be executed
and delivered by all Subsidiaries of the Borrower in accordance with SECTION 4.2
hereof.
"SUBSIDIARY NOTE" has the meaning set forth in SECTION 2.1(d)(ii)
hereof.
"▇▇▇▇▇ HOSPITALS" means the following acute care facilities and related
assets purchased by Borrower (or its Affiliates) from certain subsidiaries of
▇▇▇▇▇ Healthcare Corporation: Lander Valley Medical Center (Lander, Wyoming),
▇▇▇▇▇▇▇▇▇ Medical Center (Davenport, Iowa), Eastmoreland General Hospital
(Portland, Oregon) and Woodland Park Hospital (Portland Oregon).
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"TOTAL COMMITMENT AMOUNT" means, as of any date, subject to SECTION
2.1(b) hereof, an amount equal to One Hundred Thirty-Two Million Five Hundred
Thousand Dollars ($132,500,000).
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"WCAS" means WCAS Capital Partners III, L.P.
"WCAS SUBDEBT" means the subordinated Indebtedness loaned by WCAS to
the Borrower pursuant to SECTION 5.1(p) hereof.
"▇▇▇▇▇ ▇▇▇▇▇▇" means Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., WCAS
Healthcare Partners, L.P. and related parties.
"▇▇▇▇▇ ▇▇▇▇▇▇ SUBDEBT" means (a) the WCAS Subdebt, and (b) any
subsequent loans of subordinated Indebtedness by WCAS or ▇▇▇▇▇ ▇▇▇▇▇▇.
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary as to which all of
the Equity Interests are held by the Borrower or a Wholly-Owned Subsidiary of
the Borrower.
SECTION 1.2 ACCOUNTING TERMS.
Each accounting term not defined herein and each accounting term partly
defined herein to the extent not defined shall have the meaning given to it
under GAAP.
ARTICLE II
LOANS
SECTION 2.1 REVOLVING CREDIT.
(a) Revolving Loans. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make loans to the Borrower on a
revolving basis (each herein called a "Loan"), from time to time until the
Revolving Termination Date, in an aggregate principal amount not to exceed at
any time outstanding such Bank's Commitment Amount. The Borrower shall use the
proceeds of the Loans exclusively for Permitted Purposes. The Loans shall
consist of one or more Base Rate Loans and LIBOR Loans, subject to SECTION
2.2(a) hereof. All of the Loans shall mature on the Final Maturity Date. Subject
to the terms and conditions of this Agreement, Loans which are prepaid may be
reborrowed in whole or in part prior to the Revolving Termination Date. Each
Borrowing of a Base Rate Loan hereunder shall be in a principal amount equal to
an integral multiple of One Hundred Thousand Dollars ($100,000) and in a minimum
principal amount of Five Hundred Thousand Dollars ($500,000), and each Borrowing
of a LIBOR Loan hereunder shall be in a principal amount equal to an integral
multiple of One Million Dollars ($1,000,000) and in a minimum principal amount
of Five Million Dollars ($5,000,000).
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(b) Commitment Limits. The aggregate principal amount of Loans
outstanding shall not at any one time exceed the Total Commitment Amount minus
the Letter of Credit Obligations, and the Banks shall have no obligation to make
any Loan if, after giving effect thereto, the Available Commitment Amount would
be less than zero. The Borrower may reduce the Total Commitment Amount upon not
less than five (5) Banking Days telephone notice, confirmed by an Authorized
Representative on the date of such notice by electronic facsimile transmission,
to the Agent and by repaying to the Agent for the account of the Banks the
principal amount of any Loans outstanding in excess of such reduced amount. Any
such reduction shall be permanent and shall (unless reducing the Total
Commitment Amount to zero) be in an amount equal to at least Five Million
Dollars ($5,000,000) and be an integral multiple of One Million Dollars
($1,000,000).
(c) Borrowing Procedures. For any proposed Borrowing which is to be a
Base Rate Loan, an Authorized Representative shall give the Agent telephone
notice not later than 11:00 a.m. (Houston, Texas time) on the Banking Day of the
proposed Borrowing, confirmed by a written borrowing request in substantially
the form attached hereto as EXHIBIT 2.1(c) (a "Loan Request"), executed by an
Authorized Representative and received by the Agent by facsimile on the day of
such telephone notice. For any proposed Borrowing which is to consist of at
least one (1) LIBOR Loan, an Authorized Representative shall give the Agent
telephone notice not later than 11: 00 a.m. (Houston, Texas time) at least three
(3) Banking Days prior to the date of the proposed Borrowing, confirmed by a
Loan Request executed by an Authorized Representative and received by the Agent
by facsimile on the day of such telephone notice. Upon receipt by the Agent of
the Loan Request, the Agent shall promptly notify each Bank of the proposed
Borrowing, including the date and amount thereof. Each Bank will make an amount
equal to its respective Commitment Percentage of such Borrowing available to the
Agent for the account of the Borrower at the office specified by the Agent in
SECTION 11.9 hereof for payment to the Borrower by 2:00 p.m. (Houston, Texas
time) on the borrowing date requested by the Borrower. Unless any applicable
condition specified in ARTICLE V hereof has not been satisfied, the proceeds of
all such Loans will then be made available to the Borrower by the Agent at such
office by crediting the account of the Borrower with the aggregate of the
amounts made available to the Agent by the Banks in like funds as received by
the Agent.
(d) Notes.
(i) Notes of the Borrower. The Borrower's obligation to repay
all Loans made by the Banks shall be evidenced by a promissory note in
favor of each Bank in the form attached hereto as EXHIBIT 2.1(d)-1 (the
"Notes").
(ii) Notes of Subsidiaries. In the event that the Borrower
loans all or a portion of any Loan to any of its Subsidiaries, such
Subsidiary shall execute and deliver a promissory note in favor of the
Borrower in the form attached hereto as EXHIBIT 2.1(d)-2 (the
"Subsidiary Note"), and the Borrower shall assign such Subsidiary Note
to the Agent to be held by the Agent, on behalf of itself and for the
benefit of the Banks, as additional security for the repayment of such
Loan.
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SECTION 2.2 INTEREST AND FEES.
(a) Interest. Subject to all other provisions of this SECTION 2.2, all
or a part of each Loan may, at the option of the Borrower, be a Base Rate Loan
or a LIBOR Loan. Subject to SECTION 2.2(f) hereof, the Loans shall bear interest
on the unpaid principal amount thereof from the date of disbursement until such
amount shall become due and payable at Maturity (i) in the case of each Base
Rate Loan, at a fluctuating rate per annum equal to the Base Rate as from time
to time in effect and (ii) in the case of each LIBOR Loan, at a rate per annum
equal to the LIBOR Rate for the applicable Interest Period. Interest on each
Base Rate Loan shall be payable in arrears on the last day of each calendar
quarter, commencing with the quarter ending March 31, 1998, on any date that any
such Base Rate Loan is converted to a LIBOR Loan, on the date of any prepayment
as to the amount of such prepayment, and on the Final Maturity Date. Interest on
each LIBOR Loan shall be payable in arrears on the last day of the applicable
Interest Period (provided, however, that interest on each LIBOR Loan with an
Interest Period of six (6) months shall be paid three (3) months after
commencement of such Interest Period and on each three (3) month anniversary
thereof), on any date when such LIBOR Loan is converted to a Base Rate Loan, on
the date on which any LIBOR Loan is prepaid as to the amount of such prepayment,
and on the Final Maturity Date.
Upon the occurrence of an Event of Default, and at the direction of the
Majority Banks, interest on the Loans and any other outstanding Obligations
shall accrue at the Default Rate from the date of the occurrence of such Event
of Default. Interest accruing at the Default Rate shall be payable on demand and
in any event at Maturity and shall accrue until the earliest to occur of (i)
waiver in writing by the Majority Banks of the applicable Event of Default,
which waiver may provide for the waiver of the Default Rate from the initial
date of accrual thereof to the date of such waiver, (ii) agreement by the
Majority Banks to rescind the charging of interest at the Default Rate, or (iii)
payment in full of the Loans and other outstanding Obligations. The Banks shall
not be required to (i) accelerate the maturity of the Loans or (ii) exercise any
other rights or remedies under the Loan Documents in order to charge interest
hereunder at the Default Rate.
(b) Extensions and Conversions. Subject to the terms and conditions
hereof, including SECTION 2.2(a), the Borrower shall have the option at any time
to convert all or any part of a Loan into a Base Rate Loan or a LIBOR Loan;
provided, however, that (i) a LIBOR Loan may be converted only as of the last
day of the applicable Interest Period, and (ii) the Borrower may not convert a
Base Rate Loan into a LIBOR Loan or extend a LIBOR Loan after the occurrence and
during the continuance of an Event of Default hereunder. Each LIBOR Loan shall
be in a principal amount equal to an integral multiple of One Million Dollars
($1,000,000) and in a minimum principal amount of Five Million Dollars
($5,000,000). Subject to the terms and conditions hereof, the Borrower may
extend a LIBOR Loan beyond its current Interest Period. In the case of a
proposed conversion of a Base Rate Loan into a LIBOR Loan or an extension of a
LIBOR Loan, an Authorized Representative shall give the Agent telephone notice
not later than 11:00 a.m. (Houston, Texas time) at least three (3) Banking Days
prior to the date of the proposed conversion or extension, confirmed by a
written notice executed by an Authorized Representative and received by the
Agent by
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facsimile on the day of such telephone notice. The Agent shall provide a copy of
such written notice to the Banks. In the case of a proposed conversion of a
LIBOR Loan into a Base Rate Loan, an Authorized Representative shall give the
Agent telephone notice not later than 11:00 a.m. (Houston, Texas time) at least
one (1) Banking Day prior to the end of the applicable Interest Period confirmed
by a Notice of Conversion/ Extension executed by any Authorized Representative
and received by the Agent by facsimile the day of such telephone notice. Any
notice given by an Authorized Representative under this SECTION 2.2(b) shall be
irrevocable. Unless the Agent receives notice of a proposed conversion as and
when required hereunder, then at the end of an Interest Period for a LIBOR Loan,
such Loan shall automatically convert to a Base Rate Loan.
(c) Commitment Fee. The Borrower shall pay to the Agent for the account
of the Banks, in accordance with the Banks' Commitment Percentages, a Commitment
Fee equal to the amount listed below based upon the Borrower's ratio of Funded
Indebtedness to EBITDA as calculated in accordance with Section 7.18(a)(i) of
the average daily Available Commitment Amount as follows:
Funded Indebtedness/ Commitment Fee
EBITDA - (bps)
-------------------- --------------
> 5.0 37.50
-
> 4.5 < 5.0 37.50
-
> 4.0 < 4.5 37.50
-
> 3.5 < 4.0 37.50
-
> 3.0 < 3.5 37.50
-
> 2.5 < 3.0 25.00
-
< 2.5 25.00
The Commitment Fee shall (i) accrue from the Closing Date to the Revolving
Termination Date and (ii) be payable quarterly in arrears on the last day of
each quarter commencing with the quarter ending March 31, 1998 and on the
Revolving Termination Date.
(d) Computation of Interest and Commitment Fee. The computation of
interest and the Commitment Fee shall be based on the actual number of days
elapsed assuming (i) in the case of Base Rate Loans and any period during which
any such Loans are outstanding, a year consisting of three hundred sixty-five
(365) days and (ii) in the case of LIBOR Loans and any period during which any
such Loans are outstanding, a year consisting of three hundred sixty (360) days.
(e) Illegality, Taxation and Additional Interest Rate Provisions.
(i) In the event the Agent shall have determined (which
determination shall be conclusive and binding) that by reason of
circumstances affecting the interbank Eurodollar market, adequate and
reasonable means do not exist for ascertaining Base LIBOR, the Agent
shall forthwith give notice of such determination, confirmed in
writing, to the Borrower. If such notice is given, and until such
notice has been
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withdrawn by the Agent, no additional LIBOR Loans shall be made and no
additional conversions of Loans to LIBOR Loans shall be permitted, and
at the end of the Interest Period relating to any outstanding LIBOR
Loans, such Loans shall become Base Rate Loans.
(ii) Notwithstanding any other provisions herein, if any law,
treaty, rule or regulation, or determination of a court or other
Governmental Authority, or any change therein or in the interpretation
or application thereof, shall make it unlawful for a Bank to make or
maintain LIBOR Loans, as contemplated by this Agreement, the obligation
of such Bank hereunder to make LIBOR Loans shall forthwith be suspended
until such Bank shall notify the Agent that the circumstances causing
such suspension no longer exist, and each LIBOR Loan of such Bank then
outstanding shall (if required by such law, treaty, rule, regulation,
determination or change) immediately become a Base Rate Loan.
(iii) In the event that any adoption or modification of any
law, treaty, rule or regulation, or determination of a court or other
Governmental Authority, or that any change in the interpretation or
application thereof, which adoption, modification or change becomes
effective after the date hereof, or in the event that compliance by a
Bank with any request or directive issued after the date hereof
(whether or not having the force of law) from any Governmental
Authority:
(A) does or shall subject a Bank or any of its
foreign offices to any tax of any kind whatsoever (other than
taxes based on income from all sources) with respect to this
Agreement, the Notes, the Loans or any payments made to and
received by such Bank of principal, interest, fees or any
other amount payable hereunder; or
(B) does or shall impose, modify, or hold applicable
any reserve, special deposit, compulsory loan, FDIC insurance
or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances or loans
by, other credit extended by or any other acquisition of funds
by, any office of a Bank (other than to the extent previously
taken into account in determining the Base Rate or Statutory
Reserves); or
(C) does or shall impose on a Bank any other
condition;
and the result of any of the foregoing is to increase the cost to a
Bank of making, renewing or maintaining such Bank's Commitment Amount
or the Loans, or to reduce any amount receivable in respect thereof or
under any of the Loan Documents; then, in any such case, such Bank
shall notify the Borrower of any such event and shall deliver to the
Agent and the Borrower a written statement specifying in reasonable
detail the losses or expenses sustained or incurred, and any reasonable
allocation made by such Bank of such losses and expenses shall be
conclusive. The Borrower shall, within ten (10) days following demand
therefor, pay the amount of such losses and expenses.
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(iv) Each Bank represents and warrants to the Agent and the
Borrower that, under applicable law and treaties, such Bank is entitled
to receive all payments under this Agreement and the Notes payable to
it, without deduction or withholding of any taxes imposed by the United
States or any political subdivision thereof. On or before the Closing
Date, each Bank shall deliver to each of the Borrower and the Agent two
(2) executed copies of valid and properly completed (i) United States
Internal Revenue Service Form 1001 or 4224 certifying that such Bank is
entitled to receive payments under this Agreement and the Notes then
held by it, without deduction or withholding of any United States
federal income taxes, and (ii) Internal Revenue Service Form W-8 or W-9
establishing any exemption from United States backup withholding tax.
If any such form is found to be incomplete or incorrect, or must be
replaced (on the same or a successor form) in order to maintain its
effectiveness, the affected Bank shall execute and deliver to the
Borrower and the Agent two (2) executed copies of a valid, complete and
correct replacement form.
(f) Capital Adequacy Requirements. If any Bank shall determine that the
application of any law, rule, regulation or guideline regarding capital
adequacy, or any change therein or any change in the interpretation or
administration thereof by any central bank. or other Governmental Authority
charged with the interpretation or administration thereof, or compliance by such
Bank (or its lending office) or any corporation controlling such Bank, with any
request, guideline or directive regarding capital adequacy (whether or not
having the force of law) of any such central bank or other authority (which in
any such case has become effective after the date hereof), affects or would
affect the amount of capital required or expected to be maintained by such Bank
or any corporation controlling such Bank, and such Bank determines that the
amount of such capital is increased as a consequence of its obligation under
this Agreement, then, upon demand of such Bank, the Borrower shall, within ten
(10) days following demand therefor, pay to such Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate such Bank for
such increase.
(g) Substitution of Banks. Upon the receipt by the Borrower from any
Bank (an "Affected Bank") of a request for compensation or payment under this
SECTION 2.2, the Borrower may: (i) request the Agent to use reasonable efforts
to obtain a replacement bank or financial institution satisfactory to the
Borrower to acquire and assume all or part of such Affected Bank's Loans and
Commitments (a "Replacement Bank"); (ii) request one or more of the other Banks
to acquire and assume all or part of such Affected Bank's Loans and Commitments;
(iii) designate a Replacement Bank; or (iv) subject to SECTION 11.3(e) hereof,
terminate in whole or reduce in part the Commitments of the Affected Bank and
prepay all or part of the outstanding Loans owing to such Affected Bank in
accordance with SECTION 2.3 hereof. Any such designation of a Replacement Bank
under clause (i) or (iii) shall be subject to the prior written consent of the
Agent and each of the other Banks (which consent in the case of the Banks and
the Agent shall not be unreasonably withheld).
(h) Highest Lawful Rate. Anything in this Agreement to the contrary
notwithstanding, the Borrower shall never be required to pay unearned interest
on any Loan and shall never be required to pay interest on any Loan at a rate in
excess of the Highest Lawful Rate, and if the
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effective rate of interest which would otherwise be payable under this Agreement
would exceed the Highest Lawful Rate, or if any Bank shall receive any unearned
interest or shall receive monies that are deemed to constitute interest which
would increase the effective rate of interest payable under this Agreement to a
rate in excess of the Highest Lawful Rate, then (a) in lieu of the amount of
interest which would otherwise be payable under this Agreement, the Borrower
shall pay the Highest Lawful Rate and (b) any unearned interest paid by the
Borrower or any interest paid by the Borrower in excess of the Highest Lawful
Rate shall be credited on the principal of such Loan and thereafter shall be
refunded to the Borrower. It is further agreed, without limiting the foregoing,
that all calculations of the rate of interest contracted for, charged or
received by any Bank under this Agreement that are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate applicable to such
Bank (such Highest Lawful Rate being such Bank's "Maximum Permissible Rate")
shall be made, to the extent permitted by usury laws applicable to such Bank
(now or hereafter enacted), by amortizing, prorating and spreading in equal
parts during the period of the full stated term of the Loans all interest at any
time contracted for, charged or received by such Bank in connection therewith.
If at any time and from time to time (i) the amount of interest payable to any
Bank on any date shall be computed at such Bank's Maximum Permissible Rate
pursuant to this SECTION 2.2(h) and (ii) in respect of any subsequent interest
computation period the amount of interest otherwise payable to such Bank would
be less than the amount of interest otherwise payable to such Bank computed at
such Bank's Maximum Permissible Rate, then the amount of interest payable to
such Bank in respect of such subsequent interest computation period shall
continue to be computed at such Bank's Maximum Permissible Rate until the total
amount of interest payable to such Bank shall equal the total amount of interest
which would have been payable to such Bank if the total amount of interest had
been computed without giving effect to this SECTION 2.2(h).
SECTION 2.3 PAYMENTS.
(a) Payment of Loans. The Borrower shall repay all Loans which are
outstanding on the Revolving Termination Date by paying one-sixteenth (1/16) of
the aggregate outstanding principal amount thereof on December 31, 2000 and on
the last day of each third month thereafter to and including September 30, 2003
and by paying the aggregate principal amount thereof remaining outstanding on
December 31, 2003.
(b) Optional Prepayment. Subject to the following and the provisions of
SECTION 2.3(c) and SECTION 2.3(d) hereof, the Borrower may at any time prepay,
upon notice given not later than 10:30 a.m. (Houston, Texas time) on the date of
such prepayment in the case of Base Rate Loans, or three (3) Banking Days prior
written notice to the Agent as to any LIBOR Loans, the principal amount of any
or all of the Loans in whole or in part, without penalty or premium. With
respect to each prepayment hereunder, interest accrued to the date of prepayment
on the amount of such prepayment shall be payable (i) for LIBOR Loans, on the
date of the prepayment, and (ii) for Base Rate Loans, on the next scheduled date
for the payment of interest pursuant to SECTION 2.2(a) hereof. Any such notice
of prepayment shall specify the amount of the prepayment. Any such prepayment
shall be in a minimum principal
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36
amount of Five Million Dollars ($5,000,000) and in a principal amount which is
an integral multiple of One Million Dollars ($1,000,000).
(c) Mandatory Prepayment.
(i) If at any time the aggregate principal amount of the Loans
outstanding exceeds the Total Commitment Amount minus the Letter of
Credit Obligations, then the Borrower shall immediately pay to the
Agent, for the account of each Bank, the amount of such excess (as a
prepayment in respect of the Loans), plus any amount due under SECTION
2.3(d) hereof as a result of such prepayment.
(ii) In the event that the Borrower or any of its Subsidiaries
sells or otherwise disposes of assets in any calendar year, and the
book value of such assets, together with the book value of any other
assets sold or disposed of by the Borrower and its Subsidiaries during
such calendar year, are in excess of five percent (5%) of the book
value of the total assets of the Borrower and its Subsidiaries on the
first day of such calendar year, the Borrower shall prepay the Loans
from the Net Cash Proceeds received at any time by the Borrower or its
Subsidiaries from such sale or other disposition. The Borrower shall
also pay any amount due under SECTION 2.3(d) hereof as a result of such
prepayment or may, in lieu thereof, deposit the Net Cash Proceeds with
the Agent, to be held pending expiration of Interest Periods until the
earliest time at which such proceeds may be used to prepay the Loans in
accordance herewith without the Borrower being obligated to pay any
amounts which would have been due under SECTION 2.3(d) hereof had
payment been made earlier.
(iii) Within ninety (90) days after the end of each fiscal
year (commencing with the fiscal year ending March 31, 1998), the
Borrower shall prepay the Loans in an amount equal to one hundred
percent (100%) of the Excess Cash Flow for such fiscal year reduced by
the amount necessary to maintain a minimum of Four Million Dollars
($4,000,000) of cash and cash equivalents on the Borrower's
consolidated balance sheet at the end of such fiscal year.
(iv) In the event that the Borrower shall issue Equity
Interests to a Person other than ▇▇▇▇▇ ▇▇▇▇▇▇ in exchange for cash, or
shall incur additional unsecured or subordinated Indebtedness other
than the ▇▇▇▇▇ ▇▇▇▇▇▇ Subdebt, Borrower shall apply the proceeds so
received in prepayment of the Loans as follows:
(A) If the ratio of Funded Indebtedness to EBITDA,
calculated in accordance with SECTION 7.18(a)(i) is greater
than or equal to 4.75 : 1, then the Borrower shall prepay the
Loans in an amount equal to one hundred percent (100%) of the
Net Cash Proceeds received by the Borrower.
(B) If the ratio of Funded Indebtedness to EBITDA,
calculated in accordance with SECTION 7.18(a)(i) is less than
4.75 : 1, then the Borrower shall prepay the Loans in an
amount equal to (I) twenty-five percent (25 %) of the Net Cash
Proceeds received by the Borrower from the issuance of any
additional
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Equity Interests, and (II) fifty percent (50%) of the Net Cash
Proceeds received by the Borrower by incurring additional
unsecured or subordinated Indebtedness other than the ▇▇▇▇▇
▇▇▇▇▇▇ Subdebt.
Any prepayment made pursuant to SECTION 2.3(c)(ii) hereof shall
permanently reduce the Total Commitment Amount; provided, however, that if and
to the extent that the Net Cash Proceeds result from the sale of any asset which
is being replaced or will be replaced within twelve (12) months after the date
of receipt of such Net Cash Proceeds by a similar or comparable replacement
asset having a comparable fair market value or in connection with a Permitted
Acquisition and if the Borrower notifies the Agent in writing within five (5)
Banking Days after the applicable sale that the Borrower or its Subsidiary
intends to so replace the asset sold or to so use such Net Cash Proceeds for a
Permitted Acquisition, the Total Commitment Amount shall not be permanently
reduced until the twelve (12) month anniversary of such sale, and on such
12-month anniversary, the Total Commitment Amount shall be permanently reduced
by (i) one hundred percent (100%) of such Net Cash Proceeds received by the
Borrower or its Subsidiary from such sale if the Borrower fails to notify the
Agent in writing on or before the twelve (12) month anniversary of such asset
sale that the replacement asset has been acquired or a Permitted Acquisition has
been completed, or (ii) the amount of any excess Net Cash Proceeds not used to
acquire the replacement asset or in connection with a Permitted Acquisition. Any
Loans or portions thereof prepaid pursuant to SECTION 2.3(c)(iii) hereof may,
subject to the terms and conditions of this Agreement, be reborrowed prior to
the Revolving Termination Date.
(d) Payments Prior to Interest Period Expiration. The Borrower hereby
agrees to indemnify and hold the Banks free and harmless from any loss or
expense (including, without limitation, any loss or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired by the
Banks to fund or maintain any LIBOR Loan and in addition to any interest or
other payments which may be due the Banks under this Agreement) which the Banks
may incur as a result of (i) the failure by the Borrower to accept or complete a
borrowing, conversion or extension with respect to a LIBOR Loan after making a
request therefor, (ii) the failure of the Borrower to make any prepayment after
notice has been given in accordance with SECTION 2.3(b) hereof, (iii) a
prepayment in whole or in part (whether optional or mandatory) of any LIBOR Loan
prior to the expiration of a related Interest Period, or (iv) the conversion of
a LIBOR Loan as a result of any of the events indicated in SECTION 2.3(G)
hereof. The Agent, after consultation with the Banks, shall deliver to the
Borrower a written statement specifying in reasonable detail any amounts due the
Banks as provided above, and such statement, in the absence of manifest error,
shall be fixed and binding on all parties. In no event shall any amounts be
payable by the Banks to the Borrower under this SECTION 2.3(d).
(e) Payments by the Borrower. All payments (including prepayments)
required to be made on account of principal, interest and fees shall be made
without set-off or counterclaim and shall be made to the Agent, for the account
of the Banks, at the Agent's office referenced in SECTION 11.9 hereof, in
Dollars and in immediately available funds no later than 2:00 p.m. (Houston,
Texas time). The Agent will promptly distribute such payments to each Bank its
Commitment Percentage of such principal, interest, fees or other amounts, in
like funds as
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received. Any payment which is received by the Agent later than 2:00 p.m.
(Houston, Texas time) shall be deemed to have been received on the immediately
succeeding Banking Day. Whenever any payment hereunder shall be stated to be due
on a day other than a Banking Day, such payment shall be made on the next
succeeding Banking Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be. Unless the
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Banks hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date and the Agent may (but shall not be so required),
in reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the extent
such payment has not been made in full to the Agent, each Bank shall repay to
the Agent on demand such amount distributed to such Bank, together with interest
thereon for each day from the date such amount is distributed to such Bank until
the date such Bank repays such amount to the Agent, at the Federal Funds Rate as
in effect from time to time.
(f) Payments by the Banks to the Agent. Each Bank shall make available
to the Agent in immediately available funds the amount of such Bank's Commitment
Percentage of any Borrowing pursuant to notification as provided in SECTION
2.1(c). Unless the Agent shall have received notice from a Bank at least one (1)
Banking Day prior to the date of any proposed Borrowing that such Bank will not
make available to the Agent for the account of the Borrower the amount of that
Bank's Commitment Percentage of the proposed Borrowing, the Agent may assume
that each Bank has made such amount available to the Agent on the borrowing date
and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent any Bank shall not have made its full amount available to
the Agent and the Agent in such circumstances has made available to the Borrower
such amount, that Bank shall within two (2) Banking Days following the date of
such Borrowing make such amount available to the Agent, together with interest
at the Federal Funds Rate as in effect for each day during such period. A notice
from the Agent submitted to any Bank with respect to amounts owing under this
SECTION 2.3(e) conclusive, absent manifest error. If such amount is so
made available, such payment to the Agent shall constitute such Bank's Loan on
the date of the Borrowing for all purposes of this Agreement. If such amount is
not made available to the Agent within two (2) banking days following the date
of such Borrowing, the Agent shall notify the Borrower of such failure to fund
and, upon demand by the Agent, the Borrower shall pay such amount to the Agent
for the account of the Agent, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing. The
failure of any Bank to make any Loan on any date of any proposed Borrowing shall
not relieve any other Bank of its obligation hereunder to make its Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to make
the Loan to be made by such other Bank on such date. In the event that a Bank
for any reasons fails or refuses to fund its portion of a Loan in violation of
this Agreement, then, until such time as such Bank has funded its portion of
such Loan, or all other Banks have received in full (whether by repayment or
prepayment) of the principal and interest due in payment respect of such Loan,
such non-funding Bank shall (i) have no right to vote regarding any issue
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39
on which voting is required or advisable under this Agreement or any other Loan
Document and (ii) shall not be entitled to receive any payments of principal,
interest or fees from the Agent (or the other Banks) in respect of its Loans.
(g) Sharing of Payments, etc.. If any Bank shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Obligations owing to such Bank and such payment
exceeds such Bank's pro rata share of all Obligations owing to all of the Banks,
such Bank shall forthwith (a) notify the Agent of such fact and (b) purchase
from the other Banks such participations in the Obligations owing to such other
Banks as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid thereto together with an amount
equal to such paying Bank's allocable portion (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees that any Bank so purchasing a participation from another Bank
pursuant to this SECTION 2.3(g) may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of offset in SECTION
2.3(h) hereof), with respect to such participation as fully as if such Bank were
the direct creditor of the Borrower in the amount of such participation. The
Agent shall keep records (which shall be conclusive and binding in the absence
of manifest error) of participations purchased pursuant to this SECTION 2.3(g)
and shall in each case notify the Banks following any such purchases.
(h) Offset. In addition to and not in limitation of all rights of
offset that the Banks may have under applicable law, the Banks, upon the
occurrence and during the continuance of an Acceleration, shall have the right
to appropriate and apply to the payment of all Obligations any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter with
the Banks. Each Bank agrees promptly to notify the Borrower and the Agent after
any such offset and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such offset and
application. The rights of each Bank under this SECTION 2.3(h) are in addition
to the other rights and remedies which such Bank may have.
SECTION 2.4 WAIVERS.
The Borrower hereby expressly waives presentment, protest, notice,
demand or action on delinquency in respect of the Obligations. The Borrower
waives any defense arising by reason of any inability to pay or any defense
based on bankruptcy or insolvency or other similar limitations on creditors'
remedies. The Borrower authorizes the Agent and the Banks, without notice or
demand and without affecting the Borrower's liability hereunder or under any of
the other Loan Documents, from time to time to: (i) renew, extend, accelerate or
otherwise change the time or place for payment of the Notes or the Obligations
or any part thereof; (ii) take and hold security, and exchange, enforce, waive
and release any collateral or security or
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any part thereof or any such other security, surrender, modify, impair, change,
alter, renew, continue, compromise or release in whole or in part any such
security, or fall to perfect its interest in any such security or to establish
its priority with respect thereof; (iii) apply such security and direct the
order or manner or sale thereof as the Agent and the Banks in their sole
discretion may determine; (iv) release or substitute, in whole or in part any of
the endorsers or guarantors of the Obligations or any part thereof; (v) settle
or compromise any or all of the Obligations with any endorser or guarantor of
the Obligations; and (vi) subordinate any or all of the Obligations to any other
obligations of or claim against the Borrower, whether owing to or existing in
favor of the Agent or the Banks or any other party. The Obligations of the
Borrower shall continue to be effective or be reinstated (as the case may be) if
at any time payment by the Borrower of all or any part of the Obligations is
rescinded or must otherwise be returned by either of the Agent or the Banks upon
the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all
as though such payment to either of the Agent or the Banks had not been made.
The Agent and the Majority Banks may, at their election, exercise any
right or remedy they may have against the Borrower or any security now or
hereafter held by or for the benefit of the Agent or the Banks including,
without limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of the
Borrower hereunder, except to the extent the Obligations may thereby be paid.
The Borrower waives any defense arising out of the absence, impairment or loss
of any right or remedy against any such security, whether resulting from any
defect in, failure of, or loss or absence of priority with respect to the
interest of the Agent or the Banks in such security, or otherwise. Neither the
Agent nor any Bank shall be required to institute or prosecute proceedings to
recover any deficiency as a condition of payment hereunder or enforcement
hereof.
The Borrower waives the benefit of any statute of limitations affecting
its liability hereunder or the enforcement thereof, to the extent permitted by
law. The Borrower understands and acknowledges that the Banks would not make the
Loans in the absence of the covenants and waivers of the Borrower contained
herein.
The Borrower acknowledges that repeated and successive demands may be
made and payments or performance made hereunder in response to such demands as
and when, from time to time, the Borrower may default in performance of the
Obligations. Notwithstanding any such payment or performance hereunder, this
Agreement shall remain in full force and effect and shall apply to any and all
subsequent defaults by the Borrower in payment or performance of the
obligations.
The Borrower waives any set-off, defense or counterclaim which the
Borrower may have or claim to have against the Agent or the Banks.
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Section 2.5 APPLICATION OF PAYMENTS.
(a) Payments Prior to Acceleration. Prior to the acceleration of the
Obligations under SECTION 8.2 hereof, and other than with respect to payments
required to be made pursuant to SECTION 2.3(c) hereof (which shall be applied as
set forth in SECTION 2.3(c) hereof), if some but less than all amounts due from
the Borrower are received by the Agent, the Agent shall distribute such amounts
in the following order of priority: FIRST, to the payment of interest then due
and payable on the Loans; SECOND, to the payment of principal then due and
payable on the Loans; THIRD, to the payment of any fees then due and payable to
the Agent hereunder or under any other Loan Document; FOURTH, to the payment of
any fees then due and payable to the Banks or the Issuing Bank hereunder or
under any other Loan Document; FIFTH, to the extent of the undrawn and unexpired
amount of any Letter of Credit Obligations, to the Letter of Credit Reserve
Account; SIXTH, to the costs and expenses (including attorneys' fees and
expenses), if any, incurred by the Agent in the collection of such amounts under
this Agreement or any of the other Loan Documents; SEVENTH, to the payment of
all other Obligations not otherwise referred to in this SECTION 2.5(a) then due
and payable hereunder or under any of the other Loan Documents; and EIGHTH, upon
satisfaction in full of all outstanding Obligations, to the Borrower.
(b) Payments Subsequent to Acceleration. Subsequent to the acceleration
of the Obligations under SECTION 8.2 hereof, payments and prepayments with
respect to the Obligations made to the Agent, the Banks or the Issuing Bank or
otherwise received by the Agent, any Bank or the Issuing Bank (from realization
on Collateral or otherwise) shall be distributed in the following order of
priority: FIRST, to the costs and expenses (including attorneys' fees and
expenses), if any, incurred by the Agent, any Bank or the Issuing Bank in the
collection of such amounts under this Agreement or any of the other Loan
Documents, including, without limitation, any costs incurred in connection with
the sale or disposition of any Collateral; SECOND, to the payment of interest
then due and payable on the Loans; THIRD, to the payment of the principal of any
Loans then outstanding; FOURTH, to any fees then due and payable to the Agent
under this Agreement or any of the other Loan Documents; FIFTH, to any fees then
due and payable to the Banks and the Issuing Bank under this Agreement or any
other of the Loan Documents; SIXTH, to the extent of the undrawn and unexpired
amount of any Letter of Credit Obligations, to the Letter of Credit Reserve
Account; SEVENTH, to the payment of any obligation under any Rate Contract
between the Borrower, on the one hand, and the Agent (or an Affiliate of the
Agent) or one or more Banks (or an Affiliate of a Bank), on the other hand;
EIGHTH, to any other Obligations not otherwise referred to in section
2.5(b); NINTH, to damages incurred by the Agent, any Bank or the Issuing Bank by
reason of any breach hereof or of any of the other Loan Documents; and TENTH,
upon satisfaction in full of all Obligations, to the Borrower or as otherwise
required by law.
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ARTICLE III
LETTERS OF CREDIT
SECTION 3.1 ISSUANCE OF LETTERS OF CREDIT.
(a) Subject to the terms and conditions hereof, the Issuing Bank, on
behalf of the Banks, and in reliance on the agreements of the Banks set forth in
this SECTION 3.1 hereby agrees to issue one or more Letters of Credit up to an
aggregate face amount equal to the Letter of Credit Commitment; provided,
however, that the Issuing Bank shall not issue any Letter of Credit unless the
conditions precedent to the issuance thereof set forth in SECTION 5.3 hereof
have been satisfied, and the Issuing Bank shall have no obligation to issue any
Letter of Credit if, after giving effect to such issuance, the Available
Commitment Amount would be less than zero. Each Letter of Credit shall (1) be
denominated in Dollars and (2) expire no later than the earlier to occur of (A)
the Final Maturity Date and (B) three hundred sixty (360) days after its date of
issuance (but may contain provisions for automatic renewal, provided that no
Event of Default or Incipient Default exists on the renewal date or would be
caused by such renewal). Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York. The Issuing Bank shall not at any time be obligated to issue, or cause
to be issued, any Letter of Credit if such issuance would conflict with, or
cause the Issuing Bank to exceed any limits imposed by, any Applicable Law.
(b) The Borrower may from time to time request that the Issuing Bank
issue a Letter of Credit for a Permitted Purpose. The Borrower shall execute and
deliver to the Agent and the Issuing Bank a Request for Issuance of Letter of
Credit in the form attached hereto as EXHIBIT 3.1(B) for each Letter of Credit
to be issued by the Issuing Bank not later than 11:00 a.m. (Houston time) on the
fifth (5th) Banking Day preceding the date on which the requested Letter of
Credit is to be issued, subject to such shorter notice as may be acceptable to
the Issuing Bank and the Agent. Upon receipt of any such request, subject to
satisfaction of all conditions precedent thereto as set forth in SECTION 5.3
hereof and in accordance with SECTION 3.1 hereof, the Issuing Bank shall process
such request and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested thereby. The
Issuing Bank shall furnish a copy of such Letter of Credit to the Borrower and
the Agent following the issuance thereof. The Borrower shall pay or reimburse
the Issuing Bank for normal and customary costs and expenses incurred by the
Issuing Bank in issuing, effecting payment under, amending or otherwise
administering the Letters of Credit.
SECTION 3.2 DRAWS UNDER LETTERS OF CREDIT.
(a) At such time as the Agent shall be notified by the Issuing Bank
that the beneficiary under any Letter of Credit has drawn on the same, the Agent
shall promptly notify the Borrower and each Bank, by telephone or telecopy, of
the amount of the draw and, in the case of each Bank, such Bank's portion of
such draw amount as calculated in accordance with its Commitment Percentage.
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(b) The Borrower hereby agrees to immediately reimburse the Issuing
Bank for amounts paid by such Issuing Bank in respect of draws under a Letter of
Credit. In order to facilitate such repayment, the Borrower hereby irrevocably
requests the Banks, and the Banks hereby severally agree, on the terms and
conditions of this Agreement (other than as provided in ARTICLE II hereof with
respect to the amounts of, the timing of requests for, and the repayment of
Loans hereunder and in ARTICLE IV hereof with respect to conditions precedent to
Loans hereunder), with respect to any drawing under a Letter of Credit prior to
the occurrence of an event described in SECTION 9.1(J) hereof, to make a Base
Rate Loan to the Borrower on each day on which a draw is made under a Letter of
Credit and in the amount of such draw, and to pay the proceeds of such Loan
directly to the Issuing Bank to reimburse the Issuing Bank for the amount paid
by it upon such draw. The Borrower agrees to deliver to the Agent a Loan Request
requesting the making of such Base Rate Loan on the day of any such draw;
provided, however, that the failure of the Borrower to deliver such Loan Request
shall not effect the validity of any Base Rate Loan made hereunder. Each Bank
shall fund its share of such Base Rate Loan by paying its portion of such Loan
to the Agent in accordance with SECTION 2.3(E) hereof and its Commitment
Percentage, without reduction for any set-off or counterclaim of any nature
whatsoever and regardless of whether any Incipient Default or Event of Default
(other than with respect to an event described in SECTION 2.3(E) hereof) then
exists or would be caused thereby. If at any time that any Letters of Credit are
outstanding, any of the events described in SECTION 9.1(J) shall have occurred,
then each Bank shall, automatically upon the occurrence of any such event and
without any action on the part of the Issuing Bank, the Borrower, the Agent or
the Banks, be deemed to have purchased an undivided participation in the face
amount of all Letters of Credit then outstanding in an amount equal to such
Bank's Commitment Percentage, and each Bank shall, notwithstanding the
occurrence of such event, upon a drawing under any Letter of Credit, immediately
pay to the Agent for the account of the Issuing Bank, in immediately available
funds, the amount of such Bank's participation, and the Issuing Bank shall
deliver to such Bank a loan participation certificate dated the date of the
occurrence of such event and in the amount of such Bank's Commitment Percentage.
The disbursement of funds in connection with a draw under a Letter of Credit
pursuant to this SECTION 3.2 shall be subject to the terms and conditions of
SECTION 2.3(E) hereof. The obligations of each Bank to make payments to the
Agent, for the account of the Issuing Bank, in accordance with this SECTION 3.2
shall be absolute and unconditional, and no Bank shall be relieved of its
obligations to make such payments by reason of noncompliance by any other Person
with the terms of the Letter of Credit or for any other reason. The Agent shall
promptly remit to the Issuing Bank the amounts so received from the other Banks.
Any overdue amounts payable by the Banks to the Issuing Bank in respect of a
draw under any Letter of Credit shall bear interest, payable on demand, (x) for
the first two (2) Banking Days, at the rate on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, and (y) thereafter, at the Base Rate.
(c) The Borrower agrees that each Loan made by the Banks to reimburse
the Issuing Bank for draws under any Letter of Credit shall, for all purposes
hereunder, be deemed to be a Base Rate Loan and shall be payable and bear
interest in accordance with all other Base Rate
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Loans. At the Borrower's option, any such Base Rate Loan may be converted to a
LIBOR Loan as provided in SECTION 2.2(B).
SECTION 3.3 ACTIONS BY ISSUING BANK.
(a) The Borrower agrees that any action taken or omitted to be taken by
the Issuing Bank in connection with any Letter of Credit, except for such
actions or omissions as shall constitute gross negligence or willful misconduct
on the part of the Issuing Bank, shall be binding on the Borrower as between the
Borrower and the Issuing Bank and shall not result in any liability of the
Issuing Bank to the Borrower. The obligation of the Borrower to reimburse the
Issuing Bank for a drawing under any Letter of Credit or the Banks for Loans
disbursed by them to the Issuing Bank on account of draws made under the Letters
of Credit shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
whatsoever, including, without limitation, the following circumstances:
(i) Any lack of validity or enforceability of any Loan
Document,
(ii) Any amendment or waiver of or consent to any departure
from any or all of the Loan Documents;
(iii) Any improper use which may be made of any Letter of
Credit or any improper acts or omissions of any beneficiary or
transferee of any Letter of Credit in connection therewith;
(iv) The existence of any claim, set-off, defense or any right
which the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or Persons for whom any such
beneficiary or any such transferee may be acting), any Bank or any
other Person, whether in connection with any Letter of Credit, any
transaction contemplated by any Letter of Credit, this Agreement or any
other Loan Document, or any unrelated transaction;
(v) Any statement or any other documents presented under any
Letter of Credit proving to be insufficient, forged, fraudulent or
invalid in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) The insolvency of any Person issuing any documents in
connection with any Letter of Credit;
(vii) Any breach of any agreement between the Borrower and any
beneficiary or transferee of any Letter of Credit;
(viii) Any irregularity in the transaction with respect to
which any Letter of Credit is issued, including any fraud by the
beneficiary or any transferee of such Letter of Credit;
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(ix) Any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
wireless or otherwise, whether or not they are in code;
(x) Any act, error, neglect or default, omission, insolvency
or failure of business of any of the correspondents of the Issuing
Bank; and
(xi) Any other circumstances arising from causes beyond the
control of the Issuing Bank.
Section 3.4 FEES, INCREASED COSTS, INDEMNIFICATION, EXPENSES.
(a) Letter of Credit Fee.
(i) The Borrower shall pay the Letter of Credit Fee to the
Banks, in accordance with the Banks' respective Commitment Percentages,
and to the Issuing Bank in the following amounts: (a) with respect to
the Banks, an amount equal to the Letter of Credit Obligations with
respect to each Letter of Credit multiplied by the rate equal to the
applicable LIBOR margin based upon the Borrower's ratio of Funded
Indebtedness to EBITDA (calculated in accordance with SECTION
7.18(A)(I)) as follows:
Funded LIBOR
Indebtedness/EBITDA Margin (bps)
------------------- ------------
> 5.0 250.00
-
> 4.5 < 5.0 225.00
-
> 4.0 < 4.5 200.00
-
> 3.5 < 4.0 175.00
-
> 3.0 < 3.5 150.00
-
> 2.5 < 3.0 125.00
-
< 2.5 100.00
from the date of issuance of such Letter of Credit through and
including the later of the expiration date thereof or the date as of
which all reimbursement obligations owing with respect thereto shall be
paid in full; and (b) with respect to the Issuing Bank, an amount equal
to one-eighth of one percent (1/8%) per annum. of the stated amount of
each Letter of Credit issued by the Issuing Bank from the date of
issuance of such Letter of Credit through and including the expiration
date thereof, plus Two Hundred Fifty Dollars ($250) for issuing,
amending and renewing any Letter of Credit.
(ii) The Letter of Credit Fee shall be payable quarterly in
arrears on the last day of each quarter commencing with the quarter
ending March 31, 1998 and on the Final Maturity Date, subject to
SECTION 2.2(D) hereof.
(b) If any change in Applicable Law, any change in the interpretation
or administration thereof, or any change in compliance with Applicable Law by
the Issuing Bank as a result of any request or directive of any Governmental
Authority, central bank or comparable agency
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(whether or not having the force of law) after the date hereof shall (i) impose,
modify or deem applicable any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System), special
deposit, capital adequacy, assessment or other requirements or conditions
against letters of credit issued by the Issuing Bank or (ii) impose on the
Issuing Bank any other condition regarding this Agreement or any Letter of
Credit or any participation therein, and the result of any of the foregoing in
the determination of the Issuing Bank is to increase the cost to the Issuing
Bank of issuing or maintaining any Letter of Credit or purchasing or maintaining
any participation therein, then, on the earlier of the Final Maturity Date or a
date not more than fifteen (15) days after demand by the Issuing Bank, the
Borrower agrees to pay to the Issuing Bank, from time to time as specified by
the Issuing Bank, such additional amount or amounts as the Issuing Bank
determines will compensate it for such increased costs, from the date such
change or action is effective, together with interest on each such amount from
the Final Maturity Date or the date demanded, as applicable, until payment in
full thereof at the Base Rate. A certificate as to such increased cost incurred
by the Issuing Bank as a result of any event referred to in this subsection (b)
submitted by the Issuing Bank to the Borrower shall be conclusive, absent
manifest error, as to the amount thereof.
(c) The Borrower will indemnify and hold harmless the Agent, the
Issuing Bank and each other Bank and each of their respective employees,
representatives, officers and directors from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including
reasonable attorneys' fees, but excluding taxes) which may be imposed on,
incurred by or asserted against the Agent, the Issuing Bank or any other Bank in
any way relating to or arising out of the issuance of a Letter of Credit, except
that the Borrower shall not be liable to the Agent, the Issuing Bank or any
other Bank for any portion of such claims, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent, the
Issuing Bank or any other Bank, as the case may be. This SUBPARAGRAPH (c) shall
survive termination of this Agreement.
(d) Each Bank shall be responsible for its pro rata share (based on
such Bank's Commitment Percentage) of any and all reasonable out-of-pocket
costs, expenses (including reasonable legal fees) and disbursements which may be
incurred or made by the Issuing Bank in connection with the collection of any
amounts due under, the administration of, or the presentation or enforcement of
any rights conferred by any Letter of Credit or the Borrower's or any
guarantor's obligations to reimburse draws thereunder or otherwise. In the event
the Borrower shall fail to pay such expenses of the Issuing Bank within thirty
(30) days of demand for payment by the Issuing Bank, each Bank shall thereupon
pay to the Issuing Bank its pro rata share (based on such Bank's Commitment
Percentage) of such expenses within ten (10) days from the date of the Issuing
Bank's notice to the Banks of the Borrower's failure to pay; provided, however,
that if the Borrower shall thereafter pay such expenses, the Issuing Bank will
pay to each Bank the amounts received from such Bank hereunder.
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ARTICLE IV
SECURITY DOCUMENTS
SECTION 4.1 SECURITY AGREEMENTS; MORTGAGES; STOCK PLEDGE AGREEMENTS;
CONCENTRATION ACCOUNT PLEDGE AGREEMENT.
The Obligations shall be secured by the Security Agreements, the
Mortgages, the Concentration Account Pledge Agreement and the Stock Pledge
Agreements which shall be executed and delivered to the Agent as follows:
(a) Security Agreements. On or prior to the Closing Date, the Borrower
and its Subsidiaries shall execute and deliver the Security Agreements in
substantially the forms attached hereto as EXHIBIT 4.1-1 and EXHIBIT 4.1-2,
respectively, and any entity which becomes a Subsidiary of the Borrower
thereafter shall execute and deliver a Security Agreement in substantially the
form attached hereto as EXHIBIT 4.1-2 at the time of its creation or acquisition
by the Borrower or its Subsidiary.
(b) Mortgages. The Borrower and its Subsidiaries previously have
delivered Mortgages with respect to their respective ownership or leasehold
interest in all real property which the Borrower and its Subsidiaries either own
or lease prior to the Closing Date (the "Original Mortgages"). As to (i) the
real property constituting the ▇▇▇▇▇ Hospitals or (ii) any other ownership or
leasehold interest in real property which the Borrower or any Subsidiary
acquires from time to time after the Closing Date, the Borrower or such
Subsidiary, as the case may be, shall execute and deliver additional Mortgages,
provided that this SECTION 4.1(B) shall not require the Borrower or its
Subsidiaries to execute and deliver any Mortgage with respect to the Excluded
Leases; and provided further that (i) prior to any such acquisition, the Agent
shall have received an Environmental Report with respect to the real property so
acquired and (ii) concurrently with the execution and delivery of each such
Mortgage the Agent shall have received a title insurance policy with respect to
any real property so acquired which is substantially similar to the title
insurance policies delivered pursuant to SECTION 5.1(J)(II)(B) hereof and, to
the extent applicable, landlord's waivers from landlords in any ground leases so
acquired which shall be in form and substance satisfactory to the Agent. By
virtue of the execution and delivery of a Mortgage pursuant to this SECTION
4.1(B) the Borrower shall be deemed to have affirmed, with respect to the real
property thereby mortgaged, the covenants set forth in SECTION 6.19 hereof.
(c) Stock Pledge Agreements. On or prior to the Closing Date, the
Borrower shall execute and deliver an Amended and Restated Stock Pledge
Agreement in substantially the form attached hereto as EXHIBIT 4.1-3. The
Borrower represents that, to the best of its knowledge after reasonable inquiry,
none of its Subsidiaries existing as of the Closing Date owns any Equity
Interests of any Person. In the event that either such Subsidiary or any entity
which becomes a Subsidiary of the Borrower after the Closing Date shall ever own
any Equity Interests of any Person, the Borrower shall, promptly upon learning
of such Equity Interest ownership, cause such Subsidiary to execute and deliver
additional agreements and documents
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as necessary to give the Banks a fully-perfected, first priority security
interest in such Equity Interests. Where the Equity Interests consist of Capital
Stock of a Person, such additional agreements and documents shall include, but
shall not be limited to, a Stock Pledge Agreement.
(d) Concentration Account Pledge Agreement. On or prior to the Closing
Date, the Borrower shall execute and deliver the Concentration Account Pledge
Agreement in substantially the form attached hereto as EXHIBIT 4.1-4.
SECTION 4.2 SUBSIDIARY GUARANTIES.
The Obligations shall be unconditionally guaranteed as set forth in the
Subsidiary Guaranties, all of which Guaranties shall be in substantially the
form attached hereto as EXHIBIT 4.2-1. Any entity which shall become a
Subsidiary of the Borrower or one of its Subsidiaries after the Closing Date
shall execute and deliver a similar Subsidiary Guaranty at the time of its
creation or acquisition by the Borrower or its Subsidiary. Notwithstanding the
foregoing, with the consent of Banks having at least seventy-five percent (75%)
of the Commitment Percentages, Partial Subsidiaries may execute and deliver a
Subsidiary Guaranty in substantially the form attached hereto as EXHIBIT 4.2-2.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 CONDITIONS TO COMMITMENT.
The obligation of the Banks to continue to undertake the Commitment
pursuant to the terms and conditions of this Agreement shall be subject to the
prior or contemporaneous satisfaction of each of the following conditions
precedent:
(a) Delivery of Documents. The Borrower shall have delivered or caused
to be delivered to the Agent the following documents, each duly executed by an
Authorized Representative or similar authorized person:
(i) This Agreement.
(ii) Notes executed by the Borrower payable to each of the
Banks in the Commitment Amount of each Bank. Such Notes shall replace
and supercede any Original Notes. All obligations evidenced by the
Original Notes shall continue in full force and effect, but shall be
governed by the Notes and this Agreement. The execution and delivery of
the Notes shall not be construed as a novation of the obligations
outstanding under the Original Notes.
(iii) From each Subsidiary of the Borrower which previously
has delivered an Original Subsidiary Note, an amended and restated
Subsidiary Note, which shall
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replace and supercede any Original Subsidiary Notes. All obligations
evidenced by the Original Subsidiary Notes shall continue in full force
and effect, but shall be governed by the Amended and Restated
Subsidiary Notes and this Agreement. The execution and delivery of the
Amended and Restated Subsidiary Notes shall not be construed as a
novation of the obligations outstanding under the Original Subsidiary
Notes.
(iv) From any Subsidiary of the Borrower which previously has
not delivered an Original Subsidiary Note, but as to which a Subsidiary
Note is required by the terms of SECTION 2.1(D)(II), a Subsidiary Note.
(v) The Subsidiary Guaranties: any entity which shall be a
Subsidiary of the Borrower as of the Closing Date and which previously
has executed a Subsidiary Guaranty shall execute and deliver an Amended
and Restated Subsidiary Guaranty and any other Subsidiary of the
Borrower as of the Closing Date shall deliver a Subsidiary Guaranty.
(vi) The Security Agreements.
(vii) Amendments to the Original Mortgages, in form and
substance satisfactory to the Agent, and Mortgages for the real estate
constituting the ▇▇▇▇▇ Hospitals.
(viii) The Stock Pledge Agreement.
(ix) The Concentration Account Pledge Agreement.
(x) The Agent's Fee Letter.
(xi) The Banks' Closing Fee Letter.
(xii) An intercreditor agreement regarding the ▇▇▇▇▇ ▇▇▇▇▇▇
Subdebt, duly executed by WCAS and otherwise in form and substance
satisfactory to the Agent in its sole discretion.
(b) Reports, Certificates and Other Information. The Agent shall have
received the following, dated and in full force and effect on the Closing Date:
(i) a certificate of the Secretary or an Assistant Secretary
of the Borrower and each of its Subsidiaries as to (A) its corporate
charter and by-laws, (B) authorization of the execution, delivery and
performance of this Agreement and all of the other Loan Documents
(including action of shareholders, where required), and (C) the
incumbency and signatures of persons authorized to act hereunder and
thereunder on behalf of the Borrower and its Subsidiaries, to which
shall be attached the resolutions of the Boards of Directors of the
Borrower and its Subsidiaries relating to the matters described in the
preceding clause (B), certified by such Secretary or Assistant
Secretary to be in full force and effect on the Closing Date;
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(ii) a certificate, signed by a Responsible Officer of the
Borrower and each of its Subsidiaries stating (A) that the
representations and warranties contained in ARTICLE VI hereof and in
each of the other Loan Agreements, as applicable, are then true and
accurate as though made on and as of such date, and (B) that there then
exists no Event of Default or Incipient Default;
(iii) good standing certificates for the Borrower and each of
its Subsidiaries bearing a date satisfactory to the Agent; and
(iv) such other instruments or documents as either the Agent
may reasonably request relating to the existence and good standing of
the Borrower or any of its Subsidiaries or corporate authority for the
execution, delivery and performance of this Agreement or any of the
other Loan Documents.
(c) Opinion of Counsel. There shall have been delivered to the Agent a
written opinion dated as of the date hereof by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ &
Manner, P.C., as counsel to the Borrower and its Subsidiaries, in form and
substance reasonably acceptable to the Agent, together with such additional
opinions of local counsel as Lender reasonably may request.
(d) Payment of Fees. On or before the Closing Date, the Agent shall
have received payment of any fee or other payment due the Agent or the Banks
pursuant to any of (i) the Agent's Fee Letter, (ii) the Banks' Closing Fee
Letter, or (iii) any other Loan Documents.
(e) No Existing Default. No Event of Default or event which, upon the
lapse of time or the giving of notice or both, would constitute an Event of
Default (an "Incipient Default") shall exist on the Closing Date or after giving
effect to the transactions contemplated to take place hereunder on such date.
(f) Representations and Warranties Correct. The representations and
warranties set forth in ARTICLE VI hereof and in each of the other Loan
Documents shall be true and correct on the Closing Date, and after giving effect
to the transactions contemplated to occur on such date.
(g) Legality of Transactions. It shall not be unlawful for the
Borrower, its Subsidiaries, the Agent, the Issuing Bank or the Banks to carry
out their respective obligations under this Agreement or any of the other Loan
Documents.
(h) No Material Adverse Change. Since March 31, 1997, no Material
Adverse Change shall have occurred in the consolidated financial condition,
operations or prospects of the Borrower.
(i) No Material Litigation. No action, suit, investigation, tax claim
or proceeding shall as of the Closing Date be pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries or the property of the Borrower or any of its Subsidiaries before
any court, arbitrator or administrative or governmental body other than the
matters described in SCHEDULE 5.1(I) hereto, and an Authorized Representative
shall certify
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that the matters described in said SCHEDULE 5.10) are not reasonably expected to
have a Material Adverse Effect.
(j) Security Interests and Collateral. On or before the Closing Date,
the Borrower and its Subsidiaries shall have taken or caused to be taken all
such actions as may be reasonably necessary, in the opinion of counsel to the
Agent, to give the Banks a valid and perfected first priority Lien on and
security interest in the Collateral. Such actions shall include without
limitation:
(i) The delivery to the Agent pursuant to the Security
Agreements, the Concentration Account Pledge Agreement and the Stock
Pledge Agreements relating to such Collateral of evidence satisfactory
to the Agent of the filing of proper financing statements and fixture
filings duly filed under the Uniform Commercial Code in form and
substance satisfactory to the Agent in each jurisdiction as may be
reasonably necessary or desirable in order to perfect the first
priority security interests in the Collateral created thereby.
(ii) With respect to the Collateral constituting real
property, the delivery to the Agent of the following:
(A) Evidence that counterparts of the Mortgages and
such other documents, instruments and agreements reasonably
requested by the Agent (in each case in form and substance
reasonably satisfactory to the Agent) have been duly recorded
in all places that are reasonably necessary to create a valid
and enforceable first priority Lien on all parcels of real
property constituting the Collateral delivered on the Closing
Date in favor of the Banks, subject only to Permitted
Encumbrances;
(B) A title insurance policy for each parcel of real
property constituting such Collateral in the form of an
American Land Title Association Standard Loan Policy Form 1992
(L.P. 10), with ALTA Endorsement Form 1 Coverage, insuring
that on the Closing Date, the Borrower or the applicable
Subsidiary of the Borrower owns fee simple title to such real
property and that the mortgage relating thereto is a valid
first Lien on such real property. Each such title insurance
policy shall be in an amount approved by the Agent and
normally equal to at least the Appraised Value of such real
property and contain the special endorsements requested by the
Agent. No such title insurance policy shall contain any survey
exceptions, exceptions for rights of parties in possession,
easements not of record or installments of taxes or special
assessments (other than taxes and special assessments not then
payable), or any other exceptions to coverage not approved by
the Agent. Each such title insurance policy shall contain such
reinsurance agreements as the Agent may reasonably require;
and
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(C) Evidence of the payment of the applicable fees
respecting the recordation of the Mortgages and applicable
fees respecting the recordation of amendments to the Original
Mortgages.
(iii) The Agent shall have received a landlord's waiver from
the landlord under any ground lease in form and substance satisfactory
to the Agent as to each of the leased premises (if any) which
constitutes any Collateral being delivered on the Closing Date;
provided, however, that the Agent may, in its sole discretion, waive
this requirement as to any leases which it feels are immaterial to the
overall Collateral.
(k) Environmental Report. The Agent shall have received an
Environmental Report for any real property constituting the ▇▇▇▇▇ Hospitals.
(1) Insurance. The Agent shall have received copies of policies or
binders or certificates of insurance (or evidence thereof) required by the Loan
Documents, together with lender's loss payable endorsements in form and
substance satisfactory to the Majority Banks as to insurance maintained with
respect to the Collateral to be mortgaged or pledged under the Loan Documents,
and evidence of the payment of the premium therefor.
(m) Solvency. The Agent shall have received a certificate of the Senior
Vice President, Finance and Administration, of the Borrower in form and
substance satisfactory to the Agent that the Borrower and each of its
Subsidiaries is Solvent on and as of the Closing Date;
(n) Written Receipt. If any part of the proceeds of the Loan is to be
disbursed to a Person other than the Borrower, the Agent shall have received
from the Borrower written disbursement instructions and a written receipt for
such proceeds;
(o) Notice of Authorized Representatives. The Borrower shall have
delivered a certificate to the Agent providing the names, titles and signatures
of the Authorized Representatives; and
(p) Additional Funds Advanced by WCAS and ▇▇▇▇▇ ▇▇▇▇▇▇.
(i) WCAS shall have loaned to the Borrower, on an unsecured,
fully subordinated basis, no less than Twenty-Five Million Dollars
($25,000,000), with a maturity of January 30, 2008, an interest rate
not in excess of ten percent (10%) per annum, providing for semi-annual
payments of accrued interest and otherwise on terms and conditions
satisfactory to the Agent, in its sole discretion.
(ii) ▇▇▇▇▇ ▇▇▇▇▇▇ shall have made additional capital
contributions to the Borrower in the aggregate amount of Seventeen
Million Seven Hundred Sixty Thousand Dollars ($17,760,000), the
proceeds of which will be used by Borrower in connection with its
acquisition of the ▇▇▇▇▇ Hospitals.
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(q) Other Documents. The Agent shall have received any other document,
instrument, undertaking or certificate required by any of the Loan Documents to
be delivered on or prior to the Closing Date.
SECTION 5.2 CONDITIONS TO EACH LOAN.
The obligation of the Banks to make any Loan is subject to the prior or
contemporaneous satisfaction of each of the following conditions precedent on
and as of the date of such Borrowing:
(a) Closing Date. The Closing Date shall have occurred;
(b) No Existing Default. No Event of Default or Incipient Default shall
exist at the date of such Borrowing or after giving effect to the transactions
contemplated to take place hereunder on such date;
(c) Representations and Warranties Correct. The representations and
warranties set forth in ARTICLE VI hereof shall be true and correct at the date
of such Borrowing and after giving effect to the transactions contemplated to
take place hereunder on such date;
(d) Loan Request. The Agent shall have received a Loan Request which
shall (i) describe the Permitted Purposes for which such Loan is being requested
and the amount of such Loan to be applied to each such Permitted Purpose, (ii)
certify that the amount of such Loan allocable to working capital purposes,
together with the outstanding principal amount of Loans previously made for such
purposes, does not exceed Ten Million Dollars ($10,000,000) and (iii) constitute
a certification by the Borrower that the conditions set forth in this SECTION
5.2 are or will be satisfied on and as of the date of such Borrowing;
(e) No Material Adverse Change. No Material Adverse Change shall have
occurred since March 31, 1997;
(f) Permitted Acquisition. Any acquisition to be funded with the
requested Loan shall constitute a Permitted Acquisition;
(g) Payment of Indebtedness Tax. Any recording tax under Tennessee Code
Annotated, Section 67-4-409 shall have been paid.
(h) Additional Conditions. The Agent shall have received all such other
certificates, reports, statements, or other documents as the Agent may
reasonably request, and all other conditions to the making of such Loan which
are set forth in this Agreement, including, but not limited to, those set forth
in SECTION 4.1 AND SECTION 4.2 hereof, shall have been fulfilled.
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SECTION 5.3 CONDITIONS PRECEDENT TO EACH LETTER OF CREDIT.
The obligation of the Issuing Bank to issue each Letter of Credit is
subject to the fulfillment of each of the following conditions immediately prior
to or contemporaneously with the issuance of such Letter of Credit:
(a) Closing Date. The Closing Date shall have occurred;
(b) Representations and Warranties Correct. All of the representations
and warranties set forth in ARTICLE VI hereof shall be true and correct at the
date of issuance of the Letter of Credit and after giving effect to such
issuance;
(c) No Existing Default. There shall not exist on the date of issuance
of such Letter of Credit, and after giving effect thereto, an Event of Default
or an Incipient Default;
(d) Request for Issuance of Letter of Credit. The Agent and the Issuing
Bank shall have received a Request for Issuance of Letter of Credit which shall
constitute a certification by the Borrower that (i) the conditions set forth in
this Section 5.3 are or will be satisfied on and as of the date of issuance of
such Letter of Credit; and (ii) the Letter of Credit is being requested for a
Permitted Purpose;
(e) No Material Adverse Change. No Material Adverse Change shall have
occurred since March 31, 1997;
(f) Permitted Acquisition Any acquisition for which the Letter of
Credit is being issued shall constitute a Permitted Acquisition; and
(g) Additional Conditions. The Agent and the Issuing Bank shall have
received all such other certificates, reports, statements or other documents as
the Agent or the Issuing Bank may reasonably request, and all other conditions
to the issuance of such Letter of Credit which are set forth in this Agreement,
including, but not limited to, those set forth in SECTION 4.1 and SECTION 4.2
hereof, shall have been fulfilled.
SECTION 5.4 CONDITIONS FOR THE BENEFIT OF THE AGENT AND THE BANKS.
The conditions set forth in this ARTICLE V are for the exclusive
benefit of the Banks and the Agent and may be waived only by a written waiver
signed by the Majority Banks and the Agent. For purposes of determining
satisfaction of the conditions set forth in Section 5.1 hereof, each Bank agrees
that, by funding its Commitment Percentage of the initial Borrowing subsequent
to the Closing Date, it will be deemed to have approved any matter in such
conditions requiring its approval. For purposes of determining satisfaction or
waiver of the conditions set forth in Section 5.2 hereof for any Borrowing
subsequent to such initial Borrowing, each Bank which funds its Commitment
Percentage of such subsequent Borrowing shall be deemed to have approved any
matter disclosed by the Borrower in writing to such Bank and the Agent at least
three (3) Banking Days prior to such Borrowing, which writing refers
specifically to Section 5.2 and Section 5.4 hereof and includes a statement to
the effect
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that such Bank's funding shall be deemed a waiver of the applicable condition
with respect to such matter. Such waiver shall not be deemed a waiver with
respect to the conditions applicable to any subsequent Borrowing, but the
Borrower shall not be required to send the Banks or the Agent any additional
written notice.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the Agent, the Issuing Bank and the Banks to enter
into this Agreement, to extend the Loans and to issue the Letters of Credit, the
Borrower makes the following representations and warranties to the Agent, the
Issuing Bank and the Banks, all of which shall be true and correct as of the
Closing Date and shall survive the execution of this Agreement:
SECTION 6.1 DUE ORGANIZATION.
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, and each is duly licensed or qualified to conduct business, and
each is in good standing in, each jurisdiction wherein the character of the
property owned or the nature of the business transacted by it makes such
licensing or qualification necessary (except for jurisdictions in which the
failure to so qualify or be in good standing would not have a Material Adverse
Effect).
SECTION 6.2 ORGANIZATION, STANDING AND QUALIFICATION OF SUBSIDIARIES.
(a) Set forth in SCHEDULE 6.2 attached hereto is a complete and
accurate list of the Borrower's Subsidiaries as of the date hereof, showing
their respective jurisdictions of organization, the jurisdictions in which each
is qualified to do business and all trade names or assumed or fictitious names
used by any Subsidiary.
(b) The organizational documents and all amendments thereto for the
Borrower and each of its Subsidiaries have been duly filed (where required) and
are in proper order. All of the outstanding Equity Interests of the Borrower and
its Subsidiaries have been validly issued in compliance with all federal and
state securities laws and are fully paid and nonassessable. Except as specified
in SCHEDULE 6.2, all of the Equity Interests of or other ownership interest in
each of the Subsidiaries is owned by the Borrower or one of its Subsidiaries
free and clear of all Liens.
(c) Other than certain Equity Interests held by ▇▇▇▇▇ ▇▇▇▇▇▇, the terms
of which are disclosed on SCHEDULE 6.2, neither the Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its Equity Interests, provided,
however, that any Partial Subsidiary of the Borrower may at any time redeem any
Equity Interests held by Persons who are not Affiliates of the Borrower at a
redemption price not in excess of the fair market value of such Equity
Interests.
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SECTION 6.3 ABSENCE OF CERTAIN ACTIVITIES.
Except as set forth on SCHEDULE 6.2 attached hereto, neither the
Borrower nor any of its Subsidiaries is a partner in any partnership or a joint
venturer in any joint venture, which partnership or joint venture has not been
previously disclosed to and approved by the Majority Banks; provided, however,
that the foregoing representation shall be limited to the knowledge of the
Borrower following reasonable inquiry as to any partnerships or joint ventures
of those Subsidiaries having as their primary business the operation of acute
care facilities.
SECTION 6.4 REQUISITE POWER.
Each of the Borrower and its Subsidiaries has all requisite corporate,
partnership or other organizational power and all governmental licenses,
permits, authorizations, consents and approvals necessary to own and operate its
respective properties and to carry on its respective business as now conducted
and as proposed to be conducted (except where the failure to do so would not
have a Material Adverse Effect). Each of the Borrower and its Subsidiaries has
all requisite power to borrow the sums provided for in this Agreement and to
execute, deliver, issue and perform this Agreement, the Notes, the Subsidiary
Notes, the Security Agreements, the Concentration Account Pledge Agreement, the
Mortgages, the Subsidiary Guaranties, the Stock Pledge Agreements and the other
Loan Documents to which any of them is a party.
SECTION 6.5 AUTHORIZATION.
All action on the part of the Borrower and its Subsidiaries and their
respective directors, stockholders, partners, managers and members necessary for
the authorization, execution and delivery and performance of this Agreement, the
Notes, the Subsidiary Notes, the Security Agreements, the Concentration Account
Pledge Agreement, the Mortgages, the Subsidiary Guaranties, the Stock Pledge
Agreements and the other Loan Documents has been duly taken and is in full force
and effect.
SECTION 6.6 OFFICER AUTHORIZATION.
Each natural person executing this Agreement or any of the other Loan
Documents on behalf of the Borrower or its Subsidiaries is (as of the date of
such execution) duly and properly in office and fully authorized to execute and
deliver the same.
SECTION 6.7 BINDING NATURE.
This Agreement, the Notes, the Subsidiary Notes, the Security
Agreements, the Mortgages, the Subsidiary Guaranties, the Concentration Account
Pledge Agreement, the Stock Pledge Agreements and each of the other Loan
Documents are, or upon the execution and delivery thereof will be, a legal,
valid and binding obligation of the Borrower or its Subsidiaries, with respect
to which any of such parties is a signatory thereto, in full force and effect
and enforceable in accordance with its respective terms, except for the effect
of applicable laws regarding bankruptcy or insolvency and the effect of
equitable principles generally.
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SECTION 6.8 NO CONFLICT.
Neither the execution nor delivery of this Agreement, the Notes, the
Subsidiary Notes, the Security Agreements, the Concentration Account Pledge
Agreement, the Mortgages, the Subsidiary Guaranties, the Stock Pledge Agreements
or any of the other Loan Documents nor performance of nor compliance with the
terms and provisions hereof or thereof will (a) conflict with or result in a
breach of any Governmental Requirement or any other material agreement or
instrument binding upon the Borrower or any of its Subsidiaries, or conflict
with or result in a breach of any provision of the corporate charter or by-laws,
partnership, or other constituent document of the Borrower or any of its
Subsidiaries, or (b) result in the creation or imposition of any Lien upon any
property of the Borrower or any of its Subsidiaries pursuant to any such
agreement or instrument (other than pursuant to the Security Agreements, the
Concentration Account Pledge Agreement, the Subsidiary Guaranties, the Mortgages
and the Stock Pledge Agreements). No authorization, consent or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required to be obtained or made by the Borrower or any of its Subsidiaries,
other than those which will be obtained or made prior to the date hereof, for
the due execution, delivery and performance by the Borrower or its Subsidiaries
of this Agreement, the Notes, the Subsidiary Notes, the Security Agreements, the
Concentration Account Pledge Agreement, the Mortgages, the Subsidiary
Guaranties, the Stock Pledge Agreements or any of the other Loan Documents or
for the validity or enforceability thereof.
SECTION 6.9 NO EVENT OF DEFAULT.
No Event of Default or Incipient Default has occurred and is continuing
or will result from the execution, delivery or performance of this Agreement,
the Notes, the Subsidiary Notes, the Security Agreements, the Concentration
Account Pledge Agreement, the Mortgages, the Subsidiary Guaranties, the Stock
Pledge Agreements or any of the other Loan Documents.
SECTION 6.10 FINANCIAL STATEMENTS.
The financial statements most recently delivered to the Agent pursuant
to SECTION 7.2 hereof fairly present the financial condition and results of
operations of the Borrower consolidated with its Subsidiaries. All such
financial statements were prepared in accordance with GAAP consistently applied
throughout the respective periods covered thereby, except that financial
statements not dated as of the end of a fiscal year are subject to adjustments
upon audit. Except as disclosed in such financial statements or otherwise
disclosed in writing to the Banks, neither the Borrower nor any Subsidiary of
the Borrower is liable for any material liability, direct or contingent,
including, but not limited to, liabilities for taxes, long-term leases or
long-term commitments, which would be required to be shown as a liability or
otherwise disclosed in current financial statements.
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SECTION 6.11 NO ADVERSE CHANGE.
Since March 31, 1997, there has been no Material Adverse Change, and
there has occurred no event which would have a Materially Adverse Effect on the
Borrower or any of its Subsidiaries.
SECTION 6.12 REAL PROPERTY.
Each of the Borrower and its Subsidiaries has good marketable title in
fee simple to, or a valid and subsisting leasehold interest in, all real
property reasonably necessary for the operation of its business as a whole, free
from all Liens, charges, mortgages, deeds of trust, security interests and
encumbrances of any nature whatsoever, except for Permitted Encumbrances.
SECTION 6.13 EQUIPMENT.
The Borrower and its Subsidiaries own or have the right to use, under
valid and subsisting leases, equipment and fixtures reasonably necessary for the
operation of their business as a whole. Substantially all of the tangible
property of the Borrower and its Subsidiaries used in connection with their
business is in good operating condition (ordinary wear and tear excepted),
usable in the ordinary course of business, and is adequate for the operation of
their business.
SECTION 6.14 CONTRACTS.
Neither the Borrower nor any of its Subsidiaries nor, to the best
knowledge of the Borrower, any other party to any of the material contracts to
which the Borrower or any of its Subsidiaries is a party ("Key Contracts") is in
material default thereunder, and there are no presently existing facts or
circumstances which, if continued or on notice, could reasonably be expected to
result in such a material default on the part of the Borrower or any of its
Subsidiaries, or, to the best knowledge of the Borrower, on the part of the
other party thereto. The Borrower has no knowledge that any other party to any
of the Key Contracts intends to terminate such Key Contract.
SECTION 6.15 INTELLECTUAL PROPERTY.
SCHEDULE 6.15, attached hereto contains a complete and correct list of
all material patents, copyrights, trademarks, licenses, service marks, trade
names and other similar rights (the "Intellectual Property Rights") used by the
Borrower or any of its Subsidiaries. No proceedings have been instituted or are
pending or have been threatened in writing which challenge the validity,
ownership or use of any such Intellectual Property Rights which could reasonably
be expected to have a Material Adverse Effect. To the best knowledge of the
Borrower, no infringement of any Intellectual Property Right of any third party
has occurred or would result in any way from the operations or business of the
Borrower or any of its Subsidiaries, and, except as set forth in SCHEDULE 6.15,
no claim has been made by any
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such third party based on allegation of any such infringement which could
reasonably be expected to have a Material Adverse Effect.
SECTION 6.16 LITIGATION.
There is no action, suit, investigation, tax claim or proceeding
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries or the property of the Borrower or any
of its Subsidiaries before any court, arbitrator or administrative or
governmental body which would reasonably be expected to have a Material Adverse
Effect.
SECTION 6.17 TAX RETURNS AND TAX MATTERS.
Each of the Borrower and each of its Subsidiaries has filed all federal
and state income tax returns which are required to be filed, and each has paid
all taxes as shown on said returns and on all assessments received by it to the
extent that such taxes have become due. There is no proposed, asserted or
assessed material tax deficiency against the Borrower or any of its
Subsidiaries, except those being contested in good faith and for which such
reserve as is required by GAAP has been created.
SECTION 6.18 EMPLOYEE BENEFITS.
(a) Plans Maintained. Except as provided in SCHEDULE 6.18(i) with
respect to clauses (i) and (iii) below or in SCHEDULE 6.18(ii) with respect to
clauses (ii) and (iv) below, neither the Borrower nor any Controlled Group
member is a party to, contributes to or is currently obligated to contribute to
any plans, programs, agreements, policies, commitments or other arrangements
(whether or not set forth in a written document) in the following categories:
(i) Any funded employee pension benefit plan subject to Title
IV of ERISA, including (without limitation) any Multiemployer Plan,
except as disclosed to and approved by the Majority Banks,
(ii) Any material plan, program, agreement, policy, commitment
or other arrangement relating to severance or termination pay, whether
or not published or generally known,
(iii) Any material retiree health care plan (as described in
SECTION 6.18(G) hereof) and any material retiree life insurance plan,
and
(iv) Any material plan that is an excess benefit plan or a
"top hat" plan, as defined in Section 3(36) or Section 301(a) (3) of
ERISA, and is unfunded, as described in Section 4(b) (5) or Section
301(a)(3) of ERISA.
(b) Reporting and Disclosure. With respect to each Employee Benefit
Plan, including employee welfare benefit plans not required to be listed in
SCHEDULE 6.18(i) or
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SCHEDULE 6.18(ii), which is subject to the reporting, disclosure and record
retention requirements set forth in Part I of Subtitle B of Title I of ERISA and
the regulations thereunder, each of such requirements has been fully met on a
timely basis, except where instances of failing to do so could not, considered
in the aggregate, have a Material Adverse Effect.
(c) Qualification of Plans. Except as provided on SCHEDULE 6.18(i),
each plan which is listed in SCHEDULE 6.18(i) attached hereto, and which is
intended to be qualified under Section 401(a) of the Code, has been determined
by the Internal Revenue Service in writing to be so qualified or, for amendments
not related to TRA 86, such application has been submitted and not yet denied.
To the best knowledge of the Borrower, since the Internal Revenue Service issued
its determination with respect to any such plan (or, with respect to pending
applications, since the date such application was submitted) there has been no
occurrence (including, without limitation, a plan amendment, the enactment of
legislation or the adoption of regulations) that could cause such plan not to be
so qualified. Within the applicable remedial amendment period described in the
regulations under Section 401(b) of the Code, an application for such a
determination was or will be filed with the Internal Revenue Service with
respect to each amendment to any such plan for which a failure to do so could
reasonably be expected to have a Material Adverse Effect. Each such plan has in
all material respects been administered in accordance with its terms and the
applicable provisions of ERISA and the Code and the regulations thereunder.
(d) Contributions and Premiums. All material contributions, premiums or
other payments due from the Borrower or any other member of the Controlled Group
to (or under) any Employee Benefit Plan have been fully paid or adequately
provided for on the books and financial statements of the Borrower or other
member of the Controlled Group.
(e) Litigation and Extraordinary Claims. There are no pending or, to
the best knowledge of the Borrower, threatened claims, actions or lawsuits,
other than routine claims for benefits in the usual and ordinary course,
asserted or instituted against (i) any Employee Benefit Plan, (ii) any member of
the Controlled Group with respect to any Employee Benefit Plan, or (iii) any
fiduciary with respect to any Employee Benefit Plan, for which the Borrower may
be directly or indirectly liable, through indemnification obligations or
otherwise that, in the aggregate could reasonably be expected to have a Material
Adverse Effect.
(f) Prohibited Transactions. To the best knowledge of the Borrower,
with respect to each Employee Benefit Plan which is subject to Part 4 of
Subtitle B of Title I of ERISA, there does not now exist, nor has there existed
within the six-year period ending on the date hereof, any act or omission which
constitutes a violation of Section 406 or 407 of ERISA and is not exempted by
Section 408 of ERISA or which constitutes a violation of Section 4975(c) of the
Code and is not exempted by Section 4975(d) of the Code, except for violations
which, considered in the aggregate, would not have a Material Adverse Effect.
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(g) COBRA. To the best knowledge of the Borrower, the Borrower and its
Subsidiaries are in compliance with the requirements of COBRA, except for
violations which, considered in the aggregate, would not have a Material Adverse
Effect.
SECTION 6.19 ENVIRONMENTAL MATTERS.
Based upon inquiries and inspections undertaken by or conducted under
the auspices of Responsible Officers of the Borrower and each of its
Subsidiaries, the Borrower and its Subsidiaries are not aware of any facts or
reports that would make the following representations untrue or incorrect,
except as may be disclosed in Environmental Reports furnished by the Borrower to
the Agent:
(a) (i) The properties and operations of the Borrower and each of its
Subsidiaries comply in all respects with all applicable Environmental Laws; (ii)
none of the properties or operations of the Borrower or any of its Subsidiaries
is subject to any judicial or administrative proceeding alleging the violation
of any Environmental Law; (iii) none of the properties or operations of the
Borrower or any of its Subsidiaries is the subject of any federal or state
investigation concerning any use or release of any Hazardous Substance; (iv)
neither the Borrower nor any of its Subsidiaries, nor, to the best knowledge of
the Borrower, any predecessor of the Borrower or any of its Subsidiaries, has
filed any notice under any federal or state law indicating past or present
treatment, storage or disposal of a Hazardous Substance or reporting a spill or
release of a Hazardous Substance into the environment; (v) neither the Borrower
nor any of its Subsidiaries has any contingent liability in connection with any
release of any Hazardous Substance into the environment, and no such release
which could, under applicable law, require remediation has occurred; (vi)
neither the Borrower nor any of its Subsidiaries' operations involve the
generation, transportation, treatment, storage or disposal of Hazardous
Substances, except for the generation of Hazardous Substances in the ordinary
course of business, and except for such activities carried out through licensed
independent contractors; (vii) neither the Borrower nor any of its Subsidiaries
has disposed of any Hazardous Substance on or about any premises owned, leased
or used by the Borrower or any of its Subsidiaries and, to the best of the
knowledge of the Borrower, neither has any lessee, prior owner, or other Person;
and (viii) the existence of any surface impoundments or underground storage
tanks located in, on or about any of the premises owned, leased or used by the
Borrower or any of its Subsidiaries has been disclosed to the Agent, and any
such impoundments or tanks so disclosed do not violate any Environmental Laws;
and, in the case of clauses (i) through (viii) above, any failure of the
foregoing to be true and correct would reasonably be expected in the aggregate
to have a Material Adverse Effect.
(b) No Lien in favor of any Governmental Authority for (i) any
liability under Environmental Laws or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a release of any
Hazardous Substance into the environment has been filed or attached to any of
the premises owned, leased or used by the Borrower or any of its Subsidiaries.
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SECTION 6.20 INSURANCE.
SCHEDULE 6.20 attached hereto contains a complete and accurate list of
all insurance policies maintained by the Borrower and its Subsidiaries. The
Borrower and each of its Subsidiaries maintains such insurance with insurers
duly licensed in the applicable jurisdictions, in such amounts and against such
risks and losses as is reasonable for their business and properties. All such
insurance is in full force and effect and all premiums due in respect thereof
have been paid.
SECTION 6.21 COMPLIANCE WITH LAWS.
Except as set forth in SCHEDULE 6.21 attached hereto, the Borrower and
each of its Subsidiaries are in compliance with all Governmental Requirements
applicable to their properties, assets and business with only such exceptions as
in the aggregate could not have a Material Adverse Effect. There are no
proceedings pending or, to the best of their knowledge, threatened, to terminate
or modify any material Governmental Approvals.
SECTION 6.22 STATUTORY REGULATION.
Neither the Borrower nor any of its Subsidiaries is an investment
company within the meaning of the Investment Company Act of 1940, as amended, or
is, directly or indirectly, controlled by or acting on behalf of any person
which is an investment company, within the meaning of said Act. Neither the
Borrower nor any of its Subsidiaries is subject to any state law or regulation
regulating public utilities or similar entities, or is, within the meaning of
the Public Utility Holding Company Act of 1935, as amended: (a) a holding
company; (b) a subsidiary or Affiliate of a holding company; or (c) a public
utility. Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Interstate Commerce Act or the Federal Power Act or under
any other federal or state statute or regulation limiting or placing conditions
upon their respective power or right to borrow money.
SECTION 6.23 USE OF PROCEEDS; REGULATION U.
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
of the United States). No part of the proceeds of the Loans will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock, except in compliance
with such regulations. No part of the proceeds of the Loans will be used for any
purpose which violates the provisions of Regulation G, T, U or X of said Board
of Governors.
SECTION 6.24 SOLVENCY.
After giving effect to the transactions contemplated by this Agreement
and the other Loan Documents, including all of the Loans made and to be made
hereunder, the Borrower and each of its Subsidiaries are (and will be as a
consequence thereof) Solvent.
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SECTION 6.25 FISCAL YEAR.
The fiscal year of the Borrower ends on March 31.
SECTION 6.26 HEALTH CARE RELATED MATTERS.
(a) Except as disclosed on SCHEDULE 6.26 hereof, each acute care
facility or related business operated by the Borrower or any of its Subsidiaries
has: (i) where required by Applicable Law, obtained all CONs; (ii) obtained and
maintains in good standing all required Health Facility Licenses; (iii) obtained
and maintains applicable JCAHO accreditation for its acute care facilities or
related businesses; (iv) obtained and maintains Medicaid Certification and
Medicare Certification; (v) entered into and maintains in good standing its
Medicaid Provider Agreement and its Medicare Provider Agreement; (vi) is in
substantial compliance with the material conditions of participation in
Medicaid, Medicare and CHAMPUS programs and the conditions of participation in
each such program and with the indigent care conditions, if any, applicable to
each acute care facility or related business of the Borrower and its
Subsidiaries.
(b) The Medicare cost reports of each acute care facility or related
business of the Borrower and its Subsidiaries and of the home office of the
Borrower have been properly completed and duly filed with the Medicare
intermediary or other HCFA agents for all cost reporting periods.
(c) The Medicaid cost reports of each acute care facility or related
business of the Borrower and its Subsidiaries and of the home office of the
Borrower have been properly completed and duly filed with the agencies or agents
responsible for audits of same for all cost reporting periods. The status of
each audit with respect to such cost reports is described on SCHEDULE 6.26
hereto.
(d) The accounts receivable of the Borrower and its Subsidiaries have
been and will continue to be adjusted to reflect reimbursement policies of third
party payors such as Medicare, Medicaid, Blue Cross/Blue Shield, private
insurance companies, health maintenance organizations and preferred provider
organizations.
SECTION 6.27 RELATED AGREEMENTS.
All representations and warranties of the Borrower contained in any
Loan Documents are true and correct as if made on the date hereof and the
Borrower hereby adopts and affirms all such representations and warranties which
the Borrower agrees shall be incorporated by reference herein and made a part
hereof.
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ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Obligation is
outstanding or any Commitment is in effect, it will comply with and, if
applicable, cause each of its Subsidiaries to comply with the following
provisions:
SECTION 7.1 ACCOUNTING RECORDS.
The Borrower and each of its Subsidiaries shall maintain adequate books
and accounts in accordance with sound business practices and GAAP consistently
applied. In the event of any changes in GAAP or in the application of GAAP to
the Borrower and its Subsidiaries, the parties shall, unless they agree
otherwise, continue to determine the compliance of the Borrower with the
covenants herein set forth and otherwise interpret the provisions of this
Agreement based on GAAP prior to any such changes.
SECTION 7.2 FINANCIAL STATEMENTS AND NOTICES.
The Borrower shall furnish the following financial statements,
information and notices:
(a) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, within forty-five (45) days after the end of each month,
commencing with the month ending December 31, 1997: (i) a statement of
stockholders equity for such month; (ii) a statement of changes in financial
position or statement of cash flows (whichever is required by GAAP) for such
month; (iii) an income statement for such month; and (iv) a balance sheet as of
the end of such month. All such statements shall be prepared on a consolidated
and consolidating basis for the Borrower and its Subsidiaries, in reasonable
detail, subject to year-end audit adjustments and without footnotes, shall
include appropriate comparisons to the same period for the prior year, and shall
be certified by the Senior Vice President, Finance and Administration, of the
Borrower to have been prepared in accordance with GAAP consistently applied,
subject to year-end audit adjustments;
(b) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, within forty-five (45) days after the end of each fiscal
quarter of the Borrower, commencing with the fiscal quarter ending March 31,
1998: (i) a statement of stockholders equity for such quarter; (ii) a statement
of changes in financial position or statement of cash flows (whichever is
required by GAAP) for such quarter; (iii) an income statement for such month;
and (iv) a balance sheet as of the end of such month. All such statements shall
be prepared on a consolidated and consolidating basis for the Borrower and its
Subsidiaries, in reasonable detail, subject to year-end audit adjustments and
without footnotes, shall include appropriate comparisons to the same period for
the prior fiscal year, and shall be certified by the Senior Vice President,
Finance and Administration, of the Borrower to have been prepared in accordance
with GAAP consistently applied, subject to year-end audit adjustments;
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(c) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, within ninety (90) days after the close of each fiscal
year of the Borrower, commencing with the fiscal year ending March 31, 1998, for
the Borrower and its Subsidiaries on a consolidated and consolidating basis: (i)
a statement of stockholders equity for such fiscal year; (ii) a statement of
changes in financial position or statement of cash flows (whichever is required
by GAAP) for such fiscal year; (iii) an income statement for such fiscal year;
and (iv) a balance sheet as of the end of such fiscal year; and setting forth in
each case in comparative form the figures for the previous fiscal year. All
statements required by this SECTION 7.2(C) shall include appropriate comparisons
to the prior fiscal year. Such consolidated financial statements shall be
audited by KPMG Peat Marwick LLP or another independent certified public
accounting firm acceptable to the Majority Banks and shall include a report of
such accounting firm, which report shall be unqualified and shall state that
such financial statements fairly present the financial position of the Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP, consistently applied. Such accounting firm shall also certify to the Agent
and the Banks that in the course of the regular annual examination of the
business of the Borrower and its Subsidiaries, which examination was conducted
by such accounting firm in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge that an Event of
Default or an Incipient Default has occurred and is continuing as of the date of
certification, or if, in the opinion of such accounting firm, an Event of
Default or an Incipient Default has occurred and is continuing, a statement as
to the nature thereof. Such accounting firm shall also prepare a letter to
management of the Borrower in connection with the preparation of such audit
report which the Borrower shall deliver to the Agent and each Bank within five
Banking Days of receipt thereof;
(d) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, (i) contemporaneously with each monthly, quarterly and
year-end financial report required by the foregoing SUBPARAGRAPHS (A), (B) AND
(C), a certificate of a Responsible Officer (A) stating that, to the best of
such officer's knowledge after due inquiry, no Event of Default or Incipient
Default exists on the date of such certificate, or if any Event of Default or
Incipient Default then exists, setting forth the details thereof and the action
that the Borrower is taking or proposes to take with respect thereto, (B)
stating whether, since the date of the most recent financial statements
previously delivered pursuant to the foregoing SUBPARAGRAPH (A), (B) OR (C),
there has been a change in the generally accepted accounting principles applied
in preparing the financial statements then being delivered from those applied in
preparing the most recent audited financial statements so delivered which is
material to the financial statements then being delivered, (C) furnishing
calculations demonstrating compliance with the covenants contained in SECTION
7.18 hereof, and (D) attaching management's summary of the results contained in
such financial statements, and (ii) contemporaneously with each such quarterly
and annual financial report, a certificate of a Responsible Officer furnishing
calculations demonstrating compliance with the covenant set forth in SECTION
8.11 hereof;
(e) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, contemporaneously with each six (6) month and year-end
financial report required by the foregoing SUBPARAGRAPHS (A) AND (B), an
addendum to SCHEDULE 6.2 as to the identity
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of, and jurisdictions of incorporation or organization of, the Borrower's
Subsidiaries to the extent that such information set forth in SCHEDULE 6.2 has
changed since the Closing Date or the date of the most recent addendum thereto;
(f) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, the information required under the Security Agreements
with respect to (i) changes in the executive offices of the Borrower or any
Subsidiary or locations at which records with respect to the accounts receivable
of the Borrower or any Subsidiary are kept, as specified by Section 11(a)
thereof, and (ii) changes in or additions to the locations at which the
inventory and equipment of the Borrower and its Subsidiaries are kept, as
specified by Section 9(a) of the Security Agreements;
(g) To the Agent, upon the creation or acquisition of any new
Subsidiary or of any investment that results in a new Subsidiary, a Security
Agreement, a Subsidiary Guaranty and (to the extent applicable) one or more
Mortgages and a Subsidiary Note, all duly executed by such new Subsidiary, and a
Stock Pledge Agreement duly executed by the Borrower or its applicable
Subsidiary, as the case may be;
(h) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, contemporaneously with each year-end financial report
required by the foregoing SUBPARAGRAPH (C), a schedule identifying all insurance
then in effect and certificates evidencing such insurance;
(i) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, promptly after they are released, sent, made available or
filed, copies of all press releases, material reports, proxy statements and
financial statements that the Borrower sends or makes available to its
stockholders generally and all registration statements and reports that the
Borrower files with the Securities and Exchange Commission or any other
governmental official, agency or authority; copies of all such reports provided
that include the information required to be provided pursuant to SECTION 7.2(A),
(B) OR (C) shall to that extent be deemed to satisfy such requirements;
(j) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, promptly but in no event later than one (1) Banking Day
after a Responsible Officer of the Borrower obtains knowledge of (i) the
occurrence of an Event of Default or an Incipient Default, or (ii) any default
or event of default as defined in any evidence of Indebtedness in excess of One
Million Dollars ($1,000,000) or under any agreement, indenture or other
instrument under which such Indebtedness has been created, whether or not such
Indebtedness is accelerated or such default waived, notification thereof, and,
within five (5) calendar days after obtaining such knowledge, a statement of a
Responsible Officer setting forth details thereof and the action which the
Borrower proposes to take with respect thereto;
(k) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, as soon as available, any written report involving the
internal controls of the Borrower and its Subsidiaries submitted to the Borrower
by its independent public accountants in
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connection with their annual or any interim special audit of the financial
condition of the Borrower and its Subsidiaries;
(1) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, promptly but in no event later than five (5) calendar days
after a Responsible Officer learns thereof, written notice of any actual or
threatened claim, litigation, suit, investigation, proceeding or dispute against
or affecting the Borrower or any of its Subsidiaries which: (i) may have a
Material Adverse Effect; (ii) involves a monetary amount in excess of One
Million Dollars ($1,000,000) and is not covered by insurance; (iii) is
reasonably expected to result in a strike, work stoppage, boycott, shutdown or
other labor disruption against or involving the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect; (iv) could reasonably be expected materially to limit, prohibit or
restrict the manner in which the Borrower or any of its Subsidiaries currently
conducts its business; or (v) concerns any alleged violation by the Borrower or
any of its Subsidiaries, or any of their respective predecessors, of any
Environmental Law, where there exists a reasonable possibility that such
violation could materially affect any of the properties or the operations of the
Borrower or such Subsidiary or any alleged material noncompliance of any of the
properties or the operations of the Borrower or such Subsidiary therewith;
(m) To the Agent, as soon as possible, and in any event within twenty
(20) calendar days, after a Responsible Officer learns that any of the following
events has occurred, a statement describing such event and any action that the
Borrower proposes to take with respect thereto: (i) any Reportable Event with
respect to a Pension Plan; (ii) the institution of proceedings by the PBGC to
terminate any Pension Plan or to have a trustee appointed to administer such
plan, or receipt of notice of any intention by the PBGC to do so; (iii) the
filing of a request for a minimum funding waiver by the Borrower or a member of
the Controlled Group under Section 412 of the Code with respect to any Pension
Plan or any employee pension benefit plan (as defined in Section 3(2) of ERISA)
maintained by any member of the ERISA Affiliated Group; or (iv) the receipt by
the Borrower or any other member of the Controlled Group of a material demand
for withdrawal liability under Section 4219 or 4202 of ERISA;
(n) To the Agent, as soon as possible, and in any event within ten (10)
days after receipt of a written request from the Agent or the Majority Banks:
(i) a copy of any Employee Benefit Plan or summary description of such plan;
(ii) a copy of any report, description or other document filed with any
governmental agency with respect to any Employee Benefit Plan or any plan (as
defined in Section 3(3) of ERISA) maintained by the Borrower or any ERISA
Affiliate; or (iii) a copy of any notice, determination letter, ruling or
opinion that the Borrower or any other Controlled Group member receives from any
governmental agency with respect to any Employee Benefit Plan;
(o) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, not later than thirty (30) days prior to commencement of
each fiscal year of the Borrower, a copy of the Borrower's consolidated
financial projections for such fiscal year, including a projected consolidated
balance sheet, income statement, and statement of changes
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in financial position or statement of cash flows for and as of the end of such
fiscal year, together with the annual budget for such fiscal year;
(p) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, not later than ten (10) Banking Days prior to incurring
any ▇▇▇▇▇ ▇▇▇▇▇▇ Subdebt in addition to the WCAS Subdebt, a certificate of a
Responsible Officer (i) stating that, to the best of such officer's knowledge
after due inquiry, no Event of Default or Incipient Default exists on the date
of such certificate, and (ii) furnishing calculations demonstrating, on a pro
forma basis showing the effects of such additional ▇▇▇▇▇ ▇▇▇▇▇▇ Subdebt,
compliance with the covenants contained in SECTION 7.18 hereof; and
(q) To the Agent, with sufficient copies for distribution by the Agent
to each of the Banks, within a reasonable time after a request therefor, such
other information as the Agent or the Majority Banks may reasonably request.
SECTION 7.3 INSPECTION OF PROPERTY BOOKS AND RECORDS.
(a) The Borrower and each of its Subsidiaries shall permit the Agent or
any of the Banks (or any representative thereof), at such reasonable times and
intervals as the Agent or Banks may designate upon reasonable notice, at their
own expense, by and through the representatives of the Agent or any of the
Banks, to inspect, audit and examine their respective books and records, to make
copies thereof, to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants, and to visit and
inspect their respective properties; provided, however, that when an Event of
Default exists, representatives of the Agent or any of the Banks may visit and
inspect at the expense of the Borrower such properties at any time during
business hours and without advance notice.
(b) The Borrower and its Subsidiaries shall extend their cooperation
and assistance and comply with the requests of the Agent or the Majority Banks
or their respective representatives in connection with any audit regarding the
Collateral and will furnish any information requested in respect thereof,
including, without limitation, appraisals of the Collateral, lien search reports
and physical counts. Upon the occurrence of an Incipient Default, the Borrower
shall, at the request of the Agent or the Majority Banks, pay the reasonable
fees and expenses of an accounting firm selected by the Majority Banks to
conduct examinations of the Accounts of the Borrower and its Subsidiaries from
time to time. The Borrower shall also pay all reasonable out-of-pocket expenses
of the Agent in connection with any other audit or examination of the Collateral
hereunder.
SECTION 7.4 MAINTENANCE OF EXISTENCE, LICENSES, PERMITS, ETC.
The Borrower and each of its Subsidiaries shall preserve and maintain
their respective existences and all of their material licenses, permits,
privileges and franchises and other rights necessary or desirable in the normal
course of their businesses, and will use reasonable efforts, in the ordinary
course and consistent with past practice, to preserve their respective business
organization and preserve the goodwill and business of the patients, physicians,
third-party payors, customers, suppliers and others having business relations
with them, except where the
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failure to do so would not have a Material Adverse Effect; provided, however,
that the foregoing shall not preclude the merger of any Subsidiary of the
Borrower into another Subsidiary of the Borrower if permitted under SECTION 8.1
hereof.
SECTION 7.5 TAX RETURNS.
Each of the Borrower and its Subsidiaries shall file all federal and
state income tax returns which are required to be filed.
SECTION 7.6 QUALIFICATIONS TO DO BUSINESS.
The Borrower and each of its Subsidiaries shall qualify to do business
and shall remain in good standing in each jurisdiction in which the nature of
their business requires them to be so qualified, except where the failure to so
qualify could not have a Material Adverse Effect.
SECTION 7.7 COMPLIANCE WITH LAWS.
The Borrower and its Subsidiaries shall comply with all Governmental
Requirements, except where the failure to do so could not have a Material
Adverse Effect.
SECTION 7.8 COMPLIANCE WITH AGREEMENTS.
The Borrower and its Subsidiaries shall comply in all respects with the
terms of each agreement to which any of them is a party, except in such
instances where any failure to so comply would not, in the aggregate, have a
Material Adverse Effect.
SECTION 7.9 INSURANCE.
The Borrower and its Subsidiaries shall maintain in full force and
effect insurance of such types and in such amounts as are customarily carried in
their respective lines of business, including, but not limited to, fire, hazard,
public liability, professional liability, property damage, products liability
and workers' compensation insurance. All such insurance policies which insure
real or personal property shall include a standard form lender's loss payee
endorsement, naming the Agent as loss payee. All such insurance policies which
insure liability shall name the Agent as additional insureds for the benefit of
the Agent and each Bank. The Borrower shall deliver or cause to be delivered to
the Agent, as the Agent may from time to time request, schedules identifying all
insurance then in effect with respect to the Borrower and its Subsidiaries and
certificates evidencing such insurance.
SECTION 7.10 FACILITIES.
The Borrower and its Subsidiaries shall keep the material properties
(in the aggregate) used in their respective businesses in good repair, working
order and condition, and from time to time shall make necessary repairs or
replacements thereto so that their property shall be maintained adequately for
its intended use.
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SECTION 7.11 TAXES AND OTHER LIABILITIES.
The Borrower and its Subsidiaries shall pay and discharge when due any
and all material indebtedness, obligations, liabilities, assessments and real
and personal property taxes, including, but not limited to, federal and state
income and personal and real property taxes, except as may be subject to good
faith contest or as to which a bona fide dispute may arise; provided, however,
that adequate reserves in accordance with GAAP or other provision is made to the
satisfaction of the Majority Banks for prompt payment thereof in the event that
it is found that any of the above are due and owing.
SECTION 7.12 GOVERNMENTAL APPROVALS.
Except where the failure to do so could not have a Material Adverse
Effect, the Borrower and its Subsidiaries shall apply for, diligently pursue,
and obtain or cause to be obtained, and shall thereafter maintain in full force
and effect all Governmental Approvals that shall now or hereafter be necessary
under any Governmental Requirement (a) for land use, public and employee health
and safety, pollution or protection of the environment, and (b) for the
operation of the business of the Borrower and its Subsidiaries. The Borrower
shall promptly notify the Agent in the event of, and provide the Agent with a
copy of all notices of, any denial, suspension, or revocation of any material
Governmental Approvals.
SECTION 7.13 COMPLIANCE WITH GOVERNMENTAL APPROVALS AND GOVERNMENTAL
REQUIREMENTS.
Except where the failure to do so could not have a Material Adverse
Effect, the Borrower and each of its Subsidiaries shall comply with all terms
and conditions of all Governmental Approvals and with all other limitations,
restrictions, obligations, schedules, timetables and reporting requirements in
any Governmental Requirements in all material respects.
SECTION 7.14 COMPLIANCE WITH ENVIRONMENTAL LAWS.
The Borrower shall, and shall cause each of its Subsidiaries to,
conduct its operations and keep and maintain its property in substantial
compliance with all Environmental Laws except where the failure to do so would
not have a Material Adverse Effect.
SECTION 7.15 PREVENT CONTAMINATION.
The Borrower and its Subsidiaries shall (a) conduct their operations in
such a way as to prevent material contamination of any part of their respective
properties by any Hazardous Substance; (b) manage all Hazardous Substances in a
manner that does not require a Hazardous Waste Facility Permit, and in
compliance in all material respects with all Governmental Requirements and
Governmental Approvals; and (c) not intentionally or recklessly, and endeavor
not to unintentionally, and not permit any other Person to, emit, release or
discharge into air, soil, surface water or groundwater, any Hazardous Substance
in excess of permitted levels or reportable quantities, or other concentrations,
standards, or limitations under any
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Governmental Requirements or Governmental Approvals in the case of each of the
foregoing clauses (a) through (c) if the failure to do so would have a Material
Adverse Effect.
SECTION 7.16 TAX QUALIFICATION.
For any Employee Benefit Plan which is intended to be qualified under
Section 401(a) of the Code, the Borrower shall, or shall use its best efforts to
cause the members of the Controlled Group to:
(a) Use its best efforts to seek and receive determination letters from
the Internal Revenue Service stating that such plan, or any material amendment
to such plan, meets the requirements for qualification under Section 401(a) of
the Code, unless there is no reasonable possibility that the failure to do so
would have a Material Adverse Effect;
(b) Use its best efforts to cause such plan to meet such requirements
in operation and to be administered in accordance with the requirements of the
Code and ERISA, unless the failure to do so could not reasonably be expected to
result in a liability described in SECTION 9.1(H) hereof; and
(c) Use its best efforts to refrain from taking any action that would
cause such plan to lose its qualification under Section 401(a) of the Code or to
violate the requirements of the Code or ERISA in any material respect.
SECTION 7.17 FUNDING.
The Borrower shall, and shall use its best efforts to cause each other
member of the Controlled Group to, make all material contributions that it is
required to make by law or by any plan prior to the earliest date when statutory
Liens could be imposed under the Code or ERISA on any assets of the Borrower or
such member of the Controlled Group in order to satisfy payment of such
contributions. The Borrower shall not, and shall use its best efforts to not
permit any other member of the Controlled Group to, allow or suffer any material
statutory Lien to be placed upon its assets under the Code or ERISA.
SECTION 7.18 FINANCIAL TESTS; CALCULATION ASSUMPTIONS.
(a) Subject to SECTION 7.18(B) hereof, the Borrower shall:
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(i) Maintain the following ratio of Funded Indebtedness to EBITDA for
each of the months ending during each of the periods set forth below, such ratio
to be calculated for the twelve (12) month period preceding and including such
month:
FUNDED
PERIOD INDEBTEDNESS/EBITDA
------ -------------------
January 1998 to and < 5.50x
including August 1998 -
September 1998 to and < 5.25x
including November 1998 -
December 1998 to and < 5.0x
including May 1999 -
June 1999 to and < 4.75x
including November 1999 -
December 1999 to and < 4.50x
including November 2000 -
December 2000 to and < 4.25x
including November 2001 -
December 2001 to and < 3.50x
including November 2002 -
December 2002 and thereafter < 2.50x
-
(ii) Maintain the following ratio of Funded Indebtedness to Net Worth
for each of the months ending during each of the periods set forth below:
FUNDED
INDEBTEDNESS/
PERIOD NET WORTH
------ ---------------
January 1998 to and < 2.50x
including November 1998 -
December 1998 to and < 2.35x
including November 2000 -
December 2000 to and < 2.25x
including November 2001 -
December 2001 and thereafter < 2.00x
-
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(iii) Maintain the following Interest Coverage Ratio for each of the
months ending during each of the periods set forth below, such ratio to be
calculated for the twelve (12) month period preceding and including such month:
INTEREST
PERIOD COVERAGE RATIO
------ --------------
January 1998 to and >1.50x
including November 1998 -
December 1998 to and >1.65x
including November 1999 -
December 1999 to and >1.85x
including November 2000 -
December 2000 to and >2.00x
including November 2001 -
December 2001 and thereafter >2.25x
-
(iv) Maintain a maximum of seventy (70) Days Sales Outstanding at all
times during the period from the Closing Date through November 30, 2000, and
maintain a maximum of sixty-five (65) Days Sales Outstanding at all times
thereafter.
(v) Prior to the Revolving Termination Date, maintain a minimum Net
Worth:
(A) during the period from and including the Closing Date through
and including March 31, 1998, in an amount not less than (1) ninety
percent (90%) of the actual Net Worth at August 31, 1997 plus (II)
equity contributions received by the Borrower and its subsidiaries from
any source during such period;
(B) during the period from and including April 1, 1998 through and
including March 31, 1999, in an amount not less than (I) ninety percent
(90%) of the actual Net Worth at August 31, 1997 plus (II) seventy-five
percent (75%) of Consolidated Net Income during the period from and
including August 1, 1997 through and including March 31, 1998, plus
(III) equity contributions received by the Borrower and its
subsidiaries from any source during such period; and
(C) during each fiscal year of the Borrower thereafter, in an
amount not less than (I) ninety percent (90%) of the actual Net Worth
at the beginning of
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the immediately preceding fiscal year plus (II) seventy-five percent
(75%) of Consolidated Net Income during the immediately preceding
fiscal year, plus (III) equity contributions received by the Borrower
and its subsidiaries from any source during such period.
(vi) Maintain the following ratio of Senior Indebtedness to EBITDA for
each of the months ending during each of the periods set forth below:
SENIOR
PERIOD INDEBTEDNESS/EBITDA
------ -------------------
January 1998 to and < 4.50x
including May 1998 -
June 1998 to and < 4.25x
including November 1998 -
December 1998 to and < 4.00x
including November 1999 -
December 1999 to and < 3.75x
including November 2000 -
December 2000 to and < 3.50x
including November 2001 -
December 2001 to and < 3.00x
including November 2002 -
December 2002 and thereafter < 2.00x
-
(b) For purposes of calculating the financial ratios set forth in
SECTION 7.18(A) hereof, the following assumptions shall be made:
(i) In calculating Consolidated Net Income as a component of
EBITDA and EBITDAR for purposes of calculating compliance with the
covenants set forth in SECTION 7.18(A)(I) and SECTION 7.18(A)(III)
hereof:
(A) Corporate Overhead Expenses: (I) for each of the
months of January 1998 through and including December 2000,
the amount of corporate overhead expenses included in the
calculation of Consolidated Net Income shall be the amount of
corporate overhead expenses actually incurred during the six
(6) month period preceding and including such month multiplied
by two (2) and (II) for each of the months of January 2001
through and including December 31, 2002, the amount of
corporate overhead expenses included in the calculation of
Consolidated Net Income shall be the amount of corporate
overhead expenses
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actually incurred during the twelve (12) month period
preceding and including such month; and
(B) Interest Expense: (I) for each of the months of
January 1998 through and including December 2000, the amount
of Interest Expense shall be the amount of Interest Expense
actually incurred during the six (6) month period preceding
and including such month multiplied by two (2) and (II) for
each of the months of January 2001 through and including
December 2003, the amount of Interest Expense shall be the
amount of Interest Expense actually incurred during the twelve
(12) month period preceding and including such month.
(ii) For purposes of calculating compliance with the covenants
set forth in SECTION 7.18(A) hereof, (A) prior to the Revolving
Termination Date, EBITDA and EBITDAR of the Borrower and its
Subsidiaries for any twelve (12) month period shall be calculated on
the basis of EBITDA and EBITDAR of the Borrower and its Subsidiaries an
adjusted annualized rolling six (6) month basis; provided that EBITDA
and EBITDAR of any acute care facility or related business which the
Borrower or any of its Subsidiaries acquires (or proposes to acquire in
the case of calculating EBITDA and EBITDAR pursuant to SUBPARAGRAPH
(VI) of the definition of Permitted Acquisitions) on or after the
Closing Date for any twelve (12) month period shall be calculated on
the basis of EBITDA and EBITDAR of such acute care facility or related
business on a rolling twelve (12) month period until the last day of
the sixth month following the date of such acquisition and shall
thereafter be calculated on the same basis as EBITDA and EBITDAR of the
Borrower and its Subsidiaries; and (B) on and after the Revolving
Termination Date, all such calculations of EBITDA and EBITDAR shall be
made on the basis of such EBITDA and EBITDAR on a rolling twelve (12)
month; and provided further that with respect to EBITDA and EBITDAR of
any acute care facility or related business acquired by the Borrower or
any of its Subsidiaries on or after the Closing Date, such EBITDA and
EBITDAR shall be calculated by excluding any profits or losses
associated with any business segments of such acute care facility or
related business which are sold immediately prior to the date such
acute care facility or related business is acquired by the Borrower or
which are to be sold immediately thereafter. Any such business segments
so excluded will be identified in the compliance certificate delivered
to the Agent and the Banks pursuant to SECTION 7.2(D) hereof.
(iii) With respect to any Partial Subsidiary, for purposes of
calculating EBITDA, EBITDAR and Net Worth, the actual financial results
of such Partial Subsidiary shall be reduced by any Distribution made to
Minority Holders in such Partial Subsidiary.
SECTION 7.19 HEALTH CARE RELATED MATTERS.
The Borrower shall, and shall cause each of its Subsidiaries to, at all
times:
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(a) comply with all applicable CON requirements in jurisdictions where
the Borrower and its Subsidiaries operate;
(b) maintain in good standing all required Health Facility Licenses for
the operation of each of the acute care facilities or related businesses
operated by the Borrower and its Subsidiaries;
(c) maintain applicable JCAHO accreditation of each of the acute care
facilities or related businesses operated by the Borrower and its Subsidiaries;
provided that if any such accreditation becomes conditional, the Borrower and
its Subsidiaries will cure or otherwise address the reasons for such conditional
accreditation within twelve months of receiving notice of such status;
(d) maintain Medicaid Certification and Medicare Certification
presently in effect or hereafter obtained with respect to each acute care
facility or related business operated by the Borrower and its Subsidiaries; and
(e) maintain each Medicaid Provider Agreement and each Medicare
Provider Agreement presently in effect or hereafter entered into with respect to
each acute care facility or related business operated by the Borrower and its
Subsidiaries.
SECTION 7.20 CONCENTRATION ACCOUNT.
The Borrower previously has established the Concentration Account and
shall maintain the Concentration Account at all times prior to the Final
Maturity Date. All other bank accounts maintained by the Borrower and its
Subsidiaries (other than accounts maintained exclusively for the purpose of
making disbursements) shall be and at all times remain subject to instructions
to transfer all funds out of such accounts into the Concentration Account on a
one or two day delay basis. SCHEDULE 7.20 sets forth a current list of all bank
accounts maintained by the Borrower and its Subsidiaries, and the Borrower will
inform Agent promptly of any changes to the information contained in such
schedule.
SECTION 7.21 OPERATING LEASES.
Neither the Borrower nor any of its Subsidiaries shall create, incur,
assume, or suffer to exist, any obligation for the payment of rent or hire for
property or assets of any kind whatsoever, whether real or personal, under
leases or lease agreements (other than Capitalized Lease Obligations) which
would cause the aggregate amount of all payments made by the Borrower and its
Subsidiaries pursuant to such leases or lease agreements to exceed five percent
(5%) of Net Revenues during any fiscal year. Any such leases shall not be deemed
to constitute Indebtedness and shall not be subject to SECTION 8.6 hereof.
SECTION 7.22 SUBSIDIARY CONTROL DOCUMENTS.
The Borrower shall provide the Agent with true and correct copies of
all shareholders' agreements and other agreements to be entered into with any
other Persons proposing to
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purchase Equity Interests in any Subsidiary, which agreements shall not, in the
sole judgement of the Agent, provide to such Persons any special voting rights
or other special protections not required to be granted under the applicable
state statutes if those rights or protections could interfere with the Banks'
ability (following any foreclosure on the Equity Interests in such Subsidiary
pledged to the Banks) to (i) remove, elect and maintain a majority of members of
the Board of Directors or other governing body of such Subsidiary, or (ii)
dissolve, merge, consolidate or recapitalize such Subsidiary into the Borrower
or any other Person.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any Obligation is
outstanding or the Commitment is in effect, it will comply with and, if
applicable, cause each of its Subsidiaries to comply with the following
covenants:
SECTION 8.1 MERGERS.
Neither the Borrower nor any of its Subsidiaries shall enter into any
merger, consolidation, reorganization or recapitalization, or any agreement to
do any of the foregoing, except pursuant to a Permitted Acquisition and except
that any Subsidiary of the Borrower may be merged into the Borrower or another
Subsidiary of the Borrower.
SECTION 8.2 CHANGE OF BUSINESS.
Neither the Borrower nor any of its Subsidiaries shall change the
nature of its business or engage in any other business other than the businesses
which are substantially similar to the lines of business in which the Borrower
and its Subsidiaries are engaged as of the date hereof.
SECTION 8.3 DISTRIBUTIONS.
Subject to SECTION 8.13 hereof, neither the Borrower nor any of its
Subsidiaries shall, directly or indirectly, make or declare any Distribution or
set aside assets for a sinking or similar fund for the purchase of, or redeem,
purchase, retire or otherwise acquire, any Equity Interests of the Borrower or
such Subsidiary, or make any other Distribution in respect thereof, whether in
cash or other property, except (a) to the extent otherwise permitted under
SECTION 6.2(C) hereof; (b) the Borrower may make Distributions to any of its
Subsidiaries and any of its Subsidiaries may make Distributions to the Borrower
or any of its other Subsidiaries; (c) the Borrower may purchase Equity Interests
in any Subsidiary as a means of making additional capital contributions in
connection with a Permitted Acquisition; and (d) as long as no Event of Default
or Incipient Default exists, any Partial Subsidiary may make Distributions to
the holders of its Equity Interests (provided, however, that prior to August 1,
1999, the aggregate annual amount of Distributions to be made to Minority
Holders shall not exceed Two Hundred Seventy-Five Thousand ($275,000) per
Partial Subsidiary)
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SECTION 8.4 ACCOUNTING POLICIES.
Except in order to comply with GAAP, the Borrower shall not materially
change any of its accounting policies or its fiscal year or the fiscal year of
any of its Subsidiaries.
SECTION 8.5 INVESTMENTS.
Neither the Borrower nor any of its Subsidiaries shall make (or acquire
as part of an acquisition) any Investment, except Investments (a) in connection
with a Permitted Acquisition; (b) made by the Borrower in any of its
Wholly-Owned Subsidiaries, by any of its Subsidiaries in the Borrower or by any
of its Subsidiaries in any of its Wholly-Owned Subsidiaries (provided, however,
that Investments in Partial Subsidiaries must be in the ordinary course of
business and shall not exceed Two Million Dollars ($2,000,000) per year); (c)
constituting seller financing undertaken on commercially reasonable terms, which
Investments shall not in the aggregate exceed Two Hundred Fifty Thousand Dollars
($250,000); and (d) Investments made in accordance with the Borrower's corporate
investment policy attached hereto as SCHEDULE 8.5.
SECTION 8.6 LIENS.
Neither the Borrower nor any of its Subsidiaries shall mortgage,
pledge, grant or permit to exist a security interest in, or Lien upon, any of
their respective assets of any kind now owned or hereafter acquired, or any
income or profits therefrom, except for Permitted Encumbrances.
SECTION 8.7 GUARANTIES.
Neither the Borrower nor any of its Subsidiaries shall become liable,
directly or indirectly, for any Guaranty except: (a) endorsements for collection
or deposit in the ordinary course of business; (b) obligations entered into in
connection with the acquisition of services, supplies and equipment in the
ordinary course of business not exceeding (i) Two Hundred Fifty Thousand Dollars
($250,000) multiplied by (ii) the number of acute care facilities owned by the
Borrower and its Subsidiaries; (c) obligations of the Borrower with respect to
Letters of Credit; (d) obligations of the Borrower or its Subsidiaries arising
from physician income maintenance agreements and physician recruitment
activities not exceeding (i) One Million Two Hundred Thousand Dollars
($1,200,000) multiplied by (ii) the number of acute care facilities owned by the
Borrower and its Subsidiaries; (e) Guaranties by the Borrower of any obligations
of its Subsidiaries; (f) the Subsidiary Guaranties; and (g) Guaranties by any
Subsidiary of the obligations of any Wholly-Owned Subsidiaries.
SECTION 8.8 INDEBTEDNESS.
Neither the Borrower nor any of its Subsidiaries shall incur, create,
assume or permit to exist any Indebtedness except: (a) the Obligations; (b)
Indebtedness where payment is secured by a Permitted Encumbrance; (c) taxes,
assessments and governmental charges or levies which are not delinquent or which
are being contested in good faith and for which, in accordance
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with GAAP, adequate reserves have been set aside on the books of the Borrower or
the affected Subsidiary of the Borrower; (d) current liabilities incurred in
connection with the obtaining of goods or services in the ordinary course of
business; (e) Indebtedness which is owing by a Subsidiary acquired in a
Permitted Acquisition, provided that such Indebtedness was not incurred or
created in connection with or in contemplation of such Permitted Acquisition and
that the aggregate principal amount of any such Indebtedness owing by all such
Subsidiaries shall not exceed Two Million Dollars ($2,000,000); (f) Indebtedness
owing from the Borrower to a Wholly-Owned Subsidiary of the Borrower, from any
Subsidiary of the Borrower to the Borrower or from one Subsidiary of the
Borrower to any Wholly-Owned Subsidiary of the Borrower, and all Indebtedness
arising between the Borrower and its Subsidiaries, or between any Subsidiary and
any other subsidiary, in connection with Concentration Account activities; (g)
Indebtedness incurred in connection with Rate Contracts; (h) Guaranties
permitted under SECTION 8.7 hereof; (i) Indebtedness existing on the date
hereof, as shown on SCHEDULE 8.8 attached hereto; (j) Indebtedness incurred
pursuant to Sale-Leaseback Transactions, provided that the present value of the
aggregate payments to be made by the Borrower and its Subsidiaries pursuant to
all such Sale-Leaseback Transactions shall not exceed One Million Dollars
($1,000,000); (k) accounts payable assumed by the Borrower or any of its
Subsidiaries in connection with a Permitted Acquisition; and (1) the WCAS
Subdebt. Notwithstanding the foregoing, the Borrower may incur ▇▇▇▇▇ ▇▇▇▇▇▇
Subdebt in addition to the WCAS Subdebt provided that: (y) if any ▇▇▇▇▇ ▇▇▇▇▇▇
Subdebt is loaned by a ▇▇▇▇▇ ▇▇▇▇▇▇ entity other than WCAS, such entity shall,
prior to effecting such loan, execute and deliver to the Agent an intercreditor
agreement in form and substance satisfactory to the Agent in its sole
discretion, and (z) at least ten (10) Banking Days prior to the date such loan
is to be extended, the Borrower shall have provided to the Agent the certificate
required by SECTION 7.2(P) hereof.
SECTION 8.9 SALE OF ASSETS.
Other than (a) sales of readily marketable securities, (b) sales of
inventory and other property in the ordinary course of business, (c) sales,
transfers, leases or other dispositions of assets between or among the Borrower
and any of its Subsidiaries and (d) sales of any other assets not described in
the preceding clauses (a) through (c) during any calendar year the book value of
which, together with the book value of any other such assets sold during such
calendar year, does not exceed five percent (5%) of the book value of the total
assets of the Borrower and its Subsidiaries neither the Borrower nor any of its
Subsidiaries shall sell, transfer or otherwise dispose of any of its respective
assets (including, but not limited to, transfers or dilution of its Equity
Interests in any Subsidiary); provided, however, that notwithstanding the
foregoing the Borrower may transfer, or NAHC II of Texas, Inc. may issue, up to
twenty percent (20%) of the total outstanding Equity Interests in NAHC II of
Texas, Inc. (calculated on a fully-diluted basis) to other Persons.
SECTION 8.10 SALE-LEASEBACK TRANSACTIONS.
Neither the Borrower nor any of its Subsidiaries shall enter into any
Sale-Leaseback Transaction, except as permitted under SECTION 8.8(j) hereof.
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SECTION 8.11 CAPITAL EXPENDITURES.
The Borrower and its Subsidiaries, considered in the aggregate, shall
not during any calendar year set forth below make Consolidated Capital
Expenditures in excess of the amount equal to (a) One Million Dollars
($1,000,000) multiplied by (b) the number of acute care facilities owned by the
Borrower and its Subsidiaries during such calendar year.
SECTION 8.12 TRANSACTIONS WITH AFFILIATES.
The Borrower shall not, and shall not permit its Subsidiaries to, enter
into any agreement or transaction with an Affiliate of the Borrower except in
the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms that
are (a) approved by the Borrower's or such Subsidiary's board of directors, (b)
fully disclosed to Agent, (c) no less favorable to the Borrower or such
Subsidiary than it would obtain in a comparable arms length transaction with a
Person not an Affiliate of the Borrower, and (d) on terms consistent with the
business relationship of the Borrower or such Subsidiary and such Affiliate
prior to the date hereof, if any. Nothing contained in this Agreement shall
prohibit increases in compensation and benefits for officers and employees of
the Borrower or its Subsidiaries which are customary in the industry or
consistent with the past business practice of the Borrower or such Subsidiary,
or payment of customary directors' fees and indemnities.
SECTION 8.13 RESTRICTIVE AGREEMENTS.
The Borrower shall not and shall not permit any of its Subsidiaries to
enter into any agreement which restricts the ability or right of any such
Subsidiary to make payments to the Borrower or another Subsidiary of the
Borrower by way of dividends, distributions, returns of capital, advances,
reimbursement or otherwise.
SECTION 8.14 PREPAYMENTS.
Neither the Borrower nor any of its Subsidiaries shall prepay any
Indebtedness which is subordinated to the Obligations, provided that nothing
herein shall preclude the Borrower or any Subsidiary from effecting any
conversion of any such Indebtedness into common Capital Stock.
SECTION 8.15 CERTAIN ERISA PAYMENTS.
Neither the Borrower nor its Subsidiaries shall make any payment of any
material liability arising under ERISA or under the Code of any Controlled Group
member which is not a Subsidiary of the Borrower.
SECTION 8.16 COMPLIANCE WITH ERISA.
The Borrower shall not, directly or indirectly, and the Borrower shall
use its best efforts to prevent any Controlled Group member from directly or
indirectly undertaking to:
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(a) Maintain, become a party to, contribute to or become or be
obligated to contribute to a Pension Plan, if such maintenance or contribution
would result in material unfunded liabilities in excess of One Hundred Thousand
Dollars ($100,000) immediately following such action;
(b) Maintain, become a party to, contribute to or become obligated to
contribute to a material plan maintained outside of the United States primarily
for the benefit of persons substantially all of whom are nonresident aliens, as
described in Section 4(b)(4) of ERISA; or
(c) Maintain, become a party to, contribute to or being obligated to
contribute to or otherwise provide material health care or material life
insurance benefits to retirees or survivors of employees.
SECTION 8.17 CREATION OF SUBSIDIARIES.
The Borrower will not, nor will it permit any of its Subsidiaries to,
create any Subsidiary, unless (a) such newly created Subsidiary is organized
under the laws of a jurisdiction within the United States of America, (b) such
newly created Subsidiary executes at the time of its creation a Subsidiary
Guaranty, a Security Agreement and (to the extent applicable) a Subsidiary Note,
one or more Mortgages with respect to its ownership or leasehold interest in
real property owned by such Subsidiary at the time of its creation and such
agreements and other documents necessary or desirable to grant the Banks a
fully-perfected, first priority security interest in the Equity Interests held
by the Borrower or its Subsidiary, (c) the Borrower or its existing Subsidiary
(as applicable) and such newly created Subsidiary take all steps required and
execute all additional documents (including UCC-1 financing statements)
necessary to perfect the security interest of the Agent in the Equity Interests
of such newly created Subsidiary and the assets of such newly created Subsidiary
and (d) no Event of Default or Incipient Default exists immediately prior to or
after the creation of such newly created Subsidiary.
SECTION 8.18 FUNDAMENTAL CHANGES.
The Borrower will not, nor will it permit any of its Subsidiaries to
(a) amend or restate any of the organizational documents of such Person, or (b)
hold itself out as doing business under any tradename or assumed or fictitious
name that would require additional filings by the Banks under the provisions of
the Uniform Commercial Code in order to maintain the perfection of the Banks'
security interests.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default under this
Agreement:
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(a) Payments. The Borrower shall fail to pay when due (i) any
installment of principal or interest due hereunder or on the Notes or (h) any
reimbursement obligation with respect to any Letter of Credit, or the Borrower
shall fail to pay not later than two (2) Banking Days after the date when due
any other sum payable hereunder or under any of the other Loan Documents;
(b) Certain Covenants in This Agreement and Other Loan Documents. The
Borrower shall default in the performance of any of its agreements set forth in
SECTION 7.2, SECTION 7.18 OR SECTION 7.20 hereof or in ARTICLE VIII hereof, or
the Borrower or any of its Subsidiaries shall default in the performance of any
other agreements set forth herein or in any of the other Loan Documents and such
default is not capable of being cured; provided that, in the case of a default
under SECTION 7.18 hereof, such default shall not become an Event of Default
until thirty (30) days shall have expired from the date of occurrence of such
default;
(c) Other Covenants and Agreements. The Borrower or any of its
Subsidiaries shall default in the performance of any of their respective
agreements set forth in any provision herein not constituting an Event of
Default under any other clause of this SECTION 9.1 or in the Subsidiary
Guaranties or any of the other Loan Documents and such default, although capable
of being cured, is not cured within thirty (30) days of its occurrence;
(d) Representations and Warranties. Any representation, warranty or
certification made by the Borrower or its Subsidiaries, or any officer of the
Borrower or its Subsidiaries, in any of the Loan Documents shall be untrue in
any material respect on any date as of which the facts set forth are stated or
certified;
(e) Monetary Judgments. A judgment shall be entered against the
Borrower or any of its Subsidiaries, the uninsured or unbonded portion of which
is in excess of Seven Hundred Fifty Thousand Dollars ($750,000), and such
judgment shall remain unstayed, unvacated, undischarged or unsatisfied for
thirty (30) days;
(f) Non-Monetary Judgments. Any final non-monetary judgment, order or
decree shall be rendered against the Borrower or any of its Subsidiaries which
may have a Material Adverse Effect, and either (i) enforcement proceedings shall
have been commenced by any Person upon such judgment or order or (ii) there
shall be any period of thirty (30) days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect, unless such judgment, order or decree shall, within such thirty-day
period, be vacated or discharged (other than by satisfaction thereof);
(g) Liens for Pension Contributions. Any statutory Lien shall have been
placed upon the assets of the Borrower or any member of the Controlled Group
under the Code or ERISA in an amount in excess of Two Hundred Fifty Thousand
Dollars ($250,000);
(h) ERISA. (i) An Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code shall lose its qualification, and the
resulting loss or cost to the Borrower or any other member of the Controlled
Group can reasonably be expected to exceed One Million Dollars ($1,000,000);
(ii) the commencement or increase of contributions to, the adoption of,
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or the amendment of a Pension Plan by, the Borrower or any other Controlled
Group member shall result in a net increase in unfunded liabilities to the
Borrower or any other Controlled Group member in the aggregate in excess of One
Million Dollars ($1,000,000) immediately following such action; (iii) any
termination of a single employer Employee Benefit Plan (as defined in Section
4001(a) (15) of ERISA, but also including a plan amendment described in Section
4041(e) of ERISA) or any complete or partial withdrawal from a Multiemployer
Plan shall occur, or steps shall have been taken by any Person that make it
reasonable to expect that such termination or withdrawal will occur, and such
termination or withdrawal could reasonably be expected to result in liability of
the Borrower or any member of the Controlled Group to the PBGC, to a trustee or
to such Multiemployer Plan in the aggregate amount of One Million Dollars
($1,000,000) or more; (iv) the Borrower or any member of the Controlled Group
shall apply under Section 412 of the Code for a waiver of the minimum funding
standard; or (v) the Borrower or any member of the Controlled Group shall incur
liability attributable to the participation of a member of the ERISA Affiliated
Group (other than the Borrower or a member of the Controlled Group) in an
employee benefit plan (as defined in Section 3(3) of ERISA) and such liability
will or can reasonably be expected to have a Material Adverse Effect;
(i) Cross-Default. The Borrower or any of its Subsidiaries shall
default (unless waived) in the payment when due, whether by acceleration or
otherwise, of any amount, of principal or interest due in respect of
Indebtedness in an aggregate principal amount greater than Five Hundred Thousand
Dollars ($500,000), or any Guaranty of such Indebtedness, or default (unless
waived) in the performance or observance (subject to any applicable grace
period) of any agreement, covenant or condition with respect to any such
Indebtedness or Guaranty if the effect of such default is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders of any such
Indebtedness or Guaranty, or any trustee or agent for such holders, to cause
such Indebtedness to become due and payable prior to its expressed maturity or
to call upon such Guaranty in advance of nonpayment of the guaranteed
Indebtedness;
(j) Bankruptcy. (i) The Borrower or any of its Subsidiaries shall
institute a voluntary case seeking liquidation or reorganization under Chapter 7
or Chapter 11, respectively, of the United States Bankruptcy Code, or shall
consent to the institution of an involuntary case thereunder against it; or the
Borrower or any of its Subsidiaries shall file a petition initiating or shall
otherwise institute any similar Insolvency Proceeding under any other applicable
federal or state law, or shall consent thereto; or (ii) the Borrower or any of
its Subsidiaries shall apply for, or by consent or acquiescence there shall be
an appointment of, a receiver, liquidator, sequestrator, trustee or other
officer with similar powers; or the Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors; or (iii) the Borrower or any of
its Subsidiaries shall admit in writing its inability to pay its debts generally
as they become due; or, if an involuntary case shall be commenced seeking the
liquidation or reorganization of the Borrower or any of its Subsidiaries under
Chapter 7 or Chapter 11, respectively, of the United States Bankruptcy Code, or
any similar proceeding shall be commenced against the Borrower or any of its
Subsidiaries under any other applicable federal or state law, and (A) the
petition commencing the involuntary case is not timely controverted, or (B) the
petition
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commencing the involuntary case is not dismissed within forty-five (45) days of
its filing, or (C) an interim trustee is appointed to take possession of all or
a portion of the property and/or to operate all or any part of the business of
the Borrower or such Subsidiary, or (D) an order for relief shall have been
issued or entered therein; or (iv) a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer having similar powers over the Borrower
or any of its Subsidiaries, or of all or a part of the property of the Borrower
or any of its Subsidiaries, shall have been entered; or (v) any other similar
relief shall be granted against the Borrower or any of its Subsidiaries under
any applicable federal or state law;
(k) Voting Change. ▇▇▇▇▇ ▇▇▇▇▇▇ and executive officers of the Borrower
shall cease to hold and control (on an aggregate basis) a majority of the
Capital Stock of the Borrower, or shall otherwise cease to have the power to
elect a majority of the Board of Directors of the Borrower;
(l) Invalidity of Loan Documents. Any of the Loan Documents shall cease
for any reason to be in full force and effect or any party thereto (other than
the Agent or the Banks) shall purport to disavow its obligations thereunder,
shall declare that it does not have any further obligation thereunder or shall
contest the validity or enforceability thereof;
(m) Impairment of Collateral. A judgment creditor of the Borrower or
its Subsidiaries shall obtain possession of any of the Collateral having a book
value in excess of Five Hundred Thousand Dollars ($500,000) by any means,
including, but not limited to, levy, distraint, replevin or self-help, or the
Agent's or the Banks' security interest in, or Lien on, any portion of the
Collateral shall become impaired or otherwise unenforceable;
(n) Change of Control. A Change of Control shall occur;
(o) Change of Management. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to act as
President, Chairman of the Board of Directors and Chief Executive Officer of the
Borrower, or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall cease to act as Senior Vice President
of the Borrower performing duties essentially the same as those performed on the
closing date; or
(p) Material Adverse Change, Material Adverse Effect. The Agent shall
have determined in good faith that (i) a Material Adverse Change or Material
Adverse Effect has occurred, or (ii) the prospect of payment or performance of
any Obligation of the Borrower hereunder or under any Loan Document is
materially impaired.
SECTION 9.2 REMEDIES.
If an Event of Default shall have occurred and until such Event of
Default is waived in writing by the Majority Banks, or all of the Banks as may
be required by SECTION 11.3 hereof:
(a) With the exception of an Event of Default specified in SECTION
9.1(j), the Agent, at the direction of the Majority Banks, shall (i) terminate
the Commitment and the Letter of Credit Commitment and/or (ii) declare the
principal of and interest on the Loans, the Notes,
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the Subsidiary Notes and all other Obligations to be forthwith due and payable
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived, anything in this Agreement, the Notes or the Subsidiary
Notes to the contrary notwithstanding, or both.
(b) Upon the occurrence and continuance of an Event of Default
specified in SECTION 9.1(j) such principal, interest and other Obligations shall
thereupon and concurrently therewith become due and payable, and the Commitment
and the Letter of Credit Commitment shall forthwith terminate, all without any
action by the Agent or the Banks or the Majority Banks or the holders of the
Notes and the Subsidiary Notes, and without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived, anything in this
Agreement, the Notes or the Subsidiary Notes to the contrary notwithstanding.
(c) The Agent, with the concurrence of the Majority Banks, shall
exercise all of the post-default rights granted to it and to the Issuing Bank
and the Banks under the Loan Documents or under Applicable Law. The Agent, for
the benefit of itself, the Issuing Bank and the Banks, shall have the right to
the appointment and hereby waives any objection the Borrower may have thereto or
the right to have a bond or other security posted by the Agent, the Issuing Bank
or the Banks in connection therewith.
(d) In regard to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of any acceleration of
the Obligations pursuant to the provisions of this SECTION 9.2, the Borrower
shall promptly upon demand by the Agent deposit in the Letter of Credit Reserve
Account an amount equal to one hundred five percent (105%) of the aggregate then
undrawn and unexpired amount of the Letter of Credit Obligations with respect to
such Letters of Credit. Amounts held in the Letter of Credit Reserve Account
shall be applied by the Agent to the payment of drafts drawn under such Letters
of Credit, and after all such Letters of Credit shall have expired or been fully
drawn upon, if any, any amounts remaining on deposit in the Letter of Credit
Reserve Account shall be applied to repay any other Obligations of the Borrower
in the manner set forth in SECTION 2.5 hereof. Pending the application of such
deposit, the Agent shall, to the extent reasonably practicable, invest such
deposit in an interest bearing open account or similar available savings deposit
account and all interest accrued thereon shall be held in the Letter of Credit
Reserve Account as additional security. Except as expressly provided above,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
(e) The rights and remedies of the Agent and the Banks hereunder shall
be cumulative and not exclusive.
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ARTICLE X
THE AGENT
SECTION 10.1 APPOINTMENT AND AUTHORIZATION.
Each Bank hereby irrevocably appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
SECTION 10.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that has been selected with reasonable care.
SECTION 10.3 LIABILITY OF AGENT.
Neither the Agent, nor any of its Affiliates, nor any of their
respective officers, directors, employees, agents, or attorneys-in-fact
(collectively, the "Agent-Related Persons") shall (a) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement (except for their own gross negligence or willful misconduct) or (b)
be responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Borrower or any of its Subsidiaries or
any officer thereof contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or for the value of any Collateral or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
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SECTION 10.4 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile or telephone message, statement or other document
or conversation believed by the Agent to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower or any of its
Subsidiaries), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless the Agent shall first
receive such advice or concurrence of the Majority Banks as the Agent shall deem
appropriate and, if the Agent so requests, the Agent shall first be indemnified
to its satisfaction by the Banks against any and all liability and expense which
may be incurred by the Agent by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
the Banks.
(b) For purposes of determining compliance with the conditions
specified in SECTION 5.1 AND SECTION 5.2 hereof, each Bank shall be deemed to
have consented to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to the Agent (provided that the Banks shall have been provided
with a copy of such document or a writing setting forth the particulars of such
matter) unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from a Bank prior
to the extension of a Borrowing specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Agent to that effect or
such Bank shall not have made available to the Agent the Bank's ratable portion
of such Borrowing.
SECTION 10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Incipient Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees payable to the Agent for
the account of the Banks, unless the Agent shall have received written notice
from a Bank or the Borrower referring to this Agreement, describing such
Incipient Default or Event of Default and stating that such notice is a "notice
of default." In the event that the Agent receives such a notice, the Agent shall
give notice thereof to the Banks. The Agent shall take such action with respect
to such Incipient Default or Event of Default as shall be requested by the
Majority Banks in accordance with ARTICLE IX; provided, however, that unless and
until the Agent shall have received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Incipient Default or Event of Default as the Agent shall deem
advisable in the best interests of the Banks.
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SECTION 10.6 CREDIT DECISION.
Each Bank expressly acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower and its Subsidiaries and
made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder. Each Bank also represents that it will, independently and
without reliance upon the Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower and its Subsidiaries which may
come into the possession of any of the Agent-Related Persons.
SECTION 10.7 INDEMNIFICATION.
The Banks agree to indemnify the Agent and each Agent-Related Person
(to the extent not reimbursed by or on behalf of the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their outstanding Loans, or, if no Loans are outstanding,
their outstanding Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Loans) be imposed on,
incurred by or asserted against any such person in any way relating to or
arising out of this Agreement, any other Loan Documents or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such person
under or in connection with any of the foregoing; provided, however, that no
Bank shall be liable for the payment to the Agent or such Agent-Related Person
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from such person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse the Agent promptly upon demand for its
ratable share of any costs or out-of-pocket expenses (including attorneys' fees
and the allocated cost of in-house counsel) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document
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contemplated by or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower.
SECTION 10.8 AGENT IN INDIVIDUAL CAPACITY.
The Agent and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from and generally engage in any kind of
business with the Borrower or any of its Subsidiaries as though the Agent were
not the Agent hereunder and without notice to the Banks. With respect to its
Loans, the Agent shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not the Agent, and
the terms "Bank" and "Banks" shall include the Agent in its individual capacity.
SECTION 10.9 SUCCESSOR AGENT.
The Agent may, and at the request of the Majority Banks shall, resign
as Agent upon thirty (30) days' notice to the Banks. The new Agent shall succeed
to all the rights, powers and duties of the Agent hereunder, including the
rights, powers and duties of the Agent as the Agent. If no successor Agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
shall appoint, after consulting with the Banks and the Borrower, a successor
agent from among the Banks. Upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers
and duties of the prior Agent, and the retiring Agent's rights, powers and
duties as such shall be terminated. After any retiring Agent's resignation
hereunder as such, the provisions of this ARTICLE X AND SECTION 11.6, SECTION
11.7 AND SECTION 11.8 hereof shall inure to the benefit of such Agent as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS AND SALE OF INTERESTS.
(a) The terms and provisions of this Agreement shall be binding upon,
and, subject to the provisions of this Section 11.1, the benefits hereof shall
inure to, the parties hereto and their respective successors and assigns;
provided, however, that the Borrower may not assign this Agreement or any of the
rights, duties or obligations of the Borrower hereunder without the prior
written consent of all of the Banks.
(b) Any Bank (an "Assignor"), with the written consent of the Borrower,
which shall not be unreasonably withheld, and with the written consent of the
Agent, which shall not be unreasonably withheld, and upon three (3) Banking
Days' written notice to the Agent, may at any time assign and delegate to any
Person, or, with notice to the Borrower and the Agent but without the consent of
either the Borrower or the Agent, may assign and delegate to any of its wholly
owned Affiliates (each an "Assignee") all or any part of the Loans or the
Commitments or any other rights or obligations of such Bank hereunder in a
minimum amount of Five
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Million Dollars ($5,000,000), representing the principal amount of the Loans
assigned plus the amount of the Commitment Percentage so assigned multiplied by
the Total Commitment Amount; provided, however, that the Borrower and the Agent
may continue to deal solely and directly with such Bank in connection with the
interests so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Bank and the Assignee and (ii) such Bank and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance
in substantially the form of EXHIBIT 11.1 hereto (an "Assignment and
Acceptance") together with any Note or Notes subject to such assignment; and
(iii) the processing fee of Three Thousand Five Hundred Dollars ($3,500) shall
have been paid to the Agent. Notwithstanding the foregoing, (1) any Bank may at
any time, with notice to the Borrower and the Agent but without the consent of
either the Borrower or the Agent, assign and delegate all or any part of the
Loans or the Commitments or any other rights or obligations of such Bank
hereunder to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank, so long as such
assignment does not relieve such Bank from its obligations hereunder, and (II)
the consent of the Borrower shall not be required to any assignment made
following an Event of Default (unless such- Event of Default is subsequently
waived as provided in Section 9.2).
(c) From and after the date that the Agent notifies the Assignor that
it has received the Assignment and Acceptance, (i) the Assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Bank under the Loan Documents and (ii) the Assignor
Bank shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Documents.
(d) Within five (5) Banking Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance, the Borrower
shall execute and deliver to the Agent new Notes evidencing such Assignee's
assigned Loans and Commitment Amount and, if the Assignor has retained a portion
of its Loans and its Commitment Amount, replacement Notes in the Commitment
Amount retained by the Assignor (such Notes to be in exchange for, but not in
payment of, the Notes held by such Bank). Immediately upon each Assignee's
making its payment under the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent necessary to reflect
the addition of the Assignee and the resulting adjustment of the Assignor's
Commitment Amount arising therefrom. The Commitment Amount allocated to each
Assignee shall reduce the Commitment Amount of the Assignor pro tanto.
(e) Any Bank may at any time sell to one or more banks or other
entities (a "Participant") participating interests in any Loans, the Commitment
Amount of that Bank or any other interest of that Bank hereunder in a minimum
amount of Five Million Dollars ($5,000,000); provided, however, that (i) the
Bank's obligations under this Agreement shall remain unchanged, (ii) the selling
Bank shall remain solely responsible for the performance of
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such obligations, (iii) the Borrower and the Agent shall continue to deal solely
and directly with the selling Bank in connection with such Bank's rights and
obligations under this Agreement, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant shall have rights to approve
any amendment to, or any consent or waiver with respect to this Agreement except
to the extent such amendment, consent or waiver would require unanimous consent
as described in clauses (a) through (f) of SECTION 11.3 hereof. In the case of
any such participation, the Participant shall not have any rights under this
Agreement, or any of the other Loan Documents, and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation, except that if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
SECTION 11.2 NO IMPLIED WAIVER.
No delay or omission to exercise any right, power or remedy accruing to
the Agent or any Bank upon any breach or default of the Borrower under this
Agreement or under any of the other Loan Documents shall impair any such right,
power or remedy of the Agent or any Bank, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default occurring thereafter, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring theretofore or thereafter.
SECTION 11.3 AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment or consent shall, unless in writing and signed by all
the Banks, do any of the following:
(a) increase the Commitment Amount of any Bank or subject any Bank to
any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or of any fees or other amounts payable hereunder or under any Loan
Document;
(d) change the definition of "Majority Banks" or the percentage of the
aggregate Commitment Percentages or of the aggregate unpaid principal amount of
the Loans which shall be required for the Banks or any of them to take any
action hereunder;
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(e) amend this SECTION 11.3; or
(f) release any portion of the Collateral from the Liens created by any
of the Loan Documents unless pursuant to a bona fide arms' length transaction
not with an Affiliate of the Borrower, which transaction either (i) is permitted
by this Agreement or (ii) if such transaction requires the consent of the
Majority Banks, has been so consented to;
and, provided, further, that (y) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Majority Banks, affect the
rights or duties of the Agent under this Agreement, and (z) the definition of
"Majority Banks" or the percentage of the aggregate Commitment Percentages or of
the aggregate principal amount of the Loans which shall be required for the
Banks or any of them to take any action here-under may be changed without the
consent of the Borrower.
SECTION 11.4 REMEDIES CUMULATIVE.
All rights and remedies, either under this Agreement, by law or
otherwise afforded to the Agent or the Banks shall be cumulative and not
exclusive, and any single or partial exercise of any power or right hereunder or
thereunder does not preclude other or further exercise thereof, or the exercise
of any other power or right.
SECTION 11.5 SEVERABILITY.
Any provision of this Agreement, the Notes or any of the other Loan
Documents which is prohibited or unenforceable in any jurisdiction, shall be,
only as to such jurisdiction, ineffective to the extent of such prohibition or
unenforceability, but all the remaining provisions of this Agreement, the Notes
and the other Loan Documents shall remain valid.
SECTION 11.6 COSTS, EXPENSES AND ATTORNEYS' Fees.
The Borrower shall reimburse the Agent for all reasonable costs and
expenses, including, but not limited to, reasonable attorneys' and other
professionals' fees and expenses (including the allocated cost of the Agent's
internal counsel) and appraisal, audit, review, travel, search and filing fees
and expenses, expended or incurred by the Agent in connection with the
preparation, negotiation and execution of this Agreement, in connection with the
initial Borrowing or any due diligence review by the Agent of any Permitted
Acquisitions, in amending this Agreement or extending any waiver or consent
hereunder, or in any transaction referred to in SECTION 11.1(b) hereof, and
shall reimburse the Agent and the Banks for all costs and expenses, including,
but not limited to, reasonable attorneys' fees and expenses (including the
allocated cost of the Agent's internal counsel), expended or incurred by the
Agent or any Bank in collecting any sum which becomes due under the Notes or
under this Agreement or any of the other Loan Documents, or in the protection,
perfection, preservation and enforcement of any and all rights of the Agent or
any Bank in connection with the Loan Documents, including, without limitation,
the fees and costs incurred in any out-of-court workout or a bankruptcy or
reorganization proceeding. This obligation on the part of the Borrower
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shall survive the expiration or termination of this Agreement, with or without
occurrence of the Closing Date.
SECTION 11.7 GENERAL INDEMNIFICATION.
The Borrower shall indemnify and hold each Bank, the Agent and each of
their directors, officers, employees, Affiliates, attorneys and agents
(collectively referred to herein as the "Bank Indemnitees") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, any expenses (including
reasonable attorneys' fees and the allocated cost of in-house counsel) incurred
by any such Bank Indemnitee in connection with any investigation or discovery
served upon such Bank Indemnitee in connection with any such matter, whether or
not any such Bank Indemnitee shall be designated a party thereto) which may be
imposed on, incurred by or asserted against such Bank Indemnitees by any Person
other than the Bank with which such Bank Indemnitee is affiliated (whether
direct, indirect or consequential and whether based on any federal or state laws
or other statutory regulations, including, without limitation, securities,
environmental and commercial laws and regulations, under common law or at
equitable cause, or on contract or otherwise) in any manner relating to or
arising out of this Agreement, the Agent's Fee Letter, the Banks' Closing Fee
Letter, any other Loan Documents, or any act, event or transaction related or
attendant thereto; the making of Loans hereunder; the management of the Loans
(including any liability under federal, state or local environmental laws or
regulations); or the use or intended use of the proceeds of the Loans
(collectively, the "Indemnified Matters"); provided, however, that the Borrower
shall have no obligation to any Bank Indemnitee under this SECTION 11.7 with
respect to Indemnified Matters to the extent such Indemnified Matters were
caused by or resulted from the gross negligence or willful misconduct of a Bank
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, the Borrower shall contribute to the payment
and satisfaction of all Indemnified Matters incurred by the Bank Indemnitees the
maximum portion which the Borrower is permitted to pay and satisfy under
applicable law. This indemnification shall survive repayment by the Borrower of
all Loans made under this Agreement and the termination of this Agreement, with
or without occurrence of the Closing Date.
SECTION 11.8 ENVIRONMENTAL INDEMNIFICATION.
The Borrower hereby agrees to indemnify, defend and hold harmless each
Bank Indemnitee, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, charges, expenses
or disbursements (including attorneys' fees and the allocated cost of in-house
counsel), which may be incurred by or asserted against such Bank Indemnitee in
connection with or arising out of any pending or threatened investigation,
litigation or proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any property subject to a
mortgage in favor of the Agent or any Bank. No action taken by legal counsel
chosen by the Agent or any Bank in defending against any such investigation,
litigation or proceeding or
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requested remedial, removal or response action shall vitiate or any way impair
the Borrower's obligations and duties hereunder to indemnify and hold harmless
the Agent and each Bank. In no event shall site visit, observation, or testing
by the Agent or any Bank be a representation that Hazardous Materials are or are
not present in, on, or under the site, or that there has been or shall be
compliance with any law, regulation, or ordinance pertaining to Hazardous
Materials or any other applicable governmental law. Neither the Borrower nor any
other party is entitled to rely on any site visit, observation, or testing by
the Agent or any Bank. Neither the Agent nor any Bank owes any duty of care to
protect the Borrower or any other party against, or to inform the Borrower or
any other party of, any Hazardous Materials or any other adverse condition
affecting any site or property. Neither the Agent nor any Bank shall be
obligated to disclose to the Borrower or any other party any report or findings
made as a result of, or in connection with, any site visit, observation, or
testing by the Agent or any Bank. This indemnification shall survive repayment
of all Loans made under this Agreement and the termination of this Agreement,
with or without occurrence of the Closing Date.
SECTION 11.9 NOTICES.
Any notice which the Borrower, the Agent, the Issuing Bank or any of
the Banks may be required or may desire to give to the other parties under any
provision of this Agreement shall be in writing by electronic facsimile
transmission and shall be deemed to have been given or made when transmitted and
addressed to the Issuing Bank and any Bank at the address set forth on the
signature pages hereto or to the Agent or the Borrower as follows:
To the Borrower: New American Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Senior Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, 11, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
1800 First American Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Agent: Toronto Dominion (Texas), Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Agency
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Copy to: The Toronto-Dominion Bank
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which all notices, requests and other
communications are to be sent to it by giving written notice of such address
change to the other parties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been received by the
other parties.
SECTION 11.10 ENTIRE AGREEMENT.
This Agreement, together with the exhibits to this Agreement and all of
the other Loan Documents, is intended by the Borrower, the Agent and the Banks
as a final expression of their agreement and, together with all of the other
Loan Documents, is intended as a complete statement of the terms and conditions
of their agreement. This Agreement and the other Loan Documents contain all of
the agreements and understandings between or among the Borrower, the Agent and
the Banks concerning the Loans and the other transactions contemplated hereby.
SECTION 11.11 GOVERNING LAW AND CONSENT TO JURISDICTION.
The validity, construction and effect of this Agreement, the Notes and
all of the other Loan Documents shall be governed by the laws of the State of
New York, without regard to its laws regarding choice of applicable law, but
giving effect to federal laws applicable to national and federally insured
banks. All judicial proceedings brought against the Borrower with respect to
this Agreement, the Notes or any of the other Loan Documents may be brought in
any state or federal court of competent jurisdiction in the State of New York,
and the Borrower accepts for itself and its assets and properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts. The
Borrower waives, to the fullest extent permitted by applicable law, any
objection (including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens) which it may now or hereafter
have to the bringing of any such action or proceeding in any such jurisdiction.
Nothing herein shall limit the right of a Bank or the Agent to bring proceedings
against the Borrower in the court of any other jurisdiction.
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SECTION 11.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts each of
which shall be an original with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 11.13 WAIVER OF JURY TRIAL.
THE BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY WITH REGARD TO ANY
ACTION OF ANY TYPE OR NATURE WHATSOEVER UNDER OR CONCERNING THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY RELATED TO THE LOANS OR THE
ADMINISTRATION OR ENFORCEMENT THEREOF.
SECTION 11.14 HEADINGS.
Captions, headings and the table of contents in this Agreement are for
convenience only and are not to be deemed part of this Agreement.
SECTION 11.15 EFFECT OF AMENDMENT AND RESTATEMENT.
Upon the execution and delivery of this Agreement, the obligations of
the Borrower to repay or perform the obligations under the Original Agreement
shall continue in full force and effect and the liens, mortgages and security
interests securing payment thereof shall be continuing, but shall now be
governed by the terms of this Agreement, and any other agreements and document
herein referenced, as the case may be. The execution and delivery of this
Agreement and any other agreements or documents executed and delivered
concurrently herewith shall not be construed as a novation of the obligations
outstanding under the Original Agreement.
(The next page is the commencement of the signature pages.)
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement by its duly authorized officers as of the date and year first above
written.
BORROWER: NEW AMERICAN HEALTHCARE CORPORATION
By:
-------------------------------------
Title:
----------------------------------
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TEXAS), INC., AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
98
ISSUING BANK: THE TORONTO-DOMINION BANK,
as Issuing Bank
By:
-------------------------------------
Title:
----------------------------------
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TEXAS), INC., AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
99
AGENT/BANK: TORONTO DOMINION (TEXAS), INC.,
as Agent and as a Bank
By:
-------------------------------------
Title:
----------------------------------
Commitment Percentage: %
------------------
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TEXAS), INC., AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
100
OTHER BANKS:
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TEXAS), INC., AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
101
BANQUE PARIBAS
By: By:
---------------------------------- ----------------------------------
Title: Title:
------------------------- -------------------------
Commitment Percentage: % Commitment Percentage: %
--------------- ---------------
NATIONAL CITY BANK
By:
----------------------------------
Title:
-------------------------
Commitment Percentage: %
---------------
BANCONE
By:
----------------------------------
Title:
-------------------------
Commitment Percentage: %
---------------
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TEXAS), INC., AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
102
AMSOUTH BANK
By:
-------------------------------------
Title:
----------------------------------
Commitment Percentage: _________________%
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED CREDIT AGREEMENT BY AND
AMONG NEW AMERICAN HEALTHCARE CORPORATION, AS BORROWER,
TORONTO DOMINION (TFXAS), INC.. AS AGENT,
THE TORONTO-DOMINION BANK, AS ISSUING BANK AND
THE FINANCIAL INSTITUTIONS PARTY HERETO