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GENTIVA HEALTH SERVICES, INC.
OLSTEN HEALTH SERVICES HOLDING CORP.,
AND EACH OF THE SUBSIDIARY BORROWING CORPORATIONS
LISTED ON THE SIGNATURE PAGES HERETO,
as Borrower,
THE LENDING INSTITUTIONS LISTED IN ANNEX I ATTACHED HERETO, and
FLEET CAPITAL CORPORATION,
as Administrative Agent
and
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
as Arranger
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LOAN AND SECURITY AGREEMENT
Dated: March ___, 2000
Amount: $150,000,000.00
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, is made this day of March, 2000, by and among
the lending institutions listed in Annex I attached hereto and incorporated
herein by reference (each a "Lender", and collectively, "Lenders"), Fleet
Capital Corporation , a Rhode Island corporation with an office at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as administrative agent for the
Lenders ("Agent"), and Gentiva Health Services, Inc., a Delaware corporation
with its chief executive office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "Company"), Olsten Health Services Holding Corp., a Delaware corporation
with its chief executive office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("OHS")and each of the Subsidiary Borrowing Corporations listed on the signature
pages hereto, each with a state of incorporation and chief executive office as
listed on the exhibits hereto (each of the Company, OHS and each Subsidiary
Borrowing Corporation is a "Borrower," and collectively, "Borrower").
Capitalized terms used in this Loan and Security Agreement ("Agreement")
have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP, consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in this Agreement and the other Loan
Documents, Agent and Lenders agree to make credit facilities of up to One
Hundred and Fifty Million Dollars ($150,000,000.00) ("Total Revolving Credit
Facility") available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Each Lender agrees, severally, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to Borrower
from time to time until the Revolving Credit Maturity Date, as requested by
Borrower in the manner set forth in subsection 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to such Lender's Pro Rata
Percentage multiplied by the sum of (i) the Borrowing Base at such time minus
(ii) the sum of the LC Amount and reserves, if any, established pursuant to this
subsection 1.1.1. No Lender's portion of the Revolving Credit Loans shall at any
time exceed its respective Pro Rata Share. Agent shall have the right to
establish reserves in such amounts and with respect to the following matters, as
Agent shall deem necessary or appropriate against the amount of Revolving Credit
Loans which Borrower may otherwise request under this subsection 1.1.1: (i) sums
chargeable against Borrower's Loan Account as Revolving Credit Loans under any
section of this Agreement; (ii) amounts owing by Borrower to any Person to the
extent secured by a Lien on, or trust over, any Property of Borrower (except for
amounts secured by Liens permitted under subsections 8.2.5 (d) and (e)); and
(iii) such other matters, events, conditions or contingencies as to which Agent
reasonably determines in accordance with Agent's customary practices reserves
should be established from time to time hereunder.
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1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely for
the following purposes: (i) certain costs incurred in connection with Borrower's
divestiture from its parent, (ii) the Borrower's working capital needs, in a
manner consistent with the provisions of this Agreement and all applicable laws,
and (iii) Permitted Acquisitions. Notwithstanding the foregoing, the Revolving
Credit Loans may be used for acquisitions other than Permitted Acquisitions if
such acquisitions are approved in advance in writing by the Majority Lenders.
1.3 Letters of Credit; LC Guaranties. Each Lender agrees, severally, that a
letter of credit subfacility shall be made available to Borrower as part of the
Total Revolving Credit Facility as set forth in this section. In order to
implement this letter of credit subline, Agent agrees, for so long as no Default
or Event of Default exists, and if requested by Borrower, to: (i) issue its, or
cause to be issued by its Affiliate, standby Letters of Credit for the account
of Borrower or (ii) execute LC Guaranties by which Agent or its Affiliate shall
guaranty the payment or performance by Borrower of its reimbursement obligations
with respect to standby Letters of Credit and standby letters of credit issued
for Borrower's account by other Persons in support of Borrower's obligations
(other than obligations for the repayment of Money Borrowed), provided that the
LC Amount at any time shall not exceed the lesser of (i) Thirty Million Dollars
($30,000,000.00) and (ii) the Borrowing Base minus the sum of outstanding
Revolving Credit Loans and reserves permitted by subsection 1.1.1 hereof, if
any. No Letter of Credit or LC Guaranty may have an expiration date that is
after the last day of the Original Term except to the extent that Borrower
provides Agent, for the ratable benefit of the Lenders, at the time of and as a
condition to the issuance thereof with collateral acceptable to Agent in the
face amount thereof. Any amounts paid by Agent or Issuer under any LC Guaranty
or in connection with any Letter of Credit shall be treated as Revolving Credit
Loans, shall be secured by all of the Collateral and shall bear interest and be
payable at the same rate and in the same manner as Revolving Credit Loans. Each
Lender shall be directly and unconditionally obligated to Agent, according to
its Pro Rata Percentage, to reimburse Agent, without setoff or deduction of any
kind of nature, for honoring any drawing under any Letter of Credit or making
any payment under any LC Guaranty (without regard to the occurrence of a Default
or an Event of Default including, without limitation, following the commencement
of any bankruptcy, reorganization, insolvency, liquidation or dissolution
proceeding). The amount of Agent's payment (and the respective reimbursements of
the Lenders to Agent, as applicable) shall automatically constitute a Revolving
Credit Loan without regard to any borrowing condition herein and without any
request, consent or other action of Borrower.
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SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Revolving Credit Interest:
(a) Rate Options. At the time of each Revolving Credit Loan under the
Revolving Credit Facility, and thereafter from time to time, Borrower shall have
the right, subject to the terms and conditions of this Agreement, and provided
no Default or Event of Default has occurred and is continuing, to designate to
Agent in writing that all or a portion of the Revolving Credit Loans shall bear
interest at either the (i) Revolving Credit LIBOR Rate or (ii) Revolving Credit
Base Rate. Interest on each portion thereof shall accrue and be paid at the time
and rate applicable to the respective option selected by Borrower or otherwise
governing under the terms of this Agreement. If for any reason the Revolving
Credit LIBOR Rate option is unavailable, the Revolving Credit Base Rate shall
apply.
(i) Base Rate Option:
If Borrower desires to have the Revolving Credit Base Rate apply to a
Loan being requested under the facility established pursuant to Section 1.1
hereof, a request for a Revolving Credit Base Rate Loan may be made in the
manner specified in subsection 3.1.1(a). The rate of interest on Revolving
Credit Base Rate Loans shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate effective as of the opening of
business on the day that any such change in the Base Rate occurs. There
shall be no minimum amount applicable to requests for a Revolving Credit
Base Rate Loan.
(ii) Revolving Credit LIBOR Rate Option:
(A) Requests. Provided no Default or Event of Default has occurred and
is continuing, and subject to the provisions of this subsection
2.1.1(a)(ii) hereof, if Borrower desires to have the Revolving Credit LIBOR
Rate apply to all or a portion of the Revolving Credit Loans, Borrower
shall give Agent a written irrevocable request no later than 11:00 A.M.
Eastern time on the second (2nd) London Business Day prior to the requested
borrowing date specifying (i) the date the Revolving Credit LIBOR Rate
shall apply (which shall be a London Business Day), (ii) the LIBOR Interest
Period, and (iii) the amount to be subject to the Revolving Credit LIBOR
Rate provided that such amount shall be an integral multiple of One Million
Dollars ($1,000,000.00). In no event may Borrower have outstanding at any
time LIBOR Rate Loans with more than five (5) different LIBOR Interest
Periods.
(B) LIBOR Interest Periods. Revolving Credit LIBOR Rate Loans shall be
selected by Borrower for a LIBOR Interest Period during
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which the Revolving Credit LIBOR Rate is applicable; provided, however,
that if the LIBOR Interest Period would otherwise end on a day which is not
a London Business Day, such LIBOR Interest Period shall be extended to the
next succeeding London Business Day as is the Bank's custom in the market
to which such Revolving Credit LIBOR Rate Loan relates. All accrued and
unpaid interest on a Revolving Credit LIBOR Rate Loan shall be paid in
accordance with Section 3.2.2. No LIBOR Interest Period with respect to the
Revolving Credit LIBOR Rate Loans may end after the Revolving Credit
Maturity Date. Subject to all of the terms and conditions applicable to a
request to convert all or a portion of the Revolving Credit Loans to a
Revolving Credit LIBOR Rate Loan, Borrower may extend a Revolving Credit
LIBOR Rate Loan as of the last day of the LIBOR Interest Period to a new
Revolving Credit LIBOR Rate Loan. If Borrower fails to notify Agent of the
LIBOR Interest Period for a subsequent Revolving Credit LIBOR Rate Loan at
least two (2) London Business Days prior to the last day of the then
current LIBOR Interest Period of an outstanding Revolving Credit LIBOR Rate
Loan, or if an Event of Default has occurred and is outstanding two (2)
London Business Days prior to the last day of the then current LIBOR
Interest Period of any outstanding Revolving Credit LIBOR Rate Loan, then
such outstanding Revolving Credit LIBOR Rate Loan shall, at the end of the
applicable LIBOR Interest Period, accrue interest as a Revolving Credit
Base Rate Loan as provided in subsection 2.1.1(i) hereof.
(C) Adjustments. The Adjusted LIBOR Rate may be automatically adjusted
by Agent on a prospective basis to take into account the additional or
increased cost to any Lender of maintaining any necessary reserves for
Eurodollar deposits or increased costs due to changes in applicable United
States law or regulation or the interpretation thereof occurring subsequent
to the commencement of the then applicable LIBOR Interest Period, including
but not limited to changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve
System (or any successor or other applicable governing body), that increase
the cost to any Lender of funding the Revolving Credit LIBOR Rate Loan.
Agent shall promptly give Borrower notice of such a determination and
adjustment, which determination shall be prima facie evidence of the
correctness of the fact and the amount of such adjustment.
(D) Unavailability. If Borrower shall have requested the rate based on
the Adjusted LIBOR Rate in accordance with this subsection 2.1.1(a)(ii) and
Agent shall have determined, in good faith, that Eurodollar deposits equal
to the amount of the principal of the requested Revolving Credit LIBOR Rate
Loan and for the LIBOR Interest Period specified are unavailable, or that
the rate based on the Adjusted LIBOR Rate will not adequately and fairly
reflect the cost of the Adjusted LIBOR Rate applicable to the specified
LIBOR Interest Period, of making or maintaining the principal amount of the
requested Revolving Credit LIBOR Rate Loan during the LIBOR Interest Period
specified,
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or that by reason of circumstances affecting Eurodollar markets, adequate
means do not exist for ascertaining the rate based on the Adjusted LIBOR
Rate applicable to the specified LIBOR Interest Period, Agent shall
promptly give notice of such determination to Borrower that the rate based
on the Adjusted LIBOR Rate is not available. A determination, in good
faith, by Agent hereunder shall be prima facie evidence of the correctness
of the fact and amount of such additional costs or unavailability. Upon
such a determination, (i) the obligation to convert to, or maintain a
Revolving Credit LIBOR Rate Loan at the rate based on the Adjusted LIBOR
Rate shall be suspended until Agent shall have notified Borrower that such
conditions shall have ceased to exist, and (ii) the portion of the
Revolving Credit Loans subject to the request or requested conversion shall
accrue interest at the Revolving Credit Base Rate.
2.1.2 Default Rate of Interest. Upon the occurrence and during the
continuation of an Event of Default (i) the principal amount of all Loans shall
bear interest at a rate per annum equal to two (2) percentage points above the
interest rate otherwise applicable thereto (the "Default Rate") and (ii) the
Letters of Credit and LC Guaranty Fee referred to in Section 2.4 hereof shall
automatically increase to three percent (3%) per annum.
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under any of the other Loan Documents and
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the other Loan Documents exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement or any of the other Loan
Documents are in contravention of any such law, such provisions shall be deemed
amended to conform thereto.
2.2 Computation of Interest and Fees. Interest and Letter of Credit fees
and unused Line Fees, termination charges and collection charges hereunder shall
be calculated daily and shall be computed on the actual number of days elapsed
over a year of 360 days. For the purpose of computing interest hereunder, all
items of payment received by Agent shall be deemed applied by Agent on account
of the Obligations (subject to final payment of such items) on the Business Day
of receipt by Agent (determined in accordance with Section 3.4 hereof) of fully
collected funds, including fully collected funds received from the Dominion
Account.
2.3 Commitment Fee. Borrower shall pay to Agent the commitment fee provided
for in the Fee Letter dated January 19, 2000 among Agent, the Company and OHS,
which shall be fully earned and non-refundable and payable on the Closing Date.
2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent, for
the ratable benefit of Lenders, for standby Letters of Credit and LC Guaranties,
a fee equal to 2.25% per annum of the aggregate face amount of such Letters of
Credit and LC Guaranties outstanding from time to time during the term of this
Agreement, plus all normal and customary fees and charges associated with the
issuance, amendment, extension, cancellation and administration thereof, for the
account of Agent, which all such fees and charges shall be deemed fully earned
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upon issuance of each such Letter of Credit or LC Guaranty. The fee paid to
Agent for the ratable benefit of the Lenders shall be due and payable in full
upon the issuance of such Letter of Credit or execution of such LC Guaranty and,
all other fees and charges associated with such Letter of Credit or LC guaranty
shall be due and payable as required, first on the date of issuance or execution
and thereafter on the first Business Day of each month. The fees and charges
under this Section shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
2.5 Unused Line Fee. Borrower shall pay to Agent, for the ratable benefit
of Lenders, a fee equal to .375% per annum of the average daily difference
during any calendar month between (i) the Total Revolving Credit Facility and
(ii) the sum of the principal balance of all outstanding Revolving Credit Loans
and the LC Amount. The Unused Line Fee shall be payable quarterly in arrears on
the first (1st) day of each quarter.
2.6 Administrative Agent Fee. Borrower shall pay Agent the annual
Administrative Agent Fee provided for in the fee letter dated January 19, 2000
among Agent, the Company and OHS, which fee shall be earned and nonrefundable
and payable on the Closing Date and on each anniversary thereof.
2.7 Inspection, Audit, Examination and Appraisal Expenses. Borrower shall
pay to Agent, upon demand, in connection with all inspections, audits,
examinations and appraisals of Borrower's books and records and such other
matters as Agent shall deem reasonably appropriate (including matters set forth
under subsection 8.1.1), all fees, costs and expenses reasonably incurred by
Agent in connection with such inspections, audits, examinations and appraisals
based upon standard rates (as determined by Agent and disclosed to Borrower).
Absent the occurrence of an Event of Default, such fees shall not exceed $75,000
per annum.
2.8 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent incurs legal expenses or
any other costs or out-of-pocket expenses in connection with (i) the negotiation
and preparation of this Agreement or any of the other Loan Documents, or any
amendment of or modification of this Agreement or any of the other Loan
Documents, (ii) the administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby; (iii) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, Borrower or other Person) in any way relating to the Collateral, this
Agreement or any of the other Loan Documents or Borrower's affairs; (iv) any
attempt to enforce any rights of Agent and/or any Lender against any Obligor or
any other Person which may be obligated to Agent and/or any Lender by virtue of
this Agreement or any of the other Loan Documents, including, without
limitation, the Account Debtors; or (v) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such reasonable legal expenses and other costs and
out of pocket expenses of Agent shall be charged to Borrower. All amounts
chargeable to Borrower under this Section 2.8 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Agent and shall bear
interest from the date such demand is made until paid in full at the Revolving
Credit Base Rate from time to time. Borrower
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shall also reimburse Agent for expenses incurred by Agent in its administration
of the Collateral to the extent and in the manner provided in Section 6 hereof.
2.9 Bank Charges. Borrower shall pay to Agent, on demand, any and all fees,
costs or expenses which Agent pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower or by Agent of proceeds of Loans made by Agent
and/or any Lender to Borrower pursuant to this Agreement and (ii) the depositing
for collection, by Agent, of any check or item of payment received or delivered
to Agent and/or any Lender on account of the Obligations.
2.10 Indemnity re: LIBOR. Borrower hereby indemnifies Agent and each Lender
and holds Agent and each Lender harmless from and against any and all
out-of-pocket losses or expenses that Agent and/or any Lender may sustain or
incur as a consequence of any prepayment or any Default by Borrower in the
payment of the principal of or interest on any LIBOR Rate Loan or failure by
Borrower to complete a borrowing of, a prepayment of, or conversion of or to a
LIBOR Rate Loan after notice thereof has been given by Borrower or such rate
would otherwise be applicable pursuant to Section 2.1 hereof, including (but not
limited to) any interest payable by Agent and/or any Lender to lenders of funds
obtained by Agent and/or such Lenders in order to make or maintain the LIBOR
Rate Loans hereunder, and any other out-of-pocket loss or expense incurred by
Agent and/or any Lender by reason of the liquidation or reemployment of deposits
or other funds acquired by Agent and/or such Lenders to make, continue, convert
into or maintain, a LIBOR Rate Loan.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the credit
facility established pursuant to Section 1.1 hereof shall be as follows:
3.1.1 Loan Requests.
(a) A request for a Revolving Credit Loan shall be made, or shall be deemed
to be made, in the following manner: (i) Borrower, through any one or more of
them, may give Agent notice of its intention to borrow, in which notice Borrower
shall specify the amount of the proposed borrowing, the rate option and the
proposed borrowing date, no later than 12:00 noon, Eastern time, on the proposed
borrowing date for all Revolving Credit Base Rate Loans or, for a Revolving
Credit LIBOR Rate Loan, no later than 11:00 A.M. Eastern time on the second
(2nd) London Business Day prior to the requested borrowing date in accordance
with subsection 2.1.1(a)(ii)(A), provided, however, that no such request may be
made at a time when there exists an Event of Default; and (ii) the becoming due
of any amount required to be paid under this Agreement or any of the other Loan
Documents, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation. As an accommodation to
Borrower, Agent may permit telephonic requests for Revolving Credit Loans and
electronic transmittal of instructions, authorizations, agreements or reports to
Agent by Borrower. Unless Borrower specifically directs Agent in writing not to
accept or act upon telephonic or electronic
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communications from Borrower, Agent shall have no liability to Borrower for any
loss or damage suffered by Borrower as a result of Agent's honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and
purporting to have been sent to Agent by Borrower and Agent shall have no duty
to verify the origin of any such communication or the authority of the person
sending it, except to confirm the name of the Specified Officer.
(b) Upon receiving a request for a Revolving Credit Loan in accordance with
subsection 3.1.1(a)(i) above or upon Borrower being deemed to have made a
request for a Revolving Credit Loan under subsection 3.1.1(a)(ii) above, by
12:00 noon, Eastern time, or as soon as is reasonably practicable thereafter,
Agent shall notify all Lenders of the request. Each Lender shall advance its
applicable Pro Rata Percentage of the requested Revolving Credit Loan to Agent
by remitting immediately available federal funds to Agent pursuant to Agent's
instructions prior to 2:00 P.M. Eastern time on the date of the applicable
Revolving Credit Loan regardless of any failure by any other Lender to do so.
Subject to the satisfaction of the terms and conditions hereof, and receipt by
Agent of required funds from the other Lenders, Agent shall make the requested
Revolving Credit Loan available to Borrower, in accordance with subsection 3.1.2
as soon as is reasonably practicable thereafter on the day the requested
Revolving Credit Loan is to be made. In lieu of the foregoing, Agent may, in its
discretion, fund the Pro Rata Percentage of such Revolving Credit Loan on behalf
of any one or more Lenders (unconditionally and absolutely obligating such
affected Lender to reimburse Agent in full on demand without deduction or
setoffs for its portion of such Revolving Credit Loan, so long as Agent
reasonably believed at the time such Revolving Credit Loan was made that it was
made, in all material respects, in compliance with this Agreement) with a
settlement of the Pro Rata Shares of Lenders on the following Business Day or
under such other settlement procedures as Agent may establish from time to time.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Agent in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Agent from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Agent by
way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Agent, in
Agent's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Agent and/or
any Lender hereunder.
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3.1.4 Specified Officer. All requests for a Revolving Credit Loan and
elections of interest rate shall be made by Borrower through a Specified
Officer, and Borrower agrees that any request so made by a Specified Officer
shall be deemed made by Borrower.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrower to Lenders specifically containing payment provisions which
are in conflict with this Section 3.2 (in which event the conflicting provisions
of said notes or other instruments shall govern and control) the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit Loans may
be pre-paid at any time, subject to the requirements of Section 2.10, and shall
be payable by Borrower to Lenders immediately upon the earliest of (i) except as
otherwise provided in this Agreement, and provided that a Dominion Triggered
Period is in effect, the receipt by Agent, any Lender or Borrower of any
proceeds of any of the Collateral, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which Agent elects to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to Section 4 hereof; provided, however, that if an
Overadvance shall exist at any time, Borrower shall, on demand, repay the
Overadvance.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans shall be due
and payable on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Agent elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable pursuant to
this Agreement shall be payable by Borrower as and when provided in Section 2
hereof or in the Fee Letter dated January 19, 2000 among Agent the Company and
OHS, to Agent or to any other Person designated by Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Agent and/or Lenders
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Loss, Destruction or Condemnation of Collateral. If any
of the Collateral is lost or destroyed or taken by condemnation, Borrower shall
pay to Agent, unless otherwise agreed by Agent, as and when received by Borrower
and as a mandatory prepayment of the Revolving Credit Loans in the sole
discretion of Agent, a sum equal to the Net Available Proceeds received by
Borrower from such loss, destruction or condemnation.
3.3.2 Intentionally Omitted.
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3.3.3 LIBOR Rate Loans. Notwithstanding any other provision contained
herein, no portion of the LIBOR Rate Loans may be repaid during a LIBOR Interest
Period unless Borrower first satisfies in full its obligations under Section
2.10 arising from such repayment.
3.4 Application of Payments and Collections. All items of payment received
by Agent by 12:00 noon, Eastern time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
Eastern time, on any Business Day shall be deemed received on the following
Business Day. All amounts paid in accordance with subsections 3.1.1(a)(ii) and
3.1.2(ii) shall be deemed received prior to 12:00 noon, Eastern time, on the
Business Day upon which such funds are disbursed by the Agent under subsection
3.1.2(ii). Borrower irrevocably waives the right to direct the application of
any and all payments and collections at any time or times hereafter received by
Agent from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Agent shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Agent or its agent against the Obligations, in such manner as Agent may deem
advisable, notwithstanding any entry by Agent upon any of its books and records.
If as the result of collections of Accounts as authorized by subsection 6.2.6
hereof a credit balance exists in the Loan Account, such credit balance shall
not accrue interest in favor of Borrower, but shall be available to Borrower at
any time or times for so long as no Default or Event of Default exists. Agent
may, at its option, offset such credit balance against any of the Obligations
upon and after the occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Agent's Lien, for the
ratable benefit of Lenders, upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to the Loan Account
and shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Lenders,
and may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
3.7 Statements of Account. Agent will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrower unless Agent is notified by Borrower in writing to the contrary
within sixty (60) days of the date each accounting is mailed to Borrower. Such
notice shall only be deemed an objection to those items specifically objected to
therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lenders' right to cease making Loans to
Borrower upon or after the occurrence of any Default or Event of Default, this
Agreement shall
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be in effect for a period through and including March 10, 2004 (the "Original
Term"), unless terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Agent. This Agreement shall terminate as of the last
day of the Original Term and Agent may terminate this Agreement upon or after
the occurrence of an Event of Default according to the provisions of Section 10
hereof.
4.2.2 Termination by Borrower. Upon at least ten (10) days prior written
notice to Agent (which shall state a termination date), Borrower may, at its
option, terminate this Agreement; provided, however, no such termination shall
be effective until Borrower has paid all of the Obligations in immediately
available funds and all Letters of Credit and LC Guaranties have expired or have
been collateralized to Agent's reasonable satisfaction. Any notice of
termination given by Borrower shall be irrevocable unless all Lenders otherwise
agree in writing, and neither Agent nor Lenders shall have any obligation to
make any Loans or issue or procure any Letters of Credit or LC Guaranties on or
after the termination date stated in such notice. Borrower may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of this
Agreement for any reason, Borrower shall pay to Agent, for the ratable benefit
of Lenders, in addition to the then outstanding principal, accrued interest and
other charges owing under the terms of this Agreement and any of the other Loan
Documents as liquidated damages for the loss of the bargain and not as a
penalty, an amount equal to one percent (1%) of the Total Revolving Credit
Facility if termination occurs during the first twelve (12) month period of the
Original Term; and one half of one percent (1/2%) of the Total Revolving Credit
Facility if termination occurs during the second twelve (12) month period of the
Original Term. No amount shall be due under this subsection if the Total
Revolving Credit Facility is terminated for any reason after the second twelve
(12) month period of the Original Term.
4.2.4 Effect of Termination. All of the Obligations shall be immediately
due and payable upon the termination date stated in any notice of termination of
this Agreement. All undertakings, agreements, covenants, warranties and
representations of Borrower contained in the Loan Documents shall survive any
such termination and Agent shall retain its Liens, for the ratable benefit of
Lenders, upon the Collateral and Agent and Lenders shall retain all of their
rights and remedies under the Loan Documents notwithstanding such termination
until Borrower has paid the Obligations, in full, in immediately available
funds, together with the applicable liquidated damages pursuant to subsection
4.2.3, if any. Notwithstanding the payment in full of the Obligations, Agent
shall not be required to terminate its Liens upon the Collateral unless, with
respect to any loss or damage Agent may incur as a result of dishonored checks
or other items of payment received by Agent and/or any Lender from Borrower or
any Account Debtor and applied to the Obligations, Agent shall, at its option,
(i) have received a written agreement, executed by Borrower and by any Person
whose loans or other advances to Borrower are used in whole or in part to
satisfy the Obligations, indemnifying Agent and Lenders from any such loss
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or damage; or (ii) have retained such monetary reserves and Liens upon the
Collateral for such period of time as Agent, in its reasonable discretion, may
deem necessary to protect Agent and Lenders from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lenders of the Obligations and satisfaction by Borrower of all
covenants and undertakings contained in the Loan Documents, Borrower hereby
grants to Agent, for the ratable benefit of Lenders, a continuing security
interest in and Lien upon all of Borrower's Property (other than Equipment and
fixtures and any General Intangibles or insurance proceeds to the extent related
to Equipment and fixtures), whether now owned or existing or hereafter created,
acquired or arising and wherever located, including:
(i) Accounts;
(ii) Inventory;
(iii) Chattel Paper;
(iv) Instruments;
(v) Documents;
(vi) General Intangibles;
(vii) Deposit Accounts;
(viii) Investment Property (provided that the pledge of and creation of a
security interest in and Lien upon any capital stock issued by a corporation
organized in a jurisdiction outside the United States shall be limited to
Sixty-Five Percent (65%) of such capital stock);
(ix) All monies and other Property (other than Equipment and fixtures and
any General Intangibles or insurance proceeds to the extent related to Equipment
and fixtures) of any kind now or at any time or times hereafter in the
possession or under the control of Agent or any Lender or a bailee or Affiliate
of Agent or any Lender;
(x) All Commercial Lockboxes, all Government Lockboxes, all Concentration
Account(s), all Dominion Accounts and other accounts into which any of the
Collections are deposited, all funds received thereby or deposited therein, and
any checks or instruments from time to time representing or evidencing the same;
(xi) All Real Estate;
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(xii) All accessions to, substitutions for and all replacements, products
and cash and non-cash proceeds of (i) through (xi) above, including, without
limitation, proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(xiii) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer materials
and records) of Borrower pertaining to any of (i) through (xii) above.
The security interest in and Lien upon the Collateral granted to Agent, for
the ratable benefit of the Lenders under this Section, shall be prior to any
other Lien or security interest in the Collateral, except to the extent any such
Collateral is subject to a Purchase Money Lien, a Capitalized Lease Obligation
or a Lien as shown on Schedule 8.2.5 hereof, in which case, the security
interest and Lien granted to Agent, for the ratable benefit of the Lenders under
this Section, in any such Property shall be junior only to such Purchase Money
Lien, Lien in connection with a Capitalized Lease Obligation or existing
scheduled Lien (and any extension, renewal or replacement thereof) and shall be
senior to all other Liens on any such Property. Notwithstanding anything else in
this Agreement, the security interest and Lien granted to Agent, for the ratable
benefit of the Lenders under this Section, shall be limited to the extent that a
grant of a security interest in and Lien on any Property of the Borrower would
violate any applicable legal requirement, including any applicable patient
confidentiality restrictions.
5.2 Lien Perfection; Further Assurances. Borrower, at Agent's request,
shall execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Agent's Lien upon any of the Collateral and shall take such other action as may
be required to perfect or to continue the perfection of Agent's Lien upon the
Collateral. Notwithstanding the foregoing, (i) with respect to any Real Estate
in which Borrower has a fee interest, whether now owned or hereafter acquired,
Borrower, at Agent's request, shall execute any mortgages, instruments,
assignments and documents and shall take any other actions as Agent may request
in order to perfect Agent's Lien on any such Real Estate and (ii) with respect
to any leasehold interest of Borrower, whether now owned or hereafter acquired,
Borrower, at the reasonable request of the Majority Lenders, shall execute any
mortgages, instruments, assignments and documents and shall take any other
actions as Majority Lenders may request in order to perfect Agent's Lien on any
such leasehold interest. Borrower shall give Agent at least thirty (30) days
prior written notice before (i) acquiring any fee interest in any Real Estate or
(ii) acquiring any leasehold interest in any Real Estate with annual payments
due under the lease greater than Five Hundred Thousand Dollars ($500,000.00) and
a lease term longer than five (5) years. Agent acknowledges that Agent's Lien in
any Real Estate will not be perfected until such time as all mortgages,
instruments, assignments, documents and/or other actions as may be required in
the jurisdiction where the Real Estate is located are executed, recorded and/or
taken. Unless prohibited by applicable law, Borrower hereby authorizes Agent to
execute and file any such financing statement, instruments, assignments or
documents on Borrower's behalf. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be
14
filed in any appropriate office in lieu thereof. At Agent's request, Borrower
shall also promptly execute or cause to be executed and shall deliver to Agent
any and all documents, instruments and agreements deemed necessary by Agent to
give effect to or carry out the terms or intent of the Loan Documents, including
landlord's waivers as reasonably requested by Agent.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Inventory. All Inventory, other than Inventory in
transit: (i) will at all times be kept by Borrower at one or more of the
business locations set forth in Exhibit 6.1.1 hereto and at such new locations
which Borrower may hereafter establish, provided that, Borrower shall provide
Agent, not less than thirty (30) days prior to delivery of any Collateral to
such new location, with written notice thereof and, provided further, that prior
to delivery of any Collateral to such new location Borrower will take all
actions relative to such location as Agent may reasonably require under Section
5.2 hereof, and (ii) shall not, without at least thirty (30) days prior written
notice having been given to Agent, be otherwise moved from any such location set
forth on Exhibit 6.1.1 or new location except, prior to an Event of Default and
Agent's acceleration of the maturity of the Obligations in consequence thereof,
for (A) sales or rental of Inventory in the ordinary course of business, and (B)
removals in connection with returns thereof to vendors. Except as shown on
Exhibit 6.1.1, no Inventory is stored with a bailee, warehouseman or similar
party, nor is any Inventory consigned to any Person. Notwithstanding any of the
forgoing, Borrower may (x) keep inventory at business locations not listed on
Exhibits 6.1.1 and (y) store Inventory or maintain consignment Inventory with a
third person at a site not listed on Exhibit 6.1.1 provided that the aggregate
fair market value of the Inventory kept, stored or maintained at any such
individual business location or site may not exceed Fifty Thousand Dollars
($50,000.00).
6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with insurance companies and such deductibles as would be
maintained by a prudent operator in the same business as Borrower and as are
reasonably satisfactory to Agent. Borrower shall deliver certified copies of
such policies to Agent with satisfactory lender's loss payable endorsements,
naming Agent, for the ratable benefit of Lenders, as lender's loss payee, or
assignee and naming Agent and each of the Lenders as additional insured or
mortgagee, as appropriate. Each policy of insurance or endorsement shall contain
a clause requiring the insurer to give not less than thirty (30) days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever and a clause specifying that the interests of Agent and the
Lenders shall not be impaired or invalidated by any act or neglect of Borrower
or the owner of the Collateral or by the occupation of the premises for purposes
more hazardous than are permitted by said policy. If Borrower fails to provide
and pay for such insurance, Agent may, at its option, but shall not be required
to, procure the same and charge Borrower therefor. Borrower agrees to deliver to
Agent, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies.
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6.1.3 Protection of Inventory. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Inventory, any and
all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Inventory or in respect of the sale thereof shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due, Agent may, at its option, but shall not be required to, pay
the same and charge Borrower therefor. Neither Agent nor any Lender shall be
liable or responsible in any way for the safekeeping of any of the Inventory or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Inventory is in Agent's or any Lender's actual possession) or
for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Agent on such periodic basis as Agent shall
reasonably request a sales and collections report for the preceding period, in
form satisfactory to Agent. On or before the thirtieth (30th) day of each month
from and after the date hereof, Borrower shall deliver to Agent, in form
reasonably acceptable to Agent, a detailed aged trial balance of all Accounts
existing as of the last day of the preceding month, specifying the names,
addresses and book value for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Agent's request therefor, copies of
proof of delivery of inventory and the original copy of all documents,
including, without limitation, repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Agent shall reasonably
request. In addition, if at any time any Account with a book value in excess of
Five Hundred Thousand Dollars ($500,000.00) that was represented as an Eligible
Account on the immediately preceding Borrowing Base Certificate becomes
ineligible because it falls within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts, Borrower shall
notify Agent of such occurrence no later than the third (3rd) Business Day
following such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Agent, Borrower shall execute and
deliver to Agent, for the ratable benefit of Lenders, formal written assignments
of all of its Accounts weekly or daily, which shall include all Accounts that
have been created since the date of the last assignment, together with copies of
invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any discounts,
allowances or credits that are not reflected in the book value for the Account
involved, Borrower shall report such discounts, allowances or credits, as the
case may be, to Agent as part of the next required Schedule of Accounts. If any
amounts due and owing in excess of Two Hundred and Fifty Thousand Dollars
($250,000.00) become disputed between Borrower and any Account Debtor (other
than refusals to pay based on technical discrepancies which are curable in the
ordinary course of business), and such Account was represented as an Eligible
Account on the immediately preceding Borrowing Base Certificate, Borrower shall
provide Agent with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute,
16
all claims related thereto and the amount in controversy. Upon and after the
occurrence and during the continuance of an Event of Default, Agent shall have
the right to settle or adjust all disputes and claims, other than disputes or
claims arising solely on a technical basis in Borrower's ordinary course of
business, directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Agent may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority, Agent is authorized, in its sole discretion, to
pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor, provided, however, that Agent shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.
6.2.4 Account Verification. Whether or not an Event of Default has
occurred, any of Agent's officers, employees or agents shall have the right in
the name of Agent, any designee of Agent or Borrower, to verify the validity,
amount or any other matter relating to any Accounts by mail, telephone,
telegraph or otherwise, during regular business hours and consistent with
Agent's customary practices. Borrower shall cooperate fully with Agent in an
effort to facilitate and promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Consistent with Medicare and
Medicaid regulations, Borrower shall maintain Dominion Account(s) pursuant to
arrangements reasonably acceptable to Agent with such bank(s) as may be selected
by Borrower and be acceptable to Agent. If at any time, there exists less than
Sixty Million Dollars ($60,000,000.00) in Availability and/or the principal
balance of the Loans exceeds Thirty Five Million Dollars ($35,000,000.00) (a
"Triggering Event"), Agent shall have the right, which right shall be exercised
in accordance with Medicare and Medicaid regulations, to give notice (a "Trigger
Effectiveness Notice") to any Concentration Bank(s) that the funds of the
Borrower in any Concentration Account(s) shall thereafter be swept daily from
such accounts into the Dominion Account(s). Borrower shall subject to and
consistent with Medicare and Medicaid regulations issue to any Concentration
Bank(s) an irrevocable letter of instruction directing such Concentration
Bank(s) to act in accordance with such notice from Agent, and Borrower shall
also issue to any bank at which the Dominion Account(s) is maintained an
irrevocable letter of instruction directing such bank to deposit all payments or
other remittances received by such bank to the Dominion Account(s) for
application on account of the Obligations. All funds deposited in the Dominion
Account shall automatically be applied to the Obligations as of the date good
funds are deposited in the Dominion Account, provided that such good funds are
deposited in the Dominion Account by 12:00 noon, Eastern time, or, if such good
funds are deposited in the Dominion Account after 12:00 noon, Eastern time, on
the following Business Day. Agent shall have this right upon both the initial
and any subsequent occurrence of a Triggering Event. Except with respect to
Government Accounts, all funds deposited in the Dominion Account shall
immediately become the property of Agent, for the ratable benefit of Lenders,
and Borrower shall obtain the agreement by such banks in favor of Agent to waive
any offset rights against the funds so deposited. Agent assumes no
responsibility for such arrangement, including, without limitation, any claim of
accord and satisfaction or
17
release with respect to deposits accepted by any bank thereunder. If at any time
after the occurrence of a Triggering Event, Availability of more than Sixty
Million Dollars ($60,000,000.00) shall exist and the principal balance of the
Loans shall be less than Thirty-Five Million Dollars ($35,000,000.00), and
provided that no Event of Default has occurred and remains outstanding, Borrower
may request that Agent issue instructions (a "Trigger Rescission Notice") to any
Concentration Bank(s) to cease the daily sweep of Borrower's funds, and Agent
shall issue such instructions to such Concentration Bank(s). The time period
beginning on the date upon which Agent shall issue a Trigger Effectiveness
Notice and ending on the date upon which Agent shall issue a Trigger Rescission
Notice shall be known as a "Dominion Triggered Period."
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall use commercially reasonable efforts to make
collection of its Accounts. Borrower covenants that it shall direct all its
Account Debtors to remit all payments with respect to any and all Accounts to
the Commercial Lockboxes or the Government Lockboxes, as applicable, and that
any and all remittances received by Borrower with respect to any and all
Accounts shall be immediately deposited in kind in the Commercial Lockbox(es)
and the Government Lockbox(es), as applicable. Borrower covenants that it shall
cause all funds in all Lockbox Accounts to be transferred to Borrower's
Concentration Account(s) on a daily basis, provided that any funds which are
deposited into the Lockbox Accounts after the time of the daily transfer will be
transferred into the Concentration Account as of the next Business Day. Agent
shall have the right during any Dominion Triggered Period to issue notices
("Lockbox Trigger Notices") to the Lockbox Banks instructing such Lockbox Banks
that until instructions to the contrary are received by the Lockbox Banks from
Agent, all funds deposited in the Lockbox Accounts shall automatically be
transferred by the Lockbox Banks to the Concentration Account(s) and Borrower
shall have no direct access to the funds in such Lockbox Accounts subject to and
consistent with Medicare and Medicaid regulations. Borrower shall cooperate with
Agent in issuing such notices, which cooperation shall include, without
limitation providing to Agent (upon Agent's request) a complete and correct list
of all of Borrower's Lockbox Accounts and Lockbox Banks and executing or counter
signing any Lockbox Trigger Notices in form reasonably acceptable to Borrower as
Agent may request. Upon the ending of any Dominion Triggered Period, Borrower
may request that Agent issue instructions to the Lockbox Banks canceling the
instructions in the Lockbox Trigger Notices and Agent shall issue such
instructions to the Lockbox Banks. At all times during which a Dominion
Triggered Period is in effect, and to the extent consistent with Medicare and
Medicaid regulations, all remittances received by Borrower with respect to
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lenders'
ratable benefit and Borrower shall immediately deposit same in kind in the
Commercial Lockboxes and the Government Lockboxes, as applicable. To the extent
consistent with Medicare and Medicaid regulations, Agent retains the right at
all times after the occurrence and during the continuance of an Event of Default
to notify Account Debtors that Accounts have been assigned to Agent, for the
ratable benefit of Lenders, and to collect Accounts directly in its own name and
to charge the collection costs and expenses, including attorneys' fees, to
Borrower.
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6.3 Administration of Inventory.
6.31. Records and Reports of Inventory. Borrower shall keep accurate and
complete records of its Inventory. Borrower shall furnish Agent with Inventory
reports in form and detail reasonably satisfactory to Agent at such time as
Agent may require. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Agent shall reasonably request.
6.3.2 Returns of Inventory. If at any time or times hereafter any Account
Debtor returns any Inventory to Borrower the shipment of which generated an
Account on which such Account Debtor is obligated in excess of One Hundred
Thousand Dollars ($100,000.00), Borrower shall immediately notify Agent of the
same, specifying the reason for such return and the location, condition and
intended disposition of the returned Inventory
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep accurate
records itemizing and describing the kind, type, quantity and value of its
Equipment and shall furnish Agent with a current schedule containing the
foregoing information on an annual basis and, after the occurrence and during
the continuance Event of Default, more often if reasonably requested by Agent.
Immediately on request therefor by Agent, Borrower shall deliver to Agent
appropriate evidence of ownership, if any, of any of the Equipment.
6.4.2 Intentionally Omitted.
6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the Revolving Credit Base Rate.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make Loans hereunder, Borrower warrants,
represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Each of Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing and, except as
noted on Exhibit 7.1.1, is in good standing under the laws of the jurisdiction
of its incorporation. Each of Borrower and each of its Subsidiaries is duly
qualified and is authorized to do business and, except as noted on Exhibit
7.1.1, is in good standing as a foreign corporation in each state or
jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions in which the failure of Borrower or any of its Subsidiaries to be
so qualified would have a Material Adverse Effect.
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7.1.2 Corporate Power and Authority. Each of Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its
Subsidiaries' charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a
default in any material respect under any indenture or loan or credit agreement
or any other material agreement, lease or instrument to which Borrower or any of
its Subsidiaries is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower and each of its Subsidiaries, enforceable
against Borrower and each of its Subsidiaries in accordance with its respective
terms.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states (i) the correct name
of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by the Borrower, (ii) the name of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary and (iv) the number of authorized, issued and
treasury shares of Borrower and each Subsidiary. Borrower has good title to all
of the shares it purports to own of the stock of each of its Subsidiaries, free
and clear in each case of any Lien other than Permitted Liens. All such shares
have been duly issued and are fully paid and non-assessable. Except as set forth
in Exhibit 7.1.4, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
Except as set forth in Exhibit 7.1.4, there are no outstanding agreements or
instruments binding upon any of Borrower's shareholders relating to the
ownership of its shares of capital stock.
7.1.5 Corporate Names. Neither Borrower nor any of its Subsidiaries has
been known as or used any corporate, fictitious or trade names since March 1,
1995, except those listed on Exhibit 7.1.5 hereto. Except as otherwise set forth
on Exhibit 7.1.5 since March 1, 1995, neither Borrower nor any of its
Subsidiaries has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Borrower and its Subsidiaries'
chief executive office and other places of business are as listed on Exhibit
7.1.6 hereto. During
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the preceding one-year period, neither Borrower nor any of its Subsidiaries has
had an office, place of business or agent for service of process other than as
listed on Exhibit 7.1.6.
7.1.7 Title to Properties; Priority of Liens. Borrower and its Subsidiaries
have good and marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its Real Estate, and good title to all
of the Collateral and all of its personal Property other than Collateral,
including good leasehold title with respect to Property leased from others, in
each case, free and clear of all Liens except Permitted Liens. Borrower has paid
or discharged all lawful claims which, if unpaid, might become a Lien against
Borrower's real and personal Property that is not a Permitted Lien. The Liens
granted to Agent under Section 5 hereof, if properly perfected, are first
priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrower with respect to
any Account or Accounts. Unless otherwise indicated in writing to Agent, with
respect to all Accounts:
(i) the Accounts are genuine and in all respects what they purport to
be, and are not evidenced by a judgment;
(ii) the Accounts arise out of completed, bona fide sales and
deliveries of goods or rendition of services by Borrower in the ordinary
course of Borrower's business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents relating
thereto and forming a part of the contract between Borrower and the
respective Account Debtor;
(iii) the Accounts are for liquidated amounts not in excess of any
amount Borrower has agreed to accept pursuant to any contractual agreement
with any Account Debtor or Obligor and maturing as stated in the respective
invoices covering such sales or renditions of services, copies of which
have been furnished or are available to Agent;
(iv) Such Accounts, and Agent's security interest therein, are not,
and will not (by voluntary act or omission of Borrower) be with the passage
of time, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for (a) disputes
resulting in returned goods where the amount in controversy is deemed by
Agent to be immaterial and (b) Permitted Liens, and the Accounts are
absolutely owing to Borrower and are not contingent in any respect or for
any reason;
(v) Borrower has not made any agreement with any Account Debtor or
Obligor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except (i)
discounts or allowances which are granted by Borrower in the ordinary
course of its business for prompt payment and (ii) payment arrangements
with respect to Accounts, provided that the aggregate amount of the
portions of such Accounts subject to such payment arrangements at any given
time do
21
not exceed One Million Dollars ($1,000,000.00), and such arrangements are
reflected in the calculation of the net amount of each respective invoice
related thereto and are reflected in the Schedules of Accounts submitted to
Agent pursuant to subsection 6.2.1 hereof;
(vi) To Borrower's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforceability of any
Accounts or (other than with respect to discounts or allowances granted by
Borrower in the ordinary course of business) tend to reduce the amount
payable thereunder from the face amount of the invoice and statements
delivered to Agent with respect thereto;
(vii) To Borrower's knowledge, each Account Debtor thereunder (A) had
the capacity to contract at the time any contract or other document giving
rise to the Account was executed and (B) each such Account Debtor is
Solvent; and
(viii) Except as set forth on Schedule 7.1.8, to Borrower's knowledge,
there are no proceedings or actions which are threatened or pending against
any Account Debtor thereunder which could reasonably be expected to result
in any material adverse change in such Account Debtor's financial condition
or the collectibility of such Account.
7.1.9 Equipment. To Borrower's knowledge, the Equipment is in good
operating condition and repair in all material respects and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted, provided, however, that the foregoing will
not obligate Borrower or any of its Subsidiaries to repair any Equipment which
in Borrower's or such Subsidiary's reasonable business judgment is obsolete or
no longer used or useful by the Borrower in the ordinary course of its business.
7.1.10 Financial Statements; Fiscal Year.
(a) The Consolidated balance sheets of Borrower and such other Persons
described therein (including the accounts of all Subsidiaries of Borrower for
the respective periods during which a Subsidiary relationship existed) as of
January 3, 2000, and the related statements of income, changes in stockholder's
equity, and changes in financial position for the periods ended on such dates,
have been prepared in accordance with GAAP, and present fairly in all material
respects the financial position(s) of Borrower and such Persons at such dates
and the results of Borrower's operations for such periods. Since January 3,
2000, there has been no material adverse change in the condition, financial or
otherwise, of Borrower and such other Persons as shown on the Consolidated
balance sheet as of such date and no change in the aggregate value of Equipment
and Real Estate owned by Borrower or such other Persons, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse.
(b) The pro forma Consolidated opening balance sheet of the Borrower dated
as of the Closing Date provided by Borrower to Agent has been prepared in
22
accordance with GAAP and fairly presents in all material respects the assets and
liabilities of the Borrower based on the assumptions accompanying such
projections which, while subject to changing conditions beyond Borrower's
control are believed by Borrower to be reasonable based on historical results
and in light of reasonably foreseeable business conditions. The fiscal year of
the Borrower ends on the Sunday nearest to December 31 of each year.
7.1.11 Full Disclosure. The financial statements referred to in subsection
7.1.10 hereof do not, nor does this Agreement or any other written statement of
Borrower to Agent and/or any Lender, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact known to Borrower which Borrower has
failed to disclose to Agent in writing which materially affects adversely or, so
far as Borrower can now reasonably foresee, will materially affect adversely the
Properties, business, profits or condition (financial or otherwise) of the
Borrower or the ability of Borrower or its Subsidiaries to perform their
obligations as contained in this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. As of the Closing Date and the Funding
Date, Borrower and each of its Subsidiaries is and, after giving effect to the
Loans to be made and the Letters of Credit and LC Guaranties to be issued
hereunder, will be, Solvent. At all times after the Funding Date, each Borrower
is and will be Solvent. At all times after the Funding Date, Borrower and each
of its Subsidiaries are and will be Solvent on a Consolidated basis.
7.1.13 Surety Obligations. Neither the Borrower nor any of its Subsidiaries
is obligated as guarantor, surety or indemnitor under any surety or similar bond
or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person other than the obligations of Borrower to Olsten Corporation under the
Separation Agreement dated September 17, 1999 among Olsten Corporation, Adecco
SA and Aaronco Corp., as amended, and except as would be permitted on the date
hereof under subsection 8.2.3.
7.1.14 Taxes. The federal tax identification number of Borrower and each of
its Subsidiaries is shown on Exhibit 7.1.14 hereto. Borrower and its
Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all material taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrower maintains reasonable reserves on its books therefor or
would not individually or in the aggregate have a Material Adverse Effect. The
provision for taxes on the books of Borrower and its Subsidiaries are adequate
for all years not closed by applicable statutes, and for its current fiscal
year.
7.1.15 Brokers. There are no claims against Borrower for brokerage
commissions, finder's fees or investment banking fees in connection with the
Divestiture or the establishment of the credit facility contemplated by this
Agreement.
23
7.1.16 Patents, Trademarks, Copyrights and Licenses. Borrower and its
Subsidiaries own or possess all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and planned future
conduct of its business without any known conflict with the rights of others.
All such patents, trademarks, service marks, tradenames, copyrights, licenses
and other similar rights are listed on Exhibit 7.1.16 hereto.
7.1.16 Governmental Consents. Each of Borrower and its Subsidiaries has,
and is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it, except where the failure to have or be in good standing would not
have a Material Adverse Effect.
7.1.18 Compliance with Laws. Borrower and its Subsidiaries and their
respective Properties, business operations and leaseholds are in compliance with
the provisions of all federal, state and local laws, rules and regulations
applicable to it, its Properties or the conduct of its business except where the
failure to be in compliance would not have a Material Adverse Effect, and there
have been no citations, notices or orders of noncompliance issued to Borrower or
any of its Subsidiaries under any such law, rule or regulation which have not
been remedied except where noncompliance would not have a Material Adverse
Effect. Borrower and its Subsidiaries have established and maintain an adequate
monitoring system to insure that they remain in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced by Borrower or any of its Subsidiaries in violation of the Fair
Labor Standards Act (29 U.S.C. ss. 201 et seq.), as amended, except for any
violation which would not have a Material Adverse Effect.
7.1.19 Restrictions. Neither the Borrower nor or any of its Subsidiaries is
a party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its respective Properties. Neither the Borrower nor any of
its Subsidiaries is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Exhibit 7.1.19 hereto, none of which prohibit the execution of or compliance
with this Agreement or the other Loan Documents by Borrower or any of its
Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto, there are
no actions, suits or proceedings pending, or, to the knowledge of Borrower,
threatened, nor, to the knowledge of Borrower, are there any investigations
pending, against Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of Borrower or any of
its Subsidiaries which, either individually or in the aggregate could have a
Material Adverse Effect or could materially and adversely affect the rights of
Agent and/or Lenders hereunder. Notwithstanding the foregoing, Exhibit 7.1.20
lists all such actions, suits, proceedings or investigations which have been
instituted by any Government Authority in connection with healthcare-related
laws, rules or regulations. Neither the Borrower nor any of its
24
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or Borrower's
performance hereunder, constitute a Default or an Event of Default. Neither
Borrower nor any of its Subsidiaries is in default, and no event has occurred
and no condition exists which constitutes, or which with the passage of time or
the giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete listing of all
Capitalized Lease Obligations of Borrower and its Subsidiaries and Exhibit
7.1.22(b) hereto is a complete listing of all Operating Leases (except for any
Operating Leases with annual payments due under the respective leases of less
than Ten Thousand Dollars ($10,000.00) of Borrower and its Subsidiaries. Each
Borrower and each Subsidiary is in full compliance in all material respects with
all of the terms of each of its respective Capitalized Lease Obligations and
Operating Leases listed in said exhibits.
7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto, neither
the Borrower nor any of its Subsidiaries has any Plan. Borrower and its
Subsidiaries are in compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan, except where the
effect of such noncompliance would not have a Material Adverse Effect. No fact
or situation that could result in a material adverse change in the financial
condition of the Borrower exists in connection with any Plan. Neither Borrower
nor its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or, to Borrower's knowledge,
threatened termination, cancellation or limitation of, or any modification or
adverse change in, the business relationship between Borrower or any of its
Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of the Borrower,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely the Borrower or
prevent Borrower or any of its Subsidiaries from conducting such business after
the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25 hereto,
neither the Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. Except as described on Exhibit 7.1.25 hereto, there are no
material grievances, disputes or controversies with any union or any other
organization of Borrower's or any of its Subsidiaries' employees, or, to
Borrower's knowledge, threats of strikes, work stoppages or any asserted pending
demands for collective bargaining by any union or organization.
25
7.1.26 Healthcare Representations and Warranties.
(a) Borrower owns or leases and operates facilities to provide health care
services and (i) maintains Medicare and Medicaid provider status and is the
holder of the provider identification numbers identified on Exhibit 7.1.26(a)
hereto, all of which are current and valid (except for any provider
identification numbers which may have inadvertently and temporarily cease to be
current or valid due to technical reasons (and not for cause) and which,
individually or in the aggregate, would not have a Material Adverse Effect or
materially and adversely affect any rights of Agent and/or Lenders hereunder,
provided that Borrower, promptly upon learning of any such situation with
respect to any provider identification number, shall correct all such technical
problems and have any such provider identification number or similar substitute
number reinstated or issued as current and valid) and, except as set forth on
Exhibit 7.1.26(a) hereto, Borrower has not allowed, permitted, authorized or
caused any other Person to use any such provider identification number; (ii) has
obtained all material licenses, accreditations and approvals of governmental
authorities and all other Persons necessary for Borrower to own its assets, to
carry on its business, to execute, deliver and perform the Loan Documents, and
to receive payments from the Obligors; and (iii) is in compliance except where
the effect of such noncompliance would not result in a Material Adverse Effect
with all laws, rules, regulations, orders, decrees and directions of any
Governmental Authority (including, without limitation, the Medicare Act, the
rules and regulations of HCFA under the Medicare Act, and the applicable
Medicaid laws) applicable to the Accounts or any contracts relating thereto, or
applicable to the Borrower's business and properties, a violation of which would
or could materially and adversely affect the Borrower's ability to carry out its
Obligations hereunder with respect to the Accounts. In addition, Borrower has
not been notified by any such Governmental Authority or other person during the
immediately preceding 24 month period that such party has rescinded or not
renewed, or intends to rescind or not renew, any such license or approval.
(b) The Medicaid and Medicare cost reports of each facility and of the home
office of Borrower for all cost reporting periods have been submitted when and
as required to (i) as to Medicaid, the state agency, or other HCFA-designated
agent or agent of such state agency, charged with such responsibility or (ii) as
to Medicare, the Medicare intermediary or other HCFA-designated agent charged
with such responsibility. Borrower's cost reports do not indicate and no audit
has resulted in any determination that Borrower was overpaid for Medicaid and
Medicare in an aggregate amount of Two Million Dollars ($2,000,000.00) or more
in any of the most recent three fiscal years covered by such audit. For the
purposes of this subsection, the amounts of any overpayment for any particular
matter which have been disclosed to Agent as of the Closing Date shall not be
included in the calculation of the aggregate amount of overpayments; however, if
a final determination is made at some time after the Closing Date that the total
amount of the overpayment for any particular matter disclosed to Agent as of the
Closing Date is greater than the amount which was disclosed as of the Closing
Date, the excess of the amount as of the final determination over the amount
disclosed to Agent as of the Closing Date shall be included in the calculation
of the aggregate amount of overpayments under this subsection.
26
(c) With respect to all Accounts, as of the date each such Account is
created and included as an Eligible Account by Agent, on behalf of and for the
benefit of Lenders:
(i) All documents and agreements relating to the Accounts requested by
Agent have been delivered to Agent with respect to such Accounts and such
documents are true and correct in all material respects; Borrower has timely and
properly billed the applicable Obligors of the Accounts (except where supporting
claim documents must be forwarded to any Obligor before a ▇▇▇▇ may be submitted
in which case Borrower shall promptly complete documentation and billing of such
Obligors), and Borrower has delivered or caused to be delivered to such Obligors
all material Obligor requested supporting claim documents with respect to such
Accounts including all material documentation required by the applicable
Obligors for payment on the Accounts, and the statutory periods for issuing an
explanation of benefits ("EOB") in connection with such Accounts have not
expired; all information set forth in the bills and supporting claim documents
submitted to Obligors with respect to the Accounts is true, complete and correct
in all material respects, and, if additional information is requested by any
Obligor in connection therewith, Borrower will promptly provide the same and, if
necessary, will rebill or, if requested by the primary servicer (if other than
Borrower) cooperate with such servicer(s) to rebill any such Account;
(ii) The Accounts are exclusively owned by Borrower, and there is no
security interest in or lien against the Accounts in favor of any third party
other than Agent, except for Permitted Liens, nor is there any recording or
filing against Borrower, as debtor, covering or purporting to cover any interest
of any kind in the Accounts, except as has been or will be released or
terminated by each party holding such adverse interest in the Accounts prior to
or concurrently with the initial Loan made by Agent and Lenders to Borrower.
Borrower shall defend the first priority security interest of Agent, on behalf
of Lenders, in all Accounts against the claims of all persons claiming any
interest adverse to Agent and Lenders. With respect to any Government Accounts
the rights transferred to Agent in connection with this Agreement do not include
the right to claim payment in Agent's name from the applicable Obligor or the
right to direct such Obligor to remit payment directly to Agent except as
permitted by applicable laws and regulations governing such Accounts;
(iii) The Accounts (A) are payable in full by the Obligor identified by
Borrower as being obligated with respect to such Account, (B) are denominated
and payable only in lawful currency of the United States, and (C) are "accounts"
within the meaning of the Uniform Commercial Code of the state in which the
services or goods were provided or sold to the respective Patients or Obligors,
as applicable, by Borrower and in which Borrower has its chief executive office,
or are rights to payment under a policy of insurance or the proceeds thereof,
and are not evidenced by an instrument or chattel paper; and there are no
Obligors other than the applicable Obligors identified by Borrower as the
Obligors primarily liable, on the Accounts;
(iv) Borrower does not have any guaranty of, letter of credit providing
credit support for, or collateral security for, the Accounts, other than any
such
27
guaranty, letter of creditor or collateral security as has been assigned to
Agent, and any such guaranty, letter of credit or collateral security is not
subject to any Lien in favor of any other person;
(v) To Borrower's knowledge and belief the goods or services provided and
creating the Accounts were received by the respective Patient or Obligor, as
applicable;
(vi) Where required by applicable law or contract, the fees charged for the
goods or services constituting the basis for the Accounts are (a) consistent
with the usual, customary and reasonable fees charged by other similar medical
service providers or providers of similar goods and services, as applicable, in
Borrower's community or the community in which the respective Patient or
Obligor, as applicable, resides or is located, whichever is less, of the same or
similar service by Borrower or (b) pursuant to negotiated fee contracts, or
imposed fee schedules, with or by the applicable Obligors;
(vii) No action by Borrower other than the execution and delivery of this
Agreement and the other Loan Documents, the issuance and delivery of any
required Obligor notices (in a form approved by Agent) and the filing of UCC
financing statements in the State(s) in which the Borrower's chief executive
office is located, is required to perfect the first priority security interest
of Agent in the Accounts, and all such actions have been or will be accomplished
no later than the date of the initial Loan advance by Agent, on behalf of and
for the ratable benefit of Lenders;
(viii) The Accounts comply, in all material respects which would affect the
timely collectibility of such Accounts, with all laws and regulations applicable
thereto;
(ix) Any insurance policy, contract or other instrument obligating any
respective Obligor to make payment with respect to the Accounts, except with
respect to Governmental Accounts, does not contain any provision prohibiting the
transfer of such payment obligation from a Patient to Borrower;
(x) Fees for services or goods which are subject to limitations imposed by
worker's compensation regulations or by contracts for reimbursement from the
related Obligor do not exceed the limitations imposed thereunder, and the
Accounts for which the fees are so restricted has been clearly identified to
Agent as being subject to such restriction;
(xi) There are no Obligors, other than as designated by Borrower, that are
primarily liable on the Accounts;
(xii) Except as set forth on Exhibit 7.1.26(c), there are no proceedings or
investigations in which Borrower is named as party or any other proceedings or
investigation ending or threatened before any Government Authority or any
arbitration or similar proceedings under any contract (a) asserting the
invalidity of any of the Accounts or any contracts related thereto, (b) seeking
the payment of any of the Accounts or any contract related thereto, or (c)
seeking any determination or ruling that might materially and adversely affect
the
28
validity or enforceability of any of the Accounts or any contracts related
thereto which, either individually or in the aggregate could have a Material
Adverse Effect or could materially and adversely affect the rights of Agent
and/or Lenders hereunder. Notwithstanding the foregoing, Exhibit 7.1.26(c) lists
all such proceedings or investigations which have been instituted by any
Government Authority in connection with healthcare-related laws, rules or
regulations;
(xiii) None of the Accounts or contracts related thereto contravene in any
material respect any federal, state or local law, rule or regulation applicable
thereto (including, without limitation, the Medicare Act and the rules and
regulations of HCFA under the Medicare Act and laws, rules and regulations
relating to usury, consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy), and no party to such related contract to Borrower's knowledge is
in violation of any such law, rule or regulation in any material respect; and
(xiv) All descriptions of the Accounts provided to Agent on behalf of
Borrower remain true and correct and do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
descriptions of or statements made therein not misleading.
If a breach of any of the representations or warranties contained herein
relating to a Account may, in the reasonable opinion of Agent, have a material
adverse effect upon the validity, legality or collectibility of such Account
then, such Account shall no longer be deemed, an "Eligible Account", as defined
in Appendix A herein.
7.1.27 Y2K Compliance. All computer applications used by Borrower and its
Subsidiaries are able to effectively interpret, process and manipulate data and
recognize and perform properly date-sensitive functions involving dates prior
to, on and after December 31, 1999.
7.1.28 Operations and Accounts Receivable. Except for Gentiva Services
Limited Canada, no direct or indirect Subsidiary of the Company conducts any
business operations (except for the business of being a holding company) or owns
any Property (except for the capital stock of another corporation, or, in the
case of the Gentiva Trust, the convertible debentures of the Company) or
generates or owns any Accounts other than those Subsidiaries which are a party
to this Agreement as a Borrower or a Subsidiary Borrowing Corporation.
7.1.29 Cash Management. All funds and remittances received by Borrower with
respect to any Accounts are received into or immediately deposited by Borrower
into Borrower's Lockbox Accounts or Concentration Account(s), and all funds
deposited in Borrower's Lockbox Accounts are transferred to Borrower's
Concentration Account(s) on a daily basis, provided that any funds which are
deposited into the Lockbox Accounts after the time of the daily transfer are
transferred into the Concentration Account as of the next Business Day.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain in all material
respects accurate, complete and not misleading at all times
29
during the term of this Agreement, except for changes in the nature of
Borrower's or its Subsidiaries' business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Agent has consented to such changes or such changes are
expressly permitted by this Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance hereof and
thereof by Agent and the parties hereto and thereto and the closing of the
transactions described herein and therein, and related hereto and thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, Borrower
covenants that, unless otherwise consented to by the Majority Lenders, in
writing, which consent shall not be unreasonably withheld, it shall:
8.1.1 Visits and Inspections. Permit representatives of Agent, from time to
time, as often as may be reasonably requested, but only during normal business
hours to visit and inspect the Properties of Borrower and each of its
Subsidiaries, inspect, audit and make extracts from its books and records at
Borrower's cost as provided in this Agreement, and discuss with its officers,
its employees and its independent accountants, Borrower's and each of its
Subsidiaries' businesses, assets, liabilities, financial condition, business
prospects and results of operations. After the occurrence and during the
continuance of an Event of Default, Agent shall give notice to the Lenders prior
to conducting any such visits, inspections or audits, and, any Lender may, upon
such Lender's request and at such Lender's expense, have a representative of
such Lender accompany Agent on and participate in any such visits, inspections
or audits.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of any
event or the existence of any fact which renders any representation or warranty
in this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading in any material respect.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions, and cause to be prepared and furnished to Agent the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrower's certified public accountants concur in any change
therein and such change is disclosed to Agent and is consistent with GAAP):
(a) not later than ninety (90) days after the close of each fiscal
year of Borrower, unqualified audited financial statements of the Borrower
and its Subsidiaries as of the end of such year, on a Consolidated basis,
certified as to such Consolidated financial statements of the Borrower, by
a firm of independent certified public accountants of recognized standing
selected by Borrower but reasonably acceptable to
30
Agent (except for a qualification for a change in accounting principles
with which the accountant concurs);
(b) not later than thirty (30) days after the end of each month
hereafter, (or, in the case of each March, June, September or December,
forty-five (45) days after the end of each such month), unaudited interim
financial statements as of the end of such month and of the portion of the
Borrower's fiscal year then elapsed, on a Consolidated basis, including a
balance sheet, profit and loss statement and a statement of cash flows,
certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the Consolidated financial
position and results of operations of the Borrower for such month and
period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(c) promptly upon request, deliver such other information concerning
the Borrower as Agent may from time to time reasonably request, including
Medicare and Medicaid cost reports and audits, annual reports, security law
filings and reports to any security holders. To the extent Borrower
believes that any information reasonably requested by Agent would require
the disclosure of information subject to (i) any applicable privilege which
would prohibit such disclosure, or which privilege would be destroyed by
such disclosure or (ii) any applicable federal or state laws on patient
confidentiality, Borrower shall notify Agent of the general nature of the
information subject to the claimed privilege or applicable patient
confidentiality laws, and of Borrower's reasons for believing that such
disclosure would be prohibited, or would destroy the privilege, or would
violate any applicable patient confidentiality laws, and Agent, in its
reasonable discretion, will determine whether to require such information
under the circumstances;
(d) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports filed with
any public agency which Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration
statements which Borrower files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or any
national securities exchange;
(e) promptly after the filing thereof, copies of any annual report to
be filed in accordance with ERISA in connection with each Plan; and
(f) such other data and information (financial and otherwise) as
Agent, from time to time, may reasonably request, bearing upon or related
to the Collateral or Borrower's and/or any Subsidiaries' financial
condition or results of operations. To the extent Borrower believes that
any information reasonably requested by Agent would require the disclosure
of information subject to (i) any applicable privilege which would prohibit
such disclosure, or which privilege would be destroyed by such disclosure
or (ii) any applicable federal or state laws on patient confidentiality,
Borrower shall notify Agent of the general nature of the information
subject to the claimed privilege or
31
applicable patient confidentiality laws, and of Borrower's reasons for
believing that such disclosure would be prohibited, or would destroy the
privilege, or would violate any applicable patient confidentiality laws,
and Agent, in its reasonable discretion, will determine whether to require
such information under the circumstances.
Concurrently with the delivery of the financial statements described in
clause (a) of this subsection 8.1.3, Borrower shall forward to Agent a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Agent a certificate of the aforesaid certified public accountants
certifying to Agent that, based upon their examination of the financial
statements of the Borrower performed in connection with their examination of
said financial statements, they are not aware of any Default or Event of
Default, or, if they are aware of such Default or Event of Default, specifying
the nature thereof. Concurrently with the delivery of (i) the financial
statements described in clauses (a) of this subsection 8.1.3 and (ii) the
financial statements described in clause (b) of the subsection 8.1.3 for each
month which is the last month in a fiscal quarter of Borrower (and not for any
other months), or more frequently if requested by Agent, Borrower shall cause to
be prepared and furnished to Agent a Compliance Certificate in the form of
Exhibit B hereto executed by the Chief Financial Officer of Borrower, together
with a work sheet reflecting all calculations made in completing the Compliance
Certificate. Upon reasonable request by Agent, Borrower shall provide the
financial statements described in clauses (a) or (b) on a Consolidated and
Consolidating basis.
8.1.4 Landlord and Storage Agreements. Provide Agent with copies of all
agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept, as Agent may reasonably request from time to time.
8.1.5 Year 2000 Compliance. Take all action necessary to assure that at all
times the computer-based systems utilized by Borrower and each of its
Subsidiaries are able to effectively interpret, process and manipulate data,
including dates before, on and after December 31, 1999. At Agent's request,
Borrower shall provide to Agent assurance reasonably satisfactory to Agent that
the computer-based systems utilized by Borrower and each of its Subsidiaries are
able to recognize and perform, without error, functions involving dates before,
on and after December 31, 1999.
8.1.6 Projections. Prior to the end of each fiscal year of Borrower,
deliver to Agent Projections of Borrower for the forthcoming fiscal year, month
by month.
8.1.7 Borrowing Base Certificate. No later than thirty (30) calendar days
after the last day of each calendar month, Borrower shall deliver to Agent a
Borrowing Base Certificate in the form of Exhibit C hereto executed by the Chief
Financial Officer of Borrower.
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8.1.8 Healthcare Covenants.
(a) Borrower will (i) not amend, waive or otherwise permit or agree to any
material deviation from the terms or conditions (other than adjustments in the
ordinary course of Borrower's business) of the Accounts without the express
written consent of Agent; (ii) upon the request of Agent, use all commercially
reasonable efforts to obtain all consents from patients which are required by
law in order for Agent, or any servicing entity retained by Agent, to secure
information needed to obtain payment from the respective Obligors on the
Accounts; and (iii) promptly ▇▇▇▇ for all Accounts on the same basis and using
the same policies and practices that it has used in the past unless Agent has
been advised in writing of a change prior to the making of any Loans.
(b) Agent or its designated agents and representatives from time to time
may verify the Accounts, inspect, check, take copies of or extracts from the
Borrower's books, records and files, consistent with the state and federal laws
regarding patient confidentiality and Borrower will make the same available to
Agent or such representatives at any reasonable time for such purposes,
including records relating to the collection of Accounts, the application of
collections (including misdirected payments) and other matters related thereto.
(c) If deemed necessary by Agent and upon reasonable notice, Borrower
agrees that Agent will be permitted to have at least one of its agents or
representatives physically present in the Borrower's administrative offices
during Borrower's normal business hours to monitor Borrower in performing its
obligations under this Agreement. Upon request made by Agent, subject to state
and federal laws, including without limitation laws regarding patient
confidentiality, Borrower shall furnish, or cause to be furnished, to Agent all
relevant records related to the Accounts in written and electronic form,
including any file cabinets, storage containers or computers within which such
records are kept. Borrower's grant to Agent, on behalf of and for the benefit of
Lenders, of a security interest in such records and goods as set forth herein is
subject to the confidentiality and other rights under applicable law and under
rights and rules of the JCAHO.
(d) Borrower shall promptly notify Agent in the event of any action(s),
suit(s), proceeding(s), dispute(s), offset(s), deduction(s), defense(s) or
counterclaim(s) that are or may be asserted by Obligor(s) with respect to any
Account(s), if the aggregate amount of the portion(s) of the Account(s) subject
to such actions, suits, etc. of which Borrower has gained knowledge since the
date of the last Borrowing Base Certificate shall exceed One Million Dollars
($1,000,000.00) (except for denials of Government Accounts which shall be
disclosed on a monthly basis by Borrower to Agent). This section does not
require Borrower to provide a notice of denial to Agent in those cases where
Borrower reasonably believes that an Obligor's notice of denial will be reversed
upon the submission of supplemental information to the Obligor.
(e) Borrower shall make all payments to the applicable Obligor necessary to
prevent such Obligor from offsetting any earlier overpayment to Borrower against
any amount the Obligor may owe on any Accounts if the aggregate amount of such
offsets shall at any time exceed One Million Dollars ($1,000,000.00).
33
(f) Borrower shall comply in all material respects with all of the terms of
each settlement agreement and corporate integrity agreement entered into by
Borrower with the government.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lenders, Borrower covenants that,
unless Majority Lenders have first consented thereto in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary to merge or consolidate, with any Person, nor acquire, nor
permit any of its Subsidiaries to acquire, all or any substantial part of the
Properties of any Person. Notwithstanding any of the foregoing:
(i) any Borrower may merge or consolidate with any other Borrower, and
any Subsidiary Guarantor may merge or consolidate with any other Subsidiary
Guarantor or any Borrower;
(ii) any Subsidiary Guarantor may be liquidated or dissolved if the
Borrower decides in the exercise of its reasonable business judgment that
such liquidation or dissolution is desirable provided that (a) such
dissolution shall not have a Material Adverse Effect and (b) upon such
dissolution, any and all of the assets and Property of such Subsidiary
Guarantor shall be distributed to the Borrower(s) or Subsidiary
Guarantor(s) which own(s) the capital stock of such Subsidiary Guarantor;
(iii) any Borrower may acquire a new Subsidiary, or merge or
consolidate with another Person, as a part of any Permitted Acquisition
transaction provided that (a) in the case of any Permitted Acquisition
transaction which involves the purchase of the capital stock or equity
interests of another Person but does not involve a merger or consolidation,
the Borrower shall pledge the capital stock or equity interests of such
acquired Person to the Agent for the ratable benefit of the Lenders
pursuant to the Pledge Agreement and the acquired Person shall become a
party to this Agreement as a Subsidiary Borrowing Corporation by executing
a Joinder Agreement in the form of Exhibit D attached hereto or (b) in the
case of any Permitted Acquisition transaction which involves a merger of
the acquired Person with the respective Borrower, the Borrower shall be the
surviving entity; and
(iv) any Borrower may create a new Subsidiary provided that the
Borrower shall pledge the capital stock or equity interests of such
newly-created Subsidiary to the Agent for the ratable benefit of the
Lenders pursuant to the Pledge Agreement and the newly-created Subsidiary
shall become a party to this Agreement as a Subsidiary Borrowing
Corporation by executing a Joinder Agreement.
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Any Person which executes a Joinder Agreement pursuant to this subsection shall
be deemed to be a "Borrower" under this Agreement, and every reference herein to
"Borrower" shall be deemed to include that Person.
8.2.2Loans. Make, or permit any Subsidiary of Borrower to make, any loans
or other advances of money (other than for salary, travel advances, advances
against commissions and other similar advances in the ordinary course of
business) to any Person, other than (a) loans to employees not to exceed Five
Hundred Thousand Dollars ($500,000.00) at any time outstanding in the aggregate
and (b) loans between or among a Borrower and any other Borrowers and/or any
Subsidiary Guarantors.
8.2.3 Total Indebtedness for Money Borrowed. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of Borrower to create, incur or suffer
to exist, any Indebtedness for Money Borrowed, except:
(a) Obligations owing to Agent and/or Lenders under or in connection
with the Loan Documents;
(b) Indebtedness of a Borrower or any Subsidiary of Borrower to a
Borrower or its Subsidiary as permitted in subsection 8.2.4;
(c) the Subordinated Debt;
(d) Permitted Purchase Money Indebtedness;
(e) accounts payable to trade creditors and current operating expenses
(other than for Money Borrowed) which are not more than ninety (90) days
from the due date, and which are incurred in the ordinary course of
business and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful proceedings;
provided that Borrower or Subsidiary (as applicable) shall have set aside
such reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrower or Subsidiary (as applicable) and its
independent accountants;
(f) Obligations to pay Rentals permitted by subsection 8.2.13 and
Capitalized Lease Obligations permitted under subsection 8.2.8;
(g) contingent liabilities arising out of endorsements of checks and
other negotiable instruments for deposit or collection in the ordinary
course of business;
(h) guaranties of lease obligations or other similar obligations of
Subsidiaries to the extent that such lease obligations or similar
obligations are otherwise permitted by this Agreement;
(i) bid bonds, performance bonds, surety bonds, letters of credit or
similar obligations made in the ordinary course of business (including
bonds to secure
35
payment of judgments) which do not, in the aggregate, exceed Twenty Million
Dollars ($20,000,000.00) at any one time; and
(j) other Indebtedness not to exceed an aggregate amount of Five
Million Dollars ($5,000,000.00) outstanding at any one time.
8.2.4 Affiliate Transactions. Except as set forth in Exhibit 8.2.4 hereto,
enter into, or be a party to, or permit any Subsidiary of Borrower to enter into
or be a party to, any transaction with any Affiliate of Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Agent and are no less favorable to Borrower or Subsidiary than
would obtain in a comparable arm's length transaction with a Person not an
Affiliate of Borrower or its Subsidiary. Notwithstanding any of the foregoing,
the Company may issue up to Ten Million Dollars ($10,000,000.00) of additional
Convertible Debentures to the Gentiva Trust according to the terms of subsection
8.2.10.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(a) Liens at any time granted in favor of Agent, for the ratable
benefit of Lenders;
(b) Liens for taxes, assessments or charges imposed by any Government
Authority (excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due, or being contested in the manner described in
subsection 7.1.14 hereto, but only if in Agent's reasonable judgment such
Lien does not materially adversely affect Agent's rights or the priority of
Agent's Lien, for the ratable benefit of Lenders, upon the Collateral;
(c) Liens arising in the ordinary course of Borrower's or such
Subsidiary's business by operation of law or regulation, such as carriers,
warehouseman's landlords' and mechanics liens, but only if payment in
respect of any such Liens are not at the time required and such Liens do
not, in the aggregate, materially detract from the value of the Property of
Borrower or any of its Subsidiaries or materially impair the use thereof in
the operation of Borrower's or any of its Subsidiaries' business;
(d) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(e) such other Liens as appear on Exhibit 8.2.5 hereto;
(f) pledges or deposits to secure workers' compensation, unemployment
insurance and other social security legislation or the deposits securing
obligations to insurance companies insuring such liabilities;
36
(g) pledges or deposits to secure the performance of bids, trade
contracts (other than for Borrowed Money), statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business (including bonds to secure
payment of judgments), provided that such obligations do not, in the
aggregate, exceed Twenty Million Dollars ($20,000,000.00) at any one time;
(h) pledges or deposits to secure lease obligations of Borrower or any
Subsidiaries to the extent such lease obligations are permitted by this
Agreement;
(i) Liens consisting of judgment or judicial attachment Liens
(including prejudgment attachment) in existence less than forty-five (45)
days after the entry thereof or the enforcement of which is effectively
stayed or payment of which is covered in full (subject to a customary
deductible) by insurance or which do not otherwise result in any Event of
Default;
(j) Liens securing obligations in respect of Capitalized Lease
Obligations solely on property subject to such Capitalized Lease
Obligations;
(k) leases or subleases granted to third Persons not interfering in
any material respect with Agent's right to the Collateral or the business
of the Borrower or any Subsidiary;
(l) liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(m) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(n) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods so long as such liens attached only to the imported
goods;
(o) Liens existing on the Property of any Person at the time such
Person becomes a Subsidiary of any Borrower or is merged or consolidated
into a Borrower pursuant to a Permitted Acquisition transaction, and, in
each case, not created in contemplation of or in connection with the
Permitted Acquisition transaction, provided however, that such Liens do not
extend to any of Property of any Borrower;
(p) other Liens in an amount not to exceed Five Hundred Thousand
Dollars ($500,000.00), provided that such Liens do not secure any
Indebtedness for Money Borrowed;
37
(q) any extension, renewal or replacement of the foregoing; provided,
however, that the Liens permitted by this subsection 8.2.5 shall not cover
any additional Indebtedness or Property; and
(r) such other Liens as the Majority Lenders may hereafter approve in
writing.
8.2.6 Subordinated Debt. Either (i) make, or permit Borrower or any of its
Subsidiaries to make, any payment (including, without limitation, any
prepayment) of any part or all of any Subordinated Debt (other than in the
context of a refinancing transaction as permitted under clause (iii) of the
definition of Subordinated Debt), or otherwise repurchase, redeem or retire any
instrument evidencing any such Subordinated Debt, provided that if, after taking
any such payment into effect, no Event of Default shall have occurred and
Availability shall be at least Forty Million Dollars ($40,000,000.00 ), then
such a payment, repurchase, redemption or retirement with respect to the Quantum
Debentures may take place, or (ii) enter into any agreement (oral or written)
which could in any way be construed to amend, modify, alter or terminate any one
or more instruments or agreements evidencing or relating to any Subordinated
Debt except for amendments or modifications which are not adverse in any
material respect towards Agent and/or Lenders and as permitted by the terms of
the documents governing such Subordinated Debt. Notwithstanding any of the
foregoing, so long as no Default or Event of Default has occurred and remains
outstanding, Borrower may make regularly scheduled payments of interest in
respect of any of the Subordinated Debt.
8.2.7 Distributions. Declare or make, or permit any Subsidiary of Borrower
to declare or make, any Distributions. Notwithstanding the foregoing, (i) any
Borrower or any Subsidiary Guarantor may declare and/or make Distributions to
any Borrower and (ii) the Gentiva Trust may make regularly scheduled dividend
payments (either in cash or in-kind) to the holders of the Convertible Trust
Preferred Stock according to the terms of the documents governing the
Convertible Trust Preferred Stock.
8.2.8 Capital Expenditures. Make Capital Expenditures (including, without
limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower and its Subsidiaries, exceed (i) Twenty-Six Million Dollars
($26,000,000.00) in fiscal year 2000, (ii) Twenty-Seven Million Dollars
($27,000,000.00) in fiscal year 2001, and (iii) Thirty Million Dollars
($30,000,000.00) in each fiscal year thereafter.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any of, or
permit any Subsidiary of Borrower to sell, lease or otherwise dispose any of,
its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except: (i) sales of
Inventory in the ordinary course of business, (ii) a transfer of Property by any
Borrower or Subsidiary Guarantor to any Borrower, (iii) dispositions of Property
(including dispositions of used, worn-out or surplus Property) by Borrower or
any Subsidiary in the ordinary course of business with fair market value of less
than One Million Dollars ($1,000,000.00), in the aggregate, in any given fiscal
year (which disposition may include a disposition, whether or not in the
ordinary course of business of all or substantially all of the
38
assets of a Borrower or a Subsidiary Guarantor, or all of the stock of any
Borrower or Subsidiary Guarantor, provided that such disposition is within the
$1,000,000.00 limitation) , (iv) leases or subleases of Property which shall not
have a Material Adverse Effect, and (v) dispositions expressly authorized by
this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue any
additional shares of its capital stock except director's qualifying shares and
shares. Notwithstanding any of the foregoing, (i) the Company may issue
additional shares of its capital stock and (ii) the Gentiva Trust may issue
additional shares of preferred stock either (i) for the purpose of making
in-kind dividend payments as regularly scheduled to the holders of the
Convertible Trust Preferred Stock according to the terms of the documents
governing the Convertible Trust Preferred Stock or (ii) in connection with the
issuance of additional Convertible Debentures to the Gentiva Trust by the
Company after the Funding Date in an aggregate amount not to exceed Ten Million
Dollars ($10,000,000.00) on terms no less favorable to the Lenders than those of
the initial issuance of the Convertible Trust Preferred Stock at the time of the
Closing. Nothing in this subsection shall be construed to prohibit the creation
of new subsidiaries by any Borrower in accordance with the provisions of
subsection 8.2.1.
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis except for consignment sales
which, in the aggregate, do not exceed One Million Dollars ($1,000,000.00).
8.2.12 Restricted Investment. Make or have, or permit any Subsidiary of
Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit any Subsidiary of Borrower to become, a
lessee under any Operating Lease (other than a lease under which Borrower or any
of its Subsidiaries is lessor, which lease is otherwise permitted by the terms
of this Agreement) of Property if the aggregate Rentals payable during any
current or future period of twelve (12) consecutive months under such lease and
all other leases under which Borrower or any of its Subsidiaries is then lessee
would exceed Thirty-Seven Million Dollars ($37,000,000.00). The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any such lease.
8.2.14 Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than a Subsidiary of Borrower.
8.2.15 Change of Corporate Name. Change or permit any Subsidiary of
Borrower to change the name of the respective corporate legal entity as
registered with the Secretary of State in the jurisdiction of its incorporation
unless 30 days prior written notice of such change is given to the Agent.
39
8.3 Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, Borrower
covenants that, Borrower shall, on a consolidated basis, maintain the financial
covenants set forth on Schedule 8.3 hereto.
SECTION 9. CONDITIONS PRECEDENT
9.1 Conditions Precedent to Effectiveness of Agreement. Notwithstanding any
other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Agent and/or Lenders under the
other sections of this Agreement the effectiveness of this Agreement is subject
to satisfaction of each of the following conditions precedent:
9.1.1 Documentation. Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, a duly executed copy of this
Agreement, the Revolving Credit Notes and the other Loan Documents, together
with such additional documents, instruments and certificates as Agent and its
counsel shall require in connection therewith from time to time, all in form and
substance reasonably satisfactory to Agent and its counsel, including, without
limitation the following:
(a) Certified copies of Borrower's casualty insurance policies, together
with loss payable endorsements on Lender's standard form of lender's loss payee
endorsements naming Lender as lender loss payee and certified copies of
Borrower's liability insurance policies, together with endorsements naming
Lender as additional insured;
(b) Certified copies of (i) resolutions of Borrower's board of directors
authorizing the execution and delivery of this Agreement and the Loan Documents
and the performance of all transactions contemplated hereby and thereby, (ii)
Borrower's by-laws and any amendments thereto, and (iii) an incumbency
certificate of Borrower;
(c) A copy of the Articles or Certificate of Incorporation of Borrower, and
all amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation;
(d) Good standing certificates for Borrower, issued by the Secretary of
State or other appropriate official of Borrower's jurisdiction of incorporation
and each jurisdiction where the conduct of Borrower's business activities or the
ownership of its Properties necessitates qualification;
(e) A closing certificate signed by the Chief Financial Officer of the
Company dated as of the date hereof, stating that (i) the representations and
warranties set forth in Section 7 hereof are true and correct in all material
respects on and as of such date, (ii) Borrower is on such date in compliance in
all material respects with all the terms and provisions set forth in this
Agreement and (iii) on such date no Default or Event of Default has occurred or
is continuing;
40
(f) The Security Documents duly executed, accepted and acknowledged by or
on behalf of each of the signatories thereto;
(g) The favorable, written opinion of Borrower's counsel as to the
transactions contemplated by this Agreement and any of the other Loan Documents;
(h) the Subsidiary Guaranty duly executed and delivered by each Subsidiary
Guarantor;
(i) Duly executed agreement establishing a Dominion Account at a bank
selected by Borrower, but acceptable to Agent in its reasonable discretion for
the collection or servicing of the Accounts; and
(j) Such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
9.1.2 No Default. No Default or Event of Default shall exist.
9.2. Conditions Precedent to Funding. Notwithstanding the effectiveness of
this Agreement, any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Agent and/or
Lenders under the other sections of this Agreement, Agent and/or Lenders shall
have no obligations to make any Loans or to arrange for the issuance of any
Letters of Credit or LC Guaranties under the Revolving Credit Facility until the
following conditions precedent have been satisfied:
9.2.1 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.2.2 Availability. Agent shall have determined that immediately after
Lenders have made the initial Loans and issued the initial Letters of Credit and
LC Guaranties contemplated hereby, and paid all closing costs incurred in
connection with the transactions contemplated hereby, Aggregate Adjusted
Availability on the Funding Date shall not be less than One Hundred Million
Dollars ($100,000,000.00).
9.2.3 Borrowing Base Certificate and Disbursement Instructions. Borrower
shall have delivered to Agent an initial Borrowing Base Certificate dated as of
the Funding Date and written instructions from the Company on behalf of all
Borrowers directing the application of the initial Loans made pursuant to this
Agreement.
9.2.4 Delivery of Opinion of Special Healthcare Counsel. Borrower shall
have delivered to Agent the favorable, written opinion of Borrower's special
healthcare counsel as to certain matters relating to the creation and perfection
of Agent's security interest in certain Accounts of Borrower.
9.2.5 Payment of Fees. Borrower shall have paid all fees and expenses owing
hereunder.
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9.2.6 Convertible Debentures and Convertible Trust Preferred Stock. The
issuance of the Convertible Debentures and the Convertible Trust Preferred Stock
shall have been completed and closed and the proceeds thereof (which shall not
be less than Twenty Million Dollars ($20,000,000.00) shall have been received by
the Company and the Company shall have delivered to Agent copies of the
documents relating to the issuance of the Convertible Debentures and the
Convertible Trust Preferred Stock, certified as complete and correct by the
Company
9.2.7 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.2.8 Divestiture. The shareholders of Olsten Corporation shall have
approved the merger of Olsten Corporation with a wholly-owned subsidiary of
Adecco SA, which merger transactions shall include as an integral component the
Divestiture of Borrower, and such Divestiture of Borrower from Olsten
Corporation shall have been consummated according to the terms of the Merger
Agreement between Olsten Corporation and Adecco, SA dated August 17, 1999, as
amended, the Separation Agreement and all related agreements and documents. In
addition, Borrower shall have obtained any and all federal, state and local
regulatory approvals, and have completed any and all federal, state and local
regulatory notifications, which may be required in connection with the
Divestiture transactions, and have delivered to Agent copies of all of the
Divestiture Documents, certified as complete and correct by the Borrower.
9.2.9 No Default. No Default or Event of Default shall exist.
9.2.10 Funding Certificate. A certificate signed by the Chief Financial
Officer of the Company dated as of the Funding Date, stating that (i) the
representations and warranties set forth in Section 7 hereof are true and
correct in all material respects on and as of the Funding Date, (ii) Borrower is
on the Funding Date in compliance with all the terms and provisions set forth in
this Agreement, and (iii) on the Funding Date no Default or Event of Default has
occurred or is continuing.
9.3 Funding Date. If the Funding Date has not occurred by the end of the
day on March 24, 2000, this Agreement and all other Loan Documents shall become
null and void and of no further force and effect and all obligations, if any, of
Agent and/or Lenders to make Loans and/or arrange for the issuance of Letters of
Credit shall terminate.-
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
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10.1.1 Payment of Obligations. Borrower shall fail to pay any of the
Obligations on the due date thereof (whether at scheduled due date, at stated
maturity, on demand, upon acceleration, upon termination of this Agreement or
otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other statement
made or furnished to Agent or any Lender by or on behalf of Borrower or any
Subsidiary of Borrower in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.3 Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.2,
8.1.1, 8.1.2, 8.1.8, 8.2 or 8.3 of this Agreement on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Any Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in this Section 10.1) and
the breach of such other covenant is not cured to Agent's satisfaction within
twenty (20) days after the sooner to occur of the Borrower's receipt of notice
of such breach from Agent or the date on which such failure or neglect first
becomes known to any officer of Borrower except that, in the case of any such
failure or neglect with respect to subsection 8.1.3 hereof, such grace period
shall be ten (10) days..
10.1.5 Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or Borrower shall default in any material respect in
the performance or observance of any material term, covenant, condition or
agreement contained in, any of the Security Documents or the Other Agreements
and such default shall continue beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of default on
the part of Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) which
singly or in the aggregate with any other such Indebtedness equals or exceeds
Two Million Dollars ($2,000,000.00) if the holder of such Indebtedness would be
entitled to accelerate such Indebtedness as a consequence of such default or
event of default.
10.1.7 Uninsured Losses. Any loss, theft, damage or destruction of any
material portion of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance.
10.1.8 Adverse Changes. There shall occur any event or condition which
results in a material adverse change in the financial condition, or business
operations of the Borrower which impairs Borrower's ability to perform its
Obligations or brings into question the validity or enforceability of any of the
Loan Documents.
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10.1.9 Insolvency and Related Proceedings. Any Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than 60 days, provided that Lenders are not obligated to make Loans or
arrange for the issuance of Letters of Credit or LC Guaranties during any such
proceeding and may seek any relief that they or Agent deems appropriate in such
proceedings) or any Borrower shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally.
10.1.10 Business Disruption; Condemnation. There shall occur a cessation of
a substantial part of the business of Borrower or any of its Subsidiaries for a
period which would have a Material Adverse Effect; Borrower or any of its
Subsidiaries shall suffer the loss or revocation of any license or permit now
held or hereafter acquired by Borrower or such Subsidiary which is necessary to
the continued or lawful operation of its business and which loss or revocation
has a Material Adverse Effect; or Borrower or any of its Subsidiaries shall be
enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs and such enjoining, restraint or prevention has a Material Adverse
Effect; or any material lease or agreement pursuant to which Borrower or any of
its Subsidiaries leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and which loss or
termination has a Material Adverse Effect.
10.1.11 Change of Control. The occurrence of a Change of Control.
10.1.12 ERISA. A Reportable Event shall occur which Agent, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower or any of its Subsidiaries is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's or Subsidiary's complete or partial
withdrawal from such Plan.
10.1.13 Challenge to Agreement. Borrower or any of its Subsidiaries, or any
Affiliate of any of them, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement, or any of the other
Loan Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Agent, for the ratable benefit of
Lenders.
10.1.14 Repudiation of or Default Under Guaranty Agreement. Any Guarantor
shall revoke or attempt to revoke any guaranty and surety agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
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10.1.15 Criminal Forfeiture. Borrower or any of its Subsidiaries shall be
criminally convicted or any judicial or administrative proceeding results in a
forfeiture of any material Property of Borrower or any of its Subsidiaries.
10.1.16 Judgments. Borrower or any of its Subsidiaries shall suffer any
final judgment or judgments for the payment of money (in excess of insurance
coverage) in excess of Two Million Dollars ($2,000,000.00) in the aggregate and
the same shall not be discharged, satisfied or stayed within a period of
forty-five (45) days. Notwithstanding the foregoing, for the purposes of this
subsection only, no judgment amount shall be included in the calculation of the
aggregate amount of judgments to the extent that such respective Borrower or
Subsidiary shall obtain a bond covering the liability.
10.2 Acceleration of the Obligations. Without in any way limiting the right
of Agent to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.2 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Agent (or by Agent at the written direction of the Majority Lenders)
and without presentment, demand, protest or further notice by Agent, become at
once due and payable and Borrower shall forthwith pay to Lenders, the full
amount of such Obligations, provided that, upon the occurrence of an Event of
Default specified in subsection 10.1.9 hereof (other than an Event of Default
based solely on Borrower's ceasing to be Solvent), all of the Obligations shall
become automatically due and payable without declaration, notice or demand by
Agent.
10.3 Other Remedies. Upon the occurrence and during the continuance of an
Event of Default, Agent may (or, at the written direction of Majority Lenders,
shall) exercise from time to time the following rights and remedies to the
extent permitted by local law:
10.3.1 The right to cease making Loans.
10.3.2 Subject to all applicable laws and regulations governing payment of
Medicare and Medicaid receivables, the right to "take possession" of the
Collateral, and notify all Obligors of the Agent's security interest, on behalf
of and for the benefit of Lenders, in the Collateral and require payment under
the Accounts to be made directly to Agent, on behalf of Lenders, and Agent may,
in its own name or in the name of the Borrower, exercise all rights of a secured
party with respect to the Collateral and collect, ▇▇▇ for and receive payment on
all Accounts, and settle, compromise and adjust the same on any terms as may be
satisfactory to Agent and Lenders in their sole and absolute discretion for any
reason or without reason and Agent and Lenders may do all of the foregoing with
or without judicial process (including without limitation notifying the United
States postal authorities to redirect mail addressed to Borrower, or any of
them, to an address designated by Agent). With respect to any Government
Accounts, the rights transferred to Agent in connection with this Agreement do
not include the right to claim payment in Agent's name from the applicable
Obligor or the right to direct such Obligor to remit payment directly to Agent,
except as permitted by applicable laws and regulations governing such Accounts.
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10.3.3 All of the rights and remedies of a secured party under the Code or
under other applicable law, and all other legal and equitable rights to which
Agent or any Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.4 The right to take immediate possession of the Collateral, and to (i)
require Borrower to assemble the Collateral, at Borrower's expense, and make it
available to Agent at a place designated by Agent which is reasonably convenient
to both parties, and (ii) enter any premises where any of the Collateral shall
be located and to keep and store the Collateral on said premises until sold (and
if said premises be the Property of Borrower, Borrower agrees not to charge
Agent or any Lender for storage thereof).
10.3.5 The right to sell or otherwise dispose of all or any Collateral in
its then condition, or after any further manufacturing or processing thereof, at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Borrower agrees that ten (10) days written notice to
Borrower of any public or private sale or other disposition of Collateral shall
be reasonable notice thereof, and such sale shall be at such locations as Agent
may designate in said notice. Agent shall have the right to conduct such sales
on Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Agent shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Agent or any Lender may purchase
all or any part of the Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, first to the costs, expenses and
attorneys' fees incurred by Agent or any Lender in collecting the Obligations,
in enforcing the rights of Agent or any Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower shall remain jointly and severally liable to
Agent and Lenders therefor.
10.3.6 Agent is hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral, and Borrower's rights under all licenses and all
franchise agreements shall inure to Agent's benefit to the extent permitted
under such agreements.
10.3.7 Agent may, at its option, require Borrower to deposit with Agent
funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Agent may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Agent, for the ratable benefit of Lenders, as a reserve to fund future
payments on such LC Guaranties and future drawings against such
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Letters of Credit. At such time as all LC Guaranties have been paid or
terminated and all Letters of Credit have been drawn upon or expired, any
amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any guaranty and surety agreement given to Agent and/or any
Lender or contained in any other agreement among Agent, or any Lender and
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained. The failure
or delay of Agent or any Lender to require strict performance by Borrower of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers,
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Borrower
to Agent and Lenders shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of Default under
this Agreement or any other Loan Documents shall be deemed to have been
suspended or waived by Agent or any Lender, unless such suspension or waiver is
by an instrument in writing specifying such suspension or waiver and is signed
by a duly authorized representative of Agent and directed to Borrower.
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SECTION 11. AGENT
As between Agent and Lenders, Agent and each Lender, who are now or shall
become parties to this Agreement, agree as follows (and the Borrower hereby
consents to, and approves, such agreement):
11.1 Appointment and Authorization. Each Lender (and each subsequent holder
of any of the Notes by its acceptance thereof) hereby irrevocably appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement as are delegated to Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Subject to the provisions
of this Agreement, Agent will handle all transactions relating to the Loans and
all other Obligations, including, without limitation, all transactions with
respect to Letters of Credit, LC Guaranties, this Agreement, the other Loan
Documents and all related documents in accordance with its usual practices. The
rights, privileges and remedies accorded to the Agent hereunder shall be
exercised by Agent on behalf of and for the ratable benefit of all Lenders.
11.2 General Immunity. In performing its duties as Agent hereunder, Agent
will take the same care as it takes in connection with loans in which it alone
is interested. However, neither Agent nor any of its directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith except as such action or omission is
caused solely from its or their own gross negligence or willful misconduct
unless such action was taken or omitted by Agent at the direction of Majority
Lenders, so long as Agent acted or omitted to act in full compliance with such
directions.
11.3 Consultation with Counsel. Agent may consult with legal counsel and
any other professional advisors or consultants deemed necessary or appropriate
and selected by Agent and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel or advisors.
11.4 Documents. Agent shall not be under a duty to examine into or pass
upon the effectiveness, genuineness or validity of this Agreement or any of the
Notes or any other Loan Document furnished pursuant hereto or in connection
herewith, and Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be. In addition, Agent shall not
be liable for failing to make any inquiry concerning the accuracy, performance
or observance of any of the terms, provisions or conditions of such instrument
or document.
11.5 Rights as a Lender. With respect to its applicable Pro Rata Shares in
each of the Loans, Agent shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include
Agent in its individual capacity. Subject to the provisions of this Agreement,
Agent may lend money to and generally engage in any kind of business with
Borrower and its Subsidiaries and Affiliates as if it were not Agent. Upon the
occurrence and during the continuation of an Event of Default, Agent shall, upon
the written
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request of any Lender, disclose to Lenders any business transactions or
arrangements then existing between Agent and Borrower (but only to the extent
that such disclosure would not violate the terms of any confidentiality
agreement between Agent and Borrower).
11.6 Responsibility of Agent. It is expressly understood and agreed that
the obligations of Agent hereunder are only those expressly set forth in this
Agreement and that Agent shall be entitled to assume that no Default or Event of
Default, has occurred and is continuing, unless Agent has actual knowledge of
such fact. Except to the extent Agent is required by Lenders pursuant to the
express terms hereof to take a specific action, Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions that it may be able to take under or in
respect of, this Agreement and the Loan Documents. Agent shall incur no
liability under or in respect of this Agreement and the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties, or with respect to anything that it may do or refrain from doing in the
reasonable exercise of its judgment, or that may seem to it to be necessary or
desirable under the circumstances. Agent shall have no responsibility to carry
out audits or otherwise examine the books and records or properties of Borrower,
except as Agent in its reasonable discretion deems appropriate. The relationship
between Agent and each Lender is and shall be limited to that of agent and
principal and nothing herein shall be construed to constitute Agent a joint
venturer with any Lender, a trustee or fiduciary for any Lender or for the
holder of a participation, nor impose upon Agent duties and obligations other
than those set forth herein.
11.7 Collections and Disbursements.
11.7.1 Agent will have the right to collect and receive all payments of the
Obligations, and to collect and receive all reimbursements for draws or payments
made under the Letters of Credit or LC Guaranties respectively, together with
all fees, charges or other amounts due under this Agreement and the other Loan
Documents, and Agent will remit to each Lender, according to its applicable Pro
Rata Percentage, all such payments actually received by Agent (subject to any
required clearance procedures) in accordance with the settlement procedures
established from time to time. Settlements (including adjustments of the
proportionate shares among the Lenders) shall occur on such dates as Agent may
elect in its sole discretion but which shall be no less frequently than weekly.
Between settlement dates, all collections and payments shall be applied at
Agent's discretion.
11.7.2 If any such payment received by Agent or Issuer is rescinded or
otherwise required to be returned for any reason at any time, whether before or
after termination of this Agreement and the other Loan Documents (unless such
rescission or return occurs before the amount of such payment has been applied
to the Obligations or otherwise reflected in a settlement as provided for in
subsection 11.7.1 above), each Lender will, upon written notice from Agent,
promptly pay over to Agent its Pro Rata Percentage of the amount so rescinded or
returned (together with interest and other fees thereon if also required to be
rescinded or returned).
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11.7.3 All payments by Agent and Lenders to each other hereunder shall be
in immediately available funds. Agent will at all times maintain proper books of
account and records reflecting the interest of each Lender in the Loans, in a
manner customary to Agent's keeping of such records, which books and records
shall be available for inspection by each Lender at reasonable times during
normal business hours, at such Lender's sole expense. Agent may treat the payees
of any Note as the holder thereof until written notice of the transfer thereof
shall have been received by Agent in accordance with Section 11.16. In the event
that any Lender shall receive any payments in reduction of the Loans in an
amount greater than its applicable Pro Rata Percentage in respect of Obligations
to Lenders evidenced hereby (including, without limitation amounts obtained by
reason of setoffs), such Lender shall hold such excess in trust for Agent (on
behalf of all other Lenders) and shall promptly remit to Agent such excess
amount so that the amounts received by each Lender hereunder shall at all times
be in accordance with its applicable Pro Rata Percentage. To the extent
necessary for each Lender's actual percentage of all outstanding Loans to equal
its applicable Pro Rata Percentage, the Lender having a greater share of any
payment(s) than its applicable Pro Rata Percentage shall acquire a participation
in the applicable Pro Rata Share of the other Lenders as determined by Agent.
11.8 Indemnification. To the extent not indemnified by Borrower, Lenders
hereby each indemnify Agent and Issuer ratably according to the respective
amounts of each Lender's Pro Rata Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against Agent (or its Affiliate, as the case
may be) in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by Agent (or its Affiliate, as the
case may be) under or related to this Agreement or the Loans, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's (or its Affiliate's, as the case may be) gross
negligence or willful misconduct unless such action was taken or omitted by
Agent (or its Affiliate, as the case may be) at the direction of Majority
Lenders, so long as Agent acted or omitted to act in full compliance with such
directions. Agent shall have the right to deduct, from any amounts to be paid by
Agent to any Lender hereunder, any amounts owing to Agent (or its Affiliate, as
the case may be) by such Lender by virtue of this Section.
11.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket expenses incurred by Agent
and not reimbursed on demand by Borrower, in connection with the analysis,
negotiation, preparation, consummation, creation, amendment, administration,
termination, work-out, forbearance and enforcement of the Loans (including,
without limitation, audit expenses, counsel, consultant and expert fees and
expenditures to protect, preserve and defend Agent's and each Lender's rights
and interest under this Agreement and under the other Loan Documents) shall be
shared and paid on demand by Lenders pro rata based on their applicable Pro Rata
Percentage.
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(b) Agent shall have the right to deduct, from amounts to be paid by Agent
to any Lender hereunder, any amount owing to Agent by such Lender by virtue of
this Section.
11.10 No Reliance. By execution of or joining in this Agreement, each
Lender acknowledges that it has entered into this Agreement and the other Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent. Each Lender
shall continue to make its own analysis and evaluation of Borrower. Agent makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower, or any Account Debtor of Borrower; the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of Borrower; or the sufficiency,
authenticity, legal effect, validity or enforceability of this Agreement or the
other Loan Documents. Agent assumes no responsibility or liability with respect
to the collectability of the Obligations or the performance by Borrower of any
obligation under this Agreement or the Loan Documents.
11.11 Reporting. During the term of this Agreement, Agent will (to the
extent received by Agent) promptly furnish each Lender with (i) copies of all
notices, financial statements, borrowing base certificates and supporting
documentation of Borrower required to be delivered or obtained hereunder and
(ii) such other financial statements and reports and other information in
Agent's possession as any Lender may reasonably request; provided however, that
Agent will not be liable to any Lender for Agent's failure to do so unless such
failure constitutes gross negligence or willful misconduct or repeated failure
to comply with this provision after repeated requests by Lender. Agent will
immediately notify Lenders when it receives actual knowledge of any Event of
Default under the Loan Documents.
11.12 Removal of Agent. Agent may resign at any time upon giving thirty
(30) days prior written notice thereof to Lenders and Borrower. Agent may be
removed as Agent hereunder upon the written consent of all Lenders exclusive of
Agent upon the following: (i) willful misconduct in the performance of Agent's
duties or responsibilities under this Agreement as finally determined by a court
of competent jurisdiction; or (ii) if a receiver, trustee or conservator is
appointed for Agent or any state or federal regulatory authority assumes
management or control of Agent or if, under applicable law, the administrative
or discretionary duties and responsibilities of Agent hereunder become
controlled by or subject to the approval of any state or federal regulatory
authority. Upon any resignation or permitted removal of Agent, Lenders shall
have the right to appoint a successor Agent by majority vote of the Lenders
(based upon the Pro Rata Percentages of the Lenders). Upon the acceptance of the
appointment as a successor Agent hereunder by such successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, obligations and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder.
11.13 Action on Instructions of Lenders. With respect to any provision of
this Agreement, or any issue arising thereunder, concerning which Agent is
authorized to act or withhold action by direction of Lenders (or, if applicable,
Majority Lenders), Agent shall in all cases be fully protected in so acting, or
in so refraining from acting, hereunder in accordance
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with written instructions signed by Lenders (or, if applicable, Majority
Lenders). Such instructions and any action taken or failure to act pursuant
thereto shall be binding on all Lenders and on all holders of the Notes.
11.14 Several Obligations. The obligation of each Lender is several, and
neither Agent nor any other Lender shall be responsible for the obligation and
commitment of any other Lender.
11.15 Consent of Lenders.
(a) Except as expressly provided herein, Agent shall have the sole and
exclusive right to service, administer and monitor the Loans and the Loan
Documents, including, without limitation, the right to exercise all rights,
remedies, privileges and options under this Agreement and under the other Loan
Documents, including, without limitation, the credit judgment with respect to
the making of Loans and the determination as to the basis on which and extent to
which Loans may be made and, upon consultation with Issuer or its Affiliate (as
applicable), the determination as to whether draws should be honored for Letters
of Credit. To the extent reasonably practicable under the circumstances, without
impairing (in Agent's judgment) the Lenders' rights and interests concerning the
Borrower or the Collateral, Agent shall give notice to and shall consult with
Lenders prior to enforcing, or taking any action to collect, any and all of the
Obligations of Borrower or any other Person under the Loan Documents or
acquiring any or all of the Collateral (title to any such Collateral being held
for the benefit of the Lenders according to this Agreement). Agent may exercise
such rights directly or by employing others to operate, manage, preserve,
protect and dispose of such Collateral.
(b) Notwithstanding anything to the contrary contained in subsection
11.15(a) above, Agent shall not without the prior written consent of all
Lenders: (i) extend any payment date under the Notes or this Agreement or the
Revolving Credit Maturity Date, (ii) reduce any interest rate applicable to any
of the Loans, any fee payable to Lenders hereunder or any fee for any Letter of
Credit or LC Guaranty, (iii) increase the Total Revolving Credit Facility, (iv)
waive any Event of Default under subsection 10.1.1, (v) compromise or settle all
or a portion of the Obligations, (vi) release any Borrower or Subsidiary
Guarantor or any other Person liable in any way on account of the Obligations
except in connection with termination of the Revolving Credit Facility, and full
payment and satisfaction of all Obligations (including, without limitation,
obligations of Borrower under the Revolving Credit Note), except that, if all of
the stock of Borrower or Subsidiary Guarantor is sold in a transaction permitted
by subsection 8.2.9(iii), Agent shall release such Borrower or Subsidiary
Guarantor from its obligations hereunder and under any of the other Loan
Documents upon the request of Borrower, (vii) amend the definition of Borrowing
Base, Eligible Accounts, or Majority Lenders, (viii) amend this subsection
11.15(b), or (ix) modify the permitted use of proceeds, provided that, Agent
may, in its sole discretion and without the consent of any Lenders, release
insurance proceeds collected under subsection 6.1.2 to Borrower to permit the
repair, reconstruction or replacement of the loss or damage to Collateral. To
the extent applicable, upon receipt of written consent of all Lenders with
respect to any of the foregoing, Agent shall act in accordance therewith.
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(c) Notwithstanding anything to the contrary contained in subsection
11.15(a) above, and subject to any applicable limitation set forth in subsection
11.15(b) above, Agent shall not, without the prior written consent of Majority
Lenders: (i) waive any Event of Default (other than an Event of Default (A)
resulting from a breach of any covenant or agreement under Section 8.1 which may
be consented to by Agent within its discretion, or (B) under subsection 10.1.1
which is subject to clause (iv) of subsection 11.15(b) above); (ii) consent to
Borrower's taking any action which, if taken, would constitute an Event of
Default under this Agreement or under any of the other Loan Documents; (iii)
amend or modify or agree to an amendment or modification of any provision of
this Agreement; or (iv) release Collateral in excess of One Million Dollars
($1,000,000.00) in the aggregate in any fiscal year. To the extent applicable,
upon receipt of written consent of Majority Lenders with respect to any of the
foregoing, Agent shall act in accordance therewith.
(d) After an acceleration of the Obligations, Agent shall have the sole and
exclusive right, after consultation (to the extent reasonably practicable under
the circumstances) with all Lenders and, unless otherwise directed by Majority
Lenders, to exercise or refrain from exercising any and all right, remedies,
privileges and options under this Agreement or the other Loan Documents and
available at law or in equity to protect the rights of Agent and Lenders and
collect the Obligations, including, without limitation, instituting and pursuing
all legal actions against Borrower or to collect the Obligations, or defending
any and all actions brought by Borrower or other Person; or incurring expenses
or otherwise making expenditures to protect the Collateral, the Loans or Agent's
or any Lenders' rights or remedies.
(e) To the extent Agent is required to obtain or otherwise elects to seek
the consent of Lenders to an action Agent desires to take, if any Lender fails
to notify Agent, in writing, of its consent or dissent to any request of Agent
hereunder within ten (10) Business Days of such Lender's receipt of such
request, such Lender shall be deemed to have given its consent thereto.
(f) Notwithstanding any other provision of this Section 11.15 and without
impairing Agent's discretionary rights under Section 10, Agent shall have the
right (in its sole discretion) to permit to exist Overadvances to be outstanding
at any time up to an aggregate amount of Five Million Dollars ($5,000,000.00)
without right of disapproval by or consent of any Lenders, and be entitled in
its sole discretion to permit Borrower a period not to exceed ninety (90) days
to repay or remove such Overadvance. Notwithstanding the foregoing, Agent shall
not grant any request for an Overadvance to the extent that the aggregate amount
of all Revolving Credit Loans outstanding (after giving effect to such requested
Overadvance) would exceed the Total Revolving Credit Facility.
11.16 Participations and Assignments: Borrower hereby acknowledges and
agrees that any Lender may at any time subject to the prior written consent of
Majority Lenders: (a) grant participations in up to forty-nine percent (49%) of
its Pro Rata Share of the Loans and of its right, title and interest therein or
in or to this Agreement (collectively, "Participations") to any other lending
office of such Lender or to any Participating Lender; provided, however, that:
(i) all amounts payable by Borrower to each Lender hereunder shall be determined
as if such Lender
53
had not granted such Participation; and (ii) any agreement pursuant to which any
Lender may grant a Participation: (A) shall provide that such Lender shall
retain the sole right and responsibility to enforce the obligations of Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provisions of this Agreement; (B) such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
Participating Lender if such amendment, modification or waiver would reduce the
principal of or rate of interest on the Loans, increase the amount of the Total
Revolving Credit Facility, or postpone the date fixed for any scheduled payment
of principal of or interest on the Loans; and (C) shall not relieve such Lender
from its obligations, which shall remain absolute, to (subject to the terms and
conditions hereof) make Loans hereunder; and (b) assign, pursuant to a written
assignment and acceptance in form and substance satisfactory to Agent (the
"Assignment") all or any percent of its Pro Rata Share of the Loans, or any
right, title and interest therein or in and to this Agreement to any financial
institution so long as (i) after any such assignment occurs, the Pro Rata Share
of each Lender under this Agreement equals at least Five Million Dollars
($5,000,000.00), (ii) Agent and (if no Event of Default is outstanding) Borrower
consents to such assignment in writing, which consent shall not be unreasonably
withheld or delayed and (iii) Agent receives an assignment fee from the
assigning Lender (not reimbursable by or chargeable to the Borrower) of Five
Thousand Dollars ($5,000.00). Upon the execution by the assignor and assignee of
the Assignment, and delivery to Agent of the Assignment for acceptance, the
assigning Lender shall, to the extent provided in the Assignment, be released
from its obligations under this Agreement and the assignee thereunder shall be a
party hereto and, to the extent provided in such Assignment have the rights and
obligations of a Lender hereunder. All Participations and assignments hereunder
shall be of all of the Loans in the same proportion as is the Pro Rata
Percentage of all Loans of the Lender making the assignment or granting the
Participation. Borrower agrees that it will use its best efforts to assist and
cooperate with Agent in any manner reasonably requested by Agent to effect the
sale of participations in or assignments pursuant to this Section 11.16,
including, without limitation, assisting in the preparation of appropriate
disclosure documents. Borrower further agrees that Agent may disclose credit
information regarding Borrower to any potential participant or assignee.
11.17 Borrower's Consent. Any amendment to Section 11 (other than Section
11.16) of this Agreement shall not require Borrower's consent.
11.18 Security Interest of Lender. To the extent any Lender obtains a Lien
upon or security interest in any of the Collateral in support of any Obligation
of Borrower, or any of them, that does not arise under this Agreement or any of
the Loan Documents (other than a purchase money security interest or a
Capitalized Lease Obligation, the incurrence of and existence of which is
otherwise permitted by this Agreement), such Lien and security interest shall be
subordinate in priority to the Lien upon and security interest in the Collateral
of Agent, held for the ratable benefit of Lenders.
54
SECTION 12. MISCELLANEOUS
12.1 Power of Attorney. Subject to and consistent with Medicare and
Medicaid regulations, Borrower hereby irrevocably designates, makes, constitutes
and appoints Agent (and all Persons designated by Agent) as Borrower's true and
lawful attorney (and agent-in-fact) and Agent, or Agent's agent, may, without
notice to Borrower, and in either Borrower's or Agent's name, but at the cost
and expense of Borrower:
12.1.1 Agent or said agent, in its sole discretion, may for the purpose of
deposit, endorse Borrower's name on any checks, notes, acceptances, drafts,
money orders or any other evidence of payment or proceeds of the Collateral
which come into the possession of Agent or any Lender or under Agent's or any
Lender's control.
12.1.2 At such time or times after the occurrence and during the
continuance of an Event of Default as Agent, or Agent's agent, in its sole
discretion, may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release of the Accounts or other Collateral or any legal proceedings brought to
collect any of the Accounts or other Collateral; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such time
or times as Agent deems advisable; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) subject to
any applicable confidentiality restrictions receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Agent may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x)
subject to any applicable confidentiality restrictions use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance; and (xii)
do all other acts and things necessary, in Agent's determination, to fulfill
Borrower's obligations under this Agreement.
12.2 Indemnity. Borrower hereby agrees to indemnify Agent and each Lender
and hold Agent and each Lender harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by Agent and any
Lender (including reasonable attorneys fees and legal expenses) as the result of
Borrower's failure to observe, perform or discharge Borrower's duties hereunder
except to the extent resulting from or relating to Agent's gross negligence or
wilful misconduct. In addition, Borrower shall defend Agent and each Lender
against and hold Agent and each Lender harmless from all claims of any Person
with respect to the Collateral except to the extent resulting from or relating
to Agent's gross negligence or
55
willful misconduct. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Agent and each Lender by
any Person under any Environmental Laws or similar laws by reason of Borrower's
or any other Person's failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 12.2 shall survive the payment in full of the Obligations and the
termination of this Agreement.
12.3 Modification of Agreement; Sale of Interest. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower, Agent and the Lenders required hereunder. Borrower may not sell,
assign or transfer any interest in this Agreement, any of the other Loan
Documents, or any of the Obligations, or any portion thereof, including, without
limitation, Borrower's rights, title, interests, remedies, powers, and duties
hereunder or thereunder.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower, Agent and each Lender permitted under
Section 11.16 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, three (3)
Business Days after deposit in the mail, postage prepaid, one (1) Business Day
after deposit with
56
an overnight courier or, in the case of facsimile notice, when sent, provided
that a copy is sent either by mail or overnight courier immediately thereafter
addressed as follows:
If to Agent or any Lender: Fleet Capital Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esquire
Facsimile No.: 215-569-5522
If to Borrower: Gentiva Health Services, Inc.
Olsten Health Services Holding Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: 631 - 844 - 7538
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
Facsimile No.: 212 - 269 - 5420
If to Lenders: To the address for each Lender set forth on
Annex I hereto.
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Agent. Any notice provided hereunder to
Borrower shall be deemed to have been provided to, and shall bind and be
effective against, Borrower.
57
12.9 Agent's and Lender's Consent. Whenever Agent's or any Lender's consent
is required to be obtained under this Agreement, any of the Other Agreements or
any of the Security Documents as a condition to any action, inaction, condition
or event, Agent or any Lender shall be authorized to give or withhold such
consent in its sole and absolute discretion (except to the extent expressly
provided otherwise in this Agreement) and to condition its consent upon the
giving of additional collateral security for the Obligations, the payment of
money or any other matter.
12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent and
each Lender to respond to usual and customary credit inquiries from third
parties concerning Borrower or any of its Subsidiaries.
12.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE
LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION
SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN
UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OR ANY LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT OR ANY
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK,
SITTING IN NEW YORK COUNTY, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF NEW YORK, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT AND/OR ANY LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING
58
OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
BORROWER'S ACTUAL RECEIPT THEREOF. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH EACH LENDER AND AGENT HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT AND/OR ANY LENDER ON WHICH BORROWER MAY IN
ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT AND/OR ANY
LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL
OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING AGENT AND/OR ANY LENDER TO EXERCISE ANY OF AGENT'S AND/OR ANY
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE
59
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
12.16 Joint and Several Liability. The liability of each of the entities
comprising the "Borrower" hereunder shall be joint and several.
12.17 Release Upon Termination. Upon the termination of this Agreement
pursuant to Section 4.2 hereof and the full, final and indefeasible payment in
cash of all of the Obligations hereunder, or any sale or transfer (but not
including any lease transfer) of Collateral by Borrower or any Subsidiary
permitted by the terms of this Agreement, the Agent shall, upon the request and
at the sole cost and expense of Borrower, forthwith assign, transfer and deliver
to Borrower, against receipt and without recourse or warranty by Agent, (i) all
of the Collateral (or in the case of a sale or transfer, such of the Collateral
as is subject to such sale or transfer) that may be in possession of the Agent
and shall not have been sold by Agent in accordance with or otherwise applied to
the Obligations pursuant to the terms hereof, and (ii) with respect to such
Collateral as is not in possession of the Agent, proper documents and
instruments (including UCC-3 termination statements or releases) acknowledging
the termination hereof or the release of such Collateral (or, in the case of a
sale or transfer such of the Collateral, as is subject to such sale or
transfer), as the case may be. Notwithstanding anything else herein, Agent shall
retain any Collateral provided to Agent under Section 1.3 for the purpose of
securing any Letter(s) of Credit or LC Guaranties with expiration dates beyond
the last day of the Original Term until such time as such Letter(s) of Credit
and/or LC Guarant(ies) shall have expired.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
60
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed
on the day and year specified at the beginning of this Agreement.
GENTIVA HEALTH SERVICES, INC.
By:
------------------------------------
Print name:
------------------------------------
Title:
------------------------------------
OLSTEN HEALTH SERVICES HOLDING CORP.
By:
------------------------------------
Print name:
------------------------------------
Title:
------------------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
S-1
SUBSIDIARY BORROWING CORPORATIONS:
New York Healthcare Services, Inc.
OHS Service Corp.
Olsten Certified HealthCare Corp.
Olsten Flying Nurses Corp.
Olsten Health Services (Certified), Inc.
Olsten Health Services (Infusion), Inc.
Olsten Health Services (Quantum) Corp.
Olsten Health Services (Staffing), Inc.
Olsten Health Services (USA), Inc.
Olsten Network Management, Inc.
Olsten Network Management (Area One) Corp.
Olsten Network Management (Area Two) Corp.
Olsten Network Management (Area Three ) Corp.
Olsten Services of New York, Inc.
QC-Medi New York, Inc.
Quality Care - USA, Inc.
Quality Managed Care, Inc.
The I.V. Clinic, Inc.
The I.V. Clinic III, Inc.
By:
------------------------------------
Print name:
------------------------------------
Title:
------------------------------------
AGENT:
FLEET CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title: Senior Vice President
------------------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
S-2
LENDERS:
FLEET CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title: Senior Vice President
------------------------------------
GMAC COMMERCIAL CREDIT LLC
By:
------------------------------------
Print name:
------------------------------------
Title:
------------------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Vice President
------------------------------------
debis FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: President, ABL Division
------------------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
S-3
DIME COMMERCIAL CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Senior Vice President
------------------------------------
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Title: Assistant Vice President
------------------------------------
NATIONAL BANK OF CANADA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: Assistant Vice Presdient
------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Title: Vice President
------------------------------------
SIEMENS CREDIT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Print name: ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: Vice President - Credit
------------------------------------
S-4
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of March ___, 2000 by
and among Fleet Capital Corporation, as agent, the financial institutions
identified as "Lenders" on Annex I attached thereto, Gentiva Health Services,
Inc. Olsten Health Services Holding Corp., and each of the Subsidiary Borrowing
Corporations listed on the signature pages hereto (each a "Borrower," and
collectively "Borrower"), the following terms shall have the following meanings
(terms defined in the singular to have the same meaning when used in the plural
and vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all of each Borrower's accounts, accounts receivable and rights
to payment for services performed or for goods and Inventory sold or leased by
such Borrower including, without limitation, (a) all "accounts" as defined in
the Code, (b) all health-care-insurance receivables, including the third party
reimbursable portion of accounts receivable owing to a Borrower arising out of
the delivery by Borrower of medical, surgical, diagnostic, treatment or other
professional or medical or other healthcare related services and/or the supply
of goods related to any of such services (whether such services are supplied by
Borrower or a third party), including all rights to reimbursement under any
agreements with an Obligor, (c) all accounts, general intangibles (other than
general intangibles to the extent related to any Borrower's Equipment or
fixtures), rights, remedies, guarantees, and security interests in respect of
the foregoing, all rights of enforcement and collection, all books and records
(other than medical records, unless patient consents with respect thereto have
been received) evidencing or related to the foregoing, and all rights under this
Agreement in respect of the foregoing, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has acquired or hereafter acquires
any interest, (d) all information and data compiled or derived by such Borrower
in respect of such accounts receivable (other than any such information and data
subject to legal restrictions of patient confidentiality), (e) Government
Accounts and (f) all proceeds of any of the foregoing.
Additional Convertible Debentures - see "Convertible Debentures."
Adjusted LIBOR Rate - for any LIBOR Interest Period, as applied to a
Revolving Credit LIBOR Rate Loan, the rate per annum (rounded upward if
necessary to the next 1/16 of 1%) determined pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
(1.00 - Reserve Percentage)
For purposes hereof, "LIBOR Rate" shall mean the arithmetic average of the rates
of interest per annum (rounded upward, if necessary, to the next 1/16 of 1%) at
which Bank is offered deposits of the United States Dollar in the interbank euro
dollar loan market on
or about 11:00 A.M London time two (2) London Business Days prior to the
commencement of such LIBOR Interest Period on amounts substantially equal to the
Revolving Credit LIBOR Rate Loan as to which Borrower may elect the Adjusted
LIBOR Rate to be applicable with a maturity of comparable duration to the LIBOR
Interest Period selected by Borrower for such Revolving Credit LIBOR Rate Loan
Adjusted Net Earnings From Operations - with respect to any fiscal period,
means the net earnings (or net loss) as reflected on the financial statements of
Borrower supplied to Lender pursuant to subsection 8.1.3 of the Agreement, but
excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any Borrower accrued prior to the
date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by any Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary of
any Borrower) in which any Borrower has an ownership interest unless such
net earnings shall have actually been received by such Borrower in the form
of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of any Borrower
which for any reason is unavailable for payment of dividends to any of the
Borrower;
(vii) the earnings of any Person to which any assets of any Borrower
shall have been sold, transferred of disposed of, or into which any
Borrower shall have merged, or been a party to any consolidation or other
form of reorganization, prior to the date of such transaction;
(viii) any gain arising from the acquisition of any Securities of any
Borrower; and
(ix) any gain arising from extraordinary or non-recurring items.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds
25% (or, when used in the definition of Eligible Account, 5%) or more of any
class of the Voting Stock of a Person; or (iii) 25% (or, when used
ii
in the definition of Eligible Account, 5%) or more of the Voting Stock (or in
the case of a Person which is not a corporation, 25% (or, when used in the
definition of Eligible Account, 5%) or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A, all as
amended, restated, replaced or supplemented from time to time.
Aggregate Adjusted Availability - an amount equal to the sum of (i) the
Borrowing Base plus (ii) Borrower's unrestricted cash on hand, less the sum of
(i) the amount of Revolving Credit Loans and the LC Amount as of the Funding
Date plus (ii) all sums due and owing to trade creditors which remain
outstanding beyond normal trade terms or special terms granted by trade
creditors, plus (iii) any reserves against the Borrowing Base permitted by
subsection 1.1.1 hereof, plus (iv) closing payments and expenses.
Applicable Margin - with respect to Revolving Credit LIBOR Rate Loans, 2.5%
and with respect to Revolving Credit Base Rate Loans, .25%.
Availability - the amount of money which Borrower is entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of (i) the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Agent and/or any Lender may have paid
for the account of Borrower pursuant to any of the Loan Documents and which have
not been reimbursed by Borrower) and (ii) the LC Amount, is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is zero.
Bank - Fleet National Bank, N.A., or its successor, or such other bank as
Agent may hereafter designate with the consent of Borrower, which consent shall
not be unreasonably withheld.
Base Rate - the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.
Borrowing Base - as at any date of determination thereof, an amount equal
to the lesser of:
(i) an amount equal to Total Revolving Credit Facility; or
(ii) an amount equal to 80% of the net amount of Eligible Accounts
outstanding at such date; provided, however, that loans against Government
Accounts shall at no time exceed in the aggregate the lesser of (a) Fifty
Million Dollars ($50,000,000) or (b) 33% of Availability.
For the purposes hereof, the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which may,
iii
at Agent's option, be calculated on shortest terms), credits, allowances or
excise taxes of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding or payable in connection with such Accounts at
such time.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are closed.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations all as determined in
accordance with GAAP.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Change of Control - if at any time (i) with respect to the Company, any
person (as such term is used in Section 13(d) and Section 14(d)(2) of the
Securities Exchange Act of 1934 as in effect at the date of the Closing) or
related persons constituting a group (as such term is used Rule 13d-5 under the
Securities Exchange Act of 1934 as in effect as of the date of the Closing)
become the "beneficial owners" (as such term is used in Rule 13(d)3 of the
Securities Exchange Act of 1934 as in effect on the date of the Closing),
directly or indirectly, of more than Fifty Percent (50.0%) of the total voting
power of the then outstanding Capital Stock of Borrower, or (ii) with respect to
any Borrower or Subsidiary Guarantor other than the Company, such Borrower or
Subsidiary Guarantor shall cease to be a wholly-owned direct or indirect
subsidiary of the Company (except in connection with a disposition of all of the
stock of any such Borrower or Subsidiary Guarantor in accordance with the terms
of subsection 8.2.9 (iii)). Notwithstanding the foregoing, the Gentiva Trust may
issue, and other Persons besides the Company may own, Convertible Trust
Preferred Stock which is issued in accordance with the terms of this Agreement.
Chattel Paper - as defined in the Code, whether now owned or hereafter
acquired by Borrower.
Closing Date - the date on which all of the conditions precedent to the
effectiveness of this Agreement in Section 9.1 of the Agreement are satisfied.
Code - the Uniform Commercial Code as adopted and in force in the State of
New York, as from time to time in effect; provided, however, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, "Code" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction as from time to time in effect, for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
iv
Collateral - all of the Property and interests in Property granted to
Agent, for the ratable benefit of Lenders, pursuant to Section 5 of the
Agreement, and all other Property and interests in Property that now or
hereafter is granted to Agent, for the ratable benefit of Lenders, to secure the
payment and performance of any of the Obligations.
Collections - means with respect to any Account, all cash collections on
such Account.
Commercial Lockbox - any lockbox and/or deposit account in the name of
Borrower maintained at Bank, or such other bank as is acceptable to Agent, to
which collections are sent, that is not a Government Lockbox.
Company - as defined in the Recitals to the Agreement.
Concentration Account(s) - Borrower's centralized cash management deposit
account(s) maintained at Bank, or such other bank as is acceptable to Agent,
which is subject to a tri-party agreement among Agent, Borrower and the
Concentration Bank and into which Borrower's funds are transferred and from
which, during any Dominion Triggered Period, Borrower's funds will be swept on a
daily basis according to the provisions of subsection 6.2.5. Concentration
Account(s) may also be Lockbox Account(s).
Concentration Bank - any depository bank at which a Concentration Account
is maintained.
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
Consolidated and Consolidating - the consolidation and consolidating in
accordance with GAAP of the accounts or other items as to which such term
applies.
Convertible Debentures - all of (i) those certain 10.0% Convertible
Subordinated Debentures of the Company issued in a minimum amount of Twenty
Million Dollars ($20,000,000.00) on or before the Funding Date and maturing on
March 15, 2005, on such terms and conditions as shall be reasonably satisfactory
to Agent ("Initial Convertible Debentures"), (ii) an additional amount of
Convertible Subordinated Debentures of the Company issued in an aggregate amount
not to exceed Ten Million Dollars ($10,000,000.00) at any time after the Funding
Date on terms no less favorable to the Lenders than those of the Initial
Convertible Debentures ("Additional Convertible Debenture"), and (iii) any
Convertible Subordinated Debentures of the Company issued as regularly scheduled
in-kind interest payments on either the Initial Convertible Debentures or the
Additional Convertible Debentures pursuant to the terms and conditions of the
respective documents governing the Initial Convertible Debentures and the
Additional Convertible Debentures ("Dividend Convertible Debentures").
Convertible Trust Preferred Stock - all of those certain shares of
preferred stock issued by the Gentiva Trust in conjunction with the issuance by
the Company and
v
purchase by the Gentiva Trust of (i) the Initial Convertible Debentures, (ii)
any Additional Convertible Debentures and (iii) any Dividend Convertible
Debentures.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Deposit Accounts - as defined in the Code, whether now owned or hereafter
created or acquired by Borrower or in which Borrower now has acquired or
hereafter acquires any interest.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Divestiture - the transfer to the Company of all healthcare related assets
of Olsten Corporation and the initial public offering and spin-off of the
Company from Olsten Corporation.
Divestiture Documents - means the Separation Agreement, evidence that the
Divestiture has been consummated and all other documents, instruments and
agreements entered into by borrowers in connections with the divestiture of
Borrower's from Olsten Corporation.
Dividend Convertible Debentures - see "Convertible Debentures."
Documents - as defined in the Code, whether now owned or hereafter acquired
by Borrower or in which Borrower now has acquired or hereafter acquires any
interest.
Dominion Account - a special account of Agent, for the benefit of Lenders,
established by Borrower pursuant to the Agreement at a bank selected by
Borrower, but acceptable to Agent in its reasonable discretion, and over which
Agent shall have sole and exclusive access and control for withdrawal purposes.
Dominion Triggered Period - as defined in subsection 6.2.5.
EBITDA - Adjusted Net Earnings from Operations plus the sum of
depreciation, amortization, income taxes and Interest Expense during the period
for which Adjusted Net Earnings from Operations were calculated, determined on a
Consolidated basis for the Borrower for the applicable Measurement Period.
Eligible Account - an Account arising in the ordinary course of Borrower's
business from the sale of goods or rendition of services, and for which an
invoice has been mailed or transmitted to the respective Account Debtor or
Obligor (or prepared for mailing or transmission to the respective Account
Debtor or Obligor, provided that such
vi
invoice is actually mailed or transmitted within three (3) Business Days), which
Agent, in its sole credit judgment, deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an Eligible
Account if:
(i) it is outstanding (a) more than 180 days past the date the invoice
for the goods and/or services was issued or (b) more than 195 days past the
date the corresponding goods and/or services were provided;
(ii) it arises out of a sale made by Borrower to an Obligor who is an
Affiliate of Borrower or to an Obligor controlled by an Affiliate of
Borrower; or
(iii) 50% or more of the Accounts from the Account Debtor or Obligor
are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor or Obligor to
Borrower exceed 20% of the net amount of all Eligible Accounts, to the
extent of such excess; or
(v) the Account is subject to any terms pursuant to which (i) payment
by the Obligor is conditional or (ii) the repayment of the Account by the
Obligor is subject to any payment arrangement entered into after payment
default by the Obligor;
(vi) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or
(vii) the Account Debtor or Obligor is also Borrower's creditor or
supplier, but only to the extent of Borrower's liabilities or obligations
to such creditor or supplier, or the Account Debtor has disputed liability
with respect to such Account, or the Account Debtor has made any claim with
respect to any other Account due from such Account Debtor to Borrower, or
the Account otherwise is or may become subject to any right of setoff by
the Account Debtor, but only to the extent of any actual dispute or claim
or actual or potential right of setoff; or
(viii) the Account Debtor or Obligor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or a decree or order
for relief has been entered by a court having jurisdiction in the premises
in respect of the Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
petition or other application for relief under the federal bankruptcy laws
has been filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; or
vii
(ix) the Account Debtor or Obligor is not located in the United States
or Canada, unless the Account is supported by a letter of credit, guaranty
or acceptance terms, in each case acceptable to Agent in its sole
discretion; or
(x) it arises from a sale to the Account Debtor on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis, provided that, at such time as such sale
becomes final, such Account shall no longer be excluded from Eligible
Accounts under this clause; or
(xi) the Account is not at all times subject to Agent's duly
perfected, first priority Lien and security interest (for the ratable
benefit of Lenders) and no other Lien other than a Permitted Lien; or
(xii) the goods giving rise to such Account have not been delivered to
and accepted by the Account Debtor or the services giving rise to such
Account have not been performed by the Borrower and accepted by the Account
Debtor or the Account otherwise does not represent a final sale; or
(xiii) the Account is evidenced by chattel paper or an instrument of
any kind, or has been reduced to judgment; or
(xiv) the Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances which are made
in the ordinary course of business for prompt payment and which discounts
or allowances are reflected in the calculation of the face value of each
invoice related to such Account; or
(xv) it represents finance charges, to such extent.
Environmental Laws - all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidelines, orders and consent decrees relating
to health, safety and environmental matters.
EOB - as defined in subsection 7.1.26(c)(i) of the Agreement.
Equipment - as defined in the Code, including, without limitation, all
machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles
and other tangible personal Property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower or in which
Borrower has an interest, whether now owned or hereafter acquired by Borrower or
in which Borrower now has acquired or hereafter acquires any interest, and all
parts, accessories and special tools and all increases and accessions thereto
and substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
viii
Event of Default - as defined in Section 10.1 of the Agreement.
Fixtures - as defined in the Code, whether now owned or hereafter acquired
by Borrower or in which Borrower now has acquired or hereafter acquires any
interest.
Funding Date - the date on which all of the conditions precedent in
Sections 9.1 and 9.2 of the Agreement are satisfied and the initial Loans are
made and/or the initial Letters of Credit or LC Guaranties are issued under the
Agreement.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Intangibles - as defined in the Code, including, without
limitation, all personal property of Borrower (including, without limitation,
Intellectual Property, tax, insurance and other refunds, licenses, contract
rights, claims and choses in action) other than goods, Accounts, chattel paper,
documents, instruments and money, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has acquired or hereafter acquires
any interest, but not including any General Intangibles which to the extent
related to Equipment or fixtures of Borrower.
Gentiva Trust - the corporate trust of that name organized under the laws
of Delaware in connection with the issuance by the Company of the Convertible
Debentures.
Government Accounts - Accounts on which any federal or state governmental
unit or any intermediary for federal or state governmental unit is the Obligor.
Government Authority - any nation or government, government agency or
instrumentality, any state or other political subdivision thereof and any entity
exercising executive legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Government Lockbox - a lockbox and/or deposit account in the name of
Borrower(s) maintained at Bank, or such other bank as is acceptable to the
Agent, to which Collections on all Government Accounts are sent.
Guarantor - any Person who may now or hereafter guarantee or become surety
for payment or performance of the whole or any part of the Obligations.
HCFA - the Health Care Financing Administration
Initial Convertible Debentures - see "Convertible Debentures."
Indebtedness - as applied to a Person means, without duplication
ix
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person as at the date as of which Indebtedness is to be
determined, including, without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such
Person, and
(iv) in the case of Borrower (without duplication), the Obligations.
Instruments - as defined in the Code, whether now owned or hereafter
created or acquired by Borrower or in which Borrower now has acquired or
hereafter acquires any interest.
Insurer - any Person which in the ordinary course of its business or
activities agrees to pay for healthcare goods and services received by
individuals, including a commercial insurance company, a non-profit insurance
(such as a Blue Cross/Blue Shield entity), an employer or union which self
insures for employees or member health insurance and a health maintenance
organization. "Insurer" includes, without limitation, insurance companies
issuing health, personal injury, worker's compensation or other types of
insurance, corporations, hospitals and thirty party intermediaries but does not
include any individual guarantors or employee benefit plans.
Intellectual Property - brand names, copyrights, copyrightable material,
data, designs, drawings, formulas, information, inventions, logos, labels, label
designs, license rights, licenses, manufacturing and processing rights, methods,
processes, software and computer programs, patents, patterns, plans and
blueprints, royalties, service marks, specifications and descriptions,
trademarks, trade names, trade secrets, and any registrations and applications
with respect to any of the foregoing, and all memoranda, notes and records with
respect to any research or development of any of the foregoing, and all proceeds
and products of the foregoing.
Interest Expense - for any period, all amounts which, in conformity with
GAAP, should be included as interest expense on a consolidated statement of
operations of the Borrower and its Subsidiaries for such period, including in
any event, without limitation, interest accrued on the Revolving Credit Loans,
interest accrued in respect of all Subordinated Debt, that portion of any
Capitalized Lease Obligations attributable to interest expense in accordance
with GAAP, debt issuance costs (excluding any original issue discount on the
Subordinated Notes and any debt issuance costs incurred on or prior to the date
hereof with respect to the Subordinated Notes and the Revolving Credit Loans)
and capitalized interest accrued during such period, all commissions, all
discounts and other fees and charges accrued with respect to letters of credit
and bankers' acceptance financing and net costs under interest rate protection
agreements (including amortization
x
of such costs), all as determined for the Borrower and its Subsidiaries on a
consolidated basis for such period in accordance with GAAP.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired including, but not limited to, "inventory" as defined in the Code, all
goods intended for sale or lease by Borrower, or for display or demonstration;
all work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's business;
and all documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower or in which
Borrower now has acquired or hereafter acquires any interest; provided that
Inventory shall not include any of Borrower's Equipment.
Investment Property - as defined in the Code, whether now owned or
hereafter acquired by Borrower or in which Borrower now has acquired or
hereafter acquires any interest.
Issuer - Fleet National Bank, N.A., in its capacity as issuer of letters of
credit hereunder.
JCAHO - the Joint Commission for Accreditation of Healthcare Organizations,
a nationally recognized organization providing accreditations to hospitals and
other healthcare facilities, or any successor entity charged with performing its
functions.
LC Amount - at any time, the aggregate undrawn face amount of all Letters
of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Issuer shall guaranty the
payment or performance by Borrower of its reimbursement obligation under any
letter of credit.
Lenders - as defined in the Recitals hereto.
Letter of Credit - any letter of credit issued by Issuer for the account of
Borrower.
LIBOR Interest Period - a period of one, two, three or six months duration
during which the Revolving Credit LIBOR Rate is applicable.
LIBOR Rate Loans - collectively, all Revolving Credit LIBOR Rate Loans.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant
xi
to which title to the Property has been retained by or vested in some other
Person for security purposes.
Loan Account - the loan account established on the books of Agent pursuant
to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Subsidiary Guaranty and the Security
Documents and any and all other instruments or documents executed and/or
delivered in connection therewith.
Loans - all loans and advances of any kind made by Agent or any Lender
pursuant to the Agreement.
Lockbox Accounts - all Commercial Lockboxes and Government Lockboxes.
Lockbox Bank - any bank at which Borrower maintains a Commercial Lockbox
and/or a Government Lockbox.
Lockbox Trigger Notices - as defined in subsection 6.2.6.
London Business Day - any Business Day on which banks in London, England
are open for business.
Majority Lenders - as of any date, Lenders holding Pro Rata Percentages
aggregating at least 66 and 2/3 %.
Material Adverse Effect - any specified event, condition or occurrence as
to Borrower or any of its Subsidiaries which individually or in the aggregate
with any other such event, condition or occurrence and whether through the
effect on Borrower's or Subsidiary's business, Property, profits or condition
(financial or otherwise) or otherwise, that could reasonably be expected to
materially and adversely effect the financial condition, business or Properties
of the Borrower and its Subsidiaries taken as a whole, or the perfection or
priority of Agent's security interest with respect to any material portion of
the Collateral.
Measurement Period - as of the end of any fiscal quarter, the four (4)
consecutive fiscal quarters then ended.
Medicare Act - Subchapter XVIII of the Social Security Act (42 USC Ch. 7).
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that consti-
xii
tutes a Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed
directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
Net Available Proceeds - means the aggregate amount of proceeds of
insurance, condemnation awards and other compensation received by Borrower in
the event that any of the Collateral is lost or destroyed or taken by
condemnation net of (i) fees and expenses incurred by Borrower in connection
with recovery thereof, (ii) repayment of Indebtedness (other than Indebtedness
hereunder) to the extent secured by a Lien that is permitted hereunder and (iii)
any taxes (including income, transfer, stamp, duty, customs, withholding, and
any other taxes) paid or payable by Borrower in respect of amounts recovered
(after application of all creditors and other offsets).
Net Income - The net income of a Person as such would appear on such
Person's statement of income, prepared in accordance with GAAP.
Notes - any and all promissory notes executed by Borrower, as of the date
hereof and at any time hereafter, in connection with this Agreement or any of
the Loan Documents.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, including reimbursement obligations or
Letters of Credit and LC Guaranties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrower to Agent or any
Lender of any kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under this Agreement or any
of the other Loan Documents or otherwise whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary, due
or to become due, now existing or hereafter arising and however acquired.
Obligor - means the party primarily obligated to pay on Account, including
without limitation, any Insurer and any Government Authority that is responsible
for payment for all or any portion of any Account.
OHS - as defined in the Recitals to the Agreement.
Operating Lease - any lease of real or personal Property (other than leases
the lessee's obligations under which are Capitalized Lease Obligations).
Original Term - as defined in Section 4.1.
Other Agreements - any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter
executed
xiii
by Borrower, any Subsidiary of Borrower or any other third party and delivered
to Agent or any Lender in respect of the transactions contemplated by the
Agreement.
Overadvance - the amount, if any, by which the sum of the outstanding
principal amount of Revolving Credit Loans plus the LC Amount exceeds the
Borrowing Base.
Participations - shall have the meaning set forth in Section 11.16 herein.
Participating Lender - each Person who shall be granted the right by any
Lender, pursuant to the terms of this Agreement, to participate in any of the
Loans described in the Agreement and who shall have entered into a participation
agreement in form and substance satisfactory to Agent
Patient - when used in connection with any Account on which the primary
Obligor is not the party who received the medical or healthcare related goods
and services from Borrower which resulted in the creation of an Account, the
actual party who received such goods and services.
Permitted Acquisition - any acquisition transaction whereby any Borrower
shall acquire all or substantially all of the assets of another Person or shall
acquire all of the capital stock or other equity interests of another Person
and/or merge or consolidate with another Person, provided that (i) the value of
each such acquisition shall not exceed One Million Dollars ($1,000,000.00) and
(ii) the aggregate value of all such acquisition transactions which have
occurred since the Closing Date do not exceed Five Million Dollars
($5,000,000.00). For the purposes of this definition, the value of an
acquisition shall be deemed to be an amount equal to the sum of all cash and the
fair market value of all non-cash consideration paid by the respective Borrower
in connection with the acquisition, including cash paid, indebtedness assumed
and the value of any stock of the Company issued in connection with the
acquisition based on the market value of such stock as of the date of the
acquisition. Furthermore, in the case of any acquisition transaction which
involves the acquisition of all of the capital stock or other equity interests
of another Person and/or the merger or consolidation with another Person, such
acquisition transaction will only be deemed to be a "Permitted Acquisition" if
(i) such other Person shall engage solely in line(s) or type(s) of business that
are substantially similar to the lines and types of business engaged in by
Borrower on the Closing Date, (ii) in the case of any transaction involving a
merger or consolidation, the Borrower shall be the surviving entity, and (ii) in
the case of any transaction not involving a merger or consolidation, the
acquired Person shall become a party to this Agreement as a Subsidiary Borrowing
Corporation by executing a Joinder Agreement in the form of Exhibit D attached
hereto.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien.
xiv
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Pledge Agreement(s) - those certain Pledge Agreement(s) of even date
herewith executed and delivered by each Borrower which is the owner of the
capital stock or equity interests of any other Person, pledging such capital
stock or equity interests to Agent, for the ratable benefit of the Lenders, to
secure the Obligations hereunder.
Projections - Borrower's forecasted Consolidated (a) balance sheets, (b)
profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Pro Rata Percentage - With respect to a Lender, the percentage set forth
next to such Lender's name on Annex I to the Agreement.
Pro Rata Share - With respect to a Lender, the share of the Total Revolving
Credit Facility set forth next to such Lender's name on Annex I to the
Agreement.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within ten (10) days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancing thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
Quantum Debentures - those certain Quantum Health Resources, Inc. 4 3/4 %
Convertible Subordinated Debentures due October 1, 2000.
Real Estate - all right, title and interest of any Borrower (including,
without limitation, any leasehold estate) in and to a parcel of real property
owned or operated by any Borrower together with, in each case, all improvements
and appurtenant personal property, easements and other property and rights
incidental to the ownership, lease or operation; provided, however, that this
shall not include any Fixtures or Equipment attached to or located at such real
property.
xv
Regulation D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as
amended, and any successor thereto.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
Reserve Percentage - for any day, that reserve (expressed as a decimal)
which is in effect (whether or not actually incurred) with respect to Bank on
such day, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor or any other banking authority to which Bank is subject
including any board or governmental or administrative agency of the United
States or any other jurisdiction to which Bank is subject), for determining the
maximum reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for Eurocurrency liabilities as
defined in Regulation D.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to the extent
existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one year
from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one year
from the date of acquisition issued by a bank or trust company organized
under the laws of the United States or any state thereof having capital
surplus and undivided profits aggregating at least One Hundred Million
Dollars ($100,000,000.00);
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the
date of creation thereof; and
(vii) investments made in connection with any Permitted Acquisition.
xvi
Revolving Credit Base Rate - a per annum rate equal to the sum of the Base
Rate plus the Applicable Margin.
Revolving Credit Base Rate Loan - that portion of the Revolving Credit
Loans that bears interest at the Revolving Credit Base Rate.
Revolving Credit Facility - the credit facility established pursuant to
Section 1.1 of the Agreement.
Revolving Credit LIBOR Rate - a per annum rate equal to the sum of the
Adjusted LIBOR Rate plus the Applicable Margin.
Revolving Credit LIBOR Rate Loan - that portion of the Revolving Credit
Loans on which interest accrues at the Revolving Credit LIBOR Rate.
Revolving Credit Loan - a Loan made by Lenders to Borrower as provided in
Section 1.1 of the Agreement.
Revolving Credit Maturity Date - the last day of the Original Term.
Revolving Credit Notes - the secured promissory notes to be executed by
Borrower on or about the Closing Date in favor of each Lender, each in the
amount of such Lender's Pro Rata Share of the Total Revolving Credit Facility,
to evidence the Revolving Credit Loans, which shall be in form of Exhibit A to
the Agreement, as amended, restated, supplemented or replaced from time to time.
Schedule of Accounts - as defined in subsection 6.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
Security Documents - the Trademark Security Agreement(s), the Pledge
Agreement(s), the Subsidiary Guarantor Pledge Agreement(s) and all instruments
and agreements now or at any time hereafter securing the whole or any part of
the Obligations.
Separation Agreement - that Separation Agreement dated August 17, 1999, as
amended, among Olsten Corporation, Adecco SA and Gentiva Health Services, Inc.
and all other related agreements, including the Employee Benefits Agreement
among the same parties of even date therewith and the Tax Sharing Agreement
among the same parties of even date therewith.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
xvii
Special Charges - unusual or non-recurring expenses which are reflected in
the Consolidated statements of operations and which are required to be
separately disclosed under GAAP in notes to the Consolidated financial
statements of Borrower.
Specified Officer - ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who is presently Executive Vice
President, Chief Financial Officer and Treasurer of Borrower, or ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, who is presently Vice President of Finance and Controller of
Borrower, or such other officer of Borrower as Borrower may hereafter specify in
writing to Agent.
Subordinated Debt - Indebtedness of Borrower with respect to (i) the
Quantum Debentures and (ii) the Convertible Debentures, and (iii) any other
Indebtedness incurred by Borrower prior to the maturity of the Quantum
Debentures and the Convertible Debentures to refinance either or both of the
Quantum Debentures and the Convertible Debentures in an amount not to exceed the
then outstanding principal balance of the Quantum Debentures and the Convertible
Debentures provided such refinanced Subordinated Debt is fully subordinated to
Lenders and is on terms no less favorable to Borrower and Lenders than the
existing Quantum Debentures and/or Convertible Debentures except for changes
which are reasonably acceptable to Agent and except with respect to the rate of
interest which may be a market created interest.
Subsidiary - any corporation of which a Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the
time of determination.
Subsidiary Borrowing Corporation - any Subsidiary of Olsten Health Services
Holding Corp. or Gentiva Health Services, Inc. which is a party to this
Agreement as a Borrower.
Subsidiary Guarantor Pledge Agreement(s) - those certain Subsidiary
Guarantor Pledge Agreement(s) of even date herewith executed and delivered by
each Subsidiary Guarantor which is the owner of the capital stock or equity
interests of any other Person, pledging such capital stock or equity interests
to Agent, for the ratable benefit of the Lenders, to secure the obligations of
each such Subsidiary Guarantor under the Subsidiary Guaranty.
Subsidiary Guarantors - all of the direct and indirect Subsidiaries of the
company (except the Gentiva Trust and Gentiva Services Limited Canada), but not
including any Subsidiary which is a party to this Agreement as a Borrower.
Subsidiary Guaranty - that certain Subsidiary Guaranty of even date
herewith executed and delivered by each Subsidiary Guarantor guaranteeing the
Obligations of Borrower under this Agreement.
Tangible Net Worth - at any time, the amount by which the total assets of
Borrower as determined on a Consolidated basis and as would be shown on a
xviii
Consolidated balance sheet for Borrower, prepared in accordance with GAAP
(excluding trademarks, copyrights, goodwill, covenants not to compete, deferred
closing costs, leasehold improvements and all other assets which would be
determined to be intangible assets under GAAP) exceed all of Borrower's
liabilities as determined on a Consolidated basis as would be shown on a
Consolidated balance sheet for Borrower, prepared in accordance with GAAP.
Total Revolving Credit Facility - means One Hundred Fifty Million Dollars
($150,000,000.00).
Trademark Security Agreement(s) - those certain Trademark Security
Agreement(s) of even date herewith executed and delivered by each Borrower which
is the owner of any trademark Collateral granting a security interest in such
trademark Collateral to Agent, for the ratable benefit of the Lenders, to secure
the Obligations hereunder.
Trigger Effectiveness Notice - as defined in subsection 6.2.5 of this
Agreement.
Trigger Rescission Notice - as defined in subsection 6.2.5 of this
Agreement.
Triggering Event - as defined in subsection 6.2.5 of this Agreement.
Unused Line Fee - as defined in Section 2.5 of this Agreement.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
xix
ANNEX I
SCHEDULE OF LENDERS
Lender Pro Rate Share Pro Rate Percentage
------ -------------- -------------------
Fleet Capital Corporation $32,500,000.00 21.67%
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
GMAC Commercial Credit LLC $32,500,000.00 21.67%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
U.S. Bank National Association $23,000,000.00 15.33%
U.S. Bank Business Finance
MPFP P0512
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
debis Financial Services, Inc. $14,000,000.00 9.33%
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Dime Commercial Corp. $14,000,000.00 9.33%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
IBJ Whitehall Business Credit Corporation $14,000,000.00 9.33%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
cc: ▇▇▇▇▇ ▇▇▇▇▇▇
xx
National Bank of Canada $10,000,000.00 6.67%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Siemens Credit Corporation $10,000,000.00 6.67%
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
xxi
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY...........................................2
1.1 Revolving Credit Loans.....................................2
1.2 Use of Proceeds............................................3
1.3 Letters of Credit; LC Guaranties...........................3
SECTION 2. INTEREST, FEES AND CHARGES................................4
2.1 Interest...................................................4
2.2 Computation of Interest and Fees...........................6
2.3 Commitment Fee.............................................6
2.4 Letter of Credit and LC Guaranty Fees......................6
2.5 Unused Line Fee............................................7
2.6 Administrative Agent Fee...................................7
2.7 Inspection, Audit, Examination and Appraisal Expenses......7
2.8 Reimbursement of Expenses..................................7
2.9 Bank Charges...............................................8
2.10 Indemnity re: LIBOR........................................8
SECTION 3. LOAN ADMINISTRATION......................................8
3.1 Manner of Borrowing Revolving Credit Loans.................8
3.2 Payments...................................................10
3.3 Mandatory Prepayments......................................10
3.4 Application of Payments and Collections....................11
3.5 All Loans to Constitute One Obligation.....................11
3.6 Loan Account...............................................11
3.7 Statements of Account......................................11
SECTION 4. TERM AND TERMINATION....................................11
4.1 Term of Agreement..........................................12
4.2 Termination................................................12
SECTION 5. SECURITY INTERESTS........................................13
5.1 Security Interest in Collateral............................13
5.2 Lien Perfection; Further Assurances........................14
SECTION 6. COLLATERAL ADMINISTRATION................................15
6.1 General....................................................15
6.2 Administration of Accounts.................................16
6.3 Administration of Inventory................................19
6.4 Administration of Equipment................................19
6.5 Payment of Charges.........................................19
SECTION 7. REPRESENTATIONS AND WARRANTIES............................19
7.1 General Representations and Warranties.....................19
7.2 Continuous Nature of Representations and Warranties........30
7.3 Survival of Representations and Warranties.................31
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS....................31
8.1 Affirmative Covenants......................................31
8.2 Negative Covenants.........................................35
8.3 Specific Financial Covenants...............................41
xxii
SECTION 9. CONDITIONS PRECEDENT......................................41
9.1 Conditions Precedent to Effectiveness of Agreement.........41
9.2 Conditions Precedent to Funding............................42
Other Loan Documents................................................42
Availability........................................................42
No Litigation.......................................................43
9.3 Funding Date...............................................43
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..........44
10.1 Events of Default..........................................44
10.2 Acceleration of the Obligations............................46
10.3 Other Remedies.............................................46
10.4 Remedies Cumulative; No Waiver.............................48
SECTION 11. AGENT......................................................49
11.1 Appointment and Authorization..............................49
11.2 General Immunity...........................................49
11.3 Consultation with Counsel..................................49
11.4 Documents..................................................49
11.5 Rights as a Lender.........................................49
11.6 Responsibility of Agent....................................50
11.7 Collections and Disbursements..............................50
11.8 Indemnification............................................51
11.9 Expenses...................................................51
11.10 No Reliance................................................52
11.11 Reporting..................................................52
11.12 Removal of Agent...........................................52
11.13 Action on Instructions of Lenders..........................53
11.14 Several Obligations........................................53
11.15 Consent of Lenders.........................................53
11.16 Participations and Assignments.............................55
11.17 Borrower's Consent.........................................55
11.18 Security Interest of Lender................................55
SECTION 12. MISCELLANEOUS..............................................56
12.1 Power of Attorney..........................................56
12.2 Indemnity..................................................56
12.3 Modification of Agreement; Sale of Interest................57
12.4 Severability...............................................57
12.5 Successors and Assigns.....................................57
12.6 Cumulative Effect; Conflict of Terms.......................57
12.7 Execution in Counterparts..................................57
12.8 Notice.....................................................58
12.9 Agent's and Lender's Consent...............................59
12.10 Credit Inquiries...........................................59
12.11 Time of Essence............................................59
12.12 Entire Agreement...........................................59
12.13 Interpretation.............................................59
12.14 GOVERNING LAW; CONSENT TO FORUM............................59
12.15 WAIVERS BY BORROWER........................................60
12.16 Joint and Several Liability................................61
xxiii
LIST OF EXHIBITS
Exhibit A Revolving Credit Notes
Exhibit B Compliance Certificate
Exhibit C Borrowing Base Certificate
Exhibit D Joinder Agreement
Exhibit E Notice to Obligors - Commercial
Exhibit F Notice to Obligors - Government
Exhibit 6.1.1 Inventory Locations
Exhibit 7.1.1 Jurisdictions in which Authorized to Do Business
Exhibit 7.1.4 Capital Structure of Borrower
Exhibit 7.1.5 Corporate Names
Exhibit 7.1.6 Borrower's and each Subsidiary's Business Locations
Exhibit 7.1.14 Tax Identification Numbers of Borrower and Subsidiaries
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Borrower's Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22(a) Capitalized Leases
Exhibit 7.1.22(b) Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Contracts
Exhibit 7.1.26(a) Medicare and Medicaid Provider Numbers
Exhibit 7.1.26(c) Litigation Relating to Accounts
Exhibit 8.2.4 Affiliate Transactions Exhibit 8.2.5 Permitted Liens
Exhibit 8.3 Financial Covenants
LIST OF ANNEXES
Annex I Lenders' Pro Rata Shares/Percentages
xxiv