Exhibit 10.29
REVOLVING CREDIT AGREEMENT
among
INTEGRATED ORTHOPAEDICS, INC.,
BORROWER
NATIONSBANK, N.A.,
ADMINISTRATIVE AGENT
and
THE LENDERS NAMED HEREIN,
LENDERS
$65,000,000
DATED AS OF JULY 10, 1998
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS 7
1.1 Definitions 7
1.2 Number and Gender of Words; Other References 27
1.3 Accounting Principles 28
SECTION 2 BORROWING PROVISIONS 28
2.1 Commitments 28
2.2 LC Subfacility under Revolver Facility 28
2.3 Swing Line Subfacility under Revolver Facility 33
2.4 Termination of Commitments 34
2.5 Borrowing Procedure 35
SECTION 3 TERMS OF PAYMENT 36
3.1 Loan Accounts, Notes, and Payments 36
3.2 Interest and Principal Payments 36
3.3 Interest Options 37
3.4 Quotation of Rates 37
3.5 Default Rate 38
3.6 Interest Recapture 38
3.7 Interest Calculations 38
3.8 Maximum Rate 28
3.9 Interest Periods 39
3.10 Conversions 39
3.11 Order of Application 40
3.12 Sharing of Payments, Etc 41
3.13 Offset 41
3.14 Booking Borrowings 41
SECTION 4 CHANGE IN CIRCUMSTANCES 41
4.1 Increased Cost and Reduced Return 43
4.2 Limitation on Types of Loans 43
4.3 Illegality 43
4.4 Treatment of Affected Loans 43
4.5 Compensation 44
4.6 Taxes 44
SECTION 5 FEES 46
5.1 Treatment of Fees 46
5.2 Fees of Administrative Agent and Arranger 47
5.3 LC Fees 47
5.4 LC Issuance and Fronting Fees 47
5.5 Revolver Facility Commitment Fees 47
SECTION 6 SECURITY 48
6.1 Collateral 48
6.2 Guaranties 49
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6.3 Future Liens 49
6.4 Release of Collateral 50
6.5 Negative Pledge 50
6.6 IOI Management Services of Pennsylvania, Inc. 51
6.7 Control; Limitation of Rights. 51
SECTION 7 CONDITIONS PRECEDENT 51
7.1 Conditions Precedent to Closing 51
7.2 Conditions Precedent to a Permitted Acquisition. 51
7.3 Conditions Precedent to Each Borrowing. 52
7.4 Additional Conditions Precedent to Initial Borrowing 52
7.5 Additional Condition Precedent to Certain Borrowings. 52
SECTION 8 REPRESENTATIONS AND WARRANTIES 53
8.1 Purpose of Credit Facility 53
8.2 Existence, Good Standing, Authority, and Authorizations 53
8.3 Subsidiaries; Capital Stock 54
8.4 Authorization and Contravention 54
8.5 Binding Effect 55
8.6 Financial Statements 55
8.7 Litigation, Claims, Investigations 55
8.8 Taxes 56
8.9 Environmental Matters 56
8.10 Employee Benefit Plans 56
8.11 Properties; Liens 57
8.12 Government Regulations 57
8.13 Transactions with Affiliates 57
8.14 Debt 57
8.15 Material Agreements; Management Agreements 57
8.16 Insurance 58
8.17 Labor Matters 58
8.18 Solvency 58
8.19 Intellectual Property 58
8.20 Compliance with Laws 58
8.21 Permitted Acquisitions 58
8.22 Regulation U 59
8.24 Full Disclosure 59
8.25 Third Party Reimbursement 59
8.26 Rehabilitation Corporation of America 59
SECTION 9 COVENANTS 60
9.1 Use of Proceeds 61
9.2 Books and Records 61
9.3 Items to be Furnished 61
9.4 Inspections 63
9.5 Taxes 63
9.6 Payment of Obligations 63
9.7 Maintenance of Existence, Assets, and Business 63
9.8 Insurance 64
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9.9 Preservation and Protection of Rights 64
9.10 Employee Benefit Plans 64
9.11 Environmental Laws 65
9.12 Accreditation and Licensing 65
9.13 Debt and Guaranties 65
9.14 Liens 66
9.15 Transactions with Affiliates 67
9.16 Compliance with Laws and Documents 67
9.17 Permitted Acquisitions, Subsidiary Guaranties, and Collateral
Documents 67
9.18 Assignment 68
9.19 Fiscal Year and Accounting Methods 68
9.20 Government Regulations 68
9.21 Loans, Advances, and Investments 68
9.22 Distributions and Restricted Payments 69
9.23 Restrictions on Subsidiaries 69
9.24 Sale of Assets 69
9.25 Sale-Leaseback Financings 70
9.26 Mergers and Dissolutions; Sale of Capital Stock 70
9.27 New Business 70
9.28 [Left Intentionally Blank.] 70
9.29 Amendments to Documents 70
9.30 Financial Covenants 71
9.31 Year 2000 72
9.32 Rehabilitation Corporation of America 72
SECTION 10 DEFAULT 72
10.1 Payment of Obligation 72
10.2 Covenants 73
10.3 Debtor Relief 73
10.4 Judgments and Attachments 73
10.5 Government Action 73
10.6 Misrepresentation 73
10.7 Change of Control 73
10.8 Default Under Other Debt and Agreements. 73
10.9 Employee Benefit Plans 74
10.10 Validity and Enforceability of Loan Papers 74
10.11 Change in Laws 74
SECTION 11 RIGHTS AND REMEDIES 75
11.1 Remedies Upon Default 75
11.2 Company Waivers 75
11.3 Performance by Administrative Agent 75
11.4 Delegation of Duties and Rights 76
11.5 Not in Control 76
11.6 Course of Dealing 76
11.7 Cumulative Rights 77
11.8 Application of Proceeds 77
11.9 Certain Proceedings 77
11.10 Expenditures by Lenders 77
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11.11 INDEMNIFICATION 77
SECTION 12 AGREEMENT AMONG LENDERS 78
12.1 Administrative Agent 78
12.2 Expenses 80
12.3 Proportionate Absorption of Losses 80
12.4 Delegation of Duties; Reliance 80
12.5 Collateral Matters 81
12.6 Limitation of Liability 82
12.7 Default; Collateral 83
12.8 Limitation of Liability 83
12.9 Relationship of Lenders 83
12.10 Benefits of Agreement 83
12.11 Obligations Several 84
SECTION 13 MISCELLANEOUS 84
13.1 Headings 84
13.2 Nonbusiness Days 84
13.3 Communications 84
13.4 Form and Number of Documents 85
13.5 Exceptions to Covenants 85
13.6 Survival 85
13.7 Governing Law 85
13.8 Invalid Provisions 85
13.9 Entirety 85
13.10 Jurisdiction; Venue; Service of Process; Jury Trial 85
13.11 Amendments, Consents, Conflicts, and Waivers 86
13.12 Multiple Counterparts 87
13.13 Successors and Assigns; Assignments and Participations 87
13.14 Confidentiality. 90
13.15 Chapter 346 90
13.16 Defaulting Lender 90
13.17 Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances 90
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SCHEDULES AND EXHIBITS
Schedule 2.1 - Lenders and Commitments
Schedule 7.1 - Conditions Precedent to Closing
Schedule 7.1A - Post Closing, Pre-Initial Borrowing Conditions Precedent
Schedule 7.2 - Requirements for a Permitted Acquisition
Schedule 8.3 - Subsidiaries
Schedule 8.13 - Non-Arm's-length Transactions with Affiliates
Schedule 8.15 - Material Agreements
Schedule 9.13 - Existing Debt
Exhibit A-1 - Form of Revolver Note
Exhibit A-2 - Form of Swing Line Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion
Exhibit B-3 - Form of Notice of LC
Exhibit C - Form of Guaranty
Exhibit D - Form of Pledge, Assignment, and Security Agreement
Exhibit E-1 - Form of Compliance Certificate
Exhibit E-2 - Form of Permitted Acquisition Compliance Certificate
Exhibit E-3 - Form of Permitted Acquisition Loan Closing Certificate
Exhibit F - Form of Assignment and Acceptance Agreement
Exhibit G-1 - Form of Opinion of Counsel of Borrower
Exhibit G-2 - Form of Opinion of Medical Regulatory Counsel to the Companies
Exhibit G-3 - Form of Opinion of Local Counsel
Exhibit H - Form of Subordination Provisions
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is entered into as of July 10, 1998, among
INTEGRATED ORTHOPAEDICS, INC., a Texas corporation ("BORROWER"), Lenders
(hereinafter defined), and NATIONSBANK, N.A., as Administrative Agent
(hereinafter defined), for itself and the other Lenders.
RECITALS
A. Borrower has requested that Lenders extend credit to Borrower in
the form of this Revolving Credit Agreement (the "AGREEMENT"), providing for a
revolving loan facility in the aggregate principal amount of $65,000,000 for
working capital purposes, to finance capital expenditures and acquisitions, and
for other general corporate purposes.
B. Upon and subject to the terms and conditions of this Agreement,
Lenders are willing to extend such credit to Borrower.
Accordingly, in consideration of the mutual covenants contained herein,
Borrower, Administrative Agent, and Lenders agree, as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used herein:
ACQUIRED EBITDA for any Person means for the twelve-month period following
the date of its Acquisition, the amount equal to: (a) the sum of: (i) EBITDA
of such Person for a reporting period of at least the most-recent six
consecutive fiscal months (but not exceeding twelve months) of such Person
preceding the date of its Acquisition, PLUS, (ii) non recurring expenses
mutually agreed upon between Borrower and Administrative Agent, DIVIDED BY (b)
the number of months in the reporting period, MULTIPLIED BY (c) 12, MULTIPLIED
BY (d) the EBITDA Factor.
If financial information for at least six consecutive fiscal months of any
Person preceding the date of its Acquisition is not readily available, Acquired
EBITDA will be an amount equal to: (a) the SUM OF: (i) EBITDA for the interim
period available, PLUS (ii) non recurring expenses mutually agreed upon by
Borrower and Administrative Agent, PLUS (b) the amount equal to: (i) the most
recent preceding fiscal year end EBITDA of such Person, DIVIDED BY (ii) 12,
MULTIPLIED BY (iii) 6 minus the number of months in the interim period,
MULTIPLIED BY (c) 2, MULTIPLIED BY (d) the EBITDA Factor.
For the purposes of the definition of Acquired EBITDA, EBITDA of the
Acquisition Target shall be calculated with reference to EBITDA which would
have been attributable to the Companies by applying the management fee formula
contained in the applicable Service Agreement to the results of such Person's
medical practice or practice management operations for the relevant period.
ACQUISITION means any transaction or series of related transactions for
the purpose of, or resulting in directly or indirectly, (a) the acquisition by
Borrower or one or more Subsidiaries of the Borrower of all or substantially
all of the assets of a musculoskeletal-related practice or practice group (or
practice management company for such practice or practice group) or clinics or
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centers providing ancillary services to such practices or practice groups, or
(b) the acquisition by Borrower or one or more Subsidiaries of the Borrower of
all of the outstanding capital stock of any musculoskeletal-related practice or
practice group (or a practice management company for such practice or practice
group) or clinic or center providing ancillary services to such practice or
practice group, including by way of a merger, consolidation, amalgamation, or
other combination if the surviving entity, after giving effect thereto, is a
Company; PROVIDED THAT, in any merger involving Borrower, Borrower must be the
surviving entity, and each acquisition must include the entry of the Borrower
and one or more of its Subsidiaries into one or more Service Agreements with
such practice, practice group, clinic or center or successor thereto.
ACQUISITION AGREEMENT shall mean, collectively, each asset purchase
agreement, stock purchase agreement, or plan of merger or consolidation for the
Acquisition of a musculoskeletal-related practice or practice group (or a
practice management company for such practice or practice group) or clinics or
centers providing ancillary services to such practices or practice groups if a
Company is the surviving entity or if after giving effect thereto, the
surviving entity is a Company, and any Service Agreement to be executed in
connection therewith.
ACQUISITION TARGET means a Person that is a musculoskeletal-related
practice or practice group (or a practice management company for such practice
or practice group) or clinic or center providing services ancillary to such
practice or practice group which Borrower or any Company intends to make the
subject of an Acquisition.
ADJUSTED EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Rate Borrowing for such Interest Period by (b) 1 MINUS the Reserve Requirement
for such Eurodollar Rate Borrowing for such Interest Period.
ADMINISTRATIVE AGENT means NationsBank, N.A., and its permitted successors
or assigns as "ADMINISTRATIVE AGENT" for Lenders under this Agreement.
AFFILIATE of any Person means
(a) each Person that, directly or indirectly owns or controls, whether
beneficially, or as a trustee, guardian, or other fiduciary, five
percent (5%) or more of the Voting Stock of such Person,
(b) each Person who directly or indirectly controls, or is controlled by,
or is under common control with, such Person, and
(c) each of such Person's officers, directors, joint venturers, and
partners.
For purposes of this definition only, "CONTROL," "CONTROLLED BY," and "UNDER
COMMON CONTROL WITH" mean possession, directly or indirectly, of the power to
direct or cause the direction of management or policies (whether through
ownership of voting securities, by contract, or otherwise), PROVIDED HOWEVER,
that the term "AFFILIATE" shall specifically exclude Administrative Agent and
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Lenders.
AGENT means the Administrative Agent.
AGREEMENT means this Revolving Credit Agreement (as the same may hereafter
be amended, modified, supplemented, or restated from time to time).
APPLICABLE LENDING OFFICE means, for each Lender and for each Type of
Borrowing, the "LENDING OFFICE" of such Lender (or an affiliate of such Lender)
designated on SCHEDULE 2.1 attached hereto or such other office that such
Lender (or an affiliate of such Lender) may from time to time specify to
Administrative Agent and Borrower by written notice in accordance with the
terms hereof.
APPLICABLE MARGIN means, on any date of determination, with respect to
each Base Rate Borrowing, or Eurodollar Rate Borrowing, respectively, the
percentage per annum set forth in the appropriate column below that corresponds
to the Total Debt to Pro Forma EBITDA Ratio at such date of determination, as
calculated based on the quarterly compliance certificate of Borrower most
recently delivered pursuant to SECTION 9.3 hereof, or if delivered later, the
most recent Permitted Acquisition Compliance Certificate for a Permitted
Acquisition:
TOTAL DEBT TO PRO FORMA APPLICABLE MARGIN
EBITDA RATIO
BASE RATE EURODOLLAR RATE
BORROWINGS BORROWINGS
Less than or equal to 1.5:1.0 0.000% 1.000%
Less than or equal to 2.0 to
1.0, but greater than 1.5:1.0 0.000% 1.250%
Less than or equal to 2.5:1.0,
but greater than 2.0:1.0 0.000% 1.500%
Less than or equal to 3.0:1.0,
but greater than 2.5:1.0 0.000% 1.750%
Less than or equal to 4.0:1.0,
but greater than 3.0:1.0 .250% 2.000%
Greater than 4.0:1.0 .500% 2.250%
(a) Until the second Business Day after the initial Financial
Statements and Compliance Certificate for the fiscal quarter ending
September 30, 1998, shall have been delivered hereunder, the Applicable
Margin for Base Rate Borrowings shall be not less than 0.000% and for
Eurodollar Rate Borrowings shall be not less than 1.750%. With respect to
any adjustments in the Applicable Margin as a result of changes in the
Total Debt to Pro Forma EBITDA Ratio, such adjustment shall be effective
commencing on the second Business Day after the delivery of Financial
Statements (and related Compliance Certificate) pursuant to SECTIONS 9.3(A)
and 9.3(B) or the most recent Permitted Acquisition Compliance Certificate
for a Permitted Acquisition, as the case may be.
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(b) If Borrower fails to timely furnish to Lenders the Financial
Statements and related Compliance Certificates as required to be delivered
pursuant to SECTIONS 9.3(A) and 9.3(B), then the Applicable Margin shall be
the maximum Applicable Margin specified in the Table above.
APPLICABLE MARGIN FOR COMMITMENT FEES means, on any date of determination,
the percentage set forth in the table below which corresponds, on any date of
determination, with the Total Debt to Pro Forma EBITDA Ratio at such date of
determination, as calculated based on the quarterly compliance certificates of
Borrower most recently delivered pursuant to SECTION 9.3 hereof, or if
delivered later, the most recent Permitted Acquisition Compliance Certificate
for a Permitted Acquisition.
TOTAL DEBT TO PRO FORMA EBITDA APPLICABLE
RATIO REQUIREMENT MARGIN FOR
COMMITMENT FEES
Less than or equal to 2.5:1.0 0.250%
Less than or equal to 3.0 to
1.0 but greater than 2.5:1.0 0.300%
Less than or equal to 4.0:1.0
but greater than 3.0:1.0 0.375%
Greater than 4:0:1.0 0.500%
(a) Until the second Business Day after the initial Financial
Statements and Compliance Certificate for the fiscal quarter ending
September 30, 1998, shall have been delivered hereunder, the Applicable
Margin for Commitment Fees shall be .300%. With respect to any adjustments
in the Applicable Margin for Commitment Fees as a result of changes in the
Total Debt to Pro Forma EBITDA Ratio, such adjustment shall be effective
commencing on the second Business Day after the delivery of Financial
Statements (and related Compliance Certificate) pursuant to SECTIONS 9.3(A)
and 9.3(B) or the most recent Permitted Acquisition Compliance Certificate
for a Permitted Acquisition, as the case may be.
(b) If Borrower fails to timely furnish to Lenders the Financial
Statements and related Compliance Certificates as required to be delivered
pursuant to SECTIONS 9.3(A) and 9.3(B), then the Applicable Margin for
Commitment Fees shall be the maximum Applicable Margin specified in the
table above.
AUTHORIZATIONS means all filings, recordings, and registrations with, and
all validations or exemptions, approvals, orders, authorizations, consents,
franchises, licenses, certificates, and permits from, any Governmental
Authority, including without limitation, any of the foregoing authorizing or
permitting the acquisition, construction, or operation of any Managed Practice.
BASE RATE means, for any day, the rate per annum equal to the HIGHER of
(a) the Federal Funds Rate for such day PLUS one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the effective
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date of such change in the Prime Rate or the Federal Funds Rate.
BASE RATE BORROWING means a Borrowing bearing interest at the SUM of the
Base Rate PLUS the Applicable Margin for Base Rate Borrowings.
BLUE CROSS/BLUE SHIELD shall mean any and all contracts or agreements in
force between any of the Borrower, any Subsidiary or any Managed Practice and
any Blue Cross/Blue Shield plan.
BORROWER is defined in the preamble to this Agreement.
BORROWING means any amount disbursed (a) by one or more Lenders to
Borrower under the Loan Papers (under the LC Subfacility, the Swing Line
Facility, or otherwise), whether such amount constitutes an original
disbursement of funds, the continuation of an amount outstanding, or payment of
a draft under an LC, or (b) by any Lender in accordance with, and to satisfy
the obligations of any Company or any Guarantor under, any Loan Paper.
BORROWING DATE is defined in SECTION 2.5(A).
BUSINESS DAY means (a) for all purposes, any day OTHER THAN Saturday,
Sunday, and any other day on which commercial banking institutions are required
or authorized by Law to be closed in New York, New York, and (b) in addition to
the foregoing, in respect of any Eurodollar Rate Borrowing, a day on which
dealings in United States dollars are conducted in the London interbank market
and commercial banks are open for international business in London.
CAPITAL EXPENDITURES means an expenditure for any fixed asset having a
useful life of more than one (1) year, or any improvements or additions
thereto, including the direct or indirect acquisition of such assets, but
excluding all fixed assets financed under a Capital Lease; PROVIDED, HOWEVER,
that Capital Expenditures shall not include acquisitions of stock or assets
which are made in accordance with the definition of Permitted Acquisition.
CAPITALIZATION means, as of any date, the sum of (a) the consolidated
Total Funded Debt of Borrower and its Subsidiaries calculated in accordance
with GAAP, PLUS (b) Consolidated Net Worth.
CAPITAL LEASE means any capital lease or sublease which should be
capitalized on a balance sheet in accordance with GAAP.
CHAMPUS shall mean, collectively, the Civilian Health and Medical Program
of the Uniformed Service, a program of medical benefits covering former and
active members of the uniformed services and certain of their dependents,
financed and administered by the United States Departments of Defense, Health
and Human Services and Transportation, and all laws, rules, regulations,
manuals, orders, guidelines or requirements pertaining to such program
including (a) all federal statutes (whether set forth in 10 U.S.C.
1071-1106 or elsewhere) affecting such program; and (b) all
rules, regulations (including 32 C.F.R. 199), manuals, orders and
administrative, reimbursement and other guidelines of all governmental
authorities promulgated in connection with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.
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CHAMPVA shall mean, collectively, the Civilian Health and Medical Program
of the Department of Veteran Affairs, a program of medical benefits covering
retirees and dependents of former members of the armed services administered by
the United States Department of Veteran Affairs, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 38 U.S.C.
1713 or elsewhere) affecting such program or, to the extent applicable
to CHAMPVA; and (b) all rules, regulations (including 38 C.F.R. 17.54),
manuals, orders and administrative, reimbursement and other guidelines of all
governmental authorities promulgated in connection with such program (whether or
not having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.
CHANGE OF CONTROL means any of the following: (a) any person or group
of persons (within the meaning of the Securities Exchange Act of 1934, as
amended), other than the Investors, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 30% or
more of the issued and outstanding shares of Voting Stock of Borrower; (b) at
any time, individuals who at the Closing Date, or if later, the date two years
prior to the date of determination (the Closing Date or such later date, the
"BASELINE DATE"), constituted 50% or more of the board of directors of Borrower
(together with any new directors whose election by the board of directors of
Borrower or whose nomination for election by the stockholders of Borrower was
approved either by the Investors or by a vote of at least two-thirds of the
directors then still in office who either were directors on the Baseline Date
or whose elections or nomination for election was previously so approved) cease
for any reason other than death or disability to constitute a majority of the
directors then in office; (c) Borrower sells, transfers, conveys, assigns or
otherwise disposes of all or substantially all of its assets; or (d) the
Investors cease in the aggregate to own at least 20% of the issued and
outstanding shares of stock of Borrower having the right to vote for the
election of directors of Borrower under ordinary circumstances.
CLOSING DATE means the date upon which this Agreement has been executed
by Borrower, Lenders, and Administrative Agent and all conditions precedent
specified in SECTION 7.1 have been satisfied or waived.
CODE means the INTERNAL REVENUE CODE OF 1986, as amended, TOGETHER WITH
the rules and regulations promulgated thereunder.
COLLATERAL has the meaning set forth in SECTION 6.1.
COLLATERAL DOCUMENTS means all security agreements, pledge agreements,
assignments of partnership interests, and Guaranties at any time delivered to
Administrative Agent to create or evidence Liens securing the Obligation,
together with all reaffirmations, amendments, and modifications thereof or
supplements thereto.
COLLATERAL LETTER OF CREDIT means a letter of credit which is: (a) an
irrevocable standby letter of credit issued in favor of Administrative Agent by
a financial institution acceptable to Administrative Agent, which secures
payment of the LC Exposure and may be drawn upon the drawing of any LC issued
hereunder which remains unreimbursed for one Business Day; (b) which is in the
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form and substance reasonably satisfactory to Administrative Agent; (c) whose
expiry date is 30 Business Days following the latest expiry date of any LC
issued hereunder; (d) which shall be freely assignable and transferable,
subject to payment of customary fees; (e) which shall provide for partial draws
thereunder; and (f) shall be in the face amount equal to at least 105% of the
LC Exposure existing on the date it is delivered.
COMMITTED SUM shall mean (a) as to any Lender, such Lender's Revolver
Commitment (including without duplication the Swing Line Lender's Swing Line
Commitment) as set forth on the signature page to the Agreement or in the most
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
all Lenders' Revolver Commitments (including without duplication the Swing Line
Lender's Swing Line Commitment) which aggregate commitment shall be Sixty-Five
Million Dollars ($65,000,000.00) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement.
COMPANIES means, at any date of determination thereof, Borrower and
each of its Subsidiaries; and COMPANY means, on any date of determination,
Borrower or any of its Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer, substantially in the form of EXHIBIT E-1.
CONSEQUENTIAL LOSS means any loss or expense which any Lender may
reasonably incur in respect of a Eurodollar Rate Borrowing as a consequence of
any event described in SECTION 4.5.
CONSOLIDATED NET WORTH means, at any time, all amounts, which in
conformity with GAAP, would be included in stockholders' equity on a
consolidated balance sheet of Borrower.
CURRENT FINANCIALS means, at the time of any determination thereof, the
more recently delivered to Lenders of either (a) the Financial Statements for
the fiscal year ended December 31, 1997, and the three-month period ended
March 31, 1998, calculated on a consolidated basis for the Companies; or (b) the
Financial Statements required to be delivered under SECTIONS 9.3(A) or 9.3(B),
as the case may be, calculated on a consolidated basis for the Companies.
DEBT means (without duplication), for any Person, the sum of the
following: (a) all liabilities, obligations, and indebtedness of such Person
which in accordance with GAAP should be classified upon such Person's balance
sheet as liabilities in respect of (i) money borrowed, including, without
limitation, the Revolver Principal Debt, (ii) obligations of such Person under
Capital Leases, and (iii) obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations, and
obligations under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (b) all obligations of the
type referred to in CLAUSES (A)(I) through (A)(III) preceding of other Persons
for the payment of which such Person is responsible or liable as obligor,
guarantor, or otherwise; (c) all obligations of the type referred to in
CLAUSES (A)(I) through CLAUSE (A)(III) and CLAUSE (B) preceding of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
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amount of the obligation so secured; (d) the face amount of all letters of
credit and banker's acceptances issued for the account of such Person, and
without duplication, all drafts drawn and unpaid thereunder; and (e) net
payments under Financial ▇▇▇▇▇▇.
DEBTOR RELIEF LAWS means the BANKRUPTCY CODE OF THE UNITED STATES OF
AMERICA and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments, or similar Laws from time to
time in effect affecting the Rights of creditors generally.
DEFAULT is defined in SECTION 10.
DEFAULT RATE with respect to Base Rate Borrowings means a per annum
rate of interest equal from day to day to the LESSER of (a) the SUM of the Base
Rate PLUS the Applicable Margin for Base Rate Borrowings PLUS 2% AND (b) the
Maximum Rate, and with respect to Eurodollar Rate Borrowings means a per annum
rate of interest equal from day to day to the LESSER OF (a) the SUM of the
Eurodollar Rate PLUS the Applicable Margin for Eurodollar Rate Borrowings, PLUS
2% and (b) the Maximum Rate.
"DEFAULTING LENDER" means, at any time, any Lender that, (a) has failed
to advance a Borrowing or purchase a participation interest when required
pursuant to the terms of this Agreement (but only for so long as such Borrowing
is not made or such participation interest is not purchased), (b) has failed to
pay to Agent or any Lender an amount owed by such Lender pursuant to the terms
of this Agreement (but only for so long as such amount has not been repaid) or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
DISTRIBUTION for any Person means, with respect to any shares of any
capital stock or other equity securities issued by such Person, (a) the
retirement, redemption, purchase, or other acquisition for value of any such
securities, (b) the declaration or payment of any dividend on or with respect
to any such securities, and (c) any other payment by such Person with respect
to such securities.
DIVESTED EBITDA means, as calculated at any date of determination with
respect to the most recently ended twelve fiscal months, the GAAP LTM EBITDA
and Acquired EBITDA, as applicable, attributable to any Subsidiary whose stock
or all or substantially all of whose assets have been sold or otherwise
disposed of or any Service Agreement which has been terminated (without being
contemporaneously replaced by a new Service Agreement with the same Managed
Practice that provides substantially the same or more EBITDA to Borrower and
its Subsidiaries as the terminated Service Agreement), PROVIDED THAT only the
difference between the EBITDA provided to Borrower and its Subsidiaries by the
original Service Agreement MINUS the EBITDA provided to Borrower and its
Subsidiaries by the replacement Service Agreement shall be Divested EBITDA.
DOLLARS and the symbol $ means lawful money of the United States of
America.
EBITDA means for any Person as calculated at any date of determination
with respect to the most recently ended twelve fiscal months the SUM (without
14
duplication) of (a) consolidated net income, determined in accordance with
GAAP, PLUS to the extent already deducted in computing net income, (b) income
taxes, (c) Interest Expense, (d) depreciation and amortization, MINUS
(e) extraordinary income, MINUS (f) interest income.
EBITDA ADJUSTMENT means $1,357,000.
EBITDA FACTOR means for any Person, the QUOTIENT of (a) 12 MINUS the
number of months since the date of any Acquisition, DIVIDED BY (b) 12.
EBITDAR means with respect to any Person for any fiscal period, the SUM
of EBITDA PLUS Rental Expense.
ELIGIBLE ASSIGNEE means (a) a Lender; (b) an Affiliate of a Lender; and
(c) any other Person approved by Administrative Agent (which approval will not
be unreasonably withheld or delayed by Administrative Agent) and, unless a
Default or Potential Default has occurred and is continuing at the time any
assignment is effected in accordance with SECTION 13.13, Borrower, such
approval not to be unreasonably withheld or delayed by Borrower and such
approval to be deemed given by Borrower if no objection is received by the
assigning Lender and the Administrative Agent from Borrower within five
Business Days after notice of such proposed assignment has been provided by the
assigning Lender to Borrower; PROVIDED, HOWEVER, that neither Borrower nor any
Affiliate of Borrower shall qualify as an Eligible Assignee.
EMPLOYEE PLAN means an employee pension benefit plan covered by
TITLE IV of ERISA and established or maintained by Borrower or any ERISA
Affiliate, but not including any Multiemployer Plan.
ENVIRONMENTAL LAW means any applicable Law that relates to the
condition or protection of air, groundwater, surface water, soil, or other
environmental media, including natural resources or the regulation of any
pollutants, contaminants, wastes, substances, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. 9601 ET SEQ.) ("CERCLA"), the Clean Air Act (42 U.S.C.
7401 ET SEQ.), the Federal Water Pollution Control Act, as amended by
the Clean Water Act (33 U.S.C. 1251 ET SEQ.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 ET SEQ.),
the Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C.
11001 ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C.
1801 ET SEQ.), the National Environmental Policy Act of 1969
(42 U.S.C. 4321 ET SEQ.), the Oil Pollution Act (33 U.S.C.
2701 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C.
6901 ET SEQ.), the Rivers and Harbors Act (33 U.S.C. 401 ET
SEQ.), the Safe Drinking Water Act (42 U.S.C. 201 and 300f
ET SEQ.), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984
(42 U.S.C. 6901 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
2601 ET SEQ.), and analogous state and local Laws, as any of the
foregoing may have been and may be amended or supplemented from time to time,
and any analogous future enacted or adopted Law, but only to the extent
actually applicable.
EQUITY ISSUANCE means the issuance on and after the Closing Date by any
15
Company of any shares of any class of stock, warrants, or other equity
interests, other than present and future shares of stock, options, or warrants
issued to employees, directors, or consultants of the Companies, or stock
issued upon their exercise.
ERISA means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as
amended, and the regulations and rulings thereunder.
ERISA AFFILIATE means any company or trade or business (whether or not
incorporated) which, for purposes of TITLE IV of ERISA, is a member of
Borrower's controlled group or which is under common control with Borrower
within the meaning of SECTION 414(B), (C), (M), or (O) of the Code.
EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Dow ▇▇▇▇▇ Markets Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "EURODOLLAR RATE" shall mean,
for any Eurodollar Rate Borrowing for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Reuters Screen LIBO Page as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
EURODOLLAR RATE BORROWING means a Borrowing bearing interest at the SUM
of the Adjusted Eurodollar Rate PLUS the Applicable Margin for Eurodollar Rate
Borrowings.
EXHIBIT means an exhibit to this Agreement unless otherwise specified.
FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined (which
determination shall be conclusive and binding, absent manifest error) by
Administrative Agent to be equal to the weighted average of the rates on
overnight Federal funds transactions with member banks of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
PROVIDED THAT (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such
rate is so published on such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate charged to the Administrative Agent
(in its individual capacity) on such day on such transactions as determined by
the Administrative Agent (which determination shall be conclusive and binding,
absent manifest error).
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
which is intended to reduce or eliminate the risk of fluctuations in interest
rates, which Financial Hedge is entered into by any Company with a Lender or an
16
Affiliate of a Lender.
FINANCIAL STATEMENTS means balance sheets, statements of operations,
statements of shareholders' equity, and statements of cash flows prepared in
accordance with GAAP, which statements of operations and statements of cash
flows shall be in comparative form to the corresponding period of the preceding
fiscal year, and which balance sheets and statements of shareholders' equity
shall be in comparative form to the prior fiscal year-end figures.
FISCAL YEAR means the twelve month period ending December 31 of each
calendar year.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which are applicable from time to
time.
GAAP LTM EBITDA means, for any Person, as calculated at any date of
determination with respect to the most recently ended twelve fiscal months the
SUM (without duplication) of: (a) consolidated net income, determined in
accordance with GAAP, PLUS to the extent already deducted in computing net
income, (b) income taxes, (c) Interest Expense, (d) depreciation and
amortization, MINUS (e) extraordinary income, MINUS (f) interest income. In
determining GAAP LTM EBITDA, for each month in fiscal year 1997 included in the
calculation, GAAP LTM EBITDA shall be the quotient of: (x) the SUM of (q) the
actual audited EBITDA for Fiscal Year 1997; PLUS (r) the EBITDA Adjustment
(y) DIVIDED by 12.
GOVERNMENTAL AUTHORITY means any (a) local, state, municipal, or
federal judicial, executive, or legislative instrumentality, (b) private
arbitration board or panel, or (c) central bank.
GUARANTOR means any Person, including, but not limited to, any
Subsidiary of Borrower, who undertakes to be liable for all or any part of the
Obligation by execution of a Guaranty or otherwise.
GUARANTY means (a) a Guaranty in substantially the form and upon the
terms of EXHIBIT C, executed and delivered by any Person pursuant to the
requirements of the Loan Papers; and (b) any amendments, modifications,
supplements, restatements, ratifications, or reaffirmations of any Guaranty
made in accordance with the Loan Papers.
HAZARDOUS SUBSTANCE means (a) any substance that is designated,
defined, or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance under any Environmental Law,
including without limitation, any hazardous substance within the meaning of
SECTION 101(14) of CERCLA, (b) petroleum, oil, gasoline, natural gas, fuel
oil, motor oil, waste oil, diesel fuel, jet fuel, and other petroleum
hydrocarbons, (c) regulated asbestos and asbestos-containing materials in a
friable form, (d) polychlorinated biphenyls, or (e) urea formaldehyde foam.
HCFA means the Health Care Financing Administration, an agency of HHS,
and any successor thereto.
17
HEALTHCARE LAWS means collectively, any and all federal, state or local
laws, rules, regulations, manuals, orders, guidelines and requirements
pertaining to the delivery of services by the Managed Practices or to the
practice of medicine thereby, including without limitation all laws, rules,
regulations, manuals, orders, guidelines and requirements pertaining to
CHAMPUS, CHAMPVA, Medicaid or Medicare.
HHS means the Department of Health and Human Services.
INITIAL BORROWING means the earlier of: (a) the first Borrowing made
hereunder, or (b) the first LC issued hereunder.
INITIALLY UNPERFECTED ASSETS shall have the meaning given such term in
SECTION 6.3.
INTEREST EXPENSE means, for any period of calculation thereof, for any
Person, the aggregate amount of all interest (including commitment fees) on all
Debt of such Person, whether paid in cash or accrued as a liability and payable
in cash during such period (including, without limitation, imputed interest on
Capital Lease obligations; the amortization of any original issue discount on
any Debt; the interest portion of any deferred payment obligation; all
commissions, discounts, and other fees and charges owed with respect to letters
of credit or bankers' acceptance financing; net costs associated with Financial
▇▇▇▇▇▇; the interest component of any Debt that is guaranteed or secured by
such Person), and all cash premiums or penalties for the repayment, redemption,
or repurchase of Debt.
INTEREST PERIOD is determined in accordance with SECTION 3.9.
INVESTORS means collectively, Keystone, Inc., FW Integrated
Orthopaedics Investors, L.P., FW Integrated Orthopaedics Investors II, L.P.,
and their respective Affiliates, and INVESTOR means any of them.
LAWS means all applicable statutes, laws, treaties, ordinances, tariff
requirements, rules, regulations, orders, writs, injunctions, decrees,
judgments, opinions, or interpretations of any Governmental Authority having
jurisdiction over the Borrower and the specific operations at issue.
LC means the letter(s) of credit issued hereunder in the form agreed
upon among Borrower, Administrative Agent, and the beneficiary thereof at the
time of issuance thereof and participated in by Lenders pursuant to the terms
and conditions of SECTION 2.2 hereof.
LC AGREEMENT means a letter of credit application and agreement (in
form and substance satisfactory to Administrative Agent) submitted by Borrower
to Administrative Agent for an LC for its own account (and for its benefit or
the benefit of any other Company); PROVIDED THAT this Agreement shall control
any conflict between this Agreement and any such LC Agreement.
LC EXPOSURE means, at any time and without duplication, the SUM of
(a) the aggregate undrawn portion of all uncancelled and unexpired LCs PLUS (b)
the aggregate unpaid reimbursement obligations of Borrower in respect of
drawings of drafts under any LC.
18
LC SUBFACILITY means a subfacility for the issuance of LCs (the LC
Exposure in connection with which may never exceed $5,000,000), as described in
and subject to the limitations of SECTION 2.2.
LENDERS means, on any date of determination, the financial institutions
named on SCHEDULE 2.1 (as the same may be amended from time to time by
Administrative Agent to reflect the assignments made in accordance with
SECTION 13.13(C) of this Agreement), and subject to the terms and conditions of
this Agreement, and their respective successors and assigns.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor (other than under or relating to
subordination or other intercreditor arrangements) to have its claim satisfied
out of any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
LITIGATION means any action by or before any Governmental Authority.
LOAN PAPERS means (a) this Agreement, the Notes, the Collateral
Documents, LCs and LC Agreements, (b) all agreements, documents, or instruments
in favor of Agents or Lenders ever delivered pursuant to this Agreement or
otherwise delivered in connection with all or any part of the Obligation,
(c) any Financial Hedge between any Company or Guarantor and any Lender or any
Affiliate of any Lender, and (d) any and all future renewals, extensions,
restatements, reaffirmations, or amendments of, or supplements to, all or any
part of the foregoing.
MANAGED PRACTICE means any orthopedic physician, professional
corporation, professional association, partnership or similar Person that,
pursuant to a Service Agreement, provides musculoskeletal related professional
medical services at a medical office, clinic or other facility operated by the
Borrower or any of Borrower's Subsidiaries, or at a hospital or hospital
department with which the Borrower or any Subsidiary has a service contract.
MANAGED PRACTICE LOANS means loans or advances by Borrower or any of
its Subsidiaries to any Managed Practice made in the ordinary course of
business to finance the costs associated with the addition of physicians to
such Managed Practice or other expenditures of such Managed Practice pursuant
to specified incentive loan programs established and approved by the board of
directors of the Company (or a duly authorized committee thereof) from time to
time.
MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, would reasonably be expected to
result in any (a) material impairment of the ability of any Company or any
Guarantor to perform any of its payment or other material obligations under the
Loan Papers or the ability of Administrative Agent or any Lender to enforce any
such obligations or any of their respective Rights under the Loan Papers,
(b) material and adverse effect on the business, properties, condition
(financial or otherwise) or results of operations of the Companies taken as a
whole, or (c) Default or Potential Default.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender, the
19
maximum non-usurious amount and the maximum non-usurious rate of interest
which, under applicable Law, such Lender is permitted to contract for, charge,
take, reserve, or receive on the Obligation.
MAXIMUM WORKING CAPITAL COMMITMENT means an amount (subject to
reduction or cancellation as herein provided) equal to $15,000,000.
MEDICAID shall mean, collectively, the health care assistance program
established by Title XIX of the Social Security Act (42 U.S.C.
1396 ET SEQ.) and any statutes succeeding thereto, and all
laws, rules, regulations, manuals, orders, guidelines or requirements
pertaining to such program including (a) all federal statutes (whether set
forth in Title XIX of the Social Security Act or elsewhere) affecting such
program; (b) all state statutes and plans for medical assistance enacted in
connection with such program and federal rules and regulations promulgated in
connection with such program; and (c) all applicable provisions of all rules,
regulations, manuals, orders and administrative, reimbursement, guidelines and
requirements of all government authorities promulgated in connection with such
program (whether or not having the force of law), in each case as the same may
be amended, supplemented or otherwise modified from time to time.
MEDICARE shall mean, collectively, the health insurance program for the
aged and disabled established by Title XVIII of the Social Security Act (42
U.S.C. 1395 ET SEQ.) and any statutes succeeding thereto, and
all laws, rules, regulations, manuals, orders or guidelines pertaining to such
program including (a) all federal statutes (whether set forth in Title XVIII of
the Social Security Act or elsewhere) affecting such program; and (b) all
applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement, guidelines and requirements of all governmental
authorities promulgated in connected with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in
SECTIONS 3(37) or 4001(A)(3) of ERISA or SECTION 414(F) of the Code to which
any Company or any ERISA Affiliate is making, or has made, or is accruing, or
has accrued, an obligation to make contributions.
NATIONSBANK means NationsBank, N.A., in its individual capacity as a
Lender, and its successors and assigns.
NOTES means, at the time of any determination thereof, all outstanding
and unpaid Revolver Notes and Swing Line Note.
NOTICE OF BORROWING is defined in SECTION 2.5(A).
NOTICE OF CONVERSION is defined in SECTION 3.10.
NOTICE OF LC is defined in SECTION 2.2(A).
OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Administrative Agent, any Lender, or any Affiliate of any
Lender by any Company or Guarantor arising from, by virtue of, or pursuant to
20
any Loan Paper, TOGETHER WITH all interest accruing thereon, fees, costs, and
expenses (including, without limitation, all attorneys' fees and expenses
incurred in the enforcement or collection thereof) payable under the Loan
Papers.
PARTICIPANT is defined in SECTION 13.13(E).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established pursuant to ERISA.
PERMITTED ACQUISITION means:
(a) Acquisitions by any Company of any Acquisition Target with respect
to which each of the following requirements shall have been satisfied:
(i) Administrative Agent shall receive at least fifteen (15)
days' prior written notice of such proposed Permitted Acquisition,
which notice shall include a reasonably detailed description of the
Acquisition Target and the terms of such proposed Permitted
Acquisition, together with a copy of the Integrated Orthopaedics, Inc.
Funding Request Memorandum, substantially in the form previously
furnished to Administrative Agent containing an executive summary,
practice overview, transaction summary and economic analysis, market
survey, growth strategy, financial overview and risk analysis and
related information with respect to such Acquisition Target and
proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall involve an Acquisition
Target operating solely within one or more of the 50 states of the
United States of America or the District of Columbia, shall be
consensual, shall have been approved by the Acquisition Target board
of directors or other governing authority or its authorized legal
representative or its stockholders or other equity holders, and shall
not, involve an aggregate cash paid and debt issued or assumed
consideration in an amount that exceeds $10,000,000;
(iii) the Administrative Agent shall have received on or within
30 days following the closing date of any such Permitted Acquisition:
with respect to a Practice Acquisition, copies of each of: (A) the
acquisition or merger agreements, (B) the applicable completed closing
checklist, and (C) the Service Agreements, which shall contain terms
and provisions substantially similar to the Service Agreement Basic
Provisions (except that the term of any such Service Agreement
pursuant to SECTION 6.1 of the Service Agreement Basic Provisions may
be modified provided that such term is not reduced to a period of less
than 30 years) and no other terms or provisions which would have the
effect of modifying or varying such Service Agreement Basic
Provisions, and the Seller Notes, the terms and conditions of each of
which shall be substantially similar to the terms and conditions of
the Seller Note previously furnished to Administrative Agent and which
shall contain the subordination
21
provisions described in EXHIBIT H hereto;
(iv) at least five (5) Business Days prior to the closing date of
any such proposed Permitted Acquisition, Borrower shall have delivered
to Administrative Agent, in form and substance satisfactory to
Administrative Agent, a certificate of the chief financial officer of
Borrower in the form of EXHIBIT E-2 to the effect that: (A) at the
time of such Permitted Acquisition and after giving effect thereto, no
Default or Potential Default will have occurred and be continuing; and
(B) on a pro forma basis Borrower would have been in compliance with
the financial covenants set forth in SECTION 9.30 as of the most
recent test period for which such covenants were tested, which
covenants shall be calculated (in addition to the assumptions
specified in SECTION 9.30) as if: (x) such Acquisition and all other
Acquisitions closed or to be closed following such test period and
prior to the proposed closing date of the proposed Permitted
Acquisition had occurred at the beginning of such test period and
Borrower had received income attributable to such Acquisition Target
and such other acquired entities based on the actual performance of
such Acquisition Target and such other acquired entities over such
period (adjusted to reflect the PRO FORMA effect of Borrower's
physician compensation model as appropriate) and had incurred the Debt
and expenses incurred to purchase such Acquisition Target and such
other acquired entity at the beginning of such period and repaid,
retired, disposed of or refinanced any Debt repaid, retired, disposed
of or refinanced or to be repaid, retired, disposed of or refinanced
in such acquisition at the beginning of such period, and (y) any
disposition of stock or of all or substantially all of the assets of
any Subsidiary by Borrower or any of its Subsidiaries and any
termination of a Service Agreement (which Service Agreement is not
contemporaneously replaced by a Service Agreement with the same
Managed Practice that provides substantially the same or more EBITDA
to Borrower and its Subsidiaries as the terminated Service Agreement)
that have occurred or are to occur following such test period and
prior to the proposed closing date of the proposed Permitted
Acquisition had occurred at the beginning of such test period and the
Borrower had not received any EBITDA attributable to such entity
disposed of or any Divested EBITDA attributable to such terminated
Service Agreement over such period and had incurred any Debt or
expense incurred in connection with such disposition or termination at
the beginning of such period and had repaid, retired, disposed of or
refinanced any Debt that was or is to be repaid, retired or disposed
of or refinanced in connection with such disposition or termination
(to the extent that the Borrower and its Subsidiaries have been, or
are to be, released from all liability with respect thereto) at the
beginning of such period;
(v) on or prior to the date of such Permitted Acquisition,
Administrative Agent shall have received, in form and substance
satisfactory to Administrative Agent, such documents and instruments
as it shall require to evidence the joinder of any
22
new Subsidiary, to the Subsidiary Guaranty and Subsidiary Pledge and
Security Agreement and the perfection of all liens created thereunder
as further set forth in SECTION 9.17 hereof;
(vi) at least 40% of the aggregate consideration paid for
Permitted Acquisitions during any fiscal quarter must be stock of the
Borrower, proceeds from the sale of stock of the Borrower, or
Subordinated Debt or a combination thereof; and
(vii) all Acquisition Targets for which the Acquisition is
consummated must become or, in connection with an acquisition of
assets or a merger or similar combination, be acquired by a Wholly-
owned Subsidiary.
(b) any other Acquisition for which the prior written consent of
Required Lenders has been obtained.
PERMITTED ACQUISITION COMPLIANCE CERTIFICATE means a certificate signed
by a Responsible Officer of Borrower, substantially in the form of EXHIBIT E-2.
PERMITTED DEBT means Debt permitted under SECTION 9.13 as described in
such Section.
PERMITTED LIENS means Liens permitted under SECTION 9.14 as described
in such Section.
PERSON means any individual, entity, or Governmental Authority.
POTENTIAL DEFAULT means the occurrence of any event or existence of any
circumstance which, with the giving of notice or lapse of time or both, would
become a Default.
PRACTICE ACQUISITION shall mean a Permitted Acquisition that results in
the acquisition directly or indirectly by the Borrower or any Subsidiary, of
all or substantially all of the non-medical assets, and in Borrower's or any
Subsidiaries' discretion, and where permitted by applicable law, some or all of
the medical assets of a physician or physician group providing musculoskeletal-
related professional services.
PRIME RATE means the per annum rate of interest established from time
to time by NationsBank, N.A., as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank, N.A. to its customers.
PRO FORMA DATE OF INITIAL BORROWING means the first day of the most
recently completed fiscal quarter of Borrower for which Borrower has delivered
to Administrative Agent the Financial Statements described in SECTION 9.3
preceding the date of the Initial Borrowing.
PRO FORMA EBITDA means, as calculated at any date of determination, the
SUM (without duplication) of (a) Borrower's consolidated GAAP LTM EBITDA, PLUS
(b) Acquired EBITDA MINUS (c) Divested EBITDA.
PRO RATA or PRO RATA PART, for each Lender, means (a) for purposes of
any commitment to fund (or to purchase participations pursuant to SECTION 2.2
23
OR SECTION 2.3) in respect of the Revolver Facility, the L/C Subfacility, or the
Swing Line Subfacility, respectively, the percentage stated opposite such
Lender's name as set forth on SCHEDULE 2.1 or on the most recently amended
SCHEDULE 2.1, if any, prepared by Administrative Agent pursuant to
SECTION 13.13, (b) for purposes of sharing any amount or fee payable to any
Lender in respect of the Revolver Facility, the L/C Subfacility, or the Swing
Facility, respectively, the proportion (whether held directly or through a
participation therein pursuant to SECTION 2.2 OR SECTION 2.3 and determined
after giving effect thereto) which the portion of the Revolving Principal Debt,
Swing Principal Debt, or LC Exposure, as applicable, owed to such Lender bears
to the Revolving Principal Debt, Swing Principal Debt, or LC Exposure, as
applicable, owed to all Lenders at the time in question, and (c) for all other
purposes, the proportion which the portion of the Revolver Principal Debt owed
to such Lender bears to the Revolver Principal Debt owed to all Lenders at the
time in question, or if no Revolver Principal Debt is outstanding, then the
proportion that the aggregate of such Lender's Committed Sums under the Revolver
Facility bears to the Revolver Commitment then in effect.
PURCHASE MONEY DEBT means Debt incurred by a Company to finance the
acquisition of assets.
REGISTER is defined in SECTION 13.13(C).
REGULATION D means Regulation D of the Board of Governors of the Federal
Reserve System, as amended.
REGULATION U means Regulation U of the Board of Governors of the Federal
Reserve System, as amended.
RELEASE means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposal, deposit,
dispersal, migrating, or other movement into the air, ground, or surface water,
or soil.
RENTAL EXPENSE for any Person during any period, means the actual rent
paid by such Person during any period with respect to operating leases under
which any Person is lessee, without regard to any prepayments of rent.
REPORTABLE EVENT shall have the meaning specified in SECTION 4043 of ERISA
or the regulations issued thereunder in connection with an Employee Plan,
excluding events for which the notice requirement is waived under applicable
PBGC regulations other than those events described in SECTIONS 2615.11, 2615.15
and 2615.19 of such regulations, including each such provision as it may
subsequently be renumbered.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
REQUIRED LENDERS means (a) on any date of determination prior to
termination of the Revolver Commitment, those Lenders (other than Defaulting
Lenders) holding 66-2/3% or more of the Revolver Commitment (other than the
Revolver Commitment of the Defaulting Lenders), or (b) on any date of
determination occurring after the Revolver Commitment has terminated, those
Lenders (other than Defaulting Lenders) holding 66-2/3% or more of the
24
outstanding Revolver Principal Debt (other than the Revolving Principal Debt of
the DEFAULTING Lenders).
RESERVE REQUIREMENT means, at any time, the maximum rate at which reserves
(including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Eurodollar Rate Borrowings, "EUROCURRENCY LIABILITIES" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be determined,
or (b) any category of extensions of credit or other assets which include
Eurodollar Rate Borrowings. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
RESPONSIBLE OFFICER means the president, chief executive officer, chief
financial officer, senior vice president, or treasurer of Borrower, or, for all
purposes under the Loan Papers, any other officer designated from time to time
by the Board of Directors of Borrower, which designated officer is acceptable to
Administrative Agent.
RESTRICTED PAYMENTS means: (a) redemptions, repurchases, dividends, and
distributions of any kind in respect of Borrower's or any other Company's
capital stock (including without limitation any class of common or preferred
shares); (b) Distributions of any kind in respect of partnership interests of
any Company; and (c) payments of principal and interest on, and any redemptions
or repurchases of, Subordinated Debt.
REVOLVER COMMITMENT means an amount (subject to reduction or cancellation
as herein provided) equal to $65,000,000.
REVOLVER COMMITMENT USAGE means, at the time of any determination thereof,
the SUM of (a) the aggregate Revolver Principal Debt (whether under the Swing
Line Subfacility, or otherwise), PLUS, WITHOUT DUPLICATION, (b) the LC Exposure.
REVOLVER FACILITY means the credit facility as described in and subject to
the limitations set forth in SECTION 2.1 hereof.
REVOLVER NOTE means a promissory note in substantially the form of
EXHIBIT A-1, and all renewals and extensions of all or any part thereof.
REVOLVER PRINCIPAL DEBT means, on any date of determination, the aggregate
unpaid principal balance of all Borrowings under the Revolver Facility
(including the Swing Line Subfacility), together with the aggregate unpaid
reimbursement obligations of Borrower in respect of drawings of drafts under any
LC.
RIGHTS means rights, remedies, powers, privileges, and benefits.
SCHEDULE means, unless specified otherwise, a schedule attached to this
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Agreement, as the same may be supplemented and modified from time to time in
accordance with the terms of the Loan Papers.
SELLER NOTE means a non-negotiable promissory note made by a Company,
payable to an Acquisition Target or the stockholders or equity holders thereof,
containing the subordination provisions and other terms set forth in EXHIBIT H
hereto.
SERVICE AGREEMENT means an agreement between the Borrower or one or more
of Borrower's Subsidiaries and one or more Managed Practices pursuant to which
the Borrower or such Subsidiaries agree to provide or arrange for comprehensive
management, administrative and other non-medical support services to such
Managed Practice(s) in exchange for the payment by the Managed Practice to the
Borrower or such Subsidiary of a service fee.
SERVICE AGREEMENT BASIC PROVISIONS means the terms and provisions
contained in the following Articles and Sections of the form Service Agreement
previously furnished to Administrative Agent in connection with the execution
and delivery of this Agreement: Sections 1.1, 2.4, 2.7, 2.11, 2.12, 2.13.1,
2.15, and 2.16, Article III (other than SECTION 3.6), Article V (other than
SECTION 5.5), Article VI, Article VII (to the extent that any terms defined
therein are used in the other articles and sections listed herein) and
Article VIII.
SOLVENT means, as to a Person, that (a) the aggregate fair market value of
such Person's assets exceeds its liabilities (whether contingent, subordinated,
unmatured, unliquidated, or otherwise), (b) such Person has sufficient cash flow
to enable it to pay its Debts as they mature, and (c) such Person does not have
unreasonably small capital to conduct such Person's businesses.
SUBORDINATED DEBT means any Debt of any Company evidenced by a Seller Note
provided that such Debt is at all times subordinated to the payment and
performance of the Obligation pursuant to the provisions set forth in EXHIBIT H
hereto or such other written subordination agreement as may be in form and
substance reasonably satisfactory to Administrative Agent.
SUBSIDIARY of any Person means (a) any entity of which an aggregate of
more than 50% (in number of votes) of the stock is owned of record or
beneficially, directly or indirectly, by such Person, or (b) any partnership
(limited or general) of which such Person shall at any time be the general
partner or own fifty percent (50%) or more of the issued and outstanding
partnership interests.
SWING LINE BORROWING means any Borrowing under the Swing Line Subfacility.
SWING LINE LENDER means NationsBank, N.A.
SWING LINE NOTE means a promissory note in substantially the form of
EXHIBIT A-2 and all renewals and extensions of all or any part thereof.
SWING LINE SUBFACILITY means the subfacility under the Revolver Facility,
the Principal Debt of which may never exceed the aggregate of
26
$5,000,000, as described in, and subject to the limitations of, SECTION 2.3.
SWING LINE PRINCIPAL DEBT means, on any date of determination, that
portion of the Revolver Facility Principal Debt outstanding under the Swing Line
Subfacility.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon such Person, its income, or any of its
properties, franchises, or assets.
TERMINATION DATE means the EARLIER of (a) July 10, 2001, and (b) the
effective date of any other termination or cancellation of Lenders' commitments
to lend under, and in accordance with, this Agreement.
THIRD PARTY PAYOR shall mean any governmental entity, insurance company,
health maintenance organization, professional provider organization or similar
entity that is obligated to make payments on behalf of any account debtor of any
Person.
TOTAL FUNDED DEBT means (without duplication), as of any date of
determination with respect to any Person, the SUM of the following: (a) all
liabilities, obligations, and indebtedness of such Person which in accordance
with GAAP should be classified upon such Person's balance sheet as liabilities
in respect of (i) money borrowed, including, without limitation, the Revolver
Principal Debt; and (ii) obligations of such Person under Capital Leases; and
(b) the face amount of all letters of credit and Banker's acceptances issued for
the account of such Person, and without duplication, all drafts drawn and unpaid
thereunder.
TYPE means any type of Borrowing determined with respect to the interest
option applicable thereto.
VOTING STOCK means securities (as such term is defined in SECTION 2(l) of
the Securities Act of 1933, as amended) of any class or classes, 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).
WHOLLY-OWNED when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (EXCEPT
shares required as directors, qualifying shares) shall be owned by Borrower or
one or more of its Wholly-owned Subsidiaries.
1.2 NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless otherwise
specified in the Loan Papers, (a) where appropriate, the singular includes the
plural and VICE VERSA, and words of any gender include each other gender, (b)
heading and caption references may not be construed in interpreting provisions,
(c) monetary references are to currency of the United States of America, (d)
section, paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Paper in which they are used, (e) references to "TELECOPY,"
"FACSIMILE," "FAX," or similar terms are to facsimile or telecopy
transmissions, (f) references to "INCLUDING" mean including without limiting the
generality of any description preceding that word, (g) the rule of construction
that references to general items that follow references to specific items are
limited to the same type or character of those specific
27
items is not applicable in the Loan Papers, (h) references to any Person include
that Person's heirs, personal representatives, successors, trustees, receivers,
and permitted assigns, (i) references to any Law include every amendment or
supplement to it, rule and regulation adopted under it, and successor or
replacement for it, and (j) references to any Loan Paper or other document
include every renewal and extension of it, amendment and supplement to it, and
replacement or substitution for it.
1.3 ACCOUNTING PRINCIPLES. All accounting and financial terms used in
the Loan Papers and the compliance with each financial covenant therein shall be
determined in accordance with GAAP, and, all accounting principles shall be
applied on a consistent basis so that the accounting principles in a current
period are comparable in all material respects to those applied during the
preceding comparable period. If Borrower or any Lender determines that a change
in GAAP from that in effect on the date hereof has altered the treatment of
certain financial data to its detriment under this Agreement, such party may, by
written notice to the others and Administrative Agent not later than ten (10)
days after the effective date of such change in GAAP, request renegotiation of
the financial covenants affected by such change. If the Borrower and Required
Lenders have not agreed on revised covenants within thirty (30) days after
delivery of such notice, then, for purposes of this Agreement, GAAP will mean
generally accepted accounting principles on the date just prior to the date on
which the change that gave rise to the renegotiation occurred.
SECTION 2 BORROWING PROVISIONS.
2.1 COMMITMENTS. Subject to and in reliance upon the terms, conditions,
representations, and warranties in the Loan Papers, each Lender severally and
not jointly agrees to lend to Borrower such Lender's Pro Rata Part of one or
more Borrowings under the Revolver Facility not to exceed such Lender's
Committed Sum under the Revolver Facility, which, may be repaid and reborrowed
from time to time in accordance with the terms and provisions of the Loan
Papers; PROVIDED THAT, (a) each such Borrowing must occur on a Business Day and
no later than the Business Day immediately preceding the Termination Date; (b)
each such Borrowing shall be in an amount not less than $1,000,000 or a greater
integral multiple of $1,000,000, or $250,000 or a greater integral multiple
thereof if a Swing Line Borrowing; (c) on any date of determination, the
Revolver Commitment Usage shall never exceed the Revolver Commitment; and (d)
outstanding principal Borrowings under the Revolver Facility other than
Borrowings used to finance the purchase price of any Permitted Acquisition
(including, without limitation, the portion of such purchase price allocated to
accounts receivable and other working capital assets) may not at any time exceed
the Maximum Working Capital Commitment.
2.2 LC SUBFACILITY UNDER REVOLVER FACILITY.
(a) Subject to the terms and conditions of this Agreement and
applicable Law, Administrative Agent agrees to issue LCs upon Borrower's
application therefor (denominated in Dollars) by delivering to
Administrative Agent a properly completed notice (a "NOTICE OF LC,"
substantially in the form of EXHIBIT B-3) and an LC Agreement with
respect thereto no later than 10:00 a.m. Dallas, Texas time three
28
Business Days before such LC is to be issued; PROVIDED THAT, (i) on any
date of determination and after giving effect to any LC to be issued on
such date, the Revolver Commitment Usage shall not exceed the Revolver
Commitment then in effect, (ii) on any date of determination and after
giving effect to any LC to be issued on such date, the LC Exposure shall
not exceed $5,000,000, (iii) at the time of issuance of such LC, no
Default or Potential Default shall have occurred and be continuing, and
(iv) each LC must expire NO LATER than the EARLIER of the thirtieth
(30th) day prior to the Termination Date or one year from its issuance;
PROVIDED THAT, any LC may provide for automatic renewal for successive
twelve month periods (but no renewal period may extend beyond the
thirtieth (30th) day prior to the Termination Date) unless
Administrative Agent has given prior notice to the applicable
beneficiary of its election not to extend such LC.
(b) Immediately upon the issuance by Administrative Agent of any
LC, Administrative Agent shall be deemed to have sold and transferred to
each other Lender, and each other such Lender shall be deemed
irrevocably and unconditionally to have purchased and received from
Administrative Agent, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Pro Rata
Part, in such LC, and all Rights of Administrative Agent in respect
thereof (OTHER THAN Rights to receive certain fees provided for in
SECTION 2.2(C)). Upon the issuance, renewal, or extension of an LC,
Administrative Agent shall provide copies of such LC to each other
Lender.
(c) In order to induce Administrative Agent to issue and maintain
LCs and Lenders to participate therein, Borrower agrees to pay or
reimburse Administrative Agent (i) on the date on which any draft is
presented under any LC, the amount of any draft paid or to be paid by
Administrative Agent and (ii) promptly, upon demand, the amount of any
fees (in addition to the fees described in SECTION 5) which
Administrative Agent customarily charges to a Person similarly situated
in the ordinary course of its business for amending LC Agreements, for
honoring drafts, and taking similar action in connection with letters of
credit; PROVIDED THAT, (x) if Borrower has not reimbursed Administrative
Agent for any drafts paid or to be paid within 24 hours of demand
therefor by Administrative Agent, Administrative Agent is hereby
irrevocably authorized to fund such reimbursement obligations as a
Borrowing under the Revolver Facility to the extent of availability
under the Revolver Facility, and the proceeds of such Borrowing under
the Revolver Facility shall be advanced directly to Administrative Agent
in payment of Borrower's reimbursement obligation with respect to the
draft under the LC; and (y) if for any reason, funds are not advanced
pursuant to the Revolver Facility, then Borrower's reimbursement
obligation shall continue to be due and payable. Borrower's obligations
under this SECTION 2.2(C) shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff, counterclaim, or
defense to payment which Borrower may have at any time against
Administrative Agent or any other Person, and shall be made in
accordance with the terms and conditions of this Agreement UNDER ALL
CIRCUMSTANCES, including, without limitation, any of the following
circumstances: (A) any lack of validity or enforceability of
29
this Agreement or any of the Loan Papers; (B) the existence of any claim,
setoff, defense, or other Right which Borrower may have at any time against a
beneficiary named in a LC, any transferee of any LC (or any Person for whom any
such transferee may be acting), Administrative Agent, any Lender, or any other
Person, whether in connection with this Agreement, any LC, the transactions
contemplated herein, or any unrelated transactions (including any underlying
transaction between Borrower and the beneficiary named in any such LC); (C) any
draft, certificate, or any other document presented under the LC proving to be
forged, fraudulent, invalid, or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; and (D) the occurrence of any
Potential Default or Default . To the extent any funding of a draft has been
made by Lenders pursuant to SECTION 2.2(E) or under the Revolver Facility,
Administrative Agent shall promptly distribute any such payments received from
Borrower with respect to such draft to all Lenders funding such draft according
to their ratable share. Interest on any amounts by remaining unpaid by Borrower
(and unfunded by a Borrowing under the Revolver Facility) under this CLAUSE at
any time from and after the date such amounts become payable until paid in full
shall be payable by Borrower to Administrative Agent at the Default Rate. In the
event any payment by Borrower received by Administrative Agent with respect to
an LC and distributed to Lenders on account of their participations therein is
thereafter set aside, avoided, or recovered from Administrative Agent in
connection with any receivership, liquidation, or bankruptcy proceeding, each
Lender which received such distribution shall, upon demand by Administrative
Agent, contribute such Lender's ratable portion of the amount set aside,
avoided, or recovered, TOGETHER WITH interest at the rate required to be paid by
Administrative Agent upon the amount required to be repaid by it. Without
limiting the absolute and unconditional nature of Borrower's obligations under
this SECTION 2.2(C) as provided herein, nothing in this Agreement shall
constitute a waiver of Borrower's Rights to assert a separate and independent
claim based upon the gross negligence or willful misconduct of Administrative
Agent with respect to any LC issued hereunder.
(d) If any draft shall be presented for honor under any LC, Administrative
Agent shall promptly notify Borrower of the date and amount of such draft;
PROVIDED THAT, failure to give any such notice shall not affect the obligations
of Borrower hereunder. Administrative Agent shall make payment upon presentment
of a draft for honor unless it appears that presentment on its face does not
comply with the terms of such LC, regardless of whether (i) any default or
potential default under any other agreement has occurred and (ii) the
obligations under any other agreement have been performed by the beneficiary or
any other Person (and Administrative Agent shall not be liable for any
obligation of any Person thereunder). Administrative Agent and Lenders shall not
be responsible for, and Borrower's reimbursement obligations for honored drafts
shall not be affected by, any matter or event whatsoever (including, without
limitation, the validity or genuineness of documents or of any endorsements
thereof, even if such documents should in fact prove to be in any respect
invalid, fraudulent, or forged), or any dispute among any Company, the
beneficiary of any LC, or any other Person to whom any LC may be transferred, or
any claims whatsoever of
30
any company against any beneficiary of any LC or any such transferee; PROVIDED
THAT, nothing in this Agreement shall constitute a waiver of Borrower's Rights
to assert any claim based upon the gross negligence or wilful misconduct of
Administrative Agent or any Lender.
(e) If Borrower fails to reimburse Administrative Agent as provided in
SECTION 2.2(C) within one Business Day of the demand therefor by Administrative
Agent, Administrative Agent shall promptly notify each Lender of such failure,
of the date and amount of the draft paid, and of such Lender's Pro Rata Part
thereof. Each Lender shall promptly and unconditionally make available to
Administrative Agent in immediately available funds such Lender's Pro Rata Part
of such unpaid reimbursement obligation, which funds shall be paid to
Administrative Agent on or before the close of business on the Business Day on
which such notice was given by Administrative Agent (if given prior to
1:00 p.m., Dallas, Texas time) or on the next succeeding Business Day (if notice
was given after 1:00 p.m., Dallas, Texas time). All such amounts payable by any
such Lender shall include interest thereon accruing at the Federal Funds Rate
from the day the applicable draft is paid by Administrative Agent to (but not
including) the date such amount is paid by such Lender to Administrative Agent.
The obligations of Lenders to make payments to Administrative Agent with respect
to LCs shall be irrevocable and not subject to any qualification or exception
whatsoever (other than the gross negligence or willful misconduct of
Administrative Agent) and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances: (i) any lack of validity or
enforceability of this Agreement or any of the Loan Papers; (ii) the existence
of any claim, setoff, defense, or other Right which Borrower may have at any
time against a beneficiary named in a LC, any transferee of any LC (or any
Person for whom any such transferee may be acting), Administrative Agent, any
Lender, or any other Person, whether in connection with this Agreement, any LC,
the transactions contemplated herein, or any unrelated transactions (including
any underlying transaction between Borrower and the beneficiary named in any
such LC); (iii) any draft, certificate, or any other document presented under
the LC proving to be forged, fraudulent, invalid, or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; and (iv) the
occurrence of any Potential Default or Default.
(f) Borrower acknowledges that each LC will be deemed issued upon delivery
to its beneficiary or Borrower. If Borrower requests any LC be delivered to
Borrower rather than the beneficiary, and Borrower subsequently cancels such LC,
Borrower agrees to return it to Administrative Agent together with Borrower's
written certification that it has never been delivered to such beneficiary. If
any LC is delivered to its beneficiary pursuant to Borrower's instructions, no
cancellation thereof by Borrower shall be effective without written consent of
such beneficiary to Administrative Agent and return of such LC to Administrative
Agent. Borrower hereby agrees that if Administrative Agent becomes involved in
any dispute as a result of Borrower's cancellation of any LC, it shall indemnify
Administrative Agent and Lenders for all losses, costs, damages, expenses, and
31
reasonable attorneys' fees suffered or incurred by Administrative Agent and
Lenders as a direct result thereof.
(g) Administrative Agent agrees with each Lender that it will exercise and
give the same care and attention to each LC as it gives to its other letters of
credit, and Administrative Agent's sole liability to each Lender with respect to
such LCs (OTHER THAN liability arising from the gross negligence or willful
misconduct of Administrative Agent) shall be to distribute promptly to each
Lender who has acquired a participating interest therein such Lender's ratable
portion of any payments made to Administrative Agent by Borrower pursuant to
SECTION 2.2(C). Each Lender and Borrower agree that, in paying any draw under
any LC, Administrative Agent shall not have any responsibility to obtain any
document (OTHER THAN any documents required by the respective LC) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person delivering any such document. Administrative Agent,
Lenders, and their respective Representatives shall not be liable to any other
Lender or any Company for the use which may be made of any LC or for any acts or
omissions of any beneficiary thereof in connection therewith. Any action,
inaction, error, delay, or omission taken or suffered by Administrative Agent or
any of its Representatives under or in connection with any LC, the draws,
drafts, or documents relating thereto, or the transmission, dispatch, or
delivery of any message or advice related thereto, if in good faith and in
conformity with such Laws as Administrative Agent or any of its Representatives
may deem applicable and in accordance with the standards of care specified in
the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS issued by the
International Chamber of Commerce, as in effect on the date of issue of such LC,
shall be binding upon the Companies and Lenders and shall not place
Administrative Agent or any of its Representatives under any resulting liability
to any Company or any Lender. Any action taken or omitted to be taken by
Administrative Agent under or in connection with any LC if taken or omitted in
the absence of gross negligence or wilful misconduct shall not create for
Administrative Agent any resulting liability to any Lender or any Company.
(h) On the Termination Date or upon any demand by Administrative Agent
upon the occurrence and during continuance of a Default, Borrower shall provide
to Administrative Agent, for the benefit of Lenders, (i) cash collateral in an
amount equal to 105% of the LC Exposure existing on such date, such cash and all
interest thereon shall constitute cash collateral for all LCs, or (ii) a
Collateral Letter of Credit; and (iii) such additional cash collateral as
Administrative Agent may from time to time require, so that the cash collateral
amount shall at all times equal or exceed 105% the LC Exposure.
(i) Any cash collateral deposited under CLAUSE (I) above, and all interest
earned thereon, shall be held by Administrative Agent and invested and
reinvested at the expense and the written direction of Borrower, in U.S.
Treasury Bills with maturities of no more than ninety (90) days from the date of
investment.
(j) IN ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE PROVIDED IN THIS
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AGREEMENT, BORROWER HEREBY AGREES TO PROTECT, INDEMNIFY, PAY, AND SAVE
ADMINISTRATIVE AGENT AND EACH LENDER HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, LIABILITIES, DAMAGES, OR LOSSES OF, OR OWED TO THIRD PARTIES,
AND ANY AND ALL RELATED COSTS, CHARGES, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES, INCLUDING ALLOCATED COSTS OF INTERNAL COUNSEL), WHICH
ADMINISTRATIVE AGENT, OR ANY LENDER MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE,
DIRECT OR INDIRECT, OF (A) THE ISSUANCE OF ANY LC, OR (B) THE FAILURE OF
ADMINISTRATIVE AGENT TO HONOR A DRAFT UNDER SUCH LC AS A RESULT OF ANY ACT OR
OMISSION, WHETHER RIGHTFUL OR WRONGFUL, OF ANY PRESENT OR FUTURE GOVERNMENTAL
AUTHORITY; PROVIDED THAT, Borrower shall have no liability to indemnify
Administrative Agent or any Lender in respect of any liability arising out of
the gross negligence or willful misconduct of such party or any Representatives
of such party. The provisions of and undertakings and indemnifications set forth
in this SECTION 2.2(j) shall survive the satisfaction and payment of the
obligation and termination of this Agreement.
(k) Although referenced in any LC, terms of any particular agreement or
other obligation to the beneficiary are not in any manner incorporated herein.
The fees and other amounts payable with respect to each LC shall be as provided
in this Agreement, drafts under any LC shall be deemed part of the obligation,
and in the event of any conflict between the terms of this Agreement and any LC
Agreement, the terms of this Agreement shall be controlling.
2.3 SWING LINE SUBFACILITY UNDER REVOLVER FACILITY.
(a) For the convenience of the parties and as an integral part of the
transactions contemplated by the Loan Papers, NationsBank, solely for its own
account, may make any requested Borrowing of $250,000 or a greater integral
multiple thereof, subject to those terms and conditions applicable to Borrowings
set forth in SECTION 7.3(C), (D), (E), and (F), directly to Borrower as a Swing
Line Borrowing without requiring any other Lender to fund its Pro Rata Part
thereof unless and until SECTION 2.3(B) is applicable; PROVIDED THAT: (i) each
such Borrowing must occur on a Business Day prior to, and not on or after, the
Termination Date; (ii) the aggregate Swing Line Principal Debt outstanding on
any date of determination shall not exceed $5,000,000; (iii) on any date of
determination, the Commitment Usage shall never exceed the Revolver Commitment;
(iv) at the time of such Swing Line Borrowing, no Default or Potential Default
shall have occurred and be continuing; (v) each Swing Line Borrowing shall be a
Base Rate Borrowing; PROVIDED THAT at any time after Lenders are deemed to have
purchased pursuant to SECTION 2.3(B) a participation in any Swing Line
Borrowing, such Borrowing shall bear interest at the Default Rate; and (vi) no
additional Swing Line Borrowing shall be made at any time after any Lender has
refused, notwithstanding the requirements of SECTION 2.3(B), to purchase a
participation in any Swing Line Borrowing as provided in such Section, and until
such purchase shall occur or until the Swing Line Borrowing has been repaid.
Each Borrowing under the Swing Line Subfacility shall be available and may be
prepaid on same day telephonic notice from Borrower to NationsBank, SO LONG AS
such notice is received by NationsBank prior to 12:00 noon (Dallas,
33
Texas time). Swing Line Borrowings are payable by Borrower upon demand by
NationsBank.
(b) If Borrower fails to repay any Swing Line Borrowing within three
Business Days after demand by NationsBank (and in any event upon the earlier to
occur of a Default or the Termination Date), Administrative Agent shall timely
notify each Lender of such failure and of the date and amount not paid. No later
than the close of business on the date such notice is given (if such notice was
given prior to 12:00 noon Dallas time on any Business Day, or, if made at any
other time, on the next Business Day following the date of such notice), each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from NationsBank an undivided interest and participation in such Swing
Line Borrowing to the extent of such, Lender's Pro Rata Part thereof, and each
Lender shall make available to NationsBank in immediately available funds such
Lender's Pro Rata Part of such unpaid amount. All such amounts payable by any
Lender shall include interest thereon from the date on which such payment is
payable by such Lender to, but not including, the date such amount is paid by
such Lender to Administrative Agent, at the Federal Funds rate. If such Lender
does not promptly pay such amount upon Administrative Agent's demand therefor,
and until such time as such Lender makes the required payment, NationsBank shall
be deemed to continue to have outstanding a Swing Line Borrowing in the amount
of such unpaid obligation. Each payment by Borrower of all or any part of any
Swing Line Borrowing shall be paid to Administrative Agent for the ratable
benefit of Swing Line Lender and those Lenders who have funded their
participations in such Swing Line Debt under this SECTION 2.3(B); PROVIDED THAT,
with respect to any such participation, all interest accruing on the Swing Line
Principal Debt to which such participation relates prior to the date of funding
such participation shall be payable solely to NationsBank for its own account.
2.4 TERMINATION OF COMMITMENTS.
Without premium or penalty, and upon giving not less than five (5)
Business Days prior written and irrevocable notice to Administrative Agent,
Borrower may terminate in whole or in part the unused portion of the Revolver
Commitment; PROVIDED THAT: (i) each partial termination shall be in an amount of
not less than $5,000,000 or a greater integral multiple of $1,000,000; (ii) the
amount of the Revolver Commitment may not be reduced below the Revolver
Commitment Usage; (iii) each reduction shall be allocated Pro Rata among the
Lenders in accordance with their respective Pro Rata Parts. Promptly after
receipt of such notice of termination or reduction, Administrative Agent shall
notify each Lender of the proposed cancellation or reduction. Such termination
or partial reduction of the Revolver Commitment shall be effective on the
Business Day specified in Borrower's notice (which date must be at least five
(5) Business Days after Borrower's delivery of such notice). In the event that
the Revolver Commitment is reduced to zero at a time when there shall be no LC
Exposure or Principal Debt, this Agreement shall be terminated to the extent
specified in SECTION 13.14, and all commitment fees and other fees then earned
and unpaid hereunder and all other
34
amounts of the obligation then due and owing shall be immediately due and
payable, without notice or demand by Administrative Agent or any Lender.
2.5 BORROWING PROCEDURE. The following procedures apply to borrowings (other
than Swing Line Borrowings):
(a) Each Borrowing shall be made on Borrower's notice (a "NOTICE OF
BORROWING," substantially in the form of EXHIBIT B-1) to Administrative Agent
requesting that Lenders fund a Borrowing on a certain date (the "BORROWING
DATE"), which notice (i) shall be irrevocable and binding on Borrower, (ii)
shall specify if it is for a Borrowing under the Revolver Facility or the Swing
Line Facility, (iii) shall specify the Borrowing Date, amount, Type, and (for a
Borrowing comprised of Eurodollar Rate Borrowings) Interest Period, and (iv)
must be received by Administrative Agent no later than 10:00 a.m. Dallas, Texas
time on the third Business Day preceding the Borrowing Date for any Eurodollar
Rate Borrowing or on the Business Day immediately preceding the Borrowing Date
for any Base Rate Borrowing. Administrative Agent shall timely notify each
Lender with respect to each Notice of Borrowing.
(b) Other than in connection with any Swing Line Borrowing, each Lender
shall remit its Pro Rata Part for the relevant Facility of each requested
Borrowing to Administrative Agent's principal office in Dallas, in funds which
are or will be available for immediate use by Administrative Agent by 1:00 p.m.
Dallas time on the Borrowing Date therefor. Subject to receipt of such funds,
Administrative Agent shall (unless to its actual knowledge any of the conditions
precedent therefor have not been satisfied by Borrower or waived by Required
Lenders) make such funds available to Borrower by causing such funds to be
deposited to Borrower's account as designated to Administrative Agent by
Borrower. Notwithstanding the foregoing, unless Administrative Agent shall have
been notified by a Lender prior to a Borrowing Date that such Lender does not
intend to make available to Administrative Agent such Lender's Pro Rata Part of
the applicable Borrowing, Administrative Agent may assume that such Lender has
made such proceeds available to Administrative Agent on such date, as required
herein, and Administrative Agent may (unless to its actual knowledge any of the
conditions precedent therefor have not been satisfied by Borrower or waived by
Required Lenders), in reliance upon such assumption (but shall not be required
to), make available to Borrower a corresponding amount in accordance with the
foregoing terms, but, if such corresponding amount is not in fact made available
to Administrative Agent by such Lender on such Borrowing Date, Administrative
Agent shall be entitled to recover such corresponding amount on demand (i) from
such Lender, together with interest at the Federal Funds Rate during the period
commencing on the date such corresponding amount was made available to Borrower
and ending on (but excluding) the date Administrative Agent recovers such
corresponding amount from such Lender, or (ii) if such Lender fails to pay such
corresponding amount forthwith upon such demand, then from Borrower, TOGETHER
WITH interest at a rate per annum equal to the applicable rate for such
Borrowing during the period commencing on such Borrowing Date
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and ending on (but excluding) the date Administrative Agent recovers
such corresponding amount from Borrower. No Lender shall be responsible
for the failure of any other Lender to make its Pro Rata Part of any
Borrowing.
SECTION 3 TERMS OF PAYMENT.
3.1 LOAN ACCOUNTS, NOTES, AND PAYMENTS.
(a) The Revolver Principal Debt (other than the Swing Line
Subfacility) owed to each Lender shall be evidenced by the Revolver
Notes, one payable to each Lender in the maximum stated principal amount
of each Lender's Committed Sum under the Revolver Facility as of the
Closing Date.
(b) The Revolver Principal Debt owed to the Swing Line Lender under
the Swing Line Subfacility shall be evidenced by a Swing Line Note
payable to such Lender in the maximum principal amount of $5,000,000.00.
(c) Each payment or prepayment on the Obligation is due and must be
paid at Administrative Agent's principal office in Dallas in funds which
are or will be available for immediate use by Administrative Agent by
12:00 noon Dallas, Texas time on the day due. Payments made after 12:00
noon, Dallas, Texas, time shall be deemed made on the Business Day next
following. Administrative Agent shall pay to each Lender any payment or
prepayment to which such Lender is entitled hereunder on the same day
Administrative Agent shall have received the same from Borrower;
PROVIDED such payment or prepayment is received by Administrative Agent
prior to 12:00 noon Dallas, Texas time, and otherwise before 12:00 noon
Dallas time on the Business Day next following. If and to the extent
Administrative Agent shall not make such payments to Lenders when due as
set forth in the preceding sentence, such unpaid amounts shall accrue
interest, payable by Administrative Agent, at the Federal Funds Rate
from the due date until (but not including) the date on which
Administrative Agent makes such payments to Lenders.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) Interest on each Eurodollar Rate Borrowing shall be due and
payable as it accrues on the last day of its respective Interest Period
and on the Termination Date, as applicable; PROVIDED THAT, with respect
to Eurodollar Rate Borrowings having an Interest Period in excess of
three (3) months, Borrower shall pay interest on the three month
anniversary of the beginning of such Interest Period, on the expiration
of each Interest Period, and on the Termination Date. Interest on each
Base Rate Borrowing shall be due and payable as it accrues on each
March 31, June 30, September 30, and December 31, and on the Termination
Date.
(b) (i) On any date of determination (i) if the Revolver Commitment
Usage exceeds the Revolver Commitment, (ii) or if the Swing
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Line Principal Debt exceeds the Swing Line Subfacility, or (iii) if the
sum of the Revolver Principal Debt, together (without duplication) with
the LC Exposure, exceeds the Revolver Commitment, then Borrower shall
make a mandatory prepayment of the Revolver Principal Debt of at least
the amount of such excess, TOGETHER WITH (x) all accrued and unpaid
interest on the principal amount so prepaid and (y) any Consequential
Loss arising as a result thereof. All mandatory prepayments hereunder
for the Revolver Facility shall be applied Pro Rata to each Lender's
Committed Sum thereunder.
(ii) In the event of any sales permitted by SECTION 9.24(F) or
SECTION 9.24(G), then Borrower shall make a mandatory prepayment of the
Revolver Principal Debt of at least the amount of the net cash proceeds
of such sale, transfer or disposition, TOGETHER WITH (x) all accrued and
unpaid interest on the principal amount so prepaid and (y) any
Consequential Loss arising as a result thereof. All mandatory
prepayments hereunder for the Revolver Facility shall be applied Pro
Rata to each Lender's Committed Sum thereunder.
(c) After giving Administrative Agent advance written notice of the
intent to prepay, Borrower may voluntarily prepay all or any part of the
Principal Debt from time to time and at any time, in whole or in part,
without premium or penalty; PROVIDED THAT: (i) such notice must be
received by Administrative Agent by 12:00 noon Dallas, Texas time on (A)
the third Business Day preceding the date of prepayment of a Eurodollar
Rate Borrowing, and (B) the Business Day of a prepayment of a Base Rate
Borrowing; (ii) each such partial prepayment must be in a minimum amount
of at least $1,000,000 or a greater integral multiple of $1,000,000
thereof (if a Eurodollar Rate Borrowing or a Base Rate Borrowing), or
$250,000 or an integral multiple thereof (if a Swing Line Borrowing);
(iii) all accrued interest on any Eurodollar Rate Borrowing being
prepaid must also be paid in full, to the date of such prepayment; and
(iv) Borrower shall pay any related Consequential Loss within ten (10)
days after demand therefor. Each notice of prepayment shall specify the
prepayment date, the Facility hereunder being prepaid, and the Type of
Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and shall
constitute a binding obligation of Borrower to make a prepayment on the
date stated therein.
3.3 INTEREST OPTIONS. Except where specifically otherwise provided,
Borrowings shall bear interest at a rate per annum equal to the LESSER OF (a) as
to the respective Type of Borrowing (as designated by Borrower in accordance
with this Agreement), the Base Rate PLUS the Applicable Margin for Base Rate
Borrowings or the Adjusted Eurodollar Rate PLUS the Applicable Margin for
Eurodollar Rate Borrowings, AND (b) the Maximum Rate. Each change in the Base
Rate or the Maximum Rate, subject to the terms of this Agreement, will become
effective, without notice to Borrower or any other Person, upon the effective
date of such change.
3.4 QUOTATION OF RATES. It is hereby acknowledged that a Responsible
Officer or other appropriately designated officer of Borrower may call
Administrative Agent on or before the date on which a Notice of Borrowing is to
be delivered by Borrower in order to receive an indication of the rates then in
effect, but such indicated rates shall neither be binding upon Administrative
37
Agent or Lenders nor affect the rate of interest which thereafter is actually in
effect when the Notice of Borrowing is given.
3.5 DEFAULT RATE. To the extent permitted by Law, upon the occurrence
and during the Default set forth in SECTIONS 10.1 and 10.3 or any failure to
comply with any covenant set forth in SECTION 9.30 hereof, all the Obligation
and accrued interest thereon shall bear interest at the Default Rate until paid,
regardless whether such payment is made before or after entry of a judgment;
PROVIDED THAT, the Default Rate shall automatically apply in the case of
SECTION 2.2(C) where the Default Rate is specified.
3.6 INTEREST RECAPTURE. If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing shall
be limited to the Maximum Rate, but any subsequent reductions in such designated
rate shall not reduce the rate of interest thereon below the Maximum Rate until
the total amount of interest accrued thereon equals the amount of interest which
would have accrued thereon if such designated rate had at all times been in
effect. In the event that at maturity (stated or by acceleration), or at final
payment of the Principal Debt, the total amount of interest paid or accrued is
less than the amount of interest which would have accrued if such designated
rates had at all times been in effect, then, at such time and to the extent
permitted by Law, Borrower shall pay an amount equal to the difference between
(a) the LESSER OF the amount of interest which would have accrued if such
designated rates had at all times been in effect AND the amount of interest
which would have accrued if the Maximum Rate had at all times been in effect,
and (b) the amount of interest actually paid or accrued on the Principal Debt.
3.7 INTEREST CALCULATIONS.
(a) All payments of interest shall be calculated on the basis of
actual number of days (including the first day but excluding the last
day) elapsed but computed as if each calendar year consisted of 360 days
in the case of a Eurodollar Rate Borrowing (unless such calculation
would result in the interest on the Borrowings exceeding the Maximum
Rate, in which event such interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be), and 365 or 366 days, as
the case may be, in the case of a Base Rate Borrowing. All interest rate
determinations and calculations by Administrative Agent shall be
conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to the calculation of
the Base Rate and the Adjusted Eurodollar Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate.
3.8 MAXIMUM RATE. Regardless of any provision contained in any Loan
Paper, neither Administrative Agent nor any Lender shall ever be entitled to
contract for, charge, take, reserve, receive, or apply, as interest on the
obligation, or any part thereof, any amount in excess of the Maximum Rate, and,
if Lenders ever do so, then such excess shall be deemed a partial prepayment of
principal and treated hereunder as such and any remaining excess shall be
refunded to Borrower. In determining if the interest paid or payable exceeds the
Maximum Rate, Borrower and Lenders shall, to the maximum extent permitted
38
under applicable Law, (a) treat all Borrowings as but a single extension of
credit (and Lenders and Borrower agree that such is the case and that provision
herein for multiple Borrowings is for convenience only), (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary prepayments and the effects thereof, and (d) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligation; PROVIDED THAT, if the Obligation is paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
the Maximum Amount, Lenders shall refund such excess, and, in such event,
Lenders shall not, to the extent permitted by Law, be subject to any penalties
provided by any Laws for contracting for, charging, taking, reserving, or
receiving interest in excess of the Maximum Amount.
3.9 INTEREST PERIODS. When Borrower requests any Eurodollar Rate
Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD")
applicable thereto, which shall be, at Borrower's option, one, two, three, or
six months; PROVIDED, HOWEVER, that: (a) the initial Interest Period for a
Eurodollar Rate Borrowing shall commence on the date of such Borrowing
(including the date of any conversion thereto), and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period applicable thereto expires; (b) if any
Interest Period for a Eurodollar Rate Borrowing begins on a day for which there
is no numerically corresponding Business Day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the next Business Day
immediately following what otherwise would have been such numerically
corresponding day in the calendar month at the end of such Interest Period
(UNLESS such date would be in a different calendar month from what would have
been the month at the end of such Interest Period, or UNLESS there is no
numerically corresponding day in the calendar month at the end of the Interest
Period; whereupon, such Interest Period shall end on the last Business Day in
the calendar month at the end of such Interest Period); (c) no Interest Period
may be chosen with respect to any portion of the Principal Debt which would
extend beyond the scheduled repayment date (including any dates on which
mandatory prepayments are required to be made) for such portion of the Principal
Debt; and (d) no more than an aggregate of six (6) Interest Periods shall be in
effect at one time.
3.10 CONVERSIONS. Borrower may (a) convert a Eurodollar Rate Borrowing
on the last day of an Interest Period to a Base Rate Borrowing, (b) convert a
Base Rate Borrowing at any time to a Eurodollar Rate Borrowing, and (c) elect a
new Interest Period (in the case of a Eurodollar Rate Borrowing), by giving
notice (a "NOTICE OF CONVERSION," substantially in the form of EXHIBIT B-2) of
such intent no later than 10:00 a.m. Dallas, Texas time an the third Business
Day prior to the date of conversion or the last day of the Interest Period, as
the case may be (in the case of a conversion to a Eurodollar Rate Borrowing or
an election of a new Interest Period), and no later than 10:00 a.m. Dallas,
Texas time one Business Day prior to the last day of the Interest Period (in the
case of a conversion to a Base Rate Borrowing); PROVIDED THAT, the principal
amount converted to, or continued as, a Eurodollar Rate Borrowing shall be in an
amount not less than $1,000,000 or a greater integral multiple of $1,000,000.
Administrative Agent shall timely notify each Lender with respect to each Notice
of Conversion. Absent Borrower's Notice of Conversion or election of a new
Interest Period, a Eurodollar Rate Borrowing
39
shall be deemed converted to a Base Rate Borrowing effective as of the
expiration of the Interest Period applicable thereto. No Eurodollar Rate
Borrowing may be either made or continued as a Eurodollar Rate Borrowing, and no
Base Rate Borrowing may be converted to a Eurodollar Rate Borrowing, if the
interest rate for such Eurodollar Rate Borrowing would exceed the Maximum Rate.
3.11 ORDER OF APPLICATION.
(a) Payments and prepayments of the Obligation shall be applied in
the order and manner specified in this Agreement; PROVIDED, HOWEVER, if
no order is otherwise specified and no Default or Potential Default has
occurred and is continuing, payments and prepayments of the Obligation
shall be applied first to fees then due and payable, second to accrued
interest then due and payable on the Principal Debt, and then to the
remaining obligation in the order and manner as Administrative Agent may
select.
(b) If a Default or Potential Default has occurred and is
continuing (or if Borrower fails to give directions as permitted under
SECTION 3.11(A)), any payment or prepayment (including proceeds from the
exercise of any Rights) shall be applied to the Obligation in the
following order: (i) to the ratable payment of all fees, expenses, and
indemnities for which Agents or Lenders have not been paid or reimbursed
in accordance with the Loan Papers (as used in this SECTION 3.11(B)(I),
a "RATABLE PAYMENT" for any Lender or any Agent shall be, on any date of
determination, that proportion which the portion of the total fees,
expenses, and indemnities owed to such Lender or such Agent bears to the
total aggregate fees and indemnities owed to all Lenders and Agents on
such date of determination); (ii) to the payment of accrued interest and
principal of the Swing Line Debt; (iii) to the ratable payment of
accrued and unpaid interest on the Revolver Principal Debt; (iv) to the
ratable payment of any reimbursement obligation with respect to any LC
issued pursuant to the Revolver Facility which is due and payable and
which remains unfunded by any Borrowing under the Revolver Facility;
PROVIDED THAT, such payments shall be allocated ratably among Issuing
Bank and the Lenders which have funded their participation in such LC;
(v) to the ratable payment of the Revolver Principal Debt; (vi) as a
deposit with Administrative Agent, for the benefit of Lenders, as
security for, and to provide for the payment of, any reimbursement
obligations, if any, THEREAFTER arising with respect to any issued and
outstanding LCs issued pursuant to the Revolver Facility; and (vii) to
the payment of the remaining Obligation in the order and manner Required
Lenders deem appropriate.
Subject to the provisions of SECTION 12 and PROVIDED THAT Administrative Agent
shall not in any event be bound to inquire into or to determine the validity,
scope, or priority of any interest or entitlement of any Lender and may suspend
all payments or seek appropriate relief (including, without limitation,
instructions from Required Lenders or an action in the nature of interpleader)
in the event of any doubt or dispute as to any apportionment or distribution
contemplated hereby, Administrative Agent shall promptly distribute such amounts
to each Lender in accordance with the Agreement and the related Loan Papers.
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3.12 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, or otherwise, including, without limitation, as
a result of exercising its Rights under SECTION 3.13) which is in excess of its
ratable share of any such payment, such Lender shall purchase from the other
Lenders such participations as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; PROVIDED, HOWEVER,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery. Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this SECTION may, to
the fullest extent permitted by Law, exercise all of its Rights of payment
(including the Right of offset) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation.
3.13 OFFSET. Upon the occurrence and during the continuance of a
Default, each Lender shall be entitled to exercise (for the benefit of all
Lenders in accordance with SECTION 3.12) the Rights of offset and/or banker's
Lien against each and every account and other property, or any interest therein,
which Borrower may now or hereafter have with, or which is now or hereafter in
the possession of, such Lender to the extent of the full amount of the
obligation.
3.14 BOOKING BORROWINGS. To the extent permitted by Law, any Lender may
make, carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office of any of its Affiliates; PROVIDED THAT, no
Affiliate shall be entitled to receive any greater payment under SECTION 4 than
the transferor Lender would have been entitled to receive with respect to such
Borrowings.
SECTION 4 CHANGE IN CIRCUMSTANCES.
4.1 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable, or
any change in the interpretation or administration thereof by any
Governmental Authority, or compliance by any Lender (or its Applicable
Lending Office) with any request or directive (whether or not having the
force of law) of any such Governmental Authority:
(i) shall subject such Lender (or its Applicable Lending
Office) to any Tax or other charge with respect to any Eurodollar
Rate Borrowing, its Notes, or its obligation to loan Eurodollar
Rate Borrowings, or change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under
this Agreement or its Notes in respect of any Eurodollar Rate
Borrowings (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than
41
the Reserve Requirement utilized in the determination of the
Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition
affecting this Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending office) of making, converting into,
continuing, or maintaining any Eurodollar Rate Borrowings or to reduce
any sum received or receivable by such Lender (or its Applicable Lending
office) under this Agreement or its Notes with respect to any Eurodollar
Rate Borrowing, then Borrower shall pay to such Lender on demand such
amount or amounts as will compensate such Lender for such increased cost
or reduction. If any Lender requests compensation by Borrower under this
SECTION 4.1(A), Borrower may, by notice to such Lender (with a copy to
Administrative Agent), suspend the obligation of such Lender to loan or
continue Borrowings of the Type with respect to which such compensation
is requested, or to convert Borrowings of any other Type into Borrowings
of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of SECTION 4.4
shall be applicable); PROVIDED, THAT such suspension shall not affect
the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined
that the adoption of any applicable Law regarding capital adequacy or
any change therein or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
Governmental Authority has or would have the effect of reducing the rate
of return on the capital of such Lender or any corporation controlling
such Lender as a consequence of such Lender's obligations hereunder to a
level below that which such Lender or such corporation could have
achieved but for such adoption, change, request, or directive (taking
into consideration its policies with respect to capital adequacy), then
from time to time upon demand Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify Borrower and Administrative
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to this
SECTION and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to it. Any Lender claiming compensation under this
SECTION shall furnish to Borrower and Administrative Agent a statement
setting forth the additional amount or amounts to be paid to it
42
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging
and attribution methods.
4.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Borrowing:
(a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) Required Lenders determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted EURODOLLAR
RATE will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Rate Borrowings for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant amounts or periods, and so long as such condition remains in
effect, the Lenders shall be under no obligation to fund additional Eurodollar
Rate Borrowings, continue Eurodollar Rate Borrowings, or to convert Base Rate
Borrowings into Eurodollar Rate Borrowings, and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Eurodollar
Rate Borrowings, either prepay such Borrowings or convert such Borrowings into
Base Rate Borrowings in accordance with the terms of this Agreement.
4.3 ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Borrowings hereunder, then
such Lender shall promptly notify Borrower thereof and such Lender's obligation
to make or continue Eurodollar Rate Borrowings and to convert other Base Rate
Borrowings into Eurodollar Rate Borrowings shall be suspended until such time as
such Lender may again make, maintain, and fund Eurodollar Rate Borrowings (in
which case the provisions of SECTION 4.4 shall be applicable).
4.4 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
fund Eurodollar Rate Borrowings or to continue, or to convert Base Rate
Borrowings into Eurodollar Rate Borrowings, shall be suspended pursuant to
SECTIONS 4.1, 4.2, or 4.3 hereof, such Lender's Eurodollar Rate Borrowings shall
be automatically converted into Base Rate Borrowings on the last day(s) of the
then current Interest Period(s) for Eurodollar Rate Borrowings (or, in the case
of a conversion required by SECTION 4.3 hereof, on such earlier date as such
Lender may specify to Borrower with a copy to Administrative Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in SECTIONS 4.1, 4.2, or 4.3 hereof that gave rise to such conversion
no longer exist:
(a) to the extent that such Lender's Eurodollar Rate Borrowings
have been so converted, all payments and prepayments of principal that
would otherwise be applied to such Lender's Eurodollar Rate Borrowings
shall be applied instead to its Base Rate Borrowings; and
(b) all Borrowings that would otherwise be made or continued by
43
such Lender as Eurodollar Rate Borrowings shall be made or continued instead as
Base Rate Borrowings, and all Borrowings of such Lender that would otherwise be
converted into Eurodollar Rate Borrowings shall be converted instead into (or
shall remain as) Base Rate Borrowings.
If such Lender gives notice to Borrower (with a copy to Administrative Agent)
that the circumstances specified in SECTIONS 4.1, 4.2, or 4.3 hereof that gave
rise to the conversion of such Lender's Eurodollar Rate Borrowings pursuant to
this SECTION 4.4 no longer exist (which such Lender agrees to do promptly upon
such circumstances ceasing to exist) at a time when Eurodollar Rate Borrowings
made by other Lenders are outstanding, such Lender's Base Rate Borrowings shall
be automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Rate Borrowings, to the extent
necessary so that, after giving effect thereto, all Eurodollar Rate Borrowings
held by the Lenders and by such Lender are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Commitments.
4.5 COMPENSATION. Upon the request of any Lender, Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or conversion of a Eurodollar Rate Borrowing
for any reason (including, without limitation, the acceleration of the loan
pursuant to SECTION 11.1) on a date other than the last day of the Interest
Period for such Borrowing; or
(b) any failure by Borrower for any reason (including, without limitation,
the failure of any condition precedent specified in SECTION 7.3 to be
satisfied) to borrow, convert, continue, or prepay a Eurodollar Rate Borrowing
on the date for such borrowing, conversion, continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, continuation, or
conversion under this Agreement.
4.6 TAXES.
(a) Any and all payments by Borrower to or for the account of any Lender
or Administrative Agent hereunder or under any other Loan Paper shall be made
free and clear of and without deduction for any and all present or future
Taxes, EXCLUDING, in the case of each Lender and Administrative Agent, Taxes
imposed on its income and franchise Taxes imposed on it by the jurisdiction
under the laws of which such Lender (or its Applicable Lending Office) or
Administrative Agent (as the case may be) is organized or is engaged in
business, or any political subdivision thereof. If Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Loan Paper to any Lender or Administrative Agent, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this SECTION 4.6) such Lender or Administrative Agent receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions,
44
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, and (iv)
Borrower shall furnish to Administrative Agent, within thirty (30) days after
the date of payment at its address listed in SCHEDULE 2.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Paper or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Paper (hereinafter referred to as
"OTHER TAXES").
(c) Borrower agrees to indemnify each Lender and Administrative Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this SECTION 4.6) paid by such Lender or Administrative Agent (as the
case may be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto. If as a direct result of a payment
by the Borrower of Taxes or Other Taxes pursuant to this SECTION 4.6, a Lender
or Administrative Agent (as the case may be) receives a tax benefit or tax
savings (by way of a credit against, refund or, or reduction in Taxes or
similar item), then such Lender or Administrative Agent shall pay to the
Borrower the net after-tax amount of such credit, refund, reduction or similar
item.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and
on or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by Borrower or
Administrative Agent (but only so long as such Lender remains lawfully able to
do so), shall provide Borrower and Administrative Agent with (i) INTERNAL
REVENUE SERVICE FORM 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which the United States is a
party which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States, (ii)
INTERNAL REVENUE SERVICE FORM W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (iii) any other form or
certificate required by any taxing authority (including any certificate
required by SECTIONS 871(H) and 881(C) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a reduced rate
of tax on payments pursuant to this Agreement or any of the other Loan Papers.
Unless Borrower and Administrative Agent shall have received such forms or
other documents reasonably satisfactory to them within a reasonable time after
written request therefor indicating that payments pursuant to this Agreement or
any of the other Loan Papers are not subject to United States withholding tax
or are subject to such tax at
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a rate reduced by applicable treaty, the Borrower and the Administrative Agent
shall withhold Taxes from such payments at the applicable statutory rate.
(e) For any period with respect to which a Lender has failed for any
reason to provide Borrower and Administrative Agent with any required form
pursuant to SECTION 4.6(D) certifying that such Lender is totally exempt from
United States withholding Taxes (including a failure by such Lender to provide
such forms by reason of its inability to qualify for total exemption from
United States withholding Taxes or a change in circumstances that renders such
Lender unable to so qualify, other than a failure due to a change in Law
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under SECTION
4.6(A) or 4.6(B) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes or the withholding of
Taxes by Borrower because of its failure to deliver a form required hereunder,
Borrower shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this SECTION 4.6, then Borrower shall have
the right to request that such Lender assign its Note and commitment pursuant
to SECTION 13.13 to an Affiliate who is totally exempt from United States
withholding taxes, subject to obtaining the consent of such Affiliate, not to
be unreasonably withheld or in the absence of such an Affiliate or the
unwillingness of such Lender to so assign its Note and commitment to such an
Affiliate and at the option of the Borrower, Borrower may require that such
Lender so assign its Note and commitment to an Eligible Assignee selected by
the Borrower with the consent of Administrative Agent, which shall not be
unreasonably withheld. If Borrower does not exercise its option to require such
assignment, then such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such Lender.
(g) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower, Lenders and
Administrative Agent contained in this SECTION 4.6 shall survive the
termination of the Revolver Commitment and the payment in full of the Notes.
SECTION 5 FEES.
5.1 TREATMENT OF FEES. Except as otherwise provided by Law, the fees
described in this SECTION 5: (a) do not constitute compensation for the use,
detention, or forbearance of money, (b) are in addition to, and not in lieu of,
interest and expenses otherwise described in this Agreement, (c) shall be
PAYABLE IN ACCORDANCE with SECTION 3.1 and shall be non-refundable, (d) shall,
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to the fullest extent permitted by Law, bear interest, if not paid when
due, at the Default Rate, and (e) shall be calculated on the basis of actual
number of days (including the first day but excluding the last day) elapsed, but
computed as if each calendar year consisted of 360 days, unless such computation
would result in interest being computed in excess of the Maximum Rate in which
event such computation shall be made on the basis of a year of 365 or 366 days,
as the case may be.
5.2 FEES OF ADMINISTRATIVE AGENT AND ARRANGER. Borrower shall pay to
Administrative Agent and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC ("ARRANGER"), as
the case may be, solely for their respective accounts, the fees described in
that certain separate letter agreement dated as of June 2, 1998, between
Borrower, Administrative Agent, and Arranger.
5.3 LC FEES. Borrower shall pay to Administrative Agent, for the ratable
benefit of Lenders, in accordance with their respective Pro Rata Parts, a fee
for each LC, payable in installments in arrears, SO LONG AS such LC remains
outstanding. Such installments shall be paid for the period from and including
the date of issuance of the applicable LC, to but excluding the next quarterly
payment date (as hereinafter specified), and thereafter for the period from and
including such quarterly payment date to but excluding the next quarterly
payment date or (if earlier) the expiry date of such LC. Such installments shall
be paid on each March 31, June 30, September 30, and December 31. Each such
installment shall be in an amount equal to the product of (a) the Applicable
Margin for Eurodollar Rate Borrowings in effect on the date of payment of such
fee (and applied on a per annum basis) MULTIPLIED BY (b) the face amount of such
LC, and pro rated (in accordance with SECTION 5.1(F)) for the period for which
such installment is due.
5.4 LC ISSUANCE AND FRONTING FEES. Borrower shall pay Administrative
Agent, as the issuer of LCs and for the individual account of Administrative
Agent, an LC issuance and fronting fee for each LC, payable in installments in
arrears, SO LONG AS such LC remains outstanding. Such installments shall be paid
for the period from and including the date of issuance of the applicable LC, to
but excluding the next quarterly payment date (as hereinafter specified), and
thereafter for the period from and including such quarterly payment date to but
excluding the next quarterly payment date or (if earlier) the expiry date of
such LC. Such installments shall be paid on each March 31, June 30, September
30, and December 31. Each such installment shall be in an amount equal to the
product of (a) 0.125% per annum MULTIPLIED BY (b) the face amount of such LC,
and pro rated (in accordance with SECTION 5.1(F)) for the period for which such
installment is due. In addition, Borrower shall pay to Administrative Agent, for
its individual account, standard administrative charges for LC amendments
provided for in SECTION 2.2(C).
5.5 REVOLVER FACILITY COMMITMENT FEES. Following the Closing Date,
Borrower shall pay to Administrative Agent, for the ratable account of Lenders,
a commitment fee, payable in installments in arrears, on each March 31, June 30,
September 30, and December 31 and on the Termination Date, commencing June 30,
1998. Each installment shall be, in an amount equal to the Applicable Margin for
Commitment Fees MULTIPLIED BY the amount by which (a) the average daily Revolver
Commitment exceeds (b) the average daily Revolver Commitment Usage, in each case
during the period from and including the last payment date to and excluding the
payment date for such installment; PROVIDED THAT, each
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such installment shall be calculated in accordance with SECTION 5.1(F). Solely
for the purposes of this SECTION 5.5 determinations of the average daily
Revolver Commitment Usage shall exclude the Swing Line Borrowings.
SECTION 6 SECURITY; GUARANTIES.
6.1 COLLATERAL. To secure full and complete payment and performance of the
Obligation, the Companies and each Guarantor hereby jointly and severally grant
and convey to, and create in favor of Administrative Agent for the ratable
benefit of Lenders, first priority Liens (other than Permitted Liens) in, to,
and on the following items and types of property (collectively, herein called
the "COLLATERAL"), all as more particularly described in the Loan Papers
(PROVIDED THAT, no Agent or any Lender hereby assumes or is made the transferee
of any obligations of any Company or any Guarantor regarding any of the
Collateral):
(a) All present and future accounts, contract Rights, general intangibles
(including, without limitation, the Service Agreements), investment property,
chattel paper, documents, instruments, inventory, equipment, fixtures, money
and other goods, wherever located, now owned or hereafter acquired by any
Company or any Guarantor and any and all present and future Tax refunds of any
kind whatsoever to which any Company or any Guarantor is now or shall hereafter
become entitled.
(b) All present and future issued and outstanding shares of capital stock
or other equity or investment securities now owned or hereafter acquired by any
Company or any Guarantor, including, without limitation, all capital stock of
the Subsidiaries of any Company or any Guarantor, together with all
distributions thereon and any securities issued in substitution or replacement
thereof.
(c) All Rights, titles, and interests of any Company in and to all
promissory notes and other instruments payable to the Companies, now or
hereafter existing, including, or other inter-company notes, and all Rights in,
to, and under all other loan and collateral documents relating to such
instruments.
(d) All present and future Rights, titles, interests, and Liens (but none
of the obligations) now owned or hereafter acquired by any Company or any
Guarantor in any partnership or joint venture.
(e) The balance of every deposit account of any Company or any Guarantor
and any other claim of any Company or any Guarantor against any depository, now
or hereafter existing, whether liquidated or unliquidated, including, without
limitation, certificates of deposit, and other deposit instruments.
(f) All present and future automobiles, trucks, truck tractors, trailers,
semi-trailers, other motor vehicles or rolling stock now owned or hereafter
acquired by any Company or any Guarantor (collectively, the "VEHICLES").
(g) All present and future Rights, awards, and judgments to which
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any Company or Guarantor is entitled under any Litigation (whether
arising in equity, contract, or tort) now existing or hereafter arising.
(h) All present and future Rights (including, without limitation, the
Right to ▇▇▇ for past, present, or future infringements), titles, and interests
of any Company or any Guarantor in and to all trademark applications,
trademarks, corporate names, company names, tradenames, business names,
fictitious business names, tradestyles, service marks, logos, other source of
business identifiers, copyrights, designs, Rights or licenses to use any
trademarks, and all registrations and recordings thereof, including without
limitation, the trademark and service ▇▇▇▇ of "WORKWELL" and "WORKWELL AND
DESIGN" and the marks "INTEGRATED ORTHOPAEDICS," "IOI", "INTEGRATED
ORTHOPAEDIC AND DESIGN", AND "IOI and DESIGN" (collectively, the "TRADEMARKS"),
and the goodwill of each business to which each Trademark relates.
(i) All present and future Rights (including, without limitation, the
Right to ▇▇▇ for past, present, and future infringements), titles, and
interests of any Company or any Guarantor in and to all patents, patent
applications, utility models, industrial models, designs, and any other forms
of industrial intellectual property, including all grants, applications,
reissues, continuations, and divisions with respect thereto and any Rights to
use, manufacture, or sell any patent.
(j) All present and future increases, profits, combinations,
reclassifications, improvements, and products of, accessions, attachments, and
other additions to, tools, parts, and equipment used in connection with, and
substitutes and replacements for, all or part of the Collateral heretofore
described.
(k) All present and future accounts, contract Rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds, and other
Rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or insurance proceeds
payable with respect to, or proceeds payable by virtue of warranty or other
claims against the manufacturer of, or claims against any other Person with
respect to, all or any part of the Collateral heretofore described in this
CLAUSE or otherwise.
(1) All present and future security for the payment to any Company or any
Guarantor of any of the Collateral heretofore described and goods which gave or
will give rise to any of such Collateral or are evidenced, identified, or
represented therein or thereby.
6.2 GUARANTIES. As an inducement to Agents and Lenders to enter into this
Agreement, Borrower shall cause each other Company to execute and deliver to
Administrative Agent a Guaranty substantially in the form and upon the terms of
EXHIBIT C, providing for the guarantee of payment and performance of the
Obligation.
6.3 FUTURE LIENS. Promptly after (a) the acquisition of any assets
(personal, tangible, or intangible other than assets described in
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SECTIONS 6.1(E) and (F) or specific easements, licenses, permits, certificates
of compliance, and certificates of approval issued by regulatory authorities, or
franchises, or any real property interests of any Company, including without
limitation, fixtures, and leasehold interests (collectively, the "INITIALLY
UNPERFECTED ASSETS")) by any Company or any Guarantor, (b) the removal,
termination, or expiration of any prohibitions upon the granting of a Lien in
any asset other than the Initially Unperfected Assets (real, personal, tangible,
or intangible) of any Company or any Guarantor, or (c) upon the designation,
formation, or acquisition of any new Subsidiary (the assets and stock of such
new Subsidiary and the assets described in CLAUSES (A) and (B) hereof are
referred to herein as the "ADDITIONAL ASSETS"), Borrower shall (or shall cause
such other Company or Guarantor to) execute and deliver to Administrative Agent
all further instruments and documents (including, without limitation, Collateral
Documents and all certificates and instruments representing shares of stock or
evidencing Debt as Administrative Agent may require with respect to any such
Additional Assets other than the Initially Unperfected Assets), and shall take
all further action that may be necessary or desirable, or that Administrative
Agent may reasonably request, to grant, perfect, and protect Liens in favor of
Administrative Agent for the benefit of Lenders in such Additional Assets, as
security for the Obligation; IT BEING EXPRESSLY UNDERSTOOD that the granting of
such additional security for the Obligation is a material inducement to the
execution and delivery of this Agreement by each Lender. Upon satisfying the
terms and conditions hereof, such Additional Assets shall be included in the
"COLLATERAL" for all purposes under the Loan Papers, and all references to the
"COLLATERAL" in the Loan Papers shall include the Additional Assets.
6.4 RELEASE OF COLLATERAL. Upon any sale, transfer, or disposition of
Collateral which is expressly permitted pursuant to the Loan Papers (or is
otherwise authorized by Required Lenders or Lenders, as the case may be), and
upon ten (10) Business Days' prior written request by Borrower (which request
must be accompanied by true and correct copies of (a) all documents of transfer
or disposition, including any contract of sale, (b) a preliminary closing
statement and instructions to the title company, if any, and (c) all requested
release instruments), Administrative Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of Liens granted to Administrative Agent for the benefit of
Lenders pursuant hereto in such Collateral; PROVIDED THAT, (i) no such release
of Lien shall be granted if any Default or Potential Default has occurred and is
continuing; (ii) Administrative Agent shall not be required to execute any such
document on terms which, in Administrative Agent's opinion, would expose
Administrative Agent to liability or create any obligation or entail any
consequence OTHER THAN the release of such Liens without recourse or warranty;
and (iii) such release shall not in any manner discharge, affect, or impair the
Obligation or Liens upon (or obligations of any Company or any Guarantor in
respect of) all interests retained by the Companies and the Guarantors,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute Collateral.
6.5 NEGATIVE PLEDGE. Notwithstanding the provisions of SECTION 6.1 and 6.3
hereof, until such time as Administrative Agent or Required Lenders deem
themselves insecure, the Companies and the Guarantors shall not be required to
perfect Liens on any Initially Unperfected Assets. To the extent Administrative
Agent and Required Lenders agree to not require the granting of
50
a lien in any real property or real property leasehold interests or to delay the
perfection or attachment of any Lien granted pursuant to SECTION 6.1(E) and (F)
hereof, for whatever reason, the Companies and the Guarantors hereby covenant
and agree not to directly create, incur, grant, suffer, or permit to be created
or incurred any Lien on any such assets, OTHER THAN Permitted Liens, or to grant
any other Person a negative pledge with respect to any such assets. Furthermore,
within thirty (30) days of the request of Administrative Agent, upon
Administrative Agent or Required Lenders deeming themselves insecure, Borrower
shall (or shall cause each Company and each Guarantor to) execute and deliver to
Administrative Agent all instruments and documents (including, without
limitation, certificates and instruments and documents representing shares of
stock or evidencing Debt) and shall take all further action that may be
necessary or desirable, or that Administrative Agent may reasonably request, to
grant, perfect, and protect Liens in favor of Administrative Agent for the
benefit of Lenders, in such assets, as security for the Obligation; IT BEING
EXPRESSLY UNDERSTOOD that the provisions of this negative pledge are a material
inducement to the execution and delivery of this Agreement by each Lender.
6.6 IOI MANAGEMENT SERVICES OF PENNSYLVANIA, INC. Until IOI Management
Services of Pennsylvania, Inc. ("IOI PENNSYLVANIA") becomes a Wholly-Owned
Subsidiary, Borrower shall only be required to pledge and grant security
interests to Administrative Agent for the benefit of the Lenders in eighty-five
and seventy-one hundredths percent (85.71%) of the issued and outstanding
capital stock of IOI Pennsylvania pursuant to the Collateral Documents. Borrower
agrees to cause IOI Pennsylvania to become a Wholly-owned Subsidiary, and prior
to the Initial Borrowing hereunder, to pledge and grant a security interest in
the remaining fourteen and twenty-nine hundredths percent (14.29%) of the issued
and outstanding capital stock of IOI Pennsylvania, and to take all steps
necessary or requested by Administrative Agent to perfect such security
interests therein.
6.7 CONTROL; LIMITATION OF RIGHTS. Notwithstanding anything herein or in
any other Loan Paper to the contrary, the transactions contemplated hereby do
not and will not constitute, create, or have the effect of constituting or
creating, directly or indirectly, actual or practical ownership of the Companies
or the Guarantors by Agent or Lenders, or control, affirmative or negative,
direct or indirect, by Agent or Lenders over the management or any other aspect
of the operation of the Companies or the Guarantors, which ownership or control
remains exclusively and at all times in the Companies or the Guarantors.
SECTION 7 CONDITIONS PRECEDENT.
7.1 CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not become
effective, and Lenders shall not be obligated to advance any Borrowing or issue
any LC, unless Administrative Agent has received all of the agreements,
documents, instruments, and other items described on SCHEDULE 7.1 (OTHER THAN
each item listed on SCHEDULE 7.1A, which items are hereby permitted to be
delivered after the Closing Date, but not later than the date of the Initial
Borrowing).
7.2 CONDITIONS PRECEDENT TO A PERMITTED ACQUISITION. On or prior to the
consummation of any Acquisition (whether or not the purchase price for such
51
Acquisition is funded by Borrowings), Borrower shall have satisfied the
conditions and delivered, or caused to be delivered, to Administrative Agent,
all documents and certificates set forth on SCHEDULE 7.2 by no later than the
dates specified for satisfaction of such conditions on SCHEDULE 7.2. Promptly
upon receipt of each Permitted Acquisition Compliance Certificate,
Administrative Agent shall provide copies of such certificates to Lenders. All
documentation delivered and satisfaction of conditions pursuant to the
requirements of SECTION 7.2 must be reasonably satisfactory to Administrative
Agent, except for the acquisition documents referred to in clause (a)(iii) of
the definition of Permitted Acquisition, which shall be in the form and
delivered within the time periods specified therein. To the extent any Borrowing
is being requested in connection with the consummation of the Acquisition, the
conditions set forth in SECTIONS 7.2 and 7.3 hereof must be satisfied prior to
the making of any such Borrowing.
7.3 CONDITIONS PRECEDENT TO EACH BORROWING. In addition to the conditions
stated in SECTION 7.1 and SECTION 7.2, Lenders will not be obligated to fund (as
opposed to continue or convert) any Borrowing, and Administrative Agent will not
be obligated to issue any LC, as the case may be, unless on the date of such
Borrowing or issuance (and after giving effect thereto), as the case may be: (a)
Administrative Agent shall have timely received therefor a Notice of Borrowing
or a Notice of LC (together with the applicable LC Agreement), as the case may
be; (b) all of the representations and warranties of any Company or any
Guarantor set forth in the Loan Papers are true and correct in all material
respects (except to the extent that (i) the representations and warranties speak
to a specific date or (ii) the facts on which such representations and
warranties are based have been changed by transactions contemplated or permitted
by the Loan Papers); (c) no Material Adverse Event shall have occurred; (d) no
Default or Potential Default shall have occurred and be continuing; (e) the
funding of such Borrowings and issuance of such LC, as the case may be, is
permitted by Law; and (f) upon the reasonable request of Administrative Agent,
Borrower shall deliver to Administrative Agent evidence substantiating any of
the matters in the Loan Papers which are necessary to enable Borrower to qualify
for such Borrowing. Each Notice of Borrowing and LC Agreement delivered to
Administrative Agent shall constitute the representation and warranty by
Borrower to Administrative Agent that the statements above are true and correct
in all respects. Each condition precedent in this Agreement is material to the
transactions contemplated in this Agreement, and time is of the essence in
respect of each thereof. Subject to the prior approval of Required Lenders,
Lenders may fund any Borrowing, and Administrative Agent may issue any LC,
without all conditions being satisfied, but, to the extent permitted by Law, the
same shall not be deemed to be a waiver of the requirement that each such
condition precedent be satisfied as a prerequisite for any subsequent funding or
issuance, unless Required Lenders specifically waive each such item in writing.
7.4 ADDITIONAL CONDITIONS PRECEDENT TO INITIAL BORROWING. In addition to
the conditions stated in SECTION 7.1, SECTION 7.2, SECTION 7.3, and SECTION 7.5,
Lenders shall not be obligated to fund the Initial Borrowing unless on the date
of such Initial Borrowing, Administrative Agent has received all of the
agreements, documents, instruments, and other items described on SCHEDULE 7.1A.
7.5 ADDITIONAL CONDITION PRECEDENT TO CERTAIN BORROWINGS. In
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addition to the requirements stated in SECTION 7.1, SECTION 7.3, and SECTION
7.4, Lenders shall not be obligated to fund (as opposed to continue or convert)
any Borrowing during the first six months following the date hereof if the
proceeds of such Borrowing are to be used for any purpose other than to finance
a Permitted Acquisition, unless Borrower delivers to Administrative Agent a
certificate demonstrating pro forma compliance with SECTION 9.30(A) after giving
effect to such Borrowing.
SECTION 8 REPRESENTATIONS AND WARRANTIES. Borrower, each other Company, and each
Guarantor represent and warrant to Administrative Agent and Lenders as follows:
8.1 PURPOSE OF CREDIT FACILITY. Borrower will use (or will loan such
proceeds to its Companies to so use) all proceeds of Borrowings for one or more
of the following: (a) to finance the Permitted Acquisitions; and (b) to finance
Capital Expenditures, for working capital and for general corporate purposes up
to the Maximum Working Capital Commitment. No Company or Guarantor is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "MARGIN STOCK" within the
meaning of REGULATION U. No part of the proceeds of any Borrowing will be used,
directly or indirectly, for a purpose which violates any Law, including, without
limitation, the provisions of REGULATIONS G, T, U, or X (as enacted by the Board
of Governors of the Federal Reserve System, as amended).
8.2 EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS.
(a) Each Company and Guarantor is duly organized, validly existing, and in
good standing under the Laws of its jurisdiction of organization (such
jurisdictions being identified on SCHEDULE 8.2, as supplemented and modified in
writing from time to time to reflect any changes to such Schedule as a result
of transactions permitted by the Loan Papers). Each Company is duly qualified
to transact business and is in good standing in each jurisdiction where the
nature and extent of its business and properties require the same, except to
the extent the failure to qualify would not be a Material Adverse Event. Each
of Borrower, the Guarantors, and the Companies possesses all the
Authorizations, franchises, permits, licenses, certificates of compliance, and
approvals and grants of authority necessary or required in the conduct of its
respective business(es), and the same are valid, binding, enforceable, and
subsisting without any defaults thereunder or enforceable adverse limitations
thereon and are not subject to any proceedings or claims opposing the issuance,
development, or use thereof or contesting the validity thereof, except to the
extent the failure to possess same would not be a Material Adverse Event. No
authorization, consent, approval, waiver, license, or formal exemptions from,
nor any filing, declaration, or registration with, any Governmental Authority
(federal, state, or local), or non-governmental entity, under the terms of
contracts or otherwise, is required by reason of or in connection with the
execution and performance of the Loan Papers by Borrower, the Guarantors, and
the Companies.
(b) To Borrower's knowledge, each Managed Practice has all
53
licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for the ownership of its
property and the operation and conduct of its business (including, as
applicable, accreditations, licenses and certifications as a provider of
health care services including those necessary for it to be eligible to
receive payment and compensation and to participate under Medicare,
Medicaid, CHAMPUS, CHAMPVA, or any Blue Cross/Blue Shield or equivalent
program) and is in compliance with all of the foregoing and all applicable
laws relating to its business, except, in each case, to the extent that
the failure to have such licenses, permits, consents or approvals or to
make such filings or give such notices or to be in such compliance,
individually or in the aggregate, has not had and could not reasonably be
expected to have or result in a Material Adverse Event.
8.3 SUBSIDIARIES; CAPITAL STOCK. The Companies and Guarantors have no
Subsidiaries except as disclosed on SCHEDULE 8.3 (as supplemented and
modified in writing from time to time to reflect any changes to such
Schedule as a result of transactions permitted by the Loan Papers). All of
the outstanding shares of capital stock (or similar voting interests) of
each Subsidiary are duly authorized, validly issued, fully paid, and
nonassessable and are owned of record and beneficially as set forth on
SCHEDULE 8.3 (as supplemented and modified in writing from time to time to
reflect any changes to such Schedule as a result of transactions permitted
by the Loan Papers), free and clear of any Liens, restrictions, claims, or
Rights of another Person, other than Permitted Liens, and none of such
shares owned by any Company or Guarantor is subject to any restriction on
transfer thereof except for restrictions imposed by securities Laws and
general corporate Laws. No Company OR Guarantor has outstanding any
warrant, option, or other Right of any Person to acquire any of its
capital stock or similar equity interests.
8.4 AUTHORIZATION AND CONTRAVENTION.
(a) The execution and delivery by each Company and Guarantor of each
Loan Paper to which it is a party and the performance by such Company and
Guarantor of its obligations thereunder (a) are within the corporate power
of such Company or Guarantor, (b) will have been duly authorized by all
necessary corporate or partnership action on the part of such Company or
Guarantor when such Loan Paper is executed and delivered, (c) require no
action by or in respect of, or filing with, any Governmental Authority,
which action or filing has not been taken or made on or prior to the
Closing Date (or if later, the date of execution and delivery of such Loan
Paper), (d) will not violate any provision of the charter, bylaws, or
partnership agreement of such Company or Guarantor, (e) will not violate
any provision of Law applicable to it, other than such violations which
individually or collectively could not be a Material Adverse Event, (f)
will not violate any material written or oral agreements, contracts,
commitments, or understandings to which it is a party, other than such
violations which could not be a Material Adverse Event, or (g) will not
result in the creation or imposition of any Lien on any asset of any
Company or Guarantor. The Companies and Guarantors have (or will have upon
consummation thereof) all necessary consents and approvals of any
54
Person or Governmental Authority required to be obtained in order to effect any
asset transfer, change of control, merger, or consolidations permitted by the
Loan Papers.
(b) Each Service Agreement, and each of the transactions contemplated
thereunder does not violate any applicable rule or regulation: (i) relating to
the eligibility of a Managed Practice to receive payment and to participate as
an accredited and certified provider of health care services under Medicare,
Medicaid, CHAMPUS, CHAMPVA or any Blue Cross/Blue Shield or equivalent program,
(ii) applicable to such Person as a result of its participation in such
programs, (iii) relating to the licenses and permits required therein in
connection therewith, or (iv) relating to the practice of medicine or the
sharing of fees generated in connection therewith; except in each case ((I),
(II), (III) and (IV)), for such violations, as individually or in the aggregate
with all such events, have not had and could not reasonably be expected to have
or result in a Material Adverse Event.
8.5 BINDING EFFECT. Upon execution and delivery by all parties thereto,
each Loan Paper will constitute a legal, valid, and binding obligation of each
Company and each Guarantor party thereto, enforceable against each such Company
or Guarantor in accordance with its terms, except as enforceability may be
limited by applicable Debtor Relief Laws and general principles of equity.
8.6 FINANCIAL STATEMENTS. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of and for the portion of the fiscal year ending on the date or
dates thereof (subject only to normal year-end audit adjustments). There were no
material liabilities, direct or indirect, fixed or contingent, of the Companies
as of the date or dates of the Current Financials which are required under GAAP
to be reflected therein or in the notes thereto, and are not so reflected.
Except for transactions directly related to, or specifically contemplated by,
the Loan Papers, there have been no changes in the consolidated financial
condition of the Companies from that shown in the Current Financials after such
date which could be a Material Adverse Event, nor has Borrower or any Company
incurred any liability (including, without limitation, any liability under any
Environmental Law), direct or indirect, fixed or contingent, after such date
which could be a Material Adverse Event.
8.7 LITIGATION, CLAIMS, INVESTIGATIONS. No Company or Guarantor is subject
to, or aware of the threat of, any Litigation which is reasonably likely to be
determined adversely to any Company, any Guarantor, or any Managed Practice,
and, if so adversely determined, could (individually or collectively with other
Litigation) be a Material Adverse Event. There are no outstanding orders or
judgments for the payment of money in excess of $1,000,000 (individually or
collectively) or any warrant of attachment, sequestration, or similar proceeding
against the assets of any Company or Guarantor having a value (individually or
collectively) of $1,000,000 or more which is not either (a) stayed on appeal or
(b) being diligently contested in good faith by appropriate proceedings and
adequate reserves have been set aside on the books of such Company in accordance
with GAAP. There are no formal complaints, suits, claims, investigations, or
proceedings initiated at or by HCFA or any
55
Governmental Authority pending or to Borrower's knowledge, threatened by or
against any Company, Guarantor, or Managed Practice which could be a Material
Adverse Event, nor any judgments, decrees, or orders of any Governmental
Authority outstanding against any Company, any Guarantor, or Managed Practice
that could be a Material Adverse Event. No criminal, civil or administrative
action, audit, or investigation by a fiscal intermediary or by or on behalf of
any Governmental Authority exists or to Borrower's knowledge, is threatened with
respect to any of the Borrower, any of its Subsidiaries, or any Managed
Practice, which has had or could reasonably be expected to have or result in a
Material Adverse Event (including by way of an adverse effect on such Person's
right to receive Medicare, Medicaid, CHAMPUS, or CHAMPVA reimbursement to which
such Person would otherwise be entitled, or right to participate in the
Medicare, Medicaid, CHAMPUS, or CHAMPVA programs or on the ability of such
Person to engage in the practice of medicine or to fulfill its obligations as
contemplated under the Loan Papers or any Service Agreement), and no such Person
is subject to any pending but unassessed Medicare, Medicaid, CHAMPUS, or CHAMPVA
claim payment adjustments, except to the extent that such Person is contesting
such assessment in good faith by appropriate proceedings diligently pursued and
has established and will maintain adequate reserves for such adjustments in
accordance with GAAP, except to the extent that any such payment adjustment,
individually or in the aggregate, has not had and could not reasonably be
expected to have or result in a Material Adverse Event.
8.8 TAXES. All Tax returns of each Company and Guarantor required to be
filed have been filed (or extensions have been granted) prior to delinquency,
except for any such returns for which the failure to so file could not be a
Material Adverse Event, and all Taxes imposed upon each Company or Guarantor
which are due and payable have been paid prior to delinquency except for those
the applicability, amount or validity of which are being contested in good faith
by lawful proceedings being diligently conducted and against which reserve or
other provision has been made and in respect of which levy and execution of any
lien securing same have been and continue to be stayed.
8.9 ENVIRONMENTAL MATTERS. No Company or Guarantor after appropriate
inquiry (a) knows of any environmental condition or circumstance, such as the
presence or Release of any Hazardous Substance, on any property presently or
previously owned by any Company or any Guarantor that could be a Material
Adverse Event, (b) knows of any violation by any Company or any Guarantor of any
Environmental Law, except for such violations that could not be a Material
Adverse Event, or (c) knows that any Company or any Guarantor is under any
obligation to remedy any violation of any Environmental Law, except for such
obligations that could not be a Material Adverse Event; PROVIDED, HOWEVER, that
each Company and each Guarantor to the best of its knowledge, has in full force
and effect all environmental permits, licenses, and approvals required to
conduct its operations and is operating in substantial compliance thereunder.
8.10 EMPLOYEE BENEFIT PLANS. (a) No Employee Plan has incurred an
accumulated funding deficiency, as defined in SECTION 302 of ERISA and
SECTION 412 of the Code, (b) neither Borrower nor any ERISA Affiliate has
incurred material liability which is currently due and remains unpaid under
TITLE IV of ERISA to the PBGC or to an Employee Plan in connection with any such
Employee Plan, (c) neither Borrower nor any ERISA Affiliate has had a complete
or partial withdrawal from a Multiemployer Plan, (d) Borrower has not engaged in
any "PROHIBITED TRANSACTION" (as defined in SECTION 406 of ERISA or
56
SECTION 4975 of the Code) which would result in a Material Adverse Event, and
(e) no Reportable Event has occurred which is likely to result in the
termination of an Employee Plan. The present value of all benefit liabilities
within the meaning of TITLE IV of ERISA under each Employee Plan (based on those
actuarial assumptions used to fund such Employee Plan) did not, as of the last
annual valuation date for the 1997 plan year of such Plan, exceed the value of
the assets of such Employee Plan, and the total present values of all benefit
liabilities within the meaning of TITLE IV of ERISA of all Employee Plans (based
on the actuarial assumptions used to fund each such Plan) did not, as of the
respective annual valuation dates for the 1997 plan year of each such Plan,
exceed the value of the assets of all such plans.
8.11 PROPERTIES; LIENS. Each Company and each Guarantor has good and
marketable title to all its property reflected on the Current Financials, EXCEPT
(a) for (i) property that is obsolete, (ii) property that has been disposed of
in the ordinary course of business, or (iii) property with title defects or
failures in title which would not be a Material Adverse Event, or (b) as
otherwise permitted by the Loan Papers. Except for Permitted Liens, there is no
Lien on any property of any Company or any Guarantor, and the execution,
delivery, performance, or observance of the Loan Papers will not require or
result in the creation of any Lien on such property, other than the Liens
created under the Loan Papers.
8.12 GOVERNMENT REGULATIONS. No Company or Guarantor is subject to
regulation under the INVESTMENT COMPANY ACT OF 1940, as amended, the PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935, as amended, or any other Law (other than
REGULATIONS G, T, U, and X of the Board of Governors of the Federal Reserve
System) which regulates the incurrence of Debt.
8.13 TRANSACTIONS WITH AFFILIATES. No Company or Guarantor is a party to a
material transaction with any of its Affiliates (excluding transactions between
or among Companies), other than transactions in the ordinary course of business
and upon fair and reasonable terms not materially less favorable than such
Company could obtain or could become entitled to in an arm's-length transaction
with a Person that was not its Affiliate, and the transactions described on
SCHEDULE 8.13 hereto.
8.14 DEBT. No Company or Guarantor is an obligor on any Debt other than
Permitted Debt.
8.15 MATERIAL AGREEMENTS; MANAGEMENT AGREEMENTS. SCHEDULE 8.15 hereto sets
forth a list of all contracts material to the respective business of the
Companies and the Guarantors. There are no failures of any material written or
oral agreements, contracts, commitments, or understandings to which any Company
or Guarantor is a party to be in full force and effect which could be a Material
Adverse Event, and no default or potential default exists on the part of any
Company or any Guarantor thereunder which could be a Material Adverse Event.
None of Borrower, the Guarantors, or the Companies is a party to any management
or consulting agreement for the provision of services to it, except as described
in SCHEDULE 8.15 hereto.
8.16 INSURANCE. Each Company and each Guarantor maintains, with
financially sound, responsible, and reputable insurance companies or
associations, insurance concerning its properties and businesses against such
57
casualties and contingencies and of such types and in such amounts (and with
co-insurance and deductibles) as is customary in the case of same or similar
businesses.
8.17 LABOR MATTERS. To Borrower's knowledge, there are no actual or
threatened strikes, labor disputes, slow downs, walkouts, or other concerted
interruptions of operations by the employees of any Company or any Guarantor
that could be a Material Adverse Event. Hours worked by and payment made to
employees of the Companies and the Guarantors have not been in violation of the
FAIR LABOR STANDARDS ACT or any other applicable Law dealing with such matters,
other than any such violations, individually or collectively, which could not
constitute a Material Adverse Event. All payments due from any Company or any
Guarantor on account of employee health and welfare insurance have been paid or
accrued as a liability on its books, other than any such nonpayments which could
not, individually or collectively, constitute a Material Adverse Event.
8.18 SOLVENCY. At the time of each Borrowing hereunder and on the date of
each Permitted Acquisition, each Company and each Guarantor is (and after giving
effect to the transactions contemplated by the Loan Papers, any Permitted
Acquisition, and any incurrence of additional Debt, will be) Solvent.
8.19 INTELLECTUAL PROPERTY. Each Company and each Guarantor owns or has
sufficient and legally enforceable rights to use all material licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct its businesses as
heretofore conducted by it, now conducted by it, and now proposed to be
conducted by it. Each Company and each Guarantor is conducting its business
without infringement or claim of infringement of any license, patent, copyright,
service ▇▇▇▇, trademark, trade name, trade secret, or other intellectual
property right of others, other than any such infringements or claims which, if
successfully asserted against or determined adversely to any Company or any
Guarantor, could not, individually or collectively, constitute a Material
Adverse Event.
8.20 COMPLIANCE WITH LAWS. No Company or Guarantor is in violation of any
Laws, other than such violations which could not, individually or collectively,
be a Material Adverse Event. No Company or Guarantor has received notice
alleging any noncompliance with any Laws, except for such noncompliance which no
longer exists, or which could not constitute a Material Adverse Event.
8.21 PERMITTED ACQUISITIONS.
(a) VALIDITY. With respect to any Permitted Acquisitions, each of
Borrower, the Companies, and the Guarantors has the power and authority under
the Laws of its state of incorporation and under its articles of incorporation
and bylaws, to enter into and perform the related Acquisition agreement to
which it is a party and all other agreements, documents, and actions required
thereunder; and all actions (corporate or otherwise) necessary or appropriate
by Borrower, the Companies, or the Guarantors (as the case may be) for the
execution and performance of said Acquisition agreements, and all other
documents, agreements, and actions required thereunder, have been taken, and,
upon their execution, such Acquisition agreements will constitute the valid
58
and binding obligation of Borrower, the Companies, and the Guarantors,
as the case may be, enforceable in accordance with their respective terms.
(b) NO VIOLATIONS. With respect to any Permitted Acquisition, the making
and performance of the related Acquisition Agreements, and all other
agreements, documents, and actions required thereunder, will not violate any
provision of any Law, including, without limitation, all state corporate Laws
and judicial precedents of the states of incorporation or formation of
Borrower, the Companies, and the Guarantors, and will not violate any
provisions of the articles of incorporation and bylaws of Borrower, the
Companies, or the Guarantors, or constitute a default under any agreement by
which Borrower, the Companies, or the Guarantors or their respective property
may be bound, except to the extent the same would not be a Material Adverse
Event.
8.22 REGULATION U. "MARGIN STOCK" (as defined in REGULATION U) constitutes
less than 25% of those assets of the Companies or the Guarantors which are
subject to any limitation on sale, pledge, or other restrictions hereunder.
8.23 TRADENAME. No Company or Guarantor has used or transacted business
under any other corporate or trade name in the five-year period preceding the
date hereof, except that Borrower changed its name in 1997 from "DRCA MEDICAL
CORPORATION" to "INTEGRATED ORTHOPAEDICS, INC." and except as disclosed on Annex
A of the Collateral Documents listed as ITEM 11 on SCHEDULE 7.1 hereto.
8.24 FULL DISCLOSURE. There is no material fact or condition relating to
the Loan Papers or the financial condition, business, or property of any Company
or any Guarantor which could be a Material Adverse Event and which has not been
related, in writing, to Administrative Agent. All information heretofore
furnished by any Company or any Guarantor to any Lender or Administrative Agent
in connection with the Loan Papers was, and all such information hereafter
furnished by any Company or any Guarantor to any Lender or Administrative Agent
will be, true and accurate in all material respects or based on reasonable
estimates on the date as of which such information is stated or certified.
8.25 THIRD PARTY REIMBURSEMENT. If the Borrower, any Subsidiary, or any
Managed Practice is or has been audited by Medicare, Medicaid, CHAMPUS, CHAMPVA
or similar governmental Third Party Payors, to the Borrower's knowledge, (a)
none of such audits provides for adjustments in reimbursable costs or asserts
claims for reimbursement or repayment by such Person of costs and/or payments
theretofore made by such governmental Third Party Payor that, if adversely
determined, individually or in the aggregate, could reasonably be expected to
have or result in a Material Adverse Event and (b) no Managed Practice has had
requests or assertions of claims for reimbursement or repayment by it of costs
and/or payments heretofore made by any other Third Party Payor that, if
adversely determined, individually or in the aggregate, could reasonably be
expected to have or result in a Material Adverse Event.
8.26 REHABILITATION CORPORATION OF AMERICA. Rehabilitation
Corporation of America has no assets, no active business, and no liabilities
59
other than potential franchise tax liabilities.
SECTION 9 COVENANTS. Borrower and each Guarantor covenant and agree (and
agree to cause their ERISA Affiliates with respect to SECTION 9.10) to perform,
observe, and comply with each of the following covenants, from the Closing Date
and SO LONG THEREAFTER AS Lenders are committed to fund Borrowings and
Administrative Agent is committed to issue LCs under this Agreement and
thereafter until the payment in full of the Principal Debt (and termination of
outstanding LCs, if any) and payment in full of all other interest, fees, and
other amounts of the Obligation then due and owing, UNLESS Borrower receives a
prior written consent to the contrary by Administrative Agent as authorized by
Required Lenders:
9.1 USE OF PROCEEDS. Borrower shall use the proceeds of Borrowings only
for the purposes represented herein.
9.2 BOOKS AND RECORDS. The Companies and Guarantors shall maintain books,
records, and accounts necessary to prepare financial statements in accordance
with GAAP.
9.3 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Administrative Agent for delivery to Lenders:
(a) Promptly after preparation, and no later than 90 days after the last
day of each fiscal year of Borrower, Financial Statements showing the
consolidated and consolidating financial condition and results of operations
calculated separately for each of the Companies as of, and for the year ended
on, such day, each accompanied by:
(i) with respect to the consolidated Financial Statements of the
Companies, the unqualified opinion of a firm of nationally-recognized
independent certified public accountants, based on an audit using
generally accepted auditing standards, that such Financial Statements were
prepared in accordance with GAAP and present fairly in all material
respects the consolidated financial position and results of operations of
the Companies;
(ii) a copy of any management letter prepared by such accounting
firm;
(iii) with respect to the consolidated Financial Statements of the
Companies, a certificate from such accounting firm to Administrative Agent
indicating that during its audit it obtained no knowledge of any Default
or Potential Default or, if it obtained such knowledge, the nature and
period of existence thereof; PROVIDED that such accounting firm shall
deliver such certificate only with respect to the applicable Fiscal Year
end, and may exclude any reference to SECTION 9.30(A);
(iv) a letter from such accounting firm addressed to Borrower, with a
copy to Administrative Agent, acknowledging that (A) Borrower plans to
provide Administrative Agent with the Fiscal Year 1998 audited Financial
Statements and accompanying
60
audit report, (B) Administrative Agent has informed Borrower that
Administrative Agent and Lenders intend to rely on such firm's audit
report accompanying such Financial Statements, and (C) Borrower intends
for Administrative Agent and Lenders to so rely; and
(v) with respect to the Financial Statements of the Companies, a
Compliance Certificate.
(b) Promptly after preparation, and no later than 45 days after the last
day of the first three fiscal quarters of Borrower:
(i) Financial Statements showing the consolidated and
consolidating financial condition and results of
operations for the Companies;
(ii) an operating analysis in the form of a managements'
discussion and analysis of the results of operations for:
(A) the Companies on a consolidated basis, and
(B) the Managed Practices, at a level of
organizational detail as may be reasonably
requested by the Administrative Agent and
Lenders given the then-current magnitude and
organization of the Companies and Managed
Practices, in such a manner as to allow for the
comparison of the financial performance of
Managed Practices from period to period;
in each case for such fiscal quarter and for the period from the beginning of
the then-current fiscal year to the last day of such fiscal quarter and
accompanied by a Compliance Certificate with respect to such Financial
Statements.
(c) On or prior to March 31 of each fiscal year of Borrower, the financial
Budget for such fiscal year, accompanied by a certificate executed by a
Responsible Officer, certifying that such Budget was prepared by Borrower
based on assumptions which, in light of the historical performance of the
Companies and their prospects for the future, are reasonable.
(d) Promptly upon receipt thereof, copies of all auditor's annual
management letters delivered to Borrower.
(e) Notice, promptly after Borrower or any other company knows or has
reason to know of (i) the existence and status of any Litigation which could
be a Material Adverse Event, or of any order or judgment for the payment of
money which (individually or collectively) is in excess of $1,000,000, or any
warrant of attachment, sequestration, or similar proceeding against the
assets of any Company or Guarantor having a value (individually or
collectively) of $1,000,000, (ii) any material change in any material fact or
circumstance represented or
61
warranted in any Loan Paper, (iii) a Default or Potential Default specifying
the nature thereof and what action Borrower or any other Company or Guarantor
has taken, is taking, or proposes to take with respect thereto, (iv) the
receipt by any Company or Guarantor of any notice from any Governmental
Authority of the expiration without renewal, termination, material modification
or suspension of, or institution of any proceedings to terminate, materially
modify, or suspend, any Authorization granted by such Governmental Authority,
or any other Authorization which any Company or Guarantor is required to hold
in order to operate its business in compliance with all applicable Laws, other
than such expirations, terminations, suspensions, or modifications which
individually or in the aggregate, would not constitute a Material Adverse
Event, (v) any federal, state, or local statute, regulation, or ordinance or
judicial or administrative order limiting or controlling the operations of any
Company or any Guarantor which has been issued or adopted hereafter and which
is of material adverse importance or effect in relation to the operation of any
Company or Guarantor, (vi) the receipt by any Company or any Guarantor of
notice of any violation or alleged violation of any Environmental Law, which
violation or alleged violation could individually or collectively with other
such violations or allegations, constitute a Material Adverse Event, or (vii)
(A) the occurrence of a Reportable Event that, alone or TOGETHER WITH any other
Reportable Event, could reasonably be expected to result in liability of
Borrower or any Company or Guarantor to the PBGC in an aggregate amount
exceeding $1,000,000; (B) any expressed statement in writing on the part of the
PBGC of its intention to terminate any Employee Plan or Plans; (C) Borrower's
or an ERISA Affiliate's becoming obligated to file with the PBGC a notice of
failure to make a required installment or other payment with respect to an
Employee Plan; or (D) the receipt by Borrower or an ERISA Affiliate from the
sponsor of a Multiemployer Plan of either a notice concerning the imposition of
withdrawal liability in an aggregate amount exceeding $1,000,000 or of the
impending termination or reorganization of such Multiemployer Plan.
(f) Promptly after any of the information or disclosures provided on any
of the Schedules delivered pursuant to this Agreement or any Annexes to any of
the Collateral Documents becomes outdated or incorrect in any material respect,
such revised or updated Schedule(s) or Annexes as may be necessary or
appropriate to update or correct such information or disclosures; PROVIDED
THAT, no deletions may be made to any Annexes describing Collateral in any of
the Collateral Documents unless approved by Required Lenders.
(g) Promptly after preparation, true, correct, and complete copies of all
material reports or filings filed by or on behalf of any Company with any
Governmental Authority (including the FCC and the Securities and Exchange
Commission).
(h) Promptly after the filing thereof, a true, correct, and complete
copy of each FORM 10-K, FORM 10-Q, and FORM 8-K filed by or on behalf of
Borrower or any Company or any Guarantor with the Securities and Exchange
Commission.
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(i) Promptly upon request therefor by Administrative Agent or Lenders,
such information (not otherwise required to be furnished under the Loan Papers)
respecting the business affairs, assets, and liabilities of the Companies or
the Guarantors, and such opinions, certifications, and documents, in addition
to those mentioned in this Agreement, as reasonably requested.
9.4 INSPECTIONS. Upon reasonable notice, and prior to the occurrence and
continuation of any Potential Default or Default, not more than once each fiscal
quarter prior to the occurrence and continuation of any Potential Default or
Default, and following the occurrence and continuation of any Potential Default
or Default, as often as determined by Administrative Agent or any Lender, the
Companies and the Guarantors shall allow Administrative Agent or any Lender (or
their respective Representatives) to inspect any of their properties, to review
reports, files, and other records and to make and take away copies thereof, to
conduct tests or investigations, and to discuss any of their affairs,
conditions, and finances with other creditors, directors, officers, employees,
other representatives, and independent accountants of the Companies or
Guarantors, from time to time, during reasonable business hours.
9.5 TAXES. Each Company and each Guarantor (a) shall promptly pay when due
any and all Taxes OTHER THAN Taxes the applicability, amount, or validity of
which is being contested in good faith by lawful proceedings diligently
conducted, and against which reserve or other provision has been made, and in
respect of which levy and execution of any lien securing same have been and
continue to be stayed, (b) shall not, directly or indirectly, use any portion of
the proceeds of any Borrowing to pay the wages of employees unless a timely
payment to or deposit with the appropriate Governmental Authorities of all
amounts of Tax required to be deducted and withheld with respect to such wages
is also made, and (c) shall promptly notify Lenders if the Internal Revenue
Service or any other taxing authority commences or notifies any Company or any
Guarantor of its intention to commence an audit or investigation with respect to
any taxes of any kind due or alleged to be due from any Company or any
Guarantor.
9.6 PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in
accordance with the terms and provisions of the Loan Papers. Each Company and
each Guarantor (a) shall promptly pay (or renew and extend) all of its material
obligations and Debt as the same become due (unless such obligations and Debt
(other than the obligation) are being contested in good faith by appropriate
proceedings), and (b) shall not make any voluntary prepayment of principal of,
or interest on, any other Debt (other than the obligation), which is subordinate
to the Obligation. Borrower shall not make any payment on any Subordinated Debt
when it violates the subordination provisions thereof.
9.7 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise
permitted by SECTION 9.26, each Company and each Guarantor shall at all times:
(a) maintain its existence and good standing in the jurisdiction of its
organization and its authority to transact business in all other jurisdictions
where the failure to so maintain its authority to transact business could be a
Material Adverse Event; (b) maintain all licenses, permits, and franchises
necessary for its business where the failure to so maintain could be a Material
Adverse Event; (c) keep all of its assets (including, without limitation,
computer software) which are useful in and necessary to its
63
business in good working order and condition (ordinary wear and tear excepted)
and make all necessary repairs thereto and replacements thereof; and (d) do all
things necessary to obtain, renew, extend, and continue in effect all
Authorizations issued by any Governmental Authority which may at any time and
from time to time be necessary for the Companies and Guarantors to operate their
businesses in compliance with applicable Law, where the failure to so renew,
extend, or continue in effect could be a Material Adverse Event.
9.8 INSURANCE. The Companies and Guarantors shall, at their sole cost and
expense, keep and maintain the Collateral owned by such Company or Guarantor
insured for its actual cash value against loss or damage by fire, theft,
explosion, flood, and all other hazards and risks ordinarily insured against by
other owners or users of such properties in similar businesses of comparable
size and notify Administrative Agent promptly of any occurrence causing a
material loss or decline in value of the Collateral and the estimated (or
actual, if available) amount of such loss or decline. All policies of insurance
on the Collateral shall be in a form, with such deductibles, and with insurers
recognized as adequate by prudent business Persons in the same businesses as the
Companies or Guarantors and reasonably acceptable to Administrative Agent, and
all such policies shall be in such amount as may be reasonably satisfactory to
Administrative Agent. On the Closing Date and thereafter as each policy is
renewed and extended, the Companies and Guarantors shall deliver to
Administrative Agent a certificate of insurance for each policy of insurance and
evidence of payment of all premiums therefor. Such policies of insurance and the
certificates evidencing the same shall contain an endorsement, in form and
substance acceptable to Administrative Agent, showing loss payable to
Administrative Agent for the benefit of Lenders. Such endorsement, or an
independent instrument furnished to Administrative Agent, shall provide that the
insurance companies will give Administrative Agent at least thirty (30) days
prior written notice before any such policy or policies of insurance shall be
altered or canceled and that no act or default of any Company, any Guarantor, or
any other Person shall affect the Right of Administrative Agent to recover under
such policy or policies of insurance in case of loss or damage. Upon the payment
by the insurer of the proceeds of any such policy of insurance and if no Default
has occurred and is continuing, the Company or Guarantor so insured may retain
such insurance if such proceeds are used to repair or replace the property the
damage or destruction of which gave rise to the payment of such insurance
proceeds; PROVIDED, HOWEVER, that any insurance proceeds not used for repair or
replacement in accordance herewith, UNLESS paid as reimbursement of expenses
incurred and business losses suffered in connection with the loss or damage to
the Collateral, shall be paid to or retained by Administrative Agent for
application as a mandatory prepayment on the Obligation.
9.9 PRESERVATION AND PROTECTION OF RIGHTS. Each Company and each Guarantor
shall perform such acts and duly authorize, execute, acknowledge, deliver, file,
and record any additional agreements, documents, instruments, and certificates
as Administrative Agent or Required Lenders may reasonably deem necessary or
appropriate in order to preserve and protect the Rights of Administrative Agent
and Lenders under any Loan Paper.
9.10 EMPLOYEE BENEFIT PLANS. Borrower shall not, directly or indirectly,
engage in any "PROHIBITED TRANSACTION" (as defined in SECTION 406 of ERISA or
SECTION 4975 of the Code), and the Companies, the Guarantors, and
64
their respective ERISA Affiliates shall not, directly or indirectly, (a) incur
any "ACCUMULATED FUNDING DEFICIENCY" as such term is defined in SECTION 302 of
ERISA with respect to any Employee Plan, (b) permit any Employee Plan to be
subject to involuntary termination proceedings pursuant to TITLE IV of ERISA, or
(c) fully or partially withdraw from any Multiemployer Plan, if such prohibited
transaction, accumulated funding deficiency, termination proceeding, or
withdrawal would result in liability on the part of any Company or any Guarantor
(individually or collectively) in excess of $1,000,000.
9.11 ENVIRONMENTAL LAWS. Each Company and each Guarantor shall (a) conduct
its business so as to materially comply with all applicable Environmental Laws
and shall promptly take action to remedy any non-compliance with any
Environmental Law unless a failure to comply or remedy, whether individually or
in the aggregate would not be a Material Adverse Event, (b) promptly investigate
and remediate any known Release or threatened Release of any Hazardous Substance
on any property owned by any Company or any GUARANTOR OR AT ANY FACILITY
OPERATED by any Company or any Guarantor to the extent required by Environmental
Laws, unless a failure to investigate or remediate would not be a Material
Adverse Event.
9.12 ACCREDITATION AND LICENSING. Borrower and each of its Subsidiaries
shall keep itself fully licensed with all licenses required to operate such
Person's business under applicable law, except to the extent that the loss or
relinquishment of such qualification would not result in a Material Adverse
Event. Borrower will promptly furnish or cause to be furnished to Administrative
Agent copies of all reports and correspondence it or any Subsidiary sends or
receives relating to any loss or revocation (or threatened loss or revocation)
of any qualification described in this SECTION 9.12.
9.13 DEBT AND GUARANTIES.
(a) No Company or Guarantor shall, directly or indirectly, create, incur,
or suffer to exist any direct, indirect, fixed, or contingent liability for
any Debt, OTHER THAN:
(i) The Obligation;
(ii) Debt incurred by Borrower under any Financial Hedge;
(iii) Debt between Companies;
(iv) Existing Debt described on SCHEDULE 9.13 attached hereto;
(v) Purchase Money Debt, and Debt of any Acquisition Target assumed
by any Company in connection with any Permitted Acquisitions in the
aggregate outstanding principal amount of not more than $1,500,000 from
the date hereof through December 31, 1998, and $3,500,000 thereafter;
(vi) Debt arising under Capital Leases; and
(vii) Subordinated Debt of the Borrower to the seller of an
Acquisition Target incurred in connection with a Permitted
65
Acquisition.
(b) No Company or Guarantor shall guarantee or assume or agree to become
liable in any way, either directly or indirectly, for any Debt or liability of
others, except (i) endorsements of checks or drafts in the ordinary course of
business, (ii) the obligations of the Companies and Guarantors under the
Guaranty, and as permitted by SECTIONS 9.13(A), 9.21 and 9.25, including with
respect to Debt or liabilities of another Company.
9.14 LIENS. No Company or Guarantor will, directly or indirectly, (a)
enter into or permit to exist any arrangement or agreement which directly or
indirectly prohibits any Company or Guarantor from creating or incurring any
Lien on any of its assets, other than the Loan Papers, or (b) create, incur, or
suffer or permit to be created or incurred or to exist any Lien upon any of its
assets, other than pursuant to the Loan Papers, EXCEPT:
(i) Pledges or deposits made to secure payment of worker's compensation,
or to participate in any fund in connection with worker's compensation,
unemployment insurance, pensions, or other social security programs;
(ii) Good-faith pledges or deposits made to secure performance of bids,
tenders, insurance or other contracts (OTHER THAN for the repayment of borrowed
money), or leases, or to secure statutory obligations, surety or appeal bonds,
or indemnity, performance, or other similar bonds as all such Liens arise in
the ordinary course of business of the Companies and Guarantors;
(iii) Encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, none of which impair in any material
respect the use of such property by the Person in question in the operation of
its business, and none of which is violated by existing or proposed structures
or land use;
(iv) Liens of landlords or of mortgagees of landlords, arising by
operation of law or pursuant to a lease, on fixtures and movable property
located on premises leased in the ordinary course of business, which liens
shall secure only amounts due and payable under the applicable lease;
(v) The following, SO LONG AS the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings diligently
conducted, reserve or other appropriate provisions (if any) required by GAAP
shall have been made, levy and execution thereon have been stayed and continue
to be stayed, and they do not in the aggregate materially detract from the
value of the property of the Person in question, or materially impair the use
thereof in the operation of its business: (i) claims and Liens for Taxes (other
than Liens relating to Environmental Laws or ERISA); (ii) claims and Liens
upon, and defects of title to, real or personal property, including any
attachment of personal or real property or other legal process prior to
adjudication of a dispute of the merits; and (iii) claims and Liens of
mechanics, materialmen, warehousemen, carriers, landlords, or other like Liens;
66
(vi) The Lien of mortgages, Capital Leases, Liens securing Purchase Money
Debt, conditional sale contracts, security interests or arrangements for the
retention of title on property acquired by a Company after the date hereof,
useful and intended to be used in carrying on the business of such Company,
PROVIDED THAT:
(1) the Lien shall not extend to any property owned by any Company as
of the date hereof or not acquired pursuant to such Capital Lease or with
such Purchase Money Debt;
(2) at the time the Debt is issued or incurred, the aggregate amount
of the Debt secured by the Lien on such property shall not exceed the
lesser of the purchase price or the fair market value of the property as
determined in good faith by the Board of Directors of the Company; and
(3) the Debt secured by such Liens shall be issued or incurred
within the limitations of SECTION 9.13(A)(VI);
(vii) Liens securing the $800,000 Promissory Note dated January 22, 1993
made by IOI Management Services of Houston, Inc., payable to Borrower, as
amended, and as collaterally assigned to Administrative Agent; and
(viii) Contracts existing on the Closing Date which contain provisions
restricting or prohibiting the granting of a Lien in such contracts, and
contracts entered into by any Company after the Closing Date, which, after
reasonable best efforts by the Company to delete any provisions restricting or
prohibiting the creation of a Lien on such contract, contains such provisions.
9.15 TRANSACTIONS WITH AFFILIATES. No Company or Guarantor shall enter
into any material transaction with any of its Affiliates (excluding transactions
among or between Companies), OTHER THAN transactions in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than
such Company or Guarantor could obtain or could become entitled to in an arm's-
length transaction with a Person that was not its Affiliate.
9.16 COMPLIANCE WITH LAWS AND DOCUMENTS. No Company or Guarantor shall
violate the provisions of any Laws applicable to it, including, without
limitation, all rules and regulations promulgated by any Governmental Authority,
or any material written or oral agreement, contract, commitment, or
understanding to which it is a party, if such violation alone, or when
aggregated with all other such violations, could be a Material Adverse Event; no
Company or Guarantor shall violate the provisions of its charter, bylaws, or
partnership agreement, or modify, repeal, replace, or amend any provision of its
charter, bylaws, or partnership agreement, if such action could adversely affect
the Rights of Lenders.
9.17 PERMITTED ACQUISITIONS, SUBSIDIARY GUARANTIES, AND COLLATERAL
DOCUMENTS. In connection with each Permitted Acquisition, Borrower shall
deliver, or cause to be delivered to, Administrative Agent each of the items
described on SCHEDULE 7.2, on or before the date specified on such Schedule for
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each such item. Borrower shall cause each Subsidiary that becomes a Subsidiary
of any Company after the Closing Date (whether as a result of acquisition,
merger, creation, or otherwise), (a) to execute a Guaranty on the date such
entity becomes a Subsidiary of a Company and promptly deliver (but in no event
later than 10 days following consummation of such creation, acquisition, or
merger) such Guaranty to Administrative Agent and (b) to execute and deliver to
Administrative Agent all required Collateral Documents creating Liens in favor
of Administrative Agent on all the assets of such Subsidiary, to the extent set
forth in SECTION 6.5.
9.18 ASSIGNMENT. No Company or Guarantor shall assign or transfer any of
its rights, duties, or obligations under any of the Loan Papers.
9.19 FISCAL YEAR AND ACCOUNTING METHODS. No Company or Guarantor will
change its Fiscal Year for book accounting purposes or its method of accounting,
OTHER THAN (a) immaterial changes in methods or as required by GAAP, or (b) in
connection with a Permitted Acquisition, such changes to the newly-acquired
entity so as to conform its fiscal year and its method of accounting to those of
the Companies.
9.20 GOVERNMENT REGULATIONS. No Company or Guarantor will conduct its
business in such a way that it will become subject to regulation under the
INVESTMENT COMPANY ACT OF 1940, as amended, the PUBLIC UTILITY HOLDING COMPANY
ACT OF 1935, as amended, or any other Law (other than Regulations G, T, U, and X
of the Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
9.21 LOANS, ADVANCES, AND INVESTMENTS. No Company or Guarantor shall make
any loan, advance, extension of credit, or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
or evidences of Debt of, or interests in, any other Person, OTHER THAN (a)
readily marketable, direct, full faith and credit obligations of the United
States of America, or obligations guaranteed by the full faith and credit of the
United States of America, maturing within not more than one year from the date
of acquisition; (b) short term certificates of deposit and time deposits, which
mature within one year from the date of issuance and which are fully insured by
the Federal Deposit Insurance Corporation; (c) commercial paper maturing in 365
days or less from the date of issuance and rated either "P-1" by ▇▇▇▇▇'▇
Investors Service, Inc. ("MOODY'S"), or "A-l" by Standard and Poor's Rating
Group (a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., "S&P"); (d) debt instruments of a
domestic issuer which mature in one year or less and which are rated "A" or
better by Moody's or S&P on the date of acquisition of such investment; (e)
demand deposit accounts which are maintained in the ordinary course of business;
(f) loans, advances, extensions of credit, capital contributions, and other
investments between Companies; (g) Permitted Acquisitions; (h) trade accounts
receivable which are for goods furnished or services rendered in the ordinary
course of business and are payable in accordance with customary trade terms; (i)
purchase of accounts receivable by any Company from any Managed Practice so long
as such Company has properly filed a financing statement in the appropriate
offices, describing the accounts receivable, naming the Managed Practice as
debtor, the Company, as secured party, and Administrative Agent, as assignee to
protect the parties' interests; and (j) Managed Practice Loans not exceeding
$2,000,000.00 in aggregate outstanding principal amount at any time and loans to
officers and employees of
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the Companies, not exceeding $500,000.00 in aggregate outstanding principal
amount at any time.
9.22 DISTRIBUTIONS AND RESTRICTED PAYMENTS. No Company or Guarantor may
directly or indirectly declare, make, or pay any Restricted Payment, other than:
(a) Distributions declared, made, or paid by Borrower wholly in the form
of its capital stock;
(b) Distributions by any Company or Guarantor to Borrower or any other
Company;
(c) So long as no Default or Potential Default exists, regularly
scheduled payments (but not prepayments) of principal and interest on
Subordinated Debt at the contract rate; and
(d) The repurchase of up to 47,081 shares of the common capital stock of
Borrower currently held by ▇▇▇▇▇▇▇ Orthopaedics, Inc. for an aggregate
consideration not to exceed $250,000.00.
Notwithstanding the foregoing, Restricted Payments and Distributions are
permitted hereunder only to the extent such Restricted Payment or Distribution
is made in accordance with applicable Law.
9.23 RESTRICTIONS ON SUBSIDIARIES. No Subsidiary of Borrower nor any
Guarantor shall enter into or permit to exist any material arrangement or
agreement (other than the Loan Papers) which directly or indirectly prohibits
any such Subsidiary from (a) declaring, making, or paying, directly or
indirectly, any Distribution to Borrower or any other Company, (b) paying any
Debt owed to Borrower or any other Company, (c) making loans, advances, or
investments to Borrower or any other Company, or (d) transferring any of its
property or assets to Borrower or any other Company.
9.24 SALE OF ASSETS. No Company or Guarantor shall sell, assign, transfer,
or otherwise dispose of any of its assets, OTHER THAN (a) sales of inventory in
the ordinary course of business, (b) the sale, discount, or transfer of
delinquent accounts receivable in the ordinary course of business for purposes
of collection, (c) occasional sales of immaterial assets for consideration not
less than the fair market value thereof, (d) dispositions of obsolete assets,
(e) sale, leases, or other disposition among Companies or from a Guarantor to a
Company; (f) sales, leases, or other dispositions of equipment outside the
ordinary course of business PROVIDED, however, that Borrower shall make a
mandatory prepayment of the Revolver Principal Debt in accordance with the
provisions of SECTION 3.2 in an amount equal to, and contemporaneously with the
receipt of the gross proceeds of any such sale (LESS any reasonable selling
expenses related thereto), (g) sales of assets outside the ordinary course of
business (i) other than the sale of all or substantially all of the assets
related to a Managed Practice, having an aggregate fair market value not
exceeding $1,500,000, during the fiscal year ending December 31, 1998, and (ii)
including the sale of all or substantially all of the assets related to any
Managed Practice, during any fiscal year thereafter having a value (determined
as the greater of fair market value or book value) which when added to the value
(determined as the greater of fair market value or book value) of all
69
such other assets sold during such year, does not exceed 5% of the Borrower's
total assets as reflected on the most recent balance sheet furnished to
Administrative Agent pursuant to SECTION 9.3 at the time of any such sale,
PROVIDED, however, that Borrower shall make a mandatory prepayment of the
Revolver Principal Debt in accordance with the provisions of SECTION 3.2 in an
amount equal to, and contemporaneously with the receipt of, the gross proceeds
of any such sale (less any reasonable selling expenses related thereto); and (h)
if no Default or Potential Default then exists or arises as a result thereof,
sales of other assets, including equipment, in the ordinary course of business.
9.25 SALE-LEASEBACK FINANCINGS. No Company or Guarantor will enter into
any sale-leaseback arrangement with any Person pursuant to which such Company or
Guarantor shall lease any asset (whether now owned or hereafter acquired) if
such asset has been or is to be sold or transferred by any Company to any other
Person, other than aggregate sale-leasebacks of assets having a fair market
value of not more than $500,000 in the aggregate.
9.26 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK. No Company or
Guarantor will, directly or indirectly, merge or consolidate with any other
Person, other than (a) the dissolution of Rehabilitation Corporation of America,
(b) as a result of a Permitted Acquisition, (c) mergers or consolidations
involving Borrower if Borrower is the surviving entity, (d) mergers among
Wholly-owned Companies; PROVIDED THAT, in any merger involving Borrower
(including a Permitted Acquisition effected as a merger), Borrower must be the
surviving entity, and, in any merger involving any other Company (including a
Permitted Acquisition effected as a merger), a Company must be the surviving
entity. No Company or Guarantor shall liquidate, wind up, or dissolve (or suffer
any liquidation or dissolution), other than liquidations, wind ups, or
dissolutions incident to mergers permitted under this SECTION 9.26. No Company
or Guarantor may sell, assign, lease, transfer, or otherwise dispose of the
capital stock (or other ownership interests) of any other Company, EXCEPT for
sales, leases, transfers, or other such distributions to another Company.
9.27 NEW BUSINESS. No Company or Guarantor will alter the character of its
business from that conducted as of the Closing Date or engage in any business
other than the business conducted as of the Closing Date and activities which
are substantially similar or related thereto.
9.28 [LEFT INTENTIONALLY BLANK.]
9.29 AMENDMENTS TO DOCUMENTS. No Company or Guarantor shall (a) amend or
permit any amendments to any Company's Articles of Incorporation or Bylaws as in
effect on the date of this Agreement, if such action could adversely affect the
Rights of Lenders; (b) amend any existing credit arrangement or enter into any
new credit arrangement (to the extent permitted by the Loan Papers), if such
amended or new credit arrangements contain any provisions which are materially
more restrictive (as reasonably determined by Administrative Agent) than the
provisions of the Loan Papers; or (c) amend any subordination provision of any
now existing or hereafter arising Subordinated Debt or modify or amend in any
material respect, or waive compliance with the terms of, any Service Agreement
Basic Provision in any Service Agreement.
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9.30 FINANCIAL COVENANTS. As calculated on a consolidated basis for the
Companies:
(a) TOTAL FUNDED DEBT TO PRO FORMA EBITDA RATIO. Borrower shall not permit
the ratio of: (i) Total Funded Debt to (ii) Pro Forma EBITDA of the Companies
calculated on a consolidated basis, determined at the end of each fiscal
quarter of the Companies set forth below, to be less than zero or greater than
the ratio shown in the table below:
APPLICABLE PERIOD MAXIMUM TOTAL FUNDED
DEBT TO PRO FORMA EBITDA
RATIO
Date of Initial Borrowing to and
including December 30, 1999 4.25
December 31, 1999 to and including
June 29, 2000 3.75
June 30, 2000 and thereafter 3.25
(b) CONSOLIDATED NET WORTH. Borrower shall not permit, as of the last day
of each fiscal quarter of Borrower, its Consolidated Net Worth to be LESS than
95% of Borrower's Consolidated Net Worth as of the fiscal quarter ended June
30, 1998, but in no event less than $30,469,000, such amount to be (a)
increased on the last day of each successive fiscal quarter of Borrower by an
amount equal to seventy-five percent (75%) of the increase in net worth arising
from any Equity Issuance during such fiscal quarter, and (b) increased on the
last day of each fiscal quarter of Borrower by an amount equal to seventy-five
percent (75%) of positive consolidated net income for such fiscal quarter.
(c) MAXIMUM TOTAL FUNDED DEBT TO CAPITALIZATION. Borrower shall not permit
the ratio of Total Funded Debt to Capitalization determined on the Closing Date
and at the end of each fiscal quarter of the Companies thereafter to be greater
than the ratio shown in the table below:
APPLICABLE PERIOD MAXIMUM TOTAL FUNDED
DEBT TO CAPITALIZATION
RATIO
Closing Date to and including September
30, 1998 50%
October 1, 1998 and thereafter 60%
(d) INTEREST COVERAGE. Borrower shall not permit the ratio of (i) actual
EBITDA of the Companies for any twelve month period prior to the date of
calculation (or if less, from the date of the Initial
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Borrowing hereunder) to (ii) the cash Interest Expense of the Companies for the
same period determined on a quarterly basis at the end of each fiscal quarter
of the Companies for the twelve month (or lesser period, as applicable) period
then-ended, to be less than or equal to 1.5 to 1.0, from the date of the
Initial Borrowing through December 31, 1998. For purposes of calculating actual
EBITDA for the fiscal quarter in which the Initial Borrowing occurs hereunder,
Borrower may prorate the actual EBITDA of the Companies for such fiscal quarter
from the date of the Initial Borrowing until the end of such fiscal quarter.
(e) FIXED CHARGE COVERAGE RATIO. As of the last day of each fiscal
quarter, commencing March 31, 1999, with respect to the most recently ended
twelve month period prior to the date of calculation (or if less, from the date
of the Initial Borrowing hereunder), the ratio of: (a) the Companies' actual
EBITDAR for such period, less (i) cash Taxes of the Companies for such period,
and (ii) Capital Expenditures made by the Companies during such period to (b)
the SUM of (i) all mandatory prepayments and regularly-scheduled principal
payments with respect to Total Funded Debt of the Companies required to be paid
during such period, (ii) cash Interest Expense of the Companies during such
period, and (iii) Rental Expense of the Companies during such period shall not
be less than 1.25 to 1.00. For purposes of calculating actual EBITDAR for the
fiscal quarter in which the Initial Borrowing occurs hereunder, Borrower may
prorate the actual EBITDAR of the Companies for such fiscal quarter from the
date of the Initial Borrowing until the end of such fiscal quarter.
9.31 YEAR 2000. All of the material computer software, computer firmware,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized, and/or software systems that are used
or relied on by the Companies in the conduct of their respective businesses will
not malfunction, will not cease to function, will not generate incorrect data,
and will not produce incorrect results when processing, providing, and/or
receiving (a) date-related data into and between the twentieth and twenty-first
centuries and (b) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
9.32 REHABILITATION CORPORATION OF AMERICA. Borrower agrees to cause
Rehabilitation Corporation of America to be dissolved as soon as possible.
Borrower shall not and shall not permit any Company to transfer any assets to,
make any loan to, or investment in, Rehabilitation Corporation of America other
than a contribution not to exceed $10,000 to pay franchise taxes necessary for
dissolution. Borrower shall not permit Rehabilitation Corporation of America to
engage in any business of any nature whatsoever, other than causing it to be
dissolved.
SECTION 10 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
10.1 PAYMENT OF OBLIGATION. The failure or refusal of any Company or
Guarantor to pay (a) the principal portion of the obligation when the same
becomes due; (b) any other portion of the obligation (other than as described
in SECTION 10.1(A) and (C)) within three Business Days of becoming due (whether
72
by its terms, by acceleration, or as otherwise provided in the Loan Papers);
and (c) the indemnifications and reimbursement obligations provided for in the
Loan Papers after demand therefor.
10.2 COVENANTS. The failure or refusal of Borrower (and, if applicable, any
other Company or Guarantor) to punctually and properly perform, observe, and
comply with:
(a) Any covenant, agreement, or condition contained in SECTIONS 9.1, 9.3,
9.6(B), 9.13, 9.14, 9.17, 9.20 through 9.26, 9.29, 9.30, AND 9.31; and
(b) Any other covenant, agreement, or condition contained in any Loan
Paper (OTHER THAN the covenants to pay the Obligation set forth in SECTION 10.1
and the covenants in SECTION 10.2(A)), and such failure or refusal continues
for 10 days after Administrative Agent gives written notice to Borrower of the
existence of such failure or refusal.
10.3 DEBTOR RELIEF. Borrower, any other Company, or Guarantor (a) fails to pay
its Debts generally as they become due, (b) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, OTHER THAN as a creditor or
claimant, or (c) becomes a party to or is made the subject of any proceeding
provided for by any Debtor Relief Law, OTHER THAN as a creditor or claimant,
that could suspend or otherwise adversely affect the Rights of Administrative
Agent or any Lender granted in the Loan Papers (UNLESS, in the event such
proceeding is involuntary, the petition instituting same is dismissed within 60
days after its filing).
10.4 JUDGMENTS AND ATTACHMENTS. Any Company or Guarantor fails, within 60
days after entry, to pay, bond, or otherwise discharge any judgment or order for
the payment of money in excess of $1,000,000 (individually or collectively) or
any warrant of attachment, sequestration, or similar proceeding against any
Company's assets having a value (individually or collectively) of $1,000,000
which is not stayed on appeal.
10.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued by any
Governmental Authority, seeking to cause any Company or Guarantor to divest a
significant portion of its assets pursuant to any antitrust, restraint of trade,
unfair competition, industry regulation, or similar Laws, or (b) any
Governmental Authority shall condemn, seize, or otherwise appropriate, or take
custody or control of all or any substantial portion of the assets of any
Company or Guarantor.
10.6 MISREPRESENTATION. Any representation or warranty made by any Company or
Guarantor contained in any Loan Paper shall at any time prove to have been
incorrect in any material respect when made.
10.7 CHANGE OF CONTROL. Any Change of Control shall occur.
10.8 DEFAULT UNDER OTHER DEBT AND AGREEMENTS. Any default exists under any
material written or oral agreement, indebtedness or contract to which a Company
or Guarantor is a party (including, without limitation, under any Service
Agreement, Seller Note or Acquisition Agreement) which default, individually or
in the aggregate with all other such defaults, would be a
73
Material Adverse Event.
10.9 EMPLOYEE BENEFIT PLANS. (a) A "REPORTABLE EVENT" or "REPORTABLE
EVENTS," or a failure to make a required installment or other payment (within
the meaning of SECTION 412(N)(1) of the Code), shall have occurred with respect
to any Employee Plan or Plans that is expected to result in liability of
Borrower to the PBGC or to a Plan in an aggregate amount exceeding $1,000,000
and, within 30 days after the reporting of any such Reportable Event to
Administrative Agent or after the receipt by Administrative Agent of a statement
required pursuant to SECTION 8.3(D) hereof, Administrative Agent shall have
notified Borrower in writing that (i) Required Lenders have made a reasonable
determination that, on the basis of such Reportable Event or Reportable Events
or the failure to make a required payment, there are grounds under TITLE IV of
ERISA for the termination of such Employee Plan or Plans by the PBGC, or the
appointment by the appropriate United States district court of a trustee to
administer such Employee Plan or Plans or the imposition of a lien pursuant to
SECTION 412(N) of the Code in favor of an Employee Plan and (ii) as a result
thereof a Default exists hereunder; or (b) Borrower or any ERISA Affiliate has
provided to any affected party a 60-day notice of intent to terminate an
Employee Plan pursuant to a distress termination in accordance with SECTION
4041(C) of ERISA if the liability expected to be incurred as a result of such
termination will exceed $1,000,000; or (c) a trustee shall be appointed by a
United States district court to administer any such Employee Plan; or (d) the
PBGC shall institute proceedings (including giving notice of intent thereof) to
terminate any such Employee Plan; or (e)(i) Borrower or any ERISA Affiliate
shall have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability (within the meaning of SECTION 4201 of ERISA) to
such Multiemployer Plan, (ii) Borrower or such ERISA Affiliate does not have
reasonable grounds for contesting such withdrawal liability or is not contesting
such withdrawal liability in a timely and appropriate manner and (iii) the
amount of such withdrawal liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in connection
with withdrawal liabilities (determined as of the date or dates of such
notification), exceeds $1,000,000; or (f) Borrower or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of TITLE IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or have
been or are being terminated have been or will be increased over the amounts
required to be contributed to such Multiemployer Plans for their most recently
completed plan years by an amount exceeding $1,000,000.
10.10 VALIDITY AND ENFORCEABILITY OF LOAN PAPERS. Any Loan Paper shall, at
any time after its execution and delivery and for any reason, cease to be in
full force and effect in any material respect or be declared to be null and void
(other than in accordance with the terms hereof or thereof) or the validity or
enforceability thereof be contested by any Company or Guarantor party thereto or
any Company or Guarantor shall deny in writing that it has any or any further
liability or obligations under any Loan Paper to which it is a party.
10.11 CHANGE IN LAWS. The enactment of or any change in any law or
regulation governing or affecting a physician practice management company or
74
any practice or practice group managed thereby, including without limitation any
Healthcare Laws, which would be a Material Adverse Event and which has not
ceased to be a Material Adverse Event by the ninetieth day after the
effectiveness thereof.
SECTION 11 RIGHTS AND REMEDIES.
11.1 REMEDIES UPON DEFAULT.
(a) If a Default exists under SECTION 10.3(B) or 10.3(C), the commitment
to extend credit hereunder shall automatically terminate and the entire unpaid
balance of the obligation shall automatically become due and payable without
any action or notice of any kind whatsoever and Borrower shall be required to
provide cash collateral in an amount equal to 105% of the LC Exposure then
existing or a Collateral Letter of Credit in accordance with SECTION 2.2(H).
(b) If any Default exists, Administrative Agent may (and, subject to the
terms of SECTION 12, shall upon the request of Required Lenders) or Required
Lenders may, do any one or more of the following: (i) if the maturity of the
obligation has not already been accelerated under SECTION 11.1(A), declare the
entire unpaid balance of the obligation, or any part thereof, immediately due
and payable, whereupon it shall be due and payable; (ii) terminate the
commitments of Lenders to extend credit hereunder; (iii) reduce any claim to
judgment; (iv) to the extent permitted by Law, exercise (or request each Lender
to, and each Lender shall be entitled to, exercise) the Rights of offset or
banker's Lien against the interest of Borrower in and to every account and
other property of Borrower which are in the possession of Administrative Agent
or any Lender to the extent of the full amount of the Obligation (to the extent
permitted by Law, Borrower being deemed directly obligated to each Lender in
the full amount of the Obligation for such purposes); (v) if the maturity of
the Obligation has not already been accelerated under SECTION 11.1(A), demand
Borrower to provide cash collateral in an amount equal to 105% of the LC
Exposure then existing or a Collateral Letter of Credit in accordance with
SECTION 2.2(H); and (vi) exercise any and all other legal or equitable Rights
afforded by the Loan Papers, the Laws of the State of Texas, or any other
applicable jurisdiction as Administrative Agent shall deem appropriate, or
otherwise, including, but not limited to, the Right to bring suit or other
proceedings before any Governmental Authority either for specific performance
of any covenant or condition contained in any of the Loan Papers or in aid of
the exercise of any Right granted to Administrative Agent or any Lender in any
of the Loan Papers.
11.2 COMPANY WAIVERS. To the extent permitted by Law, the Companies and
Guarantors hereby waive presentment and demand for payment, protest, notice of
intention to accelerate, notice of acceleration, and notice of protest and
nonpayment, and agree that their respective liability with respect to the
Obligation (or any part thereof) shall not be affected by any renewal or
extension in the time of payment of the Obligation (or any part thereof), by any
indulgence, or by any release or change in any security for the payment of the
Obligation (or any part thereof).
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11.3 PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or
agreement of any Company or Guarantor is not performed in accordance with the
terms of the Loan Papers, after the occurrence and during the continuance of a
Default, Administrative Agent may, at its option (but subject to the approval of
Required Lenders), perform or attempt to perform such covenant, duty, or
agreement on behalf of such Company or Guarantor. In such event, any amount
expended by Administrative Agent in such performance or attempted performance
shall be payable by the Companies and Guarantors, jointly and severally, to
Administrative Agent on demand, shall become part of the Obligation, and shall
bear interest at the Default Rate from the date of such expenditure by
Administrative Agent until paid. Notwithstanding the foregoing, it is expressly
understood that Administrative Agent does not assume, and shall never have,
except by its express written consent, any liability or responsibility for the
performance of any covenant, duty, or agreement of any Company or any Guarantor.
11.4 DELEGATION OF DUTIES AND RIGHTS. Lenders may perform any of their
duties or exercise any of their Rights under the Loan Papers by or
through their respective Representatives.
11.5 NOT IN CONTROL. Nothing in any Loan Paper shall, or shall be deemed
to (a) give any Agent or any Lender the Right to exercise control over the
assets (including real property), affairs, or management of any Company or any
Guarantor, (b) preclude or interfere with compliance by any Company or any
Guarantor with any Law, or (c) require any act or omission by any Company or any
Guarantor that may be harmful to Persons or property. Any "MATERIAL ADVERSE
EVENT" or other materiality qualifier in any representation, warranty, covenant,
or other provision of any Loan Paper is included for credit documentation
purposes only and shall not, and shall not be deemed to, mean that
Administrative Agent or any Lender acquiesces in any non-compliance by any
Company or Guarantor with any Law or document, or that any Agent or any Lender
does not expect the Companies or Guarantors to promptly, diligently, and
continuously carry out all appropriate removal, remediation, and termination
activities required or appropriate in accordance with all Environmental Laws.
Administrative Agent and the Lenders have no fiduciary relationship with or
fiduciary duty to Borrower or any Company or Guarantor arising out of or in
connection with the Loan Papers, and the relationship between Administrative
Agent and the Lenders, on the one hand, and Borrower, the Companies, and
Guarantors, on the other hand, in connection with the Loan Papers is solely that
of debtor and creditor. The power of Administrative Agent and Lenders under the
Loan Papers is limited to the Rights provided in the Loan Papers, which Rights
exist solely to assure payment and performance of the Obligation and may be
exercised in a manner calculated by Administrative Agent and Lenders in their
respective good faith business judgment.
11.6 COURSE OF DEALING. The acceptance by Administrative Agent or
Lenders at any time and from time to time of partial payment on the Obligation
shall not be deemed to be a waiver of any Default then existing. No waiver by
Administrative Agent, Required Lenders, or Lenders of any Default shall be
deemed to be a waiver of any other then-existing or subsequent Default. No delay
or omission by Administrative Agent, Required Lenders, or Lenders in exercising
any Right under the Loan Papers shall impair such Right or be construed as a
waiver thereof or any acquiescence therein, nor shall any single or partial
exercise of any such Right preclude other or further exercise
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thereof, or the exercise of any other Right under the Loan Papers or otherwise.
11.7 CUMULATIVE RIGHTS. All Rights available to Administrative Agent and
Lenders under the Loan Papers are cumulative of and in addition to all other
Rights granted to Administrative Agent and Lenders at law or in equity, whether
or not the Obligation is due and payable and whether or not Administrative Agent
or Lenders have instituted any suit for collection, foreclosure, or other action
in connection with the Loan Papers.
11.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the obligation in the order and manner set
forth in SECTION 3.11.
11.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver, or
cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers
Administrative Agent or Lenders may reasonably request in connection with the
obtaining of any consent, approval, registration, qualification, permit,
license, or Authorization of any Governmental Authority or other Person
necessary or appropriate for the effective exercise of any Rights under the Loan
Papers. Because Borrower agrees that Administrative Agent's and Lenders'
remedies at Law for failure of Borrower to comply with the provisions of this
SECTION would be inadequate and that such failure would not be adequately
compensable in damages, Borrower agrees that the covenants of this SECTION may
be specifically enforced.
11.10 EXPENDITURES BY LENDERS. Borrower shall promptly pay within fifteen
(15) Business Days after request therefor (a) all reasonable out-of-pocket
costs, fees, and expenses paid or incurred by Administrative Agent, incident to
any Loan Paper (including, but not limited to, the reasonable fees and expenses
of counsel to Administrative Agent in connection with the negotiation,
preparation, delivery, execution, coordination and administration of the Loan
Papers and any related amendment, waiver, or consent) and (b) all reasonable
costs and expenses of Lenders and Administrative Agent incurred by
Administrative Agent or any Lender in connection with the enforcement of the
obligations of any Company or Guarantor arising under the Loan Papers
(including, without limitation, costs and expenses incurred in connection with
any workout or bankruptcy) or the exercise of any Rights arising under the Loan
Papers (including, but not limited to, reasonable attorneys' fees, court costs
and other costs of collection), all of which shall be a part of the Obligation
and shall bear interest at the Default Rate from the date due until the date
repaid.
11.11 INDEMNIFICATION. BORROWER AND EACH GUARANTOR AGREES TO INDEMNIFY
AND HOLD HARMLESS ADMINISTRATIVE AGENT, EACH LENDER, AND EACH OF THEIR
RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST
ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE
INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE
ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT
LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR
PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF THE
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TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS
OF THE BORROWINGS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF
THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS,
LIABILITY, COST, OR EXPENSE (I) RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OR (II) AROSE WITH RESPECT TO ANY HAZARDOUS
MATERIAL THAT IS FIRST MANUFACTURED, GENERATED, TREATED, LOCATED, OR STORED ON
ANY REAL PROPERTY OWNED OR OPERATED BY ANY COMPANY ("PROPERTY") AFTER IT IS
TRANSFERRED TO ANY INDEMNIFIED PARTY OR ITS SUCCESSORS BY FORECLOSURE SALE, DEED
IN LIEU OF FORECLOSURE, OR SIMILAR TRANSFER, EXCEPT TO THE EXTENT SUCH
MANUFACTURE, EMISSION, RELEASE, GENERATION, TREATMENT, STORAGE, RELEASE OR
DISPOSAL, OR VIOLATION IS ACTUALLY CAUSED BY ANY COMPANY. IN THE CASE OF AN
INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS
SECTION 11.12 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH
INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON
OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. THE BORROWER AND EACH
GUARANTOR AGREE NOT TO ASSERT ANY CLAIM AGAINST ANY INDEMNIFIED PARTY ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES
ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN PAPERS, ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE
BORROWINGS. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF THE
BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE BORROWER CONTAINED IN
THIS SECTION 11.11 SHALL SURVIVE THE PAYMENT IN FULL OF THE BORROWINGS AND ALL
OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
SECTION 12 AGREEMENT AMONG LENDERS.
12.1 ADMINISTRATIVE AGENT.
(a) Each Lender hereby appoints NationsBank, N.A. (and NationsBank,
N.A. hereby accepts such appointment) as its nominee and agent, in its
name and on its behalf: (i) to act as nominee for and on behalf of such
Lender in and under all Loan Papers; (ii) to arrange the means whereby the
funds of Lenders are to be made available to Borrower under the Loan
Papers; (iii) to take such action as may be requested by any Lender under
the Loan Papers (when such Lender is entitled to make such request under
the Loan Papers and after such requesting Lender has obtained the
concurrence of such other Lenders as may be required under the Loan
Papers); (iv) to receive all documents and items to be furnished to
Lenders under the Loan Papers; (v) to timely distribute, and
Administrative Agent agrees to so distribute, to each Lender all material
information, requests, documents, and items received from Borrower under
the Loan Papers; (vi) to promptly distribute to each Lender its ratable
part of each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance thereon, or
otherwise) in accordance with the terms of the Loan Papers; (vii) to
deliver to the appropriate Persons requests, demands, approvals, and
consents received from Lenders; and (viii) to execute, on behalf of
Lenders, such releases or other documents or instruments as are permitted
by the Loan Papers or as directed by Lenders from time to time; PROVIDED,
HOWEVER, Administrative Agent shall not be required to take any action
which
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exposes Administrative Agent to personal liability or which is contrary to
the Loan Papers or applicable Law.
(b) Administrative Agent may resign at any time as Administrative
AGENT UNDER the Loan Papers by giving written notice thereof to Lenders
and Borrower and may be removed as Administrative Agent under the Loan
Papers at any time with cause by Required Lenders. Should the initial or
any successor Administrative Agent ever cease to be a party hereto or
should the initial or any successor Administrative Agent ever resign or be
removed as Administrative Agent, then Required Lenders shall elect the
successor Administrative Agent from among the Lenders (other than the
resigning Administrative Agent), which provided no Potential Default or
Default then exists shall be reasonably acceptable to Borrower. If no
successor Administrative Agent shall have been so appointed by Required
Lenders, within 30 days after the retiring Administrative Agent's giving
of notice of resignation or Required Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on
behalf of Lenders, appoint a successor Administrative Agent, which shall
be a commercial bank having a combined capital and surplus of at least
$1,000,000,000 and which, provided no Potential Default or Default then
exists, shall be reasonably acceptable to Borrower. Upon the acceptance of
any appointment as Administrative Agent under the Loan Papers by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the Rights of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations of Administrative Agent under
the Loan Papers (PROVIDED, HOWEVER, THAT when used in connection with LCs
issued and outstanding prior to the appointment of the successor
Administrative Agent, "ADMINISTRATIVE AGENT" shall continue to refer
solely to the bank that issued the outstanding LC; PROVIDED FURTHER THAT
any LCs issued or renewed after the appointment of any successor
Administrative Agent shall be issued by such successor Administrative
Agent), and each Lender shall execute such documents as any Lender may
reasonably request to reflect such change in and under the Loan Papers.
After any retiring Administrative Agent's resignation or removal as
Administrative Agent under the Loan Papers, the provisions of this SECTION
12 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under the Loan Papers.
(c) Administrative Agent, in its capacity as a Lender, shall have the
same Rights under the Loan Papers as any other Lender and may exercise the
same as though it were not acting as Administrative Agent; the term
"LENDER" shall, unless the context otherwise indicates, include
Administrative Agent; and any resignation, or removal of by Administrative
Agent hereunder shall not impair or otherwise affect any Rights which it
has or may have in its capacity as an individual Lender. Each Lender and
Borrower agree that Administrative Agent is not a fiduciary for Lenders or
for Borrower but simply is acting in the capacity described herein to
alleviate administrative burdens for both Borrower and Lenders, that
Administrative Agent has no duties or responsibilities to Lenders or
Borrower except those expressly set forth herein, and that Administrative
Agent in its capacity as a Lender
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has all Rights of any other Lender.
(d) Administrative Agent and its Affiliates may now or hereafter be
engaged in one or more loan, letter of credit, leasing, or other financing
transactions with Borrower, act as trustee or depositary for Borrower, or
otherwise be engaged in other transactions with Borrower (collectively, the
"OTHER ACTIVITIES") not the subject of the Loan Papers. Without limiting the
Rights of Lenders specifically set forth in the Loan Papers, Administrative
Agent and its Affiliates shall not be responsible to account to Lenders for
such other activities, and no Lender shall have any interest in any other
activities, any present or future guaranties by or for the account of Borrower
which are not contemplated or included in the Loan Papers, any present or
future offset exercised by Administrative Agent and its Affiliates in respect
of such other activities, any present or future property taken as security for
any such other activities, or any property now or hereafter in the possession
or control of Administrative Agent or its Affiliates which may be or become
security for the obligations of Borrower arising under the Loan Papers by
reason of the general description of indebtedness secured or of property
contained in any other agreements, documents or instruments related to any such
other activities; PROVIDED THAT, if any payments in respect of such guaranties
or such property or the proceeds thereof shall be applied to reduction of the
obligations of Borrower arising under the Loan Papers, then each Lender shall
be entitled to share in such application ratably.
12.2 EXPENSES. Upon demand by Administrative Agent, each Lender shall
pay its Pro Rata Part of any reasonable expenses (including, without
limitation, court costs, reasonable attorneys' fees, and other costs of
collection) incurred by Administrative Agent in connection with any of the Loan
Papers if and to the extent Administrative Agent does not receive reimbursement
therefor from other sources within 60 days after incurred; PROVIDED THAT, each
Lender shall be entitled to receive its Pro Rata Part of any reimbursement for
such expenses, or part thereof, which Administrative Agent subsequently
receives from such other sources.
12.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided in
the Loan Papers, nothing in the Loan Papers shall be deemed to give any Lender
any advantage over any other Lender insofar as the Obligation arising under the
Loan Papers is concerned, or to relieve any Lender from absorbing its Pro Rata
Part of any losses sustained with respect to the Obligation (except to the
extent such losses result from unilateral actions or inactions of any Lender
that are not made in accordance with the terms and provisions of the Loan
Papers).
12.4 DELEGATION OF DUTIES; RELIANCE. Administrative Agent may perform any
of its duties or exercise any of its Rights under the Loan Papers by or through
its Representatives. Administrative Agent and its Representatives shall (a) be
entitled to rely upon (and shall be protected in relying upon) any writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telecopy, telegram, telex or teletype message, statement, order, or other
documents or conversation believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect
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to legal matters, upon opinion of counsel selected by Administrative Agent,
(b) be entitled to deem and treat each Lender as the owner and holder of the
Revolver Principal Debt owed to such Lender for all purposes until, subject to
SECTION 13.13, written notice of the assignment or transfer thereof shall have
been given to and received by Administrative Agent (and any request,
authorization, consent, or approval of any Lender shall be conclusive and
binding on each subsequent holder, assignee, or transferee of the Revolver
Principal Debt owed to such Lender or portion thereof until such notice is
given and received), (c) not be deemed to have notice of the occurrence of a
Default unless a responsible officer of Administrative Agent, who handles
matters associated with the Loan Papers and transactions thereunder, has
received written notice from a Lender or Borrower and stating that such notice
is a "NOTICE OF DEFAULT," and (d) be entitled to consult with legal counsel
(including counsel for Borrower), independent accountants, and other experts
selected by Administrative Agent and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts.
12.5 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Administrative Agent to enter into
the Loan Papers for the Lenders' Liens and agrees that any action taken by
Administrative Agent concerning any Collateral (with the consent or at the
request of Required Lenders) in accordance with any Loan Paper, that
Administrative Agent's exercise (with the consent or at the request of Required
Lenders) of powers concerning the Collateral in any Loan Paper, and that all
other reasonably incidental powers are authorized and binding upon all Lenders.
(b) Administrative Agent is authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from any Lender, from time to
time before a Default or Potential Default, to take any action with respect to
any Collateral or Loan Papers related to Collateral that may be necessary to
perfect and maintain perfected the Lender's Liens upon the Collateral.
(c) Except to use the same standard of care that it ordinarily uses for
collateral for its sole benefit, Administrative Agent has no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by any Company or is cared for, protected, or insured or has
been encumbered or that the Lender's Liens have been properly or sufficiently
or lawfully created, perfected, protected, or enforced or are entitled to any
particular priority.
(d) Administrative Agent shall exercise the same care and prudent judgment
with respect to the Collateral and the Loan Papers as it normally and
customarily exercises in respect of similar collateral and security documents.
(e) Lenders irrevocably authorize Administrative Agent, at its option and
in its discretion, to release any Lenders' Lien upon any Collateral (i) in
accordance with SECTION 9.24, (ii) constituting property being disposed of as
permitted under any Loan Paper, (iii) constituting property in which no
Company owned any interest at
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the time the Lenders' Lien was granted or at any time after that, (iv)
constituting property leased to any Company under a lease that has expired or
been terminated in a transaction permitted under the Loan Papers or is about to
expire and that has not been, and is not intended by that Company to be,
renewed, (v) consisting of an instrument evidencing Debt pledged to
Administrative Agent (for the benefit of Lenders), if the underlying Debt has
been paid in full, or (vi) if approved, authorized, or ratified in writing by
Lenders in accordance with SECTION 13.11(B)(IV). Upon request by Administrative
Agent at any time, Lenders shall confirm in writing Administrative Agent's
authority to release particular types or items of Collateral under this CLAUSE
(E).
12.6 LIMITATION OF LIABILITY.
(a) Neither Administrative Agent nor any of its Representatives shall be
liable for any action taken or omitted to be taken by it or them under the Loan
Papers in good faith and reasonably believed by it or them to be within the
discretion or power conferred upon it or them by the Loan Papers or be
responsible for the consequences of any error of judgment, except for fraud,
gross negligence, or willful misconduct; and neither Administrative Agent nor
any of its Representatives has a fiduciary relationship with any Lender by
virtue of the Loan Papers (PROVIDED THAT, nothing herein shall negate the
obligation of Administrative Agent to account for funds received by it for the
account of any Lender).
(b) Unless indemnified to its satisfaction against loss, cost, liability,
and expense, Administrative Agent shall be not compelled to do any act under
the Loan Papers or to take any action toward the execution or enforcement of
the powers thereby created or to prosecute or defend any suit in respect of the
Loan Papers. If Administrative Agent requests instructions from Lenders or
Required Lenders, as the case may be, with respect to any act or action
(including, but not limited to, any failure to act) in connection with any Loan
Paper, Administrative Agent shall be entitled (but shall not be required) to
refrain (without incurring any liability to any Person by so refraining) from
such act or action unless and until it has received such instructions. Except
where action of Required Lenders or all Lenders is required in the Loan Papers,
Administrative Agent may act hereunder in its own discretion without requesting
instructions. In no event, however, shall Administrative Agent or any of its
respective Representatives be required to take any action which it or they
determine could incur for it or them criminal or onerous civil liability.
Without limiting the generality of the foregoing, no Lender shall have any
right of action against Administrative Agent as a result of Administrative
Agent's acting or refraining from acting hereunder in accordance with the
instructions of Required Lenders (or all Lenders if required in the Loan
Papers).
(c) Administrative Agent shall not be responsible in any manner to any
Lender or any Participant for, and each Lender represents and warrants that it
has not relied upon Administrative Agent in respect of, (i) the
creditworthiness of any Company or any Guarantor and the
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risks involved to such Lender, (ii) the effectiveness, enforceability,
genuineness, validity, or the due execution of any Loan Paper, (iii) any
representation, warranty, document, certificate, report, or statement made
therein or furnished thereunder or in connection therewith, (iv) the
existence, priority, or perfection of any Lien hereafter granted or
purported to be granted under any Loan Paper, or (v) observation of or
compliance with any of the terms, covenants, or conditions of any Loan
Paper on the part of any Company or Guarantor. Each Lender agrees to
indemnify Administrative Agent or its Representatives and hold them
harmless from and against (but limited to such Lender's Pro Rata Part of)
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses, and reasonable disbursements
of any kind or nature whatsoever which may be imposed on, asserted
against, or incurred by them in any way relating to or arising out of the
Loan Papers or any action taken or omitted by them under the Loan Papers
(INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF
ADMINISTRATIVE AGENT OR ITS REPRESENTATIVES), to the extent Administrative
Agent and its respective Representatives are not reimbursed for such
amounts by any Company (PROVIDED THAT, Administrative Agent, and its
Representatives shall not have the right to be indemnified hereunder for
its or their own fraud, gross negligence, or willful misconduct).
12.7 DEFAULT; COLLATERAL. Upon the occurrence and continuance of a
Default, Lenders agree to promptly confer in order that Required Lenders or
Lenders, as the case may be, may agree upon a course of action for the
enforcement of the Rights of Lenders; and Administrative Agent shall be entitled
to refrain from taking any action (without incurring any liability to any Person
for so refraining) unless and until Administrative Agent shall have received
instructions from Required Lenders. All rights of action under this Agreement
and under the Notes and all rights to the Collateral, if any, hereunder may be
enforced by Administrative Agent and any suit or proceeding instituted by
Administrative Agent in furtherance of such enforcement shall be brought in its
name as Administrative Agent without the necessity of joining as plaintiffs or
defendants any other Lender, and the recovery of any judgment shall be for the
benefit of Lenders subject to the expenses of Administrative Agent. In actions
with respect to any property of Borrower, Administrative Agent is acting for the
ratable benefit of each Lender. Any and all agreements to subordinate (whether
made heretofore or hereafter) other indebtedness or obligations of Borrower to
the Obligation shall be construed as being for the ratable benefit of each
Lender.
12.8 LIMITATION OF LIABILITY. To the extent permitted by Law, (a)
Administrative Agent (acting in its agent capacities) shall not incur any
liability to any other Lender or Participant except for acts or omissions
resulting from its own fraud, gross negligence or wilful misconduct, and (b)
neither Administrative Agent nor any Lender, or Participant shall incur any
liability to any other Person for any act or omission of any other Lender,
Agent, or Participant.
12.9 RELATIONSHIP OF LENDERS. Nothing herein shall be construed as
creating a partnership or joint venture among Agents and Lenders.
12.10 BENEFITS OF AGREEMENT. Except for the representations and
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covenants in SECTIONS 12.1(B), 12.1(C), and 12.9 in favor of Borrower, none of
the provisions of this SECTION 12 shall inure to the benefit of any Company,
Guarantor, or any other Person other than Lenders; consequently, no Company,
Guarantor, or any other Person shall be entitled to rely upon, or to raise as a
defense, in any manner whatsoever, the failure of any Agent or any Lender to
comply with such provisions.
12.11 OBLIGATIONS SEVERAL. The obligations of Lenders hereunder are
several, and each Lender hereunder shall not be responsible for the obligations
of the other Lenders hereunder, nor will the failure of one Lender to perform
any of its obligations hereunder relieve the other Lenders from the performance
of their respective obligations hereunder.
SECTION 13 MISCELLANEOUS.
13.1 HEADINGS. The headings, captions, and arrangements used in any of
the Loan Papers are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify, or modify the terms of the Loan Papers, nor
affect the meaning thereof.
13.2 NONBUSINESS DAYS. In any case where any payment or action is due
under any Loan Paper on a day which is not a Business Day, such payment or
action may be delayed until the next-succeeding Business Day, but interest and
fees shall continue to accrue in respect of any payment to which it is
applicable until such payment is in fact made; PROVIDED THAT, if, in the case of
any such payment in respect of a Eurodollar Rate Borrowing, the next-succeeding
Business Day is in the next calendar month, then such payment shall be made on
the next-preceding Business Day.
13.3 COMMUNICATIONS. Unless specifically otherwise provided, whenever
any Loan Paper requires or permits any consent, approval, notice, request, or
demand from one party to another, such communication must be in writing (which
may be by telex or telecopy) to be effective and shall be deemed to have been
given (a) if by telex, when transmitted to the telex number, if any, for such
party, and the appropriate answer back is received, (b) if by telecopy, when
transmitted to the telecopy number for such party (and all such communications
sent by telecopy shall be confirmed promptly thereafter by personal delivery or
mailing in accordance with the provisions of this SECTION; PROVIDED, THAT any
requirement in this parenthetical shall not affect the date on which such
telecopy shall be deemed to have been delivered), (c) if by mail, on the third
Business Day after it is enclosed in an envelope, properly addressed to such
party, properly stamped, sealed, and deposited in the appropriate official
postal service, or (d) if by any other means, when actually delivered to such
party. Until changed by notice pursuant hereto, the address (and telex and
telecopy numbers, if any) for Administrative Agent and each Lender and
Administrative Agent, is set forth on SCHEDULE 2.1, and for Borrower and each
Company is the address set forth by Borrower's signature on the signature page
of this Agreement and for each Guarantor is the address set forth by such
Guarantor's signature on the signature page of its Guaranty. A copy of each
communication to Administrative Agent shall also be sent to ▇▇▇▇▇▇ and ▇▇▇▇▇,
L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Fax: 214/▇▇▇-▇▇▇▇, Attn: ▇▇▇ ▇.
▇▇▇▇▇▇.
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13.4 FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be reasonably satisfactory to Administrative Agent and its counsel.
13.5 EXCEPTIONS TO COVENANTS. No Company or Guarantor shall take any
action or fail to take any action which is permitted as an exception to any of
the covenants contained in any Loan Paper if such action or omission would
result in the breach of any other covenant contained in any of the Loan Papers.
13.6 SURVIVAL. All covenants, agreements, undertakings, representations,
and warranties made in any of the Loan Papers shall survive all closings under
the Loan Papers and, except as otherwise indicated, shall not be affected by any
investigation made by any party. All rights of, and provisions relating to,
reimbursement and indemnification of Administrative Agent or any Lender shall
survive termination of this Agreement and payment in full of the Obligation.
13.7 GOVERNING LAW. THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED
STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES TO THE LOAN
PAPERS AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE
LOAN PAPERS.
13.8 INVALID PROVISIONS. If any provision in any Loan Paper is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable; the
appropriate Loan Paper shall be construed and enforced as if such provision had
never comprised a part thereof; and the remaining provisions thereof shall
remain in full force and effect and shall not be affected by such provision or
by its severance therefrom. Administrative Agent, Lenders, and each Company and
Guarantor party to such Loan Paper agree to negotiate, in good faith, the terms
of a replacement provision as similar to the severed provision as may be
possible and be legal, valid, and enforceable.
13.9 ENTIRETY. THE RIGHTS AND OBLIGATIONS OF THE COMPANIES, GUARANTORS,
LENDERS, AND ADMINISTRATIVE AGENT SHALL BE DETERMINED SOLELY FROM WRITTEN
AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN
SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS
AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN PAPERS EXECUTED
BY ANY COMPANY, ANY GUARANTOR, ANY LENDER, AND/OR ANY AGENT, (TOGETHER WITH ALL
COMMITMENT LETTERS AND FEE LETTERS AS THEY RELATE TO THE PAYMENT OF FEES AFTER
THE CLOSING DATE) REPRESENT THE FINAL AGREEMENT BETWEEN THE COMPANIES, THE
GUARANTORS, LENDERS, AND AGENTS, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.
13.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY
HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A)
IRREVOCABLY SUBMITS THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN TEXAS, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE
MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE
LOAN PAPERS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW,
(B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
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OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
(D) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN TEXAS IN
CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO ADMINISTRATIVE AGENT
EVIDENCE THEREOF, IF REQUESTED, (E) IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE
MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE
PREPAID, AT ITS ADDRESS SET FORTH HEREIN, (F) IRREVOCABLY AGREES THAT ANY LEGAL
PROCEEDING AGAINST ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE
LOAN PAPERS OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED
COURTS, AND (G) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY LOAN PAPER OR THE TRANSACTIONS CONTEMPLATED THEREBY. The
scope of each of the foregoing waivers is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
The Companies, Guarantors, and each other party to this Agreement acknowledge
that this waiver is a material inducement to the agreement of each party hereto
to enter into a business relationship, that each has already relied on this
waiver in entering into this Agreement, and each will continue to rely on each
of such waivers in related future dealings. The Companies, Guarantors, and each
other party to this Agreement warrant and represent that they have reviewed
these waivers with their legal counsel, and that they knowingly and voluntarily
agree to each such waiver following consultation with legal counsel. THE WAIVERS
IN THIS SECTION 13.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN PAPER.
In the event of Litigation, this Agreement may be filed as a written consent to
a trial by the court.
13.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.
(a) Except as otherwise specifically provided, (i) this Agreement may
only be amended, modified or waived by an instrument in writing executed
jointly by Borrower and Required Lenders, and, in the case of any matter
affecting Administrative Agent (EXCEPT removal of Administrative Agent as
provided in SECTION 12) by Administrative Agent, and may only be
supplemented by documents delivered or to be delivered in accordance with
the express terms hereof, and (ii) the other Loan Papers may only be the
subject of an amendment, modification, or waiver if Borrower and Required
Lenders, and, in the case of any matter affecting Administrative Agent
(EXCEPT as set forth above), Administrative Agent, have approved same.
(b) Any amendment to or consent or waiver under this Agreement or any
Loan Paper which purports to accomplish any of the following must be by an
instrument in writing executed by Borrower and executed (or approved, as
the case may be) by each Lender, and, in the case of any matter affecting
Administrative Agent, by Administrative Agent: (i) extends the due date or
reduces the amount of any scheduled payment of the Obligation or any
scheduled reduction of the Revolver Commitment beyond the date specified
in the Loan Papers; (ii) reduces the
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interest rate or decreases the amount of interest, fees, or other sums
payable to Administrative Agent or Lenders hereunder (except such reductions as
are contemplated by this Agreement); (iii) changes the definition of
"APPLICABLE MARGIN" or "APPLICABLE MARGIN FOR COMMITMENT FEES" (other than
changes having the effect of increasing such Applicable Margin or Applicable
Margin for Commitment Fees)," "REQUIRED LENDERS," "REVOLVER COMMITMENT,"
"TERMINATION DATE," "PRO RATA," or "PRO RATA PART," or (iv) except as otherwise
permitted by any Loan Paper, waives compliance with, amends, or releases (in
whole or in part) any Guaranty or releases (in whole or in part) any Collateral
for the Obligation; or (v) changes this CLAUSE (B) or any other matter
specifically requiring the consent of all Lenders hereunder. Without the
consent of such Lender, no Lender's "COMMITTED SUM" may be increased.
(c) Any conflict or ambiguity between the terms and provisions herein and
terms and provisions in any other Loan Paper shall be controlled by the terms
and provisions herein.
(d) No course of dealing nor any failure or delay by Administrative Agent,
any Lender, or any of their respective Representatives with respect to
exercising any Right of Administrative Agent or any Lender hereunder shall
operate as a waiver thereof. A waiver must be in writing and signed by
Administrative Agent and Required Lenders (or by all Lenders, if required
hereunder) to be effective, and such waiver will be effective only in the
specific instance and for the specific purpose for which it is given.
13.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each Lender execute
the same counterpart so long as identical counterparts are executed by Borrower,
each Lender, and Administrative Agent. This Agreement shall become effective
when counterparts hereof shall have been executed and delivered to
Administrative Agent by each Lender, Administrative Agent, and Borrower, or,
when Administrative Agent shall have received telecopied, telexed, or other
evidence satisfactory to it that such party has executed and is delivering to
Administrative Agent a counterpart hereof.
13.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon, and inure to the benefit of the
parties hereto and their respective successors and assigns, EXCEPT THAT (i)
Borrower may not, directly or indirectly, assign or transfer, or attempt to
assign or transfer, any of its Rights, duties or obligations under any Loan
Papers without the express written consent of all Lenders, and (ii) EXCEPT as
permitted under this SECTION, no Lender may transfer, pledge, assign, sell any
participation in, or otherwise encumber its portion of the Obligation.
(b) Each Lender may assign to one or more Eligible Assignees all or a
portion of its Rights and obligations under this Agreement and the
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other Loan Papers (including, without limitation, all or a portion of its
Borrowings and its Notes); PROVIDED, HOWEVER, that:
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's Rights and obligations under this
Agreement and the other Loan Papers, any such partial assignment shall be
in an amount at least equal to $5,000,000, but, in no event less than
$1,000,000;
(iii) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its Rights and obligations under this
Agreement and the Notes;
(iv) the parties to such assignment shall execute and deliver to the
Administrative Agent for its acceptance an Assignment and Acceptance
Agreement in the form of EXHIBIT F hereto, together with any Notes subject
to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent
of such assignment, have the obligations, Rights, and benefits of a Lender
under the Loan Papers and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations under
the Loan Papers. Upon the consummation of any assignment pursuant to this
SECTION, but only upon the request of the assignor or assignee made through
Administrative Agent, Borrower shall issue appropriate Notes to the assignor
and the assignee, reflecting such Assignment and Acceptance. If the assignee is
not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to Borrower and Administrative Agent certification as
to exemption from deduction or withholding of Taxes in accordance with SECTION
4.6.
(c) Administrative Agent shall maintain at its address referred to in
SECTION 13.3 a copy of each Assignment and Acceptance Agreement delivered to
and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment, and principal amount of the
Borrowings owing to, each Lender from time to time (the "REGISTER"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and Borrower, Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of the Loan Papers. The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Upon the consummation of any assignment in
accordance with this SECTION 13.13, SCHEDULE 2.1 shall automatically be deemed
amended (to the extent required) by Administrative Agent to reflect the name,
address, and respective Committed Sums under the Revolving Facility of the
assignor and assignee.
(d) Upon its receipt of an Assignment and Acceptance Agreement
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executed by the parties thereto, together with any Notes subject to such
assignment and payment of the processing fee, the Administrative Agent shall,
if such Assignment and Acceptance has been completed and is in substantially
the form of EXHIBIT F hereto, (i) accept such Assignment and Acceptance
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the parties thereto.
(e) Subject to the provisions of this SECTION and in accordance with
applicable Law, any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time sell to
one or more Persons (each a "PARTICIPANT") participating interests in its
portion of the Obligation. In the event of any such sale to a Participant,
(i) such Lender shall remain a "LENDER" under this Agreement and the
Participant shall not constitute a "LENDER" hereunder, (ii) such Lender's
obligations under this Agreement shall remain unchanged, (iii) such Lender
shall remain solely responsible for the performance thereof, (iv) such Lender
shall remain the holder of its share of the Revolver Principal Debt for all
purposes under this Agreement, (v) Borrower and Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's Rights and obligations under the Loan Papers, and (vi) such Lender
shall be solely responsible for any withholding taxes or any filing or
reporting requirements relating to such participation and shall hold Borrower
and Administrative Agent and their respective successors, permitted assigns,
officers, directors, employees, agents, and representatives harmless against
the same. Participants shall have no Rights under the Loan Papers, other than
certain voting Rights as provided below. Subject to the following, each
Lender shall be entitled to obtain (on behalf of its Participants) the
benefits of SECTION 4 with respect to all participations in its part of the
Obligation outstanding from time to time SO LONG AS Borrower shall not be
obligated to pay any amount in excess of the amount that would be due to such
Lender under SECTION 4 calculated as though no participations have been made.
No Lender shall sell any participating interest under which the Participant
shall have any Rights to approve any amendment, modification, or waiver of
any Loan Paper, except to the extent such amendment, modification, or waiver
extends the due date for payment of any amount in respect of principal (OTHER
THAN mandatory prepayments), interest, or fees due under the Loan Papers,
reduces the interest rate or the amount of principal or fees applicable to
the Obligation (EXCEPT such reductions as are contemplated by this
Agreement), or releases any material Guaranty or all or any substantial
portion of the Collateral for the obligation under the Loan Papers (EXCEPT
such releases as are contemplated by this Agreement); PROVIDED THAT, in those
cases where a Participant is entitled to the benefits of SECTION 4 or a
Lender grants Rights to its Participants to approve amendments to or waivers
of the Loan Papers respecting the matters previously described in this
sentence, such Lender must include a voting mechanism in the relevant
participation agreement or agreements, as the case may be, whereby a majority
of such Lender's portion of the Obligation (whether held by such Lender or
Participant) shall control the vote for all of such Lender's portion of the
Obligation. Except in the case of the sale of a participating interest to
another Lender, the
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relevant participation agreement shall not permit the Participant to
transfer, pledge, assign, sell participations in, or otherwise encumber its
portion of the obligation, unless the consent of the transferring Lender (which
consent will not be unreasonably withheld) has been obtained.
(f) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Borrowings
and its Notes to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(g) Any Lender may furnish any information concerning the Companies or the
Guarantors in the possession of such Lender from time to time to Eligible
Assignees and Participants (including prospective Eligible Assignees and
Participants), subject to the provisions of SECTION 13.14.
13.14 CONFIDENTIALITY. Administrative Agent and Lenders hereby agree to
keep (and to cause their respective Affiliates, employees, directors, agents,
attorneys, accountants and all other professional advisors to keep) confidential
all information delivered to them by or on behalf of the Companies to the extent
that such information has been stated expressly by or on behalf of the Companies
to be confidential; PROVIDED that all information delivered to Administrative
Agent and Lenders prior to the date hereof shall be considered confidential,
PROVIDED FURTHER that nothing herein shall prevent Administrative Agent and
Lenders from disclosing any such information (a) to prospective Lenders and
Participants (but only if such persons agree to be bound by the confidentiality
provisions hereof), (b) to Administrative Agent's and Lenders' Affiliates and
their employees, directors, agents, attorneys, accountants and other
professional advisors, who have a need to know such information in connection
with the Loan Papers, (c) in compliance with agency request, a subpoena or other
court process or otherwise as required by law, or (d) which has been publicly
disclosed other than in breach of this Agreement.
13.15 CHAPTER 346. Borrower, Administrative Agent, and Lenders hereby
agree that, the provisions of Chapter 346 of the Texas Finance Code, as amended
(regulating certain revolving credit loans and revolving tri-party accounts)
shall not apply to the Loan Papers.
13.16 DEFAULTING LENDER. Each Lender understands and agrees that if such Lender
is a Defaulting Lender then notwithstanding the provisions of SECTION 13.11 it
shall not be entitled to vote on any matter requiring the consent of the
Required Lenders or to object to any matter requiring the consent of all the
Lenders; provided, however, that all other benefits and obligations under the
Loan Papers shall apply to such Defaulting Lender.
13.17 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The obligations of each Company and each Guarantor under the Loan
Papers shall remain in full force and effect until termination of the Revolver
Commitment and payment in full of the Revolver Principal Debt and of all
interest, fees, and other amounts of the Obligation then due and owing, (and
termination of all outstanding LCs with any Lender, if any, or provision
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of cash collateral or a Collateral Letter of Credit pursuant to SECTION 2.2(H)
UNLESS such Lender shall otherwise consent) EXCEPT that SECTIONS 4, 11, and 13,
and any other provisions under the Loan Papers expressly intended to survive by
the terms hereof or by the terms of the applicable Loan Papers, shall survive
such termination. If at any time any payment of the principal of or interest on
any Note or any other amount payable by Borrower under any Loan Paper is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy, or reorganization of Borrower or otherwise, the obligations of each
Company and each Guarantor under the Loan Papers with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
[REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.]
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Signature Page to that certain Revolving Credit Agreement dated as of July
10, 1998, among Integrated Orthopaedics, Inc., as Borrower, NationsBank, N.A.,
as Administrative Agent, and certain Lenders named therein.
EXECUTED as of the 10th day of July, 1998, but effective as of the Closing
Date.
INTEGRATED ORTHOPAEDICS, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
Mailing Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
92
Signature Page to that certain Revolving Credit Agreement dated as of July
10, 1998, among Integrated Orthopaedics, Inc., as Borrower, NationsBank, N.A.,
as Administrative Agent, and certain Lenders named therein.
EXECUTED as of the 10th day of July, 1998, but effective as of the Closing
Date.
NATIONSBANK, N.A.,
AS ADMINISTRATIVE AGENT AND AS A LENDER
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
93
Signature Page to that certain Credit Agreement dated as of July 10, 1998,
among Integrated Orthopaedics, Inc., as Borrower, NationsBank, N.A., as
Administrative Agent, and certain Lenders named therein.
Each of the undersigned Guarantors hereby acknowledges that it has reviewed
this Credit Agreement and agrees that certain of the representations and
covenants contained in SECTIONS 6, 8 and 9 apply to Guarantors:
IOI MANAGEMENT SERVICES
OF CONNECTICUT, INC.
IOI MANAGEMENT SERVICES
OF LOUISIANA, INC.
IOI MANAGEMENT SERVICES
OF PENNSYLVANIA, INC.
IOI MANAGEMENT SERVICES
OF HOUSTON, INC.
IOI MANAGEMENT SERVICES
OF COLORADO, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive
Officer
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