1
EXHIBIT 4.6
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
among
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS AGENT AND AN ISSUING BANK,
THE SEVERAL FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO
and
HEALTHCOR HOLDINGS, INC.,
as Borrower
Dated as of December 1, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II - Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.2 Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.3 Repayment of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.6 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.7 Reduction or Termination of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III - Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.2 Participation by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.3 Procedure for Issuing Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.4 Reimbursements; Payments Constitute Revolving Credit Loans . . . . . . . . . . . . . . . . . . . 20
Section 3.5 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.7 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.8 Letter of Credit Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV - Borrowing Procedure; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.2 Conversions and Continuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.3 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.4 Voluntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.5 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.6 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.7 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.8 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.9 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V - Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.2 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.4 Treatment of Eurodollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.6 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.7 Additional Costs in Respect of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.1 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2 Lockbox Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.3 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE VII - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.1 Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.2 All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.1 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.3 Corporate Action; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.4 Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.5 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.6 Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.7 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.8 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.11 Use of Proceeds; Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.15 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.16 Compliance with Laws; Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.17 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.18 Self Referral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX - Positive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.2 Maintenance of Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.4 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.6 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.7 Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.9 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.12 Security Agreements; Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.1 Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.2 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.3 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.4 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.5 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.6 Limitation on Issuance of Subsidiaries' Capital Stock . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.7 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.8 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.9 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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Section 10.10 Prepayment of Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.11 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.12 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.13 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.14 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.15 Modification of Senior Note Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XI - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.1 Funded Debt to EBITDAA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.2 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.3 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.4 Funded Debt to Capitalization Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XII - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.3 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.4 Performance by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIII - The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 13.1 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 13.2 Rights of Agent as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 13.3 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 13.4 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 13.5 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 13.6 Several Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 13.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XIV - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 14.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 14.2 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 14.3 LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.4 No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.5 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 14.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 14.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 14.9 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 14.10 Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 14.11 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 14.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 14.13 GOVERNING LAW; VENUE; SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 14.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 14.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 14.16 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 14.17 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 14.18 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 14.19 Treatment of Certain Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 68
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"),
dated as of December 1, 1997, is among HEALTHCOR HOLDINGS, INC., a corporation
duly organized and validly existing under the laws of the State of Delaware
("Borrower"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Bank" and, collectively, the "Banks") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as an
issuing bank (in such capacity, together with its successors in such capacity,
an "Issuing Bank") and as agent for itself, the Issuing Banks and the other
Banks (in such capacity, together with its successors in such capacity, the
"Agent").
R E C I T A L S:
A. The Borrower, HealthCor, Inc., a Delaware corporation
("HealthCor"), the Agent and certain of the Banks previously entered into that
certain Amended and Restated Credit Agreement dated as of October 31, 1996, as
amended pursuant to that certain First Amendment to Amended and Restated Credit
Agreement dated as of April 30, 1997, and as further amended by that certain
Second Amendment to Amended and Restated Credit Agreement dated as of September
19, 1997 (as amended, the "Existing Credit Agreement"), pursuant to which the
Banks, together with the other banks thereunder extended credit to the Borrower
in the form of term loans and to HealthCor in the form of revolving credit
loans (collectively, the "Existing Loans").
B. The Borrower guaranteed all obligations, liabilities and
indebtedness of HealthCor under the existing Agreement including, without
limitation, the reimbursement obligations of HealthCor in respect of the
letters of credit outstanding thereunder. Certain of the letters of credit
issued under the Existing Agreement for the account of HealthCor remain
outstanding on the date hereof and shall continue to remain outstanding under
this Agreement (collectively, the "Existing Letters of Credit").
C. The Borrower has repaid the indebtedness (other than the
reimbursement obligations in respect of the Existing Letters of Credit) under
the Existing Credit Agreement and has requested the Banks to make a revolving
credit loan in the form of advances and letters of credit (including the
Existing Letters of Credit) available to the Borrower in an aggregate principal
amount not to exceed $20,000,000.00 outstanding at any time.
D. The Banks are willing to make such extensions of credit to the
Borrower upon the terms and conditions hereinafter set forth.
E. The parties hereto desire to amend the Existing Credit Agreement
as hereinafter provided and have agreed for purposes of clarity and ease of
administration, to amend the Existing Credit Agreement and then restate the
Existing Credit Agreement in its entirety by means of this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows, and the
Existing Credit Agreement is hereby amended and restated in its entirety as
follows:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
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ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"Acquired Company" means, as of any date of calculation of
EBITDAA, a Subsidiary acquired by a Company, or a Person all or
substantially all of the assets of which have been acquired by a
Company, in each case, following September 30, 1997.
"Acquired EBITDA" means for each Acquired Company, (a) EBITDA for
such Acquired Company for the twelve (12) month period ended on the
date of calculation, calculated as of the Initial Report Date for such
Acquired Company, multiplied by (b) the EBITDA Factor for such
Acquired Company.
"Additional Costs" has the meaning specified in Section 5.1.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined by the Agent to be
equal to the Eurodollar Rate for such Eurodollar Loan for such
Interest Period divided by 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Adjustment Date" means the last day of each calendar quarter.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds five percent or
more of any class of voting stock of such Person; or (c) five percent
or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term
"control" means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the
Agent, any Issuing Bank or any Bank be deemed an Affiliate of Borrower
or any of the Subsidiaries.
"Agent's Fee Letter" means the letter agreement dated November 6,
1997, among the Agent, Chase Securities Inc. and Borrower.
"Alternate Base Rate" means, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day, or (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent as its prime
rate in effect at its principal office in Houston, Texas; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
7
selected by it. If for any reason the Agent determines (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate, for any reason,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first
sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective day of such
change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Alternate Base Rate Loans" means Loans, the interest rates on
which are determined on the basis of the rates referred to in the
definition of "Alternate Base Rate" in this Section 1.1.
"Applicable Commitment Fee Rate" means, for any day, a per annum
percentage rate that is subject to adjustment (upwards or downwards,
as appropriate) based on the Funded Debt to EBITDAA Ratio. Effective
as of each Adjustment Date the Applicable Commitment Fee Rate shall be
adjusted to reflect the Applicable Commitment Fee Rate prescribed
below for the Funded Debt to EBITDAA Ratio as demonstrated by the
Compliance Certificate delivered for that fiscal quarter:
APPLICABLE COMMITMENT
FUNDED DEBT TO EBITDAA RATIO FEE RATE
Less than 1.00 to 1.00 .250%
Greater than or equal to 1.00 to 1.00, but less than 1.75
to 1.00 .250%
Greater than or equal to 1.75 to 1.00, but less than 2.50
to 1.00 .375%
Greater than or equal to 2.50 to 1.00 .375%
The Applicable Commitment Fee Rate shall be .375% from the date hereof
until the first Adjustment Date after the date hereof that the
Compliance Certificate demonstrates a change in the Funded Debt to
EBITDAA Ratio that would cause another Applicable Commitment Fee Rate
to be applicable. After each adjustment of the Applicable Commitment
Fee Rate in accordance herewith, the new Applicable Commitment Fee
Rate shall apply until the next Adjustment Date that the Compliance
Certificate demonstrates a change in the Funded Debt to EBITDAA Ratio
that would cause another Applicable Commitment Fee Rate to be
applicable. Upon the request of the Agent, the Borrower must
demonstrate to the reasonable satisfaction of the Required Banks the
calculation of the required applicable ratio in order to obtain an
adjustment to a lower Applicable Commitment Fee Rate. If the Borrower
fails to furnish to the Agent any Compliance Certificate by the date
required by this Agreement, then the maximum Applicable Commitment Fee
Rate shall apply until the Borrower furnishes the required Compliance
Certificate to the Agent.
"Applicable Lending Office" means for each Bank and each Type of
Loan, the Lending Office of such Bank (or of an Affiliate of such
Bank) designated for such Type of Loan below its name on the signature
pages hereof or such other office of such Bank (or of an Affiliate of
such Bank) as such Bank may from time to time specify to the Borrower
and the Agent as the office by which its Loans of such Type are to be
made and maintained.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
8
"Applicable Margin" means, for any day, the margin of interest
over the Eurodollar Rate or Alternate Base Rate, as the case may be,
that is applicable when any Applicable Rate based on the Eurodollar
Rate or the Alternate Base Rate is determined under this Agreement.
The Applicable Margin is subject to adjustment (upwards or downwards,
as appropriate) based on the Funded Debt to EBITDAA Ratio. Effective
as of each Adjustment Date the Applicable Margin for each type of Loan
shall be adjusted to reflect the Applicable Margin prescribed below
for the Funded Debt to EBITDAA Ratio as demonstrated by the Compliance
Certificate delivered for that fiscal quarter:
FUNDED DEBT TO EURODOLLAR RATE ALTERNATE BASE RATE
EBITDAA RATIO APPLICABLE MARGIN APPLICABLE MARGIN
Less than 1.00 to 1.00 1.25% 0%
Greater than or equal to 1.00 to 1.00, 1.75% 0%
but less than 1.75 to 1.00
Greater than or equal to 1.75 to 1.00, 2.25% .250%
but less than 2.50 to 1.00
Greater than or equal to 2.50 to 1.00 2.75% .750%
The Applicable Margin shall be .750% with respect to the Alternate
Base Rate and 2.75% with respect to the Eurodollar Rate from the date
hereof until the first Adjustment Date after the date hereof that the
Compliance Certificate demonstrates a change in the Funded Debt to
EBITDAA Ratio that would cause another Applicable Margin to be
applicable. After each adjustment of the Applicable Margin for each
Type of Loan in accordance herewith, the new Applicable Margin for
each Type of Loan shall apply to all Loans of each such Type
thereafter outstanding or made until the next Adjustment Date that the
Compliance Certificate demonstrates a change in the Funded Debt to
EBITDAA Ratio that would cause another Applicable Margin to be
applicable. Upon the request of the Agent, the Borrower must
demonstrate to the reasonable satisfaction of the Required Banks the
calculation of the required applicable ratio in order to obtain an
adjustment to a lower applicable margin for each Type of Loan. If the
Borrower fails to furnish to the Agent any Compliance Certificate by
the date required by this Agreement, then the maximum Applicable
Margin shall apply to all Loans of each such Type thereafter
outstanding or made until the Borrower furnishes the required
Compliance Certificate to the Agent.
"Applicable Rate" means: (a) during the period that a Loan is an
Alternate Base Rate Loan, the Alternate Base Rate plus the Applicable
Margin; and (b) during the period that a Loan is a Eurodollar Loan,
the Adjusted Eurodollar Rate plus the Applicable Margin.
"Assignee" has the meaning assigned to it in Section 14.7(b).
"Assigning Bank" has the meaning assigned to it in Section
14.7(b).
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Bank and its assignee and accepted by the Agent
pursuant to Section 14.7, in substantially the form of Exhibit "J"
hereto.
"Assignments of Life Insurance" shall have the meaning specified
in Section 6.1(d).
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
9
"Borrower Security Agreement" means the Second Amended and
Restated Security Agreement of the Borrower in favor of the Agent for
the benefit of the Agent, the Banks and the Issuing Banks, in
substantially the form of Exhibit "D-1" hereto, as the same may be
amended, supplemented, or modified.
"Business Day" means (a) a day other than Saturday, Sunday or day
on which commercial banks in Houston, Texas or New York, New York are
not authorized or required to close, and (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods,
and notices in connection with Eurodollar Loans, any day which is a
Business Day described in clause (a) above and which is also a day on
which dealings in Dollar deposits are carried out in the Eurodollar
interbank market.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP. For purposes of this Agreement, the amount of such
Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Cash Collateralized Loans" means Revolving Credit Loans that are
fully secured by cash and/or Permitted Investments of the types
described in clauses (a) through (c) of Section 10.5 that are subject
to the "control" as defined in Section 8.106 of the UCC of the Agent
and with respect to which all steps necessary to perfect a first
priority security interest in favor of the Agent have been taken and
shall be satisfactory to the Agent.
"Closing Date" means December 1, 1997, which shall be the date of
the closing of the transactions contemplated by this Agreement and
delivery of the items required to be delivered pursuant to Section
7.1.
"Code" means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, as to each Bank, its Revolving Credit
Commitment.
"Companies" means collectively, Borrower and (a) all of its
affiliated entities including, without limitation, those entities
described on Schedule 1 hereto, (b) all of its Subsidiaries and all
Subsidiaries of any other present or future Company formed or acquired
after the date of this Agreement, and (c) the successors and assigns
of each of the foregoing entities, and "Company" means any one of the
foregoing.
"Compliance Certificate" means a certificate in substantially the
form of Exhibit "K" hereto delivered by the Borrower to the Agent
pursuant to Section 9.1(c).
"Consolidated Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
stockholders' equity on a consolidated balance sheet of the Companies.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.2 of a Eurodollar Loan as a
Eurodollar Loan from one Interest Period to the next Interest Period.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
10
"Contribution and Indemnification Agreement" has the meaning
specified in Section 7.1(o).
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Section 4.2 or Article V of one Type of Loan
into another Type of Loan.
"Default" means an Event of Default or the occurrence of an event
or condition which with notice or lapse of time or both would become
an Event of Default.
"Default Rate" means the lesser of (i) the Maximum Rate, or (ii)
the sum of the Applicable Rate in effect from day to day, plus four
percent (4%).
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means, for any Person for any period, the sum of the
following for such period determined in accordance with GAAP on a
consolidated basis: (a) net income before provision for income taxes,
plus (b) Interest Expense, plus (c) depreciation, amortization and
other non-cash charges to the extent actually deducted in arriving at
net income, minus (d) extraordinary income, plus (e) extraordinary
losses.
"EBITDA Factor" means, for each Acquired Company, as of any date
of calculation of EBITDAA, the percentage set forth below
corresponding to the Initial Report Date for such Acquired Company,
relative to such date of calculation of EBITDAA:
INITIAL REPORT DATE EBITDA FACTOR
Same as date of calculation of EBITDAA 1.000
Last day of first calendar month prior to date of .917
calculation of EBITDAA
Last day of second calendar month prior to date .833
of calculation of EBITDAA
Last day of third calendar month prior to date of .750
calculation of EBITDAA
Last day of fourth calendar month prior to date .667
of calculation of EBITDAA
Last day of fifth calendar month prior to date of .583
calculation of EBITDAA
Last day of sixth calendar month prior to date of .500
calculation of EBITDAA
Last day of seventh calendar month prior to date .417
of calculation of EBITDAA
Last day of eighth calendar month prior to date .333
of calculation of EBITDAA
Last day of ninth calendar month prior to date of .250
calculation of EBITDAA
Last day of tenth calendar month prior to date of .167
calculation of EBITDAA
Last day of eleventh calendar month prior to date .083
of calculation of EBITDAA
Last day of twelfth calendar month prior to date 0.000
of calculation of EBITDAA
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
11
"EBITDAA" means, for any period, the sum of (a) EBITDA for the
Companies on a consolidated basis for such period (excluding the $5.5
million non-cash charge taken during the quarter ending June 30,
1997), plus (b) the Historical Acquired EBITDA for all Historical
Acquired Companies for such period, plus (c) the Acquired EBITDA for
all Post-Compliance Acquired Companies for such period.
"Eligible Assignee" means any commercial bank, savings and loan
association, savings bank or other financial institution having
capital and surplus of at least $100,000,000 and reasonably acceptable
to the Agent.
"Environmental Laws" means any and all federal, state, and local
laws, regulations, and requirements pertaining to health, safety, or
the environment, as such laws, regulations, and requirements may be
amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, remedial actions, losses,
damages, costs, and expenses (including, without limitation, all
reasonable fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest arising from environmental,
health or safety conditions or the Release or threatened Release of a
Hazardous Material into the environment, resulting from the past,
present, or future operations of such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower or is under
common control (within the meaning of Section 414(c) of the Code) with
the Borrower.
"Eurodollar Loans" means Loans the interest rates on which are
determined on the basis of the rates referred to in the definition of
"Adjusted Eurodollar Rate" in this Section 1.1.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) at which the Reference Bank or any of its
Affiliates is offered Dollar deposits at or about 10:00 A.M., New York
City time, two Business Days prior to the first day of such Interest
Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its Eurodollar
Loans are then being conducted for delivery on the first day of such
Interest Period for a number of days comprised therein and in an
amount comparable to the principal amount of the Eurodollar Loan to
which such Interest Period relates.
"Event of Default" has the meaning specified in Section 12.1.
"Existing Credit Agreement" has the meaning specified in the
Recitals hereto.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
12
"Existing Letters of Credit" has the meaning specified in the
Recitals hereto.
"Existing Loans" has the meaning specified in the Recitals hereto.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members 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 the day for which such rate is to be determined
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 such rate
is not so published on such next succeeding Business Day, the Federal
Funds Rate for any day shall be the average rate charged to the Agent
on such day on such transactions as determined by the Agent.
"Funded Debt" means at any time (without duplication): (a) all
obligations of the Companies, or any of them, for borrowed money and
all obligations of the Companies, or any of them, evidenced by bonds,
notes, debentures, or other similar instruments, including without
limitation the indebtedness of the Borrower pursuant to this
Agreement, (b) all Capital Lease Obligations of the Companies, or any
of them, (c) all debt or other obligations of others Guaranteed by the
Companies, or any of them to the extent of such Guarantee, (d) all
reimbursement obligations of the Companies, or any of them (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, (e) all
obligations of the Companies, or any of them, to pay the deferred
purchase price of property or services, except trade accounts payable
of the Companies, or any of them, arising in the ordinary course of
business that are not past due by more than ninety (90) days, (f) all
obligations secured by a Lien existing on property owned by the
Companies, or any of them, whether or not the obligations secured
thereby have been assumed by the Companies, or any of them, or are
non-recourse to the credit of the Companies, or any of them, and (g)
all other debt of the Companies, or any of them.
"Funded Debt to EBITDAA Ratio" means, at any time, the ratio of
Funded Debt (excluding Cash Collateralized Loans) to EBITDAA.
"Funded Debt to Pre-Compliance EBITDAA Ratio" means, at any time,
the ratio of Funded Debt (excluding Cash Collateralized Loans) to
Pre-Compliance EBITDAA.
"GAAP" means generally accepted accounting principles, applied on
a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in
the circumstances as of the date in question. Accounting principles
are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to
those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
13
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guaranties" means (i) the second amended and restated guaranty of
the respective Guarantors in favor of the Agent for the benefit of the
Agent, the Issuing Banks and the Banks, in substantially the form of
Exhibit "E" hereto, as the same may be amended, supplemented or
modified, and (ii) the guaranties, each in substantially the form of
Exhibit "E" hereto, hereafter executed by any Companies formed or
acquired after the date of this Agreement, as the same may be amended,
supplemented or modified.
"Guarantors" means the Companies other than the Borrower.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Health Care Regulators" means all federal and state governmental
regulators and accreditation agencies and their respective official
intermediaries and/or carriers, including without limitation the Texas
Department of Health, and the Health Care Financing Administration and
its intermediary and/or carrier.
"Historical Acquired Company" means, as of any date of calculation
of EBITDAA, a Subsidiary acquired by a Company, or a Person all or
substantially all of the assets of which have been acquired by a
Company, in each case, prior to September 30, 1997.
"Historical Acquired EBITDA" means for each Historical Acquired
Company the amount of EBITDA set forth next to the relevant date of
calculation and the name of such Historical Acquired Company on
Schedule 5 attached hereto.
"HOME" means HealthCor Oxygen and Medical Equipment, Inc.
(formerly known as Permian Medical, Inc. and successor in interest by
merger to Colfax Medical Service and Supply, Inc., β.β. Supply &
Service, Inc. and Arlington Diversified Medical Equipment, Inc.), a
Texas corporation.
"Initial Report Date" for an Acquired Company means either (a) the
last day of the calendar month immediately preceding the calendar
month in which the stock or assets of such Acquired Company are
acquired by a Company, or (b) if the requisite financial information
cannot be determined for the dates or periods set forth in clause (a)
above, then the last day of another preceding calendar month approved
by the Required Banks.
"Interest Coverage Ratio" means, for any period, the ratio
determined on a consolidated basis of (a) the sum of (i) EBITDA, plus
(ii) Historical Acquired EBITDA, less (iii) the total capital
expenditures of the Companies for such period to (b) the Interest
Expense of the Companies for such period.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
14
"Interest Expense" means for any Person for any period of
calculation thereof, the net cash interest expense on debt,
liabilities or other obligations of such Person during such period;
provided, that until and including December 31, 1998, Interest Expense
shall be calculated to include pro forma interest expense on the
Senior Notes but excluding interest expense on the senior debt
refinanced with the proceeds of the Senior Notes.
"Interest Period" means with respect to any Eurodollar Loans, each
period commencing on the date such Loan is made or converted from an
Alternate Base Rate Loan or, in the case of each subsequent,
successive Interest Period applicable to a Eurodollar Loan, the last
day of the next preceding Interest Period with respect to such Loan,
and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Borrower may select
as provided in Section 4.1, except that each such Interest Period
which commences on the last Business Day of a calendar month (or on
any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the
foregoing: (a) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business
Day (or, if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); (b) any Interest
Period for a Eurodollar Loan which would otherwise extend beyond the
maturity date of the Note evidencing such Eurodollar Loan shall end on
the maturity date of such Note; (c) no more than six (6) Interest
Periods shall be in effect at the same time; (d) no Interest Period
shall have a duration of less than one (1) month and, if the Interest
Period would otherwise be a shorter period, Eurodollar Loans shall not
be available hereunder, and (e) no Interest Period for any Loans may
extend beyond a principal repayment date unless, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans having
Interest Periods that end after such principal payment date shall be
equal to or less than the Loans to be outstanding hereunder after such
principal payment date.
"Issuing Bank" means, with respect to any Letter of Credit, TCB or
any of its Affiliates or, with the approval of the Agent, any other
Bank which elects to be an Issuing Bank hereunder, in its capacity as
issuer of a Letter of Credit.
"L/C Application" has the meaning specified in Section 3.1.
"L/C Documents" has the meaning specified in Section 3.1.
"LC Participation" means, with respect to any Bank at any time,
the amount of the participating interest held by such Bank in respect
of a Letter of Credit.
"Letter of Credit" means collectively, any standby letter of
credit issued by an Issuing Bank for the account of Borrower pursuant
to Article IV and the Existing Letters of Credit.
"Letter of Credit Liabilities" means, at any time, the aggregate
face amounts of all outstanding Letters of Credit and the aggregate
amount of any unreimbursed payments made in respect of any drawing
under a Letter of Credit.
"Letter of Credit Request Form" means a certificate, in
substantially the form of Exhibit "C" hereto, properly completed and
signed by Borrower requesting issuance of a Letter of Credit.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
15
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory notes,
security agreements, pledge agreements, deeds of trust, fee letters,
assignments, guaranties, letters of credit, letter of credit
applications and other instruments, documents, and agreements executed
and delivered pursuant to or in connection with this Agreement, as
such instruments, documents, and agreements may be amended, modified,
renewed, extended, or supplemented from time to time.
"Loan Request Form" means a certificate, in substantially the form
of Exhibit "B-1" hereto, properly completed and signed by Borrower
requesting a Revolving Credit Loan.
"Loans" means the Revolving Credit Loans.
"Maximum Rate" means, at any time and with respect to any Bank,
the maximum rate of interest under applicable law that such Bank may
charge the Borrower. The Maximum Rate shall be calculated in a manner
that takes into account any and all fees, payments, and other charges
in respect of the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein
based upon the Maximum Rate resulting from a change in the Maximum
Rate shall take effect without notice to the Borrower at the time of
such change in the Maximum Rate. For purposes of determining the
Maximum Rate under Texas law, the applicable rate ceiling shall be the
indicated rate ceiling described in, and computed in accordance with,
Article 5069-1D.001, Vernon's Texas Civil Statutes.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by
Borrower or any ERISA Affiliate and which is covered by Title IV of
ERISA.
"Notes" means the Revolving Credit Notes.
"Notice of Continuation or Conversion" means a certificate, in
substantially the form of Exhibit "B-2" hereto, properly completed and
signed by the Borrower requesting the conversion of a Loan from one
Type into another Type or the continuation of a Eurodollar Loan.
"Obligated Party" means any Guarantor or any other Person who is
or becomes party to any agreement that guarantees or secures payment
and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities
of the Borrower to the Agent, the Issuing Banks and the Banks, their
successors and assigns, or any of them, arising pursuant to any of the
Loan Documents, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities of the
Borrower under this Agreement and the other Loan Documents (including,
without limitation, all of Borrower's contingent reimbursement
obligations in respect of Letters of Credit), and all interest
accruing thereon and all attorneys' fees and other expenses incurred
in the enforcement or collection thereof.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 11
16
"Operating Lease" means any lease (other than a lease constituting
a Capital Lease Obligation) of real or personal property.
"Payor" has the meaning assigned to it in Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Debt" has the meaning specified in Section 10.1.
"Permitted Investments" has the meaning specified in Section 10.5.
"Permitted Liens" has the meaning specified in Section 10.2.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Pharmacy" means HealthCor Pharmacy, Inc., a Texas corporation.
"Plan" means any employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Pledge Agreement" means that certain second amended and restated
pledge agreement in favor of the Agent for the benefit of the Agent,
the Issuing Banks and the Banks, in substantially the form of Exhibit
"F" hereto, as the same may be amended, supplemented or modified.
"Post-Compliance Acquired Company" means an Acquired Company
following the date on which Borrower's Funded Debt to Pre-Compliance
EBITDAA Ratio is less than 3.50 to 1.00 for the four fiscal quarters
then ended.
"Pre-Compliance EBITDAA" means, for any period, the sum of (a)
EBITDA for the Companies on a consolidated basis for such period
(excluding the $5.5 million non-cash charge taken during the quarter
ending June 30, 1997), plus (b) the Historical Acquired EBITDA for all
Historical Acquired Companies for such period, plus (c) the Acquired
EBITDA for all Acquired Companies for such period.
"Preferred Stock" shall mean HealthCor's Convertible Series A and
Series B Preferred Stock, $.01 par value.
"Preferred Stock Purchase Agreements" means Borrower's Convertible
Preferred Stock Purchase Agreement dated October 18, 1989, as amended,
and Series B Convertible Preferred Stock Purchase Agreement dated June
1, 1992, as amended.
"Principal Office" means the principal office of the Agent,
presently located at βββ ββββββ, βββββββ, βββββ βββββ.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 12
17
"Quarterly Payment Date" means the first day of each January,
April, July and October of each year, the first of which shall be the
first such day after the date of this Agreement.
"Reference Bank" means Texas Commerce Bank National Association.
"Register" has the meaning assigned to it in Section 14.7(d).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from
time to time.
"Regulatory Change" means, with respect to any Bank, any change
after the date of this Agreement in United States federal, state, or
foreign laws or regulations (including Regulation D) or the adoption
or making after such date of any interpretations, directives, or
requests applying to a class of banks including such Bank of or under
any United States federal or state, or any foreign, laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reportable Event" means any of the events set forth in Section
4043 of ERISA.
"Required Banks" means at any time while no Loans or Letter of
Credit Liabilities are outstanding, Banks having at least 80% of the
aggregate amount of the Commitments and, at any time while Loans or
Letter of Credit Liabilities are outstanding, Banks holding at least
80% of the outstanding aggregate principal amount of the Loans and LC
Participations.
"Required Payment" has the meaning assigned to it in Section 4.6.
"Reserve Requirement" means, for any Eurodollar Loan for any
Interest Period therefor, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation
D by member banks of the Federal Reserve System in New York City with
deposits exceeding one billion Dollars against "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 by
reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Revolving Credit Commitment" means, as to each Bank, the
obligation of such Bank to make Revolving Credit Loans and purchase
participations in Letters of Credit pursuant to Section 3.1 in an
aggregate principal amount at any one time outstanding up to but not
exceeding the amount set forth opposite the name of such Bank on the
signature pages hereto under the heading "Revolving Credit
Commitment," or in the Assignment and Acceptance pursuant to which
such Bank assumed its Revolving Credit Commitment, as applicable, as
the same may be (a) reduced pursuant to Section 2.7 or terminated
pursuant to Section 2.7 or 12.2 and (b) reduced or increased from time
to time pursuant to assignments by or to such Bank pursuant to Section
14.7.
"Revolving Credit Loan" means, as to each Bank, the loans to be
made by such Bank pursuant to Section 2.1.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
18
"Revolving Credit Note" means a promissory note of Borrower
payable to the order of a Bank, in substantially the form of Exhibit
"A" hereto, and all extensions, renewals, and modifications thereof
and all substitutions therefor.
"Revolving Credit Termination Date" means 11:00 A.M. Houston,
Texas time on December 1, 2000, or such earlier date and time on which
the Revolving Credit Commitments terminate as provided in this
Agreement.
"RICO" means the Racketeer Influenced and Corrupt Organization Act
of 1970, as amended from time to time.
"Security Agreements" means (i) the second amended and restated
security agreements in favor of the Agent for the benefit of the
Agent, the Issuing Banks and the Banks, in the form of Exhibit "D-1"
hereto for the Borrower or Exhibit "D-2" hereto for the Guarantors, as
the same may be amended, supplemented or modified, and (ii) the
Security Agreements, each in substantially the form of Exhibit "D-2"
hereto, hereafter executed by any Companies formed or acquired after
the date of this Agreement, as the same may be amended, supplemented
or modified.
"Senior Notes" means the Borrower's 11% Senior Notes due 2004 as
in effect on the Closing Date, and as the same may be amended,
supplemented or modified pursuant to the terms hereof and thereof.
"Senior Notes Documents" shall mean and include each of the
documents and other agreements entered into (including, without
limitation, the Senior Notes Indenture) relating to the issuance by
the Borrower of the Senior Notes, as in effect on the Closing Date and
as the same may be amended, supplemented or modified pursuant to the
terms hereof and thereof.
"Senior Notes Indenture" shall mean the Indenture, dated as of
December 1, 1997, among the Borrower, the Subsidiary Guarantors and
Norwest Corporate Trust, N.A., as trustee thereunder, as in effect on
the Closing Date and as the same may be amended, supplemented or
modified pursuant to the terms hereof and thereof.
"Subsidiary" means any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by Borrower or one or
more of the Subsidiaries or by Borrower and one or more of the
Subsidiaries.
"Subsidiary Guarantors" means the Companies guaranteeing the
obligations of Borrower under the Senior Notes.
"Type" means any type of Loan (i.e., Alternate Base Rate Loan or
Eurodollar Loan).
"UCC" means the Uniform Commercial Code as in effect in the State
of Texas.
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof,"
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
19
"herein," and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article and
Section references pertain to this Agreement. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
ARTICLE II
Revolving Credit Loans
Section 2.1 Revolving Credit Commitments. Subject to the
terms and conditions of this Agreement, each Bank severally agrees to make one
or more Revolving Credit Loans to Borrower from time to time from the date
hereof to and including the Revolving Credit Termination Date in an aggregate
principal amount at any time outstanding up to but not exceeding the amount of
such Bank's Revolving Credit Commitment as then in effect, provided that the
aggregate amount of all Revolving Credit Loans at any time outstanding shall
not exceed the aggregate amount of the Revolving Credit Commitments minus the
outstanding Letter of Credit Liabilities. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, Borrower may
borrow, repay, and reborrow hereunder the amount of the Revolving Credit
Commitments by means of Alternate Base Rate Loans and Eurodollar Loans and,
until the Revolving Credit Termination Date, Borrower may Convert Loans of one
Type into Loans of another Type. Loans of each Type made by each Bank shall be
made and maintained at such Bank's Applicable Lending Office for Loans of such
Type.
Section 2.2 Revolving Credit Notes. The obligation of
Borrower to repay each Bank for Revolving Credit Loans made by such Bank and
interest thereon shall be evidenced by a Revolving Credit Note executed by
Borrower, payable to the order of such Bank, in the principal amount of such
Bank's Revolving Credit Commitment, and dated the date hereof or such later
date as may be required with respect to transactions contemplated by Section
14.7.
Section 2.3 Repayment of Revolving Credit Loans. Borrower
shall repay the unpaid principal amount of all Revolving Credit Loans on the
Revolving Credit Termination Date.
Section 2.4 Interest. The unpaid principal amount of the
Revolving Credit Loans shall bear interest at a varying rate per annum equal
from day to day to the lesser of (a) the Maximum Rate, or (b) the Applicable
Rate. If at any time the Applicable Rate for any Revolving Credit Loan shall
exceed the Maximum Rate, thereby causing the interest accruing on such
Revolving Credit Loan to be limited to the Maximum Rate, then any subsequent
reduction in the Applicable Rate for such Revolving Credit Loan shall not
reduce the rate of interest on such Revolving Credit Loan below the Maximum
Rate until the aggregate amount of interest accrued on such Revolving Credit
Loan equals the aggregate amount of interest which would have accrued on such
Revolving Credit Loan if the Applicable Rate had at all times been in effect.
Accrued and unpaid interest on the Revolving Credit Loans shall be due and
payable as follows:
(i) in the case of Alternate Base Rate Loans, on each
Quarterly Payment Date;
(ii) in the case of each Eurodollar Loan, on the last day of
the Interest Period with respect thereto and in the case of an
Interest Period with a duration greater than three months, on the last
day of each third month during such Interest Period;
(iii) upon the payment or prepayment of any Revolving Credit
Loan or the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 15
20
Conversion of any Loan to a Loan of another Type (but only on the
principal amount so paid, prepaid, or Converted); and
(iv) on the Revolving Credit Termination Date.
Notwithstanding the foregoing, any outstanding principal of any Revolving
Credit Loan and (to the fullest extent permitted by law) any other amount
payable by Borrower under this Agreement or any other Loan Document that is not
paid in full when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest at the Default Rate for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Interest payable at the Default Rate shall be payable from time to time
on demand.
Section 2.5 Use of Proceeds. The proceeds of Revolving Credit
Loans shall be used by Borrower for general corporate purposes, including
support of working capital and issuance of Letters of Credit for all
Subsidiaries but excluding the financing of acquisitions of the assets or stock
of any other Person.
Section 2.6 Commitment Fee. Borrower agrees to pay to the
Agent for the account of each Bank a nonrefundable commitment fee on the daily
average unused amount of such Bank's Revolving Credit Commitment for the period
from and including the date of this Agreement to and including the Revolving
Credit Termination Date, at the Applicable Commitment Fee Rate based on a 360
day year and the actual number of days elapsed. For the purposes of
calculating the commitment fee hereunder, the Revolving Credit Commitment shall
be deemed utilized by the amount of all outstanding Revolving Credit Loans and
Letter of Credit Liabilities. Accrued commitment fee shall be payable in
arrears on each Quarterly Payment Date and on the Revolving Credit Termination
Date.
Section 2.7 Reduction or Termination of Revolving Credit
Commitments. Subject to the terms of Section 5.4 regarding prepayments,
Borrower shall have the right at any time and from time to time to terminate in
whole or reduce in part the unused portion of the Revolving Credit Commitments
upon at least five Business Days' prior notice (which notice shall be
irrevocable) to the Agent specifying the effective date thereof, whether a
termination or reduction is being made, and the amount of any partial
reduction, provided, however, the aggregate Revolving Credit Commitments shall
never be reduced below an amount equal to the outstanding Letter of Credit
Liabilities. Each partial reduction shall be in the amount of $1,000,000 or an
integral multiple thereof and Borrower shall simultaneously prepay the amount
by which the unpaid principal amount of the Revolving Credit Loans plus the
outstanding Letter of Credit Liabilities exceeds the Revolving Credit
Commitments (after giving effect to such notice) plus accrued and unpaid
interest on the principal amount so prepaid. The Revolving Credit Commitments
may not be reinstated after they have been terminated or reduced.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 16
21
ARTICLE III
Letters of Credit
Section 3.1 Letters of Credit. Subject to the terms and
conditions of this Agreement, the Issuing Banks agree to issue one or more
Letters of Credit for the account of Borrower from time to time from the date
hereof to and including the Revolving Credit Termination Date; provided,
however, that the outstanding Letter of Credit Liabilities shall not at any
time exceed the lesser of (1) $2,000,000, or (2) an amount equal to the
aggregate amount of the Revolving Credit Commitments minus the sum of the
outstanding Revolving Credit Loans and provided further, that all Existing
Letters of Credit shall be deemed to be issued under this Agreement and shall,
for purposes of Section 3.2 be deemed issued on the Closing Date. Each Letter
of Credit shall have an expiration date prior to the Revolving Credit
Termination Date, shall be payable in Dollars must be satisfactory in form and
substance to the applicable Issuing Bank, and shall be issued pursuant to such
documents and instruments (including, without limitation, such Issuing Bank's
standard application for issuance of letters of credit as then in effect [each
an "L/C Application"]) as such Issuing Bank may require (collectively, the "L/C
Documents"). No Letter of Credit shall require any payment by the Issuing Bank
to the beneficiary thereunder pursuant to a drawing prior to the third Business
Day following presentment of a draft and any related documents to the Issuing
Bank.
Section 3.2 Participation by Banks. By the issuance of any
Letter of Credit and without any further action on the part of the applicable
Issuing Bank or any of the Banks in respect thereof, each Issuing Bank hereby
grants to each Bank and each Bank hereby agrees to acquire from each Issuing
Bank a participation in each such Letter of Credit and the related Letter of
Credit Liabilities, effective upon the issuance thereof without recourse or
warranty, except as to the amount of any draws made on any Letter of Credit,
equal to such Bank's pro rata part (based on the Revolving Credit Commitments)
of such Letter of Credit and Letter of Credit Liabilities. Each Issuing Bank
shall provide a copy of each Letter of Credit to each other Bank promptly after
issuance. This agreement to grant and acquire participations is an agreement
between each Issuing Bank and the Banks, and neither Borrower nor any
beneficiary of a Letter of Credit shall be entitled to rely thereon. Borrower
agrees that each Bank purchasing a participation from any Issuing Bank pursuant
to this Section 3.2 may exercise all its rights to payment against Borrower
including the right of setoff, with respect to such participation as fully as
if such Bank were the direct creditor of Borrower in the amount of such
participation.
Section 3.3 Procedure for Issuing Letters of Credit. Each
Letter of Credit shall be issued on at least three Business Days prior notice
from the Borrower to the applicable Issuing Bank (with a copy to the Agent) by
means of a Letter of Credit Request Form describing the transaction proposed to
be supported thereby and specifying the information required therein. Such
Issuing Bank shall notify each Bank of the contents of each such notice on the
day such notice is received by such Issuing Bank if received by 11:00 a.m.
Houston, Texas time on a Business Day and otherwise on the next succeeding
Business Day. Upon fulfillment of the applicable conditions precedent
contained in Article VII, such Issuing Bank shall make the applicable Letter of
Credit available to Borrower or, if so requested by Borrower, to the
beneficiary of the Letter of Credit.
Section 3.4 Reimbursements; Payments Constitute Revolving
Credit Loans. Each payment by an Issuing Bank pursuant to a drawing under a
Letter of Credit shall constitute and be deemed an Alternate Base Rate Loan by
each Bank to Borrower under such Bank's Revolving Credit Note and this
Agreement as of the day and time such payment is made by such Issuing Bank and
in the amount of such Bank's pro rata share of such payment; provided, however,
if the applicable conditions precedent contained in Section 7.2 are not
satisfied on the date such payment
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 17
22
is made, Borrower shall pay to the Agent for the account of the Issuing Bank,
prior to 11:00 a.m. Houston, Texas time on the Business Day immediately
following the date such payment is made by the Issuing Bank, the amount of such
payment, together with interest thereon at the Alternate Base Rate plus the
Applicable Margin from the date such payment is made by the Issuing Bank. If
Borrower fails to reimburse the Issuing Bank for such drawing prior to 11:00
a.m. Houston, Texas time on the Business Day following the date such payment is
made by the Issuing Bank, such amount shall bear interest at the Default Rate
for the period from and including the due date thereof to but excluding the
date the same is paid in full. Promptly on the Business Day immediately
following the date each payment is made by an Issuing Bank pursuant to a
drawing under a Letter of Credit and after receipt of notice from the Issuing
Bank of Borrower's failure to reimburse the Issuing Bank for such payment and
the amount of such payment, each Bank will make available to the Agent for the
account of the Issuing Bank at the Principal Office in immediately available
funds, such Bank's pro rata share of such payment.
Section 3.5 Letter of Credit Fee. Borrower shall pay to the
Agent for the account of the Banks (to be shared ratably) a nonrefundable
letter of credit fee payable on the date each Letter of Credit is issued,
renewed or extended in an amount equal to the greater of (i) a percentage per
annum equal from day to day to the Applicable Margin then in effect for
Eurodollar Loans multiplied by the face amount of such Letter of Credit, for
the period during which such Letter of Credit will remain outstanding, based on
a 360 day year and the actual number of days elapsed, or (ii) $500.00. Such
letter of credit fee shall be payable upon the issuance of each such Letter of
Credit, as a condition to such issuance. A nonrefundable fee in the amount of
one-eighth of one percent (1/8%) per annum of the average daily face amount of
such Letter of Credit shall be payable by Borrower to the applicable Issuing
Bank for its own account. In addition to the foregoing fees, but without
duplication, Borrower shall pay or reimburse the applicable Issuing Bank for
such normal and customary costs and expenses as are incurred or charged by such
Issuing Bank in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
Section 3.6 Obligations Absolute. The obligations of the
Borrower under this Agreement and the other Loan Documents (including without
limitation the obligation of the Borrower to reimburse the applicable Issuing
Bank for draws under any Letter of Credit) shall be absolute, unconditional,
and irrevocable, and shall be performed strictly in accordance with the terms
of this Agreement and the other Loan Documents under all circumstances
whatsoever, including without limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit
or any other Loan Document;
(b) The existence of any claim, set-off, counterclaim, defense or
other rights which Borrower, any Obligated Party, or any other Person
may have at any time against any beneficiary of any Letter of Credit,
the Issuing Bank, or any other Person, whether in connection with this
Agreement or any other Loan Document or any unrelated transaction;
(c) Any statement, draft, or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid, or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(d) Payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or other document which does not comply with
the terms of such Letter of Credit; or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 18
23
(e) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Section 3.7 Limitation of Liability. Borrower assumes all
risks of the acts or omissions of any beneficiary of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Issuing Bank, the
Agent, any Bank nor any of their officers or directors shall have any
responsibility or liability to Borrower or any other Person for: (a) the
failure of any draft to bear any reference or adequate reference to any Letter
of Credit, or the failure of any documents to accompany any draft at
negotiation, or the failure of any Person to surrender or to take up any Letter
of Credit or to send documents apart from drafts as required by the terms of
any Letter of Credit, or the failure of any Person to note the amount of any
instrument on any Letter of Credit, each of which requirements, if contained in
any Letter of Credit itself, it is agreed may be waived by the Issuing Bank,
(b) errors, omissions, interruptions, or delays in transmission or delivery of
any messages, (c) the validity, sufficiency, or genuineness of any draft or
other document, or any endorsement(s) thereon, even if any such draft, document
or endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent, or forged or any statement therein is untrue or
inaccurate in any respect, (d) the payment by the Issuing Bank to the
beneficiary of any Letter of Credit against presentation of any draft or other
document that does not comply with the terms of the Letter of Credit, or (e)
any other circumstance whatsoever in making or failing to make any payment
under a Letter of Credit. The Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
Section 3.8 Letter of Credit Documents. Certain additional
provisions regarding the obligations, liabilities, rights, remedies and
agreements of Borrower and the Issuing Bank relative to the Letters of Credit
shall be set forth in the L/C Documents. To the extent the terms of this
Agreement conflict with any L/C Documents, this Agreement shall control.
ARTICLE IV
Borrowing Procedure; Payments
Section 4.1 Borrowing Procedure. The Borrower shall give the
Agent notice of each requested Loan by means of a Loan Request Form containing
the information therein required on the requested date of each Alternate Base
Rate Loan and at least three Business Days before the requested date of each
Eurodollar Loan. The Agent at its option may accept telephonic requests for
Loans, provided that such acceptance shall not constitute a waiver of the
Agent's right to delivery of a Loan Request Form in connection with subsequent
Loans. Any telephonic request for a Loan by the Borrower shall be promptly
confirmed by submission of a properly completed Loan Request Form to the Agent.
Each Revolving Credit Loan shall be in a minimum principal amount of $100,000
or an integral multiple thereof. The aggregate principal amount of Eurodollar
Loans having the same Interest Period shall be at least equal to $1,000,000.
The Agent shall promptly notify each Bank of the contents of each such notice
in writing. Not later than 12:00 Noon Houston, Texas time on the date
specified for each Loan hereunder, each Bank will make available to the Agent
at the Principal Office in immediately available funds, for the account of the
Borrower, its pro rata share of each Loan. After the Agent's receipt of such
funds and subject to the other terms and conditions of this Agreement, the
Agent will make each Loan available to the Borrower by depositing the same, in
immediately available funds, in an account of Borrower (designated by Borrower)
maintained with the Agent at the Principal Office. All notices under this
Section shall be irrevocable and unless otherwise provided, shall be given not
later than 11:00 A.M. Houston, Texas, time on the day which is not less than
the number of Business Days specified above for such notice.
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24
Section 4.2 Conversions and Continuations. The Borrower shall
have the right from time to time to Convert all or part of a Loan of one Type
into a Loan of another Type or to Continue Eurodollar Loans as Eurodollar Loans
by giving the Agent written notice at least three Business Days before
Conversion or Continuation by means of a Notice of Conversion or Continuation
containing the information required therein; provided that (i) Eurodollar Loans
may only be Converted on the last day of the Interest Period, and (ii) except
for Conversions into Alternate Base Rate Loans, no Conversions shall be made
while a Default has occurred and is continuing. The Agent shall promptly
notify each Bank of the contents of each such notice in writing. All notices
under this Section shall be irrevocable and shall be given not later than 11:00
A.M. Houston, Texas time on the day which is not less than the number of
Business Days specified above for such notice. If the Borrower shall fail to
give the Agent the notice as specified above for Continuation or Conversion of
a Eurodollar Loan prior to the end of the Interest Period with respect thereto,
such Eurodollar Loan shall be Converted automatically into an Alternate Base
Rate Loan on the last day of the then current Interest Period for such
Eurodollar Loan.
Section 4.3 Method of Payment. All payments of principal,
interest, and other amounts to be made by the Borrower under this Agreement and
the other Loan Documents shall be made to the Agent at the Principal Office for
the account of each Bank's Applicable Lending Office in Dollars and in
immediately available funds, without setoff, deduction, or counterclaim, not
later than 11:00 A.M., Houston, Texas time on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Borrower shall,
at the time of making each such payment, specify to the Agent the sums payable
by Borrower under this Agreement and the other Loan Documents to which such
payment is to be applied (and in the event that Borrower fails to so specify,
or if an Event of Default has occurred and is continuing, the Agent may apply
such payment to the Obligations in such order and manner as it may elect in its
sole discretion, subject to Section 4.5 hereof). Each payment received by the
Agent under this Agreement or any other Loan Document for the account of a Bank
shall be paid promptly to such Bank, in immediately available funds, for the
account of such Bank's Applicable Lending Office. Whenever any payment under
this Agreement or any other Loan Document shall be stated to be due on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and commitment fee, as the case may be.
Section 4.4 Voluntary Prepayment. The Borrower may, with same
day notice in the case of Alternate Base Rate Loans and upon at least three
Business Days' prior notice to the Agent in the case of Eurodollar Loans,
prepay the Loans in whole at any time or from time to time in part without
premium or penalty (except as set forth in Section 5.5) but with accrued
interest to the date of prepayment on the amount so prepaid, provided that (a)
Eurodollar Loans may be prepaid only on the last day of the Interest Period for
such Loans, and (b) each partial prepayment shall be in the principal amount of
$500,000 or an integral multiple thereof. Otherwise, the Borrower shall pay to
the Agent on demand for the account of the Banks, any loss or expense that the
Banks incur because of such prepayment as set forth in Section 5.5. All
notices under this Section shall be irrevocable and shall be given not later
than 11:00 A.M. Houston, Texas, time on the day which is not less than the
number of Business Days specified above for such notice.
Section 4.5 Pro Rata Treatment. Except to the extent
otherwise provided herein: (a) each Loan shall be made by the Banks under
Section 2.1 or deemed made by the Banks under Section 3.4, each payment of
commitment fee under Sections 2.6 and letter of credit fee under Section 3.5
shall be made for the account of the Banks, and each termination or reduction
of the Revolving Credit Commitments under Section 2.7 shall be applied to the
Revolving Credit
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 20
25
Commitments of the Banks, pro rata according to the respective unused Revolving
Credit Commitments and each Letter of Credit shall be deemed participated in by
the Banks, pro rata according to the amounts of their respective Revolving
Credit Commitments; (b) the making, Conversion, and Continuation of Loans of a
particular Type (other than Conversions provided for by Section 5.4) shall be
made pro rata among the Banks holding Loans of such Type according to the
amounts of their respective Commitments; (c) each payment and prepayment of
principal of or interest on Loans by the Borrowers of a particular Type shall
be made to the Agent for the account of the Banks holding Loans of such Type
pro rata in accordance with the respective unpaid principal amounts of such
Loans held by such Banks; and (d) Interest Periods for Loans of a particular
Type shall be allocated among the Banks holding Loans of such Type pro rata
according to the respective principal amounts held by such Banks.
Section 4.6 Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Bank or Borrower (the "Payor") prior to the
date on which such Bank is to make payment to the Agent of the proceeds of a
Loan to be made by it hereunder or Borrower is to make a payment to the Agent
for the account of one or more of the Banks, as the case may be (such payment
being herein called the "Required Payment"), which notice shall be effective
upon receipt, that the Payor does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Agent, the recipient of
such payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Alternate Base Rate plus
the Applicable Margin (or, if the recipient of such payment is a Bank or an
Issuing Bank, the Federal Funds Rate) for such period, but in no event in
excess of the maximum nonusurious rate permitted by applicable law.
Section 4.7 Withholding Taxes.
(a) Borrower agrees to pay to each Bank that is not a U.S. Person
such additional amounts as are necessary in order that the net payment
of any amount due to such non-U.S. Person hereunder after deduction
for or withholding in respect of any U.S. taxes imposed with respect
to such payment (or in lieu thereof, payment of such U.S. taxes by
such non-U.S. Person), will not be less than the amount stated herein
to be then due and payable, provided that the foregoing obligation to
pay such additional amounts shall not apply:
(i) to any payment to any Bank hereunder unless such Bank is,
on the date hereof (or on the date it becomes a Bank hereunder as
provided in Section 14.8 hereof) and on the date of any change in
the Applicable Lending Office of such Bank, either entitled to
submit a Form 1001 (relating to such Bank and entitling it to a
complete exemption from withholding on all interest to be received
by it hereunder in respect of the Loans) or Form 4224 (relating to
all interest to be received by such Bank hereunder in respect of
the Loans),
(ii) to any U.S. taxes imposed solely by reason of the
failure of such non-U.S. Person (or, if such non-U.S. Person is
not the beneficial owner of the relevant Loan, such beneficial
owner) to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United
States of America of such non-U.S. Person (or beneficial owner, as
the case may be) if such compliance
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 21
26
is required by statute or regulation of the United States of
America as a precondition to relief or exemption from such U.S.
taxes.
For the purposes of this Section 5.7(a), (A) "Form 1001" shall mean
Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the
Department of the Treasury of the United States of America, and (B)
"Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade Business in
the United States) of the Department of the Treasury of the United
States of America (or in relation to either such Form such successor
and related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a claim
to which such Form relates).
(b) Within 30 days after paying any amount to the Agent or any
Bank from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit
such deduction or withholding to any relevant taxing or other
authority, the Borrower shall deliver to the Agent for delivery to
such non-U.S. Person evidence satisfactory to such Person of such
deduction, withholding or payment (as the case may be).
Section 4.8 Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of Form 1001 or 4224, certifying in either case that such Bank is
entitled to receive payments from the Borrower under any Loan Document without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Bank is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with
respect to it and such Bank advises the Borrower and the Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income tax.
Section 4.9 Computation of Interest. Interest on Eurodollar
Loans and all other amounts payable by the Borrowers hereunder (other than
Alternate Base Rate Loans) shall be computed on the basis of a year of 360 days
and the actual number of days elapsed (including the first day but excluding
the last day) unless such calculation would result in a usurious rate, in which
case interest shall be calculated on the basis of a year of 365 or 366 days, as
the case may be. Interest on Alternate Base Rate Loans shall be computed on
the basis of a year of 365 or 366 days, as the case may be.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 22
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ARTICLE V
Yield Protection and Illegality
Section 5.1 Additional Costs.
(a) Borrower shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate
it for any costs incurred by such Bank which such Bank determines are
attributable to Borrower and its making or maintaining of any
Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change
which:
(i) changes the basis of taxation of any amounts payable
to such Bank under this Agreement or its Note in respect of any of
such Loans (other than taxes imposed on the overall net income of
such Bank or its Applicable Lending Office for any Eurodollar
Loans by the jurisdiction in which such Bank has its principal
office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio, or similar requirement relating to
any extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Bank (including any
Eurodollar Loans or any deposits referred to in the definition of
"Eurodollar Rate" in Section 1.1 hereof); or
(iii) imposes any other condition affecting this Agreement
or the Notes or any of such extensions of credit or liabilities or
commitments.
Each Bank will notify the Borrower of any event occurring after the
date of this Agreement which will entitle such Bank to compensation
pursuant to this Section 5.1(a) as promptly as practicable after it
obtains knowledge thereof (but in any event within 360 days after such
event) and determines to request such compensation, and will designate
a different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole opinion of such
Bank, violate any law, rule, or regulation or be in any way
disadvantageous to such Bank, provided that such Bank shall have no
obligation to so designate an Applicable Lending Office located
outside the United States of America. Each Bank will furnish the
Borrower with a certificate (which absent manifest error, shall be
conclusive) setting forth the basis and the amount of each request of
such Bank for compensation under this Section 5.1(a). If any Bank
requests compensation from the Borrower under this Section 5.1(a), the
Borrower may, by notice to such Bank (with a copy to the Agent)
suspend the obligation of such Bank to make or Continue making, or
Convert Loans into, Loans of the Type with respect to which such
compensation is requested until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of
Section 5.4 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of
this Section 5.1, in the event that, by reason of any Regulatory
Change that becomes effective after date hereof, any Bank either (i)
incurs Additional Costs based on or measured by the excess above a
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 23
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specified level of the amount of a category of deposits or other
liabilities of such Bank which includes deposits by reference to which
the interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets
of such Bank which includes Eurodollar Loans or (ii) becomes subject
to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Bank so elects by notice to
the Borrower (with a copy to the Agent), the obligation of such Bank
to make or Continue making, or Convert Loans into, Eurodollar Loans
hereunder shall be suspended until such Regulatory Change ceases to be
in effect (in which case the provisions of Section 5.4 hereof shall be
applicable).
(c) Determinations and allocations by any Bank for purposes of
this Section 5.1 of the effect of any Regulatory Change on its costs
of maintaining its obligations to make Eurodollar Loans or of making
or maintaining Eurodollar Loans or on amounts receivable by it in
respect of Eurodollar Loans, and of the additional amounts required to
compensate such Bank in respect of any Additional Costs, shall be
conclusive, provided that such determinations and allocations are made
on a reasonable basis.
Section 5.2 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if with respect to any Eurodollar Loans for any
Interest Period therefor:
(a) The Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" in Section 1.1 hereof are
not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for
Eurodollar Loans as provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Rate" in Section 1.1
hereof on the basis of which the rate of interest for such Loans for
such Interest Period is to be determined do not accurately reflect the
cost to the Banks of making or maintaining Eurodollar Loans for such
Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant amounts or periods, and so long as such condition remains in effect,
the Banks shall be under no obligation to make additional Eurodollar Loans or
to Convert Alternate Base Rate Loans into Eurodollar Loans and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Eurodollar Loans or Convert
such Eurodollar Loans into Alternate Base Rate Loans in accordance with the
terms of this Agreement.
Section 5.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Eurodollar Loans hereunder
or (b) maintain Eurodollar Loans hereunder, then such Bank shall promptly
notify the Borrower (with a copy to the Agent) thereof and such Bank's
obligation to make or maintain Eurodollar Loans and to Convert Alternate Base
Rate Loans into Eurodollar Loans hereunder shall be suspended until such time
as such Bank may again make and maintain Eurodollar Loans (in which case the
provisions of Section 5.4 hereof shall be applicable).
Section 5.4 Treatment of Eurodollar Loans. If the Eurodollar Loans of
any Bank are to be Converted pursuant to Section 5.1 or 5.3 hereof, such Bank's
Eurodollar Loans shall be automatically Converted into Alternate Base Rate
Loans on the last day(s) of the then current Interest Period(s) for the
Eurodollar Loans (or, in the case of a Conversion required by Section 5.1(b) or
5.3 hereof, on such earlier date as such Bank may specify to the Borrowers with
a
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copy to the Agent) and, unless and until such Bank gives notice as provided
below that the circumstances specified in Section 5.1 or 5.3 hereof which gave
rise to such Conversion no longer exist:
(a) To the extent that such Bank's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would
otherwise be applied to such Bank's Eurodollar Loans shall be applied
instead to its Alternate Base Rate Loans;
(b) All Loans which would otherwise be made or Continued by such
Bank as Eurodollar Loans shall be made as or Converted into Alternate
Base Rate Loans and all Loans of such Bank which would otherwise be
Converted into Eurodollar Loans shall be Converted instead into (or
shall remain as) Alternate Base Rate Loans; and
If such Bank gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1 or 5.3 hereof which gave rise to the
Conversion of such Bank's Eurodollar Loans pursuant to this Section 5.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Bank's
Alternate Base Rate Loans shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Eurodollar Loans
to the extent necessary so that, after giving effect thereto, all Loans held by
the Banks holding Eurodollar Loans and by such Bank are held pro rata (as to
principal amounts, Types, and Interest Periods) in accordance with their
respective Commitments.
Section 5.5 Compensation. The Borrower shall pay to the Agent
for the account of each Bank, upon the request of such Bank through the Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of
such Bank) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the
outstanding Loans pursuant to Section 12.2) on a date other than the
last day of an Interest Period for such Loan; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in
Article VII to be satisfied) to borrow, Convert, or prepay a
Eurodollar Loan on the date for such borrowing, Conversion, or
prepayment, specified in the relevant notice of borrowing, prepayment,
or Conversion under this Agreement.
Section 5.6 Capital Adequacy. If after the date hereof, any
Bank shall have determined that the adoption or implementation of any
applicable law, rule, or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Bank (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority,
has or would have the effect of reducing the rate of return on such Bank's (or
its parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which such Bank (or its
parent) could have achieved but for such adoption, implementation, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within ten (10) Business Days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its parent) for such reduction;
provided, however, the Borrower shall not
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be required to compensate any such Bank for any such reduction for any period
prior to the date upon which such Bank gives notice to the Borrower that an
event or change resulting in a reduced rate of return on the Bank's capital has
occurred. A certificate of such Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive, provided that the determination thereof is made on a
reasonable basis. In determining such amount or amounts, such Bank may use any
reasonable averaging and attribution methods.
Section 5.7 Additional Costs in Respect of Letters of Credit.
If as a result of any Regulatory Change there shall be imposed, modified, or
deemed applicable any tax, reserve, special deposit, or similar requirement
against or with respect to or measured by reference to Letters of Credit issued
or to be issued hereunder or the commitments to issue or participate in Letters
of Credit hereunder, and the result shall be to increase the cost to an Issuing
Bank or any Bank of issuing, maintaining or participating in any Letter of
Credit or its commitment to issue or participate in Letters of Credit hereunder
or reduce any amount receivable by an Issuing Bank or any Bank hereunder in
respect of any Letter of Credit (which increase in cost, or reduction in amount
receivable, shall be the result of the Issuing Bank's or such Bank's reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Issuing Bank or such Bank, the Borrower
agrees to pay such Issuing Bank or such Bank, from time to time as specified by
such Issuing Bank or such Bank, such additional amounts as shall be sufficient
to compensate such Issuing Bank or such Bank for such increased costs or
reductions in amount. A statement delivered to Borrower within 360 days after
the occurrence of any event entitling it to compensation pursuant to this
Section 5.7, as to such increased costs or reductions in amount incurred by
such Issuing Bank or such Bank, submitted by such Issuing Bank or such Bank to
the Borrower, shall be conclusive as to the amount thereof, provided that the
determination thereof is made on a reasonable basis.
ARTICLE VI
Security
Section 6.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the
property and collateral described in this Section 6.1 (which, together with any
other property and collateral which may now or hereafter secure the Obligations
or any part thereof, is sometimes herein called the "Collateral"):
(a) Each of the Companies shall grant to the Agent for the benefit
of the Agent, the Banks and the Issuing Banks a first priority
security interest in all of its accounts, accounts receivable,
investment property, equipment, machinery, fixtures, inventory,
chattel paper, documents, instruments, and general intangibles,
whether now owned or hereafter acquired, and all products and proceeds
thereof, pursuant to the Security Agreements, provided that such
security interest may be subject in priority to certain Permitted
Liens. The Agent may file and cause to be filed such documents and
instruments, including without limitation, Uniform Commercial Code
financing statements, as the Agent, in its sole discretion, deems
necessary or desirable to evidence and perfect its Liens and security
interests in the Collateral described in the Security Agreements.
(b) The Borrowers shall cause each Person that becomes a Company
after the date hereof to grant to the Agent for the benefit of the
Agent, the Banks and the Issuing Banks a first priority security
interest in all of its accounts, accounts receivable, investment
property, equipment, machinery, fixtures, inventory, chattel paper,
documents, instruments,
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and general intangibles, whether now owned or hereafter acquired, and
all products and proceeds thereof, pursuant to a Security Agreement,
provided that such security interest may be subject in priority to
certain Permitted Liens. The Agent may file and cause to be filed
such documents and instruments, including without limitation, Uniform
Commercial Code financing statements, as the Agent, in its sole
discretion, deems necessary or desirable to evidence and perfect its
Liens and security interests in the Collateral described in each such
Security Agreement.
(c) Borrower shall pledge and grant to the Agent for the benefit
of the Agent, the Banks and the Issuing Banks a continuing first
priority security interest in one hundred percent (100%) of the issued
and outstanding capital stock of each of its Subsidiaries, whether now
existing or hereafter formed or acquired, and all products and
proceeds thereof, pursuant to the Pledge Agreement. The Agent shall
retain possession of the certificates evidencing the capital stock of
the Subsidiaries, together with stock powers duly executed in blank by
Borrower.
(d) A life insurance policy issued on the life of S. βββββ ββββββ
in the amount of $2,000,000.00 and a life insurance policy issued on
the life of ββββββ β. ββββββ in the amount of $1,500,000 have been and
shall continue to be collaterally assigned to the Agent for the
benefit of the Agent, the Issuing Banks and the Banks pursuant to
assignments of life insurance policy as collateral, each in form and
substance satisfactory to the Agent (the "Assignments of Life
Insurance").
(e) Each of the Companies shall execute and cause to be executed
such further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as the Agent, in its
sole discretion, deems necessary or desirable to evidence and perfect
its liens and security interests in the Collateral.
Section 6.2 Lockbox Accounts. Borrower shall (and shall cause
each other presently existing Company and each Company formed or acquired in
the future to) (a) establish and maintain one or more lockboxes and/or accounts
(the "Lockbox Accounts") with the Agent (the maintenance of which shall be
subject to such rules and regulations as the Agent shall from time to time
specify), (b) grant security interests to the Agent for the benefit of the
Agent, the Issuing Banks and the Banks in each such Lockbox Account and the
related deposit accounts by executing one or more, as appropriate, assignments
in substantially the form of Exhibit "G" hereto, and (c) promptly notify all of
their respective accounts receivable obligors hereafter to direct all payments
on such accounts receivable directly into one of the Lockbox Accounts. At any
time while a Default does not exist and will not occur as a result of any
withdrawal, then (and at all other times to the extent required by applicable
law), the Companies may have full access to their respective Lockbox Accounts
and may withdraw from their respective Lockbox Accounts in the amounts then
remaining in excess of the minimum deposit required to keep such account
active. While an Event of Default exists, the Agent may, without prior notice
or demand, take and apply against the Obligations for the pro rata benefit of
the Banks any and all funds then or thereafter on deposit in any one or more
Lockbox Accounts.
Section 6.3 Guaranties. Borrower shall cause (a) the
presently existing Companies jointly and severally (without limit) to guarantee
full payment and performance of the Obligations, and (b) each Company formed or
acquired in the future to execute and deliver to the Agent on demand a
guarantee of the full payment and performance of the Obligations, pursuant to
the respective Guaranties.
Section 6.4 Setoff. If an Event of Default shall have
occurred and is continuing, the
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Agent, Issuing Banks and each Bank are hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being hereby
expressly waived by the Borrower), to set off and apply any and all deposits
(general, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Agent, Issuing Banks or such Bank to or
for the credit or the account of the Borrower (other than trust fund accounts
held by the Borrower for the benefit of non-Affiliates) against any and all of
the obligations of the Borrower now or hereafter existing under this Agreement,
the Notes, or any other Loan Document, irrespective of whether or not the
Agent, the Issuing Banks or such Bank shall have made any demand under this
Agreement, the Notes or any other Loan Document and although such obligations
may be unmatured. As further security for the Obligations, Borrower hereby
grants to the Agent for the benefit of the Agent, the Banks and the Issuing
Banks a security interest in all money, instruments and other property of
Borrower (other than trust fund accounts held by the Borrower for the benefit
of non-Affiliates) now or hereafter held by the Agent. In addition to the
right of setoff and as further security for the Obligations, Borrower hereby
grants to the Agent for the benefit of the Agent, the Banks and the Issuing
Banks a security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of Borrower (other than trust fund
accounts held by the Borrower for the benefit of non-Affiliates) now or
hereafter on deposit with or held by the Agent and all other sums at any time
credited or owing from the Agent, the Banks or the Issuing Banks to the
Borrower. The rights and remedies of the Agent, Issuing Banks and each Bank
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Agent, the Issuing Banks and the
Banks may have.
ARTICLE VII
Conditions Precedent
Section 7.1 Initial Loans. The obligation of each Bank to make
its initial Loan or of any Issuing Bank to issue the initial Letter of Credit
is subject to the condition precedent that the Agent shall have received on or
before the day of such Loan or issuance all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance
satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each of
the Companies certified by a Secretary or an Assistant Secretary of
such Company which authorize the execution, delivery, and performance
by such Company of the Loan Documents to which such Company is or is
to be a party;
(b) Incumbency Certificate. A certificate of incumbency of each
of the Companies certified as of the Closing Date by the Secretary or
an Assistant Secretary of such Company certifying the names of the
officers of such Company authorized to sign this Agreement and each of
the other Loan Documents to which such Company is or is to be a party
(including the certificates contemplated herein) together with
specimen signatures of such officers;
(c) Articles or Certificate of Incorporation. The articles or
certificate of incorporation, as applicable, of each of the Companies
certified by the Secretary of State of such Company's jurisdiction of
incorporation as of a current date acceptable to the Agent;
(d) Bylaws. A certificate for each Company certified by the
Secretary or an Assistant Secretary of such Company certifying that
the bylaws of each of the Companies have not been amended or modified
since October 31, 1996 and are still in full force and effect;
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(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of each of the
Companies as to the existence and good standing of such Company, each
dated a current date acceptable to the Agent;
(f) Revolving Credit Notes. The Revolving Credit Notes executed
by Borrower;
(g) Security Agreements. The Security Agreements executed by the
respective Companies;
(h) Guaranties. The Guaranties executed by each Guarantor;
(i) Pledge Agreement. The Pledge Agreement executed by Borrower;
(j) Stock Certificates. The original stock certificates
evidencing the stock pledged pursuant to the Pledge Agreement,
together with stock powers duly executed in blank;
(k) Financing Statements. Uniform Commercial Code financing
statements executed by the Companies and covering such Collateral as
the Agent may request;
(l) Assignments of Deposit Accounts. Assignments of deposit
accounts, executed by the appropriate parties in accordance with
Section 6.2;
(m) Senior Note Offering. Evidence satisfactory to the Agent that
the Borrower shall have received at least $76 million in proceeds from
the sale of the Senior Notes and a portion of such proceeds shall have
been utilized by Borrower on the Closing Date to satisfy in full all
obligations, indebtedness and liabilities of the Borrower and
HealthCor (other than the contingent reimbursement obligations in
respect of the Existing Letters of Credit) under the Existing Credit
Agreement;
(n) Senior Note Documents. On or prior to the Closing Date, there
shall have been delivered to the Banks true and correct copies of the
Senior Note Documents and all terms and conditions of the Senior Note
Documents (including, without limitation, maturity, interest rate,
covenants, defaults and remedies) shall be in form and substance
satisfactory to the Agent and Required Banks;
(o) Contribution and Indemnification Agreement. The Contribution
and Indemnification Agreement (herein so called) in substantially the
form of Exhibit "H" hereto, executed by the Companies;
(p) Corporate Structure. The corporate structure of Borrower and
its Subsidiaries shall be satisfactory to the Agent and the Required
Banks;
(q) Material Adverse Change. No material adverse change shall
have occurred since the date of the most recent consolidated financial
statements delivered by Borrower to the Agent, in the financial
condition, business, operations, or prospects of the Borrower or in
its assets, liabilities and properties and there shall be no material
threatened or pending litigation adversely affecting its property;
(r) Insurance Policies. Copies of all insurance policies required
by Section 9.5, together with insurance certificates evidencing such
policies and showing the Agent as an additional insured and loss
payee;
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(s) UCC Searches. The results of Uniform Commercial Code
searches showing all financing statements and other documents or
instruments on file against the Companies in such jurisdictions as the
Agent shall determine;
(t) Existing Credit Agreement. On or prior to the Closing Date,
the commitments under the Existing Credit Agreement shall have been
terminated, all loans thereunder shall have been paid in full,
together with all accrued and unpaid interest thereon, all accrued and
unpaid fees thereunder shall have been paid in full, all letters of
credit issued thereunder shall have been incorporated hereunder as
Letters of Credit, and all other amounts owing to the banks thereunder
shall have been repaid in full, and the Agent shall have received
evidence thereof in form, scope and substance satisfactory to it;
(u) Lien Releases. Executed UCC-3 Termination Statements or
Assignments and other Lien releases that release or assign to the
Agent all Liens held by holders of Funded Debt not constituting
Permitted Debt and all other Liens that do not constitute Permitted
Liens;
(v) Opinion of Counsel. Favorable opinions of in-house legal
counsel to the Companies and outside legal counsel to the Companies,
Akin, Gump, Strauss, βββββ & ββββ LLP, which taken together, address
each of the matters set forth in Exhibit "I" hereto, and such other
matters as the Agent may reasonably request;
(w) Fees. Evidence that the Borrower shall have paid to the Agent
and the Banks all fees to the extent then due referred to in the
Agent's Fee Letter;
(x) Attorneys' Fees and Expenses. Evidence that the costs, fees
and expenses (including attorneys' fees) referred to in the Agent's
Fee Letter and in Section 14.1, to the extent incurred, shall have
been paid in full by the Borrower.
Section 7.2 All Loans. The obligation of each Bank to make
any Loan or of any Issuing Bank to issue any Letter of Credit (including the
initial Loan or issuance) is subject to the following additional conditions
precedent:
(a) Request for Loan or Letter of Credit. The Agent or the
Issuing Bank shall have received, in accordance with Section 4.1 or
3.3, as the case may be, a Loan Request Form or Letter of Credit
Request Form, dated the date of such Loan or Letter of Credit,
executed by an authorized officer of the Borrower;
(b) No Default. No Default shall have occurred and be continuing,
or would result from such Loan or Letter of Credit, as the case may
be;
(c) Representations and Warranties. All of the representations
and warranties contained in Article VIII hereof and in the other Loan
Documents shall be true and correct on and as of the date of such Loan
with the same force and effect as if such representations and
warranties had been made on and as of such date; and
(d) Additional Documentation. The Agent shall have received such
additional approvals, opinions, or documents as the Agent or its legal
counsel, ββββββββ ββββββββ & ββββββ P.C., may reasonably request.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 30
35
ARTICLE VIII
Representations and Warranties
To induce the Agent, the Issuing Banks and the Banks to enter into
this Agreement, Borrower represents and warrants to the Agent, the Issuing Bank
and the Banks that:
Section 8.1 Corporate Existence. Each Company (a) is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite corporate
power and authority to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect
on its business, condition (financial or otherwise), operations, prospects, or
properties. Borrower has the corporate power and authority to execute,
deliver, and perform its obligations under this Agreement and the other Loan
Documents to which it is or may become a party. Each Guarantor has the
corporate power and authority to execute, deliver, and perform its obligations
under its Guaranty and the other Loan Documents to which it is or may become a
party.
Section 8.2 Financial Statements. Borrower has delivered to
the Agent audited consolidated financial statements of the Companies as at and
for the fiscal year ended December 31, 1996, and unaudited consolidated and
consolidating financial statements of the Companies for the nine (9)-month
period ended September 30, 1997. Such financial statements have been prepared
in accordance with GAAP (subject to year end adjustments and disclosures in the
case of unaudited interim financial statements), and fairly present in all
material respects, on a consolidated and consolidating basis, the financial
condition of the Companies as of the respective dates indicated therein and the
results of operations for the respective periods indicated therein. None of
the Companies has any material obligations or liabilities (direct, indirect,
contingent or liquidated), liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments required by GAAP to be reflected therein that are not reflected in
such financial statements. There has been no material adverse change in the
business, condition (financial or otherwise), operations, prospects, or
properties of any of the Companies since the effective date of the most recent
financial statements referred to in this Section.
Section 8.3 Corporate Action; No Breach. The execution,
delivery, and performance by each Company of this Agreement and the other Loan
Documents to which such Company is or may become a party and compliance with
the terms and provisions hereof and thereof have been duly authorized by all
requisite corporate action on the part of such Company and do not and will not
(a) violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation or bylaws of such Company, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, which violation or conflict could
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of any Company, the Collateral
taken as a whole, or the ability of the Companies to pay and perform the
Obligations, or (iii) any material agreement or instrument to which such
Company is a party or by which any of them or any of their property is bound or
subject, or (b) constitute a default under any such material agreement or
instrument, or result in the creation or imposition of any Lien (except as
provided in Article VI) upon any of the revenues or assets of such Company.
Section 8.4 Operation of Business. Each Company possesses
all licenses, permits,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 31
36
franchises, patents, copyrights, trademarks, and tradenames, or rights thereto,
necessary to conduct its business substantially as now conducted and as
presently proposed to be conducted, and no Company is in violation of any valid
rights of others with respect to any of the foregoing, which violation would
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of any Company, the Collateral
taken as a whole, or the abilities of the Companies to pay and perform the
Obligations. Without in any way limiting the foregoing, (a) Borrower is (and
each Company is, except to the extent that it would not have a material adverse
effect on the business, condition [financial or otherwise], operations,
prospects, or properties of such Company) an accredited, licensed, registered,
or certified, as the case may be, healthcare provider with the appropriate
Healthcare Regulators where the nature and extent of its business require, and
(b) each Company has obtained and possesses all requisite licenses and permits
from and has registered with all of the appropriate Governmental Authorities as
necessary for such Company to distribute or dispense drugs or controlled
substances, to the extent such Company does so, including without limitation,
the Drug Enforcement Agency of the United States Department of Justice and the
Texas Department of Public Safety except to the extent that the failure to
obtain or possess any such license would not have a material adverse effect on
the business, condition (financial or otherwise), operations, prospects, or
properties of any Company, the Collateral taken as a whole, or the abilities of
the Companies to pay and perform the Obligations.
Section 8.5 Litigation and Judgments. Except as disclosed on
Schedule 2 hereto, there is no action, suit, investigation, or proceeding
before or by any Governmental Authority or arbitrator pending, or to the
knowledge of Borrower, threatened against or affecting any Company, that would,
if adversely determined, have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of any
Company or the ability of the Companies to pay and perform the Obligations.
There are no outstanding judgments against any Company.
Section 8.6 Rights in Properties; Liens. Each Company has
good and indefeasible title to or valid leasehold interests in its properties
and assets, real and personal, including the properties, assets, and leasehold
interests reflected in the financial statements described in Section 8.2, and
none of the properties, assets, or leasehold interests of any Company is
subject to any Lien, except the Permitted Liens.
Section 8.7 Enforceability. This Agreement constitutes, and
the other Loan Documents, when delivered, shall constitute the legal, valid,
and binding obligations of the respective Companies that are party thereto,
enforceable against the respective Companies in accordance with their
respective terms, except as limited by bankruptcy, insolvency, or other laws of
general application relating to the enforcement of creditors' rights.
Section 8.8 Approvals. No authorization, approval, or consent
of, and no registration with, any Governmental Authority or third party is or
will be necessary for the execution or delivery by the Companies of the
respective Loan Documents to which they are or may become a party or for the
validity or enforceability thereof.
Section 8.9 Debt. The Companies have no Funded Debt, except
as disclosed on Schedule 3 hereto.
Section 8.10 Taxes. Each Company has filed all tax returns
(federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and has paid all of its
liabilities for taxes, assessments, governmental charges, and other levies that
are due and payable, except (i) any such taxes, assessments, levies, or other
charges the amount or validity of which are currently being contested in good
faith by appropriate proceedings
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 32
37
and with respect to which adequate reserves in accordance with GAAP have been
established on the books of such Company, and (ii) where failure to pay state
taxes does not and will not have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects or properties of any
Company, the Collateral taken as a whole, or the ability of the Companies to
pay and perform the Obligations. Borrower knows of no pending investigation of
any Company by any taxing authority or of any pending but unassessed tax
liability of any Company.
Section 8.11 Use of Proceeds; Margin Securities. None of the
Companies is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock.
Section 8.12 ERISA. Each Company is in compliance in all
material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. No Company or ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. Each Company and each ERISA Affiliate
have met their minimum funding requirements under ERISA with respect to all of
their Plans, and the present value of all vested benefits under each Plan do
not exceed the fair market value of all Plan assets allocable to such benefits,
as determined on the most recent valuation date of the Plan and in accordance
with ERISA. No Company or ERISA Affiliate has incurred any liability to the
PBGC under ERISA.
Section 8.13 Disclosure. No statement, information, report,
representation, or warranty made by any Company in this Agreement or in any
other Loan Document or furnished to the Agent, any Issuing Bank or any Bank in
connection with this Agreement or any transaction contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is no
fact known to Borrower which has a material adverse effect, or which could
reasonably be expected to have a material adverse effect, on the business,
condition (financial or otherwise), operations, prospects, or properties of any
Company that has not been disclosed in writing to the Agent, the Issuing Banks
and the Banks.
Section 8.14 Subsidiaries. Borrower has no Subsidiaries other
than those listed on Schedule 1 hereto, and Schedule 1 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of
Borrower's ownership of the outstanding voting stock of each Subsidiary. All
of the outstanding capital stock of each Subsidiary has been validly issued, is
fully paid, and is nonassessable.
Section 8.15 Agreements. No Company is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporate restriction the compliance
with which is reasonably likely to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of such Company, or the ability of such Company to pay and perform
its obligations under the Loan Documents to which it is a party. No Company is
in default in any respect in the performance, observance, or fulfillment of any
of the obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party which could
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of
such Company.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 33
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Section 8.16 Compliance with Laws; Environmental Liabilities.
No Company is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator,
including without limitation any Environmental Laws. No Company is aware of,
nor has any Company received notice of, any conditions or circumstances
associated with the currently or previously owned or leased properties or
operations of any Company that has given or could reasonably be expected to
give rise to any Environmental Liabilities of any Company, and no Lien arising
under any Environmental Law has attached to any property or revenues of any
Company.
Section 8.17 Fraud and Abuse. None of the Companies, and to
Borrower's knowledge, none of the officers, directors, agents, and employees of
any of the respective Companies, have engaged in any activities that are
prohibited under 42 U.S.C. Section 1320a-7b, known as the anti-kickback
statute, or the regulations promulgated thereunder, or related or similar state
or local statutes or regulations (including, but not limited to, Texas Health &
Safety Code Section 161.091), including but not limited to the following: (a)
knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another; (d) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or knowingly and willfully offering or paying such remuneration as an
inducement (a) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid, or other
government program or (b) in return for purchasing, leasing, or ordering or
arranging for or recommending purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in whole or in part by
Medicare, Medicaid, or other government program.
Section 8.18 Self Referral. None of the Companies, and to
Borrower's knowledge none of the officers, directors, agents, and employees of
any of the respective Companies, have engaged in any activities that are
prohibited under 42 U.S.C. Section 1395nn, known as the self-referral or βββββ
statute, or the regulations promulgated thereunder, or related or similar state
or local statutes or regulations. The Companies' respective businesses
currently are conducted in a manner that will not violate 42 U.S.C. Section
1395nn as amended and to be effective January 1, 1995.
ARTICLE IX
Positive Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder or any
Issuing Bank has any obligation to issue Letters of Credit hereunder, Borrower
will perform and observe the following positive covenants:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 34
39
Section 9.1 Reporting Requirements. The Borrower will furnish
to the Agent, the Issuing Banks and each Bank:
(a) Annual Financial Statements. As soon as available, and in any
event within ninety (90) days after the end of each fiscal year of the
Borrower, beginning with the fiscal year ending December 31, 1997, a
copy of the annual audit report of the Companies for such fiscal year
containing, on a consolidated and consolidating basis, balance sheets
and statements of income, retained earnings, and cash flow as at the
end of such fiscal year and for the 12-month period then ended, in
each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and
certified by and accompanied by the unqualified opinion of,
independent certified public accountants of recognized standing
acceptable to the Agent, to the effect that such report has been
prepared in accordance with GAAP and presents fairly in all material
respects the financial conditions and results of operations of the
Companies;
(b) Quarterly and Monthly Financial Statements. As soon as
available, and in any event within forty-five (45) days after the end
of each fiscal quarter and each calendar month, a copy of an unaudited
financial report of the Companies as of the end of such quarter or
month, as the case may be and for the portion of the fiscal year then
ended, containing, on a consolidated and consolidating basis, balance
sheets and statements of income, retained earnings, and cash flow, in
each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail and prepared in accordance with GAAP to fairly present in all
material respects (subject to year-end audit adjustments and
disclosures) the financial condition and results of operations of the
Companies, on a consolidated and consolidating basis, at the date and
for the periods indicated therein;
(c) Compliance Certificate.
(i) Concurrently with the delivery of each of the financial
statements referred to in subsection 9.1(a), and within forty-five
(45) days after the end of each fiscal quarter, a compliance
certificate of the chief financial officer or chief executive
officer of the Companies in substantially the form of Exhibit "K"
hereto;
(ii) The Agent and the Banks hereby acknowledge and agree
that the Borrower shall only be required to test compliance with
Sections 11.1, 11.2, 11.3 and 11.4 as of the last day of each
fiscal quarter or year of the Borrower, provided that the Borrower
hereby acknowledges and agrees that (x) if it has actual knowledge
of any Default or Event of Default under Section 11.1, 11.2, 11.3
or 11.4 at any time it shall give notice thereof to the Agent and
the Banks pursuant to Section 9.1(g) and (y) if the Agent or the
Required Banks reasonably believe that the Borrower is not in
compliance with Section 11.1, 11.2, 11.3 or 11.4 at any time, the
Agent or the Required Banks, as the case may be, may request that
the Borrower demonstrate (in which case the Borrower hereby agrees
to promptly demonstrate) (in reasonable detail) whether the
Borrower is in compliance with Section 11.1, 11.2, 11.3 and/or
11.4, as the case may be at such time;
(d) Accounts Receivable Report. Concurrently with the delivery of
each of the financial statements referred to in subsection 9.1(b), an
accounts receivable report in form and detail satisfactory to the
Agent and the Required Banks;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 35
40
(e) Regulatory Noncompliance. Promptly, notice of any
investigation or claim in respect of any Company's status as a
provider by or before any Health Care Regulator that is not resolved
in favor of such Company in the exit interview or that results in
notification to any Company that it is out of compliance and that
could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects,
or properties of such Company;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting any Company seeking
$100,000 or more in damages or which, if determined adversely to such
Company, could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or
properties of such Company;
(g) Notice of Default. As soon as possible and in any event
within five (5) days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that
the Borrower has taken and proposes to take with respect thereto;
(h) Notice of Material Adverse Change. As soon as possible and in
any event within five (5) days after the occurrence thereof, written
notice of any matter that is reasonably likely to have a material
adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of any Company;
(i) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and reports, if
any, which the Borrower or any Company shall file with the Securities
and Exchange Commission or any successor thereto or deliver to holders
of its Funded Debt which principal amount equals or exceeds $2,000,000
pursuant to the terms of the documentation governing such Funded Debt
(or any trustee, agent or other representative therefor);
(j) Annual Projections. As soon as available, and in any event
within forty-five (45) days after the end of each fiscal year of
Borrower, beginning with the fiscal year ending December 31, 1997,
financial projections for the Borrower and its Subsidiaries, prepared
on a quarter by quarter basis and in form and substance reasonably
satisfactory to the Agent;
(k) General Information. Promptly, such other information
concerning the Companies as the Agent or any Bank may from time to
time reasonably request.
Section 9.2 Maintenance of Existence; Conduct of Business.
Borrower will preserve and maintain, and will cause each Company to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business, except where the failure to
do so does not and will not have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of any
Company, the Collateral taken as a whole, or the ability of the Companies to
pay and perform the Obligations. Without in any way limiting the foregoing,
the Borrower will preserve and maintain, and will cause each Company to
preserve and maintain its status as an approved provider with all the Health
Care Regulators and other applicable Governmental Authorities where the failure
to do so would have a material adverse effect on its business, condition
(financial or otherwise), operations, prospects, or properties.
Section 9.3 Maintenance of Properties. Borrower will
maintain, keep, and preserve, and cause each Company to maintain, keep, and
preserve, all of its properties (tangible and intangible)
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 36
41
necessary or useful in the proper conduct of its business in good working order
and condition, unless the failure to do so would not have a material adverse
effect on the Borrower's or such Company's business, condition (financial or
otherwise), operations, prospects, or properties.
Section 9.4 Taxes and Claims. Borrower will pay or discharge,
and will cause each Company to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither
Borrower nor any Company shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves
have been established; provided, further that with respect to taxes in an
aggregate amount in excess of $100,000, the conditions of Permitted Liens as
described in Section 10.2 shall exist and notice shall have been given to the
Agent and the Banks.
Section 9.5 Insurance. Borrower will maintain, and will cause
each of the Companies to maintain, insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which Borrower and the
Companies operate, provided that in any event Borrower will maintain and cause
each Company to maintain property and casualty insurance coverage for each
Company of at least $1,000,000 per incident and $2,000,000 maximum coverage and
medical malpractice liability coverage for each Company of at least $1,500,000
per incident and $3,000,000 maximum coverage. Each insurance policy covering
Collateral or general liability shall, within ten (10) Business Days following
the Closing Date, name the Agent as loss payee or as an additional insured, as
applicable, and shall provide that such policy will not be cancelled or reduced
without thirty (30) days' prior written notice to the Agent. The Borrower
shall at all times keep and maintain the insurance coverage on the lives of S.
Wayne and ββββββ β. ββββββ described in Section 6.1. Additional covenants with
respect to insurance coverage are set forth in Section 3.6 of the Security
Agreements.
Section 9.6 Inspection Rights. At any reasonable time and
from time to time, the Borrower will permit, and will cause each Company to
permit, representatives of the Agent, the Issuing Bank and each Bank to
examine, copy, and make extracts from its books and records, to visit and
inspect its properties, and to discuss its business, operations, and financial
condition with its officers and independent certified public accountants.
Section 9.7 Keeping Books and Records. Borrower will
maintain, and will cause each Company to maintain, proper books of record and
account in which entries in conformity with GAAP (subject to year-end
adjustments and disclosures) shall be made of all dealings and transactions in
relation to its business and activities.
Section 9.8 Compliance with Laws. Borrower will comply, and
will cause each Company to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator, except where the failure to comply would not have a material
adverse effect on the Borrower's or such Company's business, condition
(financial or otherwise), operations, prospects or properties.
Section 9.9 Compliance with Agreements. Borrower will comply,
and will cause each Company to comply with all agreements, contracts, and
instruments binding on it or affecting its properties or business, except where
the failure to comply would not have a material adverse effect on the
Borrower's or such Company's business, condition (financial or otherwise),
operations, prospects or properties.
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Section 9.10 Further Assurances. Borrower will, and will cause
each Company to, execute and deliver such further agreements and instruments
and take such further action as may be requested by the Agent to carry out the
provisions and purposes of this Agreement and the other Loan Documents and to
create, preserve, and perfect the Liens of the Agent for the benefit of the
Agent, the Issuing Banks and the Banks in the Collateral.
Section 9.11 ERISA. Borrower will comply, and will cause each
Company to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 9.12 Security Agreements; Guaranties. Borrower shall
cause each Person that becomes a Company after the date hereof to execute and
deliver to the Agent a Security Agreement and a Guaranty within thirty (30)
days after the date such Person becomes a Company. Contemporaneously with the
execution and delivery of such Security Agreement and Guaranty, Borrower shall
cause all outstanding capital stock of such Company to be pledged to the Agent
pursuant to a counterpart of the Pledge Agreement and deliver to the Agent such
other documents as the Agent may reasonably request.
ARTICLE X
Negative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder or any
Issuing Bank has any obligation to issue Letters of Credit hereunder, Borrower
will perform and observe the following negative covenants:
Section 10.1 Funded Debt. Borrower will not incur, create,
assume, or permit to exist, and will not permit any Company to incur, create,
assume, or permit to exist, any Funded Debt, except the following (herein
referred to as "Permitted Debt"):
(a) Funded Debt to the Agent, the Banks and the Issuing Banks
pursuant to the Loan Documents;
(b) Funded Debt under the Senior Notes in an aggregate principal
amount not to exceed $80,000,000;
(c) Funded Debt in an aggregate amount not to exceed $2,000,000 at
any time outstanding;
(d) Funded Debt of any Company to any other Company, so long as
each such Company shall have executed and delivered to the Agent a
Security Agreement, Uniform Commercial Code Financing Statements,
assignment of deposit accounts, and a Guaranty in accordance with
Article VI, shall be a party to the Contribution and Indemnification
Agreement, and shall have delivered to the Agent Uniform Commercial
Code Lien searches and tax and judgment Lien searches for all
appropriate names and jurisdictions as the Agent may require;
(e) Purchase money indebtedness of any Company representing the
purchase price of equipment, that is secured by the asset purchased;
provided that the principal amount of such indebtedness does not
exceed the purchase price of the equipment acquired
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 38
43
and the Lien does not attach to any other asset of any Company;
capital leases so long as such leases do not cover any property other
than the property acquired in connection therewith, together with
renewals and extensions thereof; and
(f) Existing Funded Debt described on Schedule 3 hereto.
Section 10.2 Limitation on Liens. Borrower will not incur,
create, assume, or permit to exist, and will not permit any Company to incur,
create, assume, or permit to exist, any Lien upon any of its property, assets,
or revenues, whether now owned or hereafter acquired, except the following
(herein referred to as "Permitted Liens"):
(a) Existing Liens on the property described on Schedule 4 hereto
to secure Permitted Debt;
(b) Liens in favor of the Agent for the benefit of the Agent, the
Banks and the Issuing Banks to secure the Obligations;
(c) Purchase money Liens securing Funded Debt permitted by Section
10.1(e) and capital leases so long as such Liens or leases, as the
case may be, do not cover any property other than the property
acquired in connection therewith, together with renewals and
extensions thereof;
(d) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that
do not (individually or in the aggregate) materially affect the value
of the assets encumbered thereby or materially impair the ability of
such Borrower or the Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(e) The following to the extent no Lien has been filed in any
jurisdiction or agreed to: Liens for taxes, assessments, or other
governmental charges which are not yet due and payable;
(f) The following to the extent no Lien has been filed in any
jurisdiction or agreed to: Liens of mechanics, materialmen,
warehousemen, carriers, or other similar statutory Liens securing
obligations that are not yet due and are incurred in the ordinary
course of business; and landlord's Liens for rental not yet due and
payable and which, to the extent the same encumbers any of the
Collateral, has been waived or subordinated to the extent required by
the Security Agreements;
(g) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds, bids, contracts (other than for payment of Funded Debt), or
leases made in the ordinary course of business, not in excess of 10%
of the aggregate amount due thereunder;
(h) 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
provision (if any) required by GAAP shall have been made, levy and
execution thereon have been stayed and continue to be stayed, any
thereof covering any Collateral must be subordinate to all Liens in
favor of the Agent, and they do not in the aggregate materially
detract from the value of the property of the Person in question, or
materially
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 39
44
impair the use thereof in the operation of its business: Claims and
Liens for taxes, assessments and other governmental charges due and
payable; claims and Liens upon, and defects of title to, real or
personal property (other than any of the Collateral), including any
attachment of personal or real property or other legal process prior
to adjudication of a dispute on the merits; claims and Liens of
mechanics, materialmen, warehousemen, carriers, landlords, or other
like Liens; and adverse judgments on appeal;
(i) Liens on the capital stock of any Subsidiary acquired after
the date of this Agreement in a transaction permitted hereunder,
securing all or part of the purchase price thereof to the seller, so
long as either (i) the indebtedness secured thereby is subordinated to
the Obligations in the manner and to the extent satisfactory to the
Agent and the Required Banks and such Subsidiary shall have executed
and delivered to the Agent a Security Agreement, Uniform Commercial
Code financing statements, and assignment of deposit accounts, and a
Guaranty in accordance with Article VI and an addendum to the
Contribution and Indemnification Agreement by which such Subsidiary is
made a party thereto, and shall have delivered to the Agent Uniform
Commercial Code Lien searches and tax and judgment Lien searches for
all appropriate names and jurisdictions as the Agent may require, or
(ii) the indebtedness secured thereby was incurred in connection with
an acquisition, no portion of the purchase price of which was financed
with funds advanced by the Banks pursuant to this Agreement;
(j) Liens securing indebtedness for the purchase price of
equipment; provided that any such Lien shall attach only to the asset
purchased; and
(k) Financing Statements filed in connection with operating lease
transactions described in Uniform Commercial Code search reports
previously furnished to the Agent.
Section 10.3 Mergers, Etc. Borrower will not, and will not
permit any Company to, form any new Subsidiary, become a party to a merger or
consolidation, or purchase or otherwise acquire or commit to purchase or
acquire all or any part of the assets of any Person or any shares or other
evidence of beneficial ownership of any Person, or wind-up, dissolve, or
liquidate; provided, however, that each Company shall be permitted to (a) form
a new Subsidiary which shall have executed and delivered to the Agent a
Security Agreement, Uniform Commercial Code financing statements, an assignment
of deposit accounts, and a Guaranty in accordance with Article VI and an
addendum to the Contribution and Indemnification Agreement by which such
Subsidiary is made a party thereto, (b) subject to the provisions of Section
10.5, merge or consolidate with any Person if the surviving Person shall have
executed and delivered to the Agent a Security Agreement, Uniform Commercial
Code financing statements, an assignment of deposit accounts, and a Guaranty in
accordance with Article VI and, if such Person was not a party thereto, an
addendum to the Contribution and Indemnification Agreement by which such Person
is made a party thereto and shall have delivered to the Agent Uniform
Commercial Code Lien searches and tax and judgment Lien searches for all
appropriate new names and jurisdictions as the Agent may require, and (c)
purchase or acquire or commit to purchase or acquire assets of or any shares or
other evidence of beneficial ownership of any Person to the extent permitted by
Section 10.5, provided that each Subsidiary so acquired shall have executed and
delivered to the Agent a Security Agreement, Uniform Commercial Code financing
statements, an assignment of deposit accounts, and a Guaranty in accordance
with Article VI and an addendum to the Contribution and Indemnification
Agreement by which such Subsidiary is made a party thereto and shall have
delivered to the Agent Uniform Commercial Code Lien searches and tax and
judgment Lien searches for all appropriate new names and jurisdictions as the
Agent may require.
Section 10.4 Restricted Payments. Borrower will not declare or
pay any dividends or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 40
45
make any other payment or distribution (whether in cash, property, or
obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or permit any of the Companies to
purchase or otherwise acquire any capital stock of another Company, or set
apart any money for a sinking or other analogous fund for any dividend or other
distribution on its capital stock or for any redemption, purchase, retirement,
or other acquisition of any of its capital stock, except for any loan, advance,
extension of credit, capital contribution, or distribution (which includes,
with respect to the equity securities issued by any Company, the retirement,
redemption, or purchase of such shares or the declaration or payment of any
dividend by that Company) by any Company to any other Company so long as each
of the Companies shall have executed and delivered to the Agent a Security
Agreement, Uniform Commercial Code financing statements, an assignment of
deposit accounts, and a Guaranty in accordance with Article VI, shall be a
party to the Contribution and Indemnification Agreement and shall have
delivered to the Agent all Uniform Commercial Code, tax and judgment lien
searches required by the Agent.
Section 10.5 Loans and Investments. Borrower will not make,
and will not permit any Company to make, any advance, loan, extension of
credit, or capital contribution to or investment in, or purchase or own, or
permit any Company to purchase or own, any stock, bonds, notes, debentures, or
other securities of, any Person, except for the following (collectively, the
"Permitted Investments"):
(a) Investments in obligations of the United States of America and
agencies thereof and obligations guaranteed by the United States of
America maturing within one year from the date of acquisition;
(b) Certificates of deposit issued by commercial banks organized
under the laws of the United States of America or any state thereof
and having (i) combined capital, surplus, and undivided profits of not
less than $100,000,000 and (ii) a commercial paper rating from βββββ'β
Investors Service, Inc., or Standard & Poor's Corporation of at least
P-1 and A-1, respectively;
(c) Eurodollar investments with financial institutions having (i)
combined capital, surplus, and undivided profits of not less than U.S.
$100,000,000, and (ii) a commercial paper rated at least P-1 or A-1 by
βββββ'β Investors Service, Inc., or Standard & Poor's Corporation,
respectively, or, if any institution does not have a commercial paper
rating, a comparable bond rating of at least A or BAA-1 by Standard &
Poor's Corporation or βββββ'β Investors Service, Inc., respectively;
(d) Investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses
(a) through (c) above;
(e) Extensions of credit in connection with trade receivables and
overpayments of trade payables and prepaid expenses, in each case
resulting from transactions in the ordinary course of business;
(f) Any loan, advance, extension of credit, capital contribution,
or distribution (which includes, with respect to the equity securities
issued by any Company, the retirement, redemption, or purchase of such
shares or the declaration or payment of any dividend by that Company)
by any Company to any other Company so long as each of the Companies
shall have executed and delivered to the Agent a Security Agreement,
Uniform Commercial Code financing statements, an assignment of deposit
accounts, and a Guaranty in accordance with Article VI, shall be a
party to the Contribution and Indemnification Agreement and shall have
delivered to the Agent all Uniform Commercial Code, tax and judgment
lien searches required by the Agent;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 41
46
(g) Investments in the Companies listed on Schedule 2 and any
increase in the value of such investments; and
(h) Acquisitions of assets of any Person, so long as (i) no
Default is then continuing or would result from such acquisition, and
(ii)(A) the total consideration - cash and noncash - for such
acquisition paid or to be paid by the Companies is not more than
$5,000,000, or (B)(x) the total consideration - cash and noncash - for
such acquisition paid or to be paid by the Companies is not more than
$10,000,000, (y) no Revolving Credit Loans are then outstanding, and
(z) no Revolving Credit Loans will be outstanding immediately
following the consummation of such acquisition;
(i) Acquisition of any new Subsidiary, so long as (i) such
Subsidiary has executed and delivered to the Agent a Security
Agreement, Uniform Commercial Code financing statements, an assignment
of deposit accounts, and a Guaranty in accordance with Article VI and
an addendum to the Contribution and Indemnification Agreement by which
such Subsidiary is made a party thereto, and has delivered to the
Agent Uniform Commercial Code lien searches and tax and judgment lien
searches for all appropriate names and jurisdictions as the Agent may
require, (ii) no Default is then continuing or would result from such
acquisition, and (iii)(A) the total consideration - cash and noncash -
for each such acquisition paid or to be paid by the Companies is not
more than $5,000,000, or (B)(x) the total consideration - cash and
noncash - for such acquisition paid or to be paid by the Companies is
not more than $10,000,000, (y) no Revolving Credit Loans are then
outstanding, and (z) no Revolving Credit Loans will be outstanding
immediately following the consummation of such acquisition; and
(j) Repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a) and
(b) above entered into with any financial institution meeting the
qualifications specified in clause (b) above.
Section 10.6 Limitation on Issuance of Subsidiaries' Capital
Stock. Borrower will not, and will not permit any of the Companies to, at any
time issue, sell, assign, or otherwise dispose of (a) any of its capital stock,
(b) any securities exchangeable for or convertible into or carrying any rights
to acquire any of its capital stock, or (c) any option, warrant, or other right
to acquire any of its capital stock; provided, however, that the following
shall be permitted so long as no Default exists or would occur as a result
thereof: (i) options for the purchase of common stock issued to employees of
the Companies, (ii) Borrower may issue common stock, warrants for common stock,
or debt convertible into common stock to a seller in connection with an
acquisition permitted by Section 10.5, and (iii) the issuance and sale of stock
to the HealthCor Employee Stock Ownership Plan.
Section 10.7 Transactions With Affiliates. Borrower will not
enter into, and will not permit any Company to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of Borrower or such Company,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of Borrower
or such Subsidiary.
Section 10.8 Disposition of Assets. Borrower will not and will
not permit any Company to, sell, lease, assign, transfer, or otherwise dispose
of any of its assets, except dispositions of old,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 42
47
worn out or obsolete equipment in the ordinary course of business.
Section 10.9 Sale and Leaseback. Borrower will not enter into,
and will not permit any Company to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 10.10 Prepayment of Funded Debt. Borrower will not
prepay, and will not permit any Company to prepay or redeem prior to the stated
maturity thereof, any Funded Debt, except the Obligations.
Section 10.11 Nature of Business. Borrower will not and will
not permit any Company to, engage in any business not reasonably related to the
businesses in which it is engaged on the date hereof.
Section 10.12 Environmental Protection. Borrower will not, and
will not permit any Company to, (a) use (or permit any tenant to use) any of
its respective properties or assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Material, (b) generate any
Hazardous Material, (c) conduct any activity that is likely to cause a release
or threatened release of any Hazardous Material, or (d) otherwise conduct any
activity or use any of its respective properties or assets in any manner that
is likely to violate any Environmental Law or create any Environmental
Liabilities for which Borrower or Company would be responsible.
Section 10.13 Accounting. Borrower will not, and will not
permit any Company to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Agent, or (b) in tax reporting treatment, except as required
by law and disclosed to the Agent.
Section 10.14 Compensation. Borrower will not pay, and will not
permit any Company to pay, to S. βββββ ββββββ or ββββββ β. ββββββ, or either of
them, any cash compensation (including salary, bonus and other cash
compensation) which would cause the aggregate combined cash compensation of S.
βββββ ββββββ and ββββββ β. ββββββ to be greater than $750,000 during any fiscal
year of the Borrower.
Section 10.15 Modification of Senior Note Documents. Borrower
will not amend, supplement or otherwise modify any provisions of the Senior
Note Documents if such amendment, supplement or modification (a) shortens the
fixed maturity or increases the amount of, or shortens the time for payment of
interest on, or increases the amount or shortens the time for payment of any
principal or premium payable whether at maturity, at a date fixed for payment
or by acceleration or otherwise, or increases the amount of, or accelerates the
time for payment of, any fees payable in connection therewith, (b) relates to
the affirmative or negative covenants, events of default or remedies under the
Senior Note Documents and the effect of which is to subject Borrower to more
onerous or restrictive provisions, or (c) otherwise adversely affects the
interests of the Banks as senior creditors or the interest of the Banks under
this Agreement or the Loan Documents.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 43
48
ARTICLE XI
Financial Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder or any
Issuing Bank has any obligation to issue Letters of Credit hereunder, Borrower
will perform and observe the following financial covenants subject to Section
9.1(c)(ii):
Section 11.1 Funded Debt to EBITDAA Ratio. Borrower will not
permit the Funded Debt to EBITDAA Ratio for any four quarter period calculated
as of the last day of a fiscal quarter set forth below to exceed the ratio set
forth opposite such fiscal quarter below at any time during such quarter;
provided, however, notwithstanding the foregoing, Borrower will not permit the
Funded Debt to EBITDAA Ratio for any four quarter period to exceed 3.50 to 1.00
at any time after the Borrower's Funded Debt to Pre-Compliance EBITDAA is less
than 3.50 to 1.00:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 44
49
FISCAL QUARTER RATIO
-------------- -----
12/31/97 4.25:1.00
3/31/98 4.25:1.00
6/30/98 4.00:1.00
9/30/98 4.00:1.00
12/31/98 4.00:1.00
3/31/99 3.75:1.00
6/30/99 3.75:1.00
9/30/99 3.75:1.00
12/31/99 3.75:1.00
3/31/00 3.50:1.00
and thereafter
Section 11.2 Consolidated Net Worth. Borrower will at all
times maintain or cause to be maintained Consolidated Net Worth in an amount
not less than the sum of (a) eighty percent (80%) of the Consolidated Net Worth
as of December 31, 1996, plus (b) fifty percent (50%) of the consolidated net
income of the Companies (to the extent positive) for each fiscal year after
1996, plus (c) one hundred percent (100%) of the net proceeds received by the
Companies from the sale or issuance of equity securities.
Section 11.3 Interest Coverage Ratio. Borrower will not permit
the Interest Coverage Ratio for any four quarter period calculated as of the
last day of a fiscal quarter set forth below to be less than the ratio set
forth opposite such fiscal quarter below at any time during such quarter:
FISCAL QUARTER RATIO
-------------- -----
12/31/97 1.50:1.00
3/31/98 1:50:1.00
6/30/98 1.50:1.00
9/30/98 1.50:1.00
12/31/98 1.50:1.00
3/31/99 2.00:1.00
6/30/99 2.00:1.00
9/30/99 2.00:1.00
12/31/99 2.00:1.00
3/31/00 2.25:1.00
and thereafter
Section 11.4 Funded Debt to Capitalization Ratio. Borrower
will not at any time permit the ratio of (a) Funded Debt of the Companies to
(b) the sum of Funded Debt of the Companies, plus Consolidated Net Worth to be
greater than seventy percent (70%) prior to June 29, 1998, and sixty-five
percent (65%) thereafter.
ARTICLE XII
Default
Section 12.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 45
50
(a) Borrower shall fail to pay (i) any principal of the
Obligations when due, or (ii) any interest or other part of the
Obligations within five (5) days after the date due.
(b) Any representation or warranty made or deemed made by Borrower
or any Obligated Party (or any of their respective officers) in any
Loan Document or in any certificate, report, notice, or financial
statement furnished at any time in connection with this Agreement
shall be false, misleading, or erroneous in any material respect when
made or deemed to have been made.
(c) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
Article X, or Article XI of this Agreement.
(d) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any other covenant, agreement, or term
contained in this Agreement or any other Loan Document (other than
covenants to pay the Obligations and the covenants contained in
Articles X and XI of this Agreement) and such failure shall continue
for a period of thirty (30) days after notice thereof to Borrower or
Borrower or Obligated Party otherwise has notice thereof.
(e) Borrower, any Company, or any Obligated Party shall commence a
voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or
other similar official of it or a substantial part of its property or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as
they become due or shall take any corporate action to authorize any of
the foregoing.
(f) An involuntary proceeding shall be commenced against Borrower,
any Company, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or a substantial part of
its property, and such involuntary proceeding shall remain undismissed
and unstayed for a period of sixty (60) days.
(g) Borrower, any Company, or any Obligated Party shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, or similar proceeding or
proceedings involving an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000) against any of its assets or properties.
(h) A final judgment or judgments for the payment of money in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate
shall be rendered by a court or courts against Borrower, any of the
Companies, or any Obligated Party and the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within thirty (30) days from
the date of entry thereof and Borrower or the relevant Company or
Obligated Party shall not, within said period of thirty (30) days, or
such longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 46
51
(i) Borrower, any Company, or any Obligated Party shall fail to
pay when due (after the lapse of any applicable grace periods) any
principal of or interest on any Funded Debt the principal amount of
which is in excess of Five Hundred Thousand Dollars ($500,000) (other
than the Obligations), or the maturity of any such Funded Debt shall
have been accelerated, or any such Funded Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any
event shall have occurred that permits (or, with the giving of notice
or lapse of time or both, would permit) any holder or holders of such
Funded Debt or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in
full force and effect for a period of ten (10) days other than as a
result of a voluntary release or termination, or this Agreement or any
other Loan Document shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by Borrower,
any Company, any Obligated Party or any of their respective
shareholders, or Borrower or any Obligated Party shall deny that it
has any further liability or obligation under any of the Loan
Documents, or any Lien or security interest created by the Loan
Documents shall for any reason cease to be a valid, first priority
perfected security interest in and Lien upon any of the Collateral
purported to be covered thereby.
(k) Any of the following events shall occur or exist with respect
to any Company or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any
Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any
event or circumstance that might constitute grounds entitling the PBGC
to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject any Company to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or could reasonably be expected
to exceed One Hundred Thousand Dollars ($100,000).
(l) S. βββββ ββββββ and ββββββ β. ββββββ, or either of them, shall
transfer, assign, encumber (voluntarily or involuntarily), sell, or
convey in any manner more than 10% of the equity securities of
Borrower owned or held by S. βββββ ββββββ and ββββββ β. ββββββ, or
either of them on the Closing Date.
(m) There shall occur a material change or changes in the
management of the Companies, or any of them. Without in any way
limiting the foregoing, a material change in management shall be
deemed to have occurred if S. βββββ ββββββ or ββββββ β. ββββββ ceases
to be actively involved in the management of the Companies.
(n) Any Company shall fail to be an accredited, licensed,
registered or certified health care provider, as the case may be, as
represented and warranted pursuant to Section 8.4.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 47
52
Section 12.2 Remedies. If any Event of Default shall occur and
be continuing, the Agent may (and if directed by Required Banks, shall) do any
one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Notes and all other obligations of
the Borrower under the Loan Documents immediately due and payable, and
the same shall thereupon become immediately due and payable, without
notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other
formalities of any kind, all of which are hereby expressly waived by
the Borrower.
(b) Termination of Commitments. Terminate the Commitments and the
obligation of the Issuing Banks to issue Letters of Credit hereunder
without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted
to the Agent for the benefit of itself, the Issuing Banks and the
Banks to secure payment and performance of the Obligations in
accordance with the terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by
the laws of the State of Texas or any other jurisdiction, by any of
the Loan Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Subsection (e) or (f) of Section 12.1, the Commitments of all of the Banks and
the obligation of the Issuing Banks to issue Letters of Credit shall
automatically terminate, and the outstanding principal of and accrued and
unpaid interest on the Notes and all other obligations of the Borrower under
the Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
Section 12.3 Letters of Credit. If any Event of Default shall
occur and be continuing, Borrower shall, if requested by the Agent (either
acting on its own or at the request of the Required Banks), immediately deposit
with and pledge to the Agent cash or cash equivalent investments in an amount
equal to the outstanding Letter of Credit Liabilities as security for the
Obligations. Furthermore, in order to continue to secure the full and complete
payment and performance of the Obligations arising in connection with the
Letter of Credit Liabilities that continue to be outstanding after acceleration
of the other Obligations or the exercise of other rights after the occurrence
of an Event of Default, the Agent may do either or both of the following: (a)
segregate such Collateral or accounts and other property as the Agent may in
its sole discretion select, and (b) retain and deposit into one or more cash
collateral accounts any proceeds received by the Agent from the foreclosure of
Collateral, exercise of rights of offset or banker's lien, or exercise of other
rights.
Section 12.4 Performance by the Agent. If Borrower shall fail
to perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of Borrower. In such
event, Borrower shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Banks in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the Applicable Rate from and including the date of such
expenditure to but excluding the date of the Agent's
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 48
53
request for payment, and from and including the date of such request for
payment until such expenditure is paid in full, at the Default Rate.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent,
any Issuing Bank nor any Bank shall have any liability or responsibility for
the performance of any obligation of the Borrower under this Agreement or any
of the other Loan Documents.
ARTICLE XIII
The Agent
Section 13.1 Appointment, Powers and Immunities. In order to
expedite the various transactions contemplated by this agreement, the Banks and
the Issuing Banks hereby irrevocably appoint and authorize TCB to act as their
Agent hereunder and under each of the other Loan Documents. TCB hereby
consents to such appointment and agrees to perform the duties of the Agent as
specified herein. The Banks and the Issuing Banks authorize and direct the
Agent to take such action in their name and on their behalf under the terms and
provisions of the Loan Documents and to exercise such rights and powers
thereunder as are specifically delegated to or required of the Agent for the
Banks and the Issuing Banks, together with such rights and powers as are
reasonably incidental thereto. The Agent is hereby expressly authorized to act
as the Agent on behalf of itself, the other Banks and the Issuing Banks:
(a) To receive on behalf of each of the Banks and the Issuing
Banks any payment of principal, interest, fees or other amounts paid
pursuant to this Agreement and the Notes and to distribute to each
Bank and/or Issuing Bank its share of all payments so received as
provided in this Agreement;
(b) To receive all documents and items to be furnished under the
Loan Documents;
(c) To act as nominee for and on behalf of the Banks and the
Issuing Banks in and under the Loan Documents;
(d) To arrange for the means whereby the funds of the Banks are to
be made available to the Borrower;
(e) To distribute to the Banks and the Issuing Banks information,
requests, notices, payments, prepayments, documents and other items
received from the Borrower, the other Obligated Parties, and other
Persons;
(f) To execute and deliver to the Borrower, the other Obligated
Parties, and other Persons, all requests, demands, approvals, notices,
and consents received from the Banks and the Issuing Banks;
(g) To the extent permitted by the Loan Documents, to exercise on
behalf of each Bank and Issuing Bank all rights and remedies of the
Banks and the Issuing Banks upon the occurrence of any Event of
Default;
(h) To accept, execute, and deliver the Security Agreements, the
Pledge Agreement and any and all other security documents as the
secured party, including, without limitation all UCC financing
statements; and
(i) To take such other actions as may be contemplated by the Loan
Documents
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 49
54
or requested by Required Banks or, if otherwise required by the Loan
Documents, all of the Banks. To take all such actions incidental
thereto.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to the Agent;
(ii) shall have no duties or responsibilities except those expressly set forth
in this Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Bank or
Issuing Bank; (iii) shall not be required to initiate any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the Banks
or the Issuing Banks for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or any
certificate or other document referred to or provided for in, or received by
any of them under, this Agreement or any other Loan Document, or for the value,
validity, effectiveness, enforceability, or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for
herein or therein or for any failure by any Person to perform any of its
obligations hereunder or thereunder; (v) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it 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; and (vi) shall incur no liability under or in respect
of any Loan Document by acting upon any notice, consent, certificate, or other
instrument or writing believed by it to be genuine and signed or sent by the
proper party or parties. As to any matters not expressly provided for by this
Agreement, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by
Required Banks (unless otherwise required by this Agreement), and such
instructions of Required Banks and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
applicable law.
Section 13.2 Rights of Agent as a Bank. With respect to its
Commitments, the Loans made by it and the Note issued to it, TCB in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as the
Agent or an Issuing Bank, as the case may be, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Bank or Issuing Bank) accept deposits from, lend money
to, act as trustee under indentures of, provide merchant banking services to,
and generally engage in any kind of business with the Borrower, any of the
Companies, any other Obligated Party, and any other Person who may do business
with or own securities of Borrower, any Company, or any other Obligated Party,
all as if it were not acting as the Agent and without any duty to account
therefor to the Banks or the Issuing Banks.
Section 13.3 Sharing of Payments, Etc. If any Bank shall
obtain any payment of any principal of or interest on any Loan made by it under
this Agreement or payment of any other obligation under the Loan Documents then
owed by Borrower or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Loans held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing
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Bank to share the excess payment ratably with each of the other Banks in
accordance with its pro rata portion thereof. To such end, all of the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Loans made by the other Banks may exercise
all rights of setoff, banker's lien, counterclaim, or similar rights with
respect to such participation as fully as if such Bank were a direct holder of
Loans to Borrower in the amount of such participation. Nothing contained
herein shall require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of Borrower.
Section 13.4 INDEMNIFICATION. THE BANKS HEREBY AGREE TO
INDEMNIFY THE AGENT AND THE ISSUING BANKS FROM AND HOLD THE AGENT AND THE
ISSUING BANKS HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER SECTIONS
14.1 AND 14.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER
SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT OR ANY ISSUING BANK IN ANY WAY
RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY THE AGENT OR AN ISSUING BANK UNDER OR IN RESPECT OF ANY
OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO BANK SHALL BE LIABLE FOR ANY
PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S OR SUCH ISSUING
BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE
FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT AND THE
ISSUING BANKS SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL
OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF THE AGENT OR SUCH ISSUING BANK. WITHOUT LIMITING ANY OTHER PROVISION OF
THIS SECTION, EACH BANK AGREES TO REIMBURSE THE AGENT AND THE ISSUING BANKS
PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE
COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) INCURRED BY THE AGENT OR AN ISSUING BANK IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT
OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE)
OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT THE AGENT OR SUCH ISSUING BANK IS NOT REIMBURSED
FOR SUCH EXPENSES BY THE BORROWER.
Section 13.5 Independent Credit Decisions. Each Bank agrees
that it has independently and without reliance on the Agent, any Issuing Bank
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the
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56
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent, any Issuing Bank or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any Obligated Party of this Agreement
or any other Loan Document or to inspect the properties or books of Borrower or
any Obligated Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall have no duty or
responsibility to provide the Issuing Banks or any Bank with any credit or
other financial information concerning the affairs, financial condition or
business of the Borrower or any Obligated Party (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates.
Section 13.6 Several Commitments. The Commitments and other
obligations of the Banks under this Agreement are several. The default by any
Bank in making a Loan in accordance with its Commitment shall not relieve the
other Banks of their obligations under this Agreement. In the event of any
default by any Bank in making any Loan, each nondefaulting Bank shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. In no event shall
any Bank be required to advance an amount or amounts which shall in the
aggregate exceed such Bank's Commitment. No Bank shall be responsible for any
act or omission of any other Bank.
Section 13.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may
be removed at any time with or without cause by Required Banks. Upon any such
resignation or removal of the Agent, Required Banks will have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by Required Banks and shall have accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and having
combined capital and surplus of at least $100,000,000. Upon the acceptance of
its appointment as successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges, immunities,
and duties of the resigning or removed Agent, and the resigning or removed
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any Agent's resignation or removal as
Agent, the provisions of this Article XIII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was the Agent.
ARTICLE XIV
Miscellaneous
Section 14.1 Expenses. Borrower hereby agrees to pay on
demand: (a) all reasonable costs and expenses of the Agent in connection with
the preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the fees and expenses of legal counsel for the Agent, (b) all costs and
expenses of the Agent, the Issuing Banks and the Banks in connection with any
Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the fees and expenses of legal counsel for the
Agent, the Issuing Banks and the Banks, and (c) all other costs and expenses
incurred by the Agent in connection with this Agreement or any other Loan
Document.
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57
Section 14.2 INDEMNIFICATION. BORROWER SHALL INDEMNIFY THE
AGENT, EACH ISSUING BANK AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS (COLLECTIVELY,
THE "INDEMNIFIED PARTIES") FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY
AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) TO WHICH ANY OF
THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO
(A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY COMPANY, OR (E)
ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING
RELATING TO ANY OF THE FOREGOING; PROVIDED, HOWEVER, NO INDEMNIFIED PARTY SHALL
HAVE THE RIGHT TO BE INDEMNIFIED FOR ITS OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD
HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES)
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
PERSON.
Section 14.3 LIMITATION OF LIABILITY. NONE OF THE AGENT, ANY
ISSUING BANK, ANY BANK, OR ANY AFFILIATE, OFFICER, DIRECTOR, EMPLOYEE,
ATTORNEY, OR AGENT THEREOF SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND
BORROWER HEREBY WAIVES, RELEASES, AND AGREES NOT TO βββ ANY OF THEM UPON, ANY
CLAIM FOR ANY SPECIAL OR PUNITIVE DAMAGES SUFFERED OR INCURRED BY BORROWER IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. BORROWER HEREBY WAIVES,
RELEASES, AND AGREES NOT TO βββ THE AGENT, ANY ISSUING BANK, OR ANY BANK OR ANY
OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, OR
AGENTS FOR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS.
Section 14.4 No Duty. All attorneys, accountants, appraisers,
and other professional Persons and consultants retained by the Agent, the
Issuing Banks and the Banks shall have the right to act exclusively in the
interest of the Agent, the Issuing Banks and the Banks and shall have no
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58
duty of disclosure, duty of loyalty, duty of care, or other duty or obligation
of any type or nature whatsoever to the Borrower or any of the Borrower's
shareholders or any other Person.
Section 14.5 No Fiduciary Relationship. The relationship
between the Borrower and each Bank is solely that of debtor and creditor, and
neither the Agent, any Issuing Bank nor any Bank has any fiduciary or other
special relationship with the Borrower, and no term or condition of any of the
Loan Documents shall be construed so as to deem the relationship between the
Borrower and any Bank to be other than that of debtor and creditor.
Section 14.6 No Waiver; Cumulative Remedies. No failure on the
part of the Agent, any Issuing Bank or any Bank to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies provided for in this
Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.
Section 14.7 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Agent
and all of the Banks. Any Bank may sell participations to one or more
banks or other institutions in or to all or a portion of its rights
and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitments
and the Loans owing to it); provided, however, that (i) such Bank's
obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitments) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the
Borrower for the performance of such obligations, (iii) such Bank
shall remain the holder of its Note for all purposes of this
Agreement, (iv) the Borrower shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, and (v)
such Bank shall not sell a participation that conveys to the
participant the right to vote or give or withhold consents under this
Agreement or any other Loan Document, other than the right to vote
upon or consent to (A) any increase of such Bank's Commitments, (B)
any reduction of the principal amount of, or interest to be paid on,
the Loans of such Bank, (C) any reduction of any commitment fee or
other amount payable to such Bank under any Loan Document, (D) any
release of Collateral or release of any Guarantor, or (E) any
postponement of any date for the payment of any amount payable in
respect of the Loans of such Bank.
(b) The Borrower and each of the Banks agree that any Bank (the
"Assigning Bank") may, with the Agent's consent and unless an Event of
Default has occurred, the Borrower's consent (except that no consent
shall be required with respect to assignments by TCB during the first
six months after the date hereof, TCB agreeing to use reasonable
efforts to keep the Borrower advised of any potential assignees),
which consent of the Borrower shall not be unreasonably withheld or
delayed, at any time assign to one or more Eligible Assignees all, or
a proportionate part of all, of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation,
its Commitment and Loans) (each an "Assignee"); provided, however,
that (i) each such assignment shall be of a consistent, and not a
varying, percentage of all of the assigning Bank's Commitment, rights
and obligations under this Agreement and the other Loan Documents,
(ii) except in
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the case of an assignment of all of a Bank's rights and obligations
under this Agreement and the other Loan Documents, the amount of the
Commitment of the assigning Bank being assigned pursuant to each
assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall
execute and deliver to the Agent for its acceptance and recording in
the Register (as defined below), an Assignment and Acceptance,
together with the Note subject to such assignment, and, except in the
case of an assignment to an Affiliate of the Assigning Bank, a
processing and recordation fee of $2,500, to be paid by the Assignee.
Upon such execution, delivery, acceptance, and recording, from and
after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five Business Days after the
execution thereof, or, if so specified in such Assignment and
Acceptance, the date of acceptance thereof by the Agent, (x) the
assignee thereunder shall be a party hereto as a "Bank" and, to the
extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and under the Loan Documents and (y)
the Bank that is an assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of a Bank's rights and obligations under the Loan
Documents, such Bank shall cease to be a party thereto).
(c) By executing and delivering an Assignment and Acceptance, the
Bank that is an assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Loan
Documents or the execution, legality, validity, and enforceability,
genuineness, sufficiency, or value of the Loan Documents or any other
instrument or document furnished pursuant thereto; (ii) such assigning
Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or any
Obligated Party or the performance or observance by Borrower or any
Obligated Party of its obligations under the Loan Documents; (iii)
such assignee confirms that it has received a copy of the other Loan
Documents, together with copies of the financial statements referred
to in Section 8.2 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent or such assignor and
based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Agent to take such action as
agent on its behalf and exercise such powers under the Loan Documents
as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to
be performed by it as a Bank.
(d) The Agent shall maintain at its Principal Office a copy of
each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks
and the Commitment of, and principal amount of the Loans owing to,
each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower,
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60
the Agent, the Issuing Banks and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes
under the Loan Documents. The Register shall be available for
inspection by Borrower, any Issuing Bank or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and assignee representing that it is an Eligible
Assignee, together with any Note subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "J" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice, the Borrower, at its expense, shall execute and deliver
to the Agent in exchange for the surrendered Note a new Note to the
order of such Eligible Assignee in an amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained a portion of its Commitment, a new Note to
the order of the assigning Bank in an amount equal to the Commitment
retained by it hereunder (each such promissory note shall constitute a
"Note" for purposes of the Loan Documents). Such new Note shall be in
an aggregate principal amount of the surrendered Note, shall be dated
the effective date of such Assignment and Acceptance, and shall
otherwise be in substantially the form of Exhibit "A" hereto.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower or its
Subsidiaries furnished to such Bank by or on behalf of Borrower or its
Subsidiaries.
(g) Any Bank may pledge or assign its Note to any Federal Reserve
Bank in accordance with applicable law.
Section 14.8 Survival. All representations and warranties made
in this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Agent, any Issuing Bank or any Bank or any closing shall
affect the representations and warranties or the right of the Agent, any
Issuing Bank or any Bank to rely upon them. Without prejudice to the survival
of any other obligation of the Borrowers hereunder, the obligations of the
Borrowers under Article V and Sections 14.1 and 14.2 shall survive repayment of
the Notes and termination of the Commitments.
Section 14.9 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND
THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Section 14.10 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Loan Document to which
Borrower is a party, nor any consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be agreed or consented to
by Required Banks and the Borrower, and each such waiver or
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61
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver, or consent shall,
unless in writing and signed by all of the Banks and the Borrower, do any of
the following: (a) increase the Commitments of the Banks or subject the Banks
to any additional obligations; (b) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable to the Banks hereunder; (c) postpone
any date fixed for any payment of principal of, or interest on, the Notes or
any fees or other amounts payable to the Banks hereunder; (d) waive any of the
conditions specified in Article VII; (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes or the
number of Banks which shall be required for the Banks or any of them to take
any action under this Agreement; (f) change any provision contained in this
Section 14.11; or (g) release any Collateral or any Guarantor. Notwithstanding
anything to the contrary contained in this Section, no amendment, waiver, or
consent shall be made with respect to Article XIII hereof without the prior
written consent of the Agent and no amendment, waiver, or consent shall be made
with respect to Article III hereof without the prior written consent of the
Issuing Banks.
Section 14.11 Maximum Interest Rate. No provision of this
Agreement or of any other Loan Document shall require the payment or the
collection of interest in excess of the maximum amount permitted by applicable
law. If any excess of interest in such respect is hereby provided for, or
shall be adjudicated to be so provided, in any Loan Document or otherwise in
connection with this loan transaction, the provisions of this Section shall
govern and prevail and neither the Borrower nor the sureties, guarantors,
successors, or assigns of the Borrower shall be obligated to pay the excess
amount of such interest or any other excess sum paid for the use, forbearance,
or detention of sums loaned pursuant hereto. In the event any Bank ever
receives, collects, or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by applicable law shall be
applied as a payment and reduction of the principal of the indebtedness
evidenced by the Notes; and, if the principal of the Notes has been paid in
full, any remaining excess shall forthwith be paid to the Borrower. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, the Borrower and each Bank shall, to the extent permitted by applicable
law, (a) characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the entire contemplated term of
the indebtedness evidenced by the Notes so that interest for the entire term
does not exceed the Maximum Rate.
Section 14.12 Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents to which Borrower
is a party shall be given or made by telecopy or in writing and telecopied,
mailed by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party at such other address as shall be
designated by such party in a notice to each other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to the
Agent pursuant to Article II and III shall not be effective until received by
the Agent.
SECTION 14.13 GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 57
62
OR PROCEEDING AGAINST BORROWER UNDER OR IN CONNECTION WITH ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.
BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT
ANY SUCH COURT IS AN INCONVENIENT FORUM. BORROWER AGREES THAT SERVICE OF
PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 14.12. NOTHING HEREIN OR IN ANY OF THE OTHER LOAN
DOCUMENTS SHALL AFFECT THE RIGHT OF THE AGENT, ANY ISSUING BANK OR ANY BANK TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE AGENT, ANY ISSUING BANK OR ANY BANK TO BRING ANY ACTION OR PROCEEDING
AGAINST BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER
JURISDICTIONS. ANY ACTION OR PROCEEDING BY BORROWER AGAINST THE AGENT, ANY
ISSUING BANK OR ANY BANK SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS
COUNTY, TEXAS.
Section 14.14 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 14.15 Severability. Any provision of this Agreement
held by a court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 14.16 Headings. The headings, captions, and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.
Section 14.17 Construction. Each of the Borrower, the Agent,
each Issuing Bank and each Bank acknowledge that each of them has had the
benefit of legal counsel of its own choice and has been afforded an opportunity
to review this Agreement and the other Loan Documents with its legal counsel
and that this Agreement and the other Loan Documents shall be construed as if
jointly drafted by the parties hereto.
Section 14.18 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default if such action is
taken or such condition exists.
Section 14.19 Treatment of Certain Information; Confidentiality.
Each Bank, Issuing Bank and the Agent agrees to keep confidential any
non-public information supplied to it pursuant to this Agreement that is
identified in writing as confidential at the time so supplied, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the Banks, Issuing Banks or the Agent, (iii) to bank
examiners, auditors, accountants, or any administrative body or commission to
whose jurisdiction such Bank, Issuing Bank or the Agent may be subject, (iv) to
the Agent, any Issuing Bank or other Bank, (v) in connection with any
litigation between any Obligated Party and any one or more of the Banks,
Issuing Banks or the Agent, (vi) to a subsidiary or affiliate
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 58
63
of such Bank, provided such disclosure is reasonably necessary and such
subsidiary or affiliate is made aware of the confidential nature of the
information supplied and agrees to comply with the terms of this Section 14.19,
or (vii) with the Borrower's written consent; provided, further, that in no
event shall any Bank, Issuing Bank or the Agent be obligated or required to
return any materials furnished by any Obligated Party.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 59
64
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
--------
HEALTHCOR HOLDINGS, INC.
By: /s/ S. βββββ ββββββ
-----------------------------------
S. βββββ ββββββ
Chairman of the Board and
Chief Executive Officer
Address for Notices:
ββββ βββββ βββββββ ββββββββββ
βββββ β-ββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: S. βββββ ββββββ
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 60
65
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ ββββββ β. ββββββββ
-----------------------------------
ββββββ β. ββββββββ
Vice President
Address for Notices:
ββββ ββββ ββββββ, βββ βββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββ. ββββββ β. ββββββββ
Vice President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 61
66
ISSUING BANK:
------------
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ ββββββ β. ββββββββ
-----------------------------------
ββββββ β. ββββββββ
Vice President
Address for Notices:
ββββ ββββ ββββββ, βββ βββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββ. ββββββ β. ββββββββ
Vice President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 62
67
BANKS:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
Revolving Credit Commitment: By: /s/ ββββββ β. ββββββββ
$ 12,500,000 Vice President -----------------------------------
---------------- ββββββ β. ββββββββ
Address for Notices:
ββββ ββββ ββββββ, βββ βββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββ. ββββββ β. ββββββββ
Vice President
Lending Office for Alternate
Base Rate Loans
ββββ ββββ ββββββ
ββββββ, βββββ βββββ
Lending Office for Eurodollar Loans
ββββ ββββ ββββββ
ββββββ, βββββ βββββ
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 63
68
HIBERNIA NATIONAL BANK
Revolving Credit Commitment: By: /s/ βββββββββ βββββββ FOR βββββ βββββ
--------------------------------------
Name: βββββββββ βββββββ
---------------------------------
$ 7,500,000 Title: Banking Officer
---------- --------------------------------
Address for Notices:
βββ ββββββββββ ββββββ
βββ βββββββ, βββββββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββ. βββββββββββ β. βββββ
Lending Office for Alternate
Base Rate Loans
βββ ββββββββββ ββββββ
βββ βββββββ, βββββββββ βββββ
Lending Office for Eurodollar Loans
βββ ββββββββββ ββββββ
βββ βββββββ, βββββββββ βββββ
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 64
69
INDEX TO EXHIBITS
Exhibit Description of Exhibit Section
------- ---------------------- -------
"A" Form of Revolving Credit Note 2.2
"B-1" Loan Request Form 4.1
"B-2" Notice of Continuation or Conversion 4.2
"C" Letter of Credit Request Form 3.3
"D-1" Borrower Security Agreement 6.1(a)
"D-2" Subsidiary Security Agreement 6.1(b)
"E" Subsidiary Guaranty 6.3
"F" Pledge Agreement 6.1(c)
"G" Assignment of Deposit Accounts 6.2
"H" Contribution and Indemnification Agreement 7.1(o)
"I" Matters to be Addressed by Opinion of Counsel
for the Companies 7.1(v)
"J" Assignment and Acceptance 14.7
"K" Compliance Certificate 9.1(c)
INDEX TO SCHEDULES
Schedule Description of Schedule Section
-------- ----------------------- -------
1 Companies 8.14
2 Litigation 8.5
3 Existing Debt 8.9
4 Existing Liens 10.2
5 Historical Acquired EBITDA 1.1
70
EXHIBIT "A"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Form of Revolving Credit Note
71
REVOLVING CREDIT NOTE
$__________________ Dallas, Texas December 1, 1997
FOR VALUE RECEIVED, the undersigned, HEALTHCOR HOLDINGS, INC., a
Delaware corporation ("Maker"), hereby promises to pay to the order of
_________________________________ ("Payee"), at the offices of Texas Commerce
Bank National Association, a national banking association, as agent (in such
capacity, "Agent"), located at ββββ ββββ ββββββ, ββββββ, βββββ βββββ or at such
other location as Agent may designate to Maker in writing, for the account of
the Applicable Lending Office (as defined in the Agreement referred to below)
of Payee, in lawful money of the United States of America and in immediately
available funds, the principal sum of ____________________ DOLLARS
($_______________), or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Credit Loans made by Payee to Maker under the
Agreement referred to below on the dates and in the principal amounts provided
in such Agreement, and to pay interest on the amount of each such Revolving
Credit Loan, at such office, in like money and funds, for the period commencing
on the date of such Revolving Credit Loan until the Revolving Credit Loan shall
be paid in full, at the rates per annum and on the dates provided in the
Agreement.
This Note (the "Note") has been executed and delivered by Maker
pursuant to the terms of that certain Second Amended and Restated Credit
Agreement (as the same may be amended, supplemented or modified from time to
time, the "Agreement") of even date herewith, among Maker, Payee and the other
lenders from time to time party thereto (collectively, the "Banks"), the
Issuing Banks (as defined in the Agreement), and the Agent and is one of the
Revolving Credit Notes described therein. Capitalized terms used and not
otherwise defined herein shall have the same meanings as set forth in the
Agreement. Reference is hereby made to the Agreement for provisions affecting
this Note including, but not limited to, provisions regarding interest rates,
repayments, prepayments, Events of Default, and Payee's rights as a result of
the occurrence thereof.
This Note and the other Revolving Credit Notes are in renewal,
extension and modification, but not extinguishment or novation, of the
outstanding indebtedness evidenced by those certain Revolving Credit Notes
previously executed by HealthCor, Inc., a Delaware corporation ("HealthCor"),
and delivered pursuant to that certain Amended and Restated Credit Agreement
dated October 31, 1996 among Maker, HealthCor, the lenders party thereto (the
"Existing Banks"), the Existing Banks issuing Letters of Credit thereunder and
Texas Commerce Bank National Association, as agent, which in turn are in
renewal, extension and modification, but not extinguishment or novation, of
the outstanding indebtedness evidenced by those certain Revolving Credit Notes
previously executed by HealthCor and delivered pursuant to that certain Credit
Agreement dated May 16, 1996 among Maker, HealthCor, the lenders party thereto
(the
REVOLVING CREDIT NOTE - Page 1
72
"Original Banks"), the Original Banks issuing Letters of Credit thereunder and
Texas Commerce Bank National Association, as agent.
Subject to the terms of the Agreement and as otherwise calculated in
accordance with the Agreement, the outstanding principal balance hereof shall
bear interest prior to maturity at a varying rate per annum which shall from
day to day be equal to the lesser of (a) the Maximum Rate or (b) the Applicable
Rate. If at any time the Applicable Rate shall exceed the Maximum Rate,
thereby causing the interest rate hereon to be limited to the Maximum Rate,
then any subsequent reduction in the Applicable Rate shall not reduce the rate
of interest hereon below the Maximum Rate until the total amount of interest
accrued hereon equals the amount of interest which would have accrued hereon if
the Applicable Rate had at all times been in effect.
The outstanding principal balance of this Note, together with all
accrued and unpaid interest thereon, shall be due and payable on the Revolving
Credit Termination Date. Accrued and unpaid interest on the outstanding
principal balance hereof shall be due and payable as provided in Section 2.4 of
the Agreement. All past due principal and interest shall bear interest at the
Default Rate.
Maker may prepay the principal of this Note upon the terms and
conditions specified in the Agreement. Maker may borrow, repay, and reborrow
hereunder upon the terms and conditions specified in the Agreement.
If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all reasonable
costs, expenses, and fees incurred by the holder, including reasonable
attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THIS NOTE IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, grace, and
all other formalities of any kind, and consent to all extensions without notice
for any period or periods of time and partial payments, before or after
maturity, all without prejudice to the holder. The holder shall similarly have
the right to deal in any way, at any time, with one or more of the foregoing
parties without notice to any other party, and to grant any such party any
extensions of time for payment of any of said indebtedness, or to grant any
other indulgences or
REVOLVING CREDIT NOTE - Page 2
73
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
Maker hereby authorizes the holder hereof to record in its internal
records the amount and Type of all Loans made to Maker hereunder and all
continuations, conversions, and payments of principal in respect of such Loans,
which recordings shall be prima facie evidence as to the outstanding principal
balance of this Note; provided, however, any failure by the holder hereof to
make any such recording shall not limit or otherwise affect the obligations of
Maker under the Agreement or this Note.
HEALTHCOR HOLDINGS, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
REVOLVING CREDIT NOTE - Page 3
74
EXHIBIT "B-1"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Loan Request Form
75
LOAN REQUEST FORM
TO: TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Agent
ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Attention: ββββββ β. ββββββββ
Ladies and Gentlemen:
The undersigned is an officer of HEALTHCOR HOLDINGS, INC., a Delaware
corporation (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Second Amended and Restated Credit
Agreement dated as of December 1, 1997, among the Borrower, Texas Commerce Bank
National Association, a national banking association, as agent (in such
capacity, the "Agent"), certain other lenders from time to time party thereto
(collectively, the "Banks") and the Banks from time to time issuing letters of
credit thereunder (the "Issuing Banks") (such Second Amended and Restated
Credit Agreement, as the same may be amended, supplemented or modified from
time to time, being hereinafter referred to as the "Credit Agreement"). All
terms defined in the Credit Agreement shall have the same meanings herein.
In accordance with the Credit Agreement, the undersigned Borrower
hereby requests that the Banks make the Loan requested on schedule attached
hereto (the "Requested Loan").
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies to the
Agent, the Banks and the Issuing Banks that the following statements are true
and correct:
(i) The representations and warranties contained in
Article VIII of the Credit Agreement and in each of the other Loan
Documents are true and correct on and as of the date hereof with the
same force and effect as if made on and as of such date.
(ii) No Default has occurred and is continuing or would
result from the Requested Loan.
(iii) All information supplied on the schedule and
officer's certificate attached hereto is true, correct, and complete
as of the date hereof.
76
BORROWER:
HEALTHCOR HOLDINGS, INC.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
Dated as of:___________________
[insert date of
Requested Loan]
-2-
77
SCHEDULE 1
TO
LOAN REQUEST FORM
Revolving Credit Loan
Request Information
(1) Revolving Credit Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000,000.00
(2) Aggregate outstanding principal amount of all Revolving Credit Loans . . . . . . . . . . . . . . . . $_________
(3) Aggregate amount of all Letter of Credit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . $_________
(4) Available Revolving Credit Commitment [line (1) minus the sum of
line (2) and line (3)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_________
(5) Amount of requested Revolving Credit Loan (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . $_________
(6) Type of requested Revolving Credit Loan (check whichever is applicable):
_____ Alternate Base Rate Loan
_____ Eurodollar Loan having an Interest Period of:
_____ one month
_____ two months
_____ three months
_____ six months
(7) Number of Interest Periods currently in effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . _________
(8) Date of requested Revolving Credit Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . _________, 19___
---------------------
(1) The requested Revolving Credit Loan must be in an amount equal to or
less than the amount shown on line (4) above.
78
EXHIBIT "B-2"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Notice of Continuation or Conversion
79
NOTICE OF CONTINUATION OR CONVERSION
TO: TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Agent
ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Attention: ββββββ β. ββββββββ
Ladies and Gentlemen:
The undersigned is an officer of HEALTHCOR HOLDINGS, INC., a Delaware
corporation (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Second Amended and Restated Credit
Agreement dated as of December 1, 1997, among Borrower, Texas Commerce Bank
National Association, a national banking association, as agent (in such
capacity, the "Agent"), the lenders from time to time party thereto
(collectively, the "Banks"), and the Banks issuing letters of credit from time
to time thereunder (in such capacity, the "Issuing Banks") (as the same may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Credit Agreement"). All terms defined in the Credit Agreement shall
have the same meanings herein.
In accordance with the Credit Agreement, the Borrower hereby (check
whichever is applicable):
___ 1. Requests that the Banks convert a Eurodollar Loan in
the principal amount of $___________ into an Alternate Base Rate Loan; or
___ 2. Requests that the Banks convert an Alternate Base
Rate Loan in the principal amount of $___________ into a Eurodollar Loan,
having an Interest Period of (check whichever is applicable):
_____ one month
_____ two months
_____ three months
_____ six months
NOTICE OF CONTINUATION OR CONVERSION - Page 1
80
___ 3. Requests that the Banks continue a Eurodollar Loan in
the amount of $__________, having an Interest Period of (check whichever is
applicable):
_____ one month
_____ two months
_____ three months
_____ six months
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, if the undersigned has checked paragraph 2
or 3 above, the undersigned hereby certifies to the Agent, the Banks and the
Issuing Banks that the following statements are true and correct:
(i) The representations and warranties contained in
Article VIII of the Credit Agreement and in each of the other Loan
Documents are true and correct on and as of the date hereof with the
same force and effect as if made on and as of such date.
(ii) No Default has occurred and is continuing or would
result from the Continuation or Conversation, as the case may be,
requested hereunder.
BORROWER:
HEALTHCOR HOLDINGS, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Dated as of:_______________________
[insert date of
requested Continuation
or Conversion]
NOTICE OF CONTINUATION OR CONVERSION - Page 2
81
EXHIBIT "C"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Letter of Credit Request Form
82
LETTER OF CREDIT REQUEST FORM
TO: Texas Commerce Bank National Association,
as an Issuing Bank
ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Attention: ββββββ β. ββββββββ
Ladies and Gentlemen:
The undersigned is an officer of HEALTHCOR HOLDINGS, INC., a Delaware
corporation (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Second Amended and Restated Credit
Agreement dated as of December 1, 1997, among Borrower, Texas Commerce Bank
National Association, as agent (in such capacity, the "Agent"), the lenders
from time to time party thereto (collectively, the "Banks"), and the Banks from
time to time issuing letters of credit thereunder (in such capacity, the
"Issuing Banks") (as the same may be amended, supplemented or modified from
time to time, the "Credit Agreement"). All terms defined in the Credit
Agreement shall have the same meanings herein.
In accordance with the Credit Agreement, the Borrower hereby requests
that the Issuing Bank issue a Letter of Credit. The Letter of Credit shall:
(a) be issued on ________________, 19___;(1)
(b) be in the amount of $____________;(2)
(c) permit [a single drawing/multiple drawings](3) on the
terms and conditions set forth in the L/C Application
attached as Annex I hereto;
----------------------
(1) Insert date not later than the Revolving Credit Termination Date.
(2) Insert face amount of Letter of Credit. Issuance is subject to
Dollar limit on aggregate face amount of Letters of Credit
specified in Section 3.1 of the Credit Agreement ($2,000,000).
(3) Specify one.
83
(d) be payable upon presentation of a [sight draft/time
draft. The time draft shall be payable on
__________________, 19___];(4) and
(e) expire on __________________, 19___.(4)
The Letter of Credit is to be delivered by the Issuing Bank to
_____________________.(5)
[Drawing/Each drawing](3) under the Letter of Credit shall be subject
to the conditions specified in the L/C Application attached as Annex I hereto.
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that the
following statements are true and correct:
(i) The representations and warranties contained in
Article VIII of the Credit Agreement and in each of the other Loan
Documents are true and correct on and as of the date hereof with the
same force and effect as if made on and as of such date.
(ii) No Default has occurred and is continuing or would
result from the issuance of the Letter of Credit requested hereunder.
(iii) The face amount of the Letter of Credit requested
hereunder, when added to all outstanding Revolving Credit Loans and
Letter of Credit Liabilities, will not exceed the aggregate amount of
the Revolving Credit Commitments.
(iv) The proposed terms of the Letter of Credit requested
hereunder and the transactions proposed to be supported thereby are
accurately and completely described on the L/C Application attached as
Annex I hereto.
(v) All information supplied below is true, correct, and
complete as of the date hereof.
Information
(a) Revolving Credit Commitment . . . . . . . . . . . . . . $20,000,000.00
(b) Aggregate outstanding principal amount of all
Revolving Credit Loans . . . . . . . . . . . . . . . . . $_____________
--------------------------
(4) Insert date not later than the earlier of (a) one year after
issuance or (b) the Revolving Credit Termination Date.
(5) Insert name of Borrower or name and address of
beneficiary.
84
(c) Aggregate outstanding amount of all Letter of
Credit Liabilities . . . . . . . . . . . . . . . . . . . . . . . $____________
(d) Net availability for Letters of Credit: [line (a) minus the
sum of line (b) and line (c)] . . . . . . . . . . . . . . . . . . $____________
(e) Face Amount of requested Letter of Credit . . . . . . . . . . . . $____________
(f) Date requested for issuance of Letter of Credit . . . . . . . . . _______, 19__
BORROWER:
HEALTHCOR HOLDINGS, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Dated as of:__________________
[insert date of
proposed issuance
of Letter of Credit]
85
ANNEX 1
TO
LETTER OF CREDIT REQUEST FORM
L/C Application
[See Attached]
86
EXHIBIT "D-1"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Second Amended and Restated Borrower Security Agreement
87
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT (this
"Agreement") dated as of December 1, 1997, is by and between HEALTHCOR
HOLDINGS, INC., a Delaware corporation (the "Debtor"), and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association, as agent (in such
capacity, the "Agent") for itself, the Issuing Banks (hereinafter defined) and
the Banks (hereinafter defined).
R E C I T A L S:
A. The Debtor, HealthCor, Inc., a Delaware corporation
("HealthCor"), the Agent, certain lenders (collectively, the "Existing Banks"),
and the Existing Banks issuing letters of credit thereunder (in such capacity,
the "Existing Issuing Banks") previously entered into that certain Amended and
Restated Credit Agreement dated as of October 31, 1996 (as amended, the
"Existing Credit Agreement").
B. Pursuant to the Existing Credit Agreement, the Debtor and
HealthCor executed and delivered to the Agent an Amended and Restated Security
Agreement dated as of October 31, 1996, which secured the obligations of the
Debtor under the Existing Credit Agreement (the "Existing Security Agreement").
C. Concurrently herewith the Debtor, the Agent, certain lenders
(together with any other lenders that may from time to time become a party
thereto, the "Banks"), and the Banks issuing letters of credit thereunder (in
such capacity, the "Issuing Banks") are entering into that certain Second
Amended and Restated Credit Agreement of even date herewith (as the same may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
D. The parties hereto now desire to amend and restate the
Existing Security Agreement, as hereinafter provided, and have agreed, for
purposes of clarity and ease of administration, to carry out the agreed upon
amendments by amending the pertinent provisions of the Existing Security
Agreement and restating the Existing Security Agreement, insofar as it relates
to property of the Debtor, in its entirety by means of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows and the Existing Security
Agreement is hereby amended, consolidated and restated in its entirety as
follows::
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ARTICLE I
Definitions; Security Interest
Section 1.1 Definitions. All capitalized terms used and not
otherwise defined herein shall have their respective meanings as set forth in
the Credit Agreement.
Section 1.2 Security Interest. The Debtor hereby grants to the
Agent for the benefit of itself, the Banks and the Issuing Banks, and ratifies
and confirms that the Agent has previously been granted and now possesses, a
security interest in the following property, whether now owned or existing or
hereafter acquired or arising and wherever arising or located (such property
being hereinafter sometimes called the "Collateral"):
(ACCOUNTS)
(a) All accounts, receivables, accounts receivable, general
intangibles, book debts, contract rights, instruments, and documents
(including, without limitation, all documents of title); (b) all
chattel paper, notes, drafts, acceptances, other evidences, and forms
of payment under leases of equipment or contracts for the sale of
inventory or the performance of services, and other forms of
obligations received by or belonging to the Debtor for goods sold or
leased and/or services rendered by the Debtor; (c) all of the rights
of the Debtor in, to, and under all purchase orders, sales contracts,
instruments, and other documents evidencing obligations for or
representing payment for goods sold or leased and/or services rendered
by the Debtor; and (d) all moneys due or to become due to the Debtor
under all contracts for the sale or lease of goods and/or the
performance of services by the Debtor; in each case of whatever
nature, now owned by the Debtor or existing or hereafter acquired,
created, or arising and the rights and interests of the Debtor in
goods, the sale and delivery of which give rise to any and all
proceeds of any of the foregoing Collateral (including, but not
limited to, all insurance and claims for insurance in respect of the
Collateral).
(INVENTORY)
All goods, merchandise, raw materials, goods in process,
finished goods, and other tangible personal property of whatever
nature now owned by the Debtor or hereafter from time to time existing
or acquired, and held for sale or lease or furnished or to be
furnished under contracts of service or used or usable or consumed or
consumable in the Debtor's business and all accessions and
appurtenances thereto, and all accounts, receivables, accounts
receivables, instruments, notes, chattel paper, documents (including,
without limitation, all documents of title), contract rights, and
general intangibles arising in connection with any of the foregoing
and all products and proceeds of any of the foregoing Collateral
(including, without limitation, all insurance and claims for insurance
effective or held for the benefit of the Debtor or the Agent in
respect of any of the foregoing Collateral).
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 2
89
(EQUIPMENT)
All goods, equipment, machinery, furnishings, fixtures,
furniture, appliances, accessories, leasehold improvements, chattels,
and other articles of personal property of whatever nature now owned
by the Debtor or hereafter acquired, all accessions and appurtenances
thereto, and all renewals or replacements of or substitutions for any
of the foregoing and all proceeds of any of the foregoing Collateral
(including, but not limited to, all insurance and claims for insurance
in respect of any of the foregoing Collateral).
(TRADEMARKS AND PATENTS)
All trademarks and service marks now held or hereafter
acquired by the Debtor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the
United States or any state thereof or any political subdivision
thereof and any application for such trademarks and service marks, as
well as any unregistered marks used by the Debtor in the United States
and trade areas including logos, designs, trade names, company names,
business names, fictitious business names and other business
identifiers in connection with which any of these registered or
unregistered marks are used in the United States (collectively, the
"Marks"), together with the registrations and right to all renewals
thereof, and the goodwill of the business of the Debtor symbolized by
the Marks, all United States patents now or hereafter owned by the
Debtor, as well as any application for a United States patent now or
hereafter owned by the Debtor (collectively, the "Patents"), and
reissues, renewals or extensions thereof, and all know-how,
technology, inventions, processes, formulas, product formulations,
blueprints, drawings, test data, manuals, production documents,
procedures, product and manufacturing specifications or standards and
other tangible (physical, electronic or other) manifestations of any
Marks and Patents now or hereafter utilized in the Debtor's business.
(INVESTMENT PROPERTY)
All investment property, including, without limitation, all
securities, whether certificated or uncertificated, investment
accounts or securities accounts, and security entitlements which may
be carried in a securities account now owned by the Debtor or
hereafter from time to time existing or acquired, and all proceeds of
any of the foregoing Collateral (including, but not limited to, all
insurance claims for insurance in respect of any of the foregoing
Collateral).
Section 1.3 Obligations. The Collateral shall secure the
following obligations, indebtedness, and liabilities (all such obligations,
indebtedness, and liabilities being hereinafter sometimes called the
"Obligations"): (a) the obligations, indebtedness, and liabilities of the
Debtor to the Banks and the Issuing Banks evidenced by the Revolving Credit
Notes (herein so called) executed by the Debtor pursuant to the Credit
Agreement; (b) the obligations, indebtedness, and liabilities of the Debtor to
the Agent, the Banks and the Issuing Banks under the Credit Agreement; (c) all
future advances by the Banks and the Issuing Banks to the Debtor;
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 3
90
(d) all costs and expenses, including without limitation all attorneys' fees
and legal expenses, incurred by the Agent, the Banks and the Issuing Banks to
preserve and maintain the Collateral, collect the obligations herein described,
and enforce this Agreement; (e) all other Obligations (as such term is defined
in the Credit Agreement); and (f) all extensions, renewals, and modifications
of any of the foregoing.
Section 1.4 Renewal of Obligations and Liens. The parties hereto
acknowledge and agree that (a) the Revolving Credit Notes are in renewal,
extension and modification, but not in extinguishment of, the existing
indebtedness of the Debtor and HealthCor under the Existing Credit Agreement,
and (b) such existing indebtedness is secured by liens and security interests
granted by the Debtor pursuant to the Existing Security Agreement, which liens
and security interests are not extinguished or released, but instead are hereby
renewed, extended, carried forward and continued in accordance with the terms
of this Agreement.
ARTICLE II
Representations and Warranties
To induce the Agent to enter into this Agreement and to induce the
Banks and the Issuing Banks to extend credit to the Debtor under the Credit
Agreement, the Debtor represents and warrants to the Agent, the Banks and the
Issuing Banks that:
Section 2.1 Title. Except for the Permitted Liens, the Debtor
owns, and with respect to Collateral acquired after the date hereof the Debtor
will own, the Collateral free and clear of any Lien.
Section 2.2 Accounts. The Debtor represents, warrants, and
covenants that each and all of its accounts will meet the following
requirements continuously from the time each of them comes into existence until
it is collected in full: (a) the account arose from the performance of
services by the Debtor which services have been fully and satisfactorily
performed or from the absolute sale of goods by the Debtor in which the Debtor
had the sole and complete ownership, and the goods have been shipped or
delivered to the account debtor, evidencing which the Debtor or the Agent has
possession of shipping and delivery receipts; (b) the account is not subject to
setoff, counterclaim, defense, allowance or adjustment other than discounts for
prompt payment shown on the invoice or to dispute, objection or complaint by
the account debtor concerning his or its liability on the account, and the
goods, the sale of which gives rise to the account, have not been returned,
rejected, lost, or damaged; (c) the account arose in the ordinary course of the
Debtor's business, and no notice of bankruptcy, insolvency, or financial
embarrassment of the account debtor has been received by the Debtor; and (d)
the Debtor shall notify the Agent promptly in writing when any account ceases
to meet any of the requirements of this Agreement. Nothing in this Section
shall be construed to limit or release any right of the Agent to any Collateral
arising pursuant to Section 1.2 of this Agreement.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 4
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Section 2.3 Financing Statements. No financing statement,
security agreement, or other lien instrument covering all or any part of the
Collateral is on file in any public office, except as may have been filed in
favor of the Agent or to perfect any Permitted Lien.
Section 2.4 Organization and Authority. The Debtor is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation. The Debtor has the corporate power and
authority to execute, deliver, and perform this Agreement, and the execution,
delivery, and performance of this Agreement by the Debtor (a) have been
authorized by all necessary corporate action on the part of the Debtor, (b) do
not and will not violate (i) any law, rule or regulation which violation would
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of the Debtor, the Collateral
taken as a whole, or the ability of the Companies to pay and perform the
Obligations, or (ii) the certificate of incorporation or bylaws of the Debtor,
and (c) do not and will not conflict with, result in a breach of, or constitute
a default under the provisions of any material indenture, mortgage, deed of
trust, security agreement, instrument, or agreement pursuant to which the
Debtor or any of its property is bound.
Section 2.5 Principal Place of Business. The principal place of
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown below its name on the signature pages of this Agreement.
Section 2.6 Location of Collateral. All inventory, machinery,
and equipment (other than inventory, machinery and equipment, which
individually or in the aggregate is immaterial) of the Debtor are located at
the locations specified on Schedule I hereto, or at other locations within the
continental United States of America in the ordinary course of the Debtor's
business so long as all actions have been taken to assure the continued
perfection and priority of the Agent's security interest therein.
ARTICLE III
Covenants
The Debtor covenants and agrees with the Agent, the Banks and the
Issuing Banks that until the Obligations are paid and performed in full and all
Commitments of the Banks and the Issuing Banks to the Debtor have been
terminated:
Section 3.1 Maintenance. The Debtor shall maintain the
Collateral in good operating condition and repair, and the Debtor shall not
permit any waste or destruction of the Collateral or any part thereof except
for the ordinary wear and tear of its intended primary use. The Debtor shall
not use or permit the Collateral to be used in violation of any law or
inconsistently with the terms of any policy of insurance. The Debtor shall not
use or permit the Collateral to be used in any manner or for any purpose that
would impair the value of the Collateral or expose the Collateral to unusual
risk.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 5
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Section 3.2 Encumbrances. The Debtor shall not create, permit,
or suffer to exist, and the Debtor shall defend the Collateral against, any
Lien on the Collateral except Permitted Liens, and the Debtor shall defend the
Debtor's rights in the Collateral and the Agent's security interest in the
Collateral against the claims of all Persons.
Section 3.3 Modification of Collateral. The Debtor shall not do
anything to impair the rights of the Agent in the Collateral. Without the
prior written consent of the Agent, the Debtor shall not during the continuance
of an Event of Default (a) grant any extension of time for any payment with
respect to the Collateral, (b) compromise, compound, or settle any of the
Collateral, (c) release in whole or in part any person or entity liable for
payment with respect to the Collateral, (d) allow any credit or discount for
payment with respect to the Collateral other than normal trade discounts
granted in the ordinary course of business and other adjustments, such as bad
debt expense, made in the ordinary course of business, (e) release any lien,
security interest or assignment securing the Collateral, or (f) otherwise amend
or modify any of the Collateral.
Section 3.4 Disposition of Collateral. The Debtor shall not
sell, lease, assign, transfer or otherwise dispose of any of the Collateral,
except dispositions of old, worn out or obsolete equipment and inventory in the
ordinary course of business.
Section 3.5 Further Assurances. At any time and from time to
time, upon the request of the Agent, and at the sole expense of the Debtor, the
Debtor shall promptly execute and deliver all such further instruments and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statements as the Agent
may require. A carbon, photographic, or other reproduction of this Agreement
or of any financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement and may be filed as a financing
statement. The Debtor shall promptly endorse and deliver to the Agent all
documents, instruments, and chattel paper that it now owns or may hereafter
acquire.
Section 3.6 Risk of Loss; Insurance. The Debtor shall be
responsible for any loss of or damage to the Collateral. The Debtor shall
maintain, with financially sound and reputable companies, insurance policies
(i) insuring the Collateral against loss by fire, explosion, theft, and such
other risks and casualties as are customarily insured against by companies
engaged in the same or a similar business, and (ii) insuring the Debtor and the
Agent against liability for personal injury and property damage relating to the
Collateral, such policies to be in such amounts and covering such risks as are
customarily insured against by companies engaged in the same or a similar
business, but at least in the amounts specified in the Credit Agreement, with
losses payable to the Debtor and the Agent as their respective interests may
appear. All insurance with respect to the Collateral shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. The Debtor shall furnish the Agent with certificates or other
evidence satisfactory to the Agent of compliance with the foregoing insurance
provisions. The Debtor shall deliver to the Agent upon demand copies of all
insurance policies covering the Collateral or any part thereof.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 6
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Section 3.7 Inspection Rights. The Debtor shall permit the
Agent, the Banks and the Issuing Banks and their representatives, upon one (1)
Business Day's prior notice, to examine or inspect the Collateral wherever
located and to examine, inspect, and copy the Debtor's books and records at any
reasonable time and as often as they may desire. The Agent may at any time and
from time to time contact account debtors and other obligors to verify the
existence, amounts, and terms of the Debtor's accounts.
Section 3.8 Mortgagee's and Landlord Waivers. The Debtor shall
deliver to the Agent an instrument satisfactory in form and substance to the
Agent, executed by the landlord of the premises located at ββββ βββββ βββββββ
ββββββββββ, βββββ β-ββββ, ββββββ, βββββ βββββ, by which such landlord waives or
subordinates its rights, if any, in the Collateral. With respect to all other
locations of Collateral, upon the request of the Agent at any time, the Debtor
shall exert its best efforts to cause each mortgagee of real property owned by
the Debtor and each landlord of real property leased by the Debtor to execute
and deliver instruments satisfactory in form and substance to the Agent by
which such mortgagee or landlord waives or subordinates its rights, if any, in
the Collateral.
Section 3.9 Notification. The Debtor shall promptly notify the
Agent of (i) any Lien or material claim made or threatened against the
Collateral, (ii) any material change in the Collateral, including, without
limitation, any material damage to or loss of the Collateral, and (iii) the
occurrence or existence of any Default.
Section 3.10 Corporate Changes. The Debtor shall not change its
name, identity, or corporate structure in any manner that might make any
financing statement filed in connection with this Agreement seriously
misleading, unless the Debtor shall have given the Agent thirty (30) days prior
written notice thereof and shall have taken all action deemed necessary or
desirable by the Agent to make each financing statement not seriously
misleading. The Debtor shall not change its principal place of business, chief
executive office, or the place where it keeps its books and records, unless it
shall have given the Agent thirty (30) days prior written notice thereof and
shall have taken all action deemed necessary or desirable by the Agent to cause
its security interest in the Collateral to be perfected with the priority
required by this Agreement.
Section 3.11 Books and Records; Information. The Debtor shall
keep books and records of the Collateral and the Debtor's business and
financial condition in accordance with GAAP (subject to year-end adjustments
and disclosures). The Debtor shall from time to time at the request of the
Agent deliver to the Agent such information regarding the Collateral and the
Debtor as the Agent may request, including, without limitation, lists and
descriptions of the Collateral and evidence of the identity and existence of
the Collateral. Upon the request of the Agent, the Debtor shall ββββ its books
and records to reflect the security interest of the Agent under this Agreement.
Section 3.12 Location of Collateral. The Debtor shall not move
any of its equipment, machinery or inventory from the locations specified
herein without the prior written consent of the Agent, except to other
locations within the continental United States of America in the
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 7
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ordinary course of business so long as all actions have been taken to assure
the continued perfection and priority of the Agent's security interest therein.
Section 3.13 Lockbox Accounts. The Debtor hereby agrees to the
terms, provisions and covenants set forth in Section 6.2 of the Credit
Agreement and the rights of the Agent thereunder, and hereby agrees to comply
with each of the requirements specified therein.
ARTICLE IV
Special Provisions Concerning Marks
Section 4.1 Additional Representations and Warranties. The
Debtor represents and warrants that it is the true and lawful exclusive owner
of the Marks listed as being owned by it in Schedule II hereto and that, as of
the date hereof, the listed Marks include all the United States federal
registrations or applications registered in the United States Patent and
Trademark Office which are necessary for Debtor's business as currently
operated. The Debtor represents and warrants that it owns or is licensed to
use or is not prohibited from using all Marks that it uses. The Debtor further
warrants that it is aware of no third party claim (which could have a material
adverse effect on the business, condition (financial or otherwise), operations,
prospects or properties of such Debtor) that any aspect of such Debtor's
present or contemplated business operations infringes or will infringe any
ββββ. The Debtor represents and warrants that it is the owner of record of all
United States registrations and applications listed as being owned by it in
Schedule II hereto and that such registrations are valid, subsisting, have not
been cancelled and that the Debtor is not aware of any third party claim (which
could have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects or properties of such Debtor) that any such
registration is invalid or unenforceable. The Debtor hereby grants to the
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each such ββββ and associated
goodwill, and record the same.
Section 4.2 Licenses and Assignments. Other than the license
agreements listed on Schedule II hereto and any extensions or renewals thereof,
the Debtor hereby agrees not to divest itself of any right under any ββββ
except those Debtor reasonably determines are not necessary for the conduct of
its business.
Section 4.3 Infringements. The Debtor agrees, promptly upon
learning thereof, to notify the Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect
to, any party who may be infringing or otherwise violating any of the Debtor's
rights in and to any ββββ, or with respect to any party claiming that the
Debtor's use of any ββββ violates any property right of that party, in each
case to the extent that the Debtor reasonably believes that such infringement
or violation is material to its business. The Debtor further agrees, if
consistent with good business practice, diligently to prosecute any Person
infringing any ββββ to the extent that the Debtor reasonably believes that such
infringement is material to its business.
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Section 4.4 Preservation of Marks. To the extent the failure to
do so would cause a material adverse effect on the business, condition
(financial or otherwise), operations, prospects or properties of the Debtor and
the Debtor reasonably believes it to be consistent with good business practice,
the Debtor agrees to use its Marks in interstate commerce during the time in
which this Agreement is in effect, sufficiently to preserve such Marks as
trademarks or service marks registered under the laws of the United States.
Section 4.5 Maintenance of Registration. To the extent the
failure to do so would cause a material adverse effect on the business,
condition (financial or otherwise), operations, prospects or properties of the
Debtor and the Debtor reasonably believes it to be consistent with good
business practice, the Debtor shall, at its own expense, diligently process all
documents required by the Trademark Act of 1946, 15 U.S.C. Sections 1051 et
seq. to maintain trademark registration, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its Marks pursuant to 15 U.S.C.
Sections 1058(a), 1059 and 1065, and shall pay all fees and disbursements in
connection therewith and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all reasonable
administrative and judicial remedies without prior written consent of Required
Banks.
Section 4.6 Future Registered Marks. If any ββββ registration
issues hereafter to the Debtor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty
(30) days of receipt of such certificate the Debtor shall deliver a copy of
such certificate, and a grant of security in such ββββ to the Agent, confirming
the grant thereof hereunder, the form of such confirmatory grant to be
satisfactory to the Agent.
Section 4.7 Remedies. If an Event of Default shall occur and be
continuing, the Agent may, after ten (10) days' written notice to the Debtor,
take any or all of the following actions: (i) declare the entire right, title
and interest of the Debtor in and to each of the Marks and the good will of the
business associated therewith, together with all trademark rights and rights of
protection to the same, vested, in which event such rights, title and interest
shall immediately vest, in the Agent for the benefit of the Banks and the
Issuing Banks, in which case the Agent shall be entitled to exercise the power
of attorney referred to in Section 4.1 to execute, cause to be acknowledged and
notarized and record said absolute assignment with the applicable agency; (ii)
take and use or sell the Marks and the goodwill of the Debtor's businesses
symbolized by the Marks and the right to carry on the businesses and use the
assets of the Debtor in connection with which the Marks have been used; and
(iii) direct the Debtor to refrain, in which event the Debtor shall refrain,
from using the Marks in any manner whatsoever, directly or indirectly, and
execute such other and further documents that the Agent may request to further
confirm this and to transfer ownership of the Marks and registrations and any
pending trademark application in the United States Patent and Trademark Office
or any equivalent government agency or office in any foreign jurisdiction to
the Agent.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 9
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ARTICLE V
Special Provisions
Concerning Patents
Section 5.1 Additional Representations and Warranties. The
Debtor represents and warrants that it is the true and lawful exclusive owner
of all rights in the Patents listed as being owned by it in Schedule III hereto
that, as of the date hereof, said Patents include all the United States patents
and applications for United States patents that the Debtor now owns which are
necessary for Debtor's business as currently operated. The Debtor represents
and warrants that it owns or is licensed to practice under all Patents that it
now uses or practices under. The Debtor further warrants that it is aware of
no third party claim (which could have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects or
properties of the Debtor) that any aspect of such Debtor's present or
contemplated business operations infringes or will infringe any patent. The
Debtor hereby grants to the Agent an absolute power of attorney to sign, upon
the occurrence and during the continuance of any Event of Default, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each
Patent and record the same.
Section 5.2 Licenses and Assignments. Other than the license
agreements listed on Schedule III hereto and any extensions or renewals
thereof, the Debtor hereby agrees not to divest itself of any right under any
Patent except those Patents the Debtor reasonably determines are not necessary
for the conduct of its business.
Section 5.3 Infringements. The Debtor agrees, promptly upon
learning thereof, to furnish the Agent in writing with all pertinent
information available to the Debtor with respect to any infringement or other
violation of the Debtor's rights in any Patent, or with respect to any claim
that practice of any Patent violates any property rights of that party, in each
case to the extent that the Debtor reasonably believes that such infringement
or violation is material to its business. The Debtor further agrees,
consistent with good business practice and absent direction of the Agent to the
contrary (which direction shall only be given if an Event of Default shall have
occurred and be continuing, diligently to prosecute any Person infringing any
Patent to the extent that the Debtor reasonably believes that such infringement
is material to its business.
Section 5.4 Maintenance of Patents. At its own expense, the
Debtor shall make timely payment of all post-issuance fees required pursuant to
35 U.S.C. Section 41 to maintain in force rights under each Patent to the
extent the Debtor reasonably believes it to be consistent with good business
practice and failure to do so would cause a material adverse effect on the
business, condition (financial or otherwise), operations, prospects or
properties of the Debtor.
Section 5.5 Prosecution of Patent Application. At its own
expense, the Debtor shall diligently prosecute all applications for Patents
listed as being owned by it in Schedule III hereto and shall not abandon any
such application prior to exhaustion of all reasonable administrative and
judicial remedies, to the extent Debtor reasonably believes it to be consistent
with good
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 10
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business practice and failure to do so would cause a material adverse effect on
the business, condition (financial or otherwise), operations, prospects or
properties of the Debtor.
Section 5.6 Other Patents. Within thirty (30) days of
acquisition of a Patent, or of filing of an application for a Patent, the
Debtor shall deliver to the Agent a copy of said Patent or such application, as
the case may be, with a grant of security as to such Patent, as the case may
be, confirming the grant thereof hereunder, the form of such confirmatory grant
to be satisfactory to the Agent.
Section 5.7 Remedies. If an Event of Default shall occur and be
continuing, the Agent may after ten (10) days' written notice to the Debtor,
take any or all of the following actions: (i) declare the entire right, title,
and interest of the Debtor in each of the Patents vested, in which event such
right, title, and interest shall immediately vest in the Agent for the benefit
of the Banks and the Issuing Banks, in which case the Agent shall be entitled
to exercise the power of attorney referred to in Section 5.1 to execute, cause
to be acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents; and (iii) direct
the Debtor to refrain, in which event the Debtor shall refrain, from practicing
the Patents directly or indirectly, and the Debtor shall execute such other and
further documents as the Agent may request further to confirm this and to
transfer ownership of the Patents to the Agent for the benefit of the Banks and
the Issuing Banks.
ARTICLE VI
Rights of the Agent
Section 6.1 Certain Covenants and Rights Regarding the
Collateral.
(a) The Debtor shall from time to time at the request of
the Agent furnish the Agent with a schedule of each account included
in the Collateral and a list of all those liable on checks, notes,
drafts, and other instruments representing the proceeds of such
accounts. The Agent shall have the right to make test verifications
of the Collateral. If any part of the Collateral is or becomes
subject to the Federal Assignment of Claims Act, the Debtor will
execute all instruments and take all steps required by the Agent to
comply with that act. If part of the Collateral is evidenced by
promissory notes, trade acceptances or other instruments for the
payment of money, the Debtor will, at the request of the Agent,
immediately deliver them to the Agent, appropriately endorsed to the
order of the Agent, and regardless of the form of endorsement, the
Debtor waives presentment, demand, notice of dishonor, protest, and
notice of protest.
(b) If the validity or priority of this Agreement or of
any rights, titles, security interests or other interests created or
evidenced hereby shall be attacked, endangered, or questioned, or if
any legal proceedings are instituted with respect thereto, the Debtor
will give prompt written notice thereof to the Agent and, at the
Debtor's own cost and expense, will diligently endeavor to cure any
defect which may be developed or claimed,
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 11
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and will take all necessary and proper steps for the defense of such
legal proceedings, and the Agent (whether or not named as a party to
the legal proceedings with respect thereto) is hereby authorized and
empowered to take such additional steps as in its judgment and
discretion may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of
this Agreement and the rights, titles, security interests, and other
interests created or evidenced hereby, and all expenses so incurred of
every kind and character shall be a demand obligation owing by the
Debtor and the party incurring such expenses shall be subrogated to
all rights of the Person receiving such payment.
(c) During the existence of an Event of Default, the
Agent is authorized to take possession peaceably of the Collateral and
of all books, records and accounts relating thereto, and to exercise
without interference from the Debtor any and all rights which the
Debtor has with respect to the management, possession, protection, or
preservation of the Collateral. If necessary to obtain the possession
provided for above, the Agent may invoke any and all legal remedies to
dispossess the Debtor, including specifically one or more actions for
forcible entry and detainer. In connection with any action taken by
the Agent pursuant to this Section, the Agent shall not be liable for
any loss sustained by the Debtor resulting from any act or omission of
the Agent unless such loss is caused by the willful misconduct and bad
faith of the Agent, nor shall the Agent be obligated to perform or
discharge any obligation, duty, or liability under any sale or lease
agreement covering the Collateral or any part thereof, or under or by
reason of this Agreement or exercise of rights or remedies hereunder.
(d) At any time during the existence of a Default the
Agent may notify the account debtors or obligors of any accounts,
chattel paper, negotiable instruments, or other evidences of
indebtedness included in the Collateral to pay the Agent directly.
Until the Agent elects to exercise these rights, the Debtor is
authorized as agent of the Agent to collect and enforce such accounts.
The costs of collection and enforcement, including attorneys' fees and
expenses, shall be borne solely by the Debtor whether incurred by the
Agent or the Debtor.
Section 6.2 Performance by the Agent. If the Debtor fails to
perform or comply with any of its obligations and responsibilities contained
herein, the Agent itself may, at its sole discretion, cause or attempt to cause
performance or compliance with such agreement. In such event, the expenses of
the Agent shall be payable by the Debtor to the Agent on demand and together
with interest thereon at the Applicable Rate from and including the date the
Agent incurs such expenses to but excluding the date of such demand, and from
and including the date of such demand until such expenses are paid in full, at
the Default Rate, shall constitute Obligations secured by this Agreement. The
Agent, upon making such payment, shall be subrogated to all of the rights of
the Person receiving such payment. Notwithstanding the foregoing, it is
expressly agreed that the Agent shall not have any liability or responsibility
for the performance of any obligation of the Debtor under this Agreement.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 12
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Section 6.3 Setoff; Property Held by the Agent. If an Event of
Default shall have occurred and be continuing, the Agent shall have the right
to set off and apply against the Obligations, at any time and without notice to
the Debtor, any and all deposits (general or special, time or demand,
provisional or final) (other than trust fund accounts held by the Debtor for
the benefit of non-Affiliates) or other sums at any time credited by or owing
from the Agent to the Debtor whether or not the Obligations are then due. As
additional security for the Obligations, the Debtor hereby grants the Agent a
security interest in all money, instruments, and other property of the Debtor
(other than trust fund accounts held by the Debtor for the benefit of
non-Affiliates) now or hereafter held by the Agent. In addition to the Agent's
right of setoff and as further security for the Obligations, the Debtor hereby
grants the Agent a security interest in all deposits (general or special, time
or demand, provisional or final) and other accounts of the Debtor (other than
trust fund accounts held by the Debtor for the benefit of non-Affiliates) now
or hereafter deposited with or held by the Agent and all other sums at any time
credited by or owing from the Agent to the Debtor. The rights and remedies of
the Agent hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent may have.
Section 6.4 Assignment by the Agent. Subject to Section 14.7 of
the Credit Agreement, the Agent, the Banks and the Issuing Banks may from time
to time assign the Obligations and any portion thereof, and/or the Collateral
and any portion thereof, and the assignee shall be entitled to all of the
rights and remedies of such Person under this Agreement in relation thereto.
ARTICLE VII
Default
Section 7.1 Rights and Remedies. During the existence of an
Event of Default, the Agent shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted
to the Agent in this Agreement and in any other instrument or
agreement securing, evidencing, or relating to the Obligations or any
part thereof, the Agent shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as adopted by the
State of Texas. Without limiting the generality of the foregoing, the
Agent may (A) without demand or notice to the Debtor, collect,
receive, or take possession of the Collateral or any part thereof and
for that purpose the Agent may enter upon any premises on which the
Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (B) sell, lease, or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Agent's offices or elsewhere, for cash,
on credit, or for future delivery. Upon the request of the Agent, the
Debtor shall assemble the Collateral and make it available to the
Agent at any place designated by the Agent that is reasonably
convenient to the Debtor and the Agent. The Debtor agrees that the
Agent shall not be obligated to give more than ten (10) days prior
written notice of the time and place of any public sale or of the time
after which any private sale may take
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 13
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place and that such notice shall constitute reasonable notice of such
matters. The Debtor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all attorneys' fees,
legal expenses, and all other costs and expenses incurred by the Agent
in connection with the collection of the Obligations and the
enforcement of the Agent's rights under this Agreement. The Debtor
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay the Obligations
in full. The Debtor waives all rights of marshalling in respect of
the Collateral.
(ii) The Agent may cause any or all of the Collateral held
by it to be transferred into the name of the Agent or the name or
names of the Agent's nominee or nominees.
Section 7.2 Application of Proceeds of Sale. The proceeds of any
sale of Collateral pursuant to Section 7.1 hereof, as well as any Collateral
consisting of cash, shall be applied by the Agent as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses incurred by the Agent in connection with such sale or
otherwise in connection with this Agreement or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees
and expenses of its agents and one legal counsel, the repayment of all
advances made hereunder or under any other Loan Document by the Agent
on behalf of the Debtor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder;
SECOND, to the payment in full of all other Obligations that
are payable to the Agent including, without limitation, all expense
reimbursements and indemnities;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses incurred by the Issuing Banks in connection with the
Credit Agreement, any Letter of Credit, or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees
and expenses of their agents and one legal counsel;
FOURTH, to the payment in full of all other Obligations that
are payable to the Issuing Banks, including, without limitation, all
Letter of Credit disbursements and all accrued and unpaid interest
thereon and all Letter of Credit fees;
FIFTH, to the payment in full of the Obligations, pro rata
among the Banks in accordance with the amounts of the Loans held by
them, or, if no Loans shall be outstanding, in accordance with the
amounts of their Commitments;
SIXTH, if any Letter of Credit remains outstanding, the Agent,
after making the applications required by paragraphs "FIRST" through
"FIFTH" above,
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 14
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shall hold back and retain as Collateral for the Obligations an amount
equal to the aggregate face amounts of all outstanding Letters of
Credit; and
SEVENTH, provided that all of the Obligations have been paid
and performed in full and all Commitments and Letters of Credit have
terminated, to the Debtor, or its successors or assigns, or to
whomsoever may lawfully be entitled to the same, or as a court of
competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Agent (including, without limitation, a
sale pursuant to any applicable Uniform Commercial Code or under a judicial
proceeding), the receipt of the Agent or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Agent or such
officer or be answerable in any way for the misapplication thereof.
ARTICLE VIII
Miscellaneous
Section 8.1 No Waiver; Cumulative Remedies. No failure on the
part of the Agent to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 8.2 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Debtor, the Agent, the Banks and
the Issuing Banks and their respective heirs, successors, and assigns, except
that the Debtor may not assign any of its rights or obligations under this
Agreement without the prior written consent of the Agent.
Section 8.3 AMENDMENT; ENTIRE AGREEMENT; CONTROLLING AGREEMENT.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (INCLUDING THE EXISTING BORROWER
SECURITY AGREEMENT) EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the parties
hereto. In the event any term or provision of this Agreement expressly
conflicts with any term or provision of the Credit Agreement, the terms and
provisions of the Credit Agreement shall govern and control.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 15
102
Section 8.4 Notices. All notices and other communications
provided for in this Agreement shall be given or made in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid.
Section 8.5 Applicable Law; Venue; Service of Process. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION OR PROCEEDING
AGAINST THE DEBTOR UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INSTRUMENT OR AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE OBLIGATIONS OR
ANY PART THEREOF MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY,
TEXAS. THE DEBTOR HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. THE DEBTOR AGREES THAT
SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 8.4 OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR
ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE
OBLIGATIONS OR ANY PART THEREOF SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE DEBTOR OR WITH RESPECT TO
ANY OF THE COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER JURISDICTION.
ANY ACTION OR PROCEEDING BY THE DEBTOR AGAINST THE AGENT SHALL BE BROUGHT ONLY
IN A COURT LOCATED IN DALLAS COUNTY, TEXAS.
Section 8.6 Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 8.7 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Agent, or any Bank
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 16
103
or Issuing Bank shall affect the representations and warranties or the right of
the Agent, the Banks and the Issuing Banks to rely upon them.
Section 8.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.9 Waiver of Bond. In the event the Agent seeks to take
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 8.10 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 8.11 Construction. The Debtor and the Agent acknowledge
that each of them has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement with its legal
counsel and that this Agreement shall be construed as if jointly drafted by the
Debtor and the Agent.
Section 8.12 Obligations Absolute. The obligations of the Debtor
under this Agreement shall be absolute and unconditional and shall not be
released, discharged, reduced, or in any way impaired by any circumstance
whatsoever, including, without limitation, any amendment, modification,
extension, or renewal of this Agreement, the Obligations, or any document or
instrument evidencing, securing, or otherwise relating to the Obligations, or
any release or subordination of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.
Section 8.13 Release of Security Interest. At such time as all of
the Obligations have been paid and performed in full, all obligations and
commitments of the Banks and the Issuing Banks to make advances, issue letters
of credit or otherwise extend credit under the Credit Agreement have expired or
terminated, and no Letters of Credit remain outstanding, the Agent shall
release the security interest granted hereby.
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 17
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
HEALTHCOR HOLDINGS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Address for Notices:
ββββ βββββ βββββββ ββββββββββ, βββββ β-ββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: S. βββββ ββββββ
AGENT:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent
By:
------------------------------
ββββββ β. ββββββββ
Vice President
Address for Notices:
ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββββββ β. ββββββββ
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT - Page 18
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SCHEDULE I
Locations of Collateral
[See Attached]
SCHEDULE I, Locations of Collateral
106
SCHEDULE II
Trademarks
[See Attached]
SCHEDULE II, Trademarks
107
SCHEDULE III
Patents
[See Attached]
SCHEDULE III, Patents
108
EXHIBIT "D-2"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Second Amended and Restated Subsidiary Security Agreement
109
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT (this
"Agreement") dated as of December 1, 1997 is by and among the undersigned
debtors (each, a "Debtor" and collectively, the "Debtors") and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association, as agent (in such
capacity, together with its successors and assigns in such capacity, the
"Agent") for itself, the Issuing Banks (hereinafter defined) and the Banks
(hereinafter defined).
R E C I T A L S:
A. HealthCor, Inc., a Delaware corporation ("HealthCor"),
HealthCor Holdings, Inc., a Delaware corporation (the "Borrower"), the Agent,
certain lenders (collectively, the "Existing Banks"), and the Existing Banks
issuing letters of credit thereunder (in such capacity, the "Existing Issuing
Banks") previously entered into that certain Amended and Restated Credit
Agreement dated as of October 31, 1996 (as amended, the "Existing Credit
Agreement").
B. Pursuant to the Existing Credit Agreement, each of the Debtors
(other than HealthCor and CareNetwork, Inc., an Arkansas corporation
("CareNetwork")) executed and delivered to the Agent an Amended and Restated
Subsidiary Security Agreement dated as of October 31, 1996 which secured the
obligations of the Borrower and Healthcor under the Existing Credit Agreement
(the "Existing Subsidiary Security Agreement").
C. Pursuant to the Existing Credit Agreement, HealthCor and
Borrower executed and delivered to the Agent an Amended and Restated Borrower
Security Agreement dated as of October 31, 1996 which secured the obligations
of the Borrower and Healthcor under the Existing Credit Agreement (the
"Existing Borrower Security Agreement").
D. Concurrently herewith the Borrower, the Agent, certain lenders
(together with any other lenders that may from time to time become a party
thereto, the "Banks"), and the Banks issuing letters of credit thereunder (in
such capacity, the "Issuing Banks") are entering into that certain Second
Amended and Restated Credit Agreement of even date herewith (as the same may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
E. HealthCor is not a borrower under the Credit Agreement,
provided that, in connection with the execution of the Credit Agreement,
HealthCor shall continue to guarantee the obligations of the Borrower under the
Credit Agreement, and HealthCor has agreed pursuant to the terms hereof to
ratify, reaffirm and continue its obligations under the Existing Borrower
Security Agreement.
F. HealthCor desires to amend and restate its obligations under
the Existing Borrower Security Agreement, as hereinafter provided, and has
agreed, for purposes of clarity and ease of
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 1
110
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Borrower Security Agreement and
consolidating and restating HealthCor's obligations under the Existing Borrower
Security Agreement, insofar as it relates to property of HealthCor, in its
entirety by means of this Agreement.
G. The Debtors (other than HealthCor and CareNetwork) desire to
amend and restate the Existing Subsidiary Security Agreement, as hereinafter
provided, and have agreed, for purposes of clarity and ease of administration,
to carry out the agreed upon amendments by amending the pertinent provisions of
the Existing Subsidiary Security Agreement and then restating the Existing
Subsidiary Security Agreement, insofar as it relates to property of the Debtors
(other than HealthCor), in its entirety by means of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows and the Existing Subsidiary
Security Agreement and HealthCor's obligations under the Existing Borrower
Security Agreement are hereby amended, consolidated and restated in their
entirety as follows::
ARTICLE I
Definitions; Security Interest
Section 1.1 Definitions. All capitalized terms used and not
otherwise defined herein shall have their respective meanings as set forth in
the Credit Agreement.
Section 1.2 Security Interest. Each Debtor hereby grants to the
Agent, for the benefit of itself, the Issuing Banks and the Banks, and ratifies
and confirms that the Agent has previously been granted and now possesses, a
security interest in the following property, whether now owned or existing or
hereafter acquired or arising and wherever arising or located (such property
being hereinafter sometimes called the "Collateral"):
(ACCOUNTS)
(a) All accounts, receivables, accounts receivable, general
intangibles, book debts, contract rights, instruments, and documents
(including, without limitation, all documents of title); (b) all
chattel paper, notes, drafts, acceptances, other evidences, and forms
of payment under leases of equipment or contracts for the sale of
inventory or the performance of services, and other forms of
obligations received by or belonging to such Debtor for goods sold or
leased and/or services rendered by such Debtor; (c) all of the rights
of such Debtor in, to, and under all purchase orders, sales contracts,
instruments, and other documents evidencing obligations for or
representing payment for goods sold or leased and/or services rendered
by such Debtor; and (d) all moneys due or to become due to such Debtor
under all contracts for the sale or lease of goods and/or the
performance of services by such Debtor; in each case of whatever
nature, now owned by such Debtor or existing or hereafter acquired,
created, or arising and the rights and
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 2
111
interests of such Debtor in goods, the sale and delivery of which give
rise to any and all proceeds of any of the foregoing Collateral
(including, but not limited to, all insurance and claims for insurance
in respect of the Collateral).
(INVENTORY)
All goods, merchandise, raw materials, goods in process,
finished goods, and other tangible personal property of whatever
nature now owned by such Debtor or hereafter from time to time
existing or acquired, and held for sale or lease or furnished or to be
furnished under contracts of service or used or usable or consumed or
consumable in such Debtor's business and all accessions and
appurtenances thereto, and all accounts, receivables, accounts
receivables, instruments, notes, chattel paper, documents (including,
without limitation, all documents of title), contract rights, and
general intangibles arising in connection with any of the foregoing
and all products and proceeds of any of the foregoing Collateral
(including, without limitation, all insurance and claims for insurance
effective or held for the benefit of such Debtor or the Agent in
respect of any of the foregoing Collateral).
(EQUIPMENT)
All goods, equipment, machinery, furnishings, fixtures,
furniture, appliances, accessories, leasehold improvements, chattels,
and other articles of personal property of whatever nature now owned
by such Debtor or hereafter acquired, all accessions and appurtenances
thereto, and all renewals or replacements of or substitutions for any
of the foregoing and all proceeds of any of the foregoing Collateral
(including, without limitation, all insurance and claims for insurance
in respect of any of the foregoing Collateral).
(TRADEMARKS AND PATENTS)
All trademarks and service marks now held or hereafter
acquired by the Debtor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the
United States or any state thereof or any political subdivision
thereof and any application for such trademarks and service marks, as
well as any unregistered marks used by the Debtor in the United States
and trade areas including logos, designs, trade names, company names,
business names, fictitious business names and other business
identifiers in connection with which any of these registered or
unregistered marks are used in the United States (collectively, the
"Marks"), together with the registrations and right to all renewals
thereof, and the goodwill of the business of the Debtor symbolized by
the Marks, all United States patents now or hereafter owned by the
Debtor, as well as any application for a United States patent now or
hereafter owned by the Debtor (collectively, the "Patents"), and
reissues, renewals or extensions thereof, and all know-how,
technology, inventions, processes, formulas, product formulations,
blueprints, drawings, test data, manuals, production documents,
procedures, product and manufacturing specifications or standards and
other tangible (physical, electronic or other)
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 3
112
manifestations of any Marks and Patents now or hereafter utilized in
the Debtor's business.
(INVESTMENT PROPERTY)
All investment property, including, without limitation, all
securities, whether certificated or uncertificated, investment
accounts or securities accounts, and security entitlements which may
be carried in a securities account now owned by the Debtor or
hereafter from time to time existing or acquired, and all proceeds of
any of the foregoing Collateral (including, but not limited to, all
insurance claims for insurance in respect of any of the foregoing
Collateral).
Section 1.3 Obligations. The Collateral shall secure the
following obligations, indebtedness, and liabilities (all such obligations,
indebtedness, and liabilities being hereinafter sometimes called the
"Obligations"): (a) the obligations, indebtedness, and liabilities of the
Borrower to the Banks and the Issuing Banks evidenced by the Revolving Credit
Notes (herein so called) executed by the Borrower pursuant to the Credit
Agreement; (b) the obligations, indebtedness, and liabilities of each Debtor to
the Agent, the Issuing Banks and the Banks under that certain Second Amended
and Restated Subsidiary Guaranty of even date herewith, executed by such Debtor
in favor of the Agent, the Issuing Banks and the Banks pursuant to the Credit
Agreement; (c) the obligations, indebtedness, and liabilities of the Borrower
to the Agent, the Issuing Banks and the Banks under the Credit Agreement; (d)
all future advances by the Banks and the Issuing Banks to the Borrower and any
Debtor, or any of them; (e) all costs and expenses, including without
limitation all attorneys' fees and legal expenses incurred by the Agent, the
Issuing Banks and the Banks to preserve and maintain the Collateral, collect
the obligations herein described, and enforce this Agreement; (f) all other
Obligations (as such term is defined in the Credit Agreement); and (g) all
extensions, renewals, and modifications of any of the foregoing.
Section 1.4 Renewal of Obligations and Liens. The parties hereto
acknowledge and agree that (i) the Revolving Credit Notes are in renewal,
extension and modification, but not in extinguishment of, the existing
indebtedness under the Existing Credit Agreement, and (ii) such existing
indebtedness is secured by liens and security interests granted by (a) the
Debtors (other than HealthCor) pursuant to the Existing Subsidiary Security
Agreement and (b) HealthCor and the Borrower pursuant to the Existing Borrower
Security Agreement, which liens and security interests granted by the Debtors
(including, without limitation, HealthCor) are not extinguished or released,
but instead are hereby renewed, extended, carried forward and continued in
accordance with the terms of this Agreement.
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 4
113
ARTICLE II
Representations and Warranties
To induce the Agent to enter into this Agreement and to induce the
Banks and the Issuing Banks to extend credit to the Borrower under the Credit
Agreement, each Debtor represents and warrants to the Agent, the Issuing Banks
and the Banks that:
Section 2.1 Title. Except for the Permitted Liens, such Debtor
owns, and with respect to Collateral acquired after the date hereof such Debtor
will own, the Collateral free and clear of any Lien.
Section 2.2 Accounts. Each Debtor represents, warrants, and
covenants that each and all of its accounts will meet the following
requirements continuously from the time each of them comes into existence until
it is collected in full: (a) the account arose from the performance of
services by such Debtor which services have been fully and satisfactorily
performed or from the absolute sale of goods by such Debtor in which such
Debtor had the sole and complete ownership, and the goods have been shipped or
delivered to the account debtor, evidencing which such Debtor or the Agent has
possession of shipping and delivery receipts; (b) the account is not subject to
setoff, counterclaim, defense, allowance or adjustment other than discounts for
prompt payment shown on the invoice, or to dispute, objection or complaint by
the account debtor concerning his or its liability on the account, and the
goods, the sale of which gives rise to the account, have not been returned,
rejected, lost, or damaged; (c) the account arose in the ordinary course of
such Debtor's business, and no notice of bankruptcy, insolvency, or financial
embarrassment of the account debtor has been received by such Debtor; and (d)
such Debtor shall notify the Agent promptly in writing when any account ceases
to meet any of the requirements of this Agreement. Nothing in this Section
shall be construed to limit or release any right of the Agent to any Collateral
arising pursuant to Section 1.2 of this Agreement.
Section 2.3 Financing Statements. No financing statement,
security agreement, or other lien instrument covering all or any part of the
Collateral is on file in any public office, except as may have been filed in
favor of the Agent or to perfect any Permitted Lien.
Section 2.4 Organization and Authority. Each Debtor is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation. Each Debtor has the corporate power
and authority to execute, deliver, and perform this Agreement, and the
execution, delivery, and performance of this Agreement by such Debtor (a) have
been authorized by all necessary corporate action on the part of such Debtor,
(b) do not and will not violate (i) any law, rule or regulation which violation
would have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of such Debtor, the Collateral
taken as a whole, or the ability of the Companies to pay and perform the
Obligations, or (ii) the articles or certificate of incorporation or bylaws of
such Debtor, and (c) do not and will not conflict with, result in a breach of,
or constitute a default under the provisions of any material indenture,
mortgage, deed of trust, security agreement, instrument or agreement pursuant
to which such Debtor or any of its property is bound.
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Section 2.5 Principal Place of Business. The principal place of
business and chief executive office of each Debtor, and the office where each
Debtor keeps its books and records, is located at the address of such Debtor
shown below its name on the signature pages hereof.
Section 2.6 Location of Collateral. All inventory, machinery,
and equipment (except for inventory, machinery and equipment which is not,
individually or in the aggregate, material in value or to the business of any
Debtor) of each Debtor are located at the locations specified on Schedule I
hereto or at other locations within the continental United States of America in
the ordinary course of each Debtor's business so long as all actions have been
taken to assure the continued perfection and priority of the Agent's security
interest therein.
ARTICLE III
Covenants
The Debtors jointly and severally covenant and agree with the Agent,
the Issuing Banks and the Banks that until the Obligations are paid and
performed in full and all Commitments of the Banks and the Issuing Banks to the
Borrower have been terminated:
Section 3.1 Maintenance. Each Debtor shall maintain the
Collateral in good operating condition and repair, and no Debtor shall permit
any waste or destruction of the Collateral or any part thereof except for the
ordinary wear and tear of its intended primary use. No Debtor shall use or
permit the Collateral to be used in violation of any law or inconsistently with
the terms of any policy of insurance. No Debtor shall use or permit the
Collateral to be used in any manner or for any purpose that would impair the
value of the Collateral or expose the Collateral to unusual risk.
Section 3.2 Encumbrances. No Debtor shall create, permit, or
suffer to exist, and each Debtor shall defend the Collateral against, any Lien
on the Collateral except Permitted Liens, and shall defend such Debtor's rights
in the Collateral and the Agent's security interest in the Collateral against
the claims of all Persons.
Section 3.3 Modification of Collateral. No Debtor shall do
anything to impair the rights of the Agent in the Collateral. Without the
prior written consent of the Agent, no Debtor shall during the continuance of
an Event of Default (a) grant any extension of time for any payment with
respect to the Collateral, (b) compromise, compound, or settle any of the
Collateral, (c) release in whole or in part any person or entity liable for
payment with respect to the Collateral, (d) allow any credit or discount for
payment with respect to the Collateral other than normal trade discounts
granted in the ordinary course of business and other adjustments, such as bad
debt expense, made in the ordinary course of business, (e) release any lien,
security interest, or assignment securing the Collateral, or (f) otherwise
amend or modify any of the Collateral.
Section 3.4 Disposition of Collateral. No Debtor shall sell,
lease, assign, transfer or otherwise dispose of any of the Collateral except
dispositions of old, worn out or obsolete equipment and inventory in the
ordinary course of business.
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Section 3.5 Further Assurances. At any time and from time to
time, upon the request of the Agent, and at the sole expense of the Debtors,
each Debtor shall promptly execute and deliver all such further instruments and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statements as the Agent
may require. A carbon, photographic, or other reproduction of this Agreement
or of any financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement and may be filed as a financing
statement. Each Debtor shall promptly endorse and deliver to the Agent all
documents, instruments, and chattel paper that it now owns or may hereafter
acquire.
Section 3.6 Risk of Loss; Insurance. The Debtors shall be
responsible for any loss of or damage to the Collateral. Each Debtor shall
maintain, with financially sound and reputable companies, insurance policies
(i) insuring the Collateral against loss by fire, explosion, theft, and such
other risks and casualties as are customarily insured against by companies
engaged in the same or a similar business, and (ii) insuring such Debtor and
the Agent against liability for personal injury and property damage relating to
the Collateral, such policies to be in such amounts and covering such risks as
are customarily insured against by companies engaged in the same or a similar
business, but at least in the amounts specified in the Credit Agreement, with
losses payable to such Debtor and the Agent, as their respective interests may
appear. All insurance with respect to the Collateral shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. Each Debtor shall furnish the Agent with certificates or other
evidence satisfactory to the Agent of compliance with the foregoing insurance
provisions. Each Debtor shall deliver to the Agent upon demand copies of all
insurance policies covering the Collateral or any part thereof.
Section 3.7 Inspection Rights. Each Debtor shall permit the
Agent, the Banks, the Issuing Banks and their representatives, upon one (1)
Business Day's prior notice, to examine or inspect the Collateral wherever
located and to examine, inspect, and copy such Debtor's books and records at
any reasonable time and as often as they may desire. The Agent may at any time
and from time to time contact account debtors and other obligors to verify the
existence, amounts, and terms of any Debtor's accounts.
Section 3.8 Mortgagee's and Landlord Waivers. The Debtors shall
deliver to the Agent an instrument satisfactory in form and substance to the
Agent, executed by the landlord of the premises located at ββββ βββββ βββββββ
ββββββββββ, βββββ β-ββββ, ββββββ, βββββ βββββ, by which such landlord waives or
subordinates its rights, if any, in the Collateral. With respect to all other
locations of Collateral, upon the request of the Agent at any time, each Debtor
shall exert its best efforts to cause each mortgagee of real property owned by
such Debtor and each landlord of real property leased by such Debtor to execute
and deliver instruments satisfactory in form and substance to the Agent by
which such mortgagee or landlord waives or subordinates its rights, if any, in
the Collateral.
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Section 3.9 Notification. Each Debtor shall promptly notify the
Agent of (i) any Lien or material claim made or threatened against the
Collateral, (ii) any material change in the Collateral, including, without
limitation, any material damage to or loss of the Collateral, and (iii) the
occurrence or existence of any Default.
Section 3.10 Corporate Changes. No Debtor shall change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading, unless
such Debtor shall have given the Agent thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by the
Agent to make each financing statement not seriously misleading. No Debtor
shall change its principal place of business, chief executive office, or the
place where it keeps its books and records, unless it shall have given the
Agent thirty (30) days prior written notice thereof and shall have taken all
action deemed necessary or desirable by the Agent to cause its security
interest in the Collateral to be perfected with the priority required by this
Agreement.
Section 3.11 Books and Records; Information. Each Debtor shall
keep books and records of the Collateral and such Debtor's business and
financial condition in accordance with GAAP (subject to year-end adjustments
and disclosures). Each Debtor shall from time to time at the request of the
Agent deliver to the Agent such information regarding the Collateral and such
Debtor as the Agent may request, including, without limitation, lists and
descriptions of the Collateral and evidence of the identity and existence of
the Collateral. Upon request of the Agent, each Debtor shall ββββ its books
and records to reflect the security interest of the Agent under this Agreement.
Section 3.12 Location of Collateral. No Debtor shall move any of
its equipment, machinery or inventory from the locations specified herein
without the prior written consent of the Agent, except to other locations
within the continental United States of America in the ordinary course of
business so long as all actions have been taken to assure the continued
perfection and priority of the Agent's security interest therein.
Section 3.13 Lockbox Accounts. Each Debtor hereby agrees to the
terms, provisions and covenants set forth in Section 6.2 of the Credit
Agreement and the rights of the Agent thereunder, and hereby agrees to comply
with each of the requirements specified therein.
ARTICLE IV
Special Provisions Concerning Marks
Section 4.1 Additional Representations and Warranties. Each
Debtor represents and warrants that it is the true and lawful exclusive owner
of the Marks listed as being owned by it in Schedule II hereto and that, as of
the date hereof, the listed Marks include all the United States federal
registrations or applications registered in the United States Patent and
Trademark Office which are necessary for such Debtor's business as currently
operated. Each Debtor represents and warrants that it owns or is licensed to
use or is not prohibited from using all Marks that it uses. Each Debtor
further warrants that it is aware of no third party claim (which could have
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a material adverse effect on the business, condition (financial or otherwise),
operations, propsects, or properties of such Debtor) that any aspect of such
Debtor's present or contemplated business operations infringes or will infringe
any ββββ. Each Debtor represents and warrants that it is the owner of record
of all United States registrations and applications listed as being owned by it
in Schedule II hereto and that such registrations are valid, subsisting, have
not been cancelled and that such Debtor is not aware of any third-party claim
(which could have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or properties of such Debtor)
that any such registration is invalid or unenforceable. Each Debtor hereby
grants to the Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of an Event of Default, any document which may be
required by the United States Patent and Trademark Office in order to effect an
absolute assignment of all right, title and interest in each such ββββ and
associated goodwill, and record the same.
Section 4.2 Licenses and Assignments. Other than the license
agreements listed on Schedule II hereto and any extensions or renewals thereof,
each Debtor hereby agrees not to divest itself of any right under any ββββ
except those such Debtor reasonably determines are not necessary for the
conduct of its business.
Section 4.3 Infringements. Each Debtor agrees, promptly upon
learning thereof, to notify the Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect
to, any party who may be infringing or otherwise violating any of such Debtor's
rights in and to any ββββ, or with respect to any party claiming that such
Debtor's use of any ββββ violates any property right of that party, in each
case to the extent that such Debtor reasonably believes that such infringement
or violation is material to its business. Each Debtor further agrees, if
consistent with good business practice, diligently to prosecute any Person
infringing any ββββ to the extent that such Debtor reasonably believes that
such infringement is material to its business.
Section 4.4 Preservation of Marks. To the extent the failure to
do so would cause a material adverse effect on the business, condition
(financial or otherwise), operations, prospects or properties of each Debtor
and such Debtor reasonably believes it to be consistent with good business
practice, such Debtor agrees to use its Marks in interstate commerce during the
time in which this Agreement is in effect, sufficiently to preserve such Marks
as trademarks or service marks registered under the laws of the United States.
Section 4.5 Maintenance of Registration. To the extent the
failure to do so would cause a material adverse effect on the business,
condition (financial or otherwise), operations, prospects or properties of any
Debtor and any Debtor reasonably believes it to be consistent with good
business practice, such Debtor shall, at its own expense, diligently process
all documents required by the Trademark Act of 1946, 15 U.S.C. Sections 1051
et seq. to maintain trademark registration, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its Marks pursuant to 15
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U.S.C. Sections 1058(a), 1059 and 1065, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all reasonable administrative and judicial remedies without prior written
consent of Required Banks.
Section 4.6 Future Registered Marks. If any ββββ registration
issues hereafter to any Debtor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty
(30) days of receipt of such certificate such Debtor shall deliver a copy of
such certificate, and a grant of security in such ββββ to the Agent, confirming
the grant thereof hereunder, the form of such confirmatory grant to be
satisfactory to the Agent.
Section 4.7 Remedies. If an Event of Default shall occur and be
continuing, the Agent may, after ten (10) days' written notice to the Debtors,
take any or all of the following actions: (i) declare the entire right, title
and interest of any Debtor in and to each of the Marks and the good will of the
business associated therewith, together with all trademark rights and rights of
protection to the same, vested, in which event such rights, title and interest
shall immediately vest, in the Agent for the benefit of the Banks and the
Issuing Banks, in which case the Agent shall be entitled to exercise the power
of attorney referred to in Section 4.1 to execute, cause to be acknowledged and
notarized and record said absolute assignment with the applicable agency; (ii)
take and use or sell the Marks and the goodwill of any Debtor's businesses
symbolized by the Marks and the right to carry on the businesses and use the
assets of any Debtor in connection with which the Marks have been used; and
(iii) direct any Debtor to refrain, in which event such Debtor shall refrain,
from using the Marks in any manner whatsoever, directly or indirectly, and
execute such other and further documents that the Agent may request to further
confirm this and to transfer ownership of the Marks and registrations and any
pending trademark application in the United States Patent and Trademark Office
or any equivalent government agency or office in any foreign jurisdiction to
the Agent.
ARTICLE V
Special Provisions
Concerning Patents
Section 5.1 Additional Representations and Warranties. Each
Debtor represents and warrants that it is the true and lawful exclusive owner
of all rights in the Patents listed as being owned by it in Schedule III hereto
that, as of the date hereof, said Patents include all the United States patents
and applications for United States patents that such Debtor now owns which are
necessary for such Debtor's business as currently operated. Each Debtor
represents and warrants that it owns or is licensed to practice under all
Patents that it now uses or practices under. Each Debtor further warrants that
it is aware of no third party claim (which could have a material adverse effect
on the business condition (financial or otherwise), operations, prospects or
properties of such Debtor) that any aspect of such Debtor's present or
contemplated business
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operations infringes or will infringe any patent. Each Debtor hereby grants to
the Agent an absolute power of attorney to sign, upon the occurrence and during
the continuance of any Event of Default, any document which may be required by
the United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent and record the same.
Section 5.2 Licenses and Assignments. Other than the license
agreements listed on Schedule III hereto and any extensions or renewals
thereof, each Debtor hereby agrees not to divest itself of any right under any
Patent except those Patents such Debtor reasonably determines are not necessary
for the conduct of its business.
Section 5.3 Infringements. Each Debtor agrees, promptly upon
learning thereof, to furnish the Agent in writing with all pertinent
information available to such Debtor with respect to any infringement or other
violation of such Debtor's rights in any Patent, or with respect to any claim
that practice of any Patent violates any property rights of that party, in each
case to the extent that such Debtor reasonably believes that such infringement
or violation is material to its business. Each Debtor further agrees,
consistent with good business practice and absent direction of the Agent to the
contrary (which direction shall only be given if an Event of Default shall have
occurred and be continuing, diligently to prosecute any Person infringing any
Patent to the extent that such Debtor reasonably believes that such
infringement is material to its business.
Section 5.4 Maintenance of Patents. At its own expense, each
Debtor shall make timely payment of all post-issuance fees required pursuant to
35 U.S.C. Section 41 to maintain in force rights under each Patent to the
extent such Debtor reasonably believes it to be consistent with good business
practice and failure to do so would cause a material adverse effect on the
business, condition (financial or otherwise), operations, prospects or
properties of such Debtor.
Section 5.5 Prosecution of Patent Application. At its own
expense, each Debtor shall diligently prosecute all applications for Patents
listed as being owned by it in Schedule III hereto and shall not abandon any
such application prior to exhaustion of all reasonable administrative and
judicial remedies, to the extent such Debtor reasonably believes it to be
consistent with good business practice and failure to do so would cause a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects or properties of such Debtor.
Section 5.6 Other Patents. Within thirty (30) days of
acquisition of a Patent, or of filing of an application for a Patent, each
Debtor shall deliver to the Agent a copy of said Patent or such application, as
the case may be, with a grant of security as to such Patent, as the case may
be, confirming the grant thereof hereunder, the form of such confirmatory grant
to be satisfactory to the Agent.
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Section 5.7 Remedies. If an Event of Default shall occur and be
continuing, the Agent may after ten (10) days' written notice to the Debtors,
take any or all of the following actions: (i) declare the entire right, title,
and interest of any Debtor in each of the Patents vested, in which event such
right, title, and interest shall immediately vest in the Agent for the benefit
of the Banks and the Issuing Banks, in which case the Agent shall be entitled
to exercise the power of attorney referred to in Section 5.1 to execute, cause
to be acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents; and (iii) direct
any Debtor to refrain, in which event such Debtor shall refrain, from
practicing the Patents directly or indirectly, and each Debtor shall execute
such other and further documents as the Agent may request further to confirm
this and to transfer ownership of the Patents to the Agent for the benefit of
the Banks and the Issuing Banks.
ARTICLE VI
Rights of the Agent
Section 6.1 Certain Covenants and Rights Regarding the
Collateral.
(a) Each Debtor shall from time to time at the request of
the Agent furnish the Agent with a schedule of each account included
in the Collateral and a list of all those liable on checks, notes,
drafts, and other instruments representing the proceeds of such
accounts. The Agent shall have the right to make test verifications
of the Collateral. If any part of the Collateral is or becomes
subject to the Federal Assignment of Claims Act, the Debtor whose
Collateral has been affected thereby will execute all instruments and
take all steps required by the Agent to comply with that act. If part
of the Collateral is evidenced by promissory notes, trade acceptances
or other instruments for the payment of money, each Debtor will, at
the request of the Agent, immediately deliver them to the Agent,
appropriately endorsed to the Agent's order, and regardless of the
form of endorsement, such Debtor waives presentment, demand, notice of
dishonor, protest, and notice of protest.
(b) If the validity or priority of this Agreement or of
any rights, titles, security interests or other interests created or
evidenced hereby shall be attacked, endangered, or questioned, or if
any legal proceedings are instituted with respect thereto, each Debtor
will give prompt written notice thereof to the Agent and, at the
Debtors' own cost and expense, will diligently endeavor to cure any
defect which may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings, and the
Agent (whether or not named as a party to the legal proceedings with
respect thereto) is hereby authorized and empowered to take such
additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection
of the validity or priority of this Agreement and the rights, titles,
security interests, and other interests created or evidenced hereby,
and all expenses so incurred of
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every kind and character shall be a demand obligation owing by the
Debtors and the party incurring such expenses shall be subrogated to
all rights of the Person receiving such payment.
(c) During the existence of an Event of Default, the
Agent is authorized to take possession peaceably of the Collateral and
of all books, records and accounts relating thereto, and to exercise
without interference from the Debtors any and all rights which any
such Debtor has with respect to the management, possession,
protection, or preservation of the Collateral. If necessary to obtain
the possession provided for above, the Agent may invoke any and all
legal remedies to dispossess any such Debtor, including specifically
one or more actions for forcible entry and detainer. In connection
with any action taken by the Agent pursuant to this Section, the Agent
shall not be liable for any loss sustained by any Debtor resulting
from any act or omission of the Agent unless such loss is caused by
the willful misconduct and bad faith of the Agent, nor shall the Agent
be obligated to perform or discharge any obligation, duty, or
liability under any sale or lease agreement covering the Collateral or
any part thereof, or under or by reason of this Agreement or exercise
of rights or remedies hereunder.
(d) At any time during the existence of a Default the
Agent may notify the account debtors or obligors of any accounts,
chattel paper, negotiable instruments, or other evidences of
indebtedness included in the Collateral to pay the Agent directly.
Until the Agent elects to exercise these rights, each Debtor is
authorized as agent of the Agent to collect and enforce such accounts.
The costs of collection and enforcement, including attorneys' fees and
expenses, shall be borne solely by the Debtors whether incurred by the
Agent or the Debtors.
Section 6.2 Performance by the Agent. If any of the Debtors
fails to perform or comply with any of its obligations or agreements contained
herein, the Agent itself may, at its sole discretion, cause or attempt to cause
performance or compliance with such agreement. In such event, the expenses of
the Agent shall be payable by the Debtors to the Agent on demand and together
with interest thereon at the Applicable Rate from and including the date the
Agent incurs such expenses to but excluding the date of such demand, and from
and including the date of such demand until such expenses are paid in full, at
the Default Rate, shall constitute Obligations secured by this Agreement. The
Agent, upon making such payment, shall be subrogated to all of the rights of
the Person receiving such payment. Notwithstanding the foregoing, it is
expressly agreed that the Agent shall not have any liability or responsibility
for the performance of any obligation of any Debtor under this Agreement.
Section 6.3 Setoff; Property Held by the Agent. If an Event of
Default shall have occurred and be continuing, the Agent shall have the right
to set off and apply against the Obligations, at any time and without notice to
any Debtor, any and all deposits (general or special, time or demand,
provisional or final) (other than trust fund accounts held by any Debtor
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for the benefit of non-Affiliates) or other sums at any time credited by or
owing from the Agent to any Debtor whether or not the Obligations are then due.
As additional security for the Obligations, each Debtor hereby grants the Agent
a security interest in all money, instruments, and other property of such
Debtor (other than trust fund accounts held by such Debtor for the benefit of
non-Affiliates) now or hereafter held by the Agent. In addition to the Agent's
right of setoff and as further security for the Obligations, each Debtor hereby
grants the Agent a security interest in all deposits (general or special, time
or demand, provisional or final) and other accounts of such Debtor (other than
trust fund accounts held by such Debtor for the benefit of non-Affiliates) now
or hereafter deposited with or held by the Agent and all other sums at any time
credited by or owing from the Agent to such Debtor. The rights and remedies of
the Agent hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent may have.
Section 6.4 Assignment by the Agent. Subject to Section 14.7 of
the Credit Agreement, the Agent, the Banks and the Issuing Banks may from time
to time assign the Obligations and any portion thereof, and/or the Collateral
and any portion thereof, and the assignee shall be entitled to all of the
rights and remedies of such Person under this Agreement in relation thereto.
ARTICLE VII
Default
Section 7.1 Rights and Remedies. During the existence of an
Event of Default, the Agent shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted
to the Agent in this Agreement and in any other instrument or
agreement securing, evidencing, or relating to the Obligations or any
part thereof, the Agent shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as adopted by the
State of Texas. Without limiting the generality of the foregoing, the
Agent may (A) without demand or notice to any Debtor, collect,
receive, or take possession of the Collateral or any part thereof and
for that purpose the Agent may enter upon any premises on which the
Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (B) sell, lease, or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Agent's offices or elsewhere, for cash,
on credit, or for future delivery. Upon the request of the Agent, each
Debtor shall assemble the Collateral and make it available to the
Agent at any place designated by the Agent that is reasonably
convenient to such Debtor and the Agent. Each Debtor agrees that the
Agent shall not be obligated to give more than ten (10) days prior
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Each Debtor
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shall be jointly and severally liable for all expenses of retaking,
holding, preparing for sale, or the like, and all attorneys' fees,
legal expenses, and all other costs and expenses incurred by the Agent
in connection with the collection of the Obligations and the
enforcement of the Agent's rights under this Agreement. The Debtors
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay the Obligations
in full. Each Debtor waives all rights of marshalling in respect of
the Collateral.
(ii) The Agent may cause any or all of the Collateral held
by it to be transferred into the name of the Agent or the name or
names of the Agent's nominee or nominees.
Section 7.2 Application of Proceeds of Sale. The proceeds of any
sale of Collateral pursuant to Section 7.1 hereof, as well as any Collateral
consisting of cash, shall be applied by the Agent as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses incurred by the Agent in connection with such sale or
otherwise in connection with this Agreement or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees
and expenses of its agents and one legal counsel, the repayment of all
advances made hereunder or under any other Loan Document by the Agent
on behalf of any Debtor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder;
SECOND, to the payment in full of all other Obligations that
are payable to the Agent, including, without limitation, all expense
reimbursements and indemnities;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses incurred by the Issuing Banks in connection with the
Credit Agreement, any Letter of Credit, or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees
and expenses of their agents and one legal counsel;
FOURTH, to the payment in full of all other Obligations that
are payable to the Issuing Banks, including, without limitation, all
Letter of Credit disbursements and all accrued and unpaid interest
thereon and all Letter of Credit fees;
FIFTH, to the payment in full of the Obligations, pro rata
among the Banks in accordance with the amounts of the Loans held by
them, or, if no Loans shall be outstanding, in accordance with the
amounts of their Commitments;
SIXTH, if any Letter of Credit remains outstanding, the Agent,
after making the applications required by paragraphs "FIRST" through
"FIFTH" above,
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 15
124
shall hold back and retain as Collateral for the Obligations an amount
equal to the aggregate face amounts of all outstanding Letters of
Credit; and
SEVENTH, provided that all of the Obligations have been paid
and performed in full and all Commitments and Letters of Credit have
terminated, to the Debtors or their successors or assigns, or to
whomsoever may lawfully be entitled to the same, or as a court of
competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Agent (including, without limitation, a
sale pursuant to any applicable Uniform Commercial Code or under a judicial
proceeding), the receipt of the Agent or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Agent or such
officer or be answerable in any way for the misapplication thereof.
ARTICLE VIII
Miscellaneous
Section 8.1 No Waiver; Cumulative Remedies. No failure on the
part of the Agent to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 8.2 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Debtors, the Agent, the Banks and
the Issuing Banks and their respective heirs, successors, and assigns, except
that no Debtor may assign any of its rights or obligations under this Agreement
without the prior written consent of the Agent. The provisions of this
Agreement shall apply to each Debtor, individually and collectively.
Section 8.3 AMENDMENT; ENTIRE AGREEMENT; CONTROLLING AGREEMENT.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (INCLUDING THE EXISTING BORROWER
SECURITY AGREEMENT AND THE EXISTING SUBSIDIARY SECURITY AGREEMENT) EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto. In the
event any term or provision of this Agreement
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 16
125
expressly conflicts with any term or provision of the Credit Agreement, the
terms and provisions of the Credit Agreement shall govern and control.
Section 8.4 Notices. All notices and other communications
provided for in this Agreement shall be given or made in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid.
Section 8.5 Applicable Law; Venue; Service of Process. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION OR PROCEEDING
AGAINST ANY DEBTOR UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INSTRUMENT OR AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE OBLIGATIONS OR
ANY PART THEREOF MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY,
TEXAS. EACH DEBTOR HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. EACH DEBTOR AGREES THAT
SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 8.4 OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR
ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE
OBLIGATIONS OR ANY PART THEREOF SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY DEBTOR OR WITH RESPECT TO
ANY OF THE COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER JURISDICTION.
ANY ACTION OR PROCEEDING BY ANY DEBTOR AGAINST THE AGENT SHALL BE BROUGHT ONLY
IN A COURT LOCATED IN DALLAS COUNTY, TEXAS.
Section 8.6 Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 17
126
Section 8.7 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Agent, any Bank or Issuing Bank shall
affect the representations and warranties of any Debtor herein or the right of
the Agent, the Banks and the Issuing Banks to rely upon them.
Section 8.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.9 Waiver of Bond. In the event the Agent seeks to take
possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 8.10 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 8.11 Construction. Each Debtor and the Agent acknowledge
that each of them has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement with its legal
counsel and that this Agreement shall be construed as if jointly drafted by the
Debtors and the Agent.
Section 8.12 Obligations Absolute. The obligations of each Debtor
under this Agreement shall be absolute and unconditional and shall not be
released, discharged, reduced, or in any way impaired by any circumstance
whatsoever, including, without limitation, any amendment, modification,
extension, or renewal of this Agreement, the Obligations, or any document or
instrument evidencing, securing, or otherwise relating to the Obligations, or
any release or subordination of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.
Section 8.13 Release of Security Interest. At such time as all of
the Obligations have been paid and performed in full, all obligations and
commitments of the Banks and the Issuing Banks to make advances, issue letters
of credit or otherwise extend credit under the Credit Agreement have expired or
terminated, and no Letters of Credit remain outstanding, the Agent shall
release the security interest granted hereby.
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 18
127
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTORS:
HEALTHCOR, INC.
HEALTHCOR PHARMACY, INC.
HEALTHCOR OXYGEN AND MEDICAL
EQUIPMENT, INC.
PHYSICIANS HOME HEALTH NETWORK, INC.
HEALTHCOR REHABILITATION SERVICES,
INC.
HC PERSONNEL RESOURCES, INC.
CARENETWORK, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Address: ββββ βββββ βββββββ ββββββββββ
βββββ β-ββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Tel. No.: (βββ) βββ-ββββ
Attn: S. βββββ ββββββ
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 19
128
THE AGENT:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent
By:
----------------------------------------
ββββββ β. ββββββββ,
Vice President
Address: ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Fax No.: (βββ) βββ-ββββ
Tel. No.: (βββ) βββ-ββββ
Attn: ββββββ β. ββββββββ
SECOND AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT - Page 20
129
SCHEDULE 1
Locations of Collateral
[See Attached]
SCHEDULE I, Locations of Collateral
130
EXHIBIT "E"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Second Amended and Restated Subsidiary Guaranty
131
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
This SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY (this
"Guaranty"), executed as of December 1, 1997, by the undersigned guarantors
(each, a "Guarantor" and collectively, the "Guarantors"), is a condition to the
extension of credit in the form of loans and letters of credit under the Credit
Agreement (hereinafter defined).
R E C I T A L S:
A. HealthCor, Inc., a Delaware corporation ("HealthCor"),
HealthCor Holdings, Inc., a Delaware corporation (the "Borrower"), certain
lenders (collectively, the "Existing Banks"), and the Existing Banks issuing
letters of credit thereunder (in such capacity, the "Existing Issuing Banks")
and Texas Commerce Bank National Association, a national banking association,
as agent for itself, the Existing Banks and the Existing Issuing Banks (in such
capacity, the "Agent") previously entered into that certain Amended and
Restated Credit Agreement dated as of October 31, 1996 (as amended, the
"Existing Credit Agreement").
B. Pursuant to the Existing Credit Agreement, each of the
Guarantors (other than HealthCor and CareNetwork, Inc., an Arkansas corporation
("CareNetwork")) executed and delivered to the Agent an Amended and Restated
Subsidiary Guaranty dated as of October 31, 1996, which secured the obligations
of the Borrowers under the Existing Credit Agreement (the "Existing Subsidiary
Guaranty").
C. Pursuant to the Existing Credit Agreement, HealthCor and the
Borrower executed and delivered to the Agent an Amended and Restated Borrower
Guaranty dated as of October 31, 1996 which with respect to HealthCor, secured
the obligations of the Borrower under the Existing Credit Agreement and with
respect to Borrower, secured the obligations of HealthCor under the Existing
Credit Agreement (the "Existing Borrower Guaranty").
D. Concurrently herewith the Borrower, the Agent, certain lenders
(together with any other lenders that may from time to time become a party
thereto, the "Banks"), and the Banks issuing letters of credit thereunder (in
such capacity, the "Issuing Banks") are entering into that certain Second
Amended and Restated Credit Agreement of even date herewith (as the same may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
E. In connection with the execution of the Credit Agreement,
HealthCor shall continue to guarantee the obligations of the Borrower under the
Credit Agreement and has hereby agreed to ratify, reaffirm and continue its
obligations under the Existing Borrower Guaranty.
F. HealthCor desires to amend and restate its obligations under
the Existing Borrower Guaranty, as hereinafter provided, and has agreed, for
purposes of clarity and ease of administration, to carry out the agreed upon
amendments by amending the pertinent provisions
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 1
132
of the Existing Borrower Guaranty and consolidating and restating HealthCor's
obligations under the Existing Borrower Guaranty in their entirety by means of
this Guaranty.
G. The remaining parties hereto now also desire to amend and
restate the Existing Subsidiary Guaranty as hereinafter provided and have
agreed, for purposes of clarity and ease of administration, to carry out the
agreed upon amendments by amending the pertinent provisions of the Existing
Subsidiary Guaranty and restating the Existing Subsidiary Guaranty in its
entirety by means of this Guaranty.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Guarantors hereby jointly and severally,
and irrevocably and unconditionally, guarantee to the Agent, the Banks and the
Issuing Banks the full and prompt payment and performance of the Guaranteed
Indebtedness (hereinafter defined) on the following terms and the Existing
Subsidiary Guaranty and HealthCor's obligations under the Existing Borrower
Guaranty are hereby amended and restated in their entirety as follows:
1. The term "Guaranteed Indebtedness", as used herein, means all
of the "Obligations", as defined in the Credit Agreement. The term "Guaranteed
Indebtedness" shall include any and all post-petition interest and expenses
(including reasonable attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law. All other capitalized terms used
and not otherwise defined herein shall have their respective meanings as set
forth in the Credit Agreement.
2. The parties hereto acknowledge and agree that (i) the
Revolving Credit Notes renew, extend and modify, but do not extinguish the
existing indebtedness of the Borrower and HealthCor under the Existing Credit
Agreement, and (ii) such existing indebtedness is guaranteed by the Guarantors
(other than HealthCor and CareNetwork) pursuant to the Existing Subsidiary
Guaranty and, with respect to HealthCor, pursuant to the Existing Borrower
Guaranty, which Existing Subsidiary Guaranty and HealthCor's obligations under
the Existing Borrower Guaranty are hereby amended, restated and consolidated in
accordance with the terms of this Guaranty.
3. This instrument shall be an absolute, continuing, irrevocable,
and unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Borrower may have against the
Agent or any Bank or Issuing Bank, or any other party, or which any Guarantor
may have against the Borrower, the Agent, or any Bank or Issuing Bank, or any
other party, shall be available to, or shall be asserted by, any Guarantor
against the Agent, or any Bank or Issuing Bank, or any subsequent holder of the
Guaranteed Indebtedness or any part thereof or against payment of the
Guaranteed Indebtedness or any part thereof.
4. The obligations of each Guarantor hereunder shall be limited
to an aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or to being set aside, avoided,
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 2
133
or annulled under any applicable state law relating to fraudulent transfers or
fraudulent obligations.
5. If any Guarantor becomes liable for any indebtedness owing by
the Borrower to the Agent or any Bank or Issuing Bank by endorsement or
otherwise, other than under this Guaranty, such liability shall not be in any
manner impaired or affected hereby, and the rights of the Agent, the Banks and
the Issuing Banks hereunder shall be cumulative of any and all other rights
that the Agent, the Banks and the Issuing Banks may ever have against any
Guarantor. The exercise by the Agent or any Bank or Issuing Bank of any right
or remedy hereunder or under any other instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any other right or
remedy.
6. In the event of default by the Borrower in payment or
performance of the Guaranteed Indebtedness, or any part thereof, when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration, or
otherwise, each Guarantor jointly and severally agrees to promptly pay the
amount due thereon to the Agent, for the pro rata benefit of the Banks and the
Issuing Banks, without notice or demand in lawful currency of the United States
of America and it shall not be necessary for the Agent or any Bank or Issuing
Bank, in order to enforce such payment by any Guarantor, first to institute
suit or exhaust its remedies against the Borrower, any Guarantor or other
Person liable on such Guaranteed Indebtedness, or to enforce any rights against
any collateral which shall ever have been given to secure such Guaranteed
Indebtedness. Notwithstanding anything to the contrary contained in this
Guaranty, each Guarantor hereby irrevocably subordinates to the prior
indefeasible payment in full of the Guaranteed Indebtedness any and all rights
such Guarantor may now or hereafter have under any agreement or at law or in
equity (including, without limitation, any law subrogating such Guarantor to
the rights of the Agent, the Banks and the Issuing Banks) to assert any claim
against or seek contribution, indemnification or any other form of
reimbursement from the Borrower or any other party liable for payment of any or
all of the Guaranteed Indebtedness pursuant to any payment made by such
Guarantor under or in connection with this Guaranty or otherwise.
7. If acceleration of the time for payment of any amount payable
by the Borrower under the Guaranteed Indebtedness is stayed upon the
insolvency, bankruptcy, or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Guaranteed
Indebtedness shall nonetheless be jointly and severally payable by the
Guarantors hereunder forthwith on demand by the Agent.
8. Each Guarantor hereby agrees that its obligations under this
Guaranty shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of any Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of any Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of the Borrower, or the dissolution, insolvency, or
bankruptcy of
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 3
134
the Borrower, any Guarantor, or any other party at any time liable for the
payment of any or all of the Guaranteed Indebtedness; (d) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or
compromise that may be granted or given by the Agent or any Bank or Issuing
Bank to the Borrower, any Guarantor, or any other Person ever liable for any or
all of the Guaranteed Indebtedness; (f) any neglect, delay, omission, failure,
or refusal of the Agent or any Bank or Issuing Bank to take or prosecute any
action for the collection of any of the Guaranteed Indebtedness or to foreclose
or take or prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or all
of the Guaranteed Indebtedness or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (h) any payment by the Borrower or any other party to the Agent
or any Bank or Issuing Bank is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason the Agent or any Bank
or Issuing Bank is required to refund any payment or pay the amount thereof to
someone else; (i) the settlement or compromise of any of the Guaranteed
Indebtedness; (j) the non-perfection of any security interest or lien securing
any or all of the Guaranteed Indebtedness; (k) any impairment of any collateral
securing any or all of the Guaranteed Indebtedness; (l) the failure of the
Agent or any Bank or Issuing Bank to sell any collateral securing any or all of
the Guaranteed Indebtedness in a commercially reasonable manner or as otherwise
required by law; (m) any change in the corporate existence, structure or
ownership of the Borrower; or (n) any other circumstance which might otherwise
constitute a defense available to, or discharge of, the Borrower or any
Guarantor.
9. Each Guarantor represents and warrants to the Agent, the Banks
and the Issuing Banks that:
(a) All individual representations and warranties
contained in the Credit Agreement, to the extent that they relate to
the Guarantors, are true and correct in all respects.
(b) The value of the consideration received and to be
received by such Guarantor as a result of the Borrower, the Banks, the
Issuing Banks and the Agent entering into the Credit Agreement, the
extensions of credit thereunder, and such Guarantor executing and
delivering this Guaranty is reasonably equivalent to or greater than
the liability and obligation of such Guarantor hereunder, and such
liability and obligation, the Borrower's entering into the Credit
Agreement, and the extensions of credit thereunder have benefited and
may reasonably be expected to benefit such Guarantor directly or
indirectly.
(c) Such Guarantor has, independently and without
reliance upon the Agent or any Bank or Issuing Bank and based upon
such documents and information as such Guarantor has deemed
appropriate, made its own analysis and decision to enter into this
Guaranty.
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 4
135
(d) The ability of the Borrower to borrow and obtain
letters of credit from time to time under the Credit Agreement will
enable such Guarantor to obtain credit, will benefit such Guarantor
and the consolidated corporate group of which such Guarantor is a part
and is necessary and convenient to the conduct, promotion and
attainment of the business of such Guarantor.
(e) As additional consideration for entering into this
Guaranty, such Guarantor has obtained certain rights under that
certain Contribution and Indemnification Agreement of even date
herewith, among such Guarantor and the other Companies.
(f) Such Guarantor has adequate capital to conduct its
business as a going concern, as presently conducted and as proposed to
be conducted; such Guarantor will be able to meet its obligations
hereunder and in respect of its other existing and future indebtedness
and liabilities as and when the same shall be due and payable; such
Guarantor is not insolvent (as that term is defined in 11 U.S.C.
Section 101 or under other applicable law) and will not be rendered
insolvent by its obligations hereunder, and the foregoing
representations are supported by such Guarantor's internal projections
and forecasts.
(g) Such Guarantor has determined that the execution and
delivery of this Guaranty is to its advantage and benefit, taking into
account all relevant facts and circumstances.
10. Each Guarantor covenants and agrees that, as long as the
Guaranteed Indebtedness or any part thereof is outstanding or any Bank or
Issuing Bank has any commitment under the Credit Agreement:
(a) Such Guarantor will furnish promptly to the Agent
written notice of the occurrence of any default under this Guaranty or
any Default under the Credit Agreement.
(b) Such Guarantor will furnish promptly to the Agent
such additional information concerning such Guarantor as the Agent,
any Bank or Issuing Bank may reasonably request.
(c) Such Guarantor will obtain at any time and from time
to time all authorizations, licenses, consents or approvals as shall
now or hereafter be necessary or desirable under all applicable laws
or regulations to conduct its business substantially as now conducted
and as presently proposed to be conducted or otherwise in connection
with the execution, delivery and performance of this Guaranty and will
promptly furnish copies thereof to the Agent.
11. If an Event of Default shall have occurred and be continuing,
the Agent, the Banks and the Issuing Banks shall each have the right to set off
and apply against this Guaranty or the Guaranteed Indebtedness or both, at any
time and without notice to any Guarantor, any and all deposits (general or
special, time or demand, provisional or final) (other than trust fund accounts
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 5
136
held by any Guarantor for the benefit of non-Affiliates) or other sums at any
time credited by or owing from the Agent or any Bank or Issuing Bank to any
Guarantor whether or not the Guaranteed Indebtedness is then due and
irrespective of whether or not the Agent or any Bank or Issuing Bank shall have
made any demand under this Guaranty. As security for this Guaranty and the
Guaranteed Indebtedness, each Guarantor hereby grants the Agent, the Banks and
the Issuing Banks a security interest in all money, instruments, certificates
of deposit, and other property of such Guarantor (other than trust fund
accounts held by such Guarantor for the benefit of non-Affiliates) now or
hereafter held by the Agent or any Bank or Issuing Bank, including, without
limitation, property held in safekeeping. In addition to the rights of setoff
of the Agent, the Banks and the Issuing Banks and as further security for this
Guaranty and the Guaranteed Indebtedness, each Guarantor hereby grants the
Agent, the Banks and the Issuing Banks a security interest in all deposits
(general or special, time or demand, provisional or final) and all other
accounts of such Guarantor (other than trust fund accounts held by such
Guarantor for the benefit of non-Affiliates) now or hereafter on deposit with
or held by the Agent or any Bank or Issuing Bank and all other sums at any time
credited by or owing from the Agent or any Bank or Issuing Bank to such
Guarantor. The rights and remedies of the Agent, the Banks and the Issuing
Banks hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent, the Banks and the
Issuing Banks may have.
12. (a) Each Guarantor hereby agrees that the Subordinated
Indebtedness (hereinafter defined) shall be subordinate and junior in right of
payment to the prior payment in full of all Guaranteed Indebtedness, and each
Guarantor hereby assigns the Subordinated Indebtedness to the Agent, for the
pro rata benefit of the Banks and the Issuing Banks, as security for the
Guaranteed Indebtedness. If any sums shall be paid to any Guarantor by the
Borrower or any other Person on account of the Subordinated Indebtedness, such
sums shall be held in trust by such Guarantor for the benefit of the Agent and
shall forthwith be paid to the Agent, for the pro rata benefit of the Banks and
the Issuing Banks, without affecting the liability of any Guarantor under this
Guaranty and may be applied by the Agent, the Banks and the Issuing Banks
against the Guaranteed Indebtedness in such order and manner as they may
determine in their absolute discretion; provided, however, that so long as no
Event of Default shall have occurred, the Borrower shall be permitted to pay to
any Guarantor, and each Guarantor shall be permitted to receive and retain,
payments on account of Subordinated Indebtedness consisting of trade payables
owing by the Borrower to any Guarantor. Upon the request of the Agent, each
Guarantor shall execute, deliver, and endorse to the Agent, for the pro rata
benefit of the Banks and the Issuing Banks, such documents and instruments as
the Agent may request to perfect, preserve and enforce the rights of the Agent,
the Banks and the Issuing Banks hereunder. For purposes of this Guaranty, the
term "Subordinated Indebtedness" means all indebtedness, liabilities and
obligations of the Borrower and the Subsidiaries, or any of them, to any
Guarantor, whether such indebtedness, liabilities, and obligations now exist or
are hereafter incurred or arise, or whether the obligations of the Borrower or
any Subsidiary thereon are direct, indirect, contingent, primary, secondary,
several, joint, joint and several, or otherwise, and irrespective of whether
such indebtedness, liabilities or obligations are evidenced by a note,
contract, open account or otherwise, and irrespective of the Person or Persons
in whose favor such indebtedness, obligations or liabilities may, at their
inception, have been, or may hereafter be, created, or the manner in which they
have been or may hereafter be acquired by any Guarantor.
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 6
137
(b) Each Guarantor agrees that any and all liens,
security interests, judgment liens, charges, or other encumbrances upon the
assets of the Borrower and the Subsidiaries, or any of them, securing payment
of any Subordinated Indebtedness shall be and remain inferior and subordinate
to any and all liens, security interests, judgment liens, charges or other
encumbrances upon such assets securing payment of the Guaranteed Indebtedness
or any part thereof, regardless of whether such encumbrances in favor of any
Guarantor or the Agent presently exist or are hereafter created or attached.
No Guarantor shall (i) file suit against the Borrower or any Subsidiary or
exercise or enforce any other creditor's right it may have against the Borrower
or any Subsidiary, or (ii) foreclose, repossess, sequester, or otherwise take
steps or institute any action or proceedings (judicial or otherwise, including
without limitation the commencement of, or joinder in, any liquidation,
bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce
any liens, security interests, collateral rights, judgments or other
encumbrances held by any Guarantor on assets of the Borrower or any other
Company unless and until the Guaranteed Indebtedness shall have been paid in
full, no Letters of Credit are outstanding, and the Commitments have expired or
terminated.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving the Borrower or any Subsidiary as debtor, the Agent shall have the
right to prove and vote any claim under the Subordinated Indebtedness and to
receive, for the benefit of the Banks and the Issuing Banks, directly from the
receiver, trustee or other court custodian, all dividends, distributions and
payments made in respect of the Subordinated Indebtedness. The Agent, the Banks
and the Issuing Banks may apply any such dividends, distributions and payments
against the Guaranteed Indebtedness in such order and manner as they may
determine in their absolute discretion.
(d) Each Guarantor agrees that all promissory notes,
accounts receivable, ledgers, records or any other evidence of Subordinated
Indebtedness shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this
Guaranty.
13. No Guarantor shall prepay any of its Funded Debt, except the
Guaranteed Indebtedness.
14. No amendment or waiver of any provision of this Guaranty or
consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Agent and the
Required Banks. No failure on the part of the Agent or any Bank or Issuing
Bank to exercise, and no delay in exercising, any right, power, or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power, or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
15. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or other Person,
including any Guarantor, with respect to any of the Guaranteed Indebtedness
shall, if the statute of limitations in favor of any Guarantor
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 7
138
against the Agent, the Banks or the Issuing Banks shall have commenced to run,
toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such
statute of limitations.
16. This Guaranty is for the benefit of the Agent, the Banks and
the Issuing Banks, and their respective successors and assigns, and in the
event of an assignment of the Guaranteed Indebtedness, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness. This Guaranty is binding
not only on each Guarantor, but on each Guarantor's successors and assigns.
The Guarantors' obligations and agreements hereunder are joint and several.
The provisions of this Guaranty shall apply to each Guarantor individually and
collectively.
17. Each Guarantor recognizes that the Agent, the Banks and the
Issuing Banks are relying upon this Guaranty and the undertakings of each
Guarantor hereunder in making extensions of credit to the Borrower under the
Credit Agreement and further recognizes that the execution and delivery of this
Guaranty is a material inducement to the Agent, the Banks and the Issuing Banks
in entering into the Credit Agreement. Each Guarantor hereby acknowledges that
there are no conditions to the full effectiveness of this Guaranty.
18. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT TO A
LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN DALLAS COUNTY,
TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS. ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR UNDER OR IN
CONNECTION WITH THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
DALLAS COUNTY, TEXAS. EACH GUARANTOR HEREBY IRREVOCABLY (I) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT
IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. EACH GUARANTOR
AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED BELOW. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK OR ISSUING BANK TO SERVE
PROCESS IN ANY OTHER MATTER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY BANK OR ISSUING BANK TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
GUARANTOR OR WITH RESPECT TO ANY OF SUCH GUARANTOR'S PROPERTY IN COURTS IN
OTHER JURISDICTIONS TO THE EXTENT SUCH JURISDICTION IS PROPER. ANY ACTION OR
PROCEEDING BY ANY GUARANTOR AGAINST THE AGENT, ANY BANK OR ISSUING BANK SHALL
BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS COUNTY, TEXAS.
19. Each Guarantor jointly and severally agrees to pay on demand
all reasonable attorneys' fees and all other costs and expenses incurred by the
Agent, the Banks and the Issuing Banks in connection with the preparation,
administration, enforcement, or collection of this Guaranty.
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 8
139
20. Each Guarantor hereby waives promptness, diligence, notice of
any default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty, presentment, notice of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate, notice of the
incurring by the Borrower of additional indebtedness, and all other notices and
demands with respect to the Guaranteed Indebtedness and this Guaranty.
21. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
each Guarantor agrees that the Agent, the Banks and the Issuing Banks may
exercise any and all rights granted to them under the Credit Agreement and the
other Loan Documents (as defined in the Credit Agreement) without affecting the
validity or enforceability of this Guaranty.
22.(a) Each Guarantor hereby represents and warrants to the Agent,
the Banks and the Issuing Banks that such Guarantor (i) has adequate means to
obtain from the Borrower on a continuing basis information concerning the
financial condition and assets of the Borrower and (ii) is not relying upon the
Agent or any Bank or Issuing Bank to provide (and the Agent, the Banks and the
Issuing Banks shall have no duty to provide) any such information to such
Guarantor either now or in the future.
(b) THIS GUARANTY AND THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT
LIMITATION, THE EXISTING BORROWER GUARANTY AND THE EXISTING SUBSIDIARY
GUARANTY) EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Guaranty may
be amended or waived only by an instrument in writing signed by the parties
hereto. In the event any term or provision of this Guaranty expressly
conflicts with any term or provision of the Credit Agreement, the terms and
provisions of the Credit Agreement shall govern and control.
23. Each Guarantor acknowledges that it has had the benefit of
legal counsel of its own choice and has been afforded an opportunity to review
this Guaranty with its legal counsel and that this Guaranty shall be construed
as if jointly drafted by the Guarantors and the Agent.
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 9
140
EXECUTED as of the day and year first written above.
GUARANTORS:
HEALTHCOR, INC.
HEALTHCOR PHARMACY, INC.
HEALTHCOR OXYGEN AND MEDICAL
EQUIPMENT, INC.
HEALTHCOR REHABILITATION SERVICES,
INC.
PHYSICIANS HOME HEALTH NETWORK, INC.
HC PERSONNEL RESOURCES, INC.
CARENETWORK, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: ββββ βββββ βββββββ ββββββββββ
βββββ β-ββββ
ββββββ, βββββ βββββ
Attn: S. βββββ ββββββ
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY - Page 10
141
EXHIBIT "F"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Second Amended and Restated Pledge Agreement
142
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT
This SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (this "Agreement"),
dated as of December 1, 1997, is by and among the corporations signatory hereto
under the heading "Pledgors" on the signature pages hereof (whether one or
more, collectively referred to as the "Pledgors" and individually as a
"Pledgor") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association, as agent (in such capacity, the "Agent") for itself, the other
Issuing Banks (hereinafter defined) and the other lenders (collectively, the
"Banks") from time to time party to that certain Second Amended and Restated
Credit Agreement dated of even date herewith among Healthcor Holdings, Inc., a
Delaware corporation (the "Borrower"), the Agent, Texas Commerce Bank National
Association and each of the other Banks issuing letters of credit from time to
time thereunder (in such capacity, collectively, the "Issuing Banks"), and the
Banks, as the same may be amended or modified from time to time (the "Credit
Agreement").
R E C I T A L S:
A. The Borrower, HealthCor, Inc., a Delaware corporation
("HealthCor"), the Agent, certain lenders (collectively, the "Existing Banks"),
and the Existing Banks issuing letters of credit thereunder (in such capacity,
the "Existing Issuing Banks") previously entered into that certain Amended and
Restated Credit Agreement dated as of October 31, 1996 (as amended, the
"Existing Credit Agreement").
B. Pursuant to the Existing Credit Agreement, Pledgors executed and
delivered to the Agent an Amended and Restated Pledge Agreement dated as of
October 31, 1996, which secured the obligations of the Borrower and HealthCor
under the Existing Credit Agreement (the "Existing Pledge Agreement").
C. Concurrently herewith the Borrower, the Agent, the Banks and the
Issuing Banks are amending and restating the Existing Credit Agreement pursuant
to the Credit Agreement and in connection therewith, the parties hereto now
desire to amend and restate the Existing Pledge Agreement, as hereinafter
provided, and have agreed, for purposes of clarity and ease of administration,
to carry out the agreed upon amendments by amending the pertinent provisions of
the Existing Pledge Agreement and then restating the Existing Pledge Agreement
in its entirety by means of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows and the Existing Pledge
Agreement is hereby amended and restated in its entirety as follows:
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 1
143
ARTICLE I
Definition; Security Interest and Pledge
Section 1.1 Definitions. All capitalized terms used and not otherwise
defined herein shall have their respective meanings as set forth in the Credit
Agreement.
Section 1.2 Security Interest and Pledge. Each Pledgor hereby pledges
and grants to the Agent, for the benefit of itself, the Banks and the Issuing
Banks, and ratifies and confirms that the Agent has been previously granted and
now possesses a security interest in the following property (such property
being hereinafter sometimes called the "Collateral"):
(a) all present and future issued and outstanding shares of
capital stock or other equity or investment securities now owned or
hereafter acquired by such Pledgor, including without limitation, the
shares of stock more fully described on Schedule I attached hereto;
(b) all present and future increases, profits, combinations,
reclassifications of, and substitutes and replacements for, all or part
of the foregoing, and 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, lease, or other disposition of, or
collections with respect to, or proceeds payable by virtue of claims
against any Person with respect to, all or any part of the foregoing;
(c) all investment property, including, without limitation,
all securities, whether certificated or uncertificated, investment
accounts or securities accounts and security entitlements which may be
carried in a securities account now owned by each Pledgor or hereafter
from time to time existing or acquired, and all proceeds of any of the
foregoing Collateral (including, but not limited to, all insurance
claims for insurance in respect of any of the foregoing Collateral); and
(d) all products, proceeds, revenues, distributions,
dividends, stock dividends, securities, and other property, rights, and
interests any Pledgor receives or is at any time entitled to receive on
account of any of the foregoing.
Section 1.3 Obligations. The Collateral shall secure the following
obligations, indebtedness, and liabilities (all such obligations, indebtedness,
and liabilities being hereinafter sometimes called the "Obligations"): (a) the
obligations, indebtedness, and liabilities of Borrower to the Banks and the
Issuing Banks evidenced by the Revolving Credit Notes (herein so called)
executed by Borrower pursuant to the Credit Agreement; (b) the respective
obligations, indebtedness, and liabilities of the Borrower to the Agent, the
Banks and the Issuing Banks under the Credit Agreement; (c) the respective
obligations, indebtedness and liabilities of the Pledgors, other than the
Borrower, under that certain Subsidiary Guaranty of even date herewith executed
by such Pledgors in favor of the Agent, the Banks and the Issuing Banks
pursuant to the Credit
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 2
144
Agreement; (d) all future advances by the Banks and the Issuing Banks to the
Borrower; (e) all costs and expenses, including without limitation attorneys'
fees and legal expenses incurred by the Agent, the Banks and the Issuing Banks
to preserve and maintain the Collateral, collect the obligations herein
described, and enforce this Agreement; (f) all other Obligations (as such term
is defined in the Credit Agreement); and (g) all extensions, renewals and
modifications of any of the foregoing.
Section 1.4 Renewal of Obligations and Liens. The parties hereto
acknowledge and agree that (i) the Revolving Credit Notes are in renewal,
extension and modification, but not in extinguishment of, the existing
indebtedness of the Borrower and HealthCor under the Existing Credit Agreement,
and (ii) such existing indebtedness is secured by liens and security interests
granted by the Pledgors pursuant to the Existing Pledge Agreement, which liens
and security interests are not extinguished or released, but instead are hereby
renewed, extended, carried forward and continued in accordance with the terms
of this Agreement.
ARTICLE II
Representations and Warranties
Each Pledgor represents and warrants to the Agent, the Banks and the
Issuing Banks that:
Section 2.1 Title. Such Pledgor owns, and with respect to Collateral
acquired after the date hereof, such Pledgor will own, legally and
beneficially, the Collateral free and clear of any Lien, or any right or option
on the part of any Person to purchase or otherwise acquire the Collateral or
any part thereof, except for the security interest granted hereunder. The
Collateral is not subject to any restriction on transfer or assignment except
for compliance with applicable federal and state securities laws and
regulations promulgated thereunder. Such Pledgor has the unrestricted right to
pledge the Collateral as contemplated hereby. All of the Collateral has been
duly and validly issued and is fully paid and nonassessable.
Section 2.2 Organization and Authority. Each Pledgor is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation. Each Pledgor has the corporate power and authority
to execute, deliver, and perform this Agreement, and the execution, delivery,
and performance of this Agreement by such Pledgor (a) have been duly authorized
by all necessary corporate action on the part of such Pledgor, (b) do not and
will not violate or conflict with (i) any law, rule, or regulation or any
order, writ, injunction, or decree of any Governmental Authority or arbitrator,
which violation would have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or properties of such Pledgor,
the Collateral taken as a whole, or the ability of the Companies to pay and
perform the Obligations, or (ii) the articles/certificate of incorporation or
bylaws of such Pledgor, and (c) do not and will not conflict with, result in a
breach of, or constitute a default under the provisions of any material
indenture, mortgage, deed of trust, security agreement, instrument or agreement
binding on such Pledgor or any of its property.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 3
145
Section 2.3 Principal Place of Business. The principal place of
business and chief executive office of each Pledgor, and the office where each
Pledgor keeps its books and records, is located at the address of such Pledgor
shown on the signature pages hereof.
Section 2.4 Percentage of Stock. The Collateral constitutes one
hundred percent (100%) of the issued and outstanding shares of capital stock of
each issuer thereof.
Section 2.5 First Priority Perfected Security Interest. This
Agreement creates and continues in favor of the Agent for the benefit of
itself, the Banks and the Issuing Banks, a first priority perfected security
interest in the Collateral. There are no conditions precedent to the
effectiveness of this Agreement that have not been fully and permanently
satisfied.
ARTICLE III
Affirmative and Negative Covenants
Each Pledgor covenants and agrees with the Agent, the Banks and the
Issuing Banks that:
Section 3.1 Encumbrances. Such Pledgor shall not create, permit, or
suffer to exist, and shall defend the Collateral against, any Lien on the
Collateral except the pledge and security interest of the Agent hereunder and
the Permitted Liens, and shall defend such Pledgor's rights in the Collateral
and the Agent's security interest in the Collateral against the claims of all
Persons.
Section 3.2 Sale of Collateral. Except as permitted under Section
10.3(b) of the Credit Agreement, such Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of the Agent.
Section 3.3 Distributions. If such Pledgor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase, or reduction of capital or issued in
connection with any reorganization), option or rights, whether as an addition
to, in substitution of, or in exchange for any Collateral or otherwise, such
Pledgor agrees to accept the same as the Agent's agent and to hold the same in
trust for the Agent, and to deliver the same forthwith to the Agent in the
exact form received, with the appropriate endorsement of such Pledgor, when
necessary, and/or appropriate undated stock powers duly executed in blank, to
be held by the Agent as additional Collateral for the Obligations, subject to
the terms hereof. Any sums paid upon or in respect of the Collateral upon the
liquidation or dissolution of the issuer thereof shall be paid over to the
Agent to be held by it as additional Collateral for the Obligations subject to
the terms hereof; and in case any distribution of capital shall be made on or
in respect of the Collateral or any property shall be distributed upon or with
respect to the Collateral pursuant to any recapitalization or reclassification
of the capital of the issuer thereof or pursuant to any reorganization of the
issuer thereof, the property so distributed shall be delivered to the Agent to
be held by it, as additional Collateral for the Obligations, subject to the
terms hereof. All sums of money and property so paid or distributed in respect
of the Collateral
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 4
146
that are received by such Pledgor shall, until paid or delivered to the Agent,
be held by such Pledgor in trust as additional security for the Obligations.
Section 3.4 Further Assurances. At any time and from time to time,
upon the request of the Agent, and at the sole expense of such Pledgor, such
Pledgor shall promptly execute and deliver all such further instruments and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statements, continuation
statements and other documents in such offices as the Agent may require. A
carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
Subject to the right of such Pledgor to receive cash dividends under Section
4.3 hereof, in the event any Collateral is ever received by such Pledgor, such
Pledgor shall promptly transfer and deliver to the Agent such Collateral so
received by such Pledgor (together with any necessary endorsements in blank or
undated stock powers duly executed in blank), which Collateral shall thereafter
be held by the Agent pursuant to the terms of this Agreement. The Agent shall
at all times have the right to exchange any certificates representing
Collateral for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
Section 3.5 Inspection Rights. Such Pledgor shall permit the Agent,
the Banks, the Issuing Banks and their representatives, upon one (1) Business
Day's prior notice, to examine, inspect, and copy such Pledgor's books and
records at any reasonable time and as often as they may desire.
Section 3.6 Notification. Such Pledgor shall promptly notify the
Agent of (i) any Lien or material claim made or threatened against the
Collateral, (ii) any material change in the Collateral, including, without
limitation, any material decrease in the value of the Collateral, and (iii) the
occurrence or existence of any Default.
Section 3.7 Books and Records; Information. Such Pledgor shall keep
books and records of the Collateral and such Pledgor's business and financial
condition in accordance with GAAP (subject to year-end adjustments and
disclosures). Such Pledgor shall from time to time at the request of the Agent
deliver to the Agent such information regarding the Collateral and such Pledgor
as the Agent may request. Upon the request of Agent, such Pledgor shall ββββ
its books and records to reflect the security interest of the Agent under this
Agreement.
Section 3.8 Additional Securities. Such Pledgor shall not consent to
or approve the issuance of any additional shares of any class of capital stock
of the issuer of the Collateral, or any securities convertible into, or
exchangeable for, any such shares or any warrants, options, rights, or other
commitments entitling any Person to purchase or otherwise acquire any such
shares.
Section 3.9 Provide Information. Such Pledgor shall fully cooperate,
to the extent requested by the Agent, in the completion of any notice, form,
schedule, or other document filed
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 5
147
by the Agent on its own behalf or on behalf of such Pledgor, including, without
limitation, any required notice or statement of beneficial ownership or of the
acquisition of beneficial ownership of equity securities constituting part of
the Collateral and any notice of proposed sale of any such securities pursuant
to Rule 144 as promulgated by the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended. Without limiting the generality
of the foregoing, such Pledgor shall furnish to the Agent any and all
information which the Agent may reasonably request for purposes of any such
filing, regarding such Pledgor, the Collateral, and any issuer of any of the
Collateral, and such Pledgor shall disclose to the Agent all material adverse
information known by such Pledgor with respect to the operations of any issuer
of any of the Collateral.
ARTICLE IV
Rights of the Agent and Pledgors
Section 4.1 Certain Covenants and Rights Regarding Collateral.
(a) Each Pledgor shall from time to time at the request of the
Agent furnish the Agent with a schedule of each account included in the
Collateral and a list of all those liable on checks, notes, drafts, and
other instruments representing the proceeds of such accounts. The Agent
shall have the right to make test verifications of the Collateral. If
any part of the Collateral is or becomes subject to the Federal
Assignment of Claims Act, the Pledgor whose Collateral is or becomes
affected thereby will execute all instruments and take all steps
required by the Agent to comply with that act. If part of the
Collateral is evidenced by promissory notes, trade acceptances or other
instruments for the payment of money, each Pledgor will, at the request
of the Agent, immediately deliver them to the Agent, appropriately
endorsed to the Agent's order, and regardless of the form of
endorsement, each Pledgor waives presentment, demand, notice of
dishonor, protest, and notice of protest.
(b) If the validity or priority of this Agreement or of any
rights, titles, security interests or other interests created or
evidenced hereby shall be attacked, endangered, or questioned, or if any
legal proceedings are instituted with respect thereto, the Pledgors will
give prompt written notice thereof to the Agent and, at the Pledgors'
own cost and expense, will diligently endeavor to cure any defect which
may be developed or claimed, and will take all necessary and proper
steps for the defense of such legal proceedings, and the Agent (whether
or not named as a party to the legal proceedings with respect thereto)
is hereby authorized and empowered to take such additional steps as in
its judgment and discretion may be necessary or proper for the defense
of any such legal proceedings or the protection of the validity or
priority of this Agreement and the rights, titles, security interests,
and other interests created or evidenced hereby, and all expenses so
incurred of every kind and character shall be a demand obligation owing
by the Pledgors and the party incurring such expenses shall be
subrogated to all rights of the Person receiving such payment.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 6
148
(c) Upon the occurrence of an Event of Default or if the Agent
shall deem payment of the Obligations to be insecure, and at any time
thereafter, the Agent is authorized to take possession peaceably of the
Collateral and of all books, records and accounts relating thereto, and
to exercise without interference from the Pledgors any and all rights
which such Pledgors have with respect to the management, possession,
protection, or preservation of the Collateral. If necessary to obtain
the possession provided for above, the Agent may invoke any and all
legal remedies to dispossess the Pledgors, including specifically one or
more actions for forcible entry and detainer. In connection with any
action taken by the Agent pursuant to this Section, the Agent shall not
be liable for any loss sustained by the Pledgors resulting from any act
or omission of the Agent unless such loss is caused by the willful
misconduct and bad faith of the Agent, nor shall the Agent be obligated
to perform or discharge any obligation, duty, or liability under any
sale or lease agreement covering the Collateral or any part thereof, or
under or by reason of this Agreement or exercise of rights or remedies
hereunder.
(d) At any time prior to the termination of this Agreement the
Agent may notify the account debtors or obligors of any accounts,
chattel paper, negotiable instruments, or other evidences of
indebtedness included in the Collateral to pay the Agent directly.
Until the Agent elects to exercise these rights, each Pledgor is
authorized as agent of the Agent to collect and enforce such accounts.
The costs of collection and enforcement, including attorneys' fees and
expenses, shall be borne solely by the Pledgors whether incurred by the
Agent or the Pledgors.
Section 4.2 Voting Rights. Except when an Event of Default shall be
continuing, each Pledgor shall be entitled to exercise any and all voting
rights pertaining to the Collateral owned by such Pledgor or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement. The Agent shall execute and deliver to each Pledgor all such
proxies and other instruments as each Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting rights which it is
entitled to exercise pursuant to this Section.
Section 4.3 Dividends. Except when an Event of Default shall be
continuing, each Pledgor shall be entitled to receive and retain any dividends
on the Collateral, owned by such Pledgor paid in cash out of earned surplus to
the extent and only to the extent that such dividends are permitted by the
Credit Agreement.
Section 4.4 Performance by the Agent. If any Pledgor fails to perform
or comply with any of its agreements contained herein, the Agent itself may, at
its sole discretion, cause or attempt to cause performance or compliance with
such agreement. In such event, the expenses of the Agent shall be payable by
such Pledgor to the Agent on demand and together with interest thereon at the
Applicable Rate from and including the date the Agent incurs such expenses to
but excluding the date of such demand, and from and including the date of such
demand until such expenses are paid in full, at the Default Rate, shall
constitute Obligations secured by this Agreement. The Agent, upon making such
payment, shall be subrogated to all of the rights of
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 7
149
the Person receiving such payment. Notwithstanding the foregoing, it is
expressly agreed that the Agent shall not have any liability or responsibility
for the performance of any obligation of any Pledgor under this Agreement.
Section 4.5 Setoff; Property Held by the Agent. If an Event of
Default shall have occurred and be continuing, the Agent shall have the right
to set off and apply against the Obligations, at any time and without notice to
the Pledgors, any and all deposits (general or special, time or demand,
provisional or final) (other than trust fund accoundts held by any Pledgor for
the benefit of non-Affiliates) or other sums at any time credited by or owing
from the Agent to any Pledgor whether or not the Obligations are then due. As
additional security for the Obligations, each Pledgor hereby grants the Agent a
security interest in all money, instruments, and other property of such Pledgor
(other than trust fund accounts held by such Pledgor for the benefit of non-
Affiliates) now or hereafter held by the Agent. In addition to the Agent's
right of setoff and as further security for the Obligations, each Pledgor
hereby grants the Agent a security interest in all deposits (general or
special, time or demand, provisional or final) and other accounts of such
Pledgor (other than trust fund accounts held by such Pledgor for the benefit of
non-Affiliates) now or hereafter maintained with the Agent and all other sums
at any time credited by or owing from the Agent to such Pledgor. The rights
and remedies of the Agent hereunder are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Agent may have.
Section 4.6 The Agent's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by the
Agent hereunder, the Agent shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that each Pledgor shall be responsible
for preservation of all rights in the Collateral owned by such Pledgor.
Without limiting the generality of the foregoing, the Agent shall be
conclusively deemed to have exercised reasonable care in the custody of the
Collateral if the Agent takes such action, for purposes of preserving rights in
the Collateral, as such Pledgor may reasonably request in writing, but no
failure or omission or delay by the Agent in complying with any such request by
any Pledgor, and no refusal by the Agent to comply with any such request by any
Pledgor, shall be deemed to be a failure to exercise reasonable care. The
Agent shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve, or maintain any Lien given to secure the
Collateral.
Section 4.7 Assignment by the Agent. Subject to Section 14.7 of the
Credit Agreement, the Agent, the Banks and the Issuing Banks may at any time
and from time to time assign the Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to all
of the rights and remedies of the Agent, the Banks and the Issuing Banks under
this Agreement in relation thereto.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 8
150
ARTICLE V
Default
Section 5.1 Rights and Remedies. During the existence of an Event of
Default, the Agent shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted to
the Agent in this Agreement and in any other instrument or agreement
securing, evidencing, or relating to the Obligations, the Agent shall
have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted by the State of Texas. Without limiting the
generality of the foregoing, the Agent may (A) without demand or notice
to any Pledgor, collect, receive, or take possession of the Collateral
or any part thereof, (B) sell or otherwise dispose of the Collateral, or
any part thereof, in one or more parcels at public or private sale or
sales, at the Agent's offices or elsewhere, for cash, on credit, or for
future delivery, and/or (C) bid and become a purchaser at any sale free
of any right or equity of redemption in any Pledgor, which right or
equity is hereby expressly waived and released by each Pledgor. Upon
the request of the Agent, each Pledgor shall assemble the Collateral
owned by such Pledgor and make it available to the Agent at any place
designated by the Agent that is reasonably convenient to such Pledgor
and the Agent. Each Pledgor agrees that the Agent shall not be
obligated to give more than ten (10) days prior written notice of the
time and place of any public sale or of the time after which any private
sale may take place and that such notice shall constitute reasonable
notice of such matters. The Agent shall not be obligated to make any
sale of the Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all attorneys' fees and
other expenses incurred by the Agent in connection with the collection
of the Obligations and the enforcement of the Agent's rights under this
Agreement, all of which expenses and fees shall constitute additional
Obligations secured by this Agreement. Each Pledgor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay the Obligations. Each Pledgor waives
all rights of marshalling in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by
it to be transferred into the name of the Agent or the name or names of
the Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at
any time payable or receivable on account of or in exchange for any of
the Collateral, but shall be under no obligation to do so.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 9
151
(iv) The Agent shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting, consensual, and other
powers of ownership pertaining to the Collateral, and each Pledgor shall
deliver to the Agent, if requested by the Agent, irrevocable proxies
with respect to the Collateral in form satisfactory to the Agent.
(v) Each Pledgor hereby acknowledges and confirms that the
Agent may be unable to effect a public sale of any or all of the
Collateral by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, and applicable state securities laws and may be
compelled to resort to one or more private sales thereof to a restricted
group of purchasers who will be obligated to agree, among other things,
to acquire any shares of the Collateral for their own respective
accounts for investment and not with a view to distribution or resale
thereof. Each Pledgor further acknowledges and confirms that any such
private sale may result in prices or other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner, and the Agent shall be
under no obligation to take any steps in order to permit the Collateral
to be sold at a public sale. The Agent shall be under no obligation to
delay a sale of any of the Collateral for any period of time necessary
to permit any issuer thereof to register such Collateral for public sale
under the Securities Act of 1933, as amended, or under applicable state
securities laws.
(vi) On any sale of the Collateral, the Agent is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Agent's counsel, in order to
avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
Section 5.2 Application of Proceeds of Sale. The proceeds of any sale
of Collateral pursuant to Section 5.1 hereof, as well as any Collateral
consisting of cash, shall be applied by the Agent as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses incurred by the Agent in connection with such sale or otherwise
in connection with this Agreement or any of the Obligations, including,
but not limited to, all court costs and the reasonable fees and expenses
of its agents and one legal counsel, the repayment of all advances made
hereunder or under any other Loan Document by the Agent on behalf of any
Pledgor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder;
SECOND, to the payment in full of all other Obligations that are
payable to the Agent including, without limitation, all expense
reimbursements and indemnities;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses incurred by the Issuing Banks in connection with the Credit
Agreement, any Letter
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 10
152
of Credit, or any of the Obligations, including, but not limited to, all
court costs and the reasonable fees and expenses of their agents and one
legal counsel;
FOURTH, to the payment in full of all other Obligations that are
payable to the Issuing Banks, including, without limitation, all Letter
of Credit disbursements and all accrued and unpaid interest thereon and
all Letter of Credit fees;
FIFTH, to the payment in full of the Obligations, pro rata among
the Banks in accordance with the amounts of the Loans held by them, or,
if no Loans shall be outstanding, in accordance with the amounts of
their Commitments;
SIXTH, if any Letter of Credit remains outstanding, the Agent,
after making the applications required by paragraphs "FIRST" through
"FIFTH" above, shall hold back and retain as Collateral for the
Obligations an amount equal to the aggregate face amounts of all
outstanding Letters of Credit; and
SEVENTH, provided that all of the Obligations have been paid and
performed in full and all Commitments and Letters of Credit have
terminated, to the Pledgors, or their respective successors or assigns,
or to whomsoever may lawfully be entitled to the same, or as a court of
competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Agent (including, without limitation, a
sale pursuant to any applicable Uniform Commercial Code or under a judicial
proceeding), the receipt of the Agent or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Agent or such
officer or be answerable in any way for the misapplication thereof.
ARTICLE VI
Miscellaneous
Section 6.1 No Waiver; Cumulative Remedies. No failure on the part of
the Agent to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power, or privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The rights
and remedies provided for in this Agreement are cumulative and not exclusive of
any rights and remedies provided by law.
Section 6.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Pledgors, the Agent, the Banks, the
Issuing Banks, and their respective heirs,
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 11
153
successors, and assigns, except that no Pledgor may assign any of its rights or
obligations under this Agreement without the prior written consent of the
Agent.
Section 6.3 AMENDMENT; ENTIRE AGREEMENT; CONTROLLING AGREEMENT. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THE
EXISTING PLEDGE AGREEMENT) EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto. In the event any term or provision of
this Agreement expressly conflicts with any term or provision of the Credit
Agreement, the terms and provisions of the Credit Agreement shall govern and
control.
Section 6.4 Notices. All notices and other communications provided
for in this Agreement shall be given or made in writing and telecopied, mailed
by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party, at such other address as shall be
designated by such party in a notice to any other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid.
Section 6.5 APPLICABLE LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR
ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION OR PROCEEDING AGAINST ANY
PLEDGOR UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT OR
AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE OBLIGATIONS OR ANY PART
THEREOF MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.
EACH PLEDGOR HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. EACH PLEDGOR AGREES THAT SERVICE OF PROCESS
UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 6.4 OF THIS AGREEMENT.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 12
154
NOTHING IN THIS AGREEMENT OR ANY OTHER INSTRUMENT OR AGREEMENT SECURING,
EVIDENCING, OR RELATING TO THE OBLIGATIONS OR ANY PART THEREOF SHALL AFFECT THE
RIGHT OF THE AGENT, THE BANKS, AND THE ISSUING BANKS TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT TO BRING
ANY ACTION OR PROCEEDING AGAINST ANY PLEDGOR OR WITH RESPECT TO ANY OF ITS
PROPERTY IN COURTS IN OTHER JURISDICTIONS. ANY ACTION OR PROCEEDING BY ANY
PLEDGOR AGAINST THE AGENT, THE DOCUMENTATION AGENT, THE BANKS, AND THE ISSUING
BANKS SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS COUNTY, TEXAS.
Section 6.6 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 6.7 Survival. All representations and warranties made in this
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by the Agent or any Bank or Issuing Bank shall affect the
representations and warranties of any Pledgor herein or the right of the Agent,
the Banks and the Issuing Banks to rely upon them.
Section 6.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 6.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.10 Construction. Each Pledgor and the Agent acknowledge that
each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted by such
Pledgor and the Agent.
Section 6.11 Obligations Absolute. The obligations of each Pledgor
under this Agreement shall be absolute and unconditional and shall not be
released, discharged, reduced, or in any way impaired by any circumstance
whatsoever, including, without limitation, any amendment, modification,
extension, or renewal of this Agreement, the Obligations, or any document or
instrument evidencing, securing, or otherwise relating to the Obligations, or
any release, subordination, or impairment of collateral, or any waiver,
consent, extension, indulgence, compromise, settlement, or other action or
inaction in respect of this Agreement, the Obligations, or any document or
instrument evidencing, securing, or otherwise relating to the Obligations, or
any exercise or failure to exercise any right, remedy, power, or privilege in
respect of the Obligations.
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 13
155
Section 6.12 Release of Security Interest. At such time as all of the
Obligations have been paid and performed in full, all obligations and
commitments of the Banks and the Issuing Banks to make advances, issue letters
of credit or otherwise extend credit under the Credit Agreement have expired or
terminated, and no Letters of Credit remain outstanding, the Agent shall
release the security interest granted hereby.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
PLEDGORS:
HEALTHCOR HOLDINGS, INC.
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
Address for Notices:
ββββ βββββ βββββββ ββββββββββ
βββββ β-ββββ
ββββββ, βββββ βββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: S. βββββ ββββββ
AGENT:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent
By:
---------------------------
ββββββ β. ββββββββ
Vice President
Address for Notices:
ββββ ββββ ββββββ
ββββ ββββββ βββ ββββββ
ββββββ, βββββ βββββ-ββββ
Fax No.: (βββ) βββ-ββββ
Telephone No.: (βββ) βββ-ββββ
Attention: ββββββ β. ββββββββ
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT - Page 14
156
SCHEDULE I
Type of Number of Certificate
Pledgor Company Stock Shares Number(s)
------- ------- ----- ------ ---------
HealthCor Holdings, Inc. HealthCor, Inc. Common 1,000 001
HealthCor Pharmacy, Inc. Common 1,000 1
Physicians Home Health
Network, Inc. Common 1,000 05
HealthCor Oxygen and
Medical Equipment, Inc. Common 400 1
HealthCor Rehabilitation
Services, Inc. Common 100 1
HC Personnel
Resources, Inc. Common 1,000 01
CareNetwork, Inc. Common 1,000 01
SCHEDULE I TO AMENDED AND RESTATED PLEDGE AGREEMENT - Solo Page
157
EXHIBIT "G"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS
158
AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS
THIS AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS (this
"Assignment") is executed as of December 1, 1997 by the parties signatory
hereto (although more than one, "Assignor") to TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as Agent ("Assignee"), whose
address is 2200 ββββ Avenue, Post Office Box 660197, Dallas, ββββββ ββββββ,
βββββ βββββ-ββββ pursuant to that certain Second Amended and Restated Credit
Agreement dated of even date herewith among HealthCor Holdings, Inc. (the
"Borrower"), the lenders from time to time party thereto (collectively, the
"Banks"), the Banks that from time to time issue letters of credit thereunder
(in such capacity, the "Issuing Banks"), and Assignee, as agent for itself, the
Banks and the Issuing Banks (such credit agreement as the same may be amended
or otherwise modified is referred to as the "Credit Agreement"). In
consideration of the extensions of credit made or to be made or other financial
accommodations afforded or to be afforded to the Borrower by the Banks and the
Issuing Banks pursuant to the Credit Agreement, Assignor does hereby assign and
transfer to and pledge with Assignee all right, title, and interest of Assignor
in and to the following accounts:
ASSIGNOR LOCKBOX NO. ACCOUNT NO. INSTITUTION
-------- ----------- ----------- -----------
HealthCor Oxygen Medical Texas Commerce Bank
Equipment, Inc. 911437 088 05 129 721 National Association
HealthCor, Inc. 911556 074 019 132 35 Texas Commerce Bank
National Association
together with all instruments, documents, and other writings evidencing the same
and all sums now or at any time hereafter on deposit therein, all sums due or to
become due thereon, and all extensions or renewals thereof, if the account or
accounts may be extended or renewed (collectively, the "Account"), and Assignor
does also hereby grant to Assignee for the benefit of itself, the Banks and the
Issuing Banks, a security interest in the Account, which security interest may
also be evidenced by one or more other security agreements between Assignor and
Assignee, and in the event of any conflict between the terms hereof and the
terms thereof, the terms thereof will apply. Such security interest extends to
any payment, renewal, or other proceeds of the Account.
This assignment is made as and shall constitute collateral security for
any and all indebtedness and liabilities of any kind and nature of the Borrower
and/or Assignor to Assignee, the Banks and the Issuing Banks under the Credit
Agreement, howsoever evidenced, whether now existing or hereafter arising,
director or indirect, absolute, contingent, joint, several, or joint and several
(the "Obligation").
AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS - Page 1
159
During the existence of an Event of Default, Assignee is hereby authorized
to apply all or any portion of the funds represented by the Account to the
payment of the Obligation and to withdraw funds for such purpose at such times
and in such amounts as it shall in its discretion determine.
Assignor hereby constitutes and appoints Assignee the true and lawful
attorney of Assignor, with full power of substitution, during the existence of
an Event of Default, to ask, demand, collect, receive, receipt for, βββ for,
compound, and give acquittance for any and all amounts which may be or become
due or payable under the Account, to execute any and all withdrawal receipts or
other orders for the payment of money drawn on the Account, to endorse the name
of Assignor on all commercial paper given in payment or in part payment
thereof, and, in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of Assignor or otherwise,
which Assignee may deem necessary or appropriate to protect and preserve the
right, title and interest of Assignee, the Banks and the Issuing Banks
hereunder, and without limiting the foregoing, Assignee shall have and is
hereby given full power and authority to transfer the Account into the name of
the Assignee or its nominee.
Assignor represents and warrants that (a) the Account is genuine and
represents in all respects what it purports to be, (b) Assignor is the owner
thereof free and clear of all liens and encumbrances of any nature whatsoever,
(c) Assignor will not create any other security interest in, mortgage, or
otherwise assign the Account or any part thereof, (d) that any funds payable
with respect to the Account that are received by Assignor shall immediately
upon such receipt become subject to the lien hereof and be segregated from all
other funds of Assignor and be held in trust for Assignee, the Banks and the
Issuing Banks and be immediately paid into the Account, and (e) Assignor has
full powers, right and authority to execute and deliver this assignment.
This Assignment is an amendment and restatement (and not extinguishment or
novation) of that certain Assignment of Deposit Accounts dated as of October
31, 1996 executed by Assignor (other than CareNetwork, Inc., an Arkansas
corporation) in favor of Assignee.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS - Page 2
160
EXECUTED as of the date first above written.
ASSIGNOR:
HEALTHCOR, INC.
HEALTHCOR HOLDINGS, INC.
HEALTHCOR OXYGEN AND
MEDICAL EQUIPMENT, INC.
HEALTHCOR REHABILITATION
SERVICES, INC.
HC PERSONNEL RESOURCES, INC.
HEALTHCOR PHARMACY, INC.
PHYSICIANS HOME HEALTH NETWORK,
INC.
CARENETWORK, INC.
By:
--------------------------
Name:
---------------------
Title:
--------------------
AMENDED AND RESTATED ASSIGNMENT OF DEPOSIT ACCOUNTS - Page 3
161
EXHIBIT "H"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Amended and Restated Contribution and Indemnification Agreement
162
AMENDED AND RESTATED
CONTRIBUTION AND INDEMNIFICATION AGREEMENT
THIS AMENDED AND RESTATED CONTRIBUTION AND INDEMNIFICATION AGREEMENT
(this "Agreement") dated as of December 1, 1997, among HEALTHCOR HOLDINGS,
INC., a Delaware corporation (the "Borrower"), and the other parties signatory
hereto (such other parties being herein each called an "Affiliate" and
collectively called the "Affiliates", and together with Borrower, each a
"Company" and collectively the "Companies").
R E C I T A L S:
A. Borrower, HealthCor, Inc., a Delaware corporation
("HealthCor"), Texas Commerce Bank National Association, a national banking
association, as agent (in such capacity, the "Agent"), certain banks
(collectively, the "Existing Banks") and certain Existing Banks issuing letters
of credit thereunder (in such capacity, the "Existing Issuing Banks")
previously entered into an Amended and Restated Credit Agreement dated October
31, 1996 (as amended, the "Existing Credit Agreement").
B. Pursuant to the Existing Credit Agreement, each Company (other
than CareNetwork, Inc., an Arkansas corporation ("CareNetwork")) executed and
delivered to the Agent a Contribution and Indemnification Agreement dated as of
October 31, 1996 (the "Existing Contribution Agreement").
C. Concurrently herewith the Borrower, the Agent and certain
lenders (together with any other lenders that may from time to time become a
party thereto, the "Banks"), and the Banks issuing letters of credit thereunder
(in such capacity, the "Issuing Banks") are entering into that certain Second
Amended and Restated Credit Agreement of even date herewith (as the same may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
D. Each Affiliate has executed and delivered to the Agent a
Second Amended and Restated Subsidiary Guaranty, pursuant to which such
Affiliate has jointly and severally guaranteed the full and prompt payment and
performance of the Guaranteed Indebtedness (as defined in such Second Amended
and Restated Subsidiary Guaranty).
E. The parties hereto desire to continue their agreement relating
to the equitable sharing of the Affiliates' risk in guaranteeing the Guaranteed
Indebtedness and now desire to amend and restate the Existing Contribution
Agreement, as hereinafter provided, and have agreed, for purposes of clarity
and ease of administration, to carry out the agreed upon amendments by amending
the pertinent provisions of the Existing Contribution Agreement and restating
the Existing Contribution Agreement in its entirety by means of this Agreement.
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 1
163
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows and the Existing Contribution
Agreement is hereby amended and restated in its entirety as follows:
1. If any Affiliate makes a payment in respect of the Guaranteed
Indebtedness, it shall have the rights of contribution and reimbursement set
forth below against the other Companies and the Borrower and shall be
indemnified as set forth below; provided that no Affiliate shall enforce its
rights to any payment by exercising its rights of contribution, reimbursement
or indemnification until all the Guaranteed Indebtedness shall have been paid
in full.
2. If any Affiliate makes a payment in respect of the Guaranteed
Indebtedness that is greater than its Pro Rata Percentage (hereinafter defined)
of the Guaranteed Indebtedness, calculated as of the date such payment is made,
the Affiliate making such payment shall have the right to receive from each of
the other Companies, and the other Companies jointly and severally agree to
pay to such Affiliate, when permitted by paragraph 1 hereof, an amount such
that the net payments made by the Companies in respect of the Guaranteed
Indebtedness shall be shared among the Companies pro rata in proportion to
their respective Pro Rata Percentage of the Guaranteed Indebtedness. The
Companies hereby jointly and severally indemnify each of the Affiliates and
jointly and severally agree to hold each of them harmless from and against any
and all amounts which any such Affiliate shall ever be required to pay in
respect of the Guaranteed Indebtedness in excess of such Affiliate's respective
Pro Rata Percentage of the Guaranteed Indebtedness. Notwithstanding anything
to the contrary contained in this paragraph or in this Agreement, no liability
or obligation of any Company that shall accrue pursuant to this Agreement shall
be paid nor shall it be deemed owed pursuant to this Agreement or any Loan
Documents (as defined in the Credit Agreement) until all of the Guaranteed
Indebtedness shall be paid in full. As used herein, the term "Pro Rata
Percentage" shall mean, for each Company, the percentage derived by dividing
(a) the aggregate amount of all accounts receivable of such Company, by (b) the
total aggregate amount of all accounts receivable of all of the Companies.
3. If any Affiliate makes any payment in respect of the
Guaranteed Indebtedness, the Affiliate making such payment shall have the right
to receive from the Borrower, and the Borrower agrees to pay to such Affiliate,
when permitted by paragraph 1 hereof, an amount equal to such payment. The
Borrower hereby indemnifies each of the Affiliates and agrees to hold each of
them harmless from and against any and all amounts that any such Affiliate
shall ever be required to pay in respect of the Guaranteed Indebtedness.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of the Borrower that shall accrue
pursuant to this Agreement shall be paid or shall be deemed owed pursuant to
this Agreement or any Loan Documents until all of the Guaranteed Indebtedness
shall be paid in full.
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 2
164
4. Each party hereto represents and warrants to each other party
hereto and to their respective successors and assigns that:
(a) the execution, delivery and performance by each party
hereto of this Agreement are within such party's corporate or
partnership powers, have been duly authorized by all necessary
corporate or partnership action, as the case may be, require no action
by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or bylaws or other organizing document of such party or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon such party or result in the creation or
imposition of any lien, security interest or other charge or
encumbrance on any asset of such party; and
(b) this Agreement constitutes a legal, valid and binding
agreement of each party hereto, enforceable against such party in
accordance with its terms.
5. No failure or delay by any Company in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and non-exclusive of any rights or
remedies provided by law.
6. Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
parties hereto and consented to by the Agent and the Required Banks.
7. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
9. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when a counterpart hereof shall have been signed by all the parties
hereto.
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 3
165
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
HEALTHCOR HOLDINGS, INC.
HEALTHCOR, INC.
HEALTHCOR OXYGEN AND MEDICAL
EQUIPMENT, INC.
HEALTHCOR REHABILITATION SERVICES,
INC.
HC PERSONNEL RESOURCES, INC.
HEALTHCOR PHARMACY, INC.
PHYSICIANS HOME HEALTH NETWORK, INC.
CARENETWORK, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 4
166
EXHIBIT "I"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Matters to be Addressed in Opinion of Counsel
167
Matters to be Addressed in Opinion of Counsel
All capitalized terms used and not otherwise defined herein shall have
their respective meanings as set forth in the Second Amended and Restated
Credit Agreement to which this is an Exhibit (the "Credit Agreement").
1. Each Company (other than Physicians Home Health
Network, Inc.) is a corporation duly organized, validly existing, and
in good standing under the laws of the state of its incorporation.
Except where failure would not have a material adverse effect on its
business, condition (financial or otherwise), operations, prospects,
or properties, each Company is duly qualified to transact business as
a foreign corporation in each jurisdiction where such Company conducts
any substantial business or has any property, which includes, without
limitation, those jurisdictions named for each Company on Schedule 1
to the Credit Agreement.
2. The Borrower has the corporate power and authority to
execute, deliver, and perform the Credit Agreement, the Notes, the
other Loan Documents and the Senior Notes Documents to which such
Borrower is a party. The execution, delivery, and performance by the
Borrower of the Credit Agreement, the Notes, the other Loan Documents
and the Senior Notes Documents to which such Borrower is a party and
compliance with the terms and provisions thereof have been duly
authorized by all requisite corporate action on the part of the
Borrower and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the
certificate of incorporation or bylaws of the Borrower, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii) any
agreement or instrument to which the Borrower is a party or by which
the Borrower or any of its properties is bound or subject, or (b)
constitute a default under any such agreement or instrument, or result
in the creation or imposition of any Lien (except Liens created in
favor of the Agent for the benefit of itself, the Banks, and the
Issuing Banks pursuant to the Loan Documents) upon any of the revenues
or assets of the Borrower.
3. Each Guarantor has the corporate power and authority
to execute, deliver, and perform the Guaranty (the "Subsidiary
Guaranty"), each of the other Loan Documents and Senior Notes
Documents to which such Guarantor is a party. The execution,
delivery, and performance by the Guarantors of the Subsidiary
Guaranty, each of the other Loan Documents and the Senior Notes
Documents to which such Guarantor is a party and compliance with the
terms and provisions thereof have been duly authorized by all
requisite corporate action on the part of such Guarantor and do not
and will not (a) violate or conflict with, or result in a breach of,
or require any consent under (i) the articles or certificate of
incorporation or bylaws of such Guarantor, (ii) any applicable law,
rule, or regulation or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any agreement or
instrument to which such Guarantor is a party or by which it or any of
its property is bound or subject, or (b) constitute a default under
any such agreement or instrument, or result in the creation or
imposition of any Lien (except Liens created in favor of the Agent for
the benefit of itself, the Banks and
MATTERS TO BE ADDRESSED IN OPINION OF COUNSEL - Page 1
168
the Issuing Banks pursuant to the Loan Documents) upon any of the
revenues or assets of such Guarantor.
4. The Credit Agreement, the Notes, the other Loan
Documents and the Senior Notes Documents to which the Borrower is a
party have been duly executed and delivered by the Borrower and
constitute the legal, valid, and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally.
5. The Subsidiary Guaranty, each of the other Loan
Documents and the Senior Notes Documents to which each Guarantor is a
party have been duly executed and delivered by each Guarantor and
constitute the legal, valid, and binding obligations of each Guarantor
enforceable against such Guarantor in accordance with their respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally.
6. There are no legal or arbitral proceedings and no
proceedings by or before any Governmental Authority, pending or, to
our knowledge, threatened against or affecting the Borrower, any
Guarantor or any properties or rights of the Borrower or any
Guarantor, which if adversely determined, would have a material
adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Guarantor.
7. No authorization, consent, or approval of, or filing
or registration with (except as have been obtained or made on or prior
to the Closing Date and which remain in full force and effect on the
Closing Date), or exemption by any Governmental Authority is required
for the execution, delivery, and performance by the Borrower of the
Credit Agreement, the Notes, any other Loan Document or any Senior
Notes Document to which the Borrower is a party, or the execution,
delivery, and performance by any Guarantor of the Subsidiary Guaranty,
any other Loan Document or any Senior Notes Document to which such
Guarantor is a party.
8. All of the shares of capital stock of each issuer of
stock pledged pursuant to the Pledge Agreement (the "Pledged Stock")
have been duly authorized and validly issued and are fully paid and
nonassessable. None of the shares of capital stock of any issuer of
the Pledged Stock are subject to any restriction on transfer or
assignment, except compliance with applicable securities laws and
regulations.
9. None of the Companies is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
10. The issuance of the Senior Notes has been consummated
in accordance with the terms of the Senior Notes Documents and all
applicable laws. All consents and approvals of, and filings and
registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required in
order to make or
MATTERS TO BE ADDRESSED IN OPINION OF COUNSEL - Page 2
169
consummate the issuance of the Senior Notes have been obtained, given,
filed or taken and are in full force and effect (or effective judicial
relief with respect thereto has been obtained). All applicable
waiting periods with respect thereto have expired without, in all such
cases, any action being taken by any competent authority which
restrains, prevents, or imposes material adverse conditions upon the
issuance of the Senior Notes. Additionally, there does not exist any
judgment, order, or injunction prohibiting or imposing material
adverse conditions upon the issuance of the Senior Notes, and there
does not exist any judgment, order or injunction prohibiting or
imposing material adverse conditions upon the performance of the
Borrower or any of its Subsidiaries of their obligations under the
Senior Notes Documents. All actions taken by the Borrower or any of
its Subsidiaries, as the case may be, pursuant to or in furtherance of
the issuance of the Senior Notes have been taken in compliance with
the Senior Notes Documents and all applicable laws. The Credit
Agreement (and only the Credit Agreement) constitutes the "New Credit
Facility" under, and as defined in, the Senior Notes Indenture.
MATTERS TO BE ADDRESSED IN OPINION OF COUNSEL - Page 3
170
EXHIBIT "J"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Form of Assignment and Acceptance
171
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19__
Reference is hereby made to the Second Amended and Restated Credit
Agreement dated as of December 1, 1997 (as the same may be amended and in
effect from time to time, the "Credit Agreement"), among HEALTHCOR HOLDINGS,
INC., a Delaware corporation (the "Borrower"), the lenders from time to time
party thereto (the "Banks"), Texas Commerce Bank National Association, as an
issuing bank (in such capacity, an "Issuing Bank"), and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as agent for itself, the Issuing Banks and the other
Banks (in such capacity, the "Agent"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
________________________ (the "Assignor") and _________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a
_________% interest in and to all the Assignor's rights and
obligations under the Credit Agreement and the other Loan
Documents as of the Effective Date (as defined below)
(including, without limitation, such percentage interest in
the Revolving Credit Commitment of the Assignor on the
Effective Date and such percentage interest in Assignor's pro
rata interest in the Revolving Credit Loans and pro rata
participation interests in the Letter of Credit Liabilities
outstanding on the Effective Date together with such
percentage interest in all unpaid interest and fees accrued
from the Effective Date). This Assignment and Acceptance is
made by Assignor without recourse.
2. The Assignor (i) represents that as of the date hereof its
Revolving Credit Commitment is equal to $_______________, the
outstanding principal balance of its Revolving Credit Loans is
$______________, and its participation in outstanding Letters
of Credit is $______________ (all as unreduced by any
assignments which have not yet become effective); (ii) makes
no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any
other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other Loan Document, other than that
it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and
clear of any adverse claim; (iii) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Obligated Party or
the performance or observance by the Borrower or any other
Obligated Party of any of their obligations under the
Agreement or any other Loan Document; and
ASSIGNMENT AND ACCEPTANCE - Page 1
172
(iv) attaches the Note held by Assignor and requests that the
Agent exchange such Note for a new Note payable to the order
of (a) the Assignee in an amount equal to the Revolving Credit
Commitment assumed by the Assignee pursuant hereto, and (b)
the Assignor in an amount equal to the Revolving Credit
Commitment retained by the Assignor under the Credit
Agreement, retained thereby as specified above.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b)
confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements
delivered pursuant to Section 9.1(a) thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Agent, the
Assignor, any Issuing Bank, or any other Bank and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking
or not taking action under the Credit Agreement and the other
Loan Documents; (d) confirms that it is eligible to be an
Assignee; (e) appoints and authorizes Texas Commerce Bank
National Association to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as
are delegated to the agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (f) agrees
that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement and the
other Loan Documents are required to be performed by it as a
Bank; [and] (g) agrees that it will keep confidential all
information with respect to the Borrower or any Obligated
Party furnished to it by the Borrower or any Obligated Party
or the Assignor (other than information generally available to
the public or otherwise available to the Assignor on a
nonconfidential basis) [; and (h) attaches the forms
prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's exemption from United
States withholding taxes with respect to all payments to be
made to the Assignee under the Loan Documents or such other
documents as are necessary to indicate that all such payments
are subject to such tax at a rate reduced by an applicable tax
treaty].1
4. The effective date for this Assignment and Acceptance shall be
______________, 19__ (the "Effective Date").2 Following the
execution of this Assignment and Acceptance, it will be
delivered to the Agent for its acceptance and recording.
--------------------
1 If the Assignee is organized under the laws of a
jurisdiction outside the United States.
2 Such date shall be at least ten (10) Business
Days after the execution of this Assignment and
Acceptance and delivery thereof to the Agent.
ASSIGNMENT AND ACCEPTANCE - Page 2
173
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this
Assignment and Acceptance, shall have the rights and
obligations of a Bank thereunder and under the other Loan
Documents and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement
and the other Loan Documents other than its obligations under
Section 14.19 of the Credit Agreement.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect
of the interest assigned hereby (including payments of
principal, interest, fees, and other amounts) to the Assignee.
The Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective
Date by the Agent or with respect to the making of this
assignment directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Texas
and applicable laws of the United States of America.
[NAME OF ASSIGNOR],
Original
Revolving Credit Commitment: By:
-----------------------------------
Name:
$ Title:
---------------------------------
Effective Date
Revolving Credit Commitment:
$
---------------------------------
ASSIGNMENT AND ACCEPTANCE - Page 3
174
[NAME OF ASSIGNEE],
Revolving Credit Commitment: By:
-----------------------------------
Name:
-----------------------------
$ Title:
--------------------------------- ----------------------------
Accepted on the _____ day
of __________, 19__.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as agent for itself, the other
Issuing Banks and the other
Banks
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNMENT AND ACCEPTANCE - Page 4
175
EXHIBIT "K"
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Compliance Certificate
176
HEALTHCOR HOLDINGS, INC.
COMPLIANCE CERTIFICATE
FOR THE PERIOD ENDING ___________________
The undersigned officer of HealthCor Holdings, Inc. does hereby certify that
the following covenants and financial tests, as set forth in the Second Amended
and Restated Credit Agreement dated as of December 1, 1997 (the "Agreement"),
among HealthCor Holdings, Inc., Texas Commerce Bank National Association, as
agent (in such capacity, the "Agent"), the lenders from time to time party
thereto (the "Banks") and the Issuing Banks (as defined therein) are as follows
on a consolidated basis for HealthCor Holdings, Inc., and its subsidiaries:
In Compliance
(Please indicate)
-----------------
1. Financial Statements and Reports
--------------------------------
(i) Annual CPA audited consolidated and consolidating FYE
financial statements together with a Compliance Certificate
within 90 days after the end of each fiscal year. Yes No
(ii) Monthly unaudited consolidated and consolidating
financial statements within 45 days of each month end.
Such financial statements have been prepared in accordance with
GAAP and fairly and accurately present (subject to year-end audit
adjustments and disclosure) the financial condition and results
of operations of the Companies, on a consolidated and
consolidating basis, at the date and for the periods indicated therein. Yes No
(iii) Quarterly Compliance Certificate within 45 days of each fiscal quarter
end and concurrently with the delivery of the financial statements
referred to in (i) above. Yes No
2. Funded Debt to EBITDAA Ratio (To be calculated as of the last day of
each fiscal quarter.) Maximum allowed at all times is as follows
provided, Borrower will not permit the Funded Debt to EBITDAA Ratio
for any four quarter period to exceed 3.50 to 1.00 at any time after
the Borrower's Funded Debt to Pre-Compliance EBITDAA is less than 3.50
to 1.00:
Period: Ratio:
------ -----
December 1, 1997 until March 31, 1997 4.25 to 1.00
April 1, 1998 until December 31, 1998 4.00 to 1.00
January 1, 1999 until December 31, 1999 3.75 to 1.00
Thereafter 3.50 to 1.00
As of the quarter ending _________________:
$ / $ = Yes No
--------------------- ---------- ----------------
Funded Debt1 EBITDAA Ratio
3. Consolidated Net Worth
Minimum Consolidated Net Worth maintained at all times of not less
than 80% of Consolidated Net Worth as of December 31, 1996 plus 50% of
consolidated net income (if positive) for each fiscal year after
December 31, 1996, plus 100% of the net proceeds of any equity issued.
Consolidated Net Worth $
----------------
80% of Consolidated Net Worth as of December 31, 1996 $
----------------
Plus: 50% of consolidated net income (if positive)
after December 31, 1996 $
----------------
Plus: 100% of the net proceeds of any equity issued $
----------------
Minimum Consolidated Net Worth Amount = $
----------------
Consolidated Net Worth greater than or equal to Minimum Consolidated Net Worth Amount Yes No
-----------------------------------
1 Attached hereto as Schedule 1 is an itemization by
category of all Funded Debt of the Companies.
Page 1 of 2
177
4. Interest Coverage Ratio (To be calculated on a consolidated basis as
of the last day of each fiscal quarter.) Minimum allowed required at
end of each fiscal quarter.
Period: Ratio:
------ -----
December 31, 1997 until December 31, 1998 1.50 to 1.00
January 1, 1999 until December 31, 1999 2.00 to 1.00
Thereafter 2.25 to 1.00
EBITDA $
-----------------
Plus: Historical Acquired EBITDA $
-----------------
Minus: Total capital expenditures of the Companies $
-----------------
Total Available Cash Flow $
-----------------
Interest Expense of the Companies = $
-----------------
$ / $ = Yes No
------------------- ------------------------ -----------------
Total Available Interest Expense Ratio
Cash Flow
5. Funded Debt to Capitalization Ratio (To be calculated as of the last
day of each fiscal quarter.) Maximum allowed at all times is:
Period: Ratio:
------ -----
December 1, 1997 until June 29, 1998 0.70 to 1.00
Thereafter 0.65 to 1.00
Funded Debt of the Companies = $
--------------
Funded Debt of the Companies $
-------------
Plus: Consolidated Net Worth $
-------------
Total Capitalization = $
-------------
$ / $ = Yes No
---------------------- ----------------------- --------------------------
Funded Debt Total Capitalization Ratio
THE ABOVE SUMMARY REPRESENTS ONLY A SMALL PORTION OF THE COVENANTS AND
AGREEMENTS CONTAINED IN THE AGREEMENT AND DOES NOT IN ANY WAY RESTRICT OR
MODIFY THE TERMS AND CONDITIONS OF THE AGREEMENT. IN CASE OF CONFLICT BETWEEN
THIS CERTIFICATE AND THE AGREEMENT, THE AGREEMENT SHALL CONTROL.
All capitalized terms used and not defined herein shall have their respective
meanings as set forth in the Agreement.
The undersigned hereby certifies that the above information and computations
are true and correct and not misleading as of the date hereof, and that no
Default exists. The undersigned hereby further certifies that the
representations and warranties contained in Article VIII of the Credit
Agreement and in each of the other Loan Documents are true and correct on and
as of the date hereof with the same force and effect as if made on and as of
such date.
Executed this ________ day of ______________________, 19___.
HEALTHCOR HOLDINGS, INC.
NAME:
------------------------------------------------
TITLE:
-----------------------------------------------
ADDRESS:
---------------------------------------------
Page 2 of 2
178
SCHEDULE I
Itemization of Funded Debt
179
SCHEDULE 1
List of Subsidiaries
PERCENTAGE OF
NAME OF JURISDICTION OF VOTING STOCK OWNED QUALIFIED TO DO BUSINESS IN
SUBSIDIARY INCORPORATION BY BORROWER
HealthCor, Inc. Delaware 100% Arizona, Arkansas, Kansas,
Missouri, New Mexico,
Oklahoma, Texas
HealthCor Pharmacy, Inc. Texas 100% Arkansas, Colorado, Kansas,
Missouri, Oklahoma, Arizona
HealthCor Oxygen and Medical Texas 100% Arkansas, Colorado, Kansas,
Equipment, Inc. Missouri, New Mexico,
Oklahoma, Louisiana, Arizona
HealthCor Rehabilitation Texas 100% None
Services, Inc.
Physicians Home Health Network, Missouri 100% None
Inc.
HC Personnel Resources, Inc. Texas 100% None
CareNetwork, Inc. Arkansas 100% Arkansas
180
SCHEDULE 2
Existing Litigation
None
181
SCHEDULE 3
Existing Debt
[omitted]
182
SCHEDULE 4
Existing Liens
Bankers Leasing Association, Inc.
ββββ ββββ ββββ ββββ
ββββββββββ, ββββββββ βββββ
(βββ) βββ-ββββ
183
SCHEDULE 5
Historical Acquired EBITDA
HEALTHCOR HOLDINGS, INC.
Summary of Historical EBITDA
Quarter Historical
Ended EBITDA
------- ----------
9/30/97 $ 814,352
12/31/97 $ 778,192
3/31/96 $ 225,020
Calculation of Historical EBITDA
--------------------------------
September 1997 December 1997 March 1998
------------------- ------------------- ---------------------
Date Historical
Company Acquired EBITDA EBITDA Factor EBITDA Factor EBITDA Factor
---------- -------- ---------- -------------------- -------------------- ---------------------
Falmont 11/1/96 $ 66,261 $ 5,522 0.083
Guardian 12/1/96 183,825 30,638 0.167
VNS 4/1/97 144,265 48,088 0.333 $ 48,088 0.333 $ 12,022 0.083
Carenetwork 4/19/97 1,580,877 526,959 0.333 526,959 0.333 131,740 0.083
American Medical 6/1/97 487,548 203,145 0.417 203,145 0.417 81,258 0.167
Total ---------- --------- ---------
$ 814,352 $ 778,192 $ 225,020