EXHIBIT 10.16
EXECUTION
COUNTERPART
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CREDIT AGREEMENT
DATED AS OF DECEMBER 23, 1998
AMONG
PSYCH SYSTEMS HOLDINGS, INC.,
AMERICAN PSYCH SYSTEMS HOLDINGS, INC.,
THE LENDERS REFERRED TO HEREIN
AND
NATIONSCREDIT COMMERCIAL CORPORATION,
AS AGENT
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TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS......................................................1
SECTION 1.01. Certain Defined Terms.......................................1
SECTION 1.02. Accounting Terms and Determinations........................17
SECTION 1.03. Other Definitional Provisions..............................18
ARTICLE II - TERM LOANS.....................................................18
SECTION 2.01. Term Loans.................................................18
SECTION 2.02. Term Loan Notes............................................19
SECTION 2.03. Interest on the Term Loans.................................19
SECTION 2.04. Repayments and Prepayments of Term Loan Notes..............19
ARTICLE III - REVOLVING CREDIT LOANS........................................22
SECTION 3.01. Revolving Credit Loans and Commitments.....................22
SECTION 3.02. Revolving Credit Notes.....................................23
SECTION 3.03. Interest on the Revolving Credit Loans.....................23
SECTION 3.04. Advancing Revolving Credit Loans...........................24
SECTION 3.05. Mandatory Repayments and Prepayments.......................24
SECTION 3.06. Optional Prepayments.......................................26
SECTION 3.07. Application of Payments....................................26
SECTION 3.08. Reduction of Commitments...................................26
SECTION 3.09. Warrants...................................................27
ARTICLE IV - CONDITIONS.....................................................27
SECTION 4.01. Conditions to Closing......................................27
SECTION 4.02. Conditions to Acquisition Loans............................29
SECTION 4.03. Conditions to Each Loan....................................31
ARTICLE V - REPRESENTATIONS AND WARRANTIES..................................31
SECTION 5.01. Corporate Existence and Power..............................31
SECTION 5.02. Corporate and Governmental Authorization; No Contravention.32
SECTION 5.03. Binding Effect; Liens of Security Documents................32
SECTION 5.04. Financial Information......................................33
SECTION 5.05. Litigation.................................................33
SECTION 5.06. Ownership of Property, Liens...............................34
SECTION 5.07. No Default.................................................34
SECTION 5.08. No Burdensome Restrictions.................................34
SECTION 5.09. Labor Matters..............................................34
SECTION 5.10. Subsidiaries; Other Equity Investments.....................35
SECTION 5.11. Investment Company Act.....................................35
SECTION 5.12. Margin Regulations.........................................35
SECTION 5.13. Taxes......................................................35
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SECTION 5.14. Compliance with ERISA......................................36
SECTION 5.15. Brokers....................................................36
SECTION 5.16. Employment, Shareholders and Subscription Agreements.......36
SECTION 5.17. Full Disclosure............................................36
SECTION 5.18. Private Offering...........................................37
SECTION 5.19. Compliance with Environmental Requirements; No Hazardous
Materials..................................................37
SECTION 5.20. Real Property Interests....................................39
SECTION 5.21. Initial Capitalization.....................................39
SECTION 5.22. Third Party Reimbursement..................................39
SECTION 5.23. Third Party Reimbursement..................................40
ARTICLE VI - AFFIRMATIVE COVENANTS..........................................40
SECTION 6.01. Financial Statements and Other Reports.....................40
SECTION 6.02. Payment of Obligations.....................................44
SECTION 6.03. Conduct of Business and Maintenance of Existence...........44
SECTION 6.04. Maintenance of Property; Insurance.........................44
SECTION 6.05. Compliance with Laws.......................................45
SECTION 6.06. Inspection of Property, Books and Records..................45
SECTION 6.07. Use of Proceeds............................................46
SECTION 6.08. Further Assurances.........................................46
SECTION 6.09. Lenders' Meetings..........................................46
SECTION 6.10. Hedging Facilities.........................................46
SECTION 6.11. Hazardous Materials; Remediation...........................46
SECTION 6.12. [Reserved].................................................46
SECTION 6.13. Collections; Right to Notify Account Debtors...............47
SECTION 6.14. Board Meetings.............................................47
SECTION 6.15. Enforcement of Covenants Not to Compete....................48
SECTION 6.16. [Reserved].................................................48
SECTION 6.17. Landlord and Warehouseman Waivers..........................48
SECTION 6.18. Mortgages on Real Property; Title Insurance and Survey.....48
SECTION 6.19. Additional Subsidiaries....................................49
SECTION 6.20. Accreditation and Licensing................................49
SECTION 6.21. Accreditation and Licensing................................49
SECTION 6.22. Accreditation and Licensing................................49
ARTICLE VII - NEGATIVE COVENANTS............................................50
SECTION 7.01. Debt.......................................................50
SECTION 7.02. Negative Pledge............................................50
SECTION 7.03. Capital Stock..............................................51
SECTION 7.04. Restricted Payments........................................51
SECTION 7.05 ERISA......................................................51
SECTION 7.06. Consolidations, Mergers and Sales of Assets................52
SECTION 7.07. Purchase of Assets, Investments............................52
SECTION 7.08. Transactions with Affiliates...............................53
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SECTION 7.09. Amendments or Waivers......................................53
SECTION 7.10. Fiscal Year................................................53
SECTION 7.11. Management Compensation....................................53
SECTION 7.12. Capitated Beneficiary Adjustments; Public Contracts
Capitation Risk............................................53
SECTION 7.13. Investor Fees..............................................53
SECTION 7.14. Capital Expenditures.......................................54
SECTION 7.15. Total Debt Service Coverage Ratio..........................54
SECTION 7.16. Leverage Ratio.............................................54
SECTION 7.17. Minimum Consolidated Net Worth.............................54
SECTION 7.18. Interest Coverage..........................................54
SECTION 7.19. Minimum EBITDA.............................................55
SECTION 7.20. Transition Rules...........................................55
SECTION 7.21. Activities of the Holding Company..........................55
ARTICLE VIII - EVENTS OF DEFAULT............................................56
SECTION 8.01. Events of Default..........................................56
ARTICLE IX - FEES, EXPENSES AND INDEMNITIES;................................60
SECTION 9.01. Fees.......................................................60
SECTION 9.02. Computation of Interest and Fees...........................60
SECTION 9.03. General Provisions Regarding Payments......................60
SECTION 9.04. Expenses...................................................61
SECTION 9.05. Indemnity..................................................61
SECTION 9.06. Taxes......................................................62
SECTION 9.07. Funding Losses.............................................62
SECTION 9.08. Maximum Interest...........................................62
ARTICLE X - THE AGENT.......................................................63
SECTION 10.01. Appointment and Authorization..............................63
SECTION 10.02. Agent and Affiliates.......................................63
SECTION 10.03. Action by Agent............................................64
SECTION 10.04. Consultation with Experts..................................64
SECTION 10.05. Liability of Agent.........................................64
SECTION 10.06. Indemnification............................................64
SECTION 10.07. Credit Decision............................................64
SECTION 10.08. Successor Agent............................................65
ARTICLE XI - MISCELLANEOUS..................................................65
SECTION 11.01. Survival...................................................65
SECTION 11.02. No Waivers.................................................65
SECTION 11.03. Notices....................................................65
SECTION 11.04. Severability...............................................66
SECTION 11.05. Amendments and Waivers.....................................66
SECTION 11.06. Successors and Assigns; Registration.......................66
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SECTION 11.07. Collateral.................................................68
SECTION 11.08. Headings...................................................68
SECTION 11.09. Governing Law; Submission to Jurisdiction..................68
SECTION 11.10. [Reserved].................................................68
SECTION 11.11. Waiver of Jury Trial.......................................69
SECTION 11.12. Counterparts...............................................69
SECTION 11.13. Confidentiality............................................69
EXHIBIT A-1 - Term Loan Note
EXHIBIT A-2 - Revolving Credit Note
EXHIBIT B - Notice of Revolving Credit Loan
EXHIBIT C - Company Security Agreement
EXHIBIT D - Pledge Agreement
EXHIBIT E - Holding Company Guaranty Agreement
EXHIBIT F - Holding Company Pledge Agreement
EXHIBIT G - Subsidiary Guaranty Agreement
EXHIBIT H - Subsidiary Security Agreement
EXHIBIT I - Subsidiary Pledge Agreement
EXHIBIT J - Warrant
EXHIBIT K - Warrantholders Rights Agreement
EXHIBIT L - Opinion of Counsel for the Company
EXHIBIT M - Partnership Interest Pledge Agreement
SCHEDULE 5.04 - Operating and Capital Expenditures Budget
SCHEDULE 5.05 - Pending Litigation Matters
SCHEDULE 5.06 - Potential Patent/Trademark Infringement Claims
SCHEDULE 5.10 - Subsidiaries
SCHEDULE 5.16 - Employment, Shareholders' and Subscription Agreements
SCHEDULE 5.19 - Environmental Matters
SCHEDULE 5.20 - Real Property Interests
SCHEDULE 5.21 - Initial Capitalization
SCHEDULE 5.22 - Year 2000 Compliance
SCHEDULE 5.23 - Third Party Reimbursement Claims
SCHEDULE 6.04 - Required Insurance
SCHEDULE 7.11 - Management Compensation
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of December 23, 1998, among PSYCH SYSTEMS
HOLDINGS, INC., AMERICAN PSYCH SYSTEMS HOLDINGS, INC, the LENDERS listed on the
signature pages hereof and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. The following terms have
the following meanings:
"ACCOUNT DEBTOR" shall mean any Person who may become obligated to
the Company or any Subsidiary under, with respect to, or on account of, a
Receivable of such Credit Party (including without limitation any guarantor of
the payment or performance of a Receivable).
"ACQUISITION" means the purchase by the Company or any Subsidiary
of: (i) any company, limited liability company, association, partnership, joint
venture or other organization that is a managed behavioral healthcare company,
(ii) all or substantially all of the assets of any such Person or (iii) a
business line of any Person which business line constitutes a managed behavioral
healthcare business.
"ACQUISITION AVAILABILITY" has the meaning specified in Section
3.01(c).
"ACQUISITION LOANS" means, collectively, the Revolving Credit Loans
of the Lenders to be made to the Company pursuant to Section 3.01(c).
"AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a "CONTROLLING
PERSON") or (ii) any Person (other than the Company or any of its Subsidiaries)
which is controlled by or is under common control with a Controlling Person. As
used herein, the term "control" of a Person means the possession, directly or
indirectly, of the power to vote 10% or more of any class of voting securities
of such Person or to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENT" means NationsCredit in its capacity as agent for the Lenders
hereunder, and its successors in such capacity.
"AGREEMENT" means this Credit Agreement as the same shall be
amended, restated or modified from time to time.
"AGREEMENT DATE" means the date as of which this Agreement is dated.
"AMORTIZATION COMMENCEMENT DATE" shall have the meaning assigned to
it in Section 3.05(c).
"APS" means American Psych Systems, Inc., an Iowa corporation.
"ASSET SALE" means any sale, lease or other disposition (including
any such transaction effected by way of merger or consolidation) by any Credit
Party of any asset, but excluding (i) dispositions of inventory in the ordinary
course of business and (ii) dispositions of Temporary Cash Investments and cash
payments otherwise permitted under this Agreement; PROVIDED that a disposition
of assets not excluded by clauses (i) or (ii) above during any Fiscal Year shall
not constitute an Asset Sale unless and until (and only to the extent that) (x)
the aggregate Net Cash Proceeds of such disposition of assets are not used for
the purchase of reasonably equivalent replacements of such assets acquired or
ordered within 90 days thereof or (y) the aggregate Net Cash Proceeds from such
disposition (if not used as provided in clause (x) above), when combined with
all other such dispositions previously made during such Fiscal Year and not used
as provided in clause (x) above, exceeds $100,000.
"AUTHORIZED SIGNATORY" means a Person designated as such by the
Company to the Agent in writing.
"AVAILABILITY TERMINATION DATE" means December 15, 1999, or such
later date to which the Lenders, in their sole good faith discretion upon the
written request of the Company, may agree to extend the Company's ability to
incur Acquisition Loans.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or Bethesda,
Maryland are authorized by law to close.
"CAPITAL LEASE" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.
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"CAPITATED BENEFICIARY ADJUSTMENT" means any payments made to APS
upon the termination of the PHC Service Agreement pursuant to Section 2.3 of
the PHC Purchase Agreement based on the formula set forth on Schedule II-A to
the PHC Purchase Agreement.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 ET SEQ.), as
amended from time to time, and regulations promulgated thereunder.
"CHAMPUS RECEIVABLE" means a Receivable payable pursuant to
CHAMPUS.
"CHAMPUS" means, collectively, the Civilian Health and Medical
Program of the Uniformed Service, a program of medical benefits covering
former and active members of the uniformed services and certain of their
dependents, financed and administered by the United States Departments of
Defense, Health and Human Services and Transportation, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 10 U.S.C.
Sections 1071-1106 or elsewhere) affecting such program; and (b) all rules,
regulations (including 32 C.F.R. Section 199), manuals, orders and
administrative, reimbursement and other guidelines of all governmental
authorities promulgated in connection with such program (whether or not
having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.
"CHAMPVA RECEIVABLE" means a Receivable payable pursuant to
CHAMPVA.
"CHAMPVA" means, collectively, the Civilian Health and Medical
Program of the Department of Veteran Affairs, a program of medical benefits
covering retirees and dependents of former members of the armed services
administered by the United States Department of Veteran Affairs, and all
laws, rules, regulations, manuals, orders, guidelines or requirements
pertaining to such program including (a) all federal statutes (whether set
forth in 38 U.S.C. Section 1713 or elsewhere) affecting such program or, to
the extent applicable to CHAMPVA, CHAMPUS; and (b) all rules, regulations
(including 38 C.F.R. Section 17.54), manuals, orders and administrative,
reimbursement and other guidelines of all governmental authorities
promulgated in connection with such program (whether or not having the force
of law), in each case as the same may be amended, supplemented or otherwise
modified from time to time.
"CLASS" refers, with respect to Loans, to whether such Loans are
Term Loans or Revolving Credit Loans and, with respect to Commitments, to
whether such Commitments are Term Loan Commitments or Revolving Credit
Commitments.
"CLASS A COMMON STOCK" means the Class A Common Stock of the Holding
Company, par value $.001 per share.
"CLASS B COMMON STOCK" means the Class B Common Stock of the Holding
Company, par value $.001 per share.
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"CLOSING DATE" means December 23, 1998, or such other date as the
parties hereto agree to in writing.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means all property mortgaged, pledged or otherwise
purported to be subjected to a Lien pursuant to the Security Documents.
"COMMITMENT" means a Term Loan Commitment, Revolving Credit
Commitment, or any combination of the foregoing as the context may require.
"COMMITMENT TERMINATION DATE" shall have the meaning assigned to it
in Section 3.05(a).
"COMMON STOCK" means, either or both of the Class A Common Stock and
the Class B Common Stock, as the context may require.
"COMPANY" means Psych Systems Holdings, Inc., a Delaware
corporation.
"COMPANY ACCOUNT" means the account specified on the signature pages
hereof into which all Loans to the Company shall be made available, or such
other account as the Company shall from time to time specify by notice to the
Lenders.
"COMPANY PLEDGE AGREEMENT" means the Pledge Agreement dated as of
the date hereof, between the Company and the Agent, substantially in the form of
EXHIBIT D.
"COMPANY SECURITY AGREEMENT" means the Security Agreement dated as
of the date hereof, between the Company and the Agent, substantially in the form
of EXHIBIT C.
"CONSOLIDATED ADJUSTED CURRENT ASSETS" means, at any date, the
consolidated current assets (excluding cash and cash equivalents) of the Holding
Company and its Consolidated Subsidiaries determined as of such date.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Holding Company and its Consolidated
Subsidiaries for plant, property and equipment during such period (including any
such expenditures by way of acquisition of a Person or by way of assumption of
indebtedness or other obligations of a Person, to the extent reflected as plant,
property and equipment), but excluding any such expenditures made for the
replacement or restoration of assets to the extent financed by condemnation
awards or proceeds of insurance received with respect to the loss or taking of
or damage to the asset or assets being replaced or restored.
"CONSOLIDATED CURRENT ASSETS" means, at any date, the consolidated
current assets of the Holding Company and its Consolidated Subsidiaries
determined as of such date.
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"CONSOLIDATED CURRENT LIABILITIES" means, at any date, (i) the
consolidated current liabilities (excluding Debt) of the Holding Company and its
Consolidated Subsidiaries plus (ii) the current liabilities of any Person (other
than the Holding Company or a Consolidated Subsidiary) which are Guaranteed by
the Holding Company or a Consolidated Subsidiary, all determined as of such
date.
"CONSOLIDATED EBITDA" means, for any period, the EBITDA of the
Holding Company and its Consolidated Subsidiaries for such period.
"CONSOLIDATED FREE CASH FLOW" means, for any period, Consolidated
EBITDA for such period minus the following amounts:
(a) all cash payments of income taxes by the Holding Company
and its Consolidated Subsidiaries during such period; and
(b) Consolidated Capital Expenditures for such period, to the extent
that such Consolidated Capital Expenditures are permitted by Section 7.14
and are not financed during such period with the proceeds of Debt of the
Holding Company or any Subsidiary permitted under Section 7.01(b).
"CONSOLIDATED NET INCOME" means, the net income of the Holding
Company and its Consolidated Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED NET WORTH" means as of the date of any determination
thereof, the amount of the shareholder's equity of the Holding Company and its
Consolidated Subsidiaries as would be shown on the consolidated balance sheet of
the Holding Company and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Holding
Company in its consolidated financial statements if such statements were
prepared as of such date.
"CONSOLIDATED TOTAL DEBT" means at any date the Debt of the Holding
Company and its Consolidated Subsidiaries, determined on a consolidated basis at
such date.
"COVENTRY HEALTH CARE" means Coventry Health Care, Inc., a
Delaware corporation.
"CREDIT PARTY" means the Company, any Subsidiary of the Company, and
each other Guarantor.
"DEBT" of a Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the
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deferred purchase price of property or services, except trade accounts payable
arising and paid in the ordinary course of business, (iv) all Capital Leases of
such Person, (v) all obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the issuance or sale of the
same or substantially similar securities (or property), (vi) all contingent or
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument, (vii)
all equity securities of such Person subject to repurchase or redemption
otherwise than at the sole option of such Person, (viii) all Debt secured by a
Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, and (ix) all Debt of others Guaranteed by such
Person.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 9.02(b).
"EBITDA" means, for any period and for any Person, the Consolidated
Net Income of such Person and its consolidated subsidiaries for such period,
after all expenses and other proper charges except depreciation, interest,
amortization and income taxes, determined in accordance with GAAP (specifically
including in the calculation thereof in the case of the Holding Company and its
Consolidated Subsidiaries (x) any income or loss from discontinued operations
and (y) the full amount of any charges incurred in such period related to the
development of new business, whether expensed or capitalized) (A) eliminating,
without duplication: (i) all intercompany items, (ii) all earnings attributable
to equity interests in Persons that are not Subsidiaries of such Person unless
actually received by such Person, (iii) all income arising from the forgiveness,
adjustment, or negotiated settlement of any indebtedness, (iv) any extraordinary
items of income or expense (including as an extraordinary item in the case of
the Holding Company and its Consolidated Subsidiaries (1) up to $800,000 in new
business development expenses incurred prior to the Closing Date with respect to
the Pinnacle Health Enterprise, Inc., the Southwest Community Behavioral Care,
LLC or the Health Insurance Plan of New York relationships that were previously
capitalized by the Holding Company, and (2) any income or charges relating to
(x) employee termination payments, (y) lease terminations and (z) write offs of
uncollectable accounts, in each case arising from the discontinuance of the
partial hospitalization business), (v) any increase or decrease in income
arising from any change in such Person's method of accounting, subject (in the
case of the Holding Company) to Section 1.02, and (vi) any interest income, and
(B) deducting therefrom, to the extent not previously deducted in calculating
Consolidated Net Income, any development costs incurred subsequent to the
Closing Date, whether expensed or capitalized on the books of the Holding
Company.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
ground water or land, or otherwise relating
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to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Materials or wastes
or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute.
"ERISA GROUP" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.01.
"EXCESS CASH FLOW" means, for any period, an amount equal to (i)
Consolidated Free Cash Flow for such period, PLUS (ii) any interest income of
the Holding Company and its Consolidated Subsidiaries for such period, MINUS
(iii) the sum for such period of Total Debt Service for such period, and PLUS
(or MINUS) (iv) any decrease (or increase) in the Net Working Investment (other
than as a result of acquisitions) at the end of such Fiscal Year, when compared
with the Net Working Investment at the end of the prior Fiscal Year.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the Holding
Company Guaranty Agreements, the Warrant, the Warrantholder's Rights Agreement
and the Security Documents.
"FISCAL QUARTER" means a fiscal quarter of the Company.
"FISCAL YEAR" means a fiscal year of the Company.
"GAAP" has the meaning set forth in Section 1.02.
"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, contingent or otherwise, of such
Person: (i) 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 (ii) 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 such 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.
"GUARANTORS" means, collectively, the Holding Company, each
Subsidiary of the Holding Company, other than the Company and certain
Non-Guarantor Subsidiaries, and each
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other Person who now or in the future guarantees the payment and performance of
the Obligations.
"GUARANTY AGREEMENTS" means, collectively, the Holding Company
Guaranty, and each other Guaranty Agreement between a Guarantor and the Agent to
guaranty the Obligations, substantially in the form of EXHIBIT G.
"HCFA" shall mean the Health Care Financing Administration, an
agency of HHS, and any successor thereto.
"HHS" means the United States Department of Health and Human
Services or any successor thereto.
"HAZARDOUS MATERIALS" means: (i) any "hazardous substance" as
defined in CERCLA; (ii) asbestos; (iii) polychlorinated biphenyls; (iv)
petroleum, its derivatives, by-products and other hydrocarbons; and (v) any
other toxic, radioactive, caustic or otherwise hazardous substance regulated
under Environmental Laws.
"HAZARDOUS MATERIALS CONTAMINATION" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"HEALTHCARE LAW" means, collectively, any and all federal, state or
local laws, rules, regulations, manuals, orders, guidelines and requirements
pertaining to the health care industry, including without limitation all laws,
rules, regulations, manuals, orders, guidelines and requirements pertaining to
Medicaid or Medicare.
"HOLDING COMPANY" means American Psych Systems Holdings, Inc., a
Delaware corporation.
"HOLDING COMPANY GUARANTY" means the Holding Company Guaranty
Agreement dated the date hereof, between the Holding Company and the Agent,
substantially in the form of EXHIBIT E.
"HOLDING COMPANY PLEDGE AGREEMENT" means the Holding Company Pledge
Agreement dated the date hereof, between the Holding Company and the Agent,
substantially in the form of EXHIBIT F.
"INDEMNITEES" has the meaning set forth in Section 9.05.
"INDEX RATE" means for any day in any calendar month, the rate of
interest equivalent to the money market yield for the Interest Determination
Date falling in such month
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on the one month commercial paper rate for dealer-placed commercial paper of
issuers whose corporate bonds are rated "AA" or its equivalent by a nationally
recognized rating agency, as such rate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York and published weekly by the
Board of Governors of the Federal Reserve System in its H.15 report, or any
successor publication published by the Board of Governors of the Federal Reserve
System or, if such rate for such date is not yet published in such statistical
release, the rate for that date will be the rate set forth in the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System.
"INTEREST DETERMINATION DATE" means December 1, 1998 and the first
Business Day of each calendar month thereafter.
"INSURANCE ACCOUNT" has the meaning set forth in the Security
Agreements.
"INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"INVESTOR" means, collectively, Nazem & Company IV, L.P.,
Applewood Associates, L.P., Seneca Ventures, Woodland Partners, and Woodland
Venture Fund.
"JOINT VENTURE" means a corporation, limited partnership, limited
liability company or limited liability partnership: (i) the ownership interest
of which is held by the Company and one or more third party payors or health
care provider entities, (ii) over which the Company has management control,
either by contract or as holder of the controlling interest, (iii) the sole
activity of which is to perform services under Service Agreements, and (iv) is
subject to no provision in its organization documents or any contract to which
it is a party that restricts the payment of dividends from such entity to the
Company.
"KEY-PERSON LIFE INSURANCE POLICY" has the meaning set forth in
Section 6.04(e).
"LENDER" means NationsCredit and each other Person that becomes a
holder of a Note pursuant to Section 11.06, and their respective successors, and
"Lenders" means all of the foregoing.
"LEVERAGE RATIO" means at any time the ratio of (i) Consolidated
Total Debt at such time to (ii) Consolidated EBITDA for the twelve months then
most recently ended (considered as a single accounting period, and subject to
Section 7.20).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement and the
other Financing Documents, the Company or any Subsidiary shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
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"LOANS" means the Term Loans or the Revolving Credit Loans or any
combination of the foregoing, as the context may require.
"LOCKBOX BANK" means, collectively, the banks or other depository
institutions at which Pledged Accounts are established and maintained.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance proceeds
received in connection with one or more related events by any Credit Party under
any Property Insurance Policy or (ii) any award or other compensation with
respect to any condemnation of property (or any transfer or disposition of
property in lieu of condemnation) received by any Credit Party, if the amount of
such aggregate insurance proceeds or award or other compensation exceeds
$100,000.
"MARGIN STOCK" has the meaning assigned thereto in Regulation G, T,
U or X of the Federal Reserve Board, as the same may be amended, supplemented or
modified from time to time.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of the
Holding Company and its Subsidiaries, taken as a whole, (b) the rights and
remedies of the Agent or the Lenders under the Financing Documents, or the
ability of the Company, the Holding Company or any other Credit Party to perform
its obligations under the Financing Documents to which it is a party, as
applicable, (c) the legality, validity or enforceability of any Financing
Document, or (d) the existence, perfection or priority of any security interest
granted in the Financing Documents or the value of the Collateral (including its
value to the Agent and the Lenders as security for the Obligations).
"MATERIAL PLAN" means at any time a Plan having Unfunded
Liabilities.
"MAXIMUM LAWFUL RATE" has the meaning set forth in Section 9.08.
"MEDICAID" means, collectively, the healthcare assistance program
established by Title XIX of the Social Security Act (42 USC Sections 1396
ET SEQ.) and any statutes succeeding thereto, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in Title XIX of
the Social Security Act or elsewhere) affecting such program; (b) all state
statutes and plans for medical assistance enacted in connection with such
program (including any program operated under a Section 1115 demonstration
waiver approved by HCFA) and federal rules and regulations promulgated in
connection with such program; and (c) all applicable provisions of all rules,
regulations, manuals, orders and administrative, reimbursement, guidelines
and requirements of
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all government authorities promulgated in connection with such program (whether
or not having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.
"MEDICAID CERTIFICATION" means certification of a facility by HCFA
or a state agency or entity performing such function that such healthcare
facility fully complies with all the conditions of Medicaid.
"MEDICAID PROVIDER AGREEMENT" means an agreement entered into
between a state agency or other entity administering Medicaid in such state and
a health care facility or physician under which the health care facility or
physician agrees to provide services or merchandise for Medicaid patients.
"MEDICAID RECEIVABLE" means a Receivable payable pursuant to a
Medicaid Provider Agreement.
"MEDICARE" means, collectively, the health insurance program for the
aged and disabled established by Title XVIII of the Social Security Act (42 USC
Sections 1395 ET SEQ.) and any statutes succeeding thereto, and all laWs, rules,
regulations, manuals, orders or guidelines pertaining to such program including
(a) all federal statutes (whether set forth in Title XVIII of the Social
Security Act or elsewhere) affecting such program; and (b) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, guidelines and requirements of all governmental authorities
promulgated in connected with such program (whether or not having the force of
law), in each case as the same may be amended, supplemented or otherwise
modified from time to time.
"MEDICARE CERTIFICATION" means certification of a facility by HCFA
or a state agency or entity under contract with HCFA that such health care
facility fully complies with all conditions for such facility's participation in
Medicare.
"MEDICARE PROVIDER AGREEMENT" means an agreement entered into
between a state agency or other entity administering Medicare in such state and
a health care facility or physician under which the health care facility or
physician agrees to provide services or merchandise for Medicare patients.
"MEDICARE RECEIVABLE" means a Receivable payable pursuant to a
Medicare Provider Agreement.
"MORTGAGE" means any mortgage, deed of trust, deed to secure debt or
other similar instrument delivered by any Credit Party pursuant to Section 6.18
hereof, which shall be in such form as may be required by the Agent and the
Required Lenders.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan
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years made contributions, including for these purposes any Person which ceased
to be a member of the ERISA Group during such five year period.
"NATIONSCREDIT" means NationsCredit Commercial Corporation, a
Delaware corporation.
"NET CASH PROCEEDS" means, with respect to any transaction, an
amount equal to the cash proceeds received by a Credit Party from or in respect
of such transaction (including any cash proceeds received as income or other
proceeds of any non-cash proceeds of such transaction), less (x) any expenses
(including commissions) reasonably incurred by such Person in respect of such
transaction and (y) in the case of an Asset Sale, the amount of any Debt secured
by a Lien on the related asset and discharged from the proceeds of such Asset
Sale and any taxes paid or payable by such Person (as estimated by the chief
financial officer of the Company) in respect of such Asset Sale.
"NET WORKING INVESTMENT" means, at any date, Consolidated Adjusted
Current Assets MINUS Consolidated Current Liabilities, all determined at such
date.
"NON-COMPETE AGREEMENTS" means the non-compete agreements delivered
by the Company to NationsCredit no later than the Closing Date pursuant to
Section 4.01(l).
"NON-GUARANTOR SUBSIDIARIES" means, collectively, Community
Behavioral Network, L.L.C., Westchester Behavioral Health Network, L.L.C.,
Manhattan Psych Associates, L.L.C. and Southwestern Community Behavioral Care,
L.L.C.
"NOTES" means the Term Loan Notes, the Revolving Credit Notes, or
any combination of the foregoing, as the context may require.
"NOTICE OF REVOLVING CREDIT LOAN" has the meaning set forth in
Section 3.04.
"OBLIGATIONS" mean all Loans, fees, indebtedness, liabilities,
obligations, covenants and duties of the Company to the Lenders and/or the Agent
of every kind, nature and description, direct or indirect, absolute or
contingent, due or not due, in contract or tort, liquidated or unliquidated,
arising under this Agreement, or under the other Financing Documents, by
operation of law or otherwise in connection with the transactions contemplated
hereby, now existing or hereafter arising, and whether or not for the payment of
money or the performance or non-performance of any act, including, but not
limited to, all damages that the Company may owe to the Agent and/or the Lenders
by reason of any breach by the Company of any representation, warranty,
covenant, agreement or other provision of this Agreement or any of the other
Financing Documents.
"OFFICERS' CERTIFICATE" means a certificate executed on behalf of a
Person by its chairman of the board (if an officer), chief executive officer or
president or one of its vice presidents and by its chief financial officer or
treasurer.
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"PARTNERSHIP INTEREST PLEDGE AGREEMENTS" means, collectively, the
Partnership Interest Pledge Agreements executed by each of the Holding Company,
the Company or any Guarantor in favor of the Agent, substantially in the form of
EXHIBIT M.
"PAYMENT ACCOUNT" means, with respect to each Lender, the account
specified on the signature pages hereof into which all payments by or on behalf
of the Company to such Lender under the Financing Documents shall be made, or
such other account as such Lender shall from time to time specify by notice to
the Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED CONTEST" means a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; PROVIDED that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"PERMITTED LIENS" means Liens permitted pursuant to Section 7.02.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, professional association, general partnership, joint
stock company, joint venture, association, company, trust, bank, trust company,
land trust, business trust or other organization, whether or not a legal entity,
and any government agency or political subdivision thereof.
"PHC PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement, dated as of September 26, 1997, between APS and Principal Health
Care, Inc., an Iowa corporation, and assigned to Coventry Health Care, Inc.
"PHC SERVICE AGREEMENT" means that certain Behavioral Health
Services Agreement, dated as of September 26, 1997, by and among the Holding
Company, APS, Principal Health Care, Inc., an Iowa corporation ("PHC"), and each
of PHC's health maintenance organization subsidiaries party thereto, as assigned
to Coventry Health Care.
"PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"PLEDGE AGREEMENTS" means, collectively, the Holding Company Pledge
Agreement, the Company Pledge Agreement, the Partnership Interest Pledge
Agreements and any
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other pledge agreement now or hereafter delivered by any Guarantor to the Agent
to secure the obligations of such Guarantor under a Guaranty Agreement,
substantially in the form of EXHIBIT I.
"PLEDGED ACCOUNTS" has the meaning set forth in the Security
Agreements.
"PLEDGED ACCOUNT AGREEMENTS" means the Pledged Account Agreements in
form and substance satisfactory to Lender, entered into among the Agent, the
Company and its Subsidiaries and the Lockbox Banks pursuant to the Security
Agreements.
"PRIME RATE" means the rate publicly announced from time to time by
NationsBank, N.A. as its "prime rate". Changes in the Prime Rate shall be
effective as of the opening of business on the date of each announced change
therein.
"PRIORITY" means Priority, Inc., a Michigan corporation.
"PROPERTY INSURANCE POLICY" means any insurance policy maintained by
any Credit Party covering losses with respect to tangible real or personal
property or improvements or losses from business interruption.
"PUBLIC SECTOR SERVICE AGREEMENTS" means an arrangement or contract
to provide or manage behavioral healthcare services to individuals who are
covered under one or more public assistance programs or social security.
"QUARTERLY DATE" means the first Business Day of each January,
April, July and October occurring after the Closing Date.
"REAL PROPERTY" shall have the meaning assigned to it in Section
6.18.
"RECEIVABLE" means, as at any date of determination thereof, the
unpaid portion of the obligation, as stated in the respective invoice, of a
customer of the Company or any Subsidiary in respect of goods sold or leased or
services rendered in the ordinary course of business, which amount has been
earned by performance under the terms of the related contract and recognized as
revenue on the books of the Company, net of any credits, rebates or offsets owed
to the Account Debtor in respect thereof and also net of any commissions payable
to Persons other than the Company or any Subsidiary or any employee thereof.
"REQUIRED LENDERS" means at any time Lenders holding Notes
evidencing at least 66 2/3% of the aggregate unpaid principal amount of the
Loans or, if no Loans are outstanding, having at least 66 2/3% of the aggregate
amount of the Commitments.
"RESTRICTED PAYMENT" means as to any Person (i) any dividend or
other distribution on any shares of such Person's capital stock (except
dividends payable solely in shares of its capital stock of the same class), (ii)
any payment on account of the principal of or premium, if any, on any Debt
convertible into shares of such Person's capital stock, or on any
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Debt subordinated in right of payment to the Obligations, or (iii) any payment
on account of the purchase, redemption, retirement or acquisition of (a) any
shares of such Person's capital stock or (b) any option, warrant or other right
to acquire shares of such Person's capital stock. In the case of the Company and
its Subsidiaries, Restricted Payment shall also include any payment or
distribution to or for the benefit of the Holding Company.
"REVOLVING CREDIT COMMITMENT" means (i) for NationsCredit as Lender,
initially $15,000,000, less any amount assigned to another Person that becomes a
Lender after the date hereof (a "Subsequent Lender") and (ii) for any Subsequent
Lender, the amount of Revolving Credit Commitment assigned to such Lender, in
each case as such amount may be reduced from time to time in accordance with
this Agreement.
"REVOLVING CREDIT COMMITMENTS" means the sum of the Revolving Credit
Commitments of all Lenders in effect at such time.
"REVOLVING CREDIT LOANS" shall have the meaning assigned to it in
Section 3.01.
"REVOLVING CREDIT NOTES" shall have the meaning assigned to it in
Section 3.02.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
"SECURITY AGREEMENTS" means the Company Security Agreement and any
other security agreement now or hereafter executed by any Credit Party granting
the Agent a security interest in its assets as security for the Obligations,
substantially in the form of EXHIBIT H.
"SECURITY DOCUMENTS" means, collectively, the Security Agreements,
the Pledge Agreements, the Pledged Account Agreements, any Mortgage and any
other agreement pursuant to which any Credit Party provides a Lien on its assets
in favor of the Agent for the benefit of the Lenders, and all supplementary
assignments, security agreements, pledge agreements, acknowledgments or other
documents delivered or to be delivered pursuant to the terms hereof or of any
other Security Document.
"SENIOR MANAGEMENT" means the President or such other officer as
shall hereafter perform substantially the same functions as the foregoing.
"SERVICE AGREEMENT" means an agreement pursuant to which any Credit
Party agrees to provide any health care management service.
"SOLVENT" means, with respect to any Person on a particular date,
that on such date (i) the assets of such Person, at a fair valuation, will
exceed its liabilities, including contingent liabilities, (ii) the remaining
capital of such Person will not be unreasonably small to conduct its business
and (iii) such Person will not have incurred debts, and will not intend to incur
debts, beyond its ability to pay such debts as they mature. For purposes of this
definition, "debt" means any liability on a claim, and "claim" means (i) right
to payment, whether or not
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such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured. In computing the amount of
contingent liabilities of any Person on any date, such liabilities shall be
computed at the amount that, in the judgment of the Required Lenders in light of
all facts and circumstances existing at such time, represents the amount of such
liabilities that reasonably can be expected to become actual or matured
liabilities.
"SUBSEQUENT LENDER" has the meaning set forth in the definition of
"Revolving Credit Commitments".
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person. Unless otherwise specified or required by the context herein, the
term Subsidiary shall be deemed to refer to a Subsidiary of the Company.
"TARGET" means a Person, group of assets or business line that is
the subject of an Acquisition.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Rating Group and P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any State
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000 and which issues (or the parent of which issues) certificates of
deposit or commercial paper with a rating described in clause (ii) above, (iv)
repurchase agreements with respect to securities described in clause (i) above
entered into with an office of a bank or trust company meeting the criteria
specified in clause (iii) above, PROVIDED in each case that such Investment
matures within one year from the date of acquisition thereof by the Company or
any of its Subsidiaries or (v) any money market or mutual fund that invests only
in the foregoing and manager of which and the liquidity of which is reasonably
satisfactory to the Agent.
"TERM LOAN COMMITMENT" means (i) for NationsCredit as a Lender, an
amount equal to $10,000,000, less any amount assigned after the date hereof to a
Subsequent Lender, and (ii) for any Subsequent Lender, the amount of Term Loan
Commitment assigned to such Lender. "Term Loan Commitments" means, at any time,
the sum of the Term Loan Commitments of all Lenders in effect at such time.
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"TERM LOAN MATURITY DATE" means December 15, 2003, or such earlier
date on which the remaining outstanding Term Loans shall become due and payable
whether because of notice of prepayment, acceleration or otherwise.
"TERM LOAN NOTE" has the meaning set forth in Section 2.02.
"TERM LOANS" has the meaning set forth in Section 2.01.
"TOTAL DEBT SERVICE" means, for any period, the sum of (i) the
aggregate interest charges incurred by the Holding Company and its Consolidated
Subsidiaries for such period, whether expensed or capitalized, including the
portion of any obligation under Capital Leases allocable to interest expense in
accordance with GAAP but excluding the portion of any debt discount or premium
and the expenses of any debt issuance that shall be amortized in such period,
and (ii) the aggregate amount of all scheduled principal payments on all Debt,
including the portion of any payments under Capital Leases that is allocable to
principal.
"UCC" has the meaning set forth in the Security Agreements.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"WARRANTHOLDERS RIGHTS AGREEMENT" means the Warrantholders Rights
Agreement dated as of the date hereof among the Company and the Warrantholders
and Stockholders referred to therein, substantially in the form of EXHIBIT K.
"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.
"WARRANTS" has the meaning set forth in Section 3.09.
"WORKING CAPITAL AVAILABILITY" has the meaning specified in Section
3.01(b).
"WORKING CAPITAL COMMITMENT" has the meaning specified in Section
3.01(b).
"WORKING CAPITAL LOANS" means the aggregation of Revolving Credit
Loans of the Lenders to be made to the Company pursuant to Section 3.01(b).
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting
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determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time ("GAAP"), applied on a
basis consistent (except for changes concurred in by the Company's independent
public accountants) with the most recent audited consolidated financial
statements of the Holding Company and its Consolidated Subsidiaries delivered to
the Lenders (subject, in the case of interim financial statements, to the
absence of footnotes and to changes resulting from audit and normal year-end
adjustments); PROVIDED that, if: (i) the Company notifies the Lenders that the
Company wishes to amend any covenant in Article VII or the definition of "Excess
Cash Flow" or any related definition to eliminate the effect of any change in
GAAP on the operation of such covenant or the determination of "Excess Cash
Flow", or (ii) the Agent notifies the Company that the Required Lenders wish to
amend Article VII or the definition of "Excess Cash Flow" or any related
definition for such purpose, then the Company's compliance with such covenant or
"Excess Cash Flow", as the case may be, shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Company and the Required Lenders.
SECTION 1.03. OTHER DEFINITIONAL PROVISIONS. References in this
Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.01 may,
unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or "through" any date
mean, unless otherwise specified, "from and including" or "through and
including", respectively.
ARTICLE II
TERM LOANS
SECTION 2.01. TERM LOANS. Upon the terms and subject to the
conditions set forth herein, the Lenders severally, not jointly, each agrees to
make one senior floating rate loan to the Company pursuant to this Section 2.01
on the Closing Date in a principal amount not to exceed its Term Loan Commitment
(such loan, or any portion thereof assigned to any other Lender in accordance
with Section 11.06, a "TERM LOAN"). The Term Loans are not revolving in nature
and amounts of such Loan repaid or prepaid may not be reborrowed. The Term Loan
Commitment shall terminate at the close of business on the Closing Date.
SECTION 2.02. TERM LOAN NOTES. Each Term Loan shall be evidenced by
a Term Loan Note of the Company substantially in the form of EXHIBIT A-1 (each
such note, a "TERM LOAN NOTE"), dated the Closing Date in a principal amount
equal to the initial principal
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amount of such Term Loan or the portion of such Term Loan assigned to any Lender
in accordance with Section 11.06, duly executed and delivered by the Company and
payable to the Lender of such Term Loan.
SECTION 2.03. INTEREST ON THE TERM LOANS.
--------------------------
(a) The Company shall pay interest on the Term Loans monthly in
arrears on the first Business Day of each calendar month immediately succeeding
the month for which such interest accrues, commencing with the first Business
Day of the calendar month following the calendar month in which the Closing Date
occurs. In all cases accrued interest on all of the Term Loans shall be payable
by the Company to the Lenders on the Term Loan Maturity Date. Interest that
accrues at the Default Rate shall be payable upon demand. If any interest on any
of the Term Loans accrues or remains payable after the Term Loan Maturity Date,
such interest shall be payable by the Company upon demand by the Lenders.
(b) The Company shall be obligated to pay interest to the Lenders on
the outstanding principal balance of the Term Loans from and including the
Closing Date until the Term Loans are repaid in full. Subject to Section
9.02(b), interest on the outstanding principal amount of the Term Loans during
any month shall accrue at a floating rate per annum equal to the Index Rate PLUS
4.25%.
(c) Each determination by the Agent of the interest rate hereunder
shall be presumed correct, absent clear and convincing evidence to the contrary.
SECTION 2.04. REPAYMENTS AND PREPAYMENTS OF TERM LOAN NOTES.
----------------------------------------------
(a) MANDATORY SCHEDULED REPAYMENTS. Commencing on April 1, 1999 and
continuing on each Quarterly Date thereafter, the Company shall repay the Term
Loans in quarterly installments of principle in an amount equal to the
percentage set forth for such Quarterly Date below multiplied by the principal
amount of Term Loans advanced on the Closing Date, PROVIDED that there shall
become due and the Company shall pay on the Term Loan Maturity Date the entire
outstanding principal amount of the Term Loans, together with accrued and unpaid
interest on the principal amount being repaid to but excluding the date of
payment.
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AMORTIZATION TABLE
DATE QUARTERLY INSTALLMENT PERCENTAGES
April 1, 1999 2.50%
July 1, 1999 2.50%
October 1, 1999 2.50%
January 1, 2000 2.50%
April 1, 2000 3.75%
July 1, 2000 3.75%
October 1, 2000 3.75%
January 1, 2001 3.75%
April 1, 2001 5.00%
July 1, 2001 5.00%
October 1, 2001 5.00%
January 1, 2002 5.00%
April 1, 2002 5.00%
July 1, 2002 5.00%
October 1, 2002 5.00%
January 1, 2003 5.00%
April 1, 2003 5.00%
July 1, 2003 5.00%
October 1, 2003 5.00%
(b) MANDATORY INCREMENTAL PREPAYMENTS. There shall become due and
payable, and the Company shall prepay, an aggregate principal amount of the Term
Loans (or, if less, the aggregate outstanding principal amount of the Term
Loans) in the following amounts at the following times, and in the case of any
prepayment of the remaining Term Loans in whole, accrued and unpaid interest on
the principal amount being prepaid to but excluding the date of such payment:
(i) on the earlier of (x) the date the audited financial
statements for each Fiscal Year are delivered in accordance with Section
6.01 and (y) 90 days following the last day of each Fiscal Year, beginning
with the Fiscal Year ending December 31, 1999, an amount equal to 50% of
the Excess Cash Flow for such Fiscal Year then ended;
(ii) promptly upon receipt by the Company or any other Credit
Party of (x) any payment which constitutes Major Casualty Proceeds or (y)
any payment under the Key-Person Life Insurance Policy, an amount equal to
the amount of such payment, unless, in the case of Major Casualty Proceeds
only, the Required Lenders shall otherwise direct (in which case the
amount of such payment shall be deposited into the Insurance Account to be
held and applied in accordance with Section 5 of the Company Security
Agreement);
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(iii) promptly upon receipt by the Holding Company of the
proceeds from the issuance and sale of Common Stock or other equity
securities after the Closing Date, an amount equal to 50% of the Net Cash
Proceeds of such issuance and sale;
(iv) upon receipt by the Company or any other Credit Party of
the Net Proceeds of any Asset Sale, such Net Proceeds; and
(v) promptly upon receipt by APS of a Capitated Beneficiary
Adjustment payment, 100% of such Capitated Beneficiary Adjustment payment.
(c) OPTIONAL PREPAYMENTS.
--------------------
(i) From and after the Closing Date, the Company may prepay
the Term Loans, in whole or in part (in principal amounts of $100,000 or
in any integral multiple of $10,000 in excess thereof), upon at least 10
days' prior irrevocable written notice to the Lenders (and, in the case of
any prepayment, such amounts specified in such notice shall become due and
payable on the date so specified), by paying an amount equal to the
aggregate principal amount being prepaid and any premium due pursuant to
Section 2.04(e) below, plus, in the case of any prepayment of the
remaining Term Loans in whole, accrued and unpaid interest on the
principal amount being prepaid to but excluding the date of payment.
(ii) Notwithstanding the foregoing, the Company may not prepay
the Term Loans in whole pursuant to this subsection (c) unless
simultaneously with such prepayment the Company repays all Revolving
Credit Loans, any accrued unpaid interest on the Revolving Credit Loans
and any premium due with respect thereto and terminates the Revolving
Credit Commitments.
(d) APPLICATION OF PAYMENT/COMMITMENT REDUCTIONS. Each repayment or
prepayment of less than all of the outstanding aggregate principal amount of the
Term Loans shall be applied PRO RATA to all the Term Loan Notes according to
their respective outstanding principal amounts. The principal amount of each
payment pursuant to Section 2.04(b) or (c) shall be applied to reduce each of
the remaining payments required by Section 2.04(a) in the inverse order of the
maturity of such installments (subject to the Lenders' rights to elect otherwise
pursuant to Section 8.01). No payment pursuant to Section 2.04(a) or (c), shall
(except as reflected in any determination of Excess Cash Flow) reduce the amount
of any payment required by Section 2.04(b).
(e) PREPAYMENT PREMIUM. Upon each prepayment pursuant to Section
2.04(c) occurring prior to the first anniversary of the Closing Date, the
Company shall pay to the Agent for the ratable account of the Lenders, a premium
equal to 1.50% of the principal amount being prepaid.
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ARTICLE III
REVOLVING CREDIT LOANS
SECTION 3.01. REVOLVING CREDIT LOANS AND COMMITMENTS. (a) Upon the
terms and subject to the conditions set forth herein, from time to time prior to
(i) the Commitment Termination Date, in the case of Working Capital Loans, and
(ii) the Availability Termination Date, in the case of Acquisition Loans, each
Lender severally and not jointly agrees to make revolving credit loans
("REVOLVING CREDIT LOANS") from time to time to the Company in an aggregate
principal amount at any time outstanding not to exceed such Lender's Revolving
Credit Commitment. Revolving Credit Loans shall constitute either Working
Capital Loans or Acquisition Loans.
(b) (i) Working Capital Loans shall be available for the working
capital needs of the Company and its Subsidiaries. The Working Capital Loans
shall not at any time exceed in aggregate principal amount outstanding the least
of (said amount, the "WORKING CAPITAL AVAILABILITY"):
(A) $3,000,000 (the "WORKING CAPITAL COMMITMENT"),
(B) the amount that, when added to the outstanding Debt of
the Company and such sum is used in calculating the
Holding Company's Leverage Ratio on a pro forma basis as
of the date of a proposed borrowing, would not cause the
Leverage Ratio of the Holding Company to exceed the
maximum Leverage Ratio in effect at such time under
Section 7.16, and
(C) the Revolving Credit Commitment then in effect, less the
aggregate outstanding principal amount of Acquisition
Loans.
(ii) Each Working Capital Loan shall be in an aggregate amount
of $100,000 or an integral multiple of $10,000 in excess thereof. No more than
one borrowing of Working Capital Loan shall be made within any week beginning on
Monday of such week and ending on the last Business Day of such week.
(c) Acquisition Loans shall be available for the purpose of
financing Acquisitions by the Company that are approved by the Agent and the
Required Lenders in their sole good faith discretion, in such amounts and upon
such terms and conditions as the Required Lenders shall approve, and in an
aggregate principal amount not to exceed at any time outstanding in the exercise
of such discretion (the "ACQUISITION AVAILABILITY") the Revolving Credit
Commitment then in effect, less the aggregate outstanding principal amount of
Working Capital Loans; PROVIDED that no Acquisition Loan will be permitted if
the amount of such Acquisition Loan when added to the outstanding Debt of the
Company and which sum is used in calculating the Holding Company's Leverage
Ratio on a pro forma basis as of the proposed date of such borrowing after
giving effect to the proposed Acquisition, would cause the Leverage
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Ratio of the Holding Company to exceed the maximum Leverage Ratio in effect at
such time under Section 7.16, unless the Company can demonstrate that the
Leverage Ratio calculated on a pro forma basis as of the proposed date of such
borrowing after giving effect to the Acquisition and any adjustments to the
EBITDA of the Target permitted by the Required Lenders in their sole good faith
discretion, does not exceed 3.00 to 1.00.
(d) Within the foregoing limits, to but excluding (i) the
Availability Termination Date, in the case of Acquisition Loans, and (ii) the
Commitment Termination Date in the case of Working Capital Loans, the Company
may borrow under this Section 3.01, repay or prepay Revolving Credit Loans as
required under Section 3.05(b) or to the extent permitted by Section 3.06, and
reborrow pursuant to this Section 3.01.
SECTION 3.02. REVOLVING CREDIT NOTES. The Revolving Credit Loans of
each Lender shall be evidenced by a single Revolving Credit Note, substantially
in the form of EXHIBIT A-2 (each such note, a "REVOLVING CREDIT NOTE"), dated
the Closing Date in an aggregate principal amount equal to the amount of such
Lender's Revolving Credit Commitment, duly executed and delivered and payable to
such Lender. Each Lender shall record the date and amount of each Revolving
Credit Loan made by it, whether such Revolving Credit Loan was a Working Capital
Loan or an Acquisition Loan, and the date and amount of each payment of
principal made by the Company with respect thereto, and prior to any transfer of
its Revolving Credit Note shall endorse on Schedule A thereto (or any
continuation thereof) forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Revolving Credit Loan then
outstanding; PROVIDED that the failure of any Lender to make any such
recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Revolving Credit Notes. Each Lender is hereby irrevocably
authorized by the Company so to endorse its Revolving Credit Note and to attach
to and make a part of its Revolving Credit Note a continuation of any such
schedule as and when required.
SECTION 3.03. INTEREST ON THE REVOLVING CREDIT LOANS. (a) The
Company shall pay interest on the Revolving Credit Loans to the Lenders monthly
in arrears on the first day of each calendar month immediately succeeding the
month for which such interest accrues, commencing with the first day of the
calendar month following the calendar month in which the Closing Date occurs. In
all cases accrued interest on all of the Revolving Credit Loans shall be payable
by the Company to the Lenders on the Commitment Termination Date. Interest at
the Default Rate shall be payable upon demand by the Lenders. If any interest on
any of the Revolving Credit Loans accrues or remains payable after the
Commitment Termination Date, such interest shall be payable by the Company upon
demand by the Lenders.
(b) The Company shall be obligated to pay interest to the
Lenders on the outstanding principal balance of each Revolving Credit Loan from
the date such Revolving Credit Loan is made until such Revolving Credit Loan is
repaid in full. Subject to Section 9.02(b), interest on all Revolving Loans
outstanding during any month shall accrue at a floating rate per annum equal to
the Index Rate PLUS 3.75%.
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(c) Each determination by the Agent of the interest rate
hereunder shall be conclusive and binding for all purposes, absent clear and
convincing evidence to the contrary.
SECTION 3.04. ADVANCING REVOLVING CREDIT LOANS. (a) Each Working
Capital Loan shall be made on notice by the Company to the Agent, given no later
than 10:00 A.M. (New York time) on the Business Day of the proposed Revolving
Credit Loan. Such notice (each a "NOTICE OF WORKING CAPITAL LOAN") shall be
substantially in the form of EXHIBIT B hereto, shall be duly completed and
executed by an Authorized Signatory, and shall specify therein the requested
date and amount of such Working Capital Loan, and such other information as may
be required by the Agent.
(b) Each Acquisition Loan shall be made upon such notice and
upon such terms and conditions as the Agent shall specify at the time.
Notwithstanding the foregoing, no request for an Acquisition Loan pursuant to
this subsection (b) shall be effective until the Agent notifies the Company that
the Agent and the Required Lenders have consented to the proposed Acquisition
after having been provided such information respecting the proposed Acquisition
as the Agent and the Required Lenders shall require and such time to review the
same as the Agent and the Required Lenders shall reasonably deem necessary.
(c) Each Notice of Working Capital Loan or notice of a
borrowing pursuant to subsection (b) of this Section (each a "NOTICE OF
REVOLVING CREDIT LOAN") shall be given in writing (by telecopy, telex or cable)
or by telephone and confirmed immediately in writing.
(d) Not later than 4:00 p.m. (New York City time) (i) on the
date of the requested borrowing, in the case of a Notice of Working Capital Loan
or (ii) on the date of the borrowing specified by the Agent following receipt of
notice of approval of such Acquisition from the Required Lenders in the case of
any other Notice of Revolving Credit Loan, each Lender shall make available its
ratable share of such borrowing of Loans, in immediately available funds, to the
Company Account.
(e) The failure of any Lender to make a Revolving Credit Loan
on such date shall not relieve any other Lender of its obligation, if any,
hereunder to make its Revolving Credit Loan on that date. Neither the Agent nor
any Lender shall be responsible for the failure of any other Person to make any
Revolving Credit Loan hereunder on the date required therefor.
SECTION 3.05. MANDATORY REPAYMENTS AND PREPAYMENTS. (a) The
Revolving Credit Commitment of each Lender shall terminate at the opening of
business on December 15, 2003 (such date and such earlier date on which the
Revolving Credit Commitments shall terminate pursuant to Section 3.08, Section
8.01 or otherwise, the "COMMITMENT TERMINATION DATE"), and there shall become
due and the Company shall pay on the Commitment Termination Date, the entire
outstanding principal amount of each Revolving Credit Loan, together with
accrued and unpaid interest thereon to but excluding the Commitment Termination
Date.
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(b) If at any time (i) the aggregate unpaid principal balance of the
Working Capital Loans exceeds the Working Capital Availability, or (ii) the
aggregate unpaid principal balance of the Acquisition Loans exceeds the
Acquisition Availability, then, on the next succeeding Business Day, the Company
shall prepay Working Capital Loans and/or Acquisition Loans in an aggregate
principal amount equal to such excess.
(c) Commencing on April 1, 2000 (the "AMORTIZATION COMMENCEMENT
DATE") and continuing on each Quarterly Date thereafter, the Company shall repay
the Revolving Credit Loans in equal quarterly installments of principal in an
amount equal to 5.00% of all Acquisition Loans outstanding at the close of
business on the Business Day prior to the Amortization Commencement Date.
(d) There shall become due and payable, and the Company shall
prepay, on the earlier of (i) the date the audited financial statements for each
Fiscal Year are delivered in accordance with Section 6.01 and (ii) 90 days
following the last day of each Fiscal Year, beginning with the Fiscal Year
ending December 31, 1999, an aggregate principal amount of Revolving Credit
Loans equal to the excess of (x) fifty percent (50%) of the Excess Cash Flow for
such Fiscal Year over (y) the amount of such Excess Cash Flow applied to the
repayment of Term Loans on such date in accordance with Section 2.04(b).
(e) There shall become due and payable, and the Company shall prepay
promptly upon receipt by any Credit Party of the proceeds of any Asset Sale, an
amount equal to the excess of (x) 100% of the Net Cash Proceeds of such Asset
Sale over (y) the amount of such Net Proceeds applied to repayment of Term Loans
on such date in accordance with Section 2.04(b).
(f) There shall become due and payable, and the Company shall prepay
promptly upon receipt by any Credit Party of (x) any payment which constitutes
Major Casualty Proceeds or (y) any payment under the Key-Person Life Insurance
Policy, an amount equal to the excess of (x) the amount of such payment over (y)
the amount of such payment applied to the repayment of Terms Loans on such date
in accordance with Section 2.04(b), unless, in the case of Major Casualty
Proceeds only, the Required Lenders shall otherwise direct (in which case the
amount of such payment shall be deposited into the Insurance Account to be held
and applied in accordance with Section 5 of the Company Security Agreement).
(g) There shall become due and payable, and the Company shall prepay
promptly upon receipt by the Holding Company of the proceeds from the issuance
and sale of Common Stock or other equity securities after the Closing Date, an
amount equal to the excess of (x) 50% of the Net Cash Proceeds of such issuance
and sale over (y) the amount of such Net Cash Proceeds applied to the repayment
of Term Loans on such date in accordance with Section 2.04(b).
(h) There shall become due and payable, and the Company shall prepay
promptly upon receipt by the Company of a Capitated Beneficiary Adjustment
payment, an
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amount equal to the excess of (x) 100% of such Capitated Beneficiary Adjustment
payment over (y) the amount of such Capitated Beneficiary Adjustment payment
applied to the repayment of Term Loans on such date in accordance with Section
2.04(b).
SECTION 3.06. OPTIONAL PREPAYMENTS. The Company may prepay the
Revolving Credit Loans in whole or in part (in minimum principal amounts of
$100,000 or in any larger integral multiple of $10,000, or the total remaining
amount outstanding) upon at least three Business Days' prior irrevocable written
notice to the Lenders, without premium or penalty except as provided in Section
3.08(b). The aggregate principal amount of the Revolving Credit Loans designated
for prepayment in any notice of optional prepayment given pursuant to this
subsection shall become due and payable on the date fixed for prepayment as
specified in such notice.
SECTION 3.07. APPLICATION OF PAYMENTS. Each payment or prepayment of
less than all the outstanding aggregate principal amount of the Loans shall be
applied PRO RATA to all Loans according to their respective outstanding
principal amounts, and shall be applied to the Class of Loan required under this
Agreement or, if not so required, as directed by the Company. The principal
amount of each payment on the Loans pursuant to Section 3.06 shall be applied to
reduce the remaining payments required by Section 3.05(c) in inverse order of
the maturity thereof. No payment of the principal amount of the Loans pursuant
to Section 3.05(c) or 3.06 shall reduce the amount of any payment required by
Sections 3.05(d) through (h). Each payment of less than all of the outstanding
aggregate principal amount of Revolving Credit Loans of any Class shall be
applied by the Lender receiving such payment, PRO RATA to all Revolving Credit
Loans of such Class held by such Lender according to their respective
outstanding principal amounts.
SECTION 3.08. REDUCTION OF COMMITMENTS. (a) The Revolving Credit
Commitment shall reduce (i) on the Availability Termination Date to an amount
equal to (x) the Working Capital Commitment, PLUS (y) the amount of the
aggregate outstanding principal amount of Acquisition Loans, and (ii) thereafter
by the amount of each payment made or required to be made pursuant to Section
3.05(c), (d) (e), (f), (g) or (h) or Section 3.06.
(b) The Company shall have the right at any time to terminate in whole
this Agreement, or from time to time, irrevocably to reduce in part the amount
of the Revolving Credit Commitment upon at least 30 days' prior written notice
to the Agent. Such notice shall be irrevocable on the part of the Company and
shall specify the effective date of such reduction or termination, whether a
termination or reduction is being made, and, in the case of any reduction, the
amount thereof shall be in an amount of Two Million Five Hundred Thousand
Dollars ($2,500,000) or an integral multiple thereof. Upon any such reduction,
the Company shall simultaneously prepay any outstanding Revolving Credit Loans
to the extent necessary so that the aggregate outstanding principal amount of
the Revolving Credit Loans does not exceed the amount of the Revolving Credit
Commitment after giving effect to any partial reduction thereof. The aforesaid
prior notice requirement shall not apply to the Agent's exercise of remedies
under Section 8.01. In the event the Company exercises its rights under this
paragraph to prepay the Revolving Credit Loans and terminate this Agreement or
permanently reduce the Revolving
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Credit Commitment, the Company agrees that such prepayment shall be accompanied
by (i) the payment by the Company to the Agent for the ratable account of the
Lenders of all accrued and unpaid interest and, in the case of a termination of
this Agreement, all fees and other remaining Obligations hereunder and (ii) if
such reduction or prepayment shall occur prior to the first anniversary of the
Closing Date, the payment of a fee to the Agent for the ratable account of the
Lenders equal to 1.50% multiplied by the amount by which the Revolving Credit
Commitments are permanently reduced by such exercise. The amount of the
Revolving Credit Commitment may not be reinstated if it is reduced or if this
Agreement is terminated by the Company.
SECTION 3.09. WARRANTS. (a) On the Agreement Date, the Holding
Company shall deliver to NationsCredit, in consideration for executing this
Agreement, warrants exercisable for a number of shares of Common Stock
corresponding to up to 7.00% of the equity of Holding Company on a fully diluted
basis (together with any substitutions or replacements therefor, the
"WARRANTS"), subject to adjustment in accordance with the terms of the Warrants.
The Warrants shall be substantially in the form of EXHIBIT J hereto, and shall
be duly executed and registered in such name or names and in such denominations
as NationsCredit shall have notified the Holding Company. The Warrants shall be
fully earned by NationsCredit by its execution hereof.
(b) The Holding Company and NationsCredit agree that, for Federal
income tax purposes (i) the Warrants together with the Revolving Credit Loans
and Term Loans constitute an investment unit and (ii) the aggregate issue price
of the Revolving Credit Loans and Term Loans is $________ and the aggregate
purchase price of the Warrants is $_______. Neither of the Holding Company nor
any Lender shall voluntarily take any action inconsistent with the agreement set
forth in the immediately preceding sentence.
ARTICLE IV
CONDITIONS
SECTION 4.01. CONDITIONS TO CLOSING. The obligation of each
Lender to make Loans on the Closing Date shall be subject to the satisfaction
of the following conditions precedent:
(a) receipt by the Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
(b) receipt by NationsCredit of a duly executed Term Loan Note and
Revolving Credit Note for its account and of the duly executed
Warrantholders Rights Agreement, and of certificates representing the
Warrants, all duly executed and registered in such name or names and in
such denominations as NationsCredit shall have requested, each in the form
provided for herein;
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(c) receipt by the Agent of duly executed counterparts of each
Security Document required to be effective on the Closing Date (including
the Pledged Account Agreements), each in the form provided for herein,
together with evidence satisfactory to it in its sole good faith
discretion of the effectiveness, priority and perfection of the security
contemplated thereby and any consents required in connection therewith and
the lien search reports and any additional documents reasonably requested
by the Agent;
(d) receipt by the Agent of duly executed counterparts of
the Guaranty Agreements, each in the form provided herein;
(e) receipt by the Agent of opinions of Michaels, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, P.C., counsel for the Company, substantially in the form of
Exhibit L, and covering such additional matters relating to the
transactions contemplated hereby as the Agent may reasonably request (by
its execution and delivery of this Agreement, the Company authorizes and
directs such counsel to deliver such opinions to the Agent);
(f) receipt by NationsCredit, including in its capacity as Agent,
of all fees and any other amounts due and payable hereunder (including
fees and expenses payable pursuant to Section 9.04);
(g) receipt by NationsCredit of any information it may request
concerning the financial condition, results of operations, liabilities
(contingent and otherwise, including with respect to environmental
liabilities and employee and retiree benefits) and prospects of, and the
financial reporting and accounting systems and the management information
systems of, the Credit Parties; and confirmation satisfactory to the
Agent; and satisfaction of the Agent in its sole good faith discretion
with all such information;
(h) satisfaction of NationsCredit in its sole good faith
discretion as to the absence of event, act, condition or occurrence of
whatever nature that constitutes, or that is reasonably likely to result
in, a Material Adverse Effect;
(i) receipt by NationsCredit of a certificate signed by the chief
financial officer or treasurer of the Company to the effect that, both
before and immediately after the execution and delivery of the Financing
Documents, the making of the Loans, the issuance of the Warrants and the
consummation of the transactions contemplated to take place on the Closing
Date, (i) no Default shall have occurred and be continuing and (ii) the
representations and warranties of the Holding Company and the Company made
in or pursuant to the Financing Documents executed by such Person are true
in all material respects;
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(j) receipt by NationsCredit of (i) the financial statements and
balance sheet referred to in Sections 5.04(a), and (ii) a Notice of
Revolving Credit Loan together with payment instructions with respect to
each wire transfer to be made by the Agent on the Closing Date setting
forth the amount of such transfer, the purpose of such transfer, the name
and number of the account to which such transfer is to be made, the name
and ABA number of the bank or other financial institution where such
account is located and the name and telephone number of an individual that
can be contacted to confirm receipt of such transfer;
(k) receipt by the Agent of the certificate referred to in Section
6.04(b) and of a copy of the Key-Person Life Insurance Policy and a duly
executed instrument of assignment assigning the Key-Person Life Insurance
Policy to the Agent as collateral under the Security Documents;
(l) receipt by the Agent of evidence satisfactory to it in its
sole good faith discretion of the effectiveness of employment and
non-compete agreements between the Company and ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
that are in form and substance satisfactory to the Agent in its sole good
faith discretion;
(m) receipt by the Agent of evidence satisfactory to it in its
sole good faith discretion that all outstanding obligations of the
Credit Parties (if any) under any existing financing agreements have
been paid in full, all commitments thereunder have been terminated and
all Liens securing such obligations and all guarantees thereof have
been released;
(n) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Credit Parties, the corporate
authority for and the validity of the Financing Documents, and any
other matters relevant hereto, all in form and substance satisfactory
to the Agent in its sole good faith discretion; and
(o) receipt by the Agent of such other documents, opinions and
evidences as the Agent shall require in its sole good faith discretion.
The documents referred to in this Section shall be delivered to the Agent no
later than the Closing Date. The certificates and opinions referred to in this
Section shall be dated the Closing Date.
SECTION 4.02. CONDITIONS TO ACQUISITION LOANS. The obligation
of any Lender to make an Acquisition Loan on the occasion of any borrowing is
subject to the satisfaction of the following additional conditions:
(a) receipt by each Lender of a Notice of Revolving
Credit Loan in accordance with Section 3.04;
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(b) receipt by the Agent of all documents, instruments
and agreements to be delivered in connection with the Acquisition
and/or any financing therefor;
(c) completion of, and satisfaction of the Agent and the Required
Lenders with, such legal and/or business due diligence review of the
Acquisition, the terms thereof, and the Target thereof as the Agent and
the Required Lenders (including any independent consultant retained
thereby) reasonably shall deem relevant;
(d) evidence satisfactory to the Agent that all property to be
acquired in the Acquisition, including all property of any Person that,
following such Acquisition, is to become a Subsidiary, will be pledged to
the Agent and the Lenders as security for the Obligations and that the
Liens granted pursuant thereto will constitute perfected Liens, subject
only to Permitted Liens, and that any Person that will become a Subsidiary
as a result of such Acquisition has executed a guaranty of the Obligations
in form and substance satisfactory to the Agent and the Required Lenders
and otherwise complied with the requirements of Section 7.07;
(e) receipt by the Agent and the Lenders of such historical
financial statements and information and such market information
respecting the target of the Acquisition as the Agent and the Required
Lenders reasonably shall deem relevant;
(f) receipt by the Agent and the Lenders of PRO FORMA financial
statements showing the Target and the Company on a consolidated basis
after giving effect to such Acquisition as of the date of the closing
thereof (but only with such adjustments, if any, as shall be approved by
the Agent and the Required Lenders in their sole discretion) and a
certificate of the chief financial officer or treasurer of the Company
demonstrating that the Company, both before and after giving effect to the
Acquisition, will be in compliance with the financial and other covenants
contained herein and in the other Financing Documents;
(g) receipt by the Agent of evidence satisfactory to the Agent and
the Required Lenders in their sole good faith discretion of the
satisfaction (without waiver) of all material conditions to the closing of
the Acquisition (other than payment of that portion of the purchase price
to be paid in connection with such Acquisition with proceeds of an
Acquisition Loan) on the closing date thereof, and satisfaction of the
Agent and the Required Lenders in their sole good faith discretion with
the material terms and conditions of the operative acquisition documents;
(h) receipt by the Agent of a copy of each opinion, report and other
document required to be delivered pursuant to the operative acquisition
documents and requested by the Agent, with a letter from each Person
delivering
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any such opinion or report authorizing reliance thereon by the
Agent and the Lenders, all in form and substance satisfactory to the
Agent; and
(i) such other information respecting the Acquisition, the target or
the Company as the Agent and the Lenders reasonably shall deem relevant.
SECTION 4.03. CONDITIONS TO EACH LOAN. The obligation of any Lender
to make a Loan on the occasion of any borrowing thereof (including on the
Closing Date), is subject to the satisfaction of the following additional
conditions:
(a) receipt by each Lender of a Notice of Revolving
Credit Loan in accordance with Section 3.04;
(b) the fact that, immediately after such borrowing or issuance, (i)
the aggregate outstanding principal amount of the Revolving Credit Loans
will not exceed the aggregate amount of the Revolving Credit Commitments
and (ii) the aggregate outstanding principal amount of Working Capital
Loans will not exceed the Working Capital Availability;
(c) the fact that, immediately before and after such borrowing
or issuance, no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Credit
Parties contained in the Financing Documents shall be true in all material
respects on and as of the date of such borrowing, except for such changes
therein as are expressly permitted by the terms of this Agreement.
Each borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company and the Holding Company, jointly and severally,
represent and warrant that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. Each Credit Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of its organization, and each Credit Party has all corporate
powers, if applicable, and all material governmental licenses, authorizations,
consents and approvals, if any, required to carry on its business as now
conducted and as from time to time conducted. Each Credit Party is qualified to
do business as a foreign corporation in each jurisdiction in which the failure
of such Credit Party to be so qualified could reasonably be expected to have a
Material Adverse Effect.
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SECTION 5.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the each Credit Party
of the Financing Documents to which it is a party are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (other than the filing of UCC-1 financing statements, which have been
made and are in full force and effect) and do not contravene, or constitute a
default under, any provision of applicable law or regulation (including
specifically any applicable rule or regulation relating to the eligibility of
any Credit Party to receive payment and to participate as an accredited and
certified provider of health care services under Medicare, Medicaid, CHAMPUS,
CHAMPVA or any Blue Cross/Blue Shield or equivalent program or relating to the
licenses and permits required therein or in connection therewith) the violation
of which could reasonably be expected to have a Material Adverse Effect, or of
the certificate of incorporation or by-laws of such Credit Party, or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
any Credit Party or result in the creation or imposition of any Lien (other than
the Liens created by the Security Documents) on any asset of any Credit Party.
SECTION 5.03. BINDING EFFECT; LIENS OF SECURITY DOCUMENTS. (a) Each
of the Financing Documents to which any Credit Party is a party (other than the
Notes and the Warrants) constitutes a valid and binding agreement of such Credit
Party, and each of the Notes, when executed and delivered in accordance with
this Agreement, will constitute valid and binding obligations of the Company,
and in each of the Warrants, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations, of the Holding Company
and each of the Warrants when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the Company in each
case enforceable in accordance with its respective terms, subject to: (i) the
effect of any applicable bankruptcy, fraudulent transfer, moratorium,
insolvency, reorganization or other similar laws affecting the rights of
creditors generally; and (ii) the effect of general principles of equity whether
applied by a court of equity or law.
(b) The Security Documents create valid security interests in, and
first-priority mortgage Liens on, the Collateral purported to be covered
thereby, which security interests are perfected security interests, prior to all
other Liens other than Permitted Liens. Each of the representations and
warranties made by any Credit Party in the Security Documents is true and
correct in all material respects.
SECTION 5.04. FINANCIAL INFORMATION
(a) (i) The audited consolidated balance sheet of the Holding
Company and its Consolidated Subsidiaries as of December 31, 1997, and the
related audited consolidated statements of operations and cash flows for the
fiscal year then ended, (ii) the consolidated balance sheet of the Holding
Company and it Consolidated Subsidiaries as of August 31, 1998, and the related
consolidated statements of operations and cash flows for the eight months then
ended, reviewed by independent accountants satisfactory to the Agent, and (iii)
the unaudited and unreviewed consolidated balance sheet of the Holding Company
and its Consolidated Subsidiaries as of October 31, 1998, and the related
unaudited consolidated statements of
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operations and cash flows for the ten months then ended, copies of each of which
have been delivered to each of the Lenders, fairly present, in conformity with
GAAP applied on a consistent basis the consolidated financial position of the
Holding Company and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of the statements described in clause (ii) and (iii), to
normal year-end adjustments and the absence of footnotes). As of the dates of
such balance sheets and the date hereof, no Credit Party had or has any material
liabilities, contingent or otherwise, including liabilities for taxes, long-term
leases or forward or long-term commitments, which are not properly reflected on
such balance sheets.
(b) Since December 31, 1997, there has been no event, act, condition
or occurrence of whatever nature that constitutes, or that could reasonably be
expected to result in, a Material Adverse Effect.
(c) Attached hereto as SCHEDULE 5.04 is a schedule showing the
annual operating and capital expenditures budget and cash flow forecast for the
Holding Company and its Consolidated Subsidiaries for the Fiscal Year ending
December 31, 1999. Such schedule represents the best estimate of the Holding
Company of the operating and capital expenditures and cash flow for the Holding
Company and its Consolidated Subsidiaries for the Fiscal year ending December
31, 1999, taking into account all information available to the Holding Company
as of the Closing Date.
SECTION 5.05. LITIGATION. There is no action, suit or proceeding
pending against, or to the knowledge of the Holding Company or the Company
threatened against or affecting, any Credit Party before any court or arbitrator
or any governmental body, agency or official which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect. There is no
action, suit or proceeding pending against, or to the best knowledge of the
Holding Company or the Company threatened against or affecting, any party to any
of the Financing Documents before any court or arbitrator or any governmental
body, agency or official which in any manner draws into question the validity of
any of the Financing Documents. Except as described on SCHEDULE 5.05, there is,
to the best knowledge of the Holding Company or the Company, no pending
investigation of any Credit Party by HCFA or any other governmental authority,
which investigation is not otherwise conducted in the ordinary course of
business and no criminal, civil or administrative action, audit or, to the best
knowledge of the Company, investigation by a fiscal intermediary or by or on
behalf of any governmental authority exists or, to the best knowledge of the
Holding Company or the Company, is threatened with respect to any Credit Party
which could reasonably be expected to materially and adversely affect any Credit
Party's right to receive Medicare, Medicaid, CHAMPUS or CHAMPVA reimbursement to
which such Credit Party would otherwise be entitled, or right to participate in
the Medicare, Medicaid, CHAMPUS or CHAMPVA programs, or otherwise have a
Material Adverse Effect on the receipt of Medicare, Medicaid, CHAMPUS or CHAMPVA
reimbursement by such Credit Party, and, to the best knowledge of the Holding
Company or the Company, no Credit Party is subject to any pending but unassessed
Medicare, Medicaid, CHAMPUS or CHAMPVA claim payment adjustments, except to the
extent that such Credit Party is contesting such assessment in good
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faith by appropriate proceedings diligently pursued and has established and will
maintain adequate reserves for such adjustments in accordance with GAAP.
SECTION 5.06. OWNERSHIP OF PROPERTY, LIENS. On and as of the Closing
Date, each Credit Party is the lawful owner of, has good and marketable title to
and is in lawful possession of, or has valid leasehold interests in, all
properties and other assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by such Person on the
balance sheet referred to in Section 5.04(a), and none of such Person's
properties and assets is subject to any Liens, except Permitted Liens. The
Credit Parties conduct their business without infringement or claim of
infringement of any material license, patent, trademark, trade name, service
▇▇▇▇, copyright, trade secret or other intellectual property right of others
and, except as described on SCHEDULE 5.06, there is no infringement or claim of
infringement by others of any material license, patent, trademark, trade name,
service ▇▇▇▇, copyright, trade secret or other intellectual property right of
any Credit Party.
SECTION 5.07. NO DEFAULT. No Default has occurred and is continuing
and no Credit Party is in default under or with respect to any material
contract, agreement, lease or other material instrument to which it is a party
or by which its property is bound or affected. No Credit Party has received
notification from any governmental authority that any such governmental
authority has taken or intends to take action to revoke, terminate or adversely
amend any license, certificate, accreditation or permit of such Person to
operate a healthcare facility or to participate under Medicare, Medicaid,
CHAMPUS or CHAMPVA.
SECTION 5.08. NO BURDENSOME RESTRICTIONS. No contract, lease,
agreement or other instrument to which any Credit Party is a party or by which
any of its property is bound or affected, no charge, corporate restriction,
judgment, decree or order and no provision of applicable law or governmental
regulation is reasonably likely to have or result in a Material Adverse Effect.
SECTION 5.09. LABOR MATTERS. There are no strikes or other labor
disputes pending or, to the best knowledge of the Holding Company or the
Company, threatened, against any Credit Party. Hours worked and payments made to
the employees of the Credit Parties have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters. All
payments due from the Credit Parties, or for which any claim may be made against
any of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books, as the case may be. The consummation of the transactions contemplated by
the Financing Documents will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Credit Party is a party or by which it is bound.
SECTION 5.10. SUBSIDIARIES; OTHER EQUITY INVESTMENTS. Other than as
set forth on SCHEDULE 5.10, neither the Holding Company nor the Company have any
Subsidiaries. Each Subsidiary is, and, in the case of any additional Subsidiary
formed after the Closing Date, each of such additional corporate Subsidiaries,
will be at each time that this representation is made or deemed to be made after
the Closing Date, a wholly-owned Subsidiary that is a corporation or
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other business entity duly incorporated or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and have all
corporate or other powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as then
conducted. No Credit Party is engaged in any joint venture or partnership with
any other Person.
SECTION 5.11. INVESTMENT COMPANY ACT. Neither the Holding Company
nor the Company is an "investment company" as defined in the Investment Company
Act of 1940, as amended. The consummation of the transactions contemplated by
the Financing Documents do not and will not violate any provision of such Act or
any rule, regulation or order issued by the Securities and Exchange Commission
thereunder.
SECTION 5.12. MARGIN REGULATIONS. None of the proceeds from the
Loans have been or will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any Margin
Stock or for any other purpose which might cause any of the loans under this
Agreement to be considered a "purpose credit" within the meaning of Regulation
G, T, U or X of the Board of Governors of the Federal Reserve Board.
SECTION 5.13. TAXES. The Holding Company's federal tax
identification number is ▇▇-▇▇▇▇▇▇▇. The Company's federal tax identification
number is ▇▇-▇▇▇▇▇▇▇. All Federal, state and local tax returns, reports and
statements required to be filed by or on behalf of the Credit Parties prior to
the date hereof have been filed with the appropriate governmental agencies in
all jurisdictions in which such returns, reports and statements are required to
be filed, and all taxes (including real property taxes) and other charges shown
to be due and payable have been timely paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for nonpayment
thereof, except any of the foregoing as may be subject to a Permitted Contest.
All state and local sales and use taxes required to be paid by the Credit
Parties prior to the date hereof have been paid, except any of the foregoing as
may be subject to a Permitted Contest. All Federal and state returns have been
filed by the Credit Parties for all periods for which returns were due with
respect to employee income tax withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full or adequate provisions therefor have been made.
SECTION 5.14. COMPLIANCE WITH ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could reasonably be expected to
result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Code or (iii) incurred any liability under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
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SECTION 5.15. BROKERS. No broker, finder or other intermediary has
brought about the obtaining, making or closing of the transactions contemplated
by the Financing Documents, and no Credit Party has and will have any obligation
to any Person in respect of any finder's or brokerage fees in connection
herewith or therewith.
SECTION 5.16. EMPLOYMENT, SHAREHOLDERS AND SUBSCRIPTION AGREEMENTS.
Except for the agreements described in SCHEDULE 5.16, true and complete copies
of which have been delivered to the Lenders, there are no (i) employment
agreements covering the management of any Credit Party, (ii) collective
bargaining agreements or other labor agreements covering any employees of the
any Credit Party, (iii) agreements for managerial, consulting or similar
services to which any Credit Party is a party or by which any Credit Party is
bound or (iv) material agreements regarding any Credit Party, their respective
assets or operations or any investment therein to which any of its stockholders
is a party or by which it is bound.
SECTION 5.17. FULL DISCLOSURE. None of the information (financial or
otherwise) furnished by or on behalf of any Credit Party to the Agent or any
Lender in connection with the consummation of the transactions contemplated by
any of the Financing Documents contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading in the light of the circumstances under which
such statements were made. All financial projections delivered to the Lenders
have been prepared on the basis of the assumptions stated therein. Except as
previously disclosed to the Agent in writing, such projections represent the
Company's best estimate of the Credit Parties' future financial performance and
such assumptions are believed by the Holding Company and the Company to be fair
and reasonable in all material respects in light of current business conditions.
SECTION 5.18. PRIVATE OFFERING. Neither the Holding Company or the
Company nor any Person acting on its behalf has offered the Notes, the Warrants
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Lenders and not more than five other institutional
investors. Neither the Holding Company or the Company nor any Person acting on
its behalf has taken, or will take, any action which would subject the issuance
or sale of the Notes or the Warrant Shares to Section 5 of the Securities Act.
SECTION 5.19. COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO
HAZARDOUS MATERIALS. Except as provided on SCHEDULE 5.19 or other
non-compliances which could not reasonably be expected to have a Material
Adverse Effect:
(a) Other than generation in compliance with all applicable Environmental
Laws, no Hazardous Materials are located on any properties now owned, leased or
operated by the Credit Parties or have been released into the environment, or
deposited, discharged, placed or disposed of at, on, under or near any of such
properties. No portion of any such property is being used for the disposal,
storage, treatment, processing or other handling of Hazardous Materials (other
than processing or handling incidental to the generation of Hazardous Materials
in compliance with all
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applicable Environmental Laws), nor is any such property affected by any
Hazardous Materials Contamination.
(b) Other than generation in compliance with all applicable Environmental
Laws, during any period of ownership, operation, possession or control thereof
by any Credit Party, no Hazardous Materials were located on any properties
previously owned, leased or operated by any Credit Party or were released into
the environment, or deposited, discharged, placed or disposed of at, on, under
or near any of such properties. No portion of any such property was used during
any period of ownership, operation, possession or control thereof by any Credit
Party, for the disposal, storage, treatment, processing or other handling of
Hazardous Materials (other than processing or handling incidental to the
generation of Hazardous Materials in compliance with all applicable
Environmental Laws), nor is any such property, to the knowledge of any Credit
Party, affected by any Hazardous Materials Contamination.
(c) No asbestos or asbestos-containing materials are present on any of the
properties now owned, leased or operated by any Credit Party.
(d) No asbestos or asbestos-containing materials were present, during any
period of ownership, operation, possession or control thereof by any Credit
Party, on any of the properties previously owned, leased or operated by a Credit
Party.
(e) No polychlorinated biphenyls are located on or in any properties now
owned, leased or operated by any Credit Party, in the form of electrical
transformers, fluorescent light fixtures with ballasts, cooling oils or any
other device or form.
(f) No polychlorinated biphenyls were, during any period of ownership,
operation, possession or control thereof by any Credit Party, located on or in
any properties previously owned, leased or operated by any Credit Party, in the
form of electrical transformers, fluorescent light fixtures with ballasts,
cooling oils or any other device or form.
(g) No underground storage tanks are located on any properties now owned,
leased or operated by any Credit Party, or were located on any such property and
subsequently removed or filled.
(h) No underground storage tanks were, during any period of ownership,
operation, possession or control thereof by any Credit Party, located on any
properties previously owned, leased or operated by any Credit Party, or were,
during any period of ownership, operation, possession or control thereof by any
Credit Party, located on any such property and subsequently removed or filled.
(i) No notice, notification, demand, request for information, complaint,
citation, summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination has been served upon or is otherwise know to
or, to the Holding Company's or the Company's knowledge, is proposed, threatened
or anticipated with respect to or in connection with the operation of any
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properties now owned, leased or operated by any Credit Party. All such
properties and their existing and prior uses comply and at all times have
complied with any applicable governmental requirements relating to environmental
matters or Hazardous Materials. There is no condition on any of such properties
which is in violation of any applicable governmental requirements relating to
Hazardous Materials, and no Credit Party has received any communication from or
on behalf of any governmental authority that any such condition exists. None of
such properties nor any property to which any Credit Party has, directly or
indirectly, transported or arranged for the transportation of any material is
listed or, to the Holding Company's or the Company's knowledge, proposed for
listing on the National Priorities List promulgated pursuant to CERCLA, on
CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list
of sites requiring investigation or cleanup, nor, to the knowledge of any Credit
Party, is any such property anticipated or threatened to be placed on any such
list.
(j) No notice, notification, demand, request for information, complaint,
citation, summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination has been served upon or is otherwise known to
or, to any Credit Party's knowledge, is proposed, threatened or anticipated with
respect to or in connection with the operation of any properties previously
owned, leased or operated by any Credit Party and relating to any period of
ownership, operation, possession or control thereof by any Credit Party. All
such properties and their prior uses by any Credit Party at all times complied
with any applicable governmental requirements relating to environmental matters
or Hazardous Materials. There is no condition on any of such properties which is
in violation of any applicable governmental requirements relating to Hazardous
Materials and arising from any use of such properties during any period of
ownership, operation, possession or control thereof by any Credit Party, and no
Credit Party has received any communication from or on behalf of any
governmental authority that any such condition exists. None of such properties
nor any property to which any Credit Party has, directly or indirectly,
transported or arranged for the transportation of any material is listed or, to
any Credit Party's knowledge, proposed for listing on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any
similar federal, state or foreign list of sites requiring investigation or
cleanup, nor, to the knowledge of any Credit Party, is any such property
anticipated or threatened to be placed on any such list.
(k) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which any Credit Party has knowledge in
relation to the current or prior business of any Credit Party or any property or
facility now or previously owned, leased or operated by any Credit Party which
has not been delivered to the Lenders at least five days prior to the Closing
Date.
(1) For purposes of this Section 5.19, the terms "Company" and
"Subsidiary" or "Credit Party" shall include any business or business entity
(including a corporation) which is, in whole or in part, a predecessor of the
Company or any Subsidiary or any Credit Party.
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SECTION 5.20. REAL PROPERTY INTERESTS. Except for the ownership,
leasehold or other interests set forth in SCHEDULE 5.20, the Credit Parties
have, as of the Closing Date, no ownership, leasehold or other interest in real
property.
SECTION 5.21. INITIAL CAPITALIZATION. Set forth on SCHEDULE 5.21 is
a schedule of the capitalization of each of the Credit Parties as of the Closing
Date, after giving effect to the transactions contemplated to take place on the
Closing Date and the issuance of the Warrant Shares upon exercise of the
Warrants, specifying each class of interest held and the amount and holder
thereof.
SECTION 5.22. YEAR 2000 COMPLIANCE. The Holding Company and the
Company have (i) initiated a review and assessment of all areas within its, each
other Credit Party's and each of its Affiliates' business and operations
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that, the risk that computer applications
used by the Company or such other Person (or its suppliers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable. Each of
the Holding Company and the Company reasonably believes that all computer
applications (including those of its suppliers and vendors) that are material to
its, any other Credit Party's or any of its Affiliates' business and operations
will on a timely basis be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000 (that is, be "Year 2000 Compliant"),
except to the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect. SCHEDULE 5.22 attached hereto is complete and
correct in all material aspects
SECTION 5.23. THIRD PARTY REIMBURSEMENT. If any Credit Party is or
has been audited by Medicare, Medicaid, CHAMPUS, CHAMPVA or similar governmental
payors, (i) none of such audits provides for adjustments in reimbursable costs
or asserts claims for reimbursement or repayment by such Credit Party of costs
and/or payments theretofore made by such governmental payor that, if adversely
determined, could reasonably be expected to have or result in a Material Adverse
Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Holding Company and the Company agree that, so long as any
Lender has any Commitment hereunder or any amount payable under any Note:
SECTION 6.01. FINANCIAL STATEMENTS AND OTHER REPORTS. The Credit
Parties will maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in accordance with GAAP, and will deliver to each of the Lenders:
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(a) as soon as practicable and in any event within 30 days after the
end of each month, a consolidated and consolidating balance sheet of the
Credit Parties as at the end of such month and the related consolidated
and consolidating statements of operations and cash flows for such month,
and for the portion of the Fiscal Year ended at the end of such month
setting forth in each case in comparative form the figures for the
corresponding periods of the previous Fiscal Year and the figures for such
month and for such portion of the Fiscal Year ended at the end of such
month set forth in the annual operating and capital expenditure budgets
and cash flow forecast delivered pursuant to Section 6.01(j), all in
reasonable detail and certified by the chief financial officer of the
Company as fairly presenting the financial condition and results of
operations of the Credit Parties and as having been prepared in accordance
with GAAP applied on a basis consistent with the audited financial
statements of the Credit Parties, subject to the absence of footnotes and
to changes resulting from audit and normal year-end adjustments;
(b) as soon as available and in any event within 120 days after the
end of the Fiscal Year ending December 31, 1998 and 90 days after the end
of each Fiscal Year thereafter, a consolidated and consolidating balance
sheet of the Credit Parties as of the end of such Fiscal Year and the
related consolidated and consolidating statements of operations,
stockholders' equity and cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous Fiscal Year,
certified (solely with respect to such consolidated statements) without
qualification by independent public accountants of nationally recognized
standing, and any actuarial report of claims incurred but not reported
given by such independent public accountants;
(c) (i) together with each delivery of financial statements pursuant
to (a) and (b) above, an Officers' Certificate of the Company and the
Holding Company stating that the officers executing such certificate have
reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions
and condition of the Credit Parties during the accounting period covered
by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that such
officers do not have knowledge of the existence as at the date of such
Officers' Certificate, of any Default, or, if any such Default existed or
exists, specifying the nature and period of existence thereof and what
action the Credit Parties have taken or are taking or propose to take with
respect thereto; (ii) together with each delivery of financial statements
for each month and Fiscal Year, a compliance certificate of the chief
financial officer or treasurer of the Company (x) providing details of all
transactions between the Credit Parties and any Person referred to in
Section 7.08, (y) demonstrating in reasonable detail compliance during and
at the end of such accounting period with the covenants contained in
Sections 7.14 through 7.19 and (z) if not specified in the financial
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statements delivered pursuant to (a) or (b) above, as the case may be,
specifying the aggregate amount of interest paid or accrued and the
aggregate amount of depreciation and amortization charged, during such
accounting period; and (iii) beginning with the delivery of the financial
statements for the fiscal year ending December 31, 1999, together with
each delivery of financial statements pursuant to (b) above, a statement
setting forth in reasonable detail the computation of Excess Cash Flow, if
any, for such Fiscal Year, certified by the chief financial officer of the
Company as having been prepared from such financial statements in
accordance with this Agreement;
(d) together with each delivery of financial statements pursuant to
(b) above, a written statement by the independent public accountants
giving the report thereon (i) stating that their audit examination has
included a review of the terms of this Agreement as it relates to
accounting matters, (ii) stating whether, in connection with their audit
examination, any Default has come to their attention, and if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof, and (iii) stating that based on their audit
examination nothing has come to their attention which causes them to
believe that the information contained in the certificates delivered
therewith pursuant to (c) above is not correct and that the matters set
forth in the compliance certificate delivered therewith pursuant to clause
(ii) of (c) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(e) promptly upon receipt thereof, copies of all reports submitted
to any Credit Party by independent public accountants, actuaries or
consultants in connection with each annual, interim or special audit of
the financial statements of the Credit Parties made by such accountants or
any actuarial or other analysis of accrued claims by such actuary or
consultant, including the comment letter submitted by such accountants to
management in connection with their annual audit;
(f) promptly upon their becoming available, copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Credit Parties to their security holders, (ii)
all regular and periodic reports and all registration statements and
prospectuses filed by any Credit Party with any securities exchange or
with the Securities and Exchange Commission or any governmental authority
succeeding to any of its functions and (iii) all press releases and other
statements made available generally by any Credit Party to the public
concerning material developments in the business of the Credit Parties;
(g) promptly upon any officer of any Credit Party obtaining
knowledge (i) of the existence of any Default, or becoming aware that the
holder of any Debt of any Credit Party that singly, or when aggregated
with all other Debt of any of the Credit Parties the holder of which has
taken similar actions equals or exceeds $100,000 in principal amount
outstanding, has given any notice or taken any other
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action with respect to a claimed default thereunder, (ii) of any change
in the Credit Parties' certified accountant or any resignation, or
decision not to stand for re-election, by any member of the Holding
Company's board of directors, (iii) that any Person has given any
notice to any Credit Party or taken any other action with respect to a
claimed default under the Service Agreement with Coventry Health Care,
the Service Agreement with Priority or any other material Service
Agreement or any agreement or instrument (other than the Financing
Documents) the indebtedness or obligation under which either singly or
when aggregated with all other claims or Persons taking similar action,
is equal to or greater than $100,000, to which any Credit Party is a
party or by which any of their assets are bound or (iv) of the
institution of any litigation or arbitration involving an alleged
liability of any one or more Credit Parties equal to or greater than
$100,000 or any adverse determination in any litigation or arbitration
proceedings that singly or when aggregated with all other outstanding
litigation or arbitration claims involve a potential liability of any
one or more of the Credit Parties equal to or greater than $100,000, an
Officers' Certificate of the Company specifying the nature and period
of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such
claimed default (including any Default), event or condition, and what
action the Credit Parties have taken, are taking or propose to take
with respect thereto;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent
or has been terminated, a copy of such notice; (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard under Section
412 of the Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Company setting forth details as to such
occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take;
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(i) copies of any reports or notices related to taxes and any other
material reports or notices received by any Credit Party from, or filed by
any Credit Party with, any Federal, state or local governmental agency or
body regulating the activities of any Credit Party;
(j) within thirty days prior to the conclusion of each Fiscal Year,
the Credit Party's annual operating and capital expenditure budgets and
cash flow forecast for the following Fiscal Year presented on a monthly
basis, which shall be in a format reasonably consistent with projections,
budgets and forecasts theretofore provided to the Lenders;
(k) with reasonable promptness, such information and data with
respect to the Collateral as may be requested by the Agent (or such other
affiliate of NationsCredit as shall be engaged for such purpose) in
connection with any collateral audit performed pursuant to Section 6.06;
and
(l) with reasonable promptness, such other information and data with
respect to the Company or any Credit Party as from time to time may be
reasonably requested by any Lender.
SECTION 6.02. PAYMENT OF OBLIGATIONS. Each Credit Party (i) shall
pay and discharge, at or before maturity, all of their respective material
obligations and liabilities, including tax liabilities, except where the same
may be the subject of a Permitted Contest, (ii) shall maintain, and cause each
of its Subsidiaries to maintain, in accordance with GAAP, appropriate reserves
for the accrual of any of the same and (iii) shall not breach in any material
respect, or permit to exist any default under, the terms of any material lease,
commitment, contract, instrument or obligation to which it is a party, or by
which its properties or assets are bound, subject to Permitted Contests.
SECTION 6.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Each
Credit Party will continue to engage in business of the same general type as now
conducted by the Credit Parties, and will preserve, renew and keep in full force
and effect its corporate existence and its rights, privileges and franchises
necessary or desirable in the normal conduct of business.
SECTION 6.04. MAINTENANCE OF PROPERTY; INSURANCE. (a) Each
Credit Party will keep all property necessary in its business in good
working order and condition, ordinary wear and tear excepted.
(b) Each Credit Party will maintain (i) physical damage insurance on
all real and personal property on an all risks basis (including the perils of
flood and quake), covering the repair and replacement of all such property and
consequential loss coverage for business interruption and extra expense,
covering such risks, for amounts not less than those, and with deductible
amounts not greater than those, set forth in Part I of SCHEDULE 6.04, (ii)
public liability
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insurance (including medical acts and other insurance deemed appropriate by the
Agent) covering such risks, for amounts not less than those, and with deductible
amounts not greater than those, set forth in Part II of SCHEDULE 6.04 and (iii)
such other insurance coverage in such amounts and with respect to such risks as
the Required Lenders may reasonably request. All such insurance shall be
provided by insurers having an A.M. Best policyholders rating of not less than
B+ or such other insurers as the Required Lenders may approve in writing.
(c) On or prior to the Closing Date, the Company shall cause the
Agent to be named as an additional insured and loss payee on each insurance
policy required to be maintained pursuant to this Section 6.04. The Company will
deliver to the Lenders (i) on the Closing Date, a certificate from the Company's
insurance broker dated such date showing the amount of coverage as of such date,
and certifying that, in the opinion of such broker, such amounts are reasonable
and customary for companies of established repute engaged in the same or a
similar business, that such policies will include effective waivers (whether
under the terms of any such policy or otherwise) by the insurer of all claims
for insurance premiums against all loss payees and additional insureds and all
rights of subrogation against all loss payees and additional insureds, and that
if all or any part of such policy is cancelled, terminated or expires, the
insurer will forthwith give notice thereof to each additional insured and loss
payee and that no cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by each
additional insured and loss payee of written notice thereof, (ii) upon the
request of the Agent from time to time full information as to the insurance
carried, (iii) within five days of receipt of notice from any insurer, a copy of
any notice of cancellation, nonrenewal or material change in coverage from that
existing on the date of this Agreement and (iv) forthwith, notice of any
cancellation or nonrenewal of coverage by any Credit Party.
(d) Any proceeds in excess of $100,000 from any Property Insurance
Policy which are payable to the insured in respect of any claim, or any
condemnation award or other compensation in respect of a condemnation (or any
transfer or disposition of property in lieu of condemnation) for which any
Credit Party receives a condemnation award or other compensation in excess of
$100,000, shall be paid to the Agent to be held, applied or released for
application in accordance with Section 5 of the Security Agreements and each
Property Insurance Policy shall provide that all insurance proceeds in excess of
$100,000 per claim which are payable to the insured shall be adjusted with and
payable to the Agent. Each Credit Party hereby appoints the Agent as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or drafts in
connection with payments under Property Insurance Policies.
(e) The Holding Company or the Company will maintain a term life
insurance policy in form and substance and issued by a life insurance company,
in each case acceptable to the Agent in its sole good faith discretion, with
respect to ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or his successor in the capacity of President
and Chief Executive Officer of the Company, in an amount not less than
$5,000,000 (the "KEY-PERSON LIFE INSURANCE POLICY"). Any proceeds payable to any
Credit Party under the Key-Person Life Insurance Policy shall be paid to the
Agent for application in accordance with Section 5 of the Company Security
Agreement.
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SECTION 6.05. COMPLIANCE WITH LAWS. Each Credit Party will comply,
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including Environmental Laws and ERISA and the rules
and regulations thereunder), except for such noncompliances that, individually
or when aggregated with all other noncompliances, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. Each Credit
Party will keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities; and will permit representatives of any Lender
(including any consultants retained thereby) to visit and inspect any of its
properties, to examine and make abstracts or copies from any of its books and
records, to conduct a collateral audit and analysis of its accounts and
accruals, and to discuss its affairs, finances, accounts and accruals with its
officers, employees and independent public accountants, actuaries and
consultants, all at such reasonable times and as often as may reasonably be
desired.
SECTION 6.07. USE OF PROCEEDS. The proceeds of the Term Loan shall
be used by the Company solely to refinance the existing indebtedness of the
Company on the Closing Date. The proceeds of Working Capital Loans shall be used
by the Company solely for working capital needs of the Company and its
Subsidiaries. The proceeds of Acquisition Loans shall be used by the Company
solely to fund Acquisitions consented to by the Agent and the Required Lenders
in their sole good faith discretion. None of the proceeds of any Loan will be
used in violation of any applicable law or regulation.
SECTION 6.08. FURTHER ASSURANCES. Each Credit Party will at its own
cost and expense, cause to be promptly and duly taken, executed, acknowledged
and delivered all such further acts, documents and assurances (x) as may from
time to time be necessary or as the Required Lenders may from time to time
reasonably request in order to carry out the intent and purposes of the
Financing Documents and the transactions contemplated thereby, including all
such actions to establish, preserve, protect and perfect the estate, right,
title and interest of the Lenders to the Collateral (including Collateral
acquired after the date hereof), including first priority Liens thereon, subject
only to Permitted Liens and (y) as the Lenders may from time to time reasonably
request, to establish, preserve, protect and perfect first priority Liens in
favor of the Lenders on any and all assets of the Credit Parties and the
proceeds thereof, now owned or hereafter acquired, that are not Collateral on
the date hereof. The Company shall promptly give notice to the Agent of the
acquisition after the Closing Date by any Credit Party of any real property
(including leaseholds in respect of real property), trademark, copyright or
patent.
SECTION 6.09. LENDERS' MEETINGS. Within 45 days after the end of
each fiscal quarter, the Company will conduct a meeting of the Lenders to
discuss such fiscal quarter's results and the financial condition of the Credit
Parties at which shall be present the chief executive officer (if requested by
the Agent or the Required Lenders) and the chief financial officer of the
Holding Company and the Company and such other officers of the Holding Company
and the Company as the Company's chief executive officer shall designate. Such
meetings shall be held at a time and place convenient to the Lenders and to the
Company.
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SECTION 6.10. HEDGING FACILITIES. Upon the request of the Required
Lenders, the Company will, at its sole cost and expense, enter into and
thereafter maintain in full force and effect interest rate cap agreements in
such amounts and on such terms as shall reasonably be requested by the Required
Lenders.
SECTION 6.11. HAZARDOUS MATERIALS; REMEDIATION. The Company will (i)
promptly give notice to the Lenders in writing of any complaint, order,
citation, notice or other written communication from any Person with respect to,
or if any Credit Party becomes aware of, (x) the existence or alleged existence
of a violation of any applicable Environmental Law or the incurrence of any
liability, obligation, loss, damage, cost, expense, fine, penalty or sanction or
the requirement to commence any remedial action resulting from or in connection
with any air emission, water discharge, noise emission, Hazardous Material or
any other environmental, health or safety matter at, upon, under or within any
of the properties now or previously owned, leased or operated by any Credit
Party, or due to the operations or activities of any Credit Party or any other
Person on or in connection with any such property or any part thereof or (y) any
release on any of such properties of Hazardous Materials in a quantity that is
reportable under any applicable Environmental Law; (ii) promptly comply, subject
to Permitted Contests, with any governmental requirements requiring the removal,
treatment or disposal of such Hazardous Materials or Hazardous Materials
Contamination and provide evidence satisfactory to the Required Lenders of such
compliance; and (iii) provide the Lenders, within 30 days after demand therefor
by the Required Lenders, with a bond, letter of credit or similar financial
assurance evidencing to the satisfaction of the Required Lenders that sufficient
funds are available to pay the cost of removing, treating and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
assessment which may be established on any such property as a result thereof
where the projected cost thereof exceeds $100,000.
SECTION 6.12. [RESERVED].
SECTION 6.13. COLLECTIONS; RIGHT TO NOTIFY ACCOUNT DEBTORS. At any
time following the occurrence of an Event of Default and during the continuation
thereof, in addition to the Lenders' rights under the Security Documents, the
Company hereby authorizes the Agent, at any time, to (i) notify any or all
account debtors that the accounts receivable of the Credit Parties have been
assigned to the Agent and that the Agent has a security interest therein and
(ii) direct such account debtors to make all payments due from them to the
Credit Parties upon such accounts receivable directly to the Agent or to a
lockbox designated by the Agent. The Agent shall promptly furnish the Company
with a copy of any such notice sent. Any such notice, in the Agent's sole
discretion, may be sent on the applicable Credit Party's stationery, in which
event such Credit Party or such shall, if requested by the Agent, co-sign such
notice with the Agent. At any subsequent time that no Events of Default are
continuing, the Agent will withdraw such notice at the Company's request.
SECTION 6.14. BOARD MEETINGS. The Company and the Holding Company
will notify the Lenders of all meetings and actions by written consent of the
board of directors of the Holding Company and each committee thereof at the same
time and in the same manner as notice of any meetings of such board or committee
is required to be given to its directors who do not
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waive such notice (or, if such action requires no notice, then 10 days written
notice thereof describing the matters upon which action is to be taken). All
meetings of the board of directors of the Company or each committee thereof
shall be held on the same day and in the same location as the analogous meeting
of the board of directors of the Holding Company or relevant committee thereof,
as the case may be. The Lenders shall have the right to send two representatives
selected by them to each such meeting, who shall be permitted to attend such
meeting and any adjournments thereof (other than any portion of such meeting
devoted to discussion of the Lenders solely in their respective capacities as
holders of the Notes)
SECTION 6.15. ENFORCEMENT OF COVENANTS NOT TO COMPETE AND MATERIAL
CONTRACTS. Each Credit Party shall preserve, protect and defend, to the extent
permitted by applicable law, all of its rights, if any, with respect to any
covenant not to compete and other material provisions contained in any of the
material contracts of such Person or contained in any employment agreement with
any employee whose annual salary and other compensation payable by any Credit
Party is $50,000 or more.
SECTION 6.16. [RESERVED].
SECTION 6.17. LANDLORD AND WAREHOUSEMAN WAIVERS. The Company shall
use its best efforts to deliver to the Agent waivers of contractual and
statutory landlord's, mortgagee's and warehouseman's Liens in form and substance
satisfactory to the Agent under each existing lease, warehouse agreement or
similar agreement to which any Credit Party is a party; PROVIDED that such
waivers will in any event be incorporated when the existing lease, warehouse
agreement or similar agreement is amended, renewed or extended and the Credit
Parties will obtain waivers of both contractual and statutory landlord's,
mortgagee's and warehouseman's Liens in form and substance satisfactory to the
Agent in connection with each new lease, warehouse agreement or similar
agreement entered into by any Credit Party.
SECTION 6.18. MORTGAGES ON REAL PROPERTY; TITLE INSURANCE AND
SURVEY. Within thirty (30) days after the acquisition of any real property
having a fair market value in excess of $100,000 by any Credit Party, such
Credit Party will furnish the Agent with a Mortgage covering each parcel of real
property acquired by such Credit Party (the "REAL PROPERTY"), together with an
ALTA extended coverage lender's policy of title insurance in a policy amount
equal to 100% of the greater of (i) purchase price of such acquired property
(including any liabilities assumed in connection with the acquisition) or (ii)
the fair market value of such property, insuring such Mortgage as a valid,
enforceable first Lien on the Credit Party's interest in the Real Property
covered thereby, subject only to Permitted Liens and to such other exceptions as
are satisfactory to the Agent, together with an ALTA survey with respect to each
parcel of the Real Property acquired, in form and substance reasonably
satisfactory to the Agent, and legible copies of all documents affecting title,
which shall show all recording information. The policy, including each of the
exceptions to coverage contained therein, shall be subject to the approval of
the Agent, and shall be issued by a title company acceptable to the Agent.
Attached to the policy shall be any and all endorsements reasonably required by
the Agent, including (a) a comprehensive endorsement (ALTA 100 or equivalent)
covering restrictions and other matters, (b) a broad form zoning endorsement,
which specifically ensures that applicable parking
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requirements, if any, have been satisfied, (c) an endorsement ensuring that the
lien of each Mortgage is valid against any applicable usury laws or other laws
prohibiting the charging of interest on interest in the state(s) where such Real
Property is located, (d) an endorsement ensuring that the Real Property has
access to a dedicated public street, (e) a revolving credit endorsement, (f) a
contiguity endorsement, (g) a survey and "same as" endorsement and (h) an
endorsement deleting the so-called "doing business" exclusion.
SECTION 6.19. ADDITIONAL SUBSIDIARIES OR JOINT VENTURES. (a)
Promptly after the creation or acquisition of any Subsidiary by any Credit
Party, such Credit Party shall execute and deliver or cause to be executed and
delivered, (i) a Guaranty Agreement and a Security Agreement from such
Subsidiary, (ii) a pledge of all of the capital stock of such Subsidiary
pursuant to a Pledge Agreement from the parent of such Subsidiary, and (iii)
such other related stock powers, financing statements, opinions of counsel and
other documents as the Agent may request, all in form and substance reasonably
satisfactory to the Agent.
(b) Promptly upon creating or acquiring any Investment in any Joint
Venture, each Credit Party shall take such steps as the Agent shall request in
order to create in the Agent a fully perfected, first priority security interest
in such Investment and shall deliver such documents, instruments, evidences,
opinions and consents in connection therewith as the Agent shall request, all in
form and substance satisfactory to the Agent.
SECTION 6.20. YEAR 2000 COMPLIANCE. The Holding Company and the
Company will promptly notify the Agent in the event that either discovers or
determines that any computer application (including those of its suppliers and
vendors) that is material to their, any Credit Party's or any of its Affiliates'
business and operations will not be Year 2000 compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect.
SECTION 6.21. ACCREDITATION AND LICENSING. Each Credit Party shall
keep itself fully licensed with all licenses required to operate such Person's
business under applicable law and maintain such Person's qualification for
participation in, and payment under, Medicare, Medicaid, CHAMPUS, CHAMPVA and
any other federal, state or local governmental program or private program
providing for payment or reimbursement for services rendered by such Person,
except to the extent that the loss or relinquishment of such qualification would
not or could not reasonably be expected to have or result in a Material Adverse
Effect; PROVIDED, however, that nothing in this Agreement shall not require any
Credit Party to participate in the CHAMPUS or CHAMPVA programs if it elects not
to accept patients covered by such programs. The Company will promptly furnish
the Agent with copies of all reports and correspondence relating to any loss or
revocation (or threatened loss or revocation) of any qualification described in
this Section.
SECTION 6.22. DISSOLUTION OF INACTIVE SUBSIDIARIES; TRANSFER OF
DEPOSIT ACCOUNTS; ASSIGNMENT OF KEY PERSON LIFE POLICY. The Credit Parties shall
cause to be dissolved before January 31, 1999, each of the Subsidiaries of the
Holding Company listed as an inactive subsidiary on SCHEDULE 5.10. Within 15
days of the Closing Date, the Holding Company shall cause all deposit accounts
of the Holding Company to be transferred to the Company, and the
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Company shall cause to be in effect a Pledged Account Agreement for each such
Account. Within 15 days of the Closing Date, the Holding Company and the Company
shall cause all account debtors and third party payors to make all payments of
amounts owing to the Company or any other Credit Party which, as of the Closing
Date, are made to one of the deposit accounts of the Holding Company, to one of
the deposit accounts transferred to the Company. The Company shall deliver
within 15 days of the Closing Date the acknowledgment executed by the insurer of
the Assignment of the Key Person Life Insurance Policy.
ARTICLE VII
NEGATIVE COVENANTS
The Holding Company and the Company agree that, so long as any
Lender has any Commitment hereunder or any amount payable under any Note remains
outstanding:
SECTION 7.01. DEBT. No Credit Party will, directly or indirectly,
create, incur, assume, guarantee or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except for:
(a) Debt of the Credit Parties under the Financing Documents;
(b) Debt of any Credit Party incurred or assumed for the purpose of
financing all or any part of the cost of acquiring any fixed asset
(including through Capital Leases), in an aggregate principal amount at
any time outstanding not greater than $250,000;
(c) Debt of the Holding Company or the Company or any Subsidiary of
the Holding Company to the Holding Company or Company or a wholly-owned
Subsidiary of the Holding Company or Company;
(d) Debt of the Company incurred in connection with an acquisition
in accordance with terms and conditions of Section 6.07, which Debt shall
be subordinated in all respects to any and all Debt of the Credit Parties
to the Agent and the Lenders, upon terms and conditions satisfactory to
the Lenders; and
(e) Other Debt of the Credit Parties in an aggregate principal
amount (whether fixed or contingent, drawn or undrawn) not to exceed at
any time $100,000.
SECTION 7.02. NEGATIVE PLEDGE. No Credit Party will create,
assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) any Lien on any asset securing Debt permitted under Section
7.01(b) incurred or assumed for the purpose of financing all or any part
of the cost
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of acquiring such asset, PROVIDED that such Lien attaches to
such asset concurrently with or within 90 days after the acquisition
thereof;
(b) Liens arising in the ordinary course of its business which (i)
do not secure Debt, (ii) do not secure any obligation in an amount
exceeding $100,000 and (iii) do not in the aggregate materially detract
from the value of its assets or materially impair the use thereof in the
operation of its business; and
(c) Liens created by the Security Documents.
SECTION 7.03. CAPITAL STOCK. No Credit Party will issue any shares
of capital stock or other equity interests except for: (i) in the case of the
Company, shares of capital stock issued by the Company to the Holding Company
which are delivered to the Agent in pledge for the benefit of the Agent and the
Lenders; (ii) in the case of any Subsidiary of the Company or the Holding
Company (other than a Subsidiary that constitutes a Joint Venture), shares of
capital stock issued by such Subsidiary to the Company or Holding Company which
are delivered to the Agent in pledge for the benefit of the Agent and the
Lenders; (iii) in the case of any Subsidiary that constitutes a Joint Venture,
shares of stock or other equity interests that are issued ratably to the Company
and the other participants in the Joint Venture, pro rata in accordance with
their respective interests, and which shares or interests that are issued to the
Company, are delivered to the Agent in pledge for the benefit of the Agent and
the Lenders; (iv) shares of Common Stock; or (v) preferred stock of the Holding
Company on terms and conditions acceptable to the Required Lenders in their sole
good faith discretion.
SECTION 7.04. RESTRICTED PAYMENTS. No Credit Party will directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Payment; PROVIDED that the foregoing shall not restrict or prohibit dividends or
distributions by the Company or the Holding Company at such times or in such
amounts as are necessary to permit (i) purchases or redemptions of Warrants
under the terms thereof, (ii) the PRO RATA distribution by a Credit Party of Net
Proceeds received by such Credit Party from the sale of any partial
hospitalization assets to the Company and/or the Holding Company and the holders
of the minority ownership interest in such Credit Party, or (iii) a distribution
by the Company to the Holding Company in an amount not to exceed $100,000 in any
one Fiscal Year for reasonable out of pocket operating costs and expenses.
SECTION 7.05 ERISA. No Credit Party will:
(a) engage in any transaction in connection with which any Credit
Party could be subject to any material liability arising from either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code;
(b) terminate any Plan in a manner, or take any other action, which
could result in any material liability of any member of the ERISA Group to
the PBGC;
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(c) fail to make full payment when due of all amounts which, under
the provisions of any Plan, it is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency, whether or
not waived, with respect to any Plan;
(d) permit the present value of all benefit liabilities under all
Plans to exceed the fair market value of the assets of such Plans; or
(e) fail to make any payments to any Multiemployer Plan that it may
be required to make under any agreement relating to such Multiemployer
Plan or any law pertaining thereto.
SECTION 7.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. No Credit
Party will, (i) consolidate or merge with or into any other Person other than
the merger of a wholly-owned Subsidiary of the Company with and into the
Company, with the Company the surviving entity, or (ii) sell, lease or otherwise
transfer, directly or indirectly, any of its assets, other than (w) sales of
inventory in the ordinary course of businesses, (x) dispositions of Temporary
Cash Investments, (y) sales of the partial hospitalization assets of any Credit
Party, and (z) dispositions for cash and fair value of assets that the board of
directors of the Company determines in good faith are no longer used or useful
in the business of the Credit Parties, PROVIDED that immediately after such
disposition the aggregate fair market value of all such assets disposed of
pursuant to this clause (z) after the date hereof does not exceed $100,000 and
the aggregate fair market value of all such assets during the Fiscal Year in
which such disposition is made does not exceed $50,000 and PROVIDED FURTHER,
that immediately after any such disposition pursuant to clause (z), no Default
shall then exist or be created thereby.
SECTION 7.07. PURCHASE OF ASSETS, INVESTMENTS. No Credit Party will
acquire any assets other than in the ordinary course of business, or make,
acquire or own any Investment in any Person other than (a) Temporary Cash
Investments, (b) Investments in Subsidiaries, (c) Acquisitions approved by the
Required Lenders in their sole good faith discretion, and (d) Investments in
Joint Ventures, PROVIDED THAT (i) the amount invested in any single Joint
Venture in any year shall not exceed $100,000, (ii) the aggregate amount
invested in all such Joint Ventures in any one year shall not exceed $300,000,
(iii) such Investment shall not cause any Credit Party other than the applicable
Joint Venture to incur any liability other than the liability to make its
Investment, and (iv) both before and after giving effect to such Investment, no
Default or Event of Default shall have occurred and be continuing. Without
limiting the generality of the foregoing, no Credit Party will (i) acquire or
create any Subsidiary without the consent of the Required Lenders and
arrangements satisfactory to the Required Lenders for (x) a pledge of the stock
of such Subsidiary to the Agent for the benefit of the Lenders, (y) a guaranty
by such Subsidiary of the Obligations of the Company hereunder and (z) a grant
of a Lien on all of the assets of such Subsidiary to the Agent for the benefit
of the Agent and the Lenders to secure such guaranty or (ii) engage in any Joint
Venture with any other Person other than Investments in Joint Ventures provided
for above in this Section.
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SECTION 7.08. TRANSACTIONS WITH AFFILIATES. No Credit Party will,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company, on terms that are less favorable to
such Credit Party, than those which might be obtained at the time from a Person
who is not an Affiliate of the Company.
SECTION 7.09. AMENDMENTS OR WAIVERS. Without the prior written
consent of the Required Lenders, no Credit Party will agree to (i) any amendment
to or waiver of or in respect of its certificate of incorporation or Bylaws or
any Financing Document; or (ii) any other material amendment to or waiver of any
material contract constituting a part of the Collateral.
SECTION 7.10. FISCAL YEAR. The Company shall not change its
fiscal year from a fiscal year ending December 31.
SECTION 7.11. MANAGEMENT COMPENSATION. No Credit Party shall,
directly or indirectly, pay or become obligated to pay, any compensation for
services in any form to or for the account of any member of Senior Management,
in any Fiscal Year in the amount set forth for such Fiscal Year on SCHEDULE
7.11.
SECTION 7.12. CAPITATED BENEFICIARY ADJUSTMENTS; PUBLIC CONTRACTS
CAPITATION RISK.
(a) Without the prior written consent of the Required Lenders, APS
will not agree to any amendment to, or waiver of, any provision related to
the Capitated Beneficiary Adjustment or the calculation of such Capitated
Beneficiary Adjustment in the PHC Service Agreement or the PHC Purchase
Agreement
(b) Without the prior written consent of the Required Lenders, no
Credit Party will become party to any Public Sector Service Agreement or
other contract pursuant to which it becomes liable for all or any portion
of any capitation risk if the annual gross revenues generated in
connection with such Service Agreement or contract could, in the good
faith judgment of the Agent and the Required Lenders, equal or exceed
$8,000,000.
SECTION 7.13. INVESTOR FEES. No Credit Party shall, directly or
indirectly, pay or become obligated to pay any fees or other amounts to or for
the account of any Investor.
SECTION 7.14. CAPITAL EXPENDITURES. The aggregate amount of
Consolidated Capital Expenditures for any Fiscal Year shall not exceed
$300,000.
SECTION 7.15. TOTAL DEBT SERVICE COVERAGE RATIO. The Holding Company
shall not permit the ratio determined as of the last day of any month of (i)
Consolidated Free Cash Flow to (ii) Total Debt Service , in each case for the
twelve-month period then ended (or, in the case of any month ending prior to the
first anniversary of the Closing Date, for the period commencing on the Closing
Date and ending on the last day of such month), to be less than 1.50 to 1.00.
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SECTION 7.16. LEVERAGE RATIO. The Leverage Ratio shall not (i) at
any time through June 30, 1999 exceed 4.00 to 1.00, (ii) at any time from June
30, 1999 through December 31, 1999 exceed 3.75 to 1.00 or (iii) at any time
thereafter exceed 3.50 to 1.00.
SECTION 7.17. MINIMUM CONSOLIDATED NET WORTH. At no time will
Consolidated Net Worth be less than (i) Consolidated Net Worth as shown on the
Holding Company's audited balance sheet for the year ended December 31, 1998 and
delivered to the Lenders pursuant to Section 6.01(b), MINUS (ii) $250,000, MINUS
(iii) the amount of new business development expenses incurred prior to the
Closing Date with respect to the Pinnacle Health Enterprise, Inc., the Southwest
Community Behavioral Care, LLC or the Health Insurance Plan of New York
relationships that were previously capitalized by the Holding Company, PROVIDED
such amount shall not exceed $800,000, MINUS (iv) any charges relating to (x)
employee termination payments, (y) lease termination and (z) write offs of
uncollectable accounts, in each case arising from the discontinuance of the
partial hospitalization business, PLUS (v) 80% of the positive amount of the net
income of the Holding Company and its Consolidated Subsidiaries for each
complete month ended on or after such date, PLUS (vi) the amount of any increase
in Consolidated Net Worth resulting from the issuance of stock, corporate
reorganizations, recapitalizations or other similar events.
SECTION 7.18 INTEREST COVERAGE. The ratio, determined as of the last
day of any month, of (i) Consolidated EBITDA to (ii) the aggregate interest
charges incurred by the Credit Parties, whether expensed or capitalized,
including the portion of any obligation under Capital Leases allocable to
interest expense in accordance with GAAP but excluding the portion of any debt
discount or premium and the expenses of any debt issuance that shall be
amortized in such period, in each case for the twelve-month period then ended
(or, in the case of any period ending prior to the first anniversary of the
Closing Date, for the period commencing on the Closing Date and ending on the
last day of such period), to be less than the ratio set forth below opposite the
period in which such last day shall fall:
FISCAL QUARTER ENDING RATIO
--------------------- -----
March 31, 1999 2.50:1.00
June 30, 1999 2.75:1.00
September 30, 1999 3.00:1.00
December 31, 1999 3.25:1.00
March 31, 2000 3.50:1.00
June 30, 2000 3.75:1.00
September 30, 2000 and each quarter
ended thereafter 4.00:1.00
SECTION 7.19. MINIMUM EBITDA. The Holding Company shall not at any
time during any period specified below permit EBITDA for the twelve month period
most recently ended (considered as a single accounting period, and subject to
Section 7.20), to be less than the amount set forth opposite such period below,
plus, in each case, for each Target acquired
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subsequent to the Closing Date 75% of the pro forma EBITDA of such entity
included at the time of the acquisition thereof in the borrowing availability
calculation pursuant to Section 3.01(c):
FISCAL QUARTER ENDING EBITDA
--------------------- ------
March 31, 1999 $2,500,000
July 30, 1999 $2,750,000
September 30, 1999 $3,000,000
December 31, 1999 $3,000,000
March 31, 2000 $3,250,000
June 30, 2000 $3,500,000
September 30, 2000 $3,750,000
December 31, 2000 $4,000,000
March 31, 2001 $4,250,000
June 30, 2001 $4,500,000
September 30, 2001 $4,750,000
December 31, 2001 and each quarter
ended thereafter $5,000,000
SECTION 7.20. TRANSITION RULES. In calculating compliance with
Section 7.16 or Section 7.19, the Holding Company shall include the actual
EBITDA for any Person, group of assets or business that was within the past
twelve months a Target. The amount to be included for such Target shall be the
actual amount for the 12 month period most recently ended as if the Target had
been acquired by the Credit Parties at the beginning of such period. No
adjustment shall be made to the Target's EBITDA except as permitted by the
Required Lenders in their sole discretion.
SECTION 7.21. ACTIVITIES OF THE HOLDING COMPANY. The Holding
Company shall not, directly or indirectly, (i) enter into or permit to exist
any transaction or agreement (including any agreement for the incurrence or
assumption of Debt, any purchase, sale, lease or exchange of any property or
the rendering of any service), between itself and any other Person, (ii)
engage in any business or conduct any activity (including the making of any
Investment or payment) or transfer any of its assets, other than Investments
in the Company, and performance of ministerial activities and payment of
taxes and administrative fees necessary for compliance with the next
succeeding sentence or (iii) consolidate or merge with or into any other
Person. The Holding Company shall further preserve, renew and keep in full
force and effect their respective corporate existences and any rights,
privileges and franchises necessary or desirable in the conduct of their
respective business, and shall comply in all material respects with all
material applicable laws, ordinances, rules, regulations and requirements of
governmental authorities. The Holding Company shall not have any
Subsidiaries other than the Company and the other Subsidiaries listed on
Schedule 5.10 as of the Closing Date.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. If any one or more of the following
events (each an "EVENT OF DEFAULT") shall occur and be continuing for any reason
whatsoever (whether voluntary or involuntary, by operation of law or otherwise):
(a) the Company shall fail to pay any amount due hereunder when due;
(b) any Credit Party shall fail to observe or perform any covenant
applicable to it contained in Section 6.01 (g), (h), (i) or (k), 6.03,
6.05, 6.06, 6.07, 6.10, 6.11, 6.14, 6.19, 6.20, 6.22, 7.04, 7.12 or
Sections 7.14 through 7.19 or 7.21 hereof, or any Credit Party shall fail
to perform or observe any other covenant contained in Article VII hereof
or in Section 5 or Sections 4(A), (E) or (I) of any Security Agreement or
Section 3(B) of any Pledge Agreement and such failure shall continue for a
period of 10 days after any officer of a Credit Party acquires knowledge
thereof;
(c) any Credit Party shall fail to observe or perform any covenant
or agreement contained in the Financing Documents (other than those
covered by clause (a) or (b) above) for 30 days after notice thereof has
been given to the Company by the Agent;
(d) any representation, warranty, certification or statement made by
any Credit Party in any Financing Document or in any certificate,
financial statement or other document delivered pursuant to the Financing
Documents shall prove to have been incorrect in any respect (or in any
material respect if such representation, warranty, certification or
statement is not by its terms already qualified as to materiality) when
made (or deemed made);
(e) any Credit Party shall fail to make any payment in respect of
any Debt (other than the Notes) the aggregate outstanding principal amount
of which Debt, either singly or when aggregated with all other Debt with
respect to which the Credit Parties have failed to make a payment, equals
or exceeds $100,000 (such Debt, hereinafter "MATERIAL DEBT");
(f) any event or condition shall occur which (i) results in the
acceleration of the maturity of any Material Debt (other than the Notes)
of the any Credit Party, or (ii) enables (or, with the giving of notice or
lapse of time or both, would enable) the holder of such Material Debt or
any Person acting on such holder's behalf to accelerate the maturity
thereof, or (iii) results in a violation of, or a default under, any
provision of the certificate of incorporation of any Credit Party;
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(g) any Credit Party shall commence a voluntary case or other
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, liquidation, custodian or other similar official of it
or any 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 fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit 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 of it
or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against any Credit Party
under the federal bankruptcy laws as now or hereafter in effect;
(i) any one or more members of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of $100,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of ERISA
by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a trustee
to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $100,000;
(j) a judgment or order for the payment of money which when
aggregated with other such judgments or orders equals or exceeds $250,000,
shall be rendered against any Credit Party and such judgment or order
shall continue unsatisfied and unstayed for a period of 10 days or any
judgment shall be rendered against any Credit Party that exceeds by more
than $100,000 any insurance coverage applicable thereto;
(k) except as the result of any transfer made pursuant to a Pledge
Agreement, the Holding Company shall fail at any time to be the record and
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beneficial owner of 100% of the issued and outstanding capital stock of
the Company, free and clear of any Lien, or the Company or any other
Credit Party shall fail at any time to be the record and beneficial owner
of at least that percentage of the issued and outstanding capital stock or
ownership interests of the Persons listed on Schedule 5.10 as shall be
shown opposite such Person on such Schedule, or the Company shall fail at
any time to be the record and beneficial owner of 100% of the issued and
outstanding capital stock of any Subsidiary formed or acquired after the
Closing Date, except for any Joint Venture acquired in accordance with
Section 7.07, in each case free and clear of any Lien; or any person or
group of persons (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchanges Commission under the Securities Exchange Act of
1934, as amended), other than the current owners and Persons who acquire
Common Stock as consideration for acquisitions, shall have acquired
beneficial ownership (within the meaning of such Rule 13d-3) of 25% or
more of the Common Stock of the Holding Company; or each of ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Company IV, L.P., Applewood Associates, L.P., Seneca
Ventures, Woodland Partners and Woodland Venture Fund shall hold less than
the number of outstanding shares of such class of capital stock of the
Holding Company (on a fully diluted basis) as each such Person holds on
the Closing Date; or ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease to perform the
functions of President and Chief Executive Officer of the Company, and a
successor shall not have been appointed by the Company and approved by the
Required Lenders within 90 days thereafter; or, during any twelve
consecutive calendar months, Persons who were directors of the Holding
Company or who were directors of the Company on the first day of such
period shall cease to constitute a majority of the board of directors of
the Holding Company or the Company, respectively;
(l) (i) the auditor's report or reports on the audited statements
delivered pursuant to Section 6.01 shall include any material
qualification (including with respect to the scope of audit) or exception
or any adverse statement as to the ability of the Company to continue as a
going concern;
(m) the Lien created by any of the Security Documents shall at any
time fail to constitute a valid and perfected Lien on any portion of the
Collateral purported to be secured thereby which is deemed material by the
Agent, subject to no prior or equal Lien except Permitted Liens, unless
resulting from the Agent's failure to file such continuation statements as
may be required by law to maintain such perfected Lien, or any Credit
Party shall so assert in writing;
(n) any Credit Party shall be prohibited or otherwise materially
restrained from conducting the business theretofore conducted by it by
virtue of any determination, ruling, decision, decree or order of any
court or governmental authority of competent jurisdiction and such
determination, ruling, decision, decree or order remains unstayed and in
effect for any period of 10 days beyond any period for which any business
interruption insurance policy of the Credit
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Parties shall provide full coverage to the such person of any losses and
lost profits;
(o) any of the Financing Documents shall for any reason fail to
constitute the valid and binding agreement of any Credit Party to the
extent described in Section 5.03, or any such party shall so assert in
writing; or
(p) a case or other proceeding shall be commenced against either
Coventry Health Care or Priority under any bankruptcy, insolvency or other
similar law or either Coventry Health Care or Priority shall voluntarily
commence such case or other proceeding; any event shall occur which
renders either Coventry Health Care or Priority insolvent or could
reasonably be expected to have a material adverse effect on the credit
worthiness of such Person; either Coventry Health Care or Priority shall
terminate the Service Agreement to which it is a party or challenge the
legality, validity or binding effect of such Service Agreement or any
material provision thereof; or any other event occurs or condition exists
which in the sole judgment of the Required Lenders could reasonably be
expected to have a material adverse effect on the financial condition,
operations, business, properties or prospects of Coventry Health Care or
Priority.
then, and in every such event and at any time thereafter during the continuance
of such event, the Agent shall if requested by the Required Lenders, (i) by
notice to the Company terminate the Commitments and they shall thereupon
terminate, (ii) by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Credit Parties, and/or (iii)
exercise any rights or remedies provided herein, under any other Financing
Documents, or otherwise available at law or in equity; PROVIDED that in the case
of any of the Events of Default specified in clause (g) or (h) above with
respect to the Company, without any notice to the Company or any other act by
the Agent or the Lenders, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company.
ARTICLE IX
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 9.01. FEES. (a) PARTICIPATION FEES. On the Closing Date,
the Company shall pay to each Lender a fee in an amount equal to the sum
of (i) 1.00% of such Lender's Revolving Credit Commitment PLUS (ii) 1.50% of
such Lender's Term Loan Commitment (net of any amounts previously paid to
the Agent for the account thereof).
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(b) UNUSED COMMITMENT FEE. During the period from the Closing Date
through the date on which the Revolving Credit Commitments are terminated, the
Company shall pay to each Lender a fee at the rate of 0.50% per annum on the
daily average amount by which the amount of such Lender's Revolving Credit
Commitment exceeds the aggregate outstanding principal amount of its Revolving
Credit Loans. Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Date prior to the date on which the Revolving Credit
Commitments are terminated and on the date of such termination.
SECTION 9.02. COMPUTATION OF INTEREST AND FEES. (a) Commitment fees
pursuant to Section 9.01(b) and all interest hereunder and under the Notes shall
be calculated on the basis of a 360-day year for the actual number of days
elapsed.
(b) So long as any Event of Default shall have occurred and be
continuing, the interest rate applicable to the Loans or any other obligations
of the Credit Parties under the Financing Documents may be increased by the
Required Lenders, at their option, by up to two percentage points (2%) per annum
above the rate otherwise applicable, or if no such rate shall be specified, the
Prime Rate, plus 2% (the "DEFAULT RATE").
SECTION 9.03. GENERAL PROVISIONS REGARDING PAYMENTS. All payments
(including prepayments) to be made by the Credit Parties under any Financing
Document, including payments of principal of and premium and interest on the
Notes, fees, expenses and indemnities, shall be made without set-off or
counterclaim and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension. The Company shall make all payments in immediately available
funds to each Lender's Payment Account before 11:00 A.M. (New York City time) on
the date when due. Each payment (including prepayments) by the Company on
account of principal of and interest on any Loans shall be made PRO RATA
according to the respective outstanding principal amounts of Loans held by each
Lender. All amounts payable by the Credit Parties hereunder or under any other
Financing Document not paid when due (other than payments of principal and
interest on the Notes, which shall bear interest as set forth therein) shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
SECTION 9.04. EXPENSES. Whether or not the transactions contemplated
hereby shall be consummated, the Company agrees to pay on demand (i) the costs
and expenses (including without limitation the fees, expenses and disbursement
of counsel to the Agent) incurred by the Agent or NationsCredit in connection
with the preparation of this Agreement, the other Financing Documents and of the
Company's and each other Credit Party's performance of and compliance with all
agreements and conditions contained herein and therein, (ii) the fees, expenses
and disbursements of counsel to, and independent appraisers and consultants
retained by, the Agent and NationsCredit in connection with the business or
legal due diligence, negotiation, preparation, execution and administration of
this Agreement, the other Financing Documents and any amendments hereto or
thereto and waivers hereof and thereof, and the reasonable fees, expenses and
disbursements of counsel to the other Lender(s) in connection with
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any amendment to this Agreement which operates to increase the Commitments of
the Lenders hereunder (as to all such other Lenders) or to add an additional
Lender hereunder (solely as to such additional Lender), (iii) all costs and
expenses of creating, perfecting and maintaining Liens pursuant to the Financing
Documents, including filing and recording fees and expenses, the costs of any
bonds required to be posted in respect of future filing and recording fees and
expenses, title investigations and fees and expenses of such local counsel as
the Agent shall request, (iv) the fees, expenses and disbursements of
independent accountants or other experts retained by the Agent (or any affiliate
of NationsCredit as shall be engaged for such purpose) in connection with
accounting and collateral audits or reviews of the Company, its Subsidiaries and
its and their affairs, and (v) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Agent and each Lender, including fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
SECTION 9.05. INDEMNITY. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to indemnify, pay
and hold harmless the Agent and each Lender and any subsequent holder of any of
the Notes, Warrants or Warrant Shares and the officers, directors, employees and
agents of the Agent, each Lender and such holders (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitee) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto and including any such proceeding
initiated by or on behalf of the Company, any Subsidiary or any other Credit
Party, and the expenses of investigation by engineers, environmental consultants
and similar technical personnel and any commission, fee or compensation claimed
by any broker (other than any broker retained by NationsCredit) asserting any
right to payment for the transactions contemplated hereby, which may be imposed
on, incurred by or asserted against such Indemnitee as a result of or in
connection with the transactions contemplated hereby or by the other Financing
Documents (including (i)(A) as a direct or indirect result of the presence on or
under, or escape, seepage, leakage, spillage, discharge, emission or release
from, any property now or previously owned, leased or operated by the Company or
any of its Subsidiaries of any Hazardous Materials or any Hazardous Materials
Contamination, (B) arising out of or relating to the offsite disposal of any
materials generated or present on any such property or (C) arising out of or
resulting from the environmental condition of any such property or the
applicability of any governmental requirements relating to Hazardous Materials,
whether or not occasioned wholly or in part by any condition, accident or event
caused by any act or omission of the Company or any of its Subsidiaries, and
(ii) proposed and actual extensions of credit under this Agreement) and the use
or intended use of the proceeds of the Notes and the Letters of Credit, except
that the Company shall have no obligation hereunder to an Indemnitee with
respect to any liability resulting solely from the gross negligence or willful
misconduct of such Indemnitee. To the extent that the undertaking set forth in
the immediately preceding sentence may be unenforceable, the Company shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all such indemnified
liabilities incurred by the Indemnitees or any of them. Without limiting the
generality of any provision of
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this Section, to the fullest extent permitted by law, the Company hereby waives
all rights for contribution or any other rights of recovery with respect to
liabilities, losses, damages, costs and expenses arising under or relating to
Environmental Laws that it might have by statute or otherwise against any
Indemnitee; except to the extent that any thereof are finally determined by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
SECTION 9.06. TAXES. The Company agrees to pay all governmental
assessments, charges or taxes (except income or other similar taxes imposed on
any Lender or any holder of a Note), including any interest or penalties
thereon, at any time payable or ruled to be payable in respect of the existence,
execution or delivery of this Agreement, the other Financing Documents, or the
issuance of the Notes, and to indemnify and hold each Lender and each and every
holder of the Notes, Warrants or Warrant Shares harmless against liability in
connection with any such assessments, charges or taxes.
SECTION 9.07. FUNDING LOSSES. If the Company fails to borrow any
Loans after notice has been given to any Lender in accordance with Section 3.04
or make any payment when due (including pursuant to a notice of optional
prepayment), the Company shall reimburse each Lender within 15 days after demand
for any resulting loss or expense incurred by it (or by an existing or
prospective participant in the related Loan), including any loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or failure to borrow;
PROVIDED that such Lender shall have delivered to the Company a certificate
calculating in reasonable detail the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 9.08. MAXIMUM INTEREST. (a) In no event shall the interest
charged with respect to the Notes or any other Obligations of the Company or any
Subsidiary under the Financing Documents exceed the maximum amount permitted
under the laws of the State of Georgia or of any other applicable jurisdiction.
(b) Notwithstanding anything to the contrary herein or elsewhere, if
at any time the rate of interest payable for the account of any Lender hereunder
or under the Notes or any other Financing Document (the "STATED RATE") would
exceed the highest rate of interest permitted under any applicable law to be
charged by such Lender (the "MAXIMUM LAWFUL RATE"), then for so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable for the
account of such Lender shall be equal to the Maximum Lawful Rate; PROVIDED, that
if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate,
the Company shall, to the extent permitted by law, continue to pay interest for
the account of such Lender at the Maximum Lawful Rate until such time as the
total interest received by such Lender is equal to the total interest which such
Lender would have received had the Stated Rate been (but for the operation of
this provision) the interest rate payable. Thereafter, the interest rate payable
for the account of such Lender shall be the Stated Rate unless and until the
Stated Rate again would exceed the Maximum Lawful Rate, in which event this
provision shall again apply.
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(c) In no event shall the total interest received by any Lender
exceed the amount which such Lender could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate
with respect to such Lender.
(d) In computing interest payable with reference to the Maximum
Lawful Rate applicable to any Lender, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made.
(e) If any Lender has received interest hereunder in excess of the
Maximum Lawful Rate with respect to such Lender, such excess amount shall be
applied to the reduction of the principal balance of its Loans or to other
amounts (other than interest) payable hereunder, and if no such principal or
other amounts are then outstanding, such excess or part thereof remaining shall
be paid to the Company.
ARTICLE X
THE AGENT
SECTION 10.01. APPOINTMENT AND AUTHORIZATION. Each Lender
irrevocably appoints and authorizes the Agent to enter into each of the Security
Documents on its behalf and to take such action as agent on its behalf and to
exercise such powers under the Financing Documents as are delegated to the Agent
by the terms thereof, together with all such powers as are reasonably incidental
thereto.
SECTION 10.02. AGENT AND AFFILIATES. NationsCredit shall have the
same rights and powers under the Financing Documents as any other Lender and may
exercise or refrain from exercising the same as though it were not the Agent,
and NationsCredit and its affiliates may lend money to and generally engage in
any kind of business with the Company or any Subsidiary or affiliate of the
Company as if it were not the Agent hereunder.
SECTION 10.03. ACTION BY AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein and under the other
Financing Documents. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any Default, except as
expressly provided in Article VIII.
SECTION 10.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 10.05. LIABILITY OF AGENT. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection with the Financing Documents (i) with the consent
or at the request of the Required Lenders or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to
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ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with any Financing Document or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or agreements of the
Company; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; or (iv) the validity,
effectiveness, sufficiency or genuineness of any Financing Document or any other
instrument or writing furnished in connection therewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION 10.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its Revolving Credit Commitment (whether or not the Revolving
Credit Commitments have been terminated), indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from the Agent's gross negligence or willful misconduct) that the Agent may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by the Agent hereunder or thereunder.
SECTION 10.07. CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, 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 any action under the Financing Documents.
SECTION 10.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Company. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent which, absent the occurrence and continuance of a Default, must be
reasonably acceptable to the Company. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be an institution organized or licensed under the laws of the United
States of America or of any State thereof. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SURVIVAL. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the other Financing Documents and the execution, sale and delivery
of the Notes. The indemnities and agreements set forth in Articles VIII and IX
shall survive the payment of the Notes and the termination of this Agreement.
SECTION 11.02. NO WAIVERS. No failure or delay by the Agent or any
Lender in exercising any right, power or privilege under any Financing Document
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 and therein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.03. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including prepaid
overnight courier, telex, facsimile transmission or similar writing) and shall
be given to such party at its address or telecopy or telex number set forth on
the signature pages hereof (or, in the case of any such Lender who becomes a
Lender after the date hereof, in a notice delivered to the Company and the Agent
by the assignee Lender forthwith upon such assignment) or at such other address
or telecopy or telex number as such party may hereafter specify for the purpose
by notice to the Agent and the Company. Each such notice, request or other
communication shall be effective (i) if given by telex or telecopy, when such
telex or telecopy is transmitted to the telex or telecopy number specified in
this Section and the appropriate answer back is received (in the case of telex)
or telephonic confirmation of receipt thereof is obtained (in the case of
telecopy) or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the address specified in this Section or when delivery
at such address is refused.
SECTION 11.04. SEVERABILITY. In case any provision of or obligation
under this Agreement or the Notes or any other Financing Document shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 11.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Lenders
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
PROVIDED that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease any Revolving Credit Commitment of any Lender
(except for a ratable decrease in the Revolving Credit Commitments of all
Lenders) or subject any Lender to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or fees hereunder, (iii) postpone
the date fixed for any payment of principal of any Loan pursuant to Section 2.04
or Section 3.05 or of interest on any Loan or any fees hereunder or for any
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termination of any Commitment or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes which shall be required
for the Lenders or any of them to take any action under this Section or any
other provision of this Agreement.
SECTION 11.06. SUCCESSORS AND ASSIGNS; REGISTRATION. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns (including any
transferee of any Note or Warrant), except that the Company may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of all Lenders.
(b) The terms and provisions of this Agreement shall inure to the
benefit of any transferee or assignee of any Note or Warrant and, in the event
of such transfer or assignment, the rights and privileges herein conferred upon
the assigning Lender shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. Any
assignment shall be for an equal percentage of each Class of such assignor
Lender's Loans and its Revolving Credit Commitment, and any such assignee Lender
shall, upon its registration in the Note Register referred to below, become a
"Lender" for all purposes hereunder. Upon any such assignment, the assignor
Lender shall be released from its Revolving Credit Commitment to the extent
assigned to and assumed by the assignee Lender.
(c) Upon any assignment of any Note(s), the assigning Lender shall
surrender its Note(s) to the Company for exchange or registration of transfer,
and the Company will promptly execute and deliver in exchange therefor a new
Note or Note(s) of the same tenor and registered in the name of the assignor
Lender (if less than all of such Lender's Notes are assigned) and the name of
the assignee Lender.
(d) The Company shall maintain a register (the "NOTE REGISTER") of
the Lenders and all assignee Lenders that are the holders of all the Notes
issued pursuant to this Agreement. The Company will allow any Lender to inspect
and copy such list at the Company's principal place of business during normal
business hours. Prior to the due presentment for registration of transfer of any
Note, the Company may deem and treat the Person in whose name a Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and premium and interest on such Note and for all other
purposes whatsoever, and the Company shall not be affected by notice to the
contrary.
(e) Each Lender (including any assignee Lender at the time of such
assignment) represents that it (i) is acquiring its Note solely for investment
purposes and not with a view toward, or for sale in connection with, any
distribution thereof, (ii) has received and reviewed such information as it
deems necessary to evaluate the merits and risks of its investment in the Note,
(iii) is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act and (iv) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Note, including a complete loss of its investment.
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(f) Each Lender understands that the Note is being offered only in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future such Lender decides to resell, pledge
or otherwise transfer the Note, the Note may be resold, pledged or transferred
only (i) to the Company, (ii) to a person who such Lender reasonably believes is
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that such
resale, pledge or transfer is being made in reliance on Rule 144A under the
Securities Act or (iii) pursuant to an exemption from registration under the
Securities Act.
(g) Each Lender understands that the Note will, unless otherwise
agreed by the Company and the holder thereof, bear a legend to the following
effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY, (2) TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
THAT IS AWARE THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT.
(h) If the Note becomes mutilated and is surrendered by the Lender
with respect thereto to the Company, or if any Lender claims that its Note has
been lost, destroyed or wrongfully taken, the Company shall execute and deliver
to such Lender a replacement Note, upon the affidavit of such Lender attesting
to such loss, destruction or wrongful taking with respect to such Note and such
lost, destroyed, mutilated, surrendered or wrongfully taken Note shall be deemed
to be canceled for all purposes hereof. Such affidavit shall be accepted as
satisfactory evidence of the loss, wrongful taking or destruction thereof and no
indemnity shall be required as a condition of the execution and delivery of a
replacement Note. Any costs and expenses of the Company in replacing any such
Note shall be for the account of such Lender.
SECTION 11.07. COLLATERAL. Each of the Lenders represents to the
Agent and each of the other Lenders that it in good faith is not relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 11.08. HEADINGS. Headings and captions used in the Financing
Documents (including the Exhibits and Schedules hereto and thereto) are included
herein and therein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
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SECTION 11.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
GEORGIA AND OF ANY GEORGIA COURT SITTING IN THE CITY OF ATLANTA, GEORGIA FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.03. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 11.10. [RESERVED].
SECTION 11.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 11.12. COUNTERPARTS. 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 and the other Financing Documents constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
SECTION 11.13. CONFIDENTIALITY. Any information from time to time
delivered to the Agent and/or the Lenders by the Company or any other Credit
Party which is identified as confidential and which is not in the public domain
shall be held by the Agent or such Lender in accordance with its customary
procedures for handling confidential information; PROVIDED that the Agent and
each Lender may make disclosure of such information (i) to its independent
accountants and legal counsel (which Persons shall be likewise bound by the
provisions of this Section 11.13), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process, (iv) pursuant to any written agreement
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hereafter made between the Agent, any Lender and the Company or any other Credit
Party to which such information relates, which agreement permits such
disclosure, (v) as necessary in connection with the exercise of any remedy under
the Financing Documents, or (vi) subject to an agreement containing provisions
substantially the same as those of this Section 11.13, to any assignee of or
participant in, or prospective assignee of or participant in, any of the
Obligations.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized representatives on the date
first above written.
PSYCH SYSTEMS HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: President & CEO
------------------------------
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------
COMPANY ACCOUNT INFORMATION:
Bank's Name and Address:
Account #
---------------------------
ABA #
-------------------------------
Ref.:
--------------------------------
AMERICAN PSYCH SYSTEMS
HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: President & CEO
------------------------------
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, MD
--------------------------
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------
AGENT AND LENDER:
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Authorized Signatory
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: American Psych Systems,Inc.
Account Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
PAYMENT ACCOUNT INFORMATION:
Bank:
Account No.:
ABA Routing No.:
Account Name: NationsCredit Commercial
Corporation
Ref.: American Psych Systems, Inc.