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CONVERTIBLE LOAN AGREEMENT
among
HEALTHCOR HOLDINGS, INC.,
Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION,
as Agent
Dated as of December 23, 1998
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS...........................................................................1
1.1 Defined Terms...........................................................................1
1.2 Other Definitional Provisions..........................................................11
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS......................................................11
2.1 Commitments............................................................................11
2.2 Notes..................................................................................11
2.3 Procedure for Borrowing................................................................11
2.4 Interest Rates and Payment Dates.......................................................12
2.5 Optional Prepayments...................................................................12
2.6 Mandatory Prepayments..................................................................12
2.7 Computation of Interest and Fees.......................................................12
2.8 Pro Rata Treatment and Payments........................................................13
2.9 Requirements of Law....................................................................13
2.10 Taxes.................................................................................14
2.11 Lending Offices; Change of Lending Office.............................................15
SECTION 3. REPRESENTATIONS AND WARRANTIES.......................................................16
3.1 Financial Condition....................................................................16
3.2 No Change..............................................................................17
3.3 Existence; Compliance with Law.........................................................17
3.4 Power; Authorization; Enforceable Obligations..........................................17
3.5 No Legal Bar...........................................................................18
3.6 No Material Litigation.................................................................18
3.7 No Default.............................................................................18
3.8 Ownership of Property; Liens...........................................................18
3.9 Intellectual Property..................................................................18
3.10 No Burdensome Restrictions............................................................18
3.11 Taxes.................................................................................18
3.12 Federal Regulations...................................................................19
3.13 ERISA.................................................................................19
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3.14 Investment Company Act; Other Regulations.............................................19
3.15 Subsidiaries..........................................................................20
3.16 Security Documents....................................................................20
3.17 Accuracy and Completeness of Information..............................................20
3.18 Labor Relations.......................................................................21
3.19 Insurance.............................................................................21
3.20 Solvency..............................................................................21
3.21 Purpose of Loans......................................................................22
3.22 Environmental Matters.................................................................22
3.23 Common Stock..........................................................................23
SECTION 4. CONDITIONS PRECEDENT.................................................................23
4.1 Conditions to Loans....................................................................23
SECTION 5. AFFIRMATIVE COVENANTS................................................................27
5.1 Financial Statements...................................................................27
5.2 Certificates; Other Information........................................................28
5.3 Payment of Obligations.................................................................28
5.4 Conduct of Business and Maintenance of Existence.......................................28
5.5 Maintenance of Property; Insurance.....................................................29
5.6 Inspection of Property; Books and Records; Discussions.................................29
5.7 Notices................................................................................29
5.8 Environmental Laws.....................................................................30
5.9 Periodic Audit of Accounts Receivable and Inventory....................................30
5.10 Additional Collateral; Additional Guarantors..........................................31
5.11 Relief From Automatic Stay in Bankruptcy..............................................31
5.12 Exchange Offer........................................................................32
SECTION 6. NEGATIVE COVENANTS...................................................................32
6.1 Financial Condition Covenants..........................................................32
6.2 Limitation on Indebtedness.............................................................33
6.3 Limitation on Liens....................................................................33
6.4 Limitation on Guarantee Obligations....................................................34
6.5 Limitation on Fundamental Changes......................................................35
6.6 Limitation on Sale of Assets...........................................................35
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6.7 Reserved...............................................................................35
6.8 Limitation on Dividends................................................................35
6.9 Limitation on Capital Expenditures.....................................................36
6.10 Limitation on Investments, Loans and Advances.........................................36
6.11 Limitation on Optional Payments and Modifications of Debt Instruments.................36
6.12 Limitation on Transactions with Affiliates............................................36
6.13 Limitation on Sales and Leasebacks....................................................37
6.14 Limitation on Changes in Fiscal Year..................................................37
6.15 Limitation on Negative Pledge Clauses.................................................37
6.16 Limitation on Lines of Business.......................................................37
6.17 Governing Documents...................................................................37
6.18 Limitation on Subsidiary Formation....................................................37
6.19 Limitation on Securities Issuances....................................................37
SECTION 7. EVENTS OF DEFAULT....................................................................38
SECTION 8. CONVERSION...........................................................................40
8.1 Conversion Right.......................................................................40
8.2 Exercise of Conversion Right; Issuance of Shares of Common Stock on Conversion.........42
8.3 Cash Payment in Lieu of Fractional Shares..............................................43
8.4 Conversion Price.......................................................................44
8.5 Adjustments to the Conversion Price....................................................44
8.6 Stamp and Other Duties and Exchange Costs..............................................49
8.7 Reservation of Shares; Shares to be Fully Paid; Listing of Shares of Common Stock......49
8.8 Responsibility of the Agent............................................................50
8.9 Notice to Lenders Prior to Certain Actions.............................................50
SECTION 9. THE AGENT............................................................................51
9.1 Appointment............................................................................51
9.2 Delegation of Duties...................................................................51
9.3 Exculpatory Provisions.................................................................51
9.4 Reliance by Agent......................................................................51
9.5 Notice of Default......................................................................52
9.6 Non-Reliance on Agent and Other Lenders................................................52
9.7 Indemnification........................................................................52
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9.8 Agent in Its Individual Capacity.......................................................53
9.9 Successor Agent........................................................................53
SECTION 10. MISCELLANEOUS.......................................................................53
10.1 Amendments and Waivers................................................................53
10.2 Notices...............................................................................54
10.3 No Waiver; Cumulative Remedies........................................................55
10.4 Survival of Representations and Warranties............................................55
10.5 Payment of Expenses and Taxes.........................................................55
10.6 Successors and Assigns; Participations and Assignments................................56
10.7 Adjustments; Set-off..................................................................58
10.8 Counterparts..........................................................................58
10.9 Severability..........................................................................59
10.10 Integration..........................................................................59
10.11 Governing Law........................................................................59
10.12 Submission To Jurisdiction; Waivers..................................................59
10.13 Acknowledgments......................................................................60
10.14 Waivers of Jury Trial................................................................60
10.15 Confidentiality......................................................................60
10.16 Limitation on Interest...............................................................60
SCHEDULES
Schedule I Lenders, Commitments, and Lending Offices
Schedule 1.1(a) Milestones
Schedule 1.1(b) Terms of Convertible PIK Preferred Stock
Schedule 1.1(c) Terms of Split Rate Subordinated Notes
Schedule 3.1(a) Exceptions to Financial Statements
Schedule 3.1(b) Sale/Acquisition Disclosure
Schedule 3.2 Certain Events
Schedule 3.3 Good Standing
Schedule 3.6 Litigation
Schedule 3.7 Default on Contractual Obligations
Schedule 3.15 Subsidiaries
Schedule 3.16 UCC Filing Locations
Schedule 3.22 Environmental Matters
Schedule 6.2 Existing Indebtedness
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Schedule 6.3 Existing Guarantee Obligations
Schedule 6.6 Assets to be Sold
Schedule 8.1 Stock Legend
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Intercreditor Agreement
Exhibit C Form of Pledge Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Security Agreement
Exhibit F Form of Subsidiaries Guarantee
Exhibit G Form of Non-Bank Status Certificate
Exhibit H Form of Borrowing Certificate
Exhibit I Form of Opinion of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Conversion Notice
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CONVERTIBLE LOAN AGREEMENT
CONVERTIBLE LOAN AGREEMENT, dated as of December 23, 1998, among
HEALTHCOR HOLDINGS, INC., a Delaware corporation (the "Borrower"), the lenders
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from time to time parties to this Agreement (the "Lenders") and CREDIT SUISSE
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FIRST BOSTON MANAGEMENT CORPORATION, as agent for the Lenders hereunder.
RECITALS
The Borrower has requested that the Lenders make senior secured term
loans to the Borrower in the aggregate principal amount of $6,000,000, the
proceeds of which would be used to reduce certain payables of the Borrower and
its subsidiaries, for other working capital purposes of the Borrower and its
subsidiaries in the ordinary course of business and to pay fees and expenses
incurred in connection herewith. The Lenders are willing to make such credit
available to the Borrower, but only on the terms, and subject to the conditions,
set forth in this Agreement.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
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shall have the following meanings:
"Affiliate": as to any Person, any other Person (other than a
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Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person (including, with its correlative
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meanings, "controlled by" and "under common control with") means the power,
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directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agent": Credit Suisse First Boston Management Corporation, together
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with its affiliates, as the arranger of the Commitments and as the agent
for the Lenders under this Agreement and the other Loan Documents.
"Agreement": this Convertible Loan Agreement, as amended,
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supplemented or otherwise modified from time to time.
"Borrower": as defined in the heading to this Agreement.
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"Borrowing Date": any Business Day specified in a notice pursuant to
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Section 2.3 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Business": as defined in Section 3.22.
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"Business Day": a day other than a Saturday, Sunday or other day on
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which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock": any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation,
any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of 90 days or less
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from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of 90 days or less from the
date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than seven days with respect to securities issued or fully guaranteed
or insured by the United States Government, (d) commercial paper of a
domestic issuer rated at least A-1 or the equivalent thereof by Standard
and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof by
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▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and in either case maturing
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within 90 days after the day of acquisition, (e) securities with maturities
of 90 days or less from the date of acquisition issued or fully guaranteed
by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth
or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by
Moody's, (f) securities with maturities of 90 days or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
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in Section 4.1 shall be satisfied.
"Closing Price": the closing price of the shares of Common Stock on a
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Qualifying Stock Exchange or, if the shares of Common Stock are listed on
more than one such exchange, the average of such closing prices on all such
exchanges.
"Code": the Internal Revenue Code of 1986, as amended from time to
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time.
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"Collateral": all property and interests in property of the Loan
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Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"Commitment": as to any Lender, its obligation to make a Loan to the
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Borrower pursuant to Section 2.1 in the amount set forth opposite such
Lender's name on Schedule I.
"Commitment Percentage": as to any Lender, the percentage equal to
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the quotient of such Lender's Commitment divided by the aggregate
Commitments.
"Commonly Controlled Entity": an entity, whether or not incorporated,
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which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Common Stock": the Common Stock, par value $0.01 per share, of the
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Borrower as the same exists at the date of execution and delivery of this
Agreement or as such stock may be reconstituted from time to time.
"Contractual Obligation": as to any Person, any provision of any
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security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Conversion Notice": as defined in Section 8.2(a).
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"Conversion Price": as defined in Section 8.4(a).
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"Conversion Right": as defined in Section 8.1(a).
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"Convertible PIK Preferred Stock": preferred stock issued by the
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Borrower having an aggregate liquidation preference of not more than
$34,400,000 on the terms set forth on Schedule 1.1(b), and otherwise on
terms and conditions satisfactory to the Agent.
"Credit Exposure": as to any Lender at any time, (a) if the Loans
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have not been made at such time, its Commitment, and (b) if the Loans have
been made, the unpaid principal amount of its Loan.
"Credit Exposure Percentage": as to any Lender at any time, the
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fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"Default": any of the events specified in Section 7, whether or not
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any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
3
"Dollars" and "$": dollars in lawful currency of the United States of
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America.
"Environmental Laws": any and all foreign, Federal, state, local or
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municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"11% Senior Note Indenture": the Indenture, dated as of December 1,
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1997, among the Borrower, as issuer, the guarantors signatories thereto as
guarantors, and Norwest Bank Minnesota, N.A., as trustee, as modified by
the First Supplemental Indenture thereto, dated December 2, 1997, the
Second Supplemental Indenture thereto dated December 3, 1997, and the
Forbearance Letter, and as the same may be further amended, supplemented or
otherwise modified from time to time in accordance with Section 6.11.
"11% Senior Notes": the Borrower's 11% Senior Notes due 2004, issued
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pursuant to the 11% Senior Note Indenture in an original aggregate
principal amount of $80,000,000.
"ERISA": the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"Event of Default": any of the events specified in Section 7;
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provided that any requirement for the giving of notice, the lapse of time,
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or both, or any other condition, has been satisfied.
"Exchange Offer": the exchange offer of the Borrower to the holders of
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the 11% Senior Notes, offering to exchange each $1,000 principal amount of
11% Senior Notes for (a) $625 principal amount of Split Rate Subordinated
Notes and (b) shares of Convertible PIK Preferred Stock having an aggregate
liquidation preference of $430.
"Expiration Time": as defined in Section 8.5(g).
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"Federal Funds Effective Rate": for any day, the weighted average of
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the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Agent from three federal funds brokers of recognized standing selected
by it.
"Financing Lease": any lease of property, real or personal, the
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obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
4
"Forbearance Letter": the letter agreement, dated the date hereof,
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between Credit Suisse First Boston Corporation and the Loan Parties,
pursuant to which Credit Suisse First Boston Corporation shall agree to
forbear from exercising remedies under the 11% Senior Note Indenture with
respect to certain events of default under the 11% Senior Note Indenture,
as the same may be amended, supplemented or otherwise modified from time to
time.
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time.
"Governing Documents": as to any Person, its articles or certificate
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of incorporation and by-laws, its partnership agreement, its certificate of
formation and operating agreement, and/or the other organizational or
governing documents of such Person.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
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however, that the term Guarantee Obligation shall not include endorsements
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of instruments for deposit or collection in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have
--------- ----------
a correlative meaning. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the
5
amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined
by the Borrower in good faith.
"HCFP": HCFP Funding, Inc., a Delaware corporation.
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"HCFP Loan Agreement": the Loan and Security Agreement, dated as of
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May 19, 1998, among Healthcor, Inc., the Borrower, Healthcor Oxygen &
Medical Equipment, Inc., Healthcor Pharmacy, Inc., PHHN, Inc., Healthcor
Rehabilitation Services, Inc., HC Personnel Resources, Inc. and
Carenetwork, Inc., as modified by Amendment No. 1 thereto dated as of
September 14, 1998, Amendment No. 2 thereto dated as of November, 1998, and
by the Intercreditor Agreement, and as the same may be further amended,
supplemented or otherwise modified from time to time in accordance with
Section 6.11.
"HCFP Loan Documents": collectively, the HCFP Loan Agreement and the
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other "Loan Documents" as defined therein.
"Indebtedness": of any Person at any date, without duplication, (a)
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all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person and (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person has
not assumed or otherwise become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
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that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
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"Interest Payment Date": the last Business Day of each month and the
---------------------
Maturity Date (or such earlier date on which the Loans shall become due and
payable pursuant to this Agreement), commencing January 29, 1999.
"Intercreditor Agreement": the Intercreditor and Subordination
-----------------------
Agreement to be executed and delivered by HCFP, the Agent and the Borrower,
substantially in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"Lending Office": for each Lender, the lending office of such Lender
--------------
designated on Schedule I hereto (or any other lending office from time to
time notified
6
to the Agent by such Lender ) as the office at which its Loans are to be
made and maintained.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
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arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing), and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing.
"Loan": as defined in Section 2.1.
----
"Loan Documents": this Agreement, the Notes, the Subsidiaries
--------------
Guarantee, the Security Documents, the Intercreditor Agreement and the
Registration Rights Agreement.
"Loan Parties": the Borrower and each Subsidiary of the Borrower
------------
which is a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
-----------------------------
and/or its Subsidiaries in excess of $100,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date": December 31, 1999.
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"Milestone": each of the events listed on Schedule 1.1(a) under the
---------
heading "Milestones".
"Milestone Date": with respect to each Milestone, the date set forth
--------------
opposite such Milestone on Schedule 1.1(a) under the heading "Milestone
Date".
7
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Proceeds": (i) the aggregate cash consideration received by the
------------
Borrower or a Subsidiary in connection with any transaction referred to in
Section 2.6 less (ii) (A) any portion of such consideration required to be
----
paid to HCFP pursuant to the HCFP Loan Documents and the Intercreditor
Agreement or to any obligee under any Financing Lease permitted by this
Agreement, and (B) the expenses (including out-of-pocket expenses) incurred
by the Borrower or such Subsidiary in connection with such transaction
(including reasonable brokerage commissions and fees), (C) the amount of
any federal and state taxes incurred in connection with such transaction,
and (D) reserves requires to be maintained in accordance with GAAP against
foreseeable sale-related liabilities, in each case as certified by a
Responsible Officer to the Agent at the time of such transaction.
"Non-Bank Status Certificate": as defined in Section 2.10(b)(i)(B).
---------------------------
"Non-Excluded Taxes": as defined in Section 2.10(a).
------------------
"Note": as defined in Section 2.2.
----
"Obligations": the unpaid principal amount of, and interest
-----------
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
or out of or in connection with this Agreement, the Notes, the Subsidiaries
Guarantee, the Security Documents and any other Loan Documents and any
other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Agent or to the
Lenders that are required to be paid by a Loan Party pursuant to the terms
of the Loan Documents) or otherwise.
"Participant": as defined in Section 10.6(b).
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
8
"Plan": at a particular time, any employee benefit plan which is
----
covered by Title IV of ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement": the Pledge Agreement to be executed and delivered
----------------
by the Borrower, substantially in the form of Exhibit C, as the same may be
amended, supplemented or otherwise modified from time to time.
"Properties": as defined in Section 3.22.
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"Purchased Shares": as defined in Section 8.5(g).
----------------
"Qualifying Stock Exchange": the New York Stock Exchange, the American
-------------------------
Stock Exchange or the NASDAQ National Market.
"Recapitalization": the collective reference to the Exchange Offer,
----------------
the issuance of the Split Rate Subordinated Notes and the Convertible PIK
Preferred Stock in connection therewith, and the making of the Loans
hereunder.
"Reference Date": as defined in Section 8.5(f).
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"Register": as defined in Section 10.6(d).
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"Registration Rights Agreement": the Registration Rights Agreement to
-----------------------------
be made by the Borrower and the Agent for the benefit of the Lenders,
substantially in the form of Exhibit D, as the same may be amended,
supplemented or otherwise modified from time to time.
"Regulation U": Regulation U of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg. (S) 4043.
"Required Lenders": at any time, Lenders the Credit Exposure
----------------
Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or Governing Documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
9
"Responsible Officer": the chief executive officer and the president
-------------------
of the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower.
"Security Agreement": the Security Agreement to be executed and
------------------
delivered by the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit E, as the same may be amended, supplemented or
otherwise modified from time to time.
"Security Documents": the collective reference to the Pledge
------------------
Agreement, the Security Agreement, and all other security documents
hereafter delivered to the Agent granting a Lien on any asset or assets of
any Person to secure any of the Obligations or to secure any guarantee of
any such Obligations.
"Shared Collateral": the "Collateral", as defined in the HCFP Loan
-----------------
Agreement.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Split Rate Subordinated Notes": senior subordinated notes to be
-----------------------------
issued by the Borrower having an aggregate principal amount of not more
than $50,000,000 on the terms set forth on Schedule 1.1(c), and otherwise
on terms and conditions satisfactory to the Agent.
"Subsidiaries Guarantee": the Guarantee to be executed and delivered
----------------------
by each Subsidiary, substantially in the form of Exhibit F, as the same may
be amended, supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": any Subsidiary party to the Subsidiaries
--------------------
Guarantee as a guarantor.
"Trading Day": with respect to a securities exchange or automated
-----------
quotation system, a day on which such exchange or system is open for a full
day of trading.
"Transferee": as defined in Section 10.6(f).
----------
10
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof, each
-----------
Lender severally agrees to make a term loan (a "Loan") to the Borrower on the
----
Closing Date in an amount not to exceed the amount of the Commitment of such
Lender then in effect; provided, that the Commitments shall terminate at 3:00
--------
p.m., New York City time, on December 28, 1998, if the Loans have not been made
prior to that time.
2.2 Notes. The Loan of each Lender shall be evidenced by a
-----
promissory note of the Borrower, substantially in the form of Exhibit A with
appropriate insertions as to payee, date and principal amount (a "Note"),
----
payable to the order of such Lender and representing the obligation of the
Borrower to pay the amount of the Loan made by such Lender. Each Lender is
hereby authorized to record the date, and amount of its Loan and the date and
amount of each payment or prepayment of principal thereof, on the schedule
annexed to and constituting a part of its Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded;
----- -----
provided, that the failure of such Lender to make any such recordation shall not
--------
impair or otherwise affect the validity or enforceability of its Note. Each Note
shall (a) be dated the Closing Date, (b) be stated to mature on the Maturity
Date, and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 2.4. Interest on the Notes shall be payable on the dates specified in
Section 2.4(b).
2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent 10:00 a.m., New
York City time on the Closing Date requesting that the Lenders make the Loans on
the Closing Date and specifying (i) the Closing Date, and (ii) the amount to be
borrowed. Upon receipt of such notice the Agent shall promptly notify each
Lender thereof. Not later than 11:00 a.m. on the Closing Date each Lender shall
make available to the Agent at its office or to the account
11
maintained by it, as specified in Section 10.2 the amount of such Lender's Loans
in immediately available funds. The Agent shall on such date make available to
the Borrower the aggregate of the amounts made available to the Agent by the
Lenders, by wire transfer and in like funds as received by the Agent, to such
account of the Borrower as may be specified by the Borrower in writing to the
Agent.
2.4 Interest Rates and Payment Dates. (a) Each Loan shall bear
--------------------------------
interest at 11.00% per annum, but in no event in excess of the maximum
nonusurious interest rate permitted by applicable law .
(b) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, or (iii) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
the principal of the Loans and any such overdue interest, or other amount shall
bear interest at 13% per annum from the date of such non-payment until such
overdue principal, interest, commitment fee or other amount is paid in full (as
well after as before judgment), but in no event in excess of the maximum
nonusurious interest rate permitted by applicable law.
(c) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (b) of this Section
--------
shall be payable from time to time on demand.
2.5 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty, upon
at least four Business Days' irrevocable notice to the Agent, specifying the
date and amount of prepayment. Upon receipt of any such notice the Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid. Amounts
prepaid on account of the Loans may not be reborrowed. Partial prepayments
pursuant to this Section shall be in an aggregate principal amount of $100,000
or a whole multiple thereof.
2.6 Mandatory Prepayments. Unless the Required Lenders otherwise
---------------------
agree, the Borrower shall prepay the Loans and reduce the Commitments in an
amount equal to 100% of the Net Proceeds of any sale, lease, assignment,
exchange or other disposition for cash of any asset or group of assets
(including, without limitation, insurance proceeds paid as a result of any
destruction, casualty or taking of any property of the Borrower or any
Subsidiary), not made in the ordinary course of business, by the Borrower or any
Subsidiary of the Borrower, in any such case no later than three Business Days
following receipt by the Borrower or such Subsidiary of such proceeds, together
with accrued interest to such date on the amount prepaid. Prepayments of Loans
may not be reborrowed. Nothing in this Section 2.6 shall be construed to
derogate any restriction or limitation contained in any Loan Document imposed on
any transaction of the types described in this Section 2.6, including without
limitation the restrictions set forth in Sections 6.5 and 6.6 hereof.
2.7 Computation of Interest and Fees. (a) Interest shall be
--------------------------------
calculated on the basis of a 360-day year for the actual days elapsed.
12
2.8 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal amounts of the Loans then
held by the Lenders. All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set-off or counterclaim and shall be made prior
to 12:00 noon, New York City time, on the due date thereof to the Agent, for the
account of the Lenders, at the Agent's office in New York, New York, and to the
Agent's account specified in Section 10.2, in Dollars and in immediately
available funds. The Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. 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.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its Commitment Percentage of such borrowing available to the Agent,
the Agent may assume that such Lender is making such amount available to the
Agent, and the Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Agent, on demand, such amount with interest thereon at a rate equal to
the daily average Federal Funds Effective Rate for the period until such Lender
makes such amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this Section
shall be conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the Agent by
such Lender within three Business Days of such Borrowing Date, the Agent shall
also be entitled to recover such amount with interest thereon at 11% per annum
on demand, from the Borrower, but in no event or excess of the maximum
nonusurious interest rate permitted by the applicable law.
2.9 Requirements of Law.
--------------------
(a) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower shall promptly pay to
13
such Lender such additional amount or amounts as will compensate such Lender for
such reduction.
(b) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Agent) of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Borrower (with a copy to the Agent) shall be
conclusive in the absence of manifest error. The agreements in this Section
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
2.10 Taxes. (a) All payments made by the Borrower under this
-----
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
------------------
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under any Note, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required to increase any such
-------- -------
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
14
(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrower and the Agent (x) two
duly completed copies of United States Internal Revenue Service Form 1001
or 4224, or successor applicable form, as the case may be, and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, or (B) if such Lender is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224, deliver (x) a certificate substantially
in the form of Exhibit G (a "Non-Bank Status Certificate") and (y) two
---------------------------
completed and signed copies of Internal Revenue Service Form W-8 or
successor applicable form;
(ii) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, (ii) in the case of a
Non-Bank Status Certificate, that it is not a "bank" as such term is defined in
Section 881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or a Participant pursuant to Section 9.6
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms and statements required pursuant to this Section, provided that
--------
in the case of a Participant such Participant shall also furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.
2.11 Lending Offices; Change of Lending Office. (a) Loans of made
-----------------------------------------
by any Lender shall be made and maintained at such Lender's Applicable Lending
Office.
(b) Each Lender agrees that if it makes any demand for payment under
Section 2.10(a), or if any adoption or change of the type described in Section
2.9 shall occur with respect to it, it will use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions and so long as
such efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 2.10(a), or would eliminate or reduce the effect of any adoption
or change described in Section 2.9.
15
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans, the Borrower hereby represents and warrants to the Agent and
each Lender that:
3.1 Financial Condition. (a) The consolidated balance sheet of the
-------------------
Borrower and its consolidated Subsidiaries as at December 31, 1997 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. Except as set forth on Schedule
3.1(a), the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at September 30, 1998 and the related unaudited
consolidated statements of income and of cash flows for the nine-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the nine-month period then ended (subject to normal year-end
audit adjustments and absence of footnotes). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants or Responsible Officer, as the case may
be, and as disclosed therein). Neither the Borrower nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other financial derivative, which is not reflected in
the foregoing statements or in the notes thereto and is required to be disclosed
pursuant to GAAP. Except as set forth on Schedule 3.1(b), during the period
from September 30, 1998 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial condition
of the Borrower and its consolidated Subsidiaries at September 30, 1998.
(b) The operating forecast and cash flow projections of the Borrower
and its consolidated Subsidiaries, copies of which have heretofore been
furnished to the Lenders, have been prepared in good faith under the direction
of a Responsible Officer of the Borrower, and in accordance with GAAP except
that such forecast and projections do not include footnotes and other
disclosures which may be required pursuant to GAAP. The Borrower has no reason
to believe that as of the date of delivery thereof such operating forecast and
cash flow projections are materially incorrect or misleading in any material
respect, or omit to state any material fact which would render them misleading
in any material respect.
16
3.2 No Change. (a) Except as set forth on Schedule 3.2, Since
---------
September 30, 1998 there has been no development or event which has had or could
have a Material Adverse Effect, and (b) during the period from September 30,
1998 to and including the date hereof no dividends or other distributions have
been declared, paid or made upon the Capital Stock of the Borrower nor has any
of the Capital Stock of the Borrower been redeemed, retired, purchased or
otherwise acquired for value by the Borrower or any of its Subsidiaries.
3.3 Existence; Compliance with Law. Except as set forth on
------------------------------
Schedule 3.3, each of the Borrower and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
3.4 Power; Authorization; Enforceable Obligations. The Borrower
---------------------------------------------
has the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person ("Approval") is
--------
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
the Borrower is a party other than Approvals which have been heretofore obtained
or made; it being understood, however, that the continued performance by the
Borrower and the other Loan Parties of their respective obligations under this
Agreement and the other Loan Documents after the date hereof will require
various Approvals, such as filings relating to environmental matters, ERISA
matters, tax matters, intellectual property filings, filings to maintain
corporate and similar standing and existence, filings pursuant to the Uniform
Commercial Code and other security filings and recordings, filings with the
Securities and Exchange Commission, Approvals necessary in connection with the
Split Rate Subordinated Notes and the Convertible PIK Preferred Stock, routine
filings in the ordinary course of business, and filings required in connection
with the exercise by the Agent and the Lenders of remedies in connection with
the Loan Documents. This Agreement has been, and each other Loan Document to
which it is a party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights
17
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
3.5 No Legal Bar. Except as set forth on Schedule 3.7, the
------------
execution, delivery and performance of the Loan Documents to which the Borrower
is a party, the borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or Contractual Obligation of the Borrower or
of any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation (other than
Liens created by the Security Documents in favor of the Agent).
3.6 No Material Litigation. Except as set forth on Schedule 3.6,
----------------------
no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b)
which could have a Material Adverse Effect.
3.7 No Default. Except as set forth on Schedule 3.7, neither the
----------
Borrower nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which could have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has good record and indefeasible title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 6.3.
3.9 Intellectual Property. The Borrower and each of its
---------------------
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those which the failure to own or
license could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
---------------------
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property. The use of
such Intellectual Property by the Borrower and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
3.10 No Burdensome Legal Restriction. No Requirement of Law of the
--------------------------------
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has filed or
-----
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made
18
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or its Subsidiaries, as the
case may be); no tax Lien has been filed, and, to the knowledge of the Borrower,
no claim is being asserted, with respect to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose which violates, or which would be inconsistent
with, the provisions of the regulations of such Board of Governors. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in said Regulation U.
3.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed to any material degree the assets under all such
Plans allocable to such benefits.
3.14 Investment Company Act; Other Regulations. The Borrower is not
-----------------------------------------
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
19
3.15 Subsidiaries. Schedule 3.15 sets forth the name of each direct
------------
or indirect Subsidiary of the Borrower, its form of organization, its
jurisdiction of organization, the total number of issued and outstanding shares
or other interests of Capital Stock thereof, the classes and number of issued
and outstanding shares or other interests of Capital Stock of each such class,
the name of each holder of Capital Stock thereof and the number of shares or
other interests of such Capital Stock held by each such holder and the
percentage of all outstanding shares or other interests of such class of Capital
Stock held by such holders.
3.16 Security Documents. (a) The provisions of each Security
------------------
Document are effective to create in favor of the Agent for the ratable benefit
of the Lenders a legal, valid and enforceable security interest in all right,
title and interest of the Loan Party party thereto in the "Collateral" described
therein.
(b) (i) When financing statements have been filed in the offices in
the jurisdictions listed in Schedule 3.16, the Security Agreement shall
constitute a fully perfected first Lien (or, with respect to (x) the Shared
Collateral, second Lien subject only to the Lien created pursuant to HCFP Loan
Documents and (y) equipment and other property subject to Financing Leases,
second Lien subject only to the prior Liens created by such Financing Leases)
on, and security interest in, all right, title and interest of the Borrower in
the "Collateral" described therein, which can be perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in
the Pledge Agreement) are delivered to the Agent, together with stock powers
endorsed in blank by a duly authorized officer of the pledgors thereof (or, with
respect to the stock of HC Personnel Resources, Inc., and so long as
certificates representing that stock is in the possession of HCFP, upon the
execution and delivery of the Intercreditor Agreement), the Pledge Agreement
shall constitute a fully perfected first Lien (or with respect to the Shared
Collateral, second Lien subject only to the Lien created pursuant to the HCFP
Loan Documents) on, and security interest in, all right, title and interest of
the pledgors parties thereto in the "Collateral" described therein.
(c) Neither the Borrower nor any Subsidiary owns any property, or has
any interest in any property, that is not subject to a fully perfected first
priority Lien (or, with respect to (x) the Shared Collateral, second Lien
subject only to the Lien created pursuant to the HCFP Loan Documents and (y)
equipment and other property subject to Financing Leases, second Lien subject
only to the prior Liens created by such Financing Leases) on, or security
interest in, such property in favor of the Agent, other than any such property
having an aggregate fair market value at any one time not exceeding $250,000.
3.17 Accuracy and Completeness of Information. (a) All factual
----------------------------------------
information, reports and other papers and data with respect to the Loan Parties
(other than projections) furnished, and all factual statements and
representations made, to the Agent or the Lenders by a Loan Party, or on behalf
of a Loan Party, were, at the time the same were so furnished or made, when
taken together with all such other factual information, reports and other papers
and data previously so furnished and all such other factual statements and
representations
20
previously so made, complete and correct in all material respects, to the extent
necessary to give the Agent and the Lenders true and accurate knowledge of the
subject matter thereof in all material respects, and did not, as of the date so
furnished or made, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances in which the same were
made.
(b) All projections with respect to the Loan Parties furnished by or
on behalf of a Loan Party to the Agent or the Lenders were prepared and
presented in good faith by or on behalf of such Loan Party. No fact is known to
a Loan Party which materially and adversely affects or in the future is
reasonably likely (so far as such Loan Party can reasonably foresee) to have a
Material Adverse Effect which has not been set forth in the financial statements
referred to in Section 3.1 or in such information, reports, papers and data or
otherwise disclosed in writing to the Agent or the Lenders prior to the Closing
Date.
3.18 Labor Relations. No Loan Party is engaged in any unfair labor
---------------
practice which could reasonably be expected to have a Material Adverse Effect.
There is (a) no unfair labor practice complaint pending or, to the best
knowledge of each Loan Party and each of the Subsidiaries, threatened against a
Loan Party before the National Labor Relations Board which could reasonably be
expected to have a Material Adverse Effect and no grievance or arbitration
proceeding arising out of or under a collective bargaining agreement is so
pending or threatened; (b) no strike, labor dispute, slowdown or stoppage
pending or, to the best knowledge of each Loan Party, threatened against a Loan
Party; and (c) no union representation question existing with respect to the
employees of a Loan Party and no union organizing activities are taking place
with respect to any thereof.
3.19 Insurance. Each Loan Party has, with respect to its properties
---------
and business, insurance covering the risks, in the amounts, with the deductible
or other retention amounts, and with the carriers, listed on Schedule 3.19,
which insurance meets the requirements of Section 5.5 hereof and Section 5(m) of
the Security Agreement as of the date hereof and the Closing Date.
3.20 Solvency. On the Closing Date, after giving effect on a pro
--------
forma basis to the consummation of the Recapitalization and to the incurrence
and discharge of all indebtedness and obligations being incurred or discharged
on or prior to such date in connection herewith and therewith, (i) the amount of
the "present fair saleable value" of the assets of the Borrower and of the
Borrower and its Subsidiaries, taken as a whole, will, as of such date, exceed
the amount of all "liabilities of the Borrower and of the Borrower and its
Subsidiaries, taken as a whole, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (ii) the present
fair saleable value of the assets of the Borrower and of the Borrower and its
Subsidiaries, taken as a whole, will, as of such date, be greater than the
amount that will be required to pay the liabilities of the Borrower and of the
Borrower and its Subsidiaries, taken as a whole, on their respective debts as
such debts become absolute and matured, (iii) neither the Borrower nor the
Borrower and its Subsidiaries, taken as a
21
whole, will have, as of such date, an unreasonably small amount of capital with
which to conduct their respective businesses, and (iv) each of the Borrower and
the Borrower and its Subsidiaries, taken as a whole, will be able to pay their
respective debts as they mature. For purposes of this Section 3.20, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and (y) 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 or
unmatured, disputed, undisputed, secured or unsecured.
3.21 Purpose of Loans. The proceeds of the Loans shall be used by
----------------
the Borrower for working capital purposes in the ordinary course of business.
3.22 Environmental Matters. Except as set forth on Schedule 3.22:
---------------------
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and have
----------
not previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business") which could materially interfere with the
--------
continued operation of the Properties or materially impair the fair saleable
value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
22
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Adverse Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not reasonably likely to result in the
payment of a Material Environmental Amount.
3.23 Common Stock. As of the Closing Date, there were (a) 40,000,000
------------
shares of Common Stock and 10,000,000 shares of preferred stock authorized under
the certificate of incorporation of the Borrower, (b) 10,092,680 shares of
Common Stock issued and outstanding, and (c) not more than 400,000 shares of
Common Stock reserved for issuance in respect of all outstanding options,
warrants, securities convertible into or exchangeable for Common Stock,
subscriptions, and similar rights (other than the Conversion Right).
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Loans. The agreement of each Lender to make the
-------------------
Loan requested to be made by it is subject to the satisfaction, immediately
prior to or concurrently with the making of such Loan on the Closing Date, of
the following conditions precedent:
(a) Loan Documents. The Agent shall have received:
--------------
(i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender, a Note of the Borrower
conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower,
(iii) the Pledge Agreement, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender,
23
(iv) the Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of each of the parties thereto, with a counterpart
or a conformed copy for each Lender,
(v) the Security Agreement, each executed and delivered by a duly
authorized officer of each of the parties thereto, with a counterpart
or a conformed copy for each Lender,
(vi) the Registration Rights Agreement, executed and delivered by
a duly authorized officer of the Borrower, with a counterpart or a
conformed copy for each Lender, and
(vii) the Intercreditor Agreement, executed and delivered by a
duly authorized officer of each of HCFP, the Borrower and the Agent,
with a counterpart or a conformed copy for each Lender.
(b) Related Agreements. The Agent shall have received, with a copy
------------------
for each Lender, true and correct copies, certified as to authenticity by
the Borrower, of the 11% Senior Note Indenture, each of the HCFP Loan
Documents and such other documents or instruments as may be reasonably
requested by the Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower, or its Subsidiaries may be a party.
(c) Forbearances. There shall have been entered into the Forbearance
------------
Letter and any other necessary waivers or forbearance agreements with
respect to certain outstanding and incipient events of default under the
HCFP Loan Documents and the 11% Senior Note Indenture, in each case in form
and substance satisfactory to the Agent, and the Agent shall have received
fully executed copies of each waiver or forbearance agreement or other
agreement or instrument evidencing such waivers or forbearances, and such
other documents relative thereto as the Agent shall reasonably request,
with copies for each of the Lenders.
(d) Borrowing Certificate. The Agent shall have received, with a
---------------------
counterpart for each Lender, a certificate of the Borrower and each
Subsidiary Guarantor, dated the Closing Date, substantially in the form of
Exhibit H, with appropriate insertions and attachments, satisfactory in
form and substance to the Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the Borrower or
such Subsidiary Guarantor, as the case may be.
(e) Corporate Proceedings of the Borrower. The Agent shall have
-------------------------------------
received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance satisfactory to the Agent, of the Board of Directors of
the Borrower authorizing (i) the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party, (ii)
the borrowings contemplated hereunder and (iii) the granting by it of the
Liens created pursuant to the Security Documents, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Closing Date,
which certificate shall
24
be in form and substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(f) Borrower Incumbency Certificate. The Agent shall have received,
-------------------------------
with a counterpart for each Lender, a certificate of the Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document satisfactory in form and substance to
the Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Borrower.
(g) Corporate Proceedings of Subsidiaries. The Agent shall have
-------------------------------------
received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance satisfactory to the Agent, of the Board of Directors of
each Subsidiary of the Company which is a party to a Loan Document
authorizing (i) the execution, delivery and performance of the Loan
Documents to which it is a party and (ii) the granting by it of the Liens
created pursuant to the Security Documents to which it is a party,
certified by the Secretary or an Assistant Secretary of each such
Subsidiary as of the Closing Date, which certificate shall be in form and
substance satisfactory to the Agent and shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded.
(h) Subsidiary Incumbency Certificates. The Agent shall have
----------------------------------
received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing Date,
as to the incumbency and signature of the officers of such Subsidiaries
executing any Loan Document, satisfactory in form and substance to the
Agent, executed by the President or any Vice President and the Secretary or
any Assistant Secretary of each such Subsidiary.
(i) Corporate Documents. The Agent shall have received, with a
-------------------
counterpart for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of the such Loan Party.
(j) Good Standing Certificates. The Agent shall have received, with
--------------------------
a copy for each Lender, certificates dated as of a recent date from the
Secretary of State or other appropriate authority, evidencing the good
standing of each Loan Party (i) in the jurisdiction of its organization and
(ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect.
(k) Consents, Licenses and Approvals. The Agent shall have received,
--------------------------------
with a counterpart for each Lender, a certificate of a Responsible Officer
of the Borrower (i) attaching copies of all consents, authorizations and
filings referred to in Section 3.4, and (ii) stating that such consents,
licenses and filings are in full force and effect, and
25
each such consent, authorization and filing shall be in form and substance
satisfactory to the Agent.
(l) Legal Opinions. The Agent shall have received, with a
--------------
counterpart for each Lender, the executed legal opinion of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the Borrower and the other Loan
Parties, substantially in the form of Exhibit I. Such legal opinion shall
cover such other matters incident to the transactions contemplated by this
Agreement as the Agent may reasonably require.
(m) Pledged Stock; Stock Powers. The Agent shall have received the
---------------------------
certificates representing the shares pledged pursuant to the Pledge
Agreement (other than shares of HC Personal Resources, Inc., which are held
by HCFP), together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof.
Each Issuer referred to in the Pledge Agreement shall have delivered an
acknowledgment of and consent to the Pledge Agreement, executed by a duly
authorized officer of such Issuer, in substantially the form appended to
the Pledge Agreement.
(n) Actions to Perfect Liens. The Agent shall have received all duly
------------------------
executed financing statements on form UCC-1, and shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, necessary or, in the opinion
of the Agent, desirable to perfect the Liens created by the Security
Documents shall have been completed or that arrangements satisfactory to
the Agent to complete them have been made.
(o) Lien Searches. The Agent shall have received the results of a
-------------
recent search by a Person satisfactory to the Agent, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of each Loan Party, and the results of
such search shall be satisfactory to the Agent.
(p) Insurance. The Agent shall have received evidence in form and
---------
substance satisfactory to it that all of the requirements of Section 5.5
hereof and Section 5(m) of the Security Agreement shall have been
satisfied.
(q) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date.
(r) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on the Closing Date or after giving effect to the Loans
requested to be made on such date.
(s) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions
26
contemplated by this Agreement, and the other Loan Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect
or consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
--------------------
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other
independent certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and absence of footnotes);
(c) as soon as available, but in any event not later than 30 days
after the end of each calendar month, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such month and the related unaudited consolidated statements of income and
retained earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such month and the portion of the fiscal year through the
end of such month, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(d) as soon as available, but in any event not later than the last
Business Day of the week following each week, a "flash report" in form
satisfactory to the Agent
27
detailing collections, cash disbursements, payables and other information
as agreed with the Agent for such week;
all such financial statements shall present fairly the financial condition of
the Borrower and its Subsidiaries and shall be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
5.2 Certificates; Other Information. Furnish to each Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, the
Borrower during such period has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or
satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) showing in detail the calculations supporting such Officer's
certification of the Borrower's compliance with the requirements of Section
6.1(a) through 6.1(c);
(c) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except (i) as noted in Schedule 3.7 and (ii)
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Borrower or its Subsidiaries, as
the case may be.
5.4 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as
28
otherwise permitted pursuant to Section 6.5; except as noted on Schedule 3.7,
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, have a
Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all property useful
----------------------------------
and necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business, which insurance shall name the Agent as lender loss
payee, in the case of property or casualty insurance, and as an additional
insured, in the case of liability insurance; and furnish to each Lender, upon
written request, full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
5.7 Notices. Promptly give notice to the Agent and each Lender of:
-------
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $1,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the acquisition by any Loan Party of any property or interest in
property (including, without limitation, real property), but excluding
property subject to Financing Leases permitted under this Agreement, that
is not subject to a perfected Lien in favor of the Agent pursuant to the
Security Documents;
(e) the occurrence of any transaction or occurrence referred to in
Section 2.6, and the receipt of any Net Proceeds or any insurance proceeds
as a result thereof (and the amount of any consideration or insurance
proceeds in connection with such
29
transaction or occurrence required to be paid to HCFP pursuant to the HCFP
Loan Documents or to the obligee under any Financing Lease);
(f) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(g) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 Environmental Laws. (a) Comply with, and ensure compliance by
------------------
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws.
5.9 Periodic Audit of Accounts Receivable and Inventory. The Agent
---------------------------------------------------
shall be entitled to perform a periodic due diligence inspection, test and
review of the accounts receivable and inventory of the Borrower and its
Subsidiaries on a mutually convenient Business Day once during each calendar
quarter and shall in each case be satisfied in all material respects with the
results thereof; provided however, if the Agent in its reasonable judgment is
-------- -------
not satisfied that the results of any due diligence inspection, test, and review
performed pursuant to this Section 5.9, the Agent shall be entitled to perform
additional due diligence inspections, tests and reviews of such inventory and
accounts receivable on mutually convenient Business Days during the succeeding
twelve-month period until the Agent shall be so satisfied; and provided further,
-------- -------
that upon the occurrence and during the continuation of an Event of Default, the
Agent shall be entitled to perform such additional due diligence inspections,
tests and review of such accounts receivable as any Lender shall deem necessary
or advisable.
30
5.10 Additional Collateral; Additional Guarantors. (a) In the
--------------------------------------------
event that the Borrower or any Subsidiary acquires any personal property or
interest in personal property other than property made subject to a Lien
permitted under Section 6.3(g), that is not subject to a perfected Lien in favor
of the Agent pursuant to the Security Documents, the Borrower shall, and shall
cause Subsidiary to, take such action (including, without limitation, the
preparation and filing of mortgages or deeds of trust in form and substance
satisfactory to the Agent) as the Agent shall request in order to create and/or
perfect a Lien in favor of the Agent on such property.
(b) In the event that the Borrower is permitted to acquire or form
any additional Subsidiary, such Subsidiary shall execute a guarantee and a
security agreement, or supplements to the Subsidiaries Guarantee and the
Security Agreement, and the Borrower and/or any Subsidiary which is a holder of
any Capital Stock of such Subsidiary shall execute such pledge agreements or
supplements to the Pledge Agreement, each in form and substance satisfactory to
the Agent, and shall take such other action as shall be necessary or advisable
(including, without limitation, the execution of financing statements on form
UCC-1) in order to perfect the Liens granted by such Subsidiary in favor of the
Agent for the benefit of the Lenders and to effect and perfect the pledge of all
of the Capital Stock of such Subsidiary in favor of the Agent for the benefit of
the Lenders. Such Subsidiary shall thereupon become a Guarantor for all purposes
under the Loan Documents, including, without limitation, Section 5.10(a) of this
Agreement. The Agent shall be entitled to receive legal opinions of one or more
counsel to the Borrower and such Subsidiary addressing such matters as the Agent
or its counsel may reasonably request, including, without limitation, the
enforceability of the guaranty and the security agreement to which such
Subsidiary becomes a party and the pledge of the Capital Stock of such
Subsidiary, and the creation, validity and perfection of the Liens so granted by
such Subsidiary and the Borrower and/or other Subsidiaries to the Agent for the
benefit of the Lenders.
5.11 Relief From Automatic Stay in Bankruptcy. (a) Upon the
----------------------------------------
occurrence of an Event of Default under subparagraph (f)(i) or (ii) of Section 7
of this Agreement, the Borrower and each of its Subsidiaries, as applicable,
shall immediately, upon request therefor by the Agent, deliver to the Agent its
written consent to the entry of an order modifying the automatic stay provided
for under 11 U.S.C. Section 362(a) (including any similar or analogous provision
under applicable state law, the "Automatic Stay") to the extent necessary to
--------------
permit the Agent to exercise and enforce any and all rights and remedies that
the Agent has under the Loan Documents and applicable law.
(b) Neither the Borrower nor any of its Subsidiaries shall seek,
apply for or cause the entry of any order enjoining, staying or otherwise
interfering with the exercise and enforcement of any of the Agent's rights or
remedies under the Loan Documents and applicable law after the Automatic Stay
shall have been modified under the circumstances contemplated under subparagraph
(a) of this Section 5.11 or otherwise.
(c) The Borrower and each of its Subsidiaries acknowledge the exigent
circumstances surrounding the execution and delivery of the Loan Documents and
the making
31
of the Loans, that the inclusion of this Section 5.11 in this Agreement and
provision of the relief contemplated hereby is a material inducement to the
making of the Loans and that the occurrence of an Event of Default under
subparagraph (f)(i) or (ii) of Section 7 of this Agreement would constitute
"cause" within the meaning of the Automatic Stay.
5.12 Exchange Offer. The Borrower shall, and shall cause each of
--------------
its Subsidiaries to, use its best efforts to prosecute the successful
consummation of the Exchange Offer, including without limitation, promptly
creating or causing the creation of, entering into, and to the extent necessary
or desirable in connection with the Exchange Offer, filing any and all
agreements, documents and instruments which may be necessary or desirable in
connection with the Exchange Offer, promptly addressing any comments or other
communications from any Governmental Authority in connection therewith, and
cooperating in all respects with the Agent and the Lenders in connection with
the Exchange Offer.
5.13 Landlord Waivers. The Borrower shall, and shall cause each of
----------------
its Subsidiaries to, use commercially reasonable efforts to obtain a landlord's
lien waiver and collateral access agreement from each landlord of any leased
premises on which any material portion of the Collateral is located as soon as
reasonably practicable following the Closing Date.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall not, and (except with respect
to Section 6.1) shall not permit any of its Subsidiaries to, directly or
indirectly:
6.1 Financial Condition Covenants.
-----------------------------
(a) Minimum Cash Collections. Permit the cash collections of the
------------------------
Borrower and its consolidated Subsidiaries during any month set forth below to
be less than the amount set forth opposite such month below:
Month Amount
----- ------
December 1998 $ 6,500,000
January 1999 9,110,000
February 1999 11,454,000
March 1999 10,925,000
April 1999 6,995,000
May 1999 7,245,000
June 1999 7,635,000
July 1999 7,675,000
August 1999 8,455,000
September 1999 8,015,000
October 1999 7,650,000
32
November 1999 8,010,000
December 1999 8,090,000
(b) Maximum Cash Uses. Permit the aggregate cash payments of the
-----------------
Borrower and its consolidated Subsidiaries during any month in respect of direct
and indirect salaries, other direct costs, payroll, indirect costs, and interest
expense (but excluding balance sheet cash) to exceed (i) $8,000,000 for January
1999, and (ii) $6,500,000 for any month thereafter.
(c) Payables. Permit any of the accounts payable of the Borrower and
--------
its Subsidiaries to be more than 30 days past due, or more than 75 days past
invoice date.
6.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary Guarantor and of
any Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor;
(c) incurrence of Indebtedness of the Borrower and any of its
Subsidiaries incurred to finance the acquisition of fixed or capital assets
(whether pursuant to a loan, a Financing Lease or otherwise) in an
aggregate principal amount not exceeding as to the Borrower and its
Subsidiaries $1,200,000 per quarter;
(d) Indebtedness outstanding pursuant to the HCFP Loan Documents, or
pursuant to a replacement credit facility on substantially the same terms
or more favorable terms to the Lenders;
(e) the 11% Senior Notes;
(f) from and after the consummation of the Exchange Offer, the Split
Rate Subordinated Notes; and
(g) Indebtedness outstanding on the date hereof and listed on
Schedule 6.2.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a
33
period of more than 60 days or which are being contested in good faith by
appropriate proceedings, and contractual and statutory landlords' Liens so
long as the Borrower and its Subsidiaries are in compliance with Section
5.13;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 6.2,
securing Indebtedness permitted by Section 6.2(g), provided that no such
--------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by Section 6.2(c) incurred to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created substantially
--------
simultaneously with the acquisition of such fixed or capital assets, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness, (iii) the amount of Indebtedness secured
thereby is not increased and (iv) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed 100% of the original
purchase price of such property of such property at the time it was
acquired;
(h) Liens created pursuant to the Security Documents; and
(i) Liens created pursuant to the HCFP Loan Documents.
6.4 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 6.4;
(b) Guarantee Obligations in favor of HCFP pursuant to the HCFP Loan
Documents;
34
(c) guarantees made in the ordinary course of its business by the
Borrower of obligations of any of the Subsidiary Guarantors, which
obligations are otherwise permitted under this Agreement; and
(d) the Subsidiaries Guarantee.
6.5 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or
--------
Subsidiaries shall be the continuing or surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower.
6.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business, and the sale or other disposition of the
assets listed on Schedule 6.6; provided that the Net Proceeds of each such
--------
transaction are applied to the prepayment of the Loans as provided in
Section 2.6;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(d) as permitted by Section 6.5(b).
6.7 . Reserved.
6.8 Limitation on Dividends . Declare or pay any dividend (other
-----------------------
than dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase,
35
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any warrants or options to purchase
any such Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called
"Restricted Payments"), except that:
--------------------
(a) from and after the issuance of the Convertible PIK Preferred
Stock, so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the Borrower may declare and pay
dividends on the Convertible PIK Preferred Stock in accordance with the
terms thereof.
6.9 Limitation on Capital Expenditures. Make or commit to make (by
----------------------------------
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries, during each period of six months ending
on each June 30 and December 31 during the term of this Agreement, the sum of
(a) $500,000 and (b) the amount of any Indebtedness (including Financing Leases)
incurred during such period pursuant to Section 6.2(c).
6.10 Limitation on Investments, Loans and Advances. Make any
---------------------------------------------
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except :
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents; and
(c) investments by the Borrower in Subsidiary Guarantors and
investments by such Subsidiary Guarantors in the Borrower and in other
Subsidiary Guarantors.
6.11 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments. (a) Make any optional payment or prepayment on or redemption or
-----------
purchase of any Indebtedness (other than (x) the Loans and (y) Indebtedness
under the HCFP Loan Agreement, and other than pursuant to the Exchange Offer),
or (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of any Indebtedness (other than the
Loans).
6.12 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such
36
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
6.13 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
6.14 Limitation on Changes in Fiscal Year. Permit the fiscal year
------------------------------------
of the Borrower to end on a day other than December 31.
6.15 Limitation on Negative Pledge Clauses. Enter into with any
-------------------------------------
Person any agreement, other than (a) this Agreement, and (b) any industrial
revenue bonds, purchase money mortgages, Financing Leases and operating leases
permitted by this Agreement (in which cases, any prohibition or limitation shall
only be effective against the assets financed thereby), (c) the HCFP Loan
Documents, (d) the 11% Senior Note Indenture, (e) the Split Rate Senior Notes
and any indenture relating thereto, and (f) customary restrictions contained in
asset sale agreements for asset dispositions permitted under this Agreement and
relating only to the assets subject to such disposition which prohibits or
limits the ability of the Borrower or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired.
6.16 Limitation on Lines of Business. Enter into any type of
-------------------------------
business, either directly or through any Subsidiary, except for those businesses
in which the Borrower and its Subsidiaries are engaged on the date of this
Agreement.
6.17 Governing Documents. Amend its certificate of incorporation,
-------------------
partnership agreement or other Governing Documents, without the prior written
consent of the Required Lenders.
6.18 Limitation on Subsidiary Formation. Form any Subsidiaries
----------------------------------
unless, immediately upon the formation of such Subsidiary, all requirements of
Section 5.10 shall have been satisfied.
6.19 Limitation on Securities Issuances. (A) Permit any Subsidiary
----------------------------------
to issue any shares of Capital Stock that are not "certificated securities" (as
defined in (S) 8-102 of the Uniform Commercial Code as in effect in the State of
New York on the date hereof) and are not pledged to the Agent pursuant to the
Pledge Agreement or (B) issue or permit any Subsidiary to issue any shares of
preferred stock, other than the Convertible PIK Preferred Stock pursuant to the
Exchange Offer.
37
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder or
under the other Loan Documents, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 6 or
Section 8 of this Agreement, Section 5 of the Pledge Agreement, or Section
5 of the Security Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 15 days; or
(e) (i) There shall occur any "Event of Default" as defined in the
HCFP Loan Agreement or the 11% Senior Note Indenture, without giving effect
to any waiver or forbearance thereof, or (ii) the Borrower or any of its
Subsidiaries shall (A) default in any payment of principal of or interest
of any other Indebtedness (other than the Loans, and other than non-current
trade payables listed on Schedule 3.7 to the extent the same are in
compliance with the payment terms specified on Schedule 3.7) or in the
payment of any Guarantee Obligation, beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee Obligation was created; or (B) default
in the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction,
38
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 30 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 30 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $200,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
39
(i) (i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii)
the Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) the Subsidiaries Guarantee shall cease, for any reason, to be in
full force and effect or any Subsidiary Guarantor shall so assert; or
(k) other than in connection with the Recapitalization, (i) any
Person or "group" (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) (A) shall have acquired
beneficial ownership of 20% or more of any outstanding class of Capital
Stock having ordinary voting power in the election of directors of the
Borrower or (B) shall obtain the power (whether or not exercised) to elect
a majority of the Borrower's directors or (ii) the Board of Directors of
the Borrower shall not consist of a majority of Continuing Directors;
"Continuing Directors" shall mean the directors of the Borrower on
--------------------
the Closing Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is
recommended by a majority of the then Continuing Directors;
(l) Any Milestone shall not be accomplished on or prior to the
Milestone Date applicable thereto;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Agent may, or upon
the request of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest,
notice of acceleration, notice of interest to accelerate and all other notices
of any kind are hereby expressly waived.
SECTION 8. CONVERSION
8.1 Conversion Right.
----------------
(a) Subject to and upon compliance with the provisions of this
Section, each Lender shall have the right (the "Conversion Right"), at its
----------------
option, upon (x) the occurrence of
40
an Event of Default specified in Section 7(k), or (y) the Maturity Date, except
to the extent that the Loans have been previously prepaid, to convert the
principal amount of any such Loan, or any portion of such principal amount, into
that number of fully paid and non-assessable shares of Common Stock (as such
shares shall then be constituted) obtained by dividing the principal amount of
the Loans or portion thereof to be so converted by the Conversion Price in
effect at such time, by surrender of its Note in the manner provided in Section
8.2. A Lender is not entitled to any rights of a holder of shares of Common
Stock until such Lender has converted its Loan to shares of Common Stock, and
only to the extent such Loans are deemed to have been converted to shares of
Common Stock under this Section 8. If any amount paid or prepaid in respect of
any Loan is avoided, rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any other Loan Party, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any other Loan Party or any substantial part of its property, or
otherwise, the Conversion Right with respect to such amount shall be reinstated
or shall continue to be effective, all as though such payments had not been
made.
(b) Common Stock issuable upon conversion of any Loan will bear
legends substantially in the form of those set forth on Schedule 8.1.
(c) The Borrower shall at all times reserve and keep available out of
its authorized Common Stock, solely for the purpose of issuance or delivery upon
conversion of the Loans, the number of shares of Common Stock that will be
required to be delivered in connection with such conversion pursuant to the
terms of the Indenture.
(d) If on the Closing Date or on the date the Conversion Price is
adjusted pursuant to the provisions of Sections 8.4 and 8.5, the Borrower shall
not have available sufficient authorized Common Stock for the purpose of
issuance or delivery upon conversion of the Loans, the Borrower shall, within
180 days from the Closing Date and/or any such date of adjustment, obtain such
additional authorized Common Stock for such purpose (the "Reservation Grace
-----------------
Period"). If any Reservation Grace Period shall have expired prior to the
------
Borrower's obtaining additional authorized Common Stock sufficient to meet its
obligation under Section 8.1(c) (an "Authorization Default"), additional
---------------------
interest ("Authorization Default Liquidated Damages") will accrue on the Loans
----------------------------------------
from and including the day following such Authorization Default to but excluding
the day on which such Authorization Default has been cured. Authorization
Default Liquidated Damages will be paid monthly in arrears on each Interest
Payment Date, with the first such payment due on the first Interest Payment Date
following the date on which such Authorization Default Liquidated Damages begin
to accrue and will accrue at a rate per annum of one quarter of one percent
(0.25%) of the principal amount, to and including the 90th day following such
Authorization Default and at a rate per annum of one half of one percent (0.50%)
thereof from and after the 91st day following such Authorization Default. In no
event will Authorization Default Liquidated Damages accrue at a rate per annum
exceeding one half of one percent (0.50%).
41
8.2 Exercise of Conversion Right; Issuance of Shares of Common Stock
----------------------------------------------------------------
on Conversion.
-------------
(a) The Lenders have a Conversion Right which is exercisable in whole
or in part at any time and from time to time, subject to the limitations set
forth in Section 8.1(a). In order to exercise its Conversion Right, a Lender
shall complete a notice in the then current form obtainable from the Agent and
in the form of Exhibit K (a "Conversion Notice") (which may be accompanied by a
-----------------
share transfer form, or other instrument which may be required, signed by the
Lender or may include an authorization signed by the Lender, authorizing the
Lender's nominee to become the registered transferee and to execute any
requisite transfer form or other instrument which may be required, on behalf of
the Lender) and deliver such Conversion Notice and where appropriate, an
executed share transfer form, or other instrument which may be required, to the
Agent (together with the relevant Note) and any payment required by Section 8.6.
Once given, a Conversion Notice shall be irrevocable and may not be withdrawn
without the consent in writing of the Agent and, so long as no Default or Event
of Default has occurred and is continuing, the Borrower. The Agent shall deliver
to the Borrower promptly after receipt each Conversion Notice and each such
share transfer form or other instrument.
(b) The Conversion Right of any Lender in respect of a Loan being
prepaid pursuant to this Agreement and in respect of which the conditions
required for conversion have not been satisfied by the relevant Lender by the
end of the second Business Day prior to any date for prepayment thereof shall,
except as provided below, thereupon terminate. Notwithstanding the foregoing, if
there is a default in making full payment when due of the prepayment monies in
respect of any Loan, the Conversion Right in respect thereof shall extend up to
and including the date on which payment has been received by the relevant
Lender. The Conversion Right of a Lender in respect of a Loan becoming due and
payable as a result of the acceleration of the Loans following an Event of
Default shall terminate on the date that payment with respect to such Loan has
been received by such Lender.
(c) In the event that any Lenders have elected to convert their Loans
pursuant to this Section 8 by giving notice thereof to the Borrower in
accordance with the terms of this Agreement, then any subsequent prepayment of
the Loans shall not affect the right of such Lenders to receive shares of Common
Stock and such Loans of such Lenders shall not be so prepaid. No earlier than 60
days and no later than 30 days prior to the Maturity Date, the Borrower shall
deliver a notice to the Agent and the Lenders of the status of the Conversion
Rights, if any, of the Lenders.
(d) In order to exercise the Conversion Right with respect to any
Loan, the Lender shall surrender its Note, duly endorsed, at the office of the
Agent specified in Section 10.2 and shall give the Conversion Notice as
specified in Section 8.2(a). Such Conversion Notice shall state the portion of
the Loan of such Lender to be converted and the name or names (with address) in
which the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued, and shall be accompanied by
transfer taxes, if required pursuant to Section 8.7. The Agent shall promptly
notify the Borrower of
42
such conversion and shall deliver such Note to the Borrower against delivery by
the Borrower to the Agent, for the account of the Lender converting such Loan or
portion thereof, of certificates for Common Stock receivable by such Lender upon
such conversion. Each such Note surrendered for conversion shall, unless the
shares of Common Stock issuable on conversion are to be issued in the same name
as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Agent and the Borrower duly
executed by the Lender or its duly authorized attorney.
(e) As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions on
transfer if shares of Common Stock issuable on conversion are to be issued in a
name other than that of the Lender (as if such transfer were a transfer of the
Note or Notes (or portion thereof) so converted), the Borrower shall issue and
shall deliver to the Agent, for the account of such Lender, at the office of the
Agent specified in Section 10.2, a certificate or certificates for the number of
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Section and a check or cash in
respect of any fractional interest in respect of a share Common Stock arising
upon such conversion, as provided in Section 8.3. In case any Note shall be
surrendered for partial conversion, the Borrower shall execute and deliver to
Agent, for the account of such Lender, without charge to such Lender, a new Note
in an aggregate principal amount equal to the unconverted portion of the
surrendered Note.
(f) Each conversion shall be deemed to have been effected as to any
such Loan (or portion thereof) within 3 Business Days of the date on which the
requirements set forth above in this Section 8.2 have been satisfied as to such
Loan (or portion thereof), and the Person in whose name any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall become the holder of record of the shares represented thereby on such
conversion date; provided, however, that any such surrender on any date when the
--------
stock transfer books of the Borrower shall be closed shall constitute the Person
in whose name the certificates are to be issued as the record holder thereof for
all purposes on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the date
upon which such Note shall be surrendered.
(g) Interest on the principal amount of any Loan or portion thereof
surrendered for conversion shall cease to accrue from and after the effective
date of such conversion.
8.3 Cash Payment in Lieu of Fractional Shares.
-----------------------------------------
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Loans. If any fractional share of
stock otherwise would be issuable upon the conversion of any Loan or Loans, the
Borrower shall make an adjustment therefor in cash at the current market value
thereof to the Lenders of such Loans. Upon exercise of its Conversion Right a
Lender shall, when delivering the relevant Conversion Notice or no later than 21
days following the relevant Conversion Date, give directions to the
43
Agent for payment of any cash sum (rounded up to the nearest $0.01) which such
Lender is entitled to receive pursuant to this Section 8.3 and which shall be
paid by way of U.S. Dollar check drawn on a bank in the City of New York or, by
wire transfer to a U.S. Dollar account maintained by the Lender with a bank in
the City of New York.
8.4 Conversion Price.
----------------
(a) The initial conversion price of the Loans will be $2.379448 per
share of Common Stock (as adjusted in accordance with the terms of this
Agreement, from time to time, the "Conversion Price").
----------------
(b) Upon receipt of a Conversion Notice from a Lender, the Borrower
shall promptly file with the Agent a certificate of a Responsible Officer
setting forth the applicable Conversion Price and setting forth all the
information relevant to a determination of such Conversion Price.
8.5 Adjustments to the Conversion Price.
-----------------------------------
(a) The Conversion Price is subject to adjustment hereunder in
certain events, including: (i) the issuance of Common Stock of the Borrower as a
dividend or distribution on Common Stock of the Borrower; (ii) certain
subdivisions and combinations of the Common Stock of the Borrower; (iii) the
issuance to all holders of Common Stock of the Borrower of certain rights or
warrants to purchase Common Stock of the Borrower (provided that the Conversion
Price will be readjusted to the extent that such rights or warrants are not
exercised prior to the expiration thereof); (iv) the distribution to all holders
of Common Stock of the Borrower of shares of Capital Stock of the Borrower
(other than Common Stock) or evidences of Indebtedness of the Borrower or assets
(including securities, but excluding those rights, warrants, dividends and
distributions referred to above or paid in cash); (v) distributions consisting
of cash; and (vi) payment in respect of a tender offer or exchange offer by the
Borrower or any Affiliate of the Borrower. In the event of a distribution to
substantially all holders of the Borrower's Common Stock of rights to subscribe
for additional shares of the Borrower's Capital Stock as provided in clause
(iii) above, the Borrower may, instead of making any adjustment in the
Conversion Price, make proper provision so that each Lender who converts such
Loan after the record date for such distribution and prior to the expiration or
redemption of such rights shall be entitled to receive upon such conversion, in
addition to shares of Common Stock of the Borrower, an appropriate number of
such rights. If any adjustment is required to be made as set forth in clause (v)
above as a result of a cash distribution, such adjustment would be based upon
the full amount of the distribution.
(b) If the Borrower issues (i) shares of Common Stock for a
consideration per share less than the current market value per share (determined
as provided in subparagraph (h) of this Section 8.5), or (ii) any securities
convertible into or exchangeable for Common Stock initially deliverable upon
conversion or exchange of such securities that is less than the then current
market value per share (determined as provided in subparagraph (h) of this
Section 8.5) on the date of issuance of such securities (but excluding, among
other things, issuances otherwise permitted under this Agreement (a) pursuant to
any bona fide plan for the
44
benefit of employees, directors or consultants of the Borrower now or hereafter
in effect; (b) to acquire all or any portion of a business in an arm's-length
transaction between the Borrower and an unaffiliated third party including, if
applicable, issuances upon exercise of options or warrants issued in connection
with such an acquisition; (c) in a bona fide public offering pursuant to a firm
commitment underwriting or sales at the market pursuant to a continuous stock
offering program; and (d) pursuant to the exercise of warrants, rights
(including, without limitation, earnout rights) or options, or upon the
conversion of convertible securities, which are issued and outstanding on the
date hereof, or which may be issued in the future at fair value and with an
exercise price or conversion price at least equal to the current market value of
the Common Stock (determined as provided in subparagraph (h) of this Section
8.5) at the date of issuance of such warrant, right, option or convertible
security), then the Conversion Price of the Loans to be in effect after the date
of such issuance shall be determined by multiplying the Conversion Price thereof
in effect immediately prior to the date of such issuance by a fraction, the
numerator of which shall be the number of shares of such Common Stock
outstanding on the date of, but immediately prior to, such issuance or such
record date plus the number of shares of such Common Stock the
----
aggregate offering price of the total number of shares of such Common Stock so
to be issued or to be offered for subscription or purchase (or the aggregate
initial Conversion Price of the convertible securities so to be offered) would
purchase at such then current market price (determined as provided in
subparagraph (h) of this Section 8.5) and the denominator of which shall be the
number of shares of Common Stock outstanding on the date of, but immediately
prior to, such issuance plus the number of additional shares of such Common
----
Stock to be issued or to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined by an independent investment banking firm reasonably acceptable to
the Borrower and the Agent and Lenders holding a majority in principal amount of
such Loans (the cost of the engagement of said investment banking firm to be
borne by the Borrower). Such adjustment shall be made successively whenever the
date of such issuance is fixed (which date of issuance shall be the record date
for such issuance if a record date therefor is fixed); and, in the event that
such shares or options, rights or warrants are not so issued, such Conversion
Price shall again be adjusted to be such Conversion Price which would then be in
effect if the date of such issuance had not been fixed.
(c) In the case of (i) any reclassification of the Common Stock of
the Borrower, or (ii) a consolidation, merger or combination involving the
Borrower or a sale or conveyance to another Person of the property and assets of
the Borrower as an entirety or substantially as an entirety, in each case as a
result of which holders of Common Stock shall be entitled to receive stock,
other securities, other property or assets (including cash) with respect to or
in exchange for such Common Stock, the Lenders will generally be entitled
thereafter to convert such Loans for any kind and amount of shares of stock,
other securities or other property or assets (including cash) which they would
have owned or been entitled to receive upon such reclassification,
consolidation, merger, combination, sale or conveyance had such Loans been
converted into Common Stock immediately prior to such reclassification,
consolidation, merger, combination, sale or conveyance assuming that a Lender
would not
45
have exercised any rights of election as to the stock, other securities or other
property or assets (including cash) receivable in connection therewith. In the
event that holders of Common Stock shall have the right to choose between or
among two or more alternatives of stock, other securities, other property or
assets (including cash) in exchange for their Common Stock, the Lenders, upon
conversion of the Loans, shall have the right to choose between or among the
same two or more alternatives; provided that, in the event that the
--------
holders of Common Stock shall be subject to restrictions on the percentage of
one or more of the alternatives that they may receive in exchange for their
Common Stock (irrespective of whether the restrictions are on a per share or a
per class basis), each Lender shall be subject to the same restrictions with
respect to the conversion of each Loan on a per Loan basis.
(d) In case the Borrower shall pay a dividend or make a distribution
on the Common Stock exclusively in Common Stock or securities convertible or
exchangeable for Common Stock, the Conversion Price in effect at the opening of
business of the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number or shares (and/or
shares issuable upon any such conversion or exchange) constituting such dividend
or other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this subparagraph (d), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Borrower. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not occurred.
(e) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced and, conversely,
in case outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(f) Subject to the last sentence of this subparagraph (f), in case
the Borrower shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
Capital Stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (c) of this Section 8.5, any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (c) of this Section 8.5), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this
46
subparagraph (f) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (h) of this
Section 8.5) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such distribution (the "Reference Date") less
--------------
the fair market value (as determined good faith by the Board of
Directors of the Borrower, whose determination shall be conclusive and described
in a resolution of the Board of Directors), on the Reference Date, of the
portion of the evidences of Indebtedness, shares of Capital Stock, cash and
assets so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the Reference Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not occurred. For purposes of this subparagraph
(f), any dividend or distribution that includes shares of Common Stock or rights
or warrants to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of Indebtedness,
shares of Capital Stock, cash or assets other than such shares of Common Stock
or, such rights or warrants (making any Conversion Price reduction required by
this subparagraph (f) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (making any further
Conversion Price reduction required by subparagraph (c) or (d) of this Section
8.5), except any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (d) of
this Section 8.5.
(g) In case a tender or exchange offer (other than an odd-lot offer)
made by the Borrower or any Subsidiary of the Borrower for all or any portion of
the Borrower's Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Borrower or such Subsidiary of consideration per
share of Common Stock having a fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described in
a resolution of: the Board of Directors) at the last time (the "Expiration
----------
Time") tenders or exchanges may be made pursuant to such tender or exchange
----
offer (as it shall have been amended) that exceeds 110% of the current market
price per share (determined as provided in subparagraph (h) of this Section 8.5)
of the Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (g) by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (h) of this Section 8.5) of the Common
Stock on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased
---------
47
Shares") and (y) the product of the number of shares of Common Stock
------
outstanding (less any Purchase Shares) at the Expiration Time and the current
market price per share (determined as provided in subparagraph (h) of this
Section 8.5) of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
(h) For the purpose of any computation under subparagraphs (b), (f),
and (g) of this Section 8.5, the current market price per share of Common Stock
on any date in question shall be deemed to be the average of the daily Closing
Prices for the ten consecutive Trading Days prior to the earlier of the day in
question and, if applicable, the day before the "ex" date with respect to the
issuance or distribution requiring such computation; provided, however, that if
--------
another event occurs that would require an adjustment pursuant to subparagraphs
(b) through (h) of this Section 8.5, inclusive, the Board of Directors may make
such adjustments to the Closing Prices during such five Trading Day period as it
deems appropriate to effectuate the intent of the adjustments in this Section
8.5, in which case any such determination by the Board of Directors shall be set
forth in a resolution and shall be conclusive. For purposes of this paragraph,
the term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock is quoted regular way on a
Qualifying Stock Exchange or on such successor securities exchange on which the
Common Stock may be quoted or listed or in the relevant market from which the
Closing Prices were obtained without the right to receive such issuance or-
distribution, and (2) when used with respect to any tender or exchange offer
means the first date on which the Common Stock is quoted regular way on such
securities exchange or in such market after the Expiration Time of such offer.
(i) The Borrower may make such reductions in the Conversion Price, in
addition to those required by subparagraphs (c), (d), (e), (f) and (g) of this
Section 8.5, as it considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.
(j) The Borrower from time to time may, to the extent permitted by
law, reduce the Conversion Price by any amount for any period of at least 20
days (provided such reduction is irrevocable during the 20-day period), in which
case the Borrower shall give at least 15 days notice of such reduction, if the
Board of Directors of the Borrower has made a determination that such reduction
would be in the best interests of the Borrower, which determination shall be
conclusive. The Borrower may, at its option, make such reductions in the
Conversion Price, in addition to those set forth above, as the Board of
Directors of the Borrower deems advisable to avoid or diminish any income tax to
holders of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.
(l) No adjustment in the Conversion Price will be required unless
such adjustment would require a change of at least 1% in the Conversion Price
then in effect; provided that any adjustment that would otherwise be required to
be made shall be carried
48
forward and taken into account in any subsequent adjustment. Except as stated
above, the Conversion Price will not be adjusted for the issuance of Common
Stock or any securities convertible into or exchangeable for Common Stock or
carrying the right to purchase any of the foregoing.
(m) Nothing in this Section 8.5 or otherwise in this Section 8 shall
be construed to derogate any restriction or limitation contained in any Loan
Document imposed on any transaction of the types described in this Section 8.5,
including without limitation the restrictions set forth in Sections 6.2, 6.5,
6.6, 6.8 and 6.19 hereof.
(n) Notwithstanding anything to the contrary set forth in this
Section 8, the Conversion Price shall not be required to be adjusted solely as a
result of the issuance of the Convertible PIK Preferred Stock on the terms set
forth on Schedule 1.1(b).
8.6 Stamp and Other Duties and Exchange Costs.
-----------------------------------------
Payment of all stamp, transfer and registration duties (if any) and
any brokers' commission and stock exchange transaction charges and any other tax
thereon arising on exercise of Conversion Rights and/or on the transfer or
delivery of shares of Common Stock by the Borrower (or the Agent) to or to the
order of the Agent or the relevant Lender in connection therewith, payable in or
imposed by the United States, any state or other political sub-division thereof
and any other jurisdiction in which the register in the respect of any
securities is located will be made or procured by the Borrower. If the Borrower
shall fail to pay any such duties or costs, the relevant Lender shall be
entitled to tender and pay the same. The Borrower shall promptly reimburse each
Lender in respect of the payment of such duties or costs and any penalties paid
in respect thereof. A Lender exercising Conversion Rights must pay to the Agent
any such duties or costs arising in any other circumstances.
8.7 Reservation of Shares; Shares to be Fully Paid; Listing of Shares
-----------------------------------------------------------------
of Common Stock.
----------------
(a) The Borrower shall provide, free from preemptive rights, out of
its authorized but unissued Common Stock held in treasury, sufficient shares to
provide for the conversion of the Loans from time to time as such Loans are
converted as provided herein.
(b) The Borrower covenants that all shares of Common Stock issued
upon conversion of Loans will be fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof.
(c) The Borrower further covenants that promptly after the shares of
Common Stock shall have been listed on the New York Stock Exchange, the American
Stock Exchange, the NASDAQ National Market or any other national securities
exchange or automated quotation system the Borrower will, to the extent
permitted by the rules of such exchange or automated quotation system, list and
keep listed, so long as the shares of Common Stock shall be so listed on such
exchange or automated quotation system, all shares of Common Stock issuable upon
conversion of the Loans.
49
8.8 Responsibility of the Agent.
---------------------------
The Agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares Common Stock, or of any securities
or property, which may at any time be issued or delivered upon the conversion of
any Loan; and the Agent makes no representations with respect thereto, and is
entitled to rely conclusively on the Borrower therefor. Subject to the other
provisions of this Agreement, the Agent shall not be responsible for any failure
of the Borrower to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property or cash upon the surrender of
any Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Borrower contained in this Section 8.
Without limiting the generality of the foregoing, the Agent shall be under no
responsibility to determine the correctness of any provisions contained in any
amendment entered into pursuant to Section 8.5 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Lenders upon the conversion of their Notes after any event referred to in
such Section 8.5 or to any adjustment to be made with respect thereto, but,
subject to the other provisions of this Agreement may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the certificate of a Responsible Officer (which the Borrower shall
be obligated to file with the Agent prior to the execution of any such
amendment) with respect thereto.
8.9 Notice to Lenders Prior to Certain Actions.
------------------------------------------
In case:
(a) of any reclassification of the Common Stock of the Borrower
(other than a subdivision or combination of its outstanding Common Stock, or
a change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the Borrower
is a party and for which approval of any stockholders of the Borrower is
required, or of the sale or transfer of all or substantially all of the
assets of the Borrower; or
(b) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Borrower;
the Borrower shall cause to be filed with the Agent and to be mailed to each
Lender at its address appearing on the Register, as promptly as possible but in
any event at least 15 days prior to the applicable date hereinafter specified, a
notice stating the date on which such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up.
50
SECTION 9. THE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
9.4 Reliance by Agent . The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower or any other Loan Party),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent. The Agent
51
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
9.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
--------
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower or any other Loan Party, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent 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 appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents 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
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder or under the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower or any
other Loan Party which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Agent in
---------------
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the
52
obligation of the Borrower to do so), ratably according to their respective
Credit Exposure Percentages in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans)be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
--------
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Loans and all other amounts payable
hereunder.
9.8 Agent in Its Individual Capacity. The Agent and its Affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower and the other Loan Parties as though the Agent were
not the Agent hereunder and under the other Loan Documents. With respect to the
Loans made by it, the Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders" shall
------ -------
include the Agent in its individual capacity.
9.9 Successor Agent. The Agent may resign as Agent upon 10 days'
---------------
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrower, whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
-----
successor agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Loans. After any retiring
Agent's resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
----------------------
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the
53
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
-----------------
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Commitment, in each case without the consent of
each Lender affected thereby, or (ii) amend, modify or waive any provision of
this Section 10.1 or reduce the percentage specified in the definition of
Required Lenders, or consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement and the other Loan
Documents or release all or substantially all of the Collateral or release all
or substantially all of the Subsidiary Guarantors from their obligations under
the Subsidiaries Guarantee, in each case without the written consent of all the
Lenders, or (iii) amend, modify or waive any provision of Section 9 without the
written consent of the then Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Agent and all future holders of
the Loans. In the case of any waiver, the Borrower, the Lenders and the Agent
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed as follows in the case of the Borrower and the Agent, and as set forth
in Schedule I in the case of the other parties hereto, or to such other address
as may be hereafter notified by the respective parties hereto:
The Borrower: Healthcor Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: __________________________
Fax: ______________________________
with a copy to: Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., P.C.
The Agent: Credit Suisse First Boston Management Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
54
New York, New York 10038
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Funding Account: Citibank, N.A.
ABA #▇▇▇▇▇▇▇▇▇
Account: Credit Suisse First Boston
Account #▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CSFB, ▇▇▇-▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Agent or the Lenders
--------
pursuant to Section 2.3, 2.5 or 2.8(b) shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
-----------------------------
or reimburse the Agent for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel (including the allocated fees and expenses of in-
house counsel) to each Lender and of counsel to the Agent, (c) to pay,
indemnify, and hold each Lender and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Agent harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever
55
with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents, the Exchange Offer,
the Recapitalization or the use of the proceeds of the Loans and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries, the
Parent or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the Borrower shall
----------------------- --------
have no obligation hereunder to the Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Lender or (ii) legal proceedings commenced
against the Agent or any such Lender by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such. The agreements in this Section shall
survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
------------
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.9 and 2.10 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it was a Lender;
provided that, in the case of Section 2.10, such Participant shall have complied
--------
with the requirements of said Section and provided, further, that no Participant
-------- -------
shall be entitled to receive any greater amount pursuant to any such Section
than the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor
56
Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in accordance with applicable law, at any time
and from time to time assign to any Lender or any affiliate thereof or, with the
consent of the Agent (which shall not be unreasonably withheld), to an
additional bank or financial institution ("an Assignee") all or any part of its
--------
rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
J, with appropriate completions (an "Assignment and Acceptance"), executed by
-------------------------
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Agent) and delivered to the
Agent for its acceptance and recording in the Register. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with Commitments as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in Section 10.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
--------
of the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder not evidenced by a Note shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Agent) together with payment to
the Agent of a registration and processing fee of $3,500, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of
57
Section 10.16, any and all financial information in such Lender's possession
concerning the Borrower and its Affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefited
-------------------- ---------
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
--------
however, that if all or any portion of such excess payment or benefits is
-------
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loan may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set-
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
--------
validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more
------------
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be
58
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
10.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waiver. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address
of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
59
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments. The Borrower hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Borrower and the other Loan Parties, on one hand, and Agent and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
---------------------
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each Lender agrees to keep confidential all
---------------
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the Borrower in writing as confidential]; provided that
--------
nothing herein shall prevent any Lender from disclosing any such information (i)
to the Agent or any other Lender, (ii) to any Transferee which agrees to comply
with the provisions of this Section 10.15, (iii) to its employees, directors,
agents, attorneys, accountants and other professional advisors, (iv) upon the
request or demand of any examiner or other Governmental Authority having
jurisdiction over such Lender, (v) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
10.16 Limitation on Interest. It is the intention of the parties
----------------------
hereto and to the Subsidiaries Guarantee to comply with all applicable usury
laws, whether now existing or hereafter enacted. Accordingly, notwithstanding
any provision to the contrary in this Loan Agreement, the Note, the other Loan
Documents or any other document evidencing, securing, guaranteeing or otherwise
pertaining to indebtedness of the Borrower or the Subsidiary Guarantors to the
Agent or the Lenders, in no contingency or event whatsoever, whether by
acceleration of the maturity of indebtedness of the Borrower or the Subsidiary
Guarantors to the Agent or the Lenders or otherwise, shall the interest
contracted for, charged or received by the Agent or the Lenders exceed the
maximum amount permissible under applicable law. If
60
from any circumstances whatsoever fulfillment of any provisions of this Loan
Agreement, the Note, the other Loan Documents or of any other document
evidencing, securing, guaranteeing or otherwise pertaining to indebtedness of
the Borrower or the Subsidiary Guarantors to the Agent or the Lender, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstances the Agent or the Lenders shall ever receive anything of value as
interest or deemed interest by applicable law under this Loan Agreement, the
Note, the other Loan Documents or any other document evidencing, securing,
guaranteeing or otherwise pertaining to indebtedness of the Borrower or the
Subsidiary Guarantors to the Agent or the Lenders or otherwise an amount that
would exceed the highest lawful amount, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing in
connection with this Loan Agreement or on account of any other indebtedness of
the Borrower or the Subsidiary Guarantors to the Agent or the Lender, and not to
the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal owing in connection with this Loan Agreement and such other
indebtedness, such excess shall be refunded to the Borrower or the Subsidiary
Guarantors. In determining whether or not the interest paid or payable with
respect to indebtedness of the Borrower or the Subsidiary Guarantors to the
Agent or the Lender, under any specific contingency, exceeds the maximum
nonusurious rate permitted under applicable law, the Borrower or the Subsidiary
Guarantors and the Agent or the Lender shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law, and/or (d) allocate interest between portions of
such indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law. The terms and provisions of this paragraph
shall control and supersede every other conflicting provision of this Loan
Agreement, the Note and the other Loan Documents.
[Signature Pages Follow]
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
HEALTHCOR HOLDINGS, INC.
By:
---------------------------------------------
Title:
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION,
as Agent and as a Lender
By:
---------------------------------------------
Title:
62
ELLIOT ASSOCIATES, L.P.
as a Lender
By:
---------------------------------------------
Title:
63
EXHIBIT G
CERTIFICATE
Reference is hereby made to the Convertible Loan Agreement, dated as
of December 23, 1998, among Healthcor Holdings, Inc., the lenders parties
thereto, and Credit Suisse First Boston Management Corporation as agent (as
amended, restated, supplemented or otherwise modified from time to time, the
"Agreement"). Pursuant to the provisions of Section 2.10(b)(i)(B) of the
----------
Agreement, the undersigned hereby certifies that it is not a "bank" as such term
is defined in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended.
[NAME OF LENDER]
By:
---------------------------------------------
Title:
Date: , 19__
--------
Schedule 1.1(a)
MILESTONES
1. The Borrower shall, within twenty Business Days after the Closing
Date, prepare and file with the Securities and Exchange Commission
("Commission") a registration statement under the Securities Act of 1933, as
----------
amended (the "Securities Act"), to effect the registration of the offer of the
--------------
Split Rate Subordinated Notes and Convertible PIK Preferred Stock (collectively,
the "New Securities") under the Exchange Offer.
--------------
2. The Borrower shall use its best efforts to have the Registration
Statement declared effective under the Securities Act within 45 days after such
filing and maintain the effectiveness of the Registration Statement for such
period of time as is necessary to effect the offer and sale of the New
Securities.
3. The Borrower shall use its best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities law
or "Blue Sky" permits or approvals in connection with the issuance of the New
Securities in the Exchange Offer.
4. The Borrower shall advise the Agent (promptly after it receives
notice thereof) of the time when the Registration Statement has become
effective, of any supplement or amendment that has been filed, of the issuance
of any stop order, of the suspension of the qualification of the New Securities
for offering or sale in any jurisdiction, or of any request by the Commission
for amendment of the Registration Statement or for additional information.
64
Schedule 1.1(b)
TERMS OF CONVERTIBLE PIK PREFERRED STOCK
See Attached
65
Schedule 1.1(c)
TERMS OF SPLIT RATE SUBORDINATED NOTES
See Attached
66
Schedule 8.1
STOCK LEGEND
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED,
QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. NEITHER THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY
AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.
67
AMENDMENT
AMENDMENT, dated as of February 22, 1999 (this "Amendment"), to the
---------
Convertible Loan Agreement, dated as of December 23, 1999 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Loan
----
Agreement"), among HEALTHCOR HOLDINGS, INC., (the "Borrower"), the several
--------
lenders from time to time parties thereto (the "Lenders") and CREDIT SUISSE
-------
FIRST BOSTON MANAGEMENT CORPORATION, as agent (in such capacity, the "Agent")
-----
for the Lenders.
RECITALS
Pursuant to the Post-Closing Agreement, dated as of December 23, 1999,
between Borrower and Agent on behalf of the Lenders, the Borrower agreed to
negotiate with the Agent and the Lenders to develop, execute, and deliver an
amendment to the Loan Agreement clarifying the provisions of Section 6.1(a) of
the Loan Agreement, adding new covenants to Section 6.1, and adding certain
additional financial performance covenants. The Borrower and the Agent on behalf
of the Lenders have agreed to the terms of such amendment as set forth in this
Amendment.
The Borrower has requested that the Lenders lend to the Borrower an
additional $900,000 pursuant to the Loan Agreement, as amended by this
Amendment, and the Lenders have agreed to do so, but only on the terms and
subject to the conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
-------------
Loan Agreement are used herein as therein defined.
2. Amendments.
----------
(a) Section 1.1 of the Loan Agreement is hereby amended by amending the
following definitions in their entirety to read as follows:
"Commitment": as to any Lender, collectively, such Lender's Initial
----------
Commitment and Supplemental Commitment.
"Loan": collectively, the Initial Loan and the Supplemental Loan.
----
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical order:
"Cash Uses": for any period, the aggregate cash payments in
---------
respect of direct salaries, other direct costs, indirect salaries,
other indirect costs, third payroll, interest expense in respect of
Indebtedness and other amounts owing pursuant to the HCFP Loan
Documents, interest expense on Financing Leases, interest expense on
the Loan, and other cash expenses, in each case as such amounts would
be shown on a statement of cash flows of the Borrower and its
consolidated Subsidiaries prepared for such period in accordance with
GAAP.
"Consolidated EBITDA": for any period, the sum for such period
-------------------
of (a) Consolidated Net Income for such period, (b) to the extent
deducted in calculating Consolidated Net Income, the sum of provisions
for such period for income taxes, interest expense, and depreciation
and amortization expense, (c) to the extent deducted in calculating
Consolidated Net Income, amounts deducted in such period in respect of
non-cash expenses in accordance with GAAP, and (d) to the extent
deducted in calculating Consolidated Net Income, the amount of any
aggregate net loss (or minus the amount of any gain) during such
period arising from the sale, exchange or other disposition of capital
assets; provided, that Consolidated EBITDA shall in any event exclude,
--------
from and after the Closing Date the amount of any non-cash income
recognized during any period for which Consolidated EBITDA is
determined.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or deficit) of the Borrower and its Subsidiaries for such
period (taken as a cumulative whole), determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded
--------
from Consolidated Net Income (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Subsidiary, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which the Borrower
or any Subsidiary has an ownership interest, except to the extent that
any such income has been actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions, (c) the
undistributed earnings of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any
Contractual Obligation or Requirement of Law applicable to such
Subsidiary, (d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of
income accrued during such period, (e) any aggregate net gain (but not
any aggregate net loss) during such period arising from the sale,
exchange or other disposition of capital assets (such term to include
all fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all
securities), (f) any write-up of any asset, (g) any net gain from the
collection of the proceeds of life insurance policies, (h) any gain
arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of the Borrower or any Subsidiary,
(i) in the case of a successor to the Borrower by consolidation or
merger or as a transferee of its assets, any,
-2-
earnings of the successor corporation prior to such consolidation,
merger or transfer of assets, (j) any deferred credit representing the
excess of equity in any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary, (k) any non-cash
compensation expense in connection with the issuance of employee stock
options, and (l) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain.
"Initial Commitment": as to any Lender, its obligation to make
------------------
an Initial Loan to the Borrower on the Closing Date pursuant to
Section 2.1(a) in the amount set forth opposite such Lender's name on
Schedule I under the caption "Initial Loan".
"Initial Loan": as to any Lender, the term loan made by such
------------
Lender on the Closing Date pursuant to the Initial Commitment of such
Lender.
"Supplemental Closing Date": the date on which the conditions
-------------------------
precedent to the effectiveness of this Amendment set forth in Section
3 of this Amendment shall have been satisfied or waived.
"Supplemental Commitment": as to any Lender, its obligation to
-----------------------
make a Supplemental Loan to the Borrower pursuant to Section 2.1(b) in
the amount set forth opposite such Lender's name on Schedule I under
the caption "Supplemental Loan".
"Supplemental Note Endorsement": with respect to the Note of
-----------------------------
each Lender, the promissory note endorsement made by the Borrower,
substantially in the form of Exhibit A-1 to this Amendment, modifying
the Note of such Lender (as in effect prior to the Supplemental
Closing Date) to take account of the Supplemental Commitment of such
Lender.
"Supplemental Loan": as to any Lender, the term loan made by
-----------------
such Lender on the Supplemental Closing Date pursuant to the
Supplemental Commitment of such Lender.
(c) Section 2.1 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.1 to
read as follows:
"2.1 Commitments. (a) Each Lender made an Initial Loan to the
-----------
Borrower on the Closing Date in an amount equal to the amount of the
Initial Commitment of such Lender.
(b) Subject to the terms and conditions hereof, each Lender severally
agrees to make a Supplemental Loan to the Borrower on the Supplemental
Closing Date in an amount not to exceed the amount of the Supplemental
Commitment of such Lender then in effect; provided that the Supplemental
--------
Commitments shall terminate at 3:00 p.m.,
-3-
New York City time, on February 22, 1999, if the Supplemental Loans have
not been made prior to that time.
(d) Section 2.2 of the Loan Agreement is hereby amended by deleting the
parenthetical phrase "(a "Note")" and substituting in lieu thereof the phrase
----
"(as supplemented by a Supplemental Note Endorsement, a "Note")".
----
(e) Section 2.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.3 to
read as follows:
"2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time on the Closing Date or Supplemental Closing
Date, as applicable, requesting that the Lenders make Initial Loans on the
Closing Date or Supplemental Loans on the Supplemental Closing Date, as
applicable, and specifying (i) the Closing Date or the Supplemental Closing
Date, as applicable, and (ii) the amount to be borrowed. Not later than
11:00 a.m. on the Closing Date or the Supplemental Closing Date, as
applicable, each Lender shall make available to the Agent at its office or
to the account maintained by it, as specified in Section 10.2, the amount
of such Lender's Initial Loan or Supplemental Loan, as applicable, in
immediately available funds. The Agent shall on such date make available to
the Borrower the aggregate of the amounts made available to the Agent by
the Lenders, to such account of the Borrower as may be specified by the
Borrower in writing to the Agent.
(f) The Loan Agreement is hereby amended by adding a new Section 2.12 to
read as follows:
"2.12 Use of Supplemental Loan Proceeds. The Borrower shall use
---------------------------------
the proceeds of the Supplemental Loan disbursed to it solely for the
purposes set forth on Schedule 2.12 hereto."
(g) The Loan Agreement is hereby amended by adding a new Section 2.13 to
read as follows:
"2.13 Return of Supplemental Loan Proceeds. In the event the Borrower
------------------------------------
has not retained The ▇▇▇▇▇▇▇ Company by February 25, 1999, the Borrower
shall, on such date, return to the Agent, for the ratable account of the
Lenders who made a Supplemental Loan, $300,000 in immediately available
funds to such account of the Agent as may be specified by the Agent in
writing to the Borrower."
(h) The Loan Agreement is hereby amended by deleting Section 6.1(a) in its
entirety and substituting in lieu thereof the following new Section 6.1(a):
"(a) Minimum Cash Collections on Accounts Receivable. Permit
-----------------------------------------------
the cash collections on accounts receivable of the Borrower and its
consolidated
-4-
Subsidiaries during any fiscal quarter set forth below to be less than
the amount set forth opposite such fiscal quarter below:
Quarter Ending Amount
-------------- ------
3/31/99 $21,982,000
6/30/99 $23,397,000
9/30/99 $22,147,000
12/31/99 $20,781,000
(i) The Loan Agreement is hereby amended by deleting Section 6.1(b) in its
entirety and substituting in lieu thereof the following new Section 6.1(b):
"(b) Maximum Cash Uses. Permit the Cash Uses of the Borrower
-----------------
and its consolidated Subsidiaries to exceed during any fiscal quarter
set forth below the amount set forth opposite such fiscal quarter
below:
Quarter Ending Amount
-------------- ------
3/31/99 $21,720,000
6/30/99 $20,128,000
9/30/99 $21,674,000
12/31/99 $20,288,000
(j) The Loan Agreement is hereby amended by adding to Section 6.1 thereof
the following new subsection 6.1(d):
"(d) Minimum Consolidated EBITDA. Permit the Consolidated
---------------------------
EBITDA of the Borrower and its Subsidiaries for any fiscal quarter set
forth below to be less than the amount set forth opposite such fiscal
quarter below:
Quarters Ending Amount
--------------- ------
3/31/99 $ 1,528,000
6/30/99 $ 3,796,000
9/30/99 $ 2,843,000
12/31/99 $ 4,833,000"
-5-
(k) Section 6.2 of the Loan Agreement is hereby amended by deleting the
word "and" at the end of clause (f) thereof, by deleting "." at the end of
clause (g) thereof and substituting in lieu thereof the phrase "; and", and by
adding at the end thereof the following new subsection:
"(h) Indebtedness of the Borrower and any of its Subsidiaries
incurred pursuant to short-term credit facilities solely for working
capital purposes, provided that the aggregate outstanding amount of
--------
such Indebtedness, together with Indebtedness permitted to be
outstanding pursuant to Sections 6.2(a) and (d), shall not at any time
exceed $18,000,000."
(l) Section 6.3 of the Loan Agreement is hereby amended by deleting the
word "and" at the end of clause (h) thereof, by deleting "." at the end of
clause (i) thereof and substituting in lieu thereof the phrase "; and", and by
adding at the end thereof the following new subsection:
"(j) Liens securing Indebtedness incurred pursuant to Section
6.2(h)."
(m) The Loan Agreement is hereby amended by deleting Section 6.9 in its
entirety and substituting in lieu thereof the following new Section 6.9:
"6.9 Limitation on Capital Expenditures. Make or commit to make
----------------------------------
(by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or
capital assets (excluding any such asset acquired in connection with
normal replacement and maintenance programs properly charged to current
operations) except for expenditures in the ordinary course of business
not exceeding, in the aggregate for the Borrower and its Subsidiaries,
$500,000 for each quarter during the term of this Agreement, provided
--------
that any portion of such amount if not so expended during the quarter
for which it is permitted may be carried forward to the immediately
following quarter."
(n) Schedule I is hereby amended by deleting such Schedule in its entirety
and substituting in lieu thereof Schedule I to this Amendment.
(o) The Loan Agreement is hereby amended by adding thereto Schedule 2.12 to
this Amendment.
3. Effectiveness. This Amendment shall become effective upon (a) receipt
-------------
by the Agent of evidence satisfactory to the Agent that this Amendment has been
executed and delivered by the Borrower, the Required Lenders and each of the
Subsidiary Guarantors and (b) for the account of each Lender having a
Supplemental Commitment, a Supplemental Note Endorsement of the Borrower
conforming to the requirements hereof and executed by a duly authorized officer
of the Borrower.
-6-
4. Representations and Warranties. To induce the Agent and the Lenders to
------------------------------
enter into this Amendment and to lend the amount of the Supplemental Loan, the
Borrower hereby represents and warrants to the Agent and the Lenders that, after
giving effect to the amendments provided for herein, the representations and
warranties contained in the Loan Agreement and the other Loan Documents will be
true and correct in all material respects as if made on and as of the date
hereof and that no Default or Event of Default will have occurred and be
continuing.
5. No Other Amendments. Except as expressly amended hereby and by the
-------------------
Supplemental Note Endorsement, the Loan Agreement, the Notes and the other Loan
Documents shall remain in full force and effect in accordance with their
respective terms, without any waiver, amendment or modification of any provision
thereof.
6. Counterparts. This Amendment may be executed by one or more of the
------------
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
7. Expenses. The Borrower agrees to pay and reimburse the Agent for all
--------
of the out-of-pocket costs and expenses incurred by the Agent in connection with
the preparation, execution and delivery of this Amendment, including, without
limitation, the fees and disbursements of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel
to the Agent.
8. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
--------------
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
HEALTHCOR HOLDINGS, INC.
By:_______________________________
Title:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION,
as Agent
By:_______________________________
Title:
-8-
The undersigned Lenders hereby consent and agree to the foregoing
Amendment:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:_______________________________
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:_______________________________
Title:
-9-
The undersigned guarantors hereby consent and agree to the foregoing
Amendment:
HEALTHCOR, INC.
By:_______________________________
Title:
HEALTHCOR OXYGEN & MEDICAL
EQUIPMENT, INC.
By:_______________________________
Title:
HEALTHCOR PHARMACY, INC.
By:_______________________________
Title:
PHHN, INC.
By:_______________________________
Title:
HEALTHCOR REHABILITATION SERVICES,
INC.
By:_______________________________
Title:
-10-
HC PERSONNEL RESOURCES, INC.
By:_______________________________
Title:
CARENETWORK, INC.
By:_______________________________
Title:
-11-
SCHEDULE I
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
---------------------------------------------------------------------------------------------------------------------------
Initial Loan Supplemental Loan
Lender and Lending Offices
---------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Management $5,000,000 $900,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $ 1,000,000 $ 0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------------------
Total: $6,000,000.00 $900,000.00
============= ===========
---------------------------------------------------------------------------------------------------------------------------
-12-
SCHEDULE 2.12
USE OF PROCEEDS FROM SUPPLEMENTAL LOAN
1. $600,000 to cover overfunding under the HCFP Loan Agreement.
2. $300,000 to cover the retention fee of The ▇▇▇▇▇▇▇▇ Company, subject to
receipt by the Borrower of approval of its Board of Directors for such retention
and expenditure.
SECOND AMENDMENT
SECOND AMENDMENT, dated as of March 2, 1999 (this "Second Amendment"), to
----------------
the Convertible Loan Agreement, dated as of December 23, 1998 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Loan
----
Agreement"), among HEALTHCOR HOLDINGS, INC., (the "Borrower"), the several
--------
lenders from time to time parties thereto (the "Lenders") and CREDIT SUISSE
-------
FIRST BOSTON MANAGEMENT CORPORATION, as agent (in such capacity, the "Agent")
-----
for the Lenders.
RECITALS
WHEREAS pursuant to the Amendment to the Loan Agreement, dated as of
February 22, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by $900,000.
WHEREAS the Borrower has informed the Agent and the Lenders that it has
retained CKM LLC ("CKM") for the purposes of selling, in a single transaction
---
or series of transactions, all or substantially all of the assets of the
Borrower (each such transaction, a "Sale") and that CKM has, is, and will be
----
providing the Borrower with such services as necessary to effectuate one or more
Sales.
WHEREAS the Borrower has requested that the Lenders lend to the Borrower an
additional $2,000,000 pursuant to the Loan Agreement, as amended by this Second
Amendment, and the Lenders have agreed to do so, but only on the terms and
subject to the conditions set forth in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
-------------
Loan Agreement are used herein as therein defined.
2. Amendments.
----------
(a) The definition "Consolidated EBITDA" in Section 1.1 of the Loan
Agreement is hereby amended by deleting clause (d) thereof in its entirety and
substituting in lieu thereof the following new clause (d):
"(d) the amount of any aggregate net after-tax loss (or minus the
amount of any after-tax gain) during such period arising from the sale,
exchange or other disposition of capital assets outside the ordinary course
of business;"
(b) Section 1.1 of the Loan Agreement is hereby amended by amending the
following definitions in their entirety to read as follows:
"Commitment": as to any Lender, collectively, such Lender's Initial
----------
Commitment, Supplemental Commitment, and Second Supplemental Commitment.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or deficit) of the Borrower and its Subsidiaries for such period
(taken as a cumulative whole), determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from
--------
Consolidated Net Income (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary, (b) the income (or deficit) of any
Person (other than a Subsidiary) in which the Borrower or any Subsidiary
has an ownership interest, except to the extent that any such income has
been actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation or Requirement of Law applicable to
such Subsidiary, (d) any write-up of any asset, (e) any net gain from the
collection of the proceeds of life insurance policies, (f) any gain arising
from the acquisition of any securities, or the extinguishment, under GAAP,
of any Indebtedness, of the Borrower or any Subsidiary, (g) in the case of
a successor to the Borrower by consolidation or merger or as a transferee
of its assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets, (h) any deferred credit
representing the excess of equity in any Subsidiary at the date of
acquisition over the cost of the investment in such Subsidiary, (i) any
non-cash compensation expense in connection with the issuance of employee
stock options, and (j) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain.
"Loan": collectively, the Initial Loan, the Supplemental Loan, and the
----
Second Supplemental Loan.
(c) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical order:
"Second Supplemental Closing Date": the date on which the
--------------------------------
conditions precedent to the effectiveness of this Second Amendment set
forth in Section 3 of this Second Amendment shall have been satisfied
or waived.
"Second Supplemental Commitment": as to any Lender, its
------------------------------
obligation to make a Second Supplemental Loan to the Borrower pursuant
to Section 2.1(b) in the amount set forth opposite such Lender's name
on Schedule I under the caption "Second Supplemental Loan".
-2-
"Second Supplemental Note Endorsement": with respect to the Note
------------------------------------
of each Lender, the promissory note endorsement made by the Borrower,
substantially in the form of Exhibit A to this Second Amendment,
modifying the Note of such Lender (as in effect prior to the Second
Supplemental Closing Date) to take account of the Second Supplemental
Commitment of such Lender.
"Second Supplemental Loan": as to any Lender, the term loan made
------------------------
by such Lender on the Second Supplemental Closing Date pursuant to the
Second Supplemental Commitment of such Lender.
(d) Section 2.1 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.1 to
read as follows:
"2.1 Commitments. (a) Each Lender made an Initial Loan to the
-----------
Borrower on the Closing Date in an amount equal to the amount of the
Initial Commitment of such Lender. Each Lender made a Supplemental Loan to
the Borrower on the Supplemental Closing Date in an amount equal to the
amount of the Supplemental Commitment of such Lender.
(b) Subject to the terms and conditions hereof, each Lender severally
agrees to make a Second Supplemental Loan to the Borrower on the Second
Supplemental Closing Date in an amount not to exceed the amount of the
Second Supplemental Commitment of such Lender then in effect; provided that
--------
the Second Supplemental Commitments shall terminate at 3:00 p.m., New York
City time, on March 2, 1999, if the Second Supplemental Loans have not been
made prior to that time.
(e) Section 2.2 of the Loan Agreement is hereby amended by deleting the
parenthetical phrase "(as supplemented by a Supplemental Note Endorsement, a
"Note")" and substituting in lieu thereof the phrase "(such promissory note, as
-----
the same may be supplemented from time to time (including by a Supplemental Note
Endorsement and a Second Supplemental Note Endorsement), a "Note").
----
(f) Section 2.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.3 to
read as follows:
"2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time) on the Closing Date, the Supplemental
Closing Date, or the Second Supplemental Closing Date, as applicable,
requesting that the Lenders make Initial Loans on the Closing Date,
Supplemental Loans on the Supplemental Closing Date, or Second Supplemental
Loans on the Second Supplemental Closing, as applicable, and specifying (i)
the Closing Date, the Supplemental Closing Date, or the Second Supplemental
Closing Date, as applicable, and (ii) the amount to be borrowed. Not later
than 11:00 a.m. on the Closing Date, the Supplemental Closing Date, or the
Second Supplemental Closing Date, as applicable, each Lender shall make
available to the Agent at its office or to the account maintained by it, as
specified in Section 10.2,
-3-
the amount of such Lender's Initial Loan, Supplemental Loan, or Second
Supplemental Loan, as applicable, in immediately available funds. The Agent
shall on such date make available to the Borrower the aggregate of the
amounts made available to the Agent by the Lenders, to such account of the
Borrower as may be specified by the Borrower in writing to the Agent.
(g) Section 2.12 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.12 to
read as follows:
"2.12 Use of Loan Proceeds. (a) The Borrower shall use the proceeds
--------------------
of the Supplemental Loan disbursed to it solely for the purposes set forth
on Schedule 2.12 hereto.
(b) Within one (1) Business Day after the Second Supplemental Closing
Date, the Borrower shall deliver to the Agent, in form and substance
satisfactory to the Agent, a writing setting forth the uses of the proceeds
of the Second Supplemental Loan and shall use such proceeds only for the
purposes and in accordance with the amounts specified therein.
(h) Section 5.12 of the Loan Agreement is hereby amended in its entirety
and substituting in lieu thereof a new Section 5.12 to read as follows:
"5.12 Amendment of 11% Senior Note Indenture. In connection with the
--------------------------------------
11% Senior Notes, the Borrower shall have consummated, within 10 Business
Days after the Second Supplemental Closing Date, with the trustee (the
"Trustee") under the 11% Senior Note Indenture, an amendment to the 11%
--------
Senior Note Indenture on the terms set forth on Schedule 5.12 hereto and
such other terms and conditions as the Borrower, the requisite holders of
the 11% Senior Notes, if applicable, the Trustee, and the Agent may
reasonably agree upon."
(i) Schedule I is hereby amended by deleting such Schedule in its entirety
and substituting in lieu thereof Schedule I to this Second Amendment.
(j) Schedule 1.1(a) is hereby amended by deleting such Schedule in its
entirety and substituting in lieu thereof Schedule 1.1(a) to this Second
Amendment.
(k) The Loan Agreement is hereby amended by adding thereto Schedule 5.12 of
this Second Amendment.
3. Effectiveness. This Second Amendment shall become effective upon:
-------------
(a) receipt by the Agent of evidence satisfactory to the Agent that this
Second Amendment has been executed and delivered by the Borrower, the Required
Lenders and each of the Subsidiary Guarantors;
-4-
(b) for the account of each Lender having a Second Supplemental Commitment,
a Second Supplemental Note Endorsement of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the Borrower;
(c) receipt by the Agent of a true and correct copy of Amendment No. 4 to
Loan and Security Agreement, dated as of March 1, 1999, between HCFP and the
Borrower, duly executed by the parties thereto and certified as to authenticity
by the Borrower.
4. Representations and Warranties. To induce the Agent and the Lenders to
------------------------------
enter into this Second Amendment and to lend the amount of the Second
Supplemental Loan, the Borrower hereby represents and warrants to the Agent and
the Lenders that, after giving effect to the amendments provided for herein, the
representations and warranties contained in the Loan Agreement and the other
Loan Documents will be true and correct in all material respects as if made on
and as of the date hereof and that no Default or Event of Default will have
occurred and be continuing.
5. Release. For and in consideration of the agreements contained in this
-------
Second Amendment and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, the Borrower and the
Subsidiary Guarantors hereby do release and forever discharge the Lenders and
the Agent and their respective directors, officers, employees, agents, and
attorneys, from any and all claims, damages, liabilities, actions, causes of
actions, and suits, of every kind and nature whatsoever, arising out of, or in
any way related to, the Loan Agreement, as amended hereby, the Note, the other
Loan Documents and all agreements, documents and instruments related to any of
the foregoing, whether now known or unknown, which the Borrower and the
Subsidiary Guarantors have, own or hold, or at any time previously had, owned or
held, or at any time in the future may have, own or hold.
6. No Other Amendments. Except as expressly amended hereby and by the
-------------------
Second Supplemental Note Endorsement, the Loan Agreement, the Notes and the
other Loan Documents shall remain in full force and effect in accordance with
their respective terms, without any waiver, amendment or modification of any
provision thereof.
7. Counterparts. This Amendment may be executed by one or more of the
------------
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Borrower agrees to pay and reimburse the Agent for all
--------
of the out-of-pocket costs and expenses incurred by the Agent in connection with
the preparation, execution and delivery of this Amendment, including, without
limitation, the fees and disbursements of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel
to the Agent.
9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
--------------
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
-5-
[SIGNATURE PAGES FOLLOW]
-6-
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS SECOND AMENDMENT TO
BE DULY EXECUTED AND DELIVERED AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
HEALTHCOR HOLDINGS, INC.
By:_______________________________
Title:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION,
as Agent
By:_______________________________
Title:
-7-
The undersigned Lenders hereby consent and agree to the foregoing
Amendment:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:_______________________________
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:_______________________________
Title:
-8-
The undersigned guarantors hereby consent and agree to the foregoing
Amendment:
HEALTHCOR, INC.
By:_______________________________
Title:
HEALTHCOR OXYGEN & MEDICAL
EQUIPMENT, INC.
By:_______________________________
Title:
HEALTHCOR PHARMACY, INC.
By:_______________________________
Title:
PHHN, INC.
By:_______________________________
Title:
HEALTHCOR REHABILITATION SERVICES,
INC.
By:_______________________________
Title:
-9-
HC PERSONNEL RESOURCES, INC.
By:_______________________________
Title:
CARENETWORK, INC.
By:_______________________________
Title:
-10-
SCHEDULE I
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
INITIAL LOAN SUPPLEMENTAL LOAN SECOND SUPPLEMENTAL LOAN
LENDER AND LENDING OFFICES
---------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Management $ 5,000,000 $ 900,000 $2,000,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $ 1,000,000 $ 0 $ 0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Total: $6,000,000.00 $900,000.00 $2,000,000
============= =========== ==========
---------------------------------------------------------------------------------------------------------------------
-11-
Schedule 1.1(A)
MILESTONES
Within 10 Business Days after the Second Supplemental Closing Date, the
Borrower shall execute and deliver to the trustee (the "Trustee") under the 11%
-------
Senior Note Indenture an amendment to the 11% Senior Note Indenture on the terms
set forth on Schedule 5.12 hereto and such other terms and conditions as the
Borrower, the requisite holders of the 11% Senior Notes, if applicable, the
Trustee, and the Agent may reasonably agree upon.
-12-
Schedule 5.12
TERMS OF AMENDMENT TO 11% SENIOR NOTE INDENTURE
(1) Substantially all of the assets of the Borrower and its Subsidiaries,
including accounts receivable and inventory, and including a pledge of all the
shares of the Company's subsidiaries, will secure repayment of the 11% Senior
Notes, subject only to the prior liens of HCFP under the HCFP Loan Documents and
the Agent under the Loan Agreement;
(2) proceeds of sale of assets or stock, including a sale of all or
substantially all of the Borrower (i.e., all sales other than sales of inventory
in the ordinary course) less costs of sale will be offered to the Noteholders in
redemption of the 11% Senior Notes;
(3) add or modify financial and other covenants (including limitations on
additional indebtedness, limitations on acquisitions, limitations on restricted
payments, minimum consolidated EBITDA and Debt-to-EBITDA ratio, limitations on
capital expenditures, limitation on capital lease obligations and limitations on
company's entering into certain lines of business) on substantially the terms of
covenants in draft indenture for proposed split rate senior subordinated notes,
circulated to the Borrower and the Borrower's counsel, among other parties, by
the Agent's counsel on or about 2/19/99; and
(4) CSFB and ▇▇▇▇▇▇▇ will agree to forbear from declaring a default under the
11% Senior Note Indenture for a 30-day period following the date of the
amendment, subject to further extensions. [Note: This agreement will be
implemented in connection with, rather than as a part of, the amendment to the
11% Senior Note Indenture.]
-13-
Exhibit A
FORM OF SECOND SUPPLEMENTAL NOTE ENDORSEMENT
March 2, 1999
New York, New York
The undersigned Borrower hereby agrees with CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION (the "Lender") that the Note of the Borrower, dated
------
December 23, 1998, in the original principal amount of $5,900,000.00 (the
"Note"), to which this Second Supplemental Note Endorsement is attached, is
----
hereby amended by (a) deleting the amount "$5,900,000.00" where it first occurs
in the Note and substituting in lieu thereof the amount "$7,900,000.00", and (b)
deleting the first paragraph of the Note and substituting in lieu thereof the
following paragraph:
"FOR VALUE RECEIVED, the undersigned HEALTHCOR HOLDINGS, INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to
--------
pay to the order of CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION (the
"Lender"), at the office of Credit Suisse First Boston Management
------
Corporation located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States of America and in immediately funds, the
principal amount of SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS
($7,900,000.00). The principal amount of this Note shall be payable in a
single installment payable on the Maturity Date."
This Second Supplemental Note Endorsement is given as a rearrangement
and amendment of the obligations of the Borrower to the Lender under the Note
and is not given in substitution therefor or extinguishment thereof. Except as
expressly amended by this Second Supplemental Note Endorsement, all of the terms
and conditions of the Note shall continue in full force and effect. This Second
Supplemental Note Endorsement shall constitute part of the Note and the Lender
is hereby authorized to attach this Second Supplemental Note Endorsement to the
Note and to insert the following legend on the face of the Note: "This Note has
been amended pursuant to the Second Supplemental Note Endorsement dated March 2,
1999."
Borrower: HEALTHCOR HOLDINGS, INC.
--------
By:
------------------------------
Name:
Title:
-14-
Lender: CREDIT SUISSE FIRST BOSTON
------ MANAGEMENT CORPORATION
By:
------------------------------
Name:
Title:
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
THIRD AMENDMENT, dated as of March 15, 1999 (this "Third Amendment"), to
---------------
the Convertible Loan Agreement, dated as of December 23, 1998 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Loan
----
Agreement"), among HEALTHCOR HOLDINGS, INC., (the "Borrower"), the several
--------
lenders from time to time parties thereto (the "Lenders") and CREDIT SUISSE
-------
FIRST BOSTON MANAGEMENT CORPORATION, as agent (in such capacity, the "Agent")
-----
for the Lenders.
RECITALS
WHEREAS pursuant to the Loan Agreement, the Lenders made the Loan in the
amount of $6,000,000 thereunder;
WHEREAS pursuant to the Amendment to the Loan Agreement, dated as of
February 22, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by $900,000;
WHEREAS pursuant to the Second Amendment to the Loan Agreement, dated as of
March 2, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS the Borrower has informed the Agent and the Lenders that it has
retained CKM LLC ("CKM") for the purposes of selling, in a single transaction
---
or series of transactions, all or substantially all of the assets of the
Borrower (each such transaction, a "Sale") and that CKM has, is, and will be
----
providing the Borrower with such services as necessary to effectuate one or more
Sales;
WHEREAS the Borrower has requested that the Lenders lend to the Borrower an
additional $2,000,000 pursuant to the Loan Agreement, as amended by this Third
Amendment, and the Lenders have agreed to do so, but only on the terms and
subject to the conditions set forth in this Third Amendment;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
-------------
Loan Agreement are used herein as therein defined.
2. Amendments.
----------
(a) Section 1.1 of the Loan Agreement is hereby amended by amending the
following definitions in their entirety to read as follows:
"Commitment": as to any Lender, collectively, such Lender's Initial
----------
Commitment, Supplemental Commitment, Second Supplemental Commitment, and
Third Supplemental Commitment.
"Loan": collectively, the Initial Loan, the Supplemental Loan, the
----
Second Supplemental Loan, and the Third Supplemental Loan.
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical order:
"Third Supplemental Closing Date": the date on which the
-------------------------------
conditions precedent to the effectiveness of the Third Amendment set
forth in Section 3 of the Third Amendment shall have been satisfied or
waived.
"Third Supplemental Commitment": as to any Lender, its
-----------------------------
obligation to make a Third Supplemental Loan to the Borrower pursuant
to Section 2.1(b) in the amount set forth opposite such Lender's name
on Schedule I under the caption "Third Supplemental Loan".
"Third Supplemental Note Endorsement": with respect to the Note
-----------------------------------
of each Lender, the promissory note endorsement made by the Borrower,
substantially in the form of Exhibit A to this Third Amendment,
modifying the Note of such Lender (as in effect prior to the Third
Supplemental Closing Date) to take account of the Third Supplemental
Commitment of such Lender.
"Third Supplemental Loan": as to any Lender, the term loan made
-----------------------
by such Lender on the Third Supplemental Closing Date pursuant to the
Third Supplemental Commitment of such Lender.
(c) Section 2.1 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.1 to
read as follows:
"2.1 Commitments. (a) Each Lender made an Initial Loan to the
-----------
Borrower on the Closing Date in an amount equal to the amount of the
Initial Commitment of such Lender. Each Lender made a Supplemental Loan to
the Borrower on the Supplemental Closing Date in an amount equal to the
amount of the Supplemental Commitment of such Lender. Each Lender made a
Second Supplemental Loan to the Borrower on the Second Supplemental Closing
Date in an amount equal to the amount of the Second Supplemental Commitment
of such Lender.
(b) Subject to the terms and conditions hereof, each Lender severally
agrees to make a Third Supplemental Loan to the Borrower on the Third
Supplemental Closing Date in an amount not to exceed the amount of the
Third Supplemental Commitment of such Lender then in effect; provided that
--------
the Third Supplemental Commitments shall terminate at 3:00 p.m., New York
City time, on March 15, 1999, if the Third Supplemental Loans have not been
made prior to that time.
-2-
(d) Section 2.2 of the Loan Agreement is hereby amended by deleting the
parenthetical phrase "(such promissory note, as the same may be supplemented
from time to time (including by a Supplemental Note Endorsement and a Second
Supplemental Note Endorsement), a "Note")" and substituting in lieu thereof the
----
phrase "(such promissory note, as the same may be supplemented from time to time
(including by a Supplemental Note Endorsement a Second Supplemental Note
Endorsement and a Third Supplemental Note Endorsement), a "Note").
----
(e) Section 2.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.3 to
read as follows:
"2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time) on the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, or the Third
Supplemental Closing Date, as applicable, requesting that the Lenders make
Initial Loans on the Closing Date, Supplemental Loans on the Supplemental
Closing Date, Second Supplemental Loans on the Second Supplemental Closing
Date, or Third Supplemental Loans on the Third Supplemental Closing Date,
as applicable, and specifying (i) the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, or the Third
Supplemental Closing Date, as applicable, and (ii) the amount to be
borrowed. Not later than 11:00 a.m. on the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, or the Third
Supplemental Closing Date, as applicable, each Lender shall make available
to the Agent at its office or to the account maintained by it, as specified
in Section 10.2, the amount of such Lender's Initial Loan, Supplemental
Loan, Second Supplemental Loan, or Third Supplemental Loan, as applicable,
in immediately available funds. The Agent shall on such date make
available to the Borrower the aggregate of the amounts made available to
the Agent by the Lenders, to such account of the Borrower as may be
specified by the Borrower in writing to the Agent.
(f) Section 2.12 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.12 to
read as follows:
"2.12 Use of Loan Proceeds. (a) The Borrower shall use the proceeds
--------------------
of the Supplemental Loan and the Second Supplemental Loan solely for the
purposes set forth on Schedule 2.12 hereto.
(b) Within one (1) Business Day after the Third Supplemental Closing
Date, the Borrower shall deliver to the Agent, in form and substance
satisfactory to the Agent, a schedule setting forth the uses of the
proceeds of the Third Supplemental Loan and shall use such proceeds only
for the purposes and in accordance with the amounts specified therein.
(g) Schedule I is hereby amended by deleting such Schedule in its entirety
and substituting in lieu thereof Schedule I to this Third Amendment.
-3-
(h) Schedule 2.12 is hereby amended by deleting such Schedule in its
entirety and substituting in lieu thereof Schedule 2.12 to this Third Amendment.
3. Effectiveness. This Third Amendment shall become effective upon:
-------------
(a) receipt by the Agent of evidence satisfactory to the Agent that this
Third Amendment has been executed and delivered by the Borrower, the Required
Lenders and each of the Subsidiary Guarantors; and
(b) for the account of each Lender having a Third Supplemental Commitment,
a Third Supplemental Note Endorsement of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the Borrower.
4. Representations and Warranties. To induce the Agent and the Lenders to
------------------------------
enter into this Third Amendment and to lend the amount of the Third Supplemental
Loan, the Borrower hereby represents and warrants to the Agent and the Lenders
that, after giving effect to the amendments provided for herein, the
representations and warranties contained in the Loan Agreement and the other
Loan Documents will be true and correct in all material respects as if made on
and as of the date hereof and that no Default or Event of Default will have
occurred and be continuing.
5. Release. For and in consideration of the agreements contained in this
-------
Third Amendment and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, the Borrower and the
Subsidiary Guarantors hereby do release and forever discharge the Lenders and
the Agent and their respective directors, officers, employees, agents, and
attorneys, from any and all claims, damages, liabilities, actions, causes of
actions, and suits, of every kind and nature whatsoever, arising out of, or in
any way related to, the Loan Agreement, as amended hereby, the Note, the other
Loan Documents and all agreements, documents and instruments related to any of
the foregoing, whether now known or unknown, which the Borrower and the
Subsidiary Guarantors have, own or hold, or at any time previously had, owned or
held, or at any time in the future may have, own or hold.
6. No Other Amendments. Except as expressly amended hereby and by the
-------------------
Third Supplemental Note Endorsement, the Loan Agreement, the Notes and the other
Loan Documents shall remain in full force and effect in accordance with their
respective terms, without any waiver, amendment or modification of any provision
thereof.
7. Counterparts. This Third Amendment may be executed by one or more of
------------
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Borrower agrees to pay and reimburse the Agent for all
--------
of the out-of-pocket costs and expenses incurred by the Agent in connection with
the preparation, execution and delivery of this Amendment, including, without
limitation, the fees and disbursements of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel
to the Agent.
-4-
9. Applicable Law. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be duly executed and delivered as of the day and year first above written.
HEALTHCOR HOLDINGS, INC.
By:_______________________________
Title:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION,
as Agent
By:_______________________________
Title:
The undersigned Lenders hereby consent and agree to the foregoing
Amendment:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:_______________________________
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:_______________________________
Title:
-7-
The undersigned guarantors hereby consent and agree to the foregoing
Amendment:
HEALTHCOR, INC.
By:_______________________________
Title:
HEALTHCOR OXYGEN & MEDICAL
EQUIPMENT, INC.
By:_______________________________
Title:
HEALTHCOR PHARMACY, INC.
By:_______________________________
Title:
PHHN, INC.
By:_______________________________
Title:
HEALTHCOR REHABILITATION SERVICES,
INC.
By:_______________________________
Title:
-8-
HC PERSONNEL RESOURCES, INC.
BY:_______________________________
TITLE:
CARENETWORK, INC.
BY:_______________________________
TITLE:
-9-
SCHEDULE I
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
Initial Loan Supplemental Loan Second Supplemental Third Supplemental
Lender and Lending Offices Loan Loan
------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Management $5,000,000 $ 900,000 $2,000,000 $2,000,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $1,000,000 $ 0 $ 0 $ 0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
Total: $6,000,000.00 $900,000.00 $2,000,000 $2,000,000
============= =========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------
Schedule 2.12
USE OF LOAN PROCEEDS
I. USE OF SUPPLEMENTAL LOAN PROCEEDS
(a) $600,000 to cover overfunding under the HCFP Loan Agreement.
(b) $300,000 to cover the retention fee of The ▇▇▇▇▇▇▇▇ Company, subject
to receipt by the Borrower of approval of its Board of Directors for
such retention and expenditure.
II. USE OF SECOND SUPPLEMENTAL LOAN PROCEEDS
Expense Reports $272,510
Insurance $ 49,733
IT $ 85,800
Leases $700,955
Notes $212,941
Office Supplies $ 15,079
Professional $146,245
Settlements $ 0
Suppliers $819,785
Service Providers $ 53,967
Temp. Services and Related $ 9,500
Utilities $ 20,000
Miscellaneous $ 21,046
HHCA $ 0
Payroll and related $ 0
-11-
FORM OF THIRD SUPPLEMENTAL NOTE ENDORSEMENT
March 15, 1999
New York, New York
The undersigned Borrower hereby agrees with CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION (the "Lender") that the Note (as amended, modified, or
------
supplemented prior to the date hereof) of the Borrower, dated December 23, 1998,
in the original principal amount of $7,900,000.00 (the "Note"), to which this
----
Third Supplemental Note Endorsement is attached, is hereby amended by (a)
deleting the amount "$7,900,000.00" where it first occurs in the Note and
substituting in lieu thereof the amount "$9,900,000.00", and (b) deleting the
first paragraph of the Note and substituting in lieu thereof the following
paragraph:
"FOR VALUE RECEIVED, the undersigned HEALTHCOR HOLDINGS, INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to
--------
pay to the order of CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION (the
"Lender"), at the office of Credit Suisse First Boston Management
------
Corporation located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States of America and in immediately available
funds, the principal amount of NINE MILLION NINE HUNDRED THOUSAND DOLLARS
($9,900,000.00). The principal amount of this Note shall be payable in a
single installment payable on the Maturity Date."
This Third Supplemental Note Endorsement is given as a rearrangement
and amendment of the obligations of the Borrower to the Lender under the Note
and is not given in substitution therefor or extinguishment thereof. Except as
expressly amended by this Third Supplemental Note Endorsement, all of the terms
and conditions of the Note shall continue in full force and effect. This Third
Supplemental Note Endorsement shall constitute part of the Note and the Lender
is hereby authorized to attach this Third Supplemental Note Endorsement to the
Note and to insert the following legend on the face of the Note: "This Note has
been amended pursuant to the Third Supplemental Note Endorsement dated March 15,
1999."
Borrower:
--------
HEALTHCOR HOLDINGS, INC.
By: ______________________________
Name:
Title:
Lender: CREDIT SUISSE FIRST BOSTON
------ MANAGEMENT CORPORATION
By: ______________________________
Name:
Title:
-2-
FOURTH AMENDMENT
FOURTH AMENDMENT, dated as of March 30, 1999 (this "Fourth Amendment"), to
----------------
the Convertible Loan Agreement, dated as of December 23, 1998 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Loan
----
Agreement"), among HEALTHCOR HOLDINGS, INC., (the "Borrower"), the several
--------
lenders from time to time parties thereto (the "Lenders") and CREDIT SUISSE
-------
FIRST BOSTON MANAGEMENT CORPORATION, as agent (in such capacity, the "Agent")
-----
for the Lenders.
RECITALS
WHEREAS pursuant to the Loan Agreement, the Lenders made the Loan in the
amount of $6,000,000 thereunder;
WHEREAS pursuant to the Amendment to the Loan Agreement, dated as of
February 22, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by $900,000;
WHEREAS pursuant to the Second Amendment to the Loan Agreement, dated as of
March 2, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS pursuant to the Third Amendment to the Loan Agreement, dated as of
March 15, 1999 among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS the Borrower has informed the Agent and the Lenders that it has
retained CKM LLC ("CKM") for the purposes of selling, in a single transaction
---
or series of transactions, all or substantially all of the assets of the
Borrower (each such transaction, a "Sale") and that CKM has, is, and will be
----
providing the Borrower with such services as necessary to effectuate one or more
Sales;
WHEREAS the Borrower has requested that the Lenders lend to the Borrower an
additional $2,000,000 pursuant to the Loan Agreement, as amended by this Fourth
Amendment, and the Lenders have agreed to do so, but only on the terms and
subject to the conditions set forth in this Fourth Amendment;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the Loan
-- -------------
Agreement are used herein as therein defined.
2. Amendments.
(a) Section 1.1 of the Loan Agreement is hereby amended by amending the
following definitions in their entirety to read as follows:
"Commitment": as to any Lender, collectively, such Lender's Initial
----------
Commitment, Supplemental Commitment, Second Supplemental Commitment, Third
Supplemental Commitment, and Fourth Supplemental Commitment.
"Loan": collectively, the Initial Loan, the Supplemental Loan, the
----
Second Supplemental Loan, the Third Supplemental Loan, and the Fourth
Supplemental Loan.
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical order:
"Fourth Supplemental Closing Date": the date on which the
--------------------------------
conditions precedent to the effectiveness of the Fourth Amendment set
forth in Section 3 of the Fourth Amendment shall have been satisfied
or waived.
"Fourth Supplemental Commitment": as to any Lender, its
------------------------------
obligation to make a Fourth Supplemental Loan to the Borrower pursuant
to Section 2.1(b) in the amount set forth opposite such Lender's name
on Schedule I under the caption "Fourth Supplemental Loan".
"Fourth Supplemental Note Endorsement": with respect to the Note
------------------------------------
of each Lender, the promissory note endorsement made by the Borrower,
substantially in the form of Exhibit A to this Fourth Amendment,
modifying the Note of such Lender (as in effect prior to the Fourth
Supplemental Closing Date) to take account of the Fourth Supplemental
Commitment of such Lender.
"Fourth Supplemental Loan": as to any Lender, the term loan made
------------------------
by such Lender on the Fourth Supplemental Closing Date pursuant to the
Fourth Supplemental Commitment of such Lender.
(c) Section 2.1 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.1 to
read as follows:
"2.1 Commitments. (a) Each Lender made an Initial Loan to the
-----------
Borrower on the Closing Date in an amount equal to the amount of the
Initial Commitment of such Lender. Each Lender made a Supplemental Loan to
the Borrower on the Supplemental Closing Date in an amount equal to the
amount of the Supplemental Commitment of such Lender. Each Lender made a
Second Supplemental Loan to the Borrower on the Second Supplemental Closing
Date in an amount equal to the amount of the Second Supplemental Commitment
of such Lender. Each Lender made a Third Supplemental Loan to the Borrower
on the Third Supplemental Closing Date in an amount equal to the amount of
the Third Supplemental Commitment of such Lender.
(b) Subject to the terms and conditions hereof, each Lender severally
agrees to make a Fourth Supplemental Loan to the Borrower on the Fourth
Supplemental Closing Date in an amount not to exceed the amount of the
Fourth Supplemental Commitment of
such Lender then in effect; provided that the Fourth Supplemental
--------
Commitments shall terminate at 3:00 p.m., New York City time, on March 30,
1999, if the Fourth Supplemental Loans have not been made prior to that
time.
(d) Section 2.2 of the Loan Agreement is hereby amended by deleting the
parenthetical phrase "(such promissory note, as the same may be supplemented
from time to time (including by a Supplemental Note Endorsement, a Second
Supplemental Note Endorsement and a Third Supplemental Note Endorsement), a
"Note") and substituting in lieu thereof the phrase "(such promissory note, as
----
the same may be supplemented from time to time (including by a Supplemental Note
Endorsement, a Second Supplemental Note Endorsement, a Third Supplemental Note
Endorsement, and a Fourth Supplemental Note Endorsement), a "Note").
----
(e) Section 2.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.3 to
read as follows:
"2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time) on the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, the Third Supplemental
Closing Date, or the Fourth Supplemental Closing Date, as applicable,
requesting that the Lenders make Initial Loans on the Closing Date,
Supplemental Loans on the Supplemental Closing Date, Second Supplemental
Loans on the Second Supplemental Closing Date, Third Supplemental Loans on
the Third Supplemental Closing Date, or Fourth Supplemental Loans on the
Fourth Supplemental Closing Date, as applicable, and specifying (i) the
Closing Date, the Supplemental Closing Date, the Second Supplemental
Closing Date, the Third Supplemental Closing Date, or the Fourth
Supplemental Closing Date, as applicable, and (ii) the amount to be
borrowed. Not later than 11:00 a.m. on the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, the Third Supplemental
Closing Date, or the Fourth Supplemental Closing Date, as applicable, each
Lender shall make available to the Agent at its office or to the account
maintained by it, as specified in Section 10.2, the amount of such Lender's
Initial Loan, Supplemental Loan, Second Supplemental Loan, Third
Supplemental Loan, or Fourth Supplemental Loan, as applicable, in
immediately available funds. The Agent shall on such date make available
to the Borrower the aggregate of the amounts made available to the Agent by
the Lenders, to such account of the Borrower as may be specified by the
Borrower in writing to the Agent.
(f) Section 2.12 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.12 to
read as follows:
"2.12 Use of Loan Proceeds. The Borrower shall use the proceeds of
--------------------
the Supplemental Loan, the Second Supplemental Loan, the Third Supplemental
Loan, and the Fourth Supplemental Loan, solely for the purposes set forth
on Schedule 2.12 hereto.
(g) Schedule I is hereby amended by deleting such Schedule in its entirety
and substituting in lieu thereof Schedule I to this Fourth Amendment.
(h) Schedule 2.12 is hereby amended by deleting such Schedule in its
entirety and substituting in lieu thereof Schedule 2.12 to this Fourth
Amendment.
3. Effectiveness. This Fourth Amendment shall become effective upon:
-------------
(a) receipt by the Agent of evidence satisfactory to the Agent that this
Fourth Amendment has been executed and delivered by the Borrower, the Required
Lenders and each of the Subsidiary Guarantors; and
(b) for the account of each Lender having a Fourth Supplemental
Commitment, a Fourth Supplemental Note Endorsement of the Borrower conforming to
the requirements hereof and executed by a duly authorized officer of the
Borrower.
4. Representations and Warranties. To induce the Agent and the Lenders to
------------------------------
enter into this Fourth Amendment and to lend the amount of the Fourth
Supplemental Loan, the Borrower hereby represents and warrants to the Agent and
the Lenders that, after giving effect to the amendments provided for herein, the
representations and warranties contained in the Loan Agreement and the other
Loan Documents will be true and correct in all material respects as if made on
and as of the date hereof and that no Default or Event of Default will have
occurred and be continuing.
5. Release. For and in consideration of the agreements contained in this
-------
Fourth Amendment and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, the Borrower and the
Subsidiary Guarantors hereby do release and forever discharge the Lenders and
the Agent and their respective directors, officers, employees, agents, and
attorneys, from any and all claims, damages, liabilities, actions, causes of
actions, and suits, of every kind and nature whatsoever, arising out of, or in
any way related to, the Loan Agreement, as amended hereby, the Note, the other
Loan Documents and all agreements, documents and instruments related to any of
the foregoing, whether now known or unknown, which the Borrower and the
Subsidiary Guarantors have, own or hold, or at any time previously had, owned or
held, or at any time in the future may have, own or hold.
6. No Other Amendments. Except as expressly amended hereby and by the
-------------------
Fourth Supplemental Note Endorsement, the Loan Agreement, the Notes and the
other Loan Documents shall remain in full force and effect in accordance with
their respective terms, without any waiver, amendment or modification of any
provision thereof.
7. Counterparts. This Fourth Amendment may be executed by one or more
------------
of the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Borrower agrees to pay and reimburse the Agent for all
--------
of the out-of-pocket costs and expenses incurred by the Agent in connection with
the preparation, execution and delivery of this Fourth Amendment, including,
without limitation, the fees and disbursements of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
counsel to the Agent.
9. Applicable Law. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed and delivered as of the day and year first above written.
HEALTHCOR HOLDINGS, INC.
By:_______________________________
Title:
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION,
as Agent
By:_______________________________
Title:
The undersigned Lenders hereby consent and agree to the foregoing Fourth
Amendment:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:_______________________________
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:_______________________________
Title:
The undersigned guarantors hereby consent and agree to the foregoing Fourth
Amendment:
HEALTHCOR, INC.
By:_______________________________
Title:
HEALTHCOR OXYGEN & MEDICAL EQUIPMENT, INC.
By:_______________________________
Title:
HEALTHCOR PHARMACY, INC.
By:_______________________________
Title:
PHHN, INC.
By:_______________________________
Title:
HEALTHCOR REHABILITATION SERVICES, INC.
By:_______________________________
Title:
HC PERSONNEL RESOURCES, INC.
By:_______________________________
Title:
CARENETWORK, INC.
By:_______________________________
Title:
Schedule I
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
Second Third
Initial Loan Supplemental Supplemental Supplemental
Lender and Lending Offices Loan Loan Loan
--------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Management $ 5,000,000 $ 900,000 $2,000,000 $2,000,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $ 1,000,000 $ 0 $ 0 $ 0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------------------------------------------------
Total: $6,000,000.00 $900,000.00 $2,000,000 $2,000,000
============= =========== ========== ==========
--------------------------------------------------------------------------------------------------------------------------
Fourth
Supplemental
Lender and Lending Offices Loans
-----------------------------------------------------------------
Credit Suisse First Boston Management $2,000,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $ 0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------
Total: $2,000,000
==========
Schedule 2.12
USE OF LOAN PROCEEDS
I. USE OF SUPPLEMENTAL LOAN PROCEEDS
(a) $600,000 to cover overfunding under the HCFP Loan Agreement.
(b) $300,000 to cover the retention fee of The ▇▇▇▇▇▇▇▇ Company, subject to
receipt by the Borrower of approval of its Board of Directors for such
retention and expenditure.
II. USE OF SECOND SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall apply all of the proceeds from the Second Supplemental
Loan solely towards the payment of the following expenses:
Expense Reports $272,510
Insurance $ 49,733
IT $ 85,800
Leases $700,955
Notes $212,941
Office Supplies $ 15,079
Professional $146,245
Settlements $ 0
Suppliers $819,785
Service Providers $ 53,967
Temp. Services and Related $ 9,500
Utilities $ 20,000
Miscellaneous $ 21,046
HHCA $ 0
Payroll and related $ 0
III. USE OF THIRD SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall apply all of the proceeds from the Third Supplemental
Loan solely towards the payment of the following expenses:
Expense Reports $ 30,000
Insurance $ 0
IT $ 40,000
Leases $ 899,177
Notes $ 146,222
Office Supplies $ 5,000
Professional $ 354,000
Settlements $ 33,700
Suppliers $1,028,525
Service Providers $ 86,800
Temp Services and Related $ 16,000
Utilities $ 164,800
Miscellaneous $ 170,130
HHCA $ 125,000
Payroll and Related $1,500,000
IV. USE OF FOURTH SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall all apply all of the proceeds from the Fourth
Supplemental Loan solely towards the following expenses:
See Attached
FORM OF FOURTH SUPPLEMENTAL NOTE ENDORSEMENT
March 30, 1999
New York, New York
The undersigned Borrower hereby agrees with CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION (the "Lender") that the Note (as amended, modified, or
------
supplemented prior to the date hereof) of the Borrower, dated December 23, 1998,
in the original principal amount of $9,900,000.00 (the "Note"), to which this
----
Fourth Supplemental Note Endorsement is attached, is hereby amended by (a)
deleting the amount "$9,900,000.00" where it first occurs in the Note and
substituting in lieu thereof the amount "$11,900,000.00", and (b) deleting the
first paragraph of the Note and substituting in lieu thereof the following
paragraph:
"FOR VALUE RECEIVED, the undersigned HEALTHCOR HOLDINGS, INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to
--------
pay to the order of CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION (the
"Lender"), at the office of Credit Suisse First Boston Management
------
Corporation located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States of America and in immediately available
funds, the principal amount of ELEVEN MILLION NINE HUNDRED THOUSAND DOLLARS
($11,900,000.00). The principal amount of this Note shall be payable in a
single installment payable on the Maturity Date."
This Fourth Supplemental Note Endorsement is given as a rearrangement and
amendment of the obligations of the Borrower to the Lender under the Note and is
not given in substitution therefor or extinguishment thereof. Except as
expressly amended by this Fourth Supplemental Note Endorsement, all of the terms
and conditions of the Note shall continue in full force and effect. This Fourth
Supplemental Note Endorsement shall constitute part of the Note and the Lender
is hereby authorized to attach this Fourth Supplemental Note Endorsement to the
Note and to insert the following legend on the face of the Note: "This Note has
been amended pursuant to the Fourth Supplemental Note Endorsement dated March
30, 1999."
Borrower:
--------
HEALTHCOR HOLDINGS, INC.
By: ______________________________
Name:
Title:
Lender: CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION
------
By: ______________________________
Name:
Title:
Execution Copy
FIFTH AMENDMENT
FIFTH AMENDMENT, dated as of April 13, 1999 (this "Fifth Amendment"), to
---------------
the Convertible Loan Agreement, dated as of December 23, 1998 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Loan
----
Agreement"), among HEALTHCOR HOLDINGS, INC., (the "Borrower"), the several
--------
lenders from time to time parties thereto (the "Lenders") and CREDIT SUISSE
-------
FIRST BOSTON MANAGEMENT CORPORATION, as agent (in such capacity, the "Agent")
-----
for the Lenders.
RECITALS
WHEREAS pursuant to the Loan Agreement, the Lenders made the Loan in the
amount of $6,000,000 thereunder;
WHEREAS pursuant to the Amendment to the Loan Agreement, dated as of
February 22, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by $900,000;
WHEREAS pursuant to the Second Amendment to the Loan Agreement, dated as of
March 2, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS pursuant to the Third Amendment to the Loan Agreement, dated as of
March 15, 1999 among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS pursuant to the Fourth Amendment to the Loan Agreement, dated as of
March 30, 1999, among the Borrower, the Lenders, and the Agent, the Loan
Agreement was amended to increase the Loan made thereunder by an additional
$2,000,000;
WHEREAS the Borrower has informed the Agent and the Lenders that it has
retained CKM LLC ("CKM") for the purposes of selling, in a single transaction
---
or series of transactions, all or substantially all of the assets of the
Borrower (each such transaction, a "Sale") and that CKM has, is, and will be
----
providing the Borrower with such services as necessary to effectuate one or more
Sales;
WHEREAS the Borrower has requested that the Lenders lend to the Borrower an
additional $1,200,000 pursuant to the Loan Agreement, as amended by this Fifth
Amendment, and the Lenders have agreed to do so, but only on the terms and
subject to the conditions set forth in this Fifth Amendment;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
-------------
Loan Agreement are used herein as therein defined.
2. Amendments.
(a) Section 1.1 of the Loan Agreement is hereby amended by amending the
following definitions in their entirety to read as follows:
"Commitment": as to any Lender, collectively, such Lender's Initial
----------
Commitment, Supplemental Commitment, Second Supplemental Commitment, Third
Supplemental Commitment, Fourth Supplemental Commitment, and Fifth
Supplemental Commitment.
"Loan": collectively, the Initial Loan, the Supplemental Loan, the
----
Second Supplemental Loan, the Third Supplemental Loan, the Fourth
Supplemental Loan, and the Fifth Supplemental Loan.
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical order:
"Fifth Supplemental Closing Date": the date on which the
-------------------------------
conditions precedent to the effectiveness of the Fifth Amendment set
forth in Section 3 of the Fifth Amendment shall have been satisfied or
waived.
"Fifth Supplemental Commitment": as to any Lender, its
-----------------------------
obligation to make a Fifth Supplemental Loan to the Borrower pursuant
to Section 2.1(b) in the amount set forth opposite such Lender's name
on Schedule I under the caption "Fifth Supplemental Loan".
"Fifth Supplemental Note Endorsement": with respect to the Note
-----------------------------------
of each Lender, the promissory note endorsement made by the Borrower,
substantially in the form of Exhibit A to this Fifth Amendment,
modifying the Note of such Lender (as in effect prior to the Fifth
Supplemental Closing Date) to take account of the Fifth Supplemental
Commitment of such Lender.
"Fifth Supplemental Loan": as to any Lender, the term loan made
-----------------------
by such Lender on the Fifth Supplemental Closing Date pursuant to the
Fifth Supplemental Commitment of such Lender.
(c) Section 2.1 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.1 to
read as follows:
"2.1 Commitments. (a) Each Lender made an Initial Loan to the
-----------
Borrower on the Closing Date in an amount equal to the amount of the
Initial Commitment of such Lender. Each Lender made a Supplemental Loan to
the Borrower on the Supplemental Closing Date in an amount equal to the
amount of the Supplemental Commitment of such Lender. Each Lender made a
Second Supplemental Loan to the Borrower on the Second Supplemental Closing
Date in an amount equal to the amount of the Second
-2-
Supplemental Commitment of such Lender. Each Lender made a Third
Supplemental Loan to the Borrower on the Third Supplemental Closing Date in
an amount equal to the amount of the Third Supplemental Commitment of such
Lender. Each Lender made a Fourth Supplemental Loan to the Borrower on the
Fourth Supplemental Closing Date in an amount equal to the amount of the
Fourth Supplemental Commitment of such Lender.
(b) Subject to the terms and conditions hereof, each Lender severally
agrees to make a Fifth Supplemental Loan to the Borrower on the Fifth
Supplemental Closing Date in an amount not to exceed the amount of the
Fifth Supplemental Commitment of such Lender then in effect; provided that
--------
the Fifth Supplemental Commitments shall terminate at 3:00 p.m., New York
City time, on April 13, 1999, if the Fifth Supplemental Loans have not been
made prior to that time.
(d) Section 2.2 of the Loan Agreement is hereby amended by deleting the
parenthetical phrase "(such promissory note, as the same may be supplemented
from time to time (including by a Supplemental Note Endorsement, a Second
Supplemental Note Endorsement, a Third Supplemental Note Endorsement, and a
Fourth Supplemental Note Endorsement), a "Note") and substituting in lieu
----
thereof the phrase "(such promissory note, as the same may be supplemented from
time to time (including by a Supplemental Note Endorsement, a Second
Supplemental Note Endorsement, a Third Supplemental Note Endorsement, a Fourth
Supplemental Note Endorsement, and a Fifth Supplemental Note Endorsement), a
"Note").
----
(e) Section 2.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.3 to
read as follows:
"2.3 Procedure for Borrowing. The Borrower shall give the Agent
-----------------------
irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time) on the Closing Date, the Supplemental
Closing Date, the Second Supplemental Closing Date, the Third Supplemental
Closing Date, the Fourth Supplemental Closing Date, or the Fifth
Supplemental Closing Date, as applicable, requesting that the Lenders make
Initial Loans on the Closing Date, Supplemental Loans on the Supplemental
Closing Date, Second Supplemental Loans on the Second Supplemental Closing
Date, Third Supplemental Loans on the Third Supplemental Closing Date,
Fourth Supplemental Loans on the Fourth Supplemental Closing Date, or Fifth
Supplemental Loans on the Fifth Supplemental Closing Date, as applicable,
and specifying (i) the Closing Date, the Supplemental Closing Date, the
Second Supplemental Closing Date, the Third Supplemental Closing Date, the
Fourth Supplemental Closing Date, or the Fifth Supplemental Closing Date,
as applicable, and (ii) the amount to be borrowed. Not later than 11:00
a.m. on the Closing Date, the Supplemental Closing Date, the Second
Supplemental Closing Date, the Third Supplemental Closing Date, the Fourth
Supplemental Closing Date, or the Fifth Supplemental Closing Date, as
applicable, each Lender shall make available to the Agent at its office or
to the account maintained by it, as specified in Section 10.2, the amount
of such Lender's Initial Loan, Supplemental Loan, Second Supplemental Loan,
Third Supplemental Loan, Fourth Supplemental Loan, or Fifth Supplemental
Loan as applicable, in immediately available funds. The Agent shall on
such date make available to the Borrower the aggregate of the
amounts made available to the Agent by the Lenders, to such account of the
Borrower as may be specified by the Borrower in writing to the Agent.
(f) Section 2.12 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and substituting in lieu thereof a new Section 2.12 to
read as follows:
"2.12 Use of Loan Proceeds. The Borrower shall use the proceeds of
--------------------
the Supplemental Loan, the Second Supplemental Loan, the Third Supplemental
Loan, the Fourth Supplemental Loan, and the Fifth Supplemental Loan solely
for the purposes set forth on Schedule 2.12 hereto.
(g) Schedule I is hereby amended by deleting such Schedule in its entirety
and substituting in lieu thereof Schedule I to this Fifth Amendment.
(h) Schedule 2.12 is hereby amended by deleting such Schedule in its
entirety and substituting in lieu thereof Schedule 2.12 to this Fifth Amendment.
3. Effectiveness. This Fifth Amendment shall become effective upon:
-------------
(a) receipt by the Agent of evidence satisfactory to the Agent that this
Fourth Amendment has been executed and delivered by the Borrower, the Required
Lenders and each of the Subsidiary Guarantors; and
(b) for the account of each Lender having a Fifth Supplemental Commitment,
a Fifth Supplemental Note Endorsement of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the Borrower.
4. Representations and Warranties. To induce the Agent and the Lenders to
------------------------------
enter into this Fifth Amendment and to lend the amount of the Fifth Supplemental
Loan, the Borrower hereby represents and warrants to the Agent and the Lenders
that, after giving effect to the amendments provided for herein, the
representations and warranties contained in the Loan Agreement and the other
Loan Documents will be true and correct in all material respects as if made on
and as of the date hereof and that no Default or Event of Default will have
occurred and be continuing.
5. Release. For and in consideration of the agreements contained in this
-------
Fifth Amendment and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, the Borrower and the
Subsidiary Guarantors hereby do release and forever discharge the Lenders and
the Agent and their respective directors, officers, employees, agents, and
attorneys, from any and all claims, damages, liabilities, actions, causes of
actions, and suits, of every kind and nature whatsoever, arising out of, or in
any way related to, the Loan Agreement, as amended hereby, the Note, the other
Loan Documents and all agreements, documents and instruments related to any of
the foregoing, whether now known or unknown, which the Borrower and the
Subsidiary Guarantors have, own or hold, or at any time previously had, owned or
held, or at any time in the future may have, own or hold.
6. No Other Amendments. Except as expressly amended hereby and by the
-------------------
Fifth Supplemental Note Endorsement, the Loan Agreement, the Notes and the other
Loan Documents
-4-
shall remain in full force and effect in accordance with their respective terms,
without any waiver, amendment or modification of any provision thereof.
7. Counterparts. This Fifth Amendment may be executed by one or more of
------------
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Borrower agrees to pay and reimburse the Agent for all
--------
of the out-of-pocket costs and expenses incurred by the Agent in connection with
the preparation, execution and delivery of this Fifth Amendment, including,
without limitation, the fees and disbursements of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
counsel to the Agent.
9. Applicable Law. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
be duly executed and delivered as of the day and year first above written.
HEALTHCOR HOLDINGS, INC.
By:_______________________________
Title:
CREDIT SUISSE FIRST BOSTON MANAGEMENT
CORPORATION,
as Agent
By:_______________________________
Title:
-6-
The undersigned Lenders hereby consent and agree to the foregoing Fifth
Amendment:
CREDIT SUISSE FIRST BOSTON MANAGEMENT
CORPORATION
By:_______________________________
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:_______________________________
Title:
-7-
The undersigned guarantors hereby consent and agree to the foregoing Fifth
Amendment:
-8-
HEALTHCOR, INC.
By:_______________________________
Title:
HEALTHCOR OXYGEN & MEDICAL
EQUIPMENT, INC.
By:_______________________________
Title:
HEALTHCOR PHARMACY, INC.
By:_______________________________
Title:
PHHN, INC.
By:_______________________________
Title:
HEALTHCOR REHABILITATION
SERVICES, INC.
By:_______________________________
Title:
HC PERSONNEL RESOURCES, INC.
By:_______________________________
Title:
CARENETWORK, INC.
By:_______________________________
Title:
-9-
Schedule I
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
Second Third Fourth Fifth
Initial Loan Supplemental Supplemental Supplemental Supplemental Supplemental
Lender and Lending Offices Loan Loan Loan Loans Loans
-----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Management $5,000,000 $900,000 $2,000,000 $2,000,000 $2,000,000 $1,200,000
Corporation
Applicable Lending Offices:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, L.P. $1,000,000 $0 $0 $0 $0 $0
Applicable Lending Offices:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
Total: $6,000,000.00 $900,000.00 $2,000,000 $2,000,000 $2,000,000 $1,200,000
============= =========== ========== ========== ========== ==========
-----------------------------------------------------------------------------------------------------------------------------------
-10-
Schedule 2.12
USE OF LOAN PROCEEDS
I. USE OF SUPPLEMENTAL LOAN PROCEEDS
(a) $600,000 to cover overfunding under the HCFP Loan Agreement.
(b) $300,000 to cover the retention fee of The ▇▇▇▇▇▇▇▇ Company, subject to
receipt by the Borrower of approval of its Board of Directors for such retention
and expenditure.
II. USE OF SECOND SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall apply all of the proceeds from the Second Supplemental
Loan solely towards the payment of the following expenses:
Expense Reports $272,510
Insurance $ 49,733
IT $ 85,800
Leases $700,955
Notes $212,941
Office Supplies $ 15,079
Professional $146,245
Settlements $ 0
Suppliers $819,785
Service Providers $ 53,967
Temp. Services and Related $ 9,500
Utilities $ 20,000
Miscellaneous $ 21,046
HHCA $ 0
Payroll and related $ 0
III. USE OF THIRD SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall apply all of the proceeds from the Third Supplemental
Loan solely towards the payment of the following expenses:
Expense Reports $ 30,000
Insurance $ 0
IT $ 40,000
Leases $ 899,177
Notes $ 146,222
Office Supplies $ 5,000
Professional $ 354,000
Settlements $ 33,700
Suppliers $1,028,525
Service Providers $ 86,800
-11-
Temp Services and Related $ 16,000
Utilities $ 164,800
Miscellaneous $ 170,130
HHCA $ 125,000
Payroll and Related $1,500,000
IV. USE OF FOURTH SUPPLEMENTAL LOAN PROCEEDS
The Borrower shall all apply all of the proceeds from the Fourth
Supplemental Loan solely towards the following expenses:
See Attached
V. USE OF FIFTH SUPPLEMENTAL LOAN PROCEEDS
See Attached
-12-
FORM OF FIFTH SUPPLEMENTAL NOTE ENDORSEMENT
April 13, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
The undersigned Borrower hereby agrees with CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION (the "Lender") that the Note (as amended, modified, or
------
supplemented prior to the date hereof) of the Borrower, dated December 23, 1998,
in the original principal amount of $11,900,000.00 (the "Note"), to which this
----
Fifth Supplemental Note Endorsement is attached, is hereby amended by (a)
deleting the amount "$11,900,000.00" where it first occurs in the Note and
substituting in lieu thereof the amount "$13,100,000.00", and (b) deleting the
first paragraph of the Note and substituting in lieu thereof the following
paragraph:
"FOR VALUE RECEIVED, the undersigned HEALTHCOR HOLDINGS, INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to
--------
pay to the order of CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION (the
"Lender"), at the office of Credit Suisse First Boston Management
------
Corporation located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States of America and in immediately available
funds, the principal amount of THIRTEEN MILLION ONE HUNDRED THOUSAND
DOLLARS ($13,100,000.00). The principal amount of this Note shall be
payable in a single installment payable on the Maturity Date."
This Fifth Supplemental Note Endorsement is given as a rearrangement and
amendment of the obligations of the Borrower to the Lender under the Note and is
not given in substitution therefor or extinguishment thereof. Except as
expressly amended by this Fifth Supplemental Note Endorsement, all of the terms
and conditions of the Note shall continue in full force and effect. This Fifth
Supplemental Note Endorsement shall constitute part of the Note and the Lender
is hereby authorized to attach this Fifth Supplemental Note Endorsement to the
Note and to insert the following legend on the face of the Note: "This Note has
been amended pursuant to the Fifth Supplemental Note Endorsement dated April 13,
1999."
Borrower:
HEALTHCOR HOLDINGS, INC.
By: ______________________________
Name:
Title:
Lender: CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By: ______________________________
Name:
Title:
-2-