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EXHIBIT 10.1
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AMENDED AND RESTATED CREDIT AGREEMENT
among
HORIZON HEALTH CORPORATION
as Parent,
HORIZON MENTAL HEALTH MANAGEMENT, INC.
as Borrower,
THE CHASE MANHATTAN BANK
(as successor in interest by merger to the Chase Bank of Texas,
National Association, formerly known as
Texas Commerce Bank National Association),
as Agent,
and
the banks named herein
15 November 2000
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TABLE OF CONTENTS
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ARTICLE I. Definitions...................................................................................5
Section 1.1. Definitions.................................................................................5
Section 1.2. Other Definitional Provisions..............................................................14
Section 1.3. Accounting Terms and Determinations........................................................14
Section 1.4. Time of Day................................................................................15
ARTICLE II. Revolving Credit Facility....................................................................15
Section 2.1. Revolving Commitments......................................................................15
Section 2.2. Revolving Notes............................................................................15
Section 2.3. Repayment of Loans; Assumption of Term Loans under the
Existing Credit Agreement..................................................................15
Section 2.4. Use of Proceeds............................................................................15
Section 2.5. Revolving Commitment Fee...................................................................15
Section 2.6. Reduction or Termination of Revolving Commitments..........................................16
ARTICLE III. [Intentionally Omitted]......................................................................16
ARTICLE IV. Interest and Fees............................................................................16
Section 4.1. Interest Rate..............................................................................16
Section 4.2. Determinations of Margins and Fees.........................................................16
Section 4.3. Payment Dates..............................................................................17
Section 4.4. Default Interest...........................................................................17
Section 4.5. Conversions and Continuations of Accounts..................................................17
Section 4.6. Computations...............................................................................18
ARTICLE V. Administrative Matters.......................................................................18
Section 5.1. Borrowing Procedure........................................................................18
Section 5.2. Minimum Amounts............................................................................18
Section 5.3. Certain Notices............................................................................18
Section 5.4. Optional Prepayments.......................................................................19
Section 5.5. Method of Payment..........................................................................19
Section 5.6. Pro Rata Treatment.........................................................................20
Section 5.7. Sharing of Payments........................................................................20
Section 5.8. Non-Receipt of Funds by Agent..............................................................20
Section 5.9. Withholding Taxes..........................................................................21
Section 5.10. Withholding Tax Exemption..................................................................21
ARTICLE VI. Yield Protection and Illegality..............................................................22
Section 6.1. Additional Costs...........................................................................22
Section 6.2. Limitation on Eurodollar Accounts..........................................................23
Section 6.3. Illegality.................................................................................23
Section 6.4. Treatment of Affected Loans................................................................23
Section 6.5. Compensation...............................................................................24
Section 6.6. Capital Adequacy...........................................................................24
Table of Contents, Page i
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ARTICLE VII. Conditions Precedent.........................................................................25
Section 7.1. Initial Loan...............................................................................25
Section 7.2. All Loans..................................................................................26
ARTICLE VIII. Representations and Warranties...............................................................26
Section 8.1. Corporate Existence........................................................................26
Section 8.2. Financial Statements.......................................................................26
Section 8.3. Corporate Action; No Breach................................................................27
Section 8.4. Operation of Business......................................................................27
Section 8.5. Litigation and Judgments...................................................................27
Section 8.6. Rights in Properties; Liens................................................................27
Section 8.7. Enforceability.............................................................................27
Section 8.8. Approvals..................................................................................27
Section 8.9. Debt.......................................................................................28
Section 8.10. Taxes......................................................................................28
Section 8.11. Margin Securities..........................................................................28
Section 8.12. ERISA......................................................................................28
Section 8.13. Disclosure.................................................................................28
Section 8.14. Subsidiaries...............................................................................28
Section 8.15. Agreements.................................................................................29
Section 8.16. Compliance with Laws.......................................................................29
Section 8.17. Investment Company Act.....................................................................29
Section 8.18. Public Utility Holding Company Act.........................................................29
Section 8.19. Environmental Matters......................................................................29
Section 8.20. Solvency...................................................................................30
Section 8.21. Benefit Received...........................................................................30
ARTICLE IX. Positive Covenants...........................................................................30
Section 9.1. Reporting Requirements.....................................................................30
Section 9.2. Maintenance of Existence; Conduct of Business..............................................32
Section 9.3. Maintenance of Properties..................................................................32
Section 9.4. Taxes and Claims...........................................................................32
Section 9.5. Insurance..................................................................................32
Section 9.6. Inspection Rights..........................................................................32
Section 9.7. Keeping Books and Records..................................................................32
Section 9.8. Compliance with Laws.......................................................................33
Section 9.9. Compliance with Agreements.................................................................33
Section 9.10. Further Assurances and Collateral Matters..................................................33
Section 9.11. ERISA......................................................................................34
ARTICLE X. Negative Covenants...........................................................................34
Section 10.1. Debt.......................................................................................34
Section 10.2. Limitation on Liens and Restrictions on Subsidiaries.......................................36
Section 10.3. Mergers, etc...............................................................................37
Section 10.4. Restrictions on Dividends and other Distributions..........................................37
Section 10.5. Investments................................................................................37
Section 10.6. Limitation on Issuance of Capital Stock....................................................40
Section 10.7. Transactions With Affiliates...............................................................40
Section 10.8. Disposition of Assets......................................................................40
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Section 10.9. Lines of Business..........................................................................40
Section 10.10. Sale and Leaseback.........................................................................40
Section 10.11. Prepayment of Debt.........................................................................40
ARTICLE XI. Financial Covenants..........................................................................40
Section 11.1. Consolidated Net Worth.....................................................................40
Section 11.2. Indebtedness to Capitalization.............................................................41
Section 11.3. Fixed Charge Coverage......................................................................41
Section 11.4. Indebtedness to Adjusted EBITDA............................................................43
Section 11.5. Current Ratio..............................................................................44
ARTICLE XII. Default......................................................................................44
Section 12.1. Events of Default..........................................................................44
Section 12.2. Remedies...................................................................................46
Section 12.3. Performance by Agent.......................................................................47
Section 12.4. Setoff.....................................................................................47
Section 12.5. Continuance of Default.....................................................................47
ARTICLE XIII. Agent........................................................................................47
Section 13.1. Appointment, Powers and Immunities.........................................................47
Section 13.2. Rights of Agent as a Bank..................................................................48
Section 13.3. Defaults...................................................................................48
Section 13.4. Indemnification............................................................................48
Section 13.5. Independent Credit Decisions...............................................................49
Section 13.6. Several Revolving Commitments..............................................................49
Section 13.7. Successor Agent............................................................................49
Section 13.8. Agent Fee..................................................................................50
Section 13.9. Intercreditor Provisions...................................................................50
ARTICLE XIV. Miscellaneous................................................................................50
Section 14.1. Expenses...................................................................................50
Section 14.2. Indemnification............................................................................50
Section 14.3. Limitation of Liability....................................................................51
Section 14.4. No Duty....................................................................................51
Section 14.5. No Fiduciary Relationship..................................................................51
Section 14.6. Equitable Relief...........................................................................51
Section 14.7. No Waiver; Cumulative Remedies.............................................................52
Section 14.8. Successors and Assigns.....................................................................52
Section 14.9. Survival...................................................................................53
Section 14.10. Entire Agreement; Amendment and Restatement; Ratification..................................53
Section 14.11. Amendments.................................................................................55
Section 14.12. Maximum Interest Rate......................................................................55
Section 14.13. Notices....................................................................................55
Section 14.14. Governing Law; Venue of Service of Process.................................................56
Section 14.15. Counterparts...............................................................................56
Section 14.16. Severability...............................................................................56
Section 14.17. Headings...................................................................................56
Section 14.18. Non-Application of Chapter 346 of The Finance Code of Texas................................56
Section 14.19. Construction...............................................................................56
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Section 14.20. Independence of Covenants..................................................................57
Section 14.21. Waiver of Jury Trial.......................................................................57
Table of Contents, Page iv
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
"A" Revolving Note
"B" Assignment and Acceptance
"C" Compliance Certificate
"D" Parent Joinder Agreement
INDEX TO SCHEDULES
Schedule Description of Schedule
1.1(a) Revolving Commitments
8.5 Existing Litigation
8.14 List of Subsidiaries
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
INDEX TO EXHIBITS AND SCHEDULES - Solo Page
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"), dated as
of November 15, 2000, is among HORIZON HEALTH CORPORATION, a corporation duly
organized and validly existing under the laws of the State of Delaware
("Parent"), HORIZON MENTAL HEALTH MANAGEMENT, INC., a corporation duly
organized and validly existing under the laws of the State of Texas
("Borrower"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Bank" and, collectively, the "Banks"), and THE CHASE
MANHATTAN BANK (as successor in interest by merger to the Chase Bank of Texas,
National Association, formerly known as Texas Commerce Bank National
Association), individually as a Bank and as agent for itself and the other
Banks (in its capacity as agent, together with its successors in such capacity,
the "Agent").
RECITALS:
A. Parent, Texas Commerce Bank National Association ("Texas Commerce"),
individually as a bank and as the agent, Bank of America National Trust and
Savings Association (now known as Bank of America, N.A. and herein, "Bank of
America"), Comerica Bank-Texas ("Comerica"), Cooperatieve Centrale Raiffeisen -
Boerenleenbank B.A., "Rabobank Nederland," New York Bank ("Rabobank"), and
Banque Paribas, Houston Agency ("Banque Paribas") entered into a Credit
Agreement dated as of December 9, 1997 (as the same has been amended or
otherwise modified, the "Existing Credit Agreement"). Pursuant to the Existing
Credit Agreement:
1. Parent entered into: (a) a Security Agreement, dated as of
December 9, 1997 with the Agent (as the same has been and may hereafter
be amended or otherwise modified, the "Parent Security Agreement"), and
(b) a Pledge and Security Agreement, dated as of December 9, 1997 with
the Agent (as the same has been and may hereafter be amended or
otherwise modified, the "Parent Pledge Agreement");
2. Each of Horizon Mental Health Management, Inc., a Texas
corporation ("Borrower"), Mental Health Outcomes, Inc., a Delaware
corporation ("Outcomes"), HHG Colorado, Inc., a Colorado corporation
("Colorado"), HHMC Partners, Inc., a Delaware corporation ("Partners"),
Geriatric Medical Care, Inc., a Tennessee corporation ("Geriatric"),
Specialty Rehab Management, Inc., a Delaware corporation ("Specialty"),
Acorn Behavioral Healthcare Management Corporation, a Pennsylvania
corporation ("Acorn"), and Florida Professional Psychological Services,
Inc. ("FPPS") entered into (a) an Unconditional Guaranty Agreement,
dated as of December 9, 1997 in favor of the Agent and the banks party
to the Existing Credit Agreement (as the same has been and may
hereafter be amended or otherwise modified, the "Guaranty "), and (b) a
Security Agreement dated as of December 9, 1997 with the Agent (as the
same has been and may hereafter be amended or otherwise modified, the
"Subsidiary Security Agreement");
3. Borrower entered into a Pledge and Security Agreement dated
as of December 9, 1997 with the Agent (as amended by that certain
Pledge Amendment dated May 19, 1998 and as the same has otherwise been
and may hereafter be amended or otherwise modified, the "Borrower
Pledge Agreement.")
B. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, FPPS, Bank of America, Comerica, Rabobank, Banque Paribas, and Chase
Bank of Texas, National Association (formerly known as Texas Commerce Bank
National Association and herein, "Chase Texas"),
AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
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individually as a bank and as agent for itself and the other banks, and North
Control Development Company, a Texas corporation ("NCD") entered into a Consent
Letter, dated as of April 30, 1998, consenting to the acquisition by Parent of
FPM Behavioral Health, Inc. ("FPMBH").
C. In connection with the acquisition of FPMBH:
1. Parent entered into a Pledge Amendment, dated as of June 1,
1998, amending Schedule 1 to the Parent Pledge Agreement to add
Parent's ownership interest in FPMBH thereon.
2. FPMBH entered into (a) a Subsidiary Joinder Agreement,
dated as of June 1, 1998, joining into the Subsidiary Security
Agreement and the Guaranty as a guarantor and debtor thereunder, and
(b) a Pledge and Security Agreement, dated as of June 1, 1998, pledging
to the Agent its interests in its subsidiaries (as the same has been
and may hereafter be amended or otherwise modified, the "FPMBH Pledge
Agreement").
3. Each of FPMBH's subsidiaries, Arizona Psychiatric
Affiliates, Inc. ("APA"), Florida Psychiatric Associates, Inc. ("FPA"),
FPM/Hawaii, Inc. ("Hawaii"), Florida Psychiatric Management, Inc.
("FPMI"), FPM of Louisiana, Inc. ("Louisiana"), FPM Management, Inc.
("FPMMI"), FPM of Ohio, Inc. ("Ohio"), FPM of Utah, Inc. ("Utah"),
FPM/Southeast, Inc. ("Southeast"), FPM of West Virginia, Inc. ("West
Virginia"), FPMBP of Arizona, Inc. ("Arizona"), FPMBH Clinical
Services, Inc. ("Clinical"), and FPMBH of Texas, Inc. ("Texas"),
entered into a separate Subsidiary Joinder Agreement, dated as of June
1, 1998, joining into the Subsidiary Security Agreement and the
Guaranty as a guarantor and debtor thereunder.
4. Each of FPMI and Clinical entered into separate Pledge and
Security Agreements, dated as of June 1, 1998, pledging the stock of
their respective subsidiaries.
D. FPMBH changed its name to Horizon Behavioral Services, Inc.
(hereinafter referred to as "HBS") and in connection with the name change,
Parent entered into a Pledge Amendment dated as of August 1, 1998 amending
Schedule 1 to the Parent Pledge Agreement to add Parent's ownership of HBS
thereon.
E. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, FPPS, NCD, Bank of America, Comerica, Rabobank, Banque Paribas, and
Chase Texas, individually as a bank and as agent for itself and the other banks,
entered into a Amendment Letter, dated as of June 30, 1998, amending the
Existing Credit Agreement.
F. The following corporate restructuring have occurred:
1. FPPS merged with and into HBS effective as of June 4, 1998
("FPPS Merger").
2. Hawaii, FPMMI, Louisiana, Ohio, Utah, West Virginia, and
Southeast were merged with and into HBS effective as of September 1,
1998 (the "FPM Mergers").
3. Parent contributed all the capital stock of Acorn to HBS,
Clinical was merged with and into FPA effective as of September 10,
1998 and APA was merged with and into FPA effective as of September 24,
1998 (collectively, the "Florida Psychiatric Mergers"). As a result of
the merger of FPMMI into HBS, the pledge and security agreement
executed by FPMI is no longer effective because FPMI no longer has any
subsidiaries. As a result of the Florida Psychiatric Mergers, Clinical
has been merged out of existence and the survivor of such mergers FPA
does not have any subsidiaries. Therefore, the pledge and security
agreement executed by Clinical is no longer effective.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
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G. HBS entered into a Pledge Amendment, dated as of September 10, 1998,
amending Schedule 1 to the FPMBH Pledge Agreement to add HBS's 100% ownership
interest in Acorn and FPA acquired in connection with the contribution described
in clause F.3. above and the Florida Psychiatric Mergers.
H. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, HBS, FPA, FPMI, Arizona, Texas, NCD, Bank of America, Comerica,
Rabobank, Banque Paribas, and Chase Texas, individually as a bank and as agent
for the banks, entered into a Second Amendment to Credit Agreement and Third
Amendment to Letter Loan Agreement, dated as of September 30, 1998(the "Second
Amendment") pursuant to which: (i) certain provisions of the Credit Agreement
were amended, (ii) the banks consented to HBS's acquisition of all of the shares
of Choice Health, Inc. ("Choice"), (iii) the banks consented to Parent's
contribution to HBS of one hundred percent (100%) of the issued and outstanding
shares of capital stock of Acorn, (iv) the banks consented to the Florida
Psychiatric Mergers and FPMBH Merger, and (v) the banks consented to the release
and return of the stock powers and the shares of stock of FPPS, Hawaii, FPMMI,
Louisiana, Ohio, Utah, West Virginia, Southeast, Clinical, and APA. In
connection with the Second Amendment:
1. HBS (formerly FPMBH) entered into a Pledge Amendment, dated
as of October 5, 1998, amending Schedule 1 to the FPMBH Pledge
Agreement to add HBS's 100% ownership interest in Choice thereto.
2. Choice entered into a Subsidiary Joinder Agreement joining
into the Subsidiary Security Agreement and the Guaranty as a guarantor
and debtor thereunder.
I. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, HBS, FPA, FPMI, Arizona, Texas, Choice, NCD, Bank of America,
Comerica, Rabobank, Banque Paribas, and Chase Texas, individually as a bank and
as agent for the banks, entered into a Third Amendment to Credit Agreement and
Fourth Amendment to Letter Loan Agreement, dated as of November 6, 1998,
amending certain provisions of the Credit Agreement.
J. HBS (formerly FPMBH) acquired 100% of the capital stock of Resources
in Employee Assistance and Corporate Health, Inc. ("Reach") and in connection
with such acquisition:
1. HBS (formerly FPMBH) entered into a Pledge Amendment, dated
as of March 31, 1999, amending Schedule 1 to the FPMBH Pledge Agreement
to add 100% of the capital stock of Reach thereto.
2. Reach entered into a Subsidiary Joinder Agreement,
dated as of March 31, 1999, joining into the Subsidiary Security
Agreement and the Guaranty as a party thereto.
K. Parent, Borrower, Outcomes, Geriatric, Specialty, Acorn, Partners,
HBS, FPA, FPMI, Texas, Choice, Reach, NCD, Bank of America, Comerica and Chase
Texas, individually as a bank and as agent for itself and the banks entered into
a Fourth Amendment to Credit Agreement and Fifth Amendment to Letter Loan
Agreement, dated as of October 12, 1999, amending certain provisions of the
Credit Agreement.
L. Parent sent a letter to Chase Texas as agent dated June 27, 2000
canceling all Revolving Commitments under the Existing Credit Agreement.
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M. Acorn was merged with and into HBS on June 2, 2000; Choice was
dissolved on January 19, 2000; Colorado was dissolved on January 19, 1999;
Arizona was merged with and into HBS on December 17, 1998; and Reach was
dissolved on August 10, 2000.
N. Borrower has created a new subsidiary, HMHM of Tennessee, Inc., a
Tennessee corporation (herein "HMHM"), HBS has created two new subsidiaries,
Horizon Behavioral Services-Colorado, Inc., a Colorado corporation ("HBS CO")
and Horizon Behavioral Services of California, Inc., a California corporation
("HBS CA"), and Texas created a new subsidiary, FPM Behavioral Health Services,
Inc., a Texas non-profit corporation ("FPM"). In connection with the creation of
the forgoing subsidiaries:
1. each of HMHM and HBS CO entered into a Subsidiary Joinder
Agreement, dated as of November 15, 2000, joining into the Subsidiary
Security Agreement and the Guaranty as a guarantor and debtor
thereunder;
2. Texas entered into Pledge and Security Agreement, dated as
of November 15, 2000, pledging the membership interest of FPM (the
"Texas Pledge Agreement");
3. Borrower entered into a Pledge Amendment, dated as of
November 15, 2000, amending Schedule 1 to the Pledge Agreement to add
100% of the capital stock of HMHM thereto; and
4. HBS entered into a Pledge Amendment, dated as of November
15, 2000, amending Schedule 1 to the FPMBH Pledge Agreement to add 100%
of the capital stock of HBS CO and HBS CA thereto.
O. As a result of the transactions described above, the Obligated
Parties under the Existing Credit Agreement are Borrower, Outcomes, Geriatric,
Specialty, Partners, HBS (formerly FPMBH), FPA, FPMI, Texas, HBS CO and HMHM.
P. On November 15, 0000, Xxxx xx Xxxxxxx, Xxxxxxxx, Rabobank and Banque
Paribas assigned to The Chase Manhattan Bank (as successor in interest by merger
to Chase Texas and herein after "Chase") all of their respective interest in the
Existing Credit Agreement, including without limitation, all of their respective
term loans outstanding thereunder.
Q. Each of Parent, the Obligated Parties, Chase, and Agent wish to
amend and restate the Existing Credit Agreement in its entirety, as hereinafter
set forth in order to: (i) convert the term loans outstanding under the Existing
Credit Agreement to revolving loans hereunder, (ii) allow the Borrower to assume
all the obligations outstanding under the Existing Credit Agreement owed by the
Parent thereunder, (iii) add the Parent as a guarantor of all the obligations,
indebtedness and liabilities of the Borrower so assumed and otherwise arising
hereunder; (iv) provide Borrower with a revolving commitment, and (v) otherwise
modify the terms of the Existing Credit Agreement as herein set forth.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
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NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Additional Costs" has the meaning specified in Section 6.1.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by Agent to be equal to the Eurodollar Rate
for such Eurodollar Account for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 4.2.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall Agent or any Bank
be deemed an Affiliate of Parent or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of
this Agreement.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Applicable Lending Office" means for each Bank and each Type of
Account, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Account below its name on the signature pages hereof or
such other office of such Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to Borrower and Agent as the office by which its
Loans subject to Accounts of such Type are to be made and maintained.
"Applicable Rate" has the meaning set forth in Section 4.1.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by Agent pursuant to Section 14.8,
in substantially the form of Exhibit "B".
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Margin" has the meaning specified in Section 4.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate
in effect on such day. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum then most recently publicly announced from time to time by
Chase as its prime rate in effect at its Principal Office; each change in the
Prime Rate shall be effective on the date such change is
AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
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publicly announced as effective. "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as released on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so released for any day which
is a Business Day, the arithmetic average (rounded upwards to the next 1/100th
of 1%), as determined by Agent, of the quotations for the day of such
transactions received by Agent from three federal funds brokers of recognized
standing selected by it. If for any reason Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of Agent to obtain sufficient quotations in accordance with the terms
thereof, the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. The Base Rate may not be any Bank's best or favored rate
and the Banks may make other loans to other Persons at rates lower than the
Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning specified in the introductory paragraph of
this Agreement.
"Borrower Pledge Agreement" has the meaning specified in the Recitals
to this Agreement.
"Business Day" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of Texas or the
State of New York or is a day on which banking institutions located in the
State of Texas or the State of New York are closed, and (b), with respect to
all borrowings, payments, Conversions, Continuations, Interest Periods, and
notices in connection with Loans subject to Eurodollar Accounts, any day which
is a Business Day described in clause (a) above and which is also a day on
which dealings in Dollar deposits are carried out in the European interbank
market.
"Calculation Period" has the meaning specified in Section 4.2.
"Capital Expenditures" means, for any period, all expenditures of
Parent and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP including all such expenditures associated with Capital
Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property, which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP. For purposes of this Agreement,
the amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Chase" means The Chase Manhattan Bank, a New York State banking
association in its individual capacity and not as Agent, as successor in
interest by merger to Chase Bank of Texas, National Association, formerly Texas
Commerce Bank National Association.
"Closing Date" means November 16, 2000.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
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"Collateral" means the property in which Liens have been granted
pursuant to the Parent Security Agreement, the Parent Pledge Agreement, the
Subsidiary Security Agreement, and the Subsidiary Pledge Agreements, whether
such Liens are now existing or hereafter arise.
"Commitment Fee Rate" means the per annum rate determined in
accordance with Section 4.2.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of the Revolving
Commitment of such Bank and the denominator of which is the aggregate amount of
the Revolving Commitments of all of the Banks.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit "C" properly completed and executed by the chief financial officer
of Parent.
"Consolidated Net Income" has the meaning specified in Section 11.3.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 4.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 4.5 or Article 6 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property
or services, except trade accounts payable of such Person arising in the
ordinary course of business that are not past due by more than ninety (90) days
or that are past due by more than ninety (90) days but are being contested in
good faith by appropriate proceedings diligently pursued; (d) all Capital Lease
Obligations of such Person; (e) all Debt or other obligations of others
Guaranteed by such Person; (f) all obligations secured by a Lien existing on
property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds, and similar instruments; (h) all liabilities of such Person in
respect of all unfunded vested benefits under any Plan; (i) all obligations of
such Person in respect of mandatory redemption or mandatory dividend rights on
capital stock (or other equity); (j) all obligations of such Person, contingent
or otherwise, for the payment of money under any non-compete, consulting,
performance based or similar agreement entered into with the seller of a Target
or any other similar arrangements providing for the deferred payment of the
purchase price for an acquisition permitted hereby or an acquisition
consummated prior to the date hereof, in each case to the extent reflected as a
liability on the balance sheet of a Person in accordance with GAAP; (k) all
obligations of such Person under any interest rate or currency swap, cap,
collar or similar hedge agreement; and (l) all other amounts which are required
to be reflected as a liability on the balance sheet of a Person in accordance
with GAAP, excluding trade accounts payable excluded from Debt pursuant to
clause (c) of this definition, accruals, deferred credits and loss
contingencies.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, or any
other amount payable by Borrower under any Loan Document which is not paid when
due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such
AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
14
amount is paid in full equal to the sum of two percent (2%) plus the Applicable
Rate for Base Rate Accounts as in effect from time to time (provided, that if
such amount in default is principal of a Loan subject to a Eurodollar Account
and the due date is a day other than the last day of an Interest Period
therefor, the "Default Rate" for such principal shall be, for the period from
and including the due date and to but excluding the last day of the Interest
Period therefor, two percent (2%) plus the interest rate for such Loan for such
Interest Period as provided in Section 4.1 hereof, and, thereafter, the rate
provided for above in this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" has the meaning specified in Section 11.3.
"Eligible Assignee" means one or more commercial bank, savings and
loan association, savings bank, finance company, insurance company, pension
fund, mutual fund, or other financial institution (whether a corporation,
partnership, or other entity) which is qualified to make Loans hereunder and
has a combined capital and surplus of at least One Hundred Million Dollars
($100,000,000).
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses,
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order, or agreement with any
Governmental Authority or other Person, arising from environmental, health, or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Parent or is under common control (within the
meaning of Section 414(c) of the Code) with Parent.
"Eurodollar Account" means a portion of a Loan that bears interest at
a rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Account for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) offered to Chase or one of its Affiliates at approximately
11:00 A.M. London time (or as soon thereafter as practicable) two Business Days
prior to the first day of such Interest Period by leading banks in the European
interbank market for Dollar deposits in immediately available funds having a
term comparable to such Interest Period and, if necessary to obtain such
offers, in an amount comparable to the principal amount of the Eurodollar
Account applicable to Agent to which such Interest Period relates. If Agent is
not participating in a Eurodollar Account during any Interest Period therefor
(pursuant to Section 6.4 hereof or for any other reason), the Eurodollar Rate
for such Account for such Interest Period shall, if necessary to obtain the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
15
Eurodollar Rate offers, be determined by reference to the amount of the Account
which Agent would have made had it been participating in such Account.
"Eurodollar Rate Margin" has the meaning specified in Section 4.2.
"Event of Default" has the meaning specified in Section 12.1.
"Extension Request" means a request from the Borrower to extend the
Revolving Termination Date to a date one year from the then effective Revolving
Termination Date, delivered in writing to the Agent ninety (90) days before the
then effective Revolving Termination Date.
"Existing Credit Agreement" has the meaning specified in the Recitals
to this Agreement.
"Federal Funds Effective Rate" has the meaning specified in the
definition of Base Rate.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period three calendar months in duration with the first such
period in any Fiscal Year beginning on the first day of September and the last
such period in any Fiscal Year ending on the last day of August.
"Fiscal Year" means twelve (12) month period beginning on the first
day of September and ending on the last day of August of the following year.
"Florida Psychiatric Mergers" has the meaning specified in the
Recitals to this Agreement.
"FPM" has the meaning specified in the Recitals to this Agreement.
"FPM Mergers" has the meaning specified in the Recitals to this
Agreement.
"FPMBH" has the meaning specified in the Recitals to this Agreement.
"FPMBH Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"FPPS" has the meaning specified in the Recitals to this Agreement.
"FPPS Merger" has the meaning specified in the Recitals to this
Agreement.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other
AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
16
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The amount of any Guarantee shall be equal to the amount
of the obligations so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"Guaranty" has the meaning specified in the Recitals to this
Agreement.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"HBS CA" has the meaning specified in the Recitals to this Agreement.
"HBS CO" has the meaning specified in the Recitals to this Agreement.
"HMHM" has the meaning specified in the Recitals to this Agreement.
"Indebtedness" has the meaning specified in Section 11.2.
"Indebtedness to Adjusted EBITDA Ratio" means the ratio of
Indebtedness to Adjusted EBITDA as determined and calculated in accordance with
Section 11.4.
"Insignificant Subsidiary" means HBS CA and FPM.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as Borrower
may select as provided in Section 4.5 or 5.1, except that each such Interest
Period which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day); (b) any Interest Period in existence under a Loan which would otherwise
extend beyond the Termination Date applicable to such Loan shall end on the
Termination Date applicable to such Loan; (c) no more than six (6) Interest
Periods shall be in effect at the same time; and (d) no Interest Period for any
Eurodollar Account shall have a duration of less than one (1) month and, if the
Interest Period would otherwise be a shorter period, the related Eurodollar
Account shall not be available hereunder.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.
"Loan Documents" means this Agreement, the Revolving Notes, the Parent
Security Agreement, the Parent Pledge Agreement, the Guaranty, the Subsidiary
Security Agreement, the Subsidiary Pledge
AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
17
Agreements, and all other promissory notes, security agreements, deeds of
trust, assignments, guaranties, letters of credit, and other instruments,
agreements, and other documentation executed and delivered pursuant to or in
connection with this Agreement, as such instruments, agreements, and other
documentation may be amended or otherwise modified.
"Loans" means, as to any Bank, the advances made by such Bank pursuant
to Section 2.1 and the term loans outstanding under the Existing Credit
Agreement as of the Closing Date, which are not being repaid but are being
assumed by the Borrower and continued as "Loans" hereunder.
"Master Assignment and Acceptance" means that certain Master
Assignment and Acceptance, dated as of November 15, 2000, executed by Chase,
Bank of America, Comerica, Rabobank and Banque Paribas pursuant to which Bank
of America, Comerica, Rabobank and Banque Paribas assigned to Chase all of
their respective interests in the Existing Credit Agreement.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of Parent and the Subsidiaries taken as a whole or (b) a material
adverse effect on the validity, perfection, priority, or ability of Agent to
enforce Agent's Lien on the Collateral or of the ability of Agent or any Bank
to enforce a material provision of the Loan Documents. In determining whether
any individual event could reasonably be expected to result in a Material
Adverse Effect, notwithstanding that such event does not itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events could
reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of non-usurious interest under applicable law that such Bank may
charge Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to Borrower at the time of such change in the
Maximum Rate. For purposes of determining the Maximum Rate under Texas law, the
applicable rate ceiling shall be the weekly ceiling described in, and computed
in accordance with Chapter 303 of the Texas Finance Code.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by Parent or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Obligated Party" means Parent, the Subsidiaries who are parties to
the Guaranty, the Subsidiary Security Agreement or a Subsidiary Pledge
Agreement or any other Person (exclusive of Borrower) who is or becomes party
to any agreement that guarantees or secures payment and performance of the
Obligations or any part thereof. Not all Subsidiaries are Obligated Parties.
AHG Partnership, HBS CA, and FPM are not Obligated Parties.
"Obligation" means all obligations, indebtedness, and liabilities of
Borrower to Agent and the Banks, or any of them, arising pursuant to any of the
Loan Documents, pursuant to any interest rate swap, interest rate caps,
interest rate collars, or other similar agreements entered into by Agent or any
Bank with Parent or any Subsidiary enabling Parent or a Subsidiary to fix or
limit its interest expense, whether now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligation of Borrower to repay the Loans, interest on the
Loans and all fees, costs, and expenses (including attorneys' fees and
expenses) provided for in the Loan Documents or such agreements enabling Parent
or any Subsidiary to fix or limit its interest expense.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 11
18
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Parent" has the meaning specified in the introductory paragraph of
this Agreement.
"Parent Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"Parent Security Agreement" has the meaning specified in the Recitals
to this Agreement.
"Permitted Acquisition" means an acquisition of a Person or its assets
in a transaction complying with the conditions set out in Section 10.5(a).
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan established or maintained by
Parent or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Principal Office" means the principal office of Agent, located at 1
Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Prohibited Transaction" means any transaction set forth in Section
406 or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not
exist a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of February, May, August
and November of each year, the first of which shall be the first such day after
the date of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of the Existing Credit Agreement in United States federal, state, or
foreign laws or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives, or requests applying to a
class of banks including such Bank of or under any United States federal or
state, or any foreign, laws or regulations (whether or not having the force of
law) by any Governmental Authority or monetary authority charged with the
interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 12
19
"Required Banks" means Banks having (a) sixty-six and two-thirds
percent (66 2/3%) or more of the Revolving Commitments or (b) if all Revolving
Commitments have terminated, sixty-six and two-thirds percent (66 2/3%) or more
of the outstanding principal amount of the Loans.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of
the Federal Reserve System in New York City with deposits exceeding One Billion
Dollars against "Eurocurrency Liabilities" as such term is used in Regulation
D. Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined or any category of extensions of credit or other assets which
include Eurodollar Accounts.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Bank on Schedule 1.1(a) hereto under the heading "Revolving Commitment" or
in the most recent Assignment and Acceptance executed by such Bank, as the same
may be reduced or terminated pursuant to Section 2.6 or 12.2. The aggregate
amount of the Revolving Commitments of all Banks equals Fifteen Million Dollars
($15,000,000).
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means November 15, 2003, unless Agent,
after receiving Borrower's Extension Request, notifies Borrower in writing of
the Banks' agreement to extend the Revolving Termination Date to a date one
year from the then effective Revolving Termination Date, in which case the
Revolving Termination Date shall mean the date one year from the then effective
Revolving Termination Date; provided that in Agent's written notification to
Borrower of the Banks' agreement to extend the Revolving Termination Date the
Agent may require the Borrower to pay a fee to be determined by Agent at the
time of the extension; provided further, that nothing contained herein shall be
considered a commitment or other agreement by any Bank to extend the Revolving
Termination Date beyond November 15, 2003 or impair any Bank's right to
decline, in their sole and absolute discretion at any time, to extend the
Revolving Termination Date.
"Security Documents" means each of the Parent Pledge Agreement, the
Parent Security Agreement, the Subsidiary Pledge Agreements, the Subsidiary
Security Agreement, and all amendments and modifications thereto.
"Second Amendment" has the meaning specified in the Recitals to this
Agreement.
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by
Parent or one or more of the Subsidiaries or by Parent and one or more of the
Subsidiaries.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
20
"Subsidiary Joinder Agreement" means an agreement which has been or
will be executed by a Subsidiary as required hereby adding it as a party to the
Guaranty and the Subsidiary Security Agreement, in substantially the form of
Exhibit "H" to the Existing Credit Agreement, as the same may be amended or
otherwise modified.
"Subsidiary Pledge Agreements" means each of the pledge and security
agreements between a Subsidiary and the Agent for the benefit of itself and the
Banks, in substantially the form of Exhibit "F" to the Existing Credit
Agreement, as the same may be amended or otherwise modified, and includes as of
the Closing Date each of the following:
(a) the Borrower Pledge Agreement;
(b) the FPMBH Pledge Agreement; and
(c) the Texas Pledge Agreement.
"Subsidiary Security Agreement" has the meaning specified in the
Recitals.
"Target" means the Person who is to be acquired or whose assets are to
be acquired in an acquisition governed by Section 10.5.
"Termination Date" means the Revolving Termination Date or such
earlier date on which the Revolving Commitments terminate as provided in this
Agreement.
"Texas Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Texas.
Section 1.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder", and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 8.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 8.2 hereof. To enable the ready and consistent
determination of compliance by Parent with its obligations under this Agreement,
Parent will not change the manner in which either the last day of its Fiscal
Year or the last days of the first three Fiscal Quarters of its Fiscal Year is
calculated. In the event any changes in accounting principles required by GAAP
or recommended by Parent's certified public accountants and implemented by
Parent occur and such changes result in a change in the method of the
calculation of financial covenants, standards, or terms under this Agreement,
then Parent, Borrower, Agent, and the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
21
Banks agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such changes with the desired result
that the criteria for evaluating such covenants, standards, or terms shall be
the same after such changes as if such changes had not been made. Until such
time as such an amendment shall have been executed and delivered by Parent,
Agent, Borrower, and the Banks, all financial covenants, standards, and terms
in this Agreement shall continue to be calculated or construed as if such
changes had not occurred.
Section 1.4. Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to Dallas, Texas time.
ARTICLE II.
Revolving Credit Facility
Section 2.1. Revolving Commitments. Subject to the terms and conditions
of this Agreement, each Bank severally agrees to make one or more advances to
Borrower from time to time from and including the Closing Date to but excluding
the Termination Date; provided that the aggregate amount of all Loans made or
held by a Bank at any time outstanding shall not exceed the amount of such
Bank's Revolving Commitment as then in effect. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, Borrower may
borrow, prepay, and reborrow hereunder the amount of the Revolving Commitments
and may establish Base Rate Accounts and Eurodollar Accounts thereunder and,
until the Revolving Termination Date, Borrower may Continue Eurodollar Accounts
established under the Loans or Convert Accounts established under the Loans of
one Type into Accounts of the other Type. Accounts of each Type under the Loan
made by each Bank shall be established and maintained at such Bank's Applicable
Lending Office for Loans of such Type.
Section 2.2. Revolving Notes. The Loans made by a Bank shall be
evidenced by a single promissory note of Borrower in substantially the form of
Exhibit "A" hereto, payable to the order of such Bank in a principal amount
equal to its Revolving Commitment and otherwise duly completed.
Section 2.3. Repayment of Loans; Assumption of Term Loans under the
Existing Credit Agreement. Borrower shall pay to Agent for the account of the
Banks the outstanding principal amount of all of the Loans on the Termination
Date. In furtherance of the forgoing, the Borrower hereby assumes all the
obligations, indebtedness and liability of the Parent outstanding on the Closing
Date under the Existing Credit Agreement as if it were the original "Borrower"
thereunder, the term loans outstanding thereunder being continued under the
terms of this Agreement as "Loans".
Section 2.4. Use of Proceeds. The proceeds of the Loans shall be used
by Borrower for ongoing working capital needs and other general corporate
purposes, including, without limitation, to finance the purchase price of
Permitted Acquisitions and making loans to its Parent and Subsidiaries in
accordance with Section 10.5.
Section 2.5. Revolving Commitment Fee. Borrower agrees to pay to Agent
for the account of each Bank a commitment fee on the daily average unused amount
of such Bank's Revolving Commitment for the period from and including the
Closing Date to and including the Termination Date, at a rate equal to the
Commitment Fee Rate as determined in accordance with subsection 4.2(b). For the
purpose of calculating the commitment fee hereunder, the Revolving Commitments
shall be deemed utilized by all outstanding Loans. Accrued commitment fees under
this Section 2.5 shall be payable in arrears on each Quarterly Payment Date and
on the Termination Date.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 15
22
Section 2.6. Reduction or Termination of Revolving Commitments.
Borrower shall have the right to terminate or reduce in part the unused portion
of the Revolving Commitments at any time and from time to time, provided that:
(a) Borrower shall give notice of each such termination or reduction as provided
in Section 5.3; and (b) each partial reduction shall be in an aggregate amount
at least equal to Three Million Dollars ($3,000,000). The Revolving Commitments
may not be reinstated after they have been terminated or reduced.
ARTICLE III.
[INTENTIONALLY OMITTED]
ARTICLE IV.
Interest and Fees
Section 4.1. Interest Rate. Subject to Section 14.12, Borrower shall
pay to Agent for the account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank for the period commencing on the date of
such Loan to but excluding the date such Loan is due, at a fluctuating rate per
annum equal to the Applicable Rate. The term "Applicable Rate" means (i) during
the period that such Loans or portions thereof are subject to a Base Rate
Account, the Base Rate plus the Base Margin and (ii) during the period that such
Loans or portions thereof are subject to a Eurodollar Account, the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin.
Section 4.2. Determinations of Margins and Fees. The margins identified
in Section 4.1 and the fees payable under Section 2.5 shall be defined and
determined as follows:
(a) "Base Margin" shall mean (i) during the period commencing
on the Closing Date and ending on but not including the first Adjustment Date
(as defined below), one-half of one percent (0.500%) per annum and (ii) during
each period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a "Calculation Period"), the percent per annum set forth
in the table below in this Section 4.2 under the heading "Base Margin" opposite
the Indebtedness to EBITDA Ratio which corresponds to the Indebtedness to EBITDA
Ratio set forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
(b) "Commitment Fee Rate" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date, three-eighths of one percent (0.375%) per annum and (ii) during
each Calculation Period, the percent per annum set forth in the table below
under the heading "Commitment Fee" opposite the Indebtedness to EBITDA Ratio
which corresponds to the Indebtedness to EBITDA Ratio set forth in, and as
calculated in accordance with, the applicable Compliance Certificate.
(c) "Eurodollar Rate Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date, two percent (2.000%) per annum and (ii) during each Calculation
Period, the percent per annum set forth in the table below under the heading
Eurodollar Rate Margin opposite the Indebtedness to EBITDA Ratio which
corresponds to the Indebtedness to EBITDA Ratio set forth in, and as calculated
in accordance with, the applicable Compliance Certificate.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 16
23
Indebtedness to EBITDA Base Margin Commitment Fee Eurodollar Rate Margin
---------------------- ----------- -------------- ----------------------
Greater than or equal to 1.50 0.500% 0.500% 2.250%
Greater than or equal to 1.00
but less than 1.50 0.500% 0.375% 2.000%
Less than 1.00 0.500% 0.375% 1.750%
Upon delivery of the Compliance Certificate pursuant to subsection 9.1(c) in
connection with the financial statements of Parent and the Subsidiaries
required to be delivered pursuant to Section 9.1(b) at the end of each Fiscal
Quarter commencing with such Compliance Certificate delivered with respect to
the Fiscal Quarter ending on November 30, 2000, the Base Margin, the Eurodollar
Rate Margin (for Interest Periods commencing after the applicable Adjustment
Date) and, the Commitment Fee Rate shall automatically be adjusted in
accordance with the Indebtedness to EBITDA Ratio set forth therein and the
table set forth above, such automatic adjustment to take effect as of the first
Business Day after the receipt by Agent of the related Compliance Certificate
pursuant to Section 9.1(c) (each such Business Day when such margins or fees
change pursuant to this sentence or the next following sentence, herein an
"Adjustment Date"). If Parent fails to deliver such Compliance Certificate
which so sets forth the Indebtedness to EBITDA Ratio within the period of time
required by subsection 9.1(c): (i) the Base Margin shall automatically be
adjusted to one-half of one percent (0.500%) per annum; (ii) the Eurodollar
Rate Margin (for Interest Periods commencing after the applicable Adjustment
Date) shall automatically be adjusted to two and one-quarter percent (2.250%)
per annum; and (iii) the Commitment Fee Rate shall automatically be adjusted to
one-half of one percent (0.500%), such automatic adjustments to take effect as
of the first Business Day after the last day on which Parent was required to
deliver the applicable Compliance Certificate in accordance with Section 9.1(c)
and to remain in effect until subsequently adjusted in accordance herewith upon
the delivery of a Compliance Certificate.
Section 4.3. Payment Dates. Accrued interest on the Loans shall be due
and payable as follows: (i) in the case of Loans subject to Base Rate Accounts,
on each Quarterly Payment Date and on the Termination Date; and (ii) in the case
of Loans subject to Eurodollar Accounts and with respect to each such Account,
on the last day of such Interest Period, the applicable Termination Date and, if
such Interest Period is six (6) months long, on the date ninety (90) days from
the start of such Interest Period.
Section 4.4. Default Interest. Notwithstanding the foregoing, Borrower
will pay to Agent for the account of each Bank interest at the applicable
Default Rate on any principal of any Loan made by such Bank, and (to the fullest
extent permitted by law) any other amount payable by Borrower under any Loan
Document to or for the account of Agent or such Bank, that is not paid in full
when due (whether at stated maturity, by acceleration, or otherwise), for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Interest payable at the Default Rate shall be payable from
time to time on demand.
Section 4.5. Conversions and Continuations of Accounts. Subject to
Section 5.2, Borrower shall have the right from time to time to Convert all or
part of any Base Rate Account in existence under a Loan into a Eurodollar
Account under the same Loan or to Continue Eurodollar Accounts in existence
under a Loan as Eurodollar Accounts under the same Loan, provided that: (a)
Borrower shall give Agent notice of each such Conversion or Continuation as
provided in Section 5.3; (b) a Eurodollar Account may only be Converted on the
last day of the Interest Period therefor; and (c) except for Conversions into
Base Rate Accounts, no Conversions or Continuations shall be made while a
Default has occurred and is continuing.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 17
24
Section 4.6. Computations. Interest and fees payable by Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Eurodollar Accounts on the basis of a year of 360 days and the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which payable unless such calculation would
result in a usurious rate, in which case interest shall be calculated on the
basis of a year of 365 or 366 days, as the case may be; (ii) with respect to
Base Rate Accounts (A) if based on the Prime Rate, on the basis of a year of 365
or 366 days, as the case may be and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable or (B) if based on the Federal Funds Effective Rate on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable unless in
the case of clauses (i) or (ii) (B) such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
ARTICLE V.
Administrative Matters
Section 5.1. Borrowing Procedure. Borrower shall give Agent, and Agent
will give the Banks, notice of each borrowing under the Revolving Commitments in
accordance with Section 5.3. Not later than 1:00 P.M. on the date specified for
each such borrowing each Bank will make available to Agent the amount of the
Loan to be made by it on such date, at the Principal Office, in immediately
available funds, for the account of Borrower. The amount so received by Agent
shall, subject to the terms and conditions of this Agreement, be made available
to Borrower by (a) depositing the same, in immediately available funds, in an
account of Borrower (designated by Borrower) maintained with Agent at the
Principal Office or (b) wire transferring such funds to a Person or Persons
designated by Borrower in writing.
Section 5.2. Minimum Amounts. Except for prepayments pursuant to
Article 6, each borrowing under a Loan and each prepayment of principal of a
Loan shall be in an amount at least equal to Five Hundred Thousand Dollars
($500,000) or any larger amounts in increments of One Hundred Thousand Dollars
($100,000). Except for Conversions pursuant to Article 6, each Eurodollar
Account applicable to a Loan shall be in a minimum principal amount of One
Million Dollars ($1,000,000) or any larger amounts in increments of One Hundred
Thousand Dollars ($100,000).
Section 5.3. Certain Notices. Notices by Borrower to Agent of
terminations or reductions of Revolving Commitments, of borrowings and
prepayments of Loans, and of Conversions and Continuations of Accounts shall be
irrevocable and shall be effective only if received by Agent not later than
10:00 A.M. (a) on the Business Day of the borrowing, prepayment or repayment of
Loans subject to Base Rate Accounts or of the Conversion into Base Rate Accounts
and (b) with respect to any other repayments, terminations, reductions,
borrowings, Conversions, Continuations, or prepayments, on the Business Day
which is the number of Business Days prior to the day of the relevant action
specified below:
AMENDED AND RESTATED CREDIT AGREEMENT - Page 18
25
Number of Business
Action Days Prior to Action
------ --------------------
Termination or reduction of Revolving Commitments 5
Borrowing of Loans subject to Eurodollar Accounts,
Conversions into or Continuations as Eurodollar
Accounts or prepayment of Loans subject to Eurodollar
Accounts 3
Any notices of the type described in this Section 5.3 which are received by
Agent after 10:00 A.M. on a Business Day shall be deemed to be received and
shall be effective on the next Business Day. Each such notice of termination or
reduction shall specify the amount of the Revolving Commitments to be
terminated or reduced. Each such notice of borrowing, Conversion, Continuation,
or prepayment shall: (a) specify the Loans to be borrowed or prepaid or the
Accounts to be Converted or Continued; (b) the amount (subject to Section 5.2
hereof) to be borrowed, Converted, Continued, or prepaid; (c) in the case of a
Conversion, the Type of Account to result from such Conversion; (d) in the case
of a borrowing the Type of Account or Accounts to be applicable to such
borrowing and the amounts thereof; (e) in the event a Eurodollar Account is
selected, the duration of the Interest Period therefor; and (f) the date of
borrowing, Conversion, Continuation, or prepayment (which shall be a Business
Day). Agent shall notify the Banks of the contents of each such notice on the
date of its receipt of the same or, if received on or after 10:00 A.M. on a
Business Day, on the next Business Day. In the event Borrower fails to select
the Type of Account applicable to a Loan, or the duration of any Interest
Period for any Eurodollar Account, within the time period and otherwise as
provided in this Section 5.3, such Account (if outstanding as a Eurodollar
Account) will be automatically Converted into a Base Rate Account on the last
day of the preceding Interest Period for such Account or (if outstanding as a
Base Rate Account) will remain as, or (if not then outstanding) will be made
as, a Base Rate Account. Borrower may not borrow any Loans subject to a
Eurodollar Account, Convert any Base Rate Accounts into Eurodollar Accounts, or
Continue any Eurodollar Account as a Eurodollar Account if the Applicable Rate
for such Eurodollar Accounts would exceed the Maximum Rate or if a Default
exists.
Section 5.4. Optional Prepayments. Subject to Section 5.2 and the
provisions of this Section 5.4, Borrower may, at any time and from time to time
without premium or penalty upon prior notice to Agent as specified in Section
5.3, prepay or repay any Loan in full or in part. Loans subject to a Eurodollar
Account may be prepaid or repaid only on the last day of the Interest Period
applicable thereto unless (i) Borrower pays to Agent for the account of the
applicable Banks any amounts due under Section 6.5 as a result of such
prepayment or repayment or (ii) after giving effect to such prepayment or
repayment the aggregate principal amount of the Eurodollar Accounts applicable
to the Loan being prepaid or repaid having Interest Periods that end after such
payment date shall be equal to or less than the principal amount of such Loan
after such prepayment or repayment.
Section 5.5. Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by
Borrower or any Obligated Party under the Loan Documents shall be made to Agent
at the Principal Office for the account of each Bank's Applicable Lending Office
in Dollars and in immediately available funds, without setoff, deduction, or
counterclaim, not later than 1:00 P.M. on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day). Borrower and each
Obligated Party shall, at the time of making each such payment, specify to Agent
the sums payable under the Loan Documents to which such payment is to be applied
AMENDED AND RESTATED CREDIT AGREEMENT - Page 19
26
(and in the event that Borrower fails to so specify, or if an Event of Default
has occurred and is continuing, Agent may apply such payment and any proceeds
of any Collateral to the Obligations in such order and manner as the Required
Banks may elect in their sole discretion, subject to Section 5.6 hereof). Each
payment received by Agent under any Loan Document for the account of a Bank
shall be paid to such Bank by 3:00 P.M. on the date the payment is deemed made
to Agent in immediately available funds, for the account of such Bank's
Applicable Lending Office. Whenever any payment under any Loan Document shall
be stated to be due on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest and
commitment fee, as the case may be.
Section 5.6. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Loan shall be made by the Banks, each payment of
commitment fees under Section 2.5 shall be made for the account of the Banks,
and each termination or reduction of the Revolving Commitments shall be applied
to the Revolving Commitments of the Banks, pro rata according to their
respective Commitment Percentages; (b) the making, Conversion, and Continuation
of Accounts of a particular Type (other than Conversions provided for by Section
6.4) shall be made pro rata among the Banks holding Accounts of such Type
according to their respective Commitment Percentages; (c) each payment and
prepayment of principal of or interest on Loans by Borrower shall be made to
Agent for the account of Agent or the Banks holding such Loans pro rata in
accordance with the respective unpaid principal amounts of such Loans or
participation interests held by Agent or such Banks; provided that as long as no
default in the payment of interest exists, payments of interest made when the
Banks are holding different types of accounts applicable to the same Loan as a
result of the application of Section 6.4 shall be made to the Banks in
accordance with the amount of interest actually owed to each; and (d) proceeds
of Collateral shall be shared by Agent and the Banks pro rata in accordance with
the respective unpaid principal amounts of and interest on the Obligations then
due Agent and the Banks. If at any time payment, in whole or in part, of any
amount distributed by Agent hereunder is rescinded or must otherwise be restored
or returned by Agent as a preference, fraudulent conveyance, or otherwise under
any bankruptcy, insolvency, or similar law, then each Person receiving any
portion of such amount agrees, upon demand, to return the portion of such amount
it has received to Agent.
Section 5.7. Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through Agent) through the exercise of any right of set-off,
banker's lien, counterclaim, or similar right, or otherwise, it shall promptly
purchase from the other Banks participations in the Obligations held by the
other Banks in such amounts, and make such other adjustments from time to time
as shall be equitable to the end that all the Banks shall share the benefit of
such payment pro rata in accordance with the unpaid principal of and interest on
the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. Borrower agrees, to the fullest extent
it may effectively do so under applicable law, that any Bank so purchasing a
participation in the Obligations held by the other Banks may exercise all rights
of set-off, banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Obligations in
the amount of such participation. Nothing contained herein shall require any
Bank to exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of Borrower.
Section 5.8. Non-Receipt of Funds by Agent. Unless Agent shall have
been notified by a Bank or Borrower (the "Payor") prior to the date on which
such Bank is to make payment to Agent hereunder or Borrower is to make a payment
to Agent for the account of one or more of the Banks, as the case may be (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to Agent, Agent may assume
AMENDED AND RESTATED CREDIT AGREEMENT - Page 20
27
that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
Required Payment to Agent, (a) the recipient of such payment shall, on demand,
pay to Agent the amount made available to it together with interest thereon in
respect of the period commencing on the date such amount was so made available
by Agent until the date Agent recovers such amount at a rate per annum equal to
the Federal Funds Effective Rate for such period and (b) Agent shall be
entitled to offset against any and all sums to be paid to such recipient, the
amount calculated in accordance with the foregoing clause (a).
Section 5.9. Withholding Taxes. All payments by Borrower of amounts
payable under any Loan Document shall be payable without deduction for or on
account of any present or future taxes, duties, or other charges levied or
imposed by the United States of America or by the government of any jurisdiction
outside the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or measured by
the net income or profit of a Bank pursuant to the laws of the jurisdiction in
which it is organized or in which the principal office or Applicable Lending
Office of such Bank is located or any subdivision thereof or therein). If any
such taxes, duties, or other charges are so levied or imposed, Borrower will
make additional payments in such amounts so that every net payment of amounts
payable by it under any Loan Document, after withholding or deduction for or on
account of any such present or future taxes, duties, or other charges, will not
be less than the amount provided for herein or therein, provided that Borrower
may withhold to the extent required by law and shall have no obligation to pay
such additional amounts to any Bank to the extent that such taxes, duties, or
other charges are levied or imposed by reason of the failure or inability of
such Bank to comply with the provisions of Section 5.10. Borrower shall furnish
promptly to Agent for distribution to each affected Bank, as the case may be,
official receipts evidencing any such withholding or reduction.
Section 5.10. Withholding Tax Exemption. Each Bank that is not
organized under the laws of the United States of America or a state thereof
agrees that it will deliver to Borrower and Agent two duly completed copies of
the appropriate United States Internal Revenue Service Form certifying that such
Bank is entitled to receive payments from Borrower under any Loan Document
without deduction or withholding of any United States federal income taxes. Each
Bank which so delivers such a Form further undertakes to deliver to Borrower and
Agent two (2) additional copies of such form on or before the date such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by Borrower or
Agent, in each case certifying that such Bank is entitled to receive payments
from Borrower under any Loan Document without deduction or withholding of any
United States federal income taxes, unless an event (including without
limitation any change in treaty, law, or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank advises Borrower
and Agent that it is not capable of receiving such payments without any
deduction or withholding of United States federal income tax.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 21
28
ARTICLE VI.
Yield Protection and Illegality
Section 6.1. Additional Costs.
(a) Borrower shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
reasonable costs incurred by such Bank which such Bank determines are
attributable to its making or maintaining of any Loans subject to Eurodollar
Accounts hereunder or its obligation to make any of such Loans hereunder, or any
reduction in any amount receivable by such Bank hereunder in respect of any such
Loans or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Revolving Notes in respect of
any of such Loans (other than franchise taxes and taxes imposed on the overall
net income of such Bank or its Applicable Lending Office for any of such Loans
by the United States of America or the jurisdiction in which such Bank has its
Principal Office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, such Bank (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Rate" in Section 1.1
hereof); or
(iii) imposes any other condition affecting this
Agreement or the Revolving Notes or any of such extensions of credit or
liabilities or commitments.
Each Bank will notify Borrower (with a copy to Agent) of any event occurring
after the date of this Agreement which will entitle such Bank to compensation
pursuant to this subsection 6.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and will
designate a different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Bank, violate any
law, rule, or regulation or be in any way disadvantageous to such Bank. Each
Bank will furnish Borrower with a certificate setting forth the basis and the
amount of each request of such Bank for compensation under this subsection
6.1(a). If any Bank requests compensation from Borrower under this subsection
6.1(a), Borrower may, by notice to such Bank (with a copy to Agent) suspend the
obligation of such Bank to make Loans subject to Eurodollar Accounts or
Continue Eurodollar Accounts as Eurodollar Accounts or Convert Base Rate
Accounts into Eurodollar Accounts until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section
6.4 hereof shall be applicable with respect to such Eurodollar Accounts).
(b) Without limiting the effect of the foregoing provisions of
this Section 6.1, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to which the interest rate on
the Loans subject to Eurodollar Accounts is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Bank
which includes Loans subject to Eurodollar Accounts or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if such Bank so elects by notice to Borrower (with a copy to
Agent), the obligation of such Bank to make Loans subject to Eurodollar Accounts
or Continue Eurodollar Accounts as Eurodollar Accounts or Convert Base Rate
AMENDED AND RESTATED CREDIT AGREEMENT - Page 22
29
Accounts into Eurodollar Accounts hereunder shall be suspended until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 6.4 hereof shall be applicable).
(c) Determinations and allocations by any Bank for purposes of
this Section 6.1 of the effect of any Regulatory Change on its costs of
maintaining its obligation to make Loans or of making or maintaining Loans or on
amounts receivable by it in respect of the Loans, and of the additional amounts
required to compensate such Bank in respect of any Additional Costs, shall,
absent manifest error, be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
Section 6.2. Limitation on Eurodollar Accounts. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Accounts under a
Loan for any Interest Period therefor:
(a) Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof are not being provided in
the relative amounts or for the relative maturities for purposes of determining
the rate of interest for the Loans subject to such Eurodollar Accounts as
provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Agent that the relevant rates of interest referred to in
the definition of "Adjusted Eurodollar Rate" in Section 1.1 hereof on the basis
of which the rate of interest for such Loans for such Interest Period is to be
determined do not accurately reflect the cost to the Banks of making or
maintaining such Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Eurodollar Account and the relevant amounts or periods, and so long as such
condition remains in effect, the Banks shall be under no obligation to make
additional Loans subject to a Eurodollar Account or to Convert Base Rate
Accounts into Eurodollar Accounts and Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Eurodollar Accounts, either
prepay the Loans subject to such Eurodollar Accounts or Convert such Eurodollar
Accounts into Base Rate Accounts in accordance with the terms of this
Agreement. Determinations made under this Section 6.2 shall be made on a
reasonable basis.
Section 6.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Eurodollar
Account hereunder or (b) maintain Loans subject to a Eurodollar Account
hereunder, then such Bank shall promptly notify Borrower (with a copy to Agent)
thereof and such Bank's obligation to make or maintain Loans subject to a
Eurodollar Account and to Convert Base Rate Accounts into Eurodollar Accounts
hereunder shall be suspended until such time as such Bank may again make and
maintain Loans subject to a Eurodollar Account (in which case the provisions of
Section 6.4 hereof shall be applicable).
Section 6.4. Treatment of Affected Loans. If the Accounts applicable to
a Loan of any Bank (hereinafter called "Affected Accounts") are to be Converted
pursuant to Section 6.1 or 6.3 hereof, the Bank's Affected Accounts shall be
automatically Converted into Base Rate Accounts on the last day(s) of the then
current Interest Period(s) (or, in the case of a Conversion required by
subsection 6.1(b) or Section 6.3 hereof, on such earlier date as such Bank may
specify to Borrower with a copy to Agent) and, unless and until such Bank gives
notice as provided below that the circumstances specified in Section 6.1 or 6.3
hereof which gave rise to such Conversion no longer exist: (a) to the extent
that such Bank's Affected Accounts have been so Converted, all payments and
prepayments of principal which would otherwise be applied to such Bank's
Affected Accounts shall be applied instead to its Base Rate Accounts;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 23
30
and (b) all Accounts which would otherwise be established or Continued by such
Bank as Eurodollar Accounts shall be made as or Converted into Base Rate
Accounts and all Accounts of such Bank which would otherwise be Converted into
Eurodollar Accounts shall be Converted instead into (or shall remain as) Base
Rate Accounts. If such Bank gives notice to Borrower (with a copy to Agent)
that the circumstances specified in Section 6.1 or 6.3 hereof which gave rise
to the Conversion of such Bank's Affected Accounts pursuant to this Section 6.4
no longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Accounts are outstanding, such
Bank's Base Rate Accounts shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Eurodollar
Accounts to the extent necessary so that, after giving effect thereto, all
Accounts held by the Banks holding Eurodollar Accounts and by such Bank are
held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their respective Commitment Percentages.
Section 6.5. Compensation. Borrower shall pay to Agent for the account
of each Bank, upon the request of such Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Loan subject to a
Eurodollar Account or Conversion of a Eurodollar Account for any reason
(including, without limitation, the acceleration of the outstanding Loans
pursuant to subsection 12.2(a)) on a date other than the last day of an Interest
Period for the applicable Eurodollar Account; or
(b) Any failure by Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 7 to be
satisfied) to borrow or prepay a Loan subject to a Eurodollar Account, or
Convert a Base Rate Account to a Eurodollar Account on the date for such
borrowing, Conversion, or prepayment specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Account which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Account
provided for herein over (ii) the interest component of the amount such Bank
would have bid in the European interbank market for Dollar deposits of leading
banks and amounts comparable to such principal amount and with maturities
comparable to such period.
Section 6.6. Capital Adequacy. If any Bank shall have determined that
any Regulatory Change has or would have the effect of reducing the rate of
return on such Bank's (or its parent's) capital as a consequence of its
obligations hereunder or the transactions contemplated hereby to a level below
that which such Bank (or its parent) could have achieved but for such adoption,
implementation, change, or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within ten (10) Business Days after demand
by such Bank (with a copy to Agent), Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its parent) for
such reduction. A certificate of such Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive, provided that the determination thereof is made
on a reasonable basis. In determining such amount or amounts, such Bank may use
any reasonable averaging and attribution methods.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 24
31
ARTICLE VII.
Conditions Precedent
Section 7.1. Initial Loan. The effectiveness of this Agreement as an
amendment and restatement of the Existing Credit Agreement and obligation of
each Bank to make its initial Loan hereunder is subject to the condition
precedent that Agent shall have received on or before the day of any such Loan
and on or before November 15, 2000 all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to
Agent:
(a) Resolutions. Resolutions of the Board of Directors of
Parent and each Subsidiary certified by its Secretary or an Assistant Secretary
which authorize its execution, delivery, and performance of the Loan Documents
to which it is or is to be a party.
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of Parent and each
Subsidiary certifying the name of each of its officers (i) who are authorized to
sign the Loan Documents to which it is or is to be a party (including the
certificates contemplated herein) together with specimen signatures of each such
officers and (ii) who will, until replaced by other officers duly authorized for
that purpose, act as its representative for the purposes of signing
documentation and giving notices and other communications in connection with the
Loan Documents.
(c) Articles of Incorporation. The articles of incorporation
of Parent and each Subsidiary certified by the Secretary of State of the state
of its incorporation (or the other appropriate governmental officials of its
jurisdiction of organization) and dated a current date or, if applicable, a
certification that such articles of incorporation have not changed since the
certified copies delivered under the Existing Credit Agreement.
(d) Bylaws. The bylaws of Parent and each Subsidiary certified
by its Secretary or an Assistant Secretary or, if applicable, a certification
that such bylaws have not changed since the certified copies delivered under the
Existing Credit Agreement.
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of Parent and each Subsidiary
as to its existence and good standing, all dated a current date.
(f) Revolving Notes. The Revolving Notes executed by Borrower.
(g) Guaranty by Parent. The Parent Joinder Agreement in
substantially the form of Exhibit "D" hereto, executed by the Parent.
(h) Joinder of New Subsidiaries. Such documentation as the
Agent may request to evidence (i) the joinder of each of HMHM and HBS CO to the
Guaranty and the Subsidiary Security Agreement, each as a guarantor and debtor
thereunder and (ii) the pledge to the Agent of the stock of, or other ownership
interests in, HMHM, HBS CO, HBS CA, and FPM.
(i) Assignment. Evidence that Chase shall have purchased all
the term loans outstanding under the Existing Credit Agreement pursuant to the
Master Assignment and Acceptance.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 25
32
(j) Existing Credit Agreement Interest and Fees. Evidence that
all unpaid interest and commitment fees accrued under the Existing Credit
Agreement through the Closing Date and any amounts payable under Section 6.5 of
the Existing Credit Agreement shall have been paid in full.
(k) Fees. The fees due on the Closing Date as described in the
commitment letter dated October 2, 2000 between Chase and Parent.
(l) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including attorneys' fees) referred to in Section 14.1, to the extent
incurred, shall have been paid in full by Borrower.
Section 7.2. All Loans. The obligation of each Bank to make any Loan
(including the initial Loan) is subject to the following additional conditions
precedent:
(a) No Default. No Default shall have occurred and be
continuing, or would result from such Loan;
(b) Representations and Warranties. All of the representations
and warranties contained in Article 8 hereof and in the other Loan Documents
shall be true and correct on and as of the date of such Loan with the same force
and effect as if such representations and warranties had been made on and as of
such date except to the extent that such representations and warranties relate
specifically to another date; and
(c) Additional Documentation. Agent shall have received such
additional approvals, opinions, or documents as Agent may reasonably request.
Each notice of borrowing by Borrower hereunder, shall constitute a
representation and warranty by Borrower that the conditions precedent set forth
in subsections 7.2(a) and (b) have been satisfied (both as of the date of such
notice and, unless Borrower otherwise notifies Agent prior to the date of such
borrowing, as of the date of such borrowing).
ARTICLE VIII.
Representations and Warranties
To induce Agent and the Banks to enter into this Agreement, Parent and
Borrower each represent and warrant to Agent and the Banks that:
Section 8.1. Corporate Existence. Parent and each Subsidiary (a) is a
corporation or other entity (as reflected on Schedule 8.14) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority to own
its assets and carry on its business as now being or as proposed to be
conducted, and (c) is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where the failure
to so qualify could reasonably be expected to have a Material Adverse Effect.
Parent and each Subsidiary has the corporate power and authority to execute,
deliver, and perform their respective obligations under the Loan Documents to
which it is or may become a party.
Section 8.2. Financial Statements. Parent has delivered to Agent and
the Banks audited consolidated financial statements of Parent and the
Subsidiaries as at and for the Fiscal Year ended August 31, 2000. Such financial
statements, have been prepared in accordance with GAAP, and present
AMENDED AND RESTATED CREDIT AGREEMENT - Page 26
33
fairly, on a consolidated basis, the financial condition of Parent and the
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither Parent nor any
of the Subsidiaries has any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or anticipated
losses from any unfavorable commitments except as referred to or reflected in
such financial statements. There has been no material adverse change in the
business, condition (financial or otherwise), operations, prospects, or
properties of Parent and the Subsidiaries taken as a whole since the effective
date of the financial statements referred to in this Section.
Section 8.3. Corporate Action; No Breach. The execution, delivery, and
performance by Parent and each Subsidiary of the Loan Documents to which each is
or may become a party and compliance with the terms and provisions hereof and
thereof have been duly authorized by all requisite action on the part of Parent
and each Subsidiary and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the articles of
incorporation, bylaws or other governing documents of Parent or any of the
Subsidiaries, (ii) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or (iii) any
material agreement or instrument to which Parent or any Subsidiary is a party or
by which any of them or any of their property is bound or subject, or (b)
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien (except as provided herein) upon any of the
revenues or assets of Parent or any Subsidiary.
Section 8.4. Operation of Business. Parent and each of the Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, necessary to conduct their respective businesses
substantially as now conducted except those that the failure to so possess could
not reasonably be expected to have a Material Adverse Effect, and Parent and
each of its Subsidiaries are not in violation of any valid rights of others with
respect to any of the foregoing except violations that could not reasonably be
expected to have a Material Adverse Effect.
Section 8.5. Litigation and Judgments. Other than as disclosed on
Schedule 8.5, there is no action, suit, investigation, or proceeding before or
by any Governmental Authority or arbitrator pending, or to the knowledge of
either Borrower or the Parent, threatened against or affecting Parent or any
Subsidiary, that would, if adversely determined, have a Material Adverse Effect.
There are no outstanding judgments against Parent or any Subsidiary.
Section 8.6. Rights in Properties; Liens. Parent and each Subsidiary
have good title to or valid leasehold interests in their respective properties
and assets, real and personal, including the properties, assets, and leasehold
interests reflected in the financial statements described in Section 8.2, and
none of the properties, assets, or leasehold interests of Parent or any
Subsidiary is subject to any Lien, except as of the Closing Date, as reflected
on Schedule 10.2 and, at all times after the Closing Date, as permitted by
Section 10.2.
Section 8.7. Enforceability. The Loan Documents to which Parent or any
Subsidiary is a party, when delivered, shall constitute the legal, valid, and
binding obligations of Parent or the Subsidiary, as applicable, enforceable
against Parent or the applicable Subsidiary in accordance with their respective
terms, except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and general
principles of equity.
Section 8.8. Approvals. All authorizations, approvals, and consents of,
and all filings or registrations with, any Governmental Authority or third party
necessary for the execution, delivery, or performance by Parent or any
Subsidiary of the Loan Documents to which each is or may become a party or for
the validity or enforceability thereof have been obtained or made, provided,
however, that if HBS
AMENDED AND RESTATED CREDIT AGREEMENT - Page 27
34
CA obtains a Xxxx-Xxxxx License from the State of California pursuant to the
Xxxx-Xxxxx Health Care Service Plan Act of 1975 to operate prepaid health
service plans in the State of California then HBS's pledge of HBS CA's stock
will be restricted from sale or foreclosure by the Agent or any Lender pursuant
to such Xxxx-Xxxxx Health Care Service Plan Act of 1975.
Section 8.9. Debt. Parent and the Subsidiaries have no Debt, except as
of the Closing Date, the Debt described on Schedule 10.1 and, at all times after
the Closing Date, as permitted by Section 10.1.
Section 8.10. Taxes. Parent and each Subsidiary have filed all material
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable other than those being
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves have been established. Neither Borrower nor Parent know of any
pending investigation of Parent or any Subsidiary by any taxing authority or of
any pending but unassessed tax liability of Parent or any Subsidiary.
Section 8.11. Margin Securities. Neither Parent nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 8.12. ERISA. Parent and each Subsidiary are in compliance in
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings.
Neither Parent nor any ERISA Affiliate has completely or partially withdrawn
from a Multiemployer Plan. Parent and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans. The
present value of all vested benefits under each Plan do not exceed the fair
market value of all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with ERISA, by an
amount that will exceed One Hundred Thousand Dollars ($100,000). Neither Parent
nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA.
Section 8.13. Disclosure. All factual information furnished by or on
behalf of Parent in writing to Agent or any Bank (including, without limitation,
all information contained in the Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information
hereafter furnished by or on behalf of Parent to Agent or any Bank, will be true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information not misleading in any material respect at such time in
light of the circumstances under which such information was provided.
Section 8.14. Subsidiaries. As of the Closing Date, Parent has no
Subsidiaries other than those listed on Schedule 8.14 hereto. Schedule 8.14 sets
forth the type of each Subsidiary listed thereon, the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of
Parent's or a Subsidiary's ownership of the outstanding voting stock (or other
ownership interests) of each such Subsidiary and, the authorized, issued, and
outstanding capital stock (or other equity interests) of each such Subsidiary.
All of the outstanding capital stock (or other equity interests) of each
Subsidiary listed on Schedule 8.14 has been validly issued, is fully paid, and
is nonassessable. There are no outstanding
AMENDED AND RESTATED CREDIT AGREEMENT - Page 28
35
subscriptions, options, warrants, calls, or rights (including preemptive
rights) to acquire, and no outstanding securities or instruments convertible
into, capital stock of any Subsidiary except as disclosed on Schedule 8.14.
Section 8.15. Agreements. Neither Parent nor any Subsidiary is a party
to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate restriction that could
reasonably be expected to have a Material Adverse Effect. Neither Parent nor any
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party other than defaults which will
not have a Material Adverse Effect.
Section 8.16. Compliance with Laws. Neither Parent nor any Subsidiary
is in violation in any material respect of any law, rule, regulation, order, or
decree of any Governmental Authority or arbitrator.
Section 8.17. Investment Company Act. Neither Parent nor any Subsidiary
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
Section 8.18. Public Utility Holding Company Act. Neither Parent nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 8.19. Environmental Matters.
(a) Parent, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all Environmental
Laws. Neither Borrower nor Parent is aware of, nor has Borrower or Parent
received written notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or prevent the
compliance or continued compliance of Parent and the Subsidiaries with all
Environmental Laws;
(b) Parent and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and Parent and its Subsidiaries
are in compliance with all of the terms and conditions of such permits;
(c) No Hazardous Materials have been used, generated, stored,
transported, disposed of on, or Released from any of the properties or assets of
Parent or any Subsidiary, and to the knowledge of Borrower and Parent, no
Hazardous Materials are present at such properties, except in compliance with
Environmental Laws. The use which Parent and the Subsidiaries make and intend to
make of their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or Release of any
Hazardous Material on, in, or from any of their properties or assets except in
compliance with Environmental Laws;
(d) Neither Parent nor any of the Subsidiaries nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Authority or other
Person or subject to any judicial or administrative proceeding with respect to
(i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii)
any Environmental Liabilities arising from a Release or threatened Release;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 29
36
(e) Neither Parent nor any of the Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C.ss.6901 et seq., regulations thereunder
or any comparable provision of state law. Parent and the Subsidiaries are in
compliance with all applicable financial responsibility requirements of all
Environmental Laws;
(f) Neither Parent nor any of the Subsidiaries has filed
or failed to file any notice required under applicable Environmental Law
reporting a Release; and
(g) No Lien arising under any Environmental Law has
attached to any property or revenues of Parent or the Subsidiaries.
Section 8.20. Solvency. Parent and each Subsidiary, both individually
and on a consolidated basis: (a) owns and will own assets the fair saleable
value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay probable liabilities of then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to it; (b) has capital that is not unreasonably small
in relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 8.21. Benefit Received. Parent and the Subsidiaries will
receive reasonably equivalent value in exchange for the obligations incurred
under the Loan Documents to which each is a party.
ARTICLE IX.
Positive Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the
following positive covenants:
Section 9.1. Reporting Requirements. Parent will furnish to Agent and
each Bank:
(a) Annual Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each Fiscal Year, beginning
with the Fiscal Year ending on August 31, 2001, a copy of the annual audit
report of Parent and the Subsidiaries for such Fiscal Year containing, on a
consolidated basis, balance sheets and statements of income, retained earnings,
and cash flow and on a consolidating basis, balance sheets and statements of
income, in each case as at the end of such Fiscal Year and for the Fiscal Year
then ended, in each case setting forth in comparative form the figures for the
preceding Fiscal Year, all in reasonable detail and audited and certified on an
unqualified basis by independent certified public accountants of recognized
standing acceptable to Agent, to the effect that such report has been prepared
in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available, and
in any event within forty-five (45) days after the end of each of the first
three (3) Fiscal Quarters of each Fiscal Year and within ninety (90) days after
the last Fiscal Quarter of each Fiscal Year, a copy of an unaudited financial
report of Parent and the Subsidiaries as of the end of such period and for the
Fiscal Quarter then ended containing, on a consolidated basis, a balance sheet
and statements of income, retained earnings, and cash flow and on a
consolidating basis, balance sheets and statements of income, in each case
setting forth in comparative form the figures for the corresponding Fiscal
Quarter of the preceding Fiscal Year, all in reasonable detail certified by the
chief financial officer of Parent to have been prepared in accordance with GAAP
and to fairly present (subject to year-end audit adjustments) the financial
condition and results of operations of Parent and the Subsidiaries, on a
consolidated basis, at the date and for the periods indicated therein;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 30
37
(c) Compliance Certificate. Within forty-five (45) days after
the end of each Fiscal Quarter, or with respect to the last Fiscal Quarter of
each Fiscal Year, within ninety (90) days of the end of such Fiscal Quarter, a
Compliance Certificate;
(d) Annual Projections. As soon as available and in any event
within forty-five (45) days after the beginning of each Fiscal Year, Parent will
deliver its consolidated and consolidating forecasted profit and loss statement
for the current Fiscal Year set forth on a Fiscal Quarter by Fiscal Quarter
basis consistent with Parent's historical financial statements, together with
appropriate supporting details, a statement of underlying assumption and a pro
forma projection of Parent's compliance with the financial covenants in this
Agreement for the same period;
(e) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to Parent or any Subsidiary
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of
Parent or any Subsidiary;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator affecting Parent or any Subsidiary which, if determined
adversely to Parent or such Subsidiary, could reasonably be expected to have a
Material Adverse Effect;
(g) Notice of Default. As soon as possible and in any event
within five (5) Business Days after an officer of Parent has knowledge of the
occurrence of each Default, a written notice setting forth the details of such
Default and the action that Parent has taken and proposes to take with respect
thereto;
(h) ERISA Reports. If requested by Agent, promptly after the
filing or receipt thereof, copies of all reports, including annual reports, and
notices which Parent or any Subsidiary files with or receives from the PBGC or
the U.S. Department of Labor under ERISA; and as soon as possible and in any
event within five (5) Business Days after Parent or any Subsidiary knows or has
reason to know that any Reportable Event or Prohibited Transaction has occurred
with respect to any Plan or that the PBGC or Parent or any Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to terminate
any Plan, a certificate of the chief financial officer of Parent setting forth
the details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action that Parent proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to Agent and the Banks pursuant to any other
clause of this Section;
(j) Notice of Material Adverse Effect. As soon as possible and
in any event within five (5) Business Days after an officer of Parent has
knowledge of the occurrence thereof, written notice of any matter that could
reasonably be expected to have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by Parent or
any Subsidiary to its stockholders generally and one copy of each regular,
periodic, or special report, registration statement, or prospectus filed by
Parent or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 31
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(l) Notice of Xxxx-Xxxxx Licensing. As soon as possible and in
any event within five (5) Business Days after HBS CA receives notice from the
State of California that it has been granted a Xxxx-Xxxxx License pursuant to
the Xxxx-Xxxxx Health Care Service Plan Act of 1975, written notice of such
licensing and a copy of any documentation associated therewith; and
(m) General Information. Promptly, such other information
concerning Parent or any Subsidiary as Agent or any Bank may from time to time
reasonably request.
Section 9.2. Maintenance of Existence; Conduct of Business. Parent
will, and will cause each Subsidiary to, preserve and maintain (i) its existence
(except as permitted by Section 10.3) and (ii) all of its privileges, licenses,
permits, franchises, qualifications, and rights that are necessary or desirable
in the ordinary conduct of its business. Parent will, and will cause each
Subsidiary to, conduct its business in an orderly and efficient manner in
accordance with good business practices.
Section 9.3. Maintenance of Properties. Parent will, and will cause
each Subsidiary to, maintain, keep, and preserve in good working order and
condition (exclusive of ordinary wear, tear and casualty) all of its material
properties necessary in the conduct of its business.
Section 9.4. Taxes and Claims. Parent will, and will cause each
Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all valid and
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither Parent nor any
Subsidiary shall be required to pay or discharge any tax, levy, assessment, or
governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves have been
established.
Section 9.5. Insurance. Parent will, and will cause each Subsidiary to,
maintain insurance with financially sound and reputable insurance companies in
such amounts and covering such risks as are usually carried by corporations
engaged in similar businesses and owning similar properties in the same general
areas in which Parent and the Subsidiaries operate, provided that in any event
Parent will maintain and cause each Subsidiary to maintain workmen's
compensation insurance (or alternate comparable coverage as required by law),
property insurance, comprehensive general liability insurance and professional
liability insurance reasonably satisfactory to Agent. Each general liability
insurance policy shall name Agent as additional insured, each insurance policy
covering Collateral shall name Agent as loss payee and shall provide that such
policy will not be canceled or materially changed without fifteen (15) days
prior written notice to Agent.
Section 9.6. Inspection Rights. Upon two (2) Business Day's prior
notice and from time to time during normal business hours, Parent will, and will
cause each Subsidiary to, permit representatives of Agent to examine, copy, and
make extracts from its books and records, to visit and inspect its properties,
and to discuss its business, operations, and financial condition with its
officers, employees, and independent certified public accountants. When a
Default exists, the prior notice described in the first sentence of this Section
9.6 shall not be required. The representatives of any Bank may accompany Agent
during any examination, visit, inspection or discussions under this Section 9.6.
Section 9.7. Keeping Books and Records. Parent will, and will cause
each Subsidiary to, maintain proper books of record and account in which full,
true, and correct entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 32
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Section 9.8. Compliance with Laws. Parent will, and will cause each
Subsidiary to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws and ERISA), rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 9.9. Compliance with Agreements. Parent will, and will cause
each Subsidiary to, comply in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.
Section 9.10. Further Assurances and Collateral Matters.
(a) Further Assurance and Exceptions to Perfection. Parent
will, and will cause each Subsidiary, other than an Insignificant Subsidiary,
to, execute and deliver such further documentation and take such further action
as may be requested by Agent to carry out the provisions and purposes of the
Loan Documents and to create, preserve, and perfect the Liens of Agent for the
benefit of itself and the Banks in the Collateral provided that prior to the
occurrence of a Default, neither Parent nor any Subsidiary, nor an Insignificant
Subsidiary at any time, shall be required to:
(i) execute or have filed any UCC Financing Statement
fixture filings or, except as set forth below in this subsection (a), execute or
have filed any UCC Financing Statement necessary to perfect Agent's Lien on
property at a location identified pursuant to the Parent Security Agreement or
the Subsidiary Security Agreement as a "Contract Location" (herein a "Contract
Location");
(ii) execute or deliver any waivers, subordinations
or acknowledgments from any third parties who have possession or control of any
Collateral;
(iii) except as required by Section 7.1(g) of the
Existing Credit Agreement, obtain any landlord or mortgagee waivers or
subordinations;
(iv) deliver any certificates of title evidencing
equipment of Parent or a Subsidiary, other than an Insignificant Subsidiary,
with Agent's Lien noted thereon; or
(v) grant Agent control over any deposit, security or
commodity account.
If a Default occurs, then Parent shall, and shall cause each Subsidiary, other
than an Insignificant Subsidiary, to, take such action as Agent may request to
perfect and protect the Liens of Agent in all the Collateral, including any or
all of the actions described in clauses (i) through (v) of this Section
9.10(a). Notwithstanding the foregoing, if prior to the occurrence of a
Default, the book value of the equipment (excluding vehicles) and fixtures
located at a Contract Location exceeds Twenty Thousand Dollars ($20,000.00),
then Parent shall, or shall cause the applicable Subsidiary, other than an
Insignificant Subsidiary, to, take all actions as Agent may request to perfect
and protect the Liens of Agent in the equipment and fixtures held at such
Contract Location. Parent shall promptly notify Agent if the book value of the
equipment (excluding vehicles) and fixtures located at a Contract Location
exceeds Twenty Thousand Dollars ($20,000.00).
(b) Subsidiary Pledge. Upon the creation or acquisition of any
Subsidiary, other than the creation of the Insignificant Subsidiaries, the
Parent shall cause such Subsidiary to execute and deliver a Subsidiary Joinder
Agreement and such other documentation as the Agent may request to cause such
Subsidiary to evidence, perfect, or otherwise implement the guaranty and
security for repayment of the Obligations contemplated by a Guaranty, the
Subsidiary Security Agreement and, if applicable, a Subsidiary Pledge Agreement.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 33
40
(c) Parent Pledge of Subsidiary Stock. If any Subsidiary is
created or acquired after the Closing Date, Parent shall execute and deliver to
Agent an amendment to the Parent Pledge Agreement describing as collateral
thereunder the stock of or other ownership interests in the new Subsidiary and
Parent shall deliver the certificates representing such stock or other interests
to Agent together with undated stock or other powers duly executed in blank.
(d) Insignificant Subsidiaries. If as of any date, the
aggregate amount of the Insignificant Subsidiaries' EBITDA as calculated for the
most recently completed four (4) Fiscal Quarter period as of the date of
determination exceeds Five Hundred Thousand Dollars ($500,000), then, within
thirty (30) days after the date of determination, the Parent and Borrower shall
either (i) cause each Insignificant Subsidiary to execute and deliver such
documentation as the Agent may request to cause such Insignificant Subsidiary to
evidence, perfect, or otherwise implement the guaranty of and security for the
Obligations contemplated by the Guaranty and the Subsidiary Security Agreement
or (ii) provide Agent written notice that the Insignificant Subsidiaries shall
be excluded from the calculation of all consolidated financial covenants
hereunder. If Parent and the Borrower elect to exclude the Insignificant
Subsidiaries from the calculation of all consolidated financial covenants, then
without any further amendment or other modification to the Loan Documents, the
Insignificant Subsidiaries shall thereafter be so excluded. In calculating
compliance with the financial covenants thereafter, the Parent will show the
calculations utilized to exclude the Insignificant Subsidiaries from such
financial covenants.
(e) Post Closing Items. Without limiting clauses (a), (b),
(c), or (d) of this Section 9.10 and to the extent not delivered on or prior to
November 15, 2000, the Parent and Borrower agree that they shall, and shall, on
or prior to December 15, 2000, cause (i) FPM to deliver a certified copy of the
organizational document of FPM, a certified copy of the governing document of
FPM, and certificates of the appropriate government officials of the state of
incorporation of FPM as to its existence and good standing, (ii) each Subsidiary
to deliver certificates of the appropriate governmental officials of each
Subsidiary's authority to do business and good standing in all jurisdictions in
which the nature of its business makes such qualification necessary and where
the failure to so qualify could reasonably be expected to have a Material
Adverse Effect, (iii) HBS CO to deliver an affidavit of lost certificate and a
new stock certificate evidencing the 100% of the capital stock of HBS CO, and
(iv) Choice and Colorado to deliver documentation evidencing the transfer of
assets from Choice and Colorado to another entity.
Section 9.11. ERISA. Parent will, and will cause each Subsidiary to, comply
with all minimum funding requirements and all other requirements of ERISA, if
9applicable, so as not to give rise to any liability which will have a Material
Adverse Effect.
ARTICLE X.
Negative Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the
following negative covenants:
Section 10.1. Debt. Parent will not, and will not permit any Subsidiary
to, incur, create, assume, or permit to exist any Debt, except:
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41
(a) Debt to Agent and Banks pursuant to the Loan Documents and
existing Debt described on Schedule 10.1;
(b) Intercompany Debt owed by the Parent or a Subsidiary to
Borrower; provided that (i) the obligations of each obligor of such Debt must be
subordinated in right of payment to any liability such obligor may have for the
Obligations from and after such time as any portion of the Obligations shall
become due and payable (whether at stated maturity, by acceleration or
otherwise), the Borrower hereby agreeing to such subordination, (ii) such Debt
must be incurred in the ordinary course of business and on terms customary for
intercompany borrowings among Borrower and the Parent or a Subsidiary or must be
made on such other terms and provisions as Agent may reasonably require, (iii)
Borrower shall have granted Agent a Lien on its right, title and interest in and
to such Debt and all Liens securing the payment thereof, and (iv) the sum of
(A)the aggregate amount of all Debt owed by Insignificant Subsidiaries to
Borrower and the other Subsidiaries plus (B) the aggregate amount of all capital
contributions to, investments in and purchases of stock, bonds or other equity
securities of Insignificant Subsidiaries by Parent and the other Subsidiaries
shall not exceed the amounts provided for in Section 10.5;
(c) Debt of Parent or any Subsidiary (other than the
Insignificant Subsidiaries) not to exceed Five Hundred Thousand Dollars
($500,000) in the aggregate for Parent and all Subsidiaries at any time
outstanding secured by purchase money Liens permitted by Section 10.2;
(d) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on Parent's
or a Subsidiary's behalf in accordance with the policies issued to Parent and
the Subsidiaries;
(e) Guarantees by Parent of (i) trade accounts payable owed by
a Subsidiary, and arising in the ordinary course of business, (ii) Debt of a
Subsidiary or (iii) operating leases of a Subsidiary entered into in the
ordinary course of business; provided that, (A) the Debt guaranteed is otherwise
permitted hereunder; and (B) no Default exists or would result from such
Guarantee;
(f) Guarantees incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds,
and other similar obligations not exceeding at any time outstanding Five Hundred
Thousand Dollars ($500,000) in aggregate liability;
(g) Debt arising in connection with interest rate swap, cap,
collar or similar agreements entered into in the ordinary course of business to
fix or limit Parent's or any Subsidiary's (other than an Insignificant
Subsidiary) interest expense;
(h) Debt of any Person (or any of such Person's subsidiaries)
existing at the time such Person becomes a Subsidiary (or is merged into or
consolidated with Parent or any of the Subsidiaries), but only to the extent
that such Debt was not incurred in connection with, as a result of or in
contemplation of such Person becoming a Subsidiary (or being merged into or
consolidated with Parent or any Subsidiary); provided, however, that (i) in no
event shall the aggregate amount of such Debt outstanding at any time exceed
Five Hundred Thousand Dollars ($500,000) and (ii) immediately after such
acquired Person becomes a Subsidiary (or is merged into or consolidated with
Parent or any Subsidiary), no Default exists; and
(i) Debts of Parent or any Subsidiary (other than an
Insignificant Subsidiary), other than the Debts specifically described in
clauses (a) through (h) of this Section 10.1, which in the aggregate for Parent
and all Subsidiaries do not exceed One Hundred Thousand Dollars ($100,000) at
any time outstanding.
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Section 10.2. Limitation on Liens and Restrictions on Subsidiaries.
Parent will not, and will not permit any Subsidiary to, incur, create, assume,
or permit to exist any Lien upon any of its property, assets, or revenues,
whether now owned or hereafter acquired, except the following, none of which
shall encumber the Collateral other than those Liens described in clauses (a),
(b), (d), (e), (g) and (h):
(a) Existing Liens disclosed on Schedule 10.2 hereto,
(b) Liens in favor of Agent for the benefit of itself and the
Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of Parent or the
Subsidiaries to use such assets in their respective businesses, and none of
which is violated in any material respect by existing or proposed structures or
land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental charges that
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords, or other similar statutory Liens securing obligations that are not
yet due and are incurred in the ordinary course of business or which are being
contested in good faith and for which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, and contracts (other than for payment of Debt);
(g) Liens for purchase money obligations and Capital Lease
Obligations; provided that: (i) the Debt secured by any such Lien is permitted
under Section 10.1; and (ii) any such Lien encumbers only the asset so
purchased;
(h) Liens related to any attachment or judgment not
constituting an Event of Default;
(i) Liens arising from filing UCC financing statements
regarding leases permitted by this Agreement; and
(j) Liens on fixed assets of a Person existing at the time
such Person becomes a Subsidiary (or such Person is merged into or consolidated
with Parent or any Subsidiary) in accordance with the provisions of Section 10.3
hereof; provided, however, that such Liens (i) only secure the Debt permitted by
subsection 10.1(h) above, (ii) were in existence prior to such acquired Person
becoming a Subsidiary (or prior to the contemplation of such merger or
consolidation), (iii) do not cover any property other than the property of such
acquired Person which is subject to such Liens prior to such acquired Person
becoming a Subsidiary (or prior to the contemplation of such merger or
consolidation), and (iv) do not cover any accounts receivables, inventory or
general intangibles.
Neither Parent nor any Subsidiary shall enter into or assume any agreement
(other than the Loan Documents and other than the documentation relating to the
guaranties described on Schedule 10.1) prohibiting the creation or assumption of
any Lien upon its properties or assets, whether now owned or
AMENDED AND RESTATED CREDIT AGREEMENT - Page 36
43
hereafter acquired; provided that, in connection with the creation of purchase
money Liens, Parent or any Subsidiary may agree that it will not permit any
other Liens to encumber the asset subject to such purchase money Lien. Except as
provided herein, as provided in the documentation relating to the guaranties
described on Schedule 10.1 and except for any restrictions imposed or required
to be imposed by applicable law and regulation, Parent will not and will not
permit any Subsidiaries directly or indirectly to create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary to: (1) pay dividends or make any
other distribution on any of such Subsidiary's capital stock (or other equity
interests) owned by Parent or any Subsidiary; (2) subject to subordination
provisions, pay any Debt owed to Parent or any other Subsidiary; (3) make loans
or advances to Parent or any other Subsidiary; or (4) transfer any of its
property or assets to Parent or any other Subsidiary.
Section 10.3. Mergers, etc. Parent will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
wind-up, dissolve, or liquidate itself; provided that, (i) Parent and the
Subsidiaries (other than an Insignificant Subsidiary) may acquire assets or
shares or other evidence of beneficial ownership of a Person in accordance with
the restrictions set forth in subsection 10.5; (ii) if no Default exists or
would result, any Subsidiary may merge into or consolidate with Parent, any
other Subsidiary (other than an Insignificant Subsidiary) or a Target if the
surviving Person is or becomes a wholly owned Subsidiary directly owned by
Parent, assumes the obligations of the applicable Subsidiary under the Loan
Documents and is solvent as contemplated under Section 8.20 after giving effect
to such merger or consolidation, and (iii) Parent or any wholly owned Subsidiary
(other than an Insignificant Subsidiary) directly owned by Parent (the
"Acquiring Company") may acquire all or substantially all of the assets of any
Subsidiary (a "Transferring Subsidiary") if the Acquiring Company assumes all
the Transferring Subsidiary's liabilities (including without limitation, all
liabilities of the Transferring Subsidiary under the Loan Documents to which it
is a party) and, following such assignment and assumption, such Transferring
Subsidiary may wind up, dissolve, and liquidate.
Section 10.4. Restrictions on Dividends and other Distributions. Parent
will not and will not permit any Subsidiary to directly or indirectly declare,
order, pay, make or set apart any sum for (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
(or other equity interest) of Parent or any Subsidiary now or hereafter
outstanding; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock (or other equity interest) of Parent or any
Subsidiary now or hereafter outstanding; or (c) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options, or other rights
to acquire shares of any class of stock (or other equity interest) of Parent or
any Subsidiary now or hereafter outstanding; except that (i) Subsidiaries (other
than Parent) may make, declare and pay dividends and make other distributions
with respect to their capital stock (or other equity interest) to Parent or the
other Subsidiaries, (ii) this Section 10.4 shall not prohibit the transactions
permitted by clauses (a), (j), or (l) of Section 10.5, and (iii) from the
Closing Date through and including the Termination Date, Parent may redeem or
repurchase shares of its capital stock and declare and pay dividends on account
of its capital stock; provided that (a) the total of (i) the aggregate amount
paid by Parent in connection with such redemptions and repurchases during such
period plus (ii) the aggregate amount of any other dividends paid by Parent
under this Section 10.4, both calculated after giving effect to the repurchase,
redemption, or dividend in question, does not exceed Ten Million Dollars
($10,000,000) and (b) at the date of such repurchase, redemption or dividend no
Default exists or would result therefrom.
Section 10.5. Investments. Parent will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any advance, loan, other
extension of credit, or capital contribution to
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44
or investment in any Person, or purchase or own any stock, bonds, notes,
debentures, or other securities of any Person, or be or become a joint venturer
with or partner of any Person, except:
(a) Parent or any wholly owned Subsidiary directly owned by
Parent (other than an Insignificant Subsidiary) may acquire shares, other equity
securities or other evidence of beneficial ownership of a Person or all or
substantially all of a Person's assets or the assets of a division or branch of
such Person, if, with respect to each such acquisition:
(i) Default. No Default exists or would result
therefrom;
(ii) Bank Approval. Parent shall have obtained the
prior written consent of the Required Banks if (A) the Purchase Price for the
acquisition is greater than Ten Million Dollars ($10,000,000) or (B) after
giving effect to such acquisition, the aggregate Purchase Price of all Permitted
Acquisitions that have occurred during the four (4) consecutive Fiscal Quarters
then most recently ending is greater than Fifteen Million Dollars ($15,000,000).
As used above, the phrase "Purchase Price" means, as of any date of
determination and with respect to a proposed acquisition, the purchase price to
be paid for the Target or its assets, including all cash consideration paid
(whether classified as purchase price, non-compete, consulting or post-closing
performance based payments or otherwise) or to be paid (based on the estimated
amount thereof), the value of all other assets to be transferred by the
purchaser in connection with such acquisition to the seller (but specifically
excluding any stock of Parent issued to the seller which shall not be part of
the Purchase Price for purposes of this clause (ii)) all valued in accordance
with the applicable purchase agreement and the outstanding principal amount of
all Debt of the Target or the seller assumed or acquired in connection with such
acquisition.
(iii) Delivery and Notice Requirements. Parent shall
provide to Agent, fifteen (15) days prior to the consummation of the
acquisition, the following: (A) notice of the acquisition, (B) the most recent
financial statements of the Target that Parent has available, (C) such other
documentation and information relating to the Target and the acquisition as
Agent may reasonably request, and (D) evidence certified by the chief executive
or chief financial officer of Parent that Parent shall be in compliance with the
covenants contained in Article 11 on a pro forma basis for the four (4) Fiscal
Quarter period then most recently ending (assuming (1) the consummation of the
acquisition in question; (2) that the incurrence or assumption of any Debt in
connection therewith occurred on the first day of such period; (3) to the extent
such Debt bears interest at a floating rate, the rate in effect for the entire
period of calculation was the rate in effect at the time of calculation; and (4)
any sale of Subsidiaries or lines of business which occurred during such period
occurred on the first day of such period). Within sixty (60) days of such
acquisition the obligations under subsections 9.10(b) and (c) shall be
fulfilled.
(iv) Diligence. Parent has completed due diligence on
the Target or the assets to be acquired;
(v) U.S. Acquisitions. The Target is organized under
the laws of a state in the United States of America and is involved in the same
general type of business activities as the Subsidiaries; and
(vi) Structure. If the proposed acquisition is an
acquisition of the stock of a Target, the acquisition will be structured so that
the Target will become a wholly owned Subsidiary directly owned by Parent or
indirectly owned by Parent through a wholly owned Subsidiary, other than an
Insignificant Subsidiary, directly owned by Parent. If the proposed acquisition
is an acquisition of assets, the acquisition will be structured so that Parent
or a wholly owned Subsidiary, other than an Insignificant Subsidiary, directly
owned by Parent shall acquire the assets either directly or through a merger;
and
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(b) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one year or less from the
date of acquisition;
(c) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of $250,000,000;
(d) commercial paper or bonds of a domestic issuer if at the
time of purchase such paper or bonds are rated in one of the two highest rating
categories of Standard and Poor's Corporation or Xxxxx'x Investors Service,
Inc.;
(e) current trade and customer accounts receivable for
services rendered in the ordinary course of business;
(f) shares of any mutual fund registered under the Investment
Company Act of 1940, as amended, which invests solely in investments of the type
described in clauses (b) through (d) of this Section 10.5;
(g) loans to physicians; provided that (i) at the time of such
loan no Default shall exist or result therefrom; (ii) the aggregate amount of
such loans made by Parent and the Subsidiaries and outstanding at any one time
shall not exceed Two Hundred Fifty Thousand Dollars ($250,000), calculated net
of any bad debt reserves;
(h) advances to employees for business expenses incurred in
the ordinary course of business including, without limitation, loans in
connection with employee relocations and changes in Parent's and the
Subsidiaries' payroll payment dates;
(i) existing investments described on Schedule 10.5 hereto;
(j) loans, advances and other extensions of credit to
Subsidiaries made in accordance with the restrictions set forth in subsection
10.1(b); provided that, at the time any such loan, advance or other extension of
credit is made, no Default exists or would result therefrom;
(k) Guarantees permitted by Section 10.1; and
(l) if no Default exists, Parent and the Subsidiaries (other
than an Insignificant Subsidiary) may make additional capital contributions to
and/or investments in or purchase any stocks, bonds, or other equity securities
authorized to be issued under Section 10.6 of a wholly owned Subsidiary or a
newly created Person organized by Parent or a Subsidiary (other than an
Insignificant Subsidiary) that, immediately after such investment or purchase,
will be a wholly owned Subsidiary if the obligations under Section 9.10 shall be
fulfilled and the aggregate amount of such contributions, investments and
purchases made under the permissions of this clause (l) plus the aggregate
amount of all loans and advances to Insignificant Subsidiaries made under the
permissions of Section 10.1(b) does not exceed One Hundred Thousand Dollars
($100,000) in the aggregate during the entire term of this Agreement and the
Existing Credit Agreement; provided, however, Parent and the Subsidiaries may,
make additional capital contributions, loans, and advances to and/or investments
in or purchase any stocks, bonds, or other equity securities authorized to be
issued under Section 10.6 of HBS CA if the aggregate amount thereof made during
the entire term of this Agreement does not exceed the lesser of (i) One Million
Five Hundred Thousand Dollars ($1,500,000) or (ii) the minimum amount necessary
for HBS CA to maintain
AMENDED AND RESTATED CREDIT AGREEMENT - Page 39
46
compliance with the minimum net worth requirement of Fifty Thousand Dollars
($50,000) for entities licensed under the Xxxx-Xxxxx Health Care Service Plan
Act of 1975.
Section 10.6. Limitation on Issuance of Capital Stock. Except as
permitted by Section 10.4 and except for issuances, sales, assignments or other
disposition to Parent, or to a Subsidiary which is the parent of the issuer,
Parent will not permit any Subsidiary to, at any time issue, sell, assign, or
otherwise dispose of (a) any of its capital stock (or other equity interests),
(b) any securities exchangeable for or convertible into or carrying any rights
to acquire any of its capital stock (or other equity interests), or (c) any
option, warrant, or other right to acquire any of its capital stock (or other
equity interests).
Section 10.7. Transactions With Affiliates. Parent will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of Parent or such Subsidiary, except in the ordinary
course of and pursuant to the reasonable requirements of Parent's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
Parent or such Subsidiary than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate of Parent or such Subsidiary.
Section 10.8. Disposition of Assets. Parent will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer, or otherwise dispose of
any of its assets, except (a) dispositions of inventory in the ordinary course
of business; (b) dispositions of unnecessary, obsolete or worn out equipment;
(c) the sale, discount or transfer of delinquent notes or accounts receivable in
the ordinary course of business for purposes of collection in accordance with
past practices; and (d) if no Default exists or would result therefrom, other
dispositions of assets if the aggregate book value of the assets disposed of
does not exceed Three Hundred Thousand Dollars ($300,000) in the aggregate
during any twelve (12) month period and the assets disposed of are not accounts
or general intangibles.
Section 10.9. Lines of Business. Parent will not, and will not permit
any Subsidiary to, engage in any line or lines of business activity other than
the businesses in which they are engaged on the Closing Date and any businesses
which are similar or related to those engaged in by Parent and the Subsidiaries
on the Closing Date.
Section 10.10. Sale and Leaseback. Parent will not, and will not permit
any Subsidiary to, enter into any arrangement with any Person pursuant to which
it leases from such Person real or personal property that has been or is to be
sold or transferred, directly or indirectly, by it to such Person.
Section 10.11. Prepayment of Debt. Parent will not, and will not permit
any Subsidiary to prepay or optionally redeem any Debt other than the
Obligations.
ARTICLE XI.
Financial Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the following
financial covenants:
Section 11.1. Consolidated Net Worth. Parent will at all times maintain
a Consolidated Net Worth in an amount not less than the sum of (a) Forty-One
Million Six Hundred Ninety-One Thousand Six Hundred Forty-Three Dollars
($41,691,643); plus (b) fifty percent (50%) of Parent's cumulative net income
determined on a consolidated basis in accordance with GAAP for each Fiscal
Quarter to have
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completely elapsed since August 31, 2000; plus (c) one hundred percent (100%) of
the net cash proceeds of any sale of equity securities or other contributions to
the capital of Parent received by Parent since August 31, 2000, calculated
without duplication. If Parent's consolidated net income for a Fiscal Quarter
is zero or less, no adjustment to the requisite level of Consolidated Net Worth
shall be made. "Consolidated Net Worth" means, at any particular time,
calculated without duplication, in conformity with GAAP, all amounts which would
be included as stockholders' equity on a consolidated balance sheet of Parent
and the Subsidiaries.
Section 11.2. Indebtedness to Capitalization. Parent will not at any
time permit the ratio of Indebtedness to Capitalization to exceed .50 to 1.00.
As used in this Section 11.2, the following terms have the following meanings:
"Capitalization" for means, at any particular time,
the sum of Consolidated Net Worth (as defined in Section 11.1)
plus Indebtedness.
"Indebtedness" means, at the time of determination,
the sum of the following determined for Parent and the
Subsidiaries on a consolidated basis (without duplication):
(a) all obligations for borrowed money; (b) all obligations of
such Person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all Capital Lease Obligations; (d)
all obligations to reimburse the issuer of any letter of
credit for amounts drawn or drawable; and (e) the outstanding
principal amount of the loans extended to North Central
Development Company which are secured by a Lien on the
facility located at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
leased by Parent.
Section 11.3. Fixed Charge Coverage. As of the end of each Fiscal
Quarter, Parent shall not permit the ratio of Cash Flow for the four (4) Fiscal
Quarters then ending to Fixed Charges as of such Fiscal Quarter end to be less
than 1.20 to 1.00. For purposes of this Section 11.3 the following terms shall
have the following meanings:
"Cash Flow" means, for any period, the total of the
following for Parent and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (A)
EBITDA; minus (B) any provision for (or plus any benefit from)
cash income or franchise taxes included in determining
Consolidated Net Income.
"Consolidated Net Income" means, for any period and
any Person (a "Subject Person"), such Subject Person's
consolidated net income (or loss) determined in conformity
with GAAP, but excluding:
(a) any extraordinary gains or losses or
nonrecurring revenue or expense;
(b) any gains or losses realized upon the
sale or other disposition of any capital stock or debt
security of any Person;
(c) any gains or losses in respect of the
write-up of any asset at greater than original cost or
write-down at less than original cost;
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48
(d) any gains or losses realized upon the
sale or other disposition of property, plant, equipment, or
intangible assets of the Subject Person or any of its
subsidiaries which is not sold or otherwise disposed of in the
ordinary course of business;
(e) any gains or losses from the disposal of
a discontinued business;
(f) any net gains or losses arising from the
extinguishment of any debt of the Subject Person or its
subsidiaries;
(g) any restoration to income of any
contingency reserve relating to any long term assets or long
term liability, except to the extent that provision for such
reserve was made out of income accrued during such period;
(h) the cumulative effect of any change in
an accounting principle on income of prior periods;
(i) any deferred credit representing the
excess of equity in any acquired company or assets at the date
of acquisition over the cost of the investment in such company
or asset;
(j) the income from any sale of assets in
which the book value of such assets prior to their sale had
been the book value inherited by the Subject Person from a
transfer of such assets;
(k) the income (or loss) of any Person
(other than a subsidiary) in which the Subject Person or a
subsidiary has an ownership interest; provided, however, that
(i) Consolidated Net Income shall include amounts in respect
of the income of such Person when actually received in cash by
the Subject Person or such subsidiary in the form of dividends
or similar distributions and (ii) Consolidated Net Income
shall be reduced by the aggregate amount of all investments,
regardless of the form thereof, made by the Subject Person or
any of its subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(l) the income of any subsidiaries to the
extent the payment of such income in the form of a
distribution or repayment of any Debt to the Subject Person or
a Subsidiary is not permitted, whether on account of any
restriction in by-laws, articles of incorporation or similar
governing document, any agreement or any law, statute,
judgment, decree, or governmental order, rule, or regulation
applicable to such Subsidiary;
(m) any reduction in or addition to income
tax expense resulting from an increase or decrease in a
deferred income tax asset due to the anticipation of future
income tax benefits;
(n) any reduction in or addition to income
tax expense due to the change in a statutory tax rate
resulting in an increase or decrease in a deferred income tax
asset or in a deferred income tax liability;
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(o) any gains or losses attributable to
returned surplus assets of any pension-benefit plan or any
pension credit attributable to the excess of (i) the return on
pension-plan assets over (ii) the pension obligation's service
cost and interest cost;
(p) the income or loss of any Person
acquired by the Subject Person or a subsidiary for any period
prior to the date of such acquisition; and
(q) the income from any sale of assets in
which the accounting basis of such assets had been the book
value of any Person acquired by the Subject Person or a
subsidiary prior to the date such Person became a subsidiary
or was merged into or consolidated with the Subject Person or
a subsidiary.
"EBITDA" means, for any period and any Person, the
total of the following each calculated without duplication on
a consolidated basis for such period: (a) Consolidated Net
Income; plus (b) any provision for (or less any benefit from)
income or franchise taxes included in determining Consolidated
Net Income; plus (c) interest expense (including the interest
portion of Capital Lease Obligations) deducted in determining
Consolidated Net Income; plus (d) amortization and
depreciation expense deducted in determining Consolidated Net
Income.
"Fixed Charges" means, as of any date of
determination, the total of the following for Parent and the
Subsidiaries calculated on a consolidated basis without
duplication but excluding any of the forgoing of any Prior
Target for any period prior to the date of such acquisition:
(a) cash interest expense (including the interest portion of
Capital Lease Obligations) for the four (4) Fiscal Quarter
period then ending; plus (b) one-fifth (1/5) of the Parent's
and the Subsidiaries' outstanding balance of the Loans; plus
(c) Capital Expenditures made during the four (4) Fiscal
Quarter period then ending; plus (d) payments made during the
four (4) Fiscal Quarter period then ending pursuant to any
Capital Lease Obligations.
"Prior Target" means all Targets acquired or whose
assets have been acquired in a transaction permitted by
subsection 10.5(a) or subsection 10.5(a) of the Existing
Credit Agreement.
Section 11.4. Indebtedness to Adjusted EBITDA. As of the last day of
each Fiscal Quarter, Parent shall not permit the ratio of Indebtedness
outstanding as of such day to the Adjusted EBITDA for the four (4) Fiscal
Quarter period then ended to exceed 2.00 to 1.00. As used in this Section 11.4,
"Adjusted EBITDA" means, for any period (the "Subject Period"), the total of the
following calculated without duplication for such period: (a) Parent's EBITDA
(as defined in Section 11.3); plus (b) on a pro forma basis, the pro forma
EBITDA of each Prior Target or, as applicable, the EBITDA of a Prior Target
attributable to the assets acquired from such Prior Target, for any portion of
such Subject Period occurring prior to the date of the acquisition of such Prior
Target or the related assets but only to the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 43
50
extent such EBITDA for such Prior Target can be established in a manner
satisfactory to Agent based on financial statements of the Prior Target prepared
in accordance with GAAP.
Section 11.5. Current Ratio. Parent will not at any time permit the
ratio of Current Assets to Current Liabilities to be less than 1.00 to 1.00. As
used in this Section 11.5, the following terms have the following meanings:
"Current Assets" means, as of any date, all amounts
which are required to be carried as current assets on a
consolidated balance sheet of Parent at such date in
accordance with GAAP.
"Current Liabilities" means, as of any date, all
amounts which are required to be carried as current
liabilities on a consolidated balance sheet of Parent at such
date in accordance with GAAP, excluding (i) for purposes of
the calculation at any time prior to the Closing Date only,
$3,600,000 of the current maturities of long-term debt
reflected on the balance sheet of Parent as of Xxxxxx 00, 0000
xxx (xx) ,xx all times, the outstanding principal balance of
the Loans.
ARTICLE XII.
Default
Section 12.1. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Borrower shall fail to pay when due any principal,
interest, fees, or other Obligations payable under any Loan Document or any part
thereof.
(b) Any representation, warranty, or certification made or
deemed made by Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with any Loan Document
shall be false, misleading, or erroneous in any material respect when made or
deemed to have been made.
(c) Borrower or any Obligated Party shall fail to perform,
observe or comply with (i) any covenant, agreement, or term contained in clause
(g) of Section 9.2, Sections 9.5 or 9.6, Article 10, or Article 11 of this
Agreement or (ii) any covenant, agreement, or term contained in any Loan
Document relating to the creation, perfection or protection of the Liens
required to be granted to secure the obligation of any Obligated Party under the
Loan Documents.
(d) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in any Loan
Document (other than covenants to pay the Obligations and the covenants
described in subsection 12.1(c)) and such failure shall continue for a period of
twenty (20) days after the earlier of (i) the date Agent or any Bank provides
Borrower with notice thereof or (ii) the date Borrower or Parent should have,
with the exercise of reasonable diligence, notified Agent thereof in accordance
with subsection 9.1(g).
(e) Borrower, any Obligated Party or any other Subsidiary
shall (i) apply for or consent to the appointment of, or the taking of
possession by a receiver, custodian, trustee, examiner, liquidator, or the like
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code
AMENDED AND RESTATED CREDIT AGREEMENT - Page 44
51
(as now or hereafter in effect, the "Bankruptcy Code"), (iv) institute any
proceeding or file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, (vi) admit in
writing its inability to, or be generally unable to pay its debts as such debts
become due, or (vii) take any corporate action for the purpose of effecting any
of the foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of Borrower, any Obligated Party or any other
Subsidiary, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement, or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator, or the like of Borrower, any such
Obligated Party or any such other Subsidiary or of all or any substantial part
of its property, or (iii) similar relief in respect of Borrower, any such
Obligated Party or any such other Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of thirty (30) or more days,
or an order for relief against Borrower, any Obligated Party or any other
Subsidiary shall be entered in an involuntary case under the Bankruptcy Code.
(g) Borrower, any Obligated Party or any other Subsidiary
shall fail to discharge within a period of thirty (30) days after the
commencement thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000) against any of its assets or properties.
(h) A final judgment or judgments for the payment of money in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate shall be
rendered by a court or courts against Borrower, any Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof, and Borrower or the
relevant Subsidiary or Obligated Party shall not, within said period of thirty
(30) days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) Borrower, any Obligated Party or any other Subsidiary
shall fail to pay when due any principal of or interest on any Debt if the
aggregate principal amount of the affected Debt equals or exceeds One Hundred
Thousand Dollars ($100,000) (other than the Obligations), or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been required
to be prepaid prior to the stated maturity thereof or any event shall have
occurred with respect to any Debt in the aggregate principal amount equal to or
in excess of One Hundred Thousand Dollars ($100,000) that permits (or, with the
giving of notice or lapse of time or both, would permit) any holder or holders
of such Debt or any Person acting on behalf of such holder or holders to
accelerate the maturity thereof or require any such prepayment.
(j) This Agreement shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by Borrower, any Obligated Party or any other
Subsidiary or Borrower or any Obligated Party shall deny that it has any further
liability or obligation under any of the Loan Documents, or any lien or security
interest created by the Loan Documents shall for any reason (other than the
negligence of Agent or the release thereof in accordance with the Loan
Documents) cease to be a valid, first priority perfected security interest in
and lien upon any of the Collateral purported to be covered thereby.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 45
52
(k) Any of the following events shall occur or exist with
respect to Parent or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii)
the filing under Section 4041 of ERISA of a notice of intent to terminate any
Plan or the termination of any Plan; (iv) any event or circumstance that might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings; or
(v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Banks subject Parent to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably be
expected to exceed One Hundred Thousand Dollars ($100,000).
(l) Ninety (90) days shall have elapsed after the Management
Change Date and Xxxxx X. XxXxxx shall not have been replaced as President and
Chief Executive Officer of the Parent with an individual possessing
substantially the same qualifications as Xxxxx X. XxXxxx. As used in this clause
(l), the term "Management Change Date" means the date when Xxxxx X. XxXxxx (i)
ceases to hold the titles and responsibilities of President and Chief Executive
Officer of the Parent or (ii) otherwise fails to be active in the management of
the day to day operations of the Parent.
(m) Any Person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Exchange Act) shall become the direct or indirect beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of more than 20% of the
total voting power of all classes of capital stock then outstanding of Parent
entitled (without regard to the occurrence of any contingency) to vote in
elections of directors of Parent except as a result of stock repurchases by
Parent otherwise authorized hereunder.
Section 12.2. Remedies. If any Event of Default shall occur and be
continuing, Agent may (and if directed by Required Banks, shall) do any one or
more of the following:
(a) Acceleration. By notice to Borrower, declare all
outstanding principal of and accrued and unpaid interest on the Revolving Notes
and all other amounts payable by Borrower under the Loan Documents immediately
due and payable, and the same shall thereupon become immediately due and
payable, without further notice, demand, presentment, notice of dishonor, notice
of acceleration, notice of intent to accelerate, protest, or other formalities
of any kind, all of which are hereby expressly waived by Borrower and Parent.
(b) Termination of Revolving Commitments. Terminate the
Revolving Commitments without notice to Borrower or Parent.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to Agent for the benefit of itself and the Banks to secure payment and
performance of the Obligations in accordance with the terms of the Loan
Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
subsection 12.1(e) or (f), the Revolving Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest on the Revolving Notes and all other amounts payable by Borrower
AMENDED AND RESTATED CREDIT AGREEMENT - Page 46
53
under the Loan Documents shall thereupon become immediately due and payable
without notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest, or other formalities of any kind, all
of which are hereby expressly waived by Borrower and Parent.
Section 12.3. Performance by Agent. If Borrower or any Obligated Party
shall fail to perform any covenant or agreement in accordance with the terms of
the Loan Documents, Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of Borrower or the
applicable Obligated Party. In such event, Borrower shall, at the request of
Agent, promptly pay any amount expended by Agent or the Banks in connection with
such performance or attempted performance to Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and including
the date of such expenditure to but excluding the date such expenditure is paid
in full. Notwithstanding the foregoing, it is expressly agreed that neither
Agent nor any Bank shall have any liability or responsibility for the
performance of any obligation of Borrower or any Obligated Party under any Loan
Document.
Section 12.4. Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to Parent or Borrower (any such notice being hereby expressly
waived by Borrower and Parent), to set off and apply any and all deposits
(general, time, demand, provisional, or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of Borrower or Parent against any and all of the Obligations, irrespective of
whether or not Agent or such Bank shall have made any demand under such Loan
Documents and although such Obligations may be unmatured. Each Bank agrees
promptly to notify Borrower (with a copy to Agent) after any such setoff and
application; provided, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights and remedies of each Bank
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Bank may have.
Section 12.5. Continuance of Default. For purposes of all Loan
Documents, a Default shall be deemed to have continued and exist until Agent
shall have actually received evidence satisfactory to Agent that such Default
shall have been remedied.
ARTICLE XIII.
Agent
Section 13.1. Appointment, Powers and Immunities. Each Bank hereby
appoints (and continues the appointment created by the Existing Credit
Agreement) and authorizes Chase to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to Agent by
the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Neither Agent nor any of its Affiliates,
officers, directors, employees, attorneys, or agents shall be liable for any
action taken or omitted to be taken by any of them hereunder or otherwise in
connection with any Loan Document or any of the other Loan Documents except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, Agent (i) may treat the payee of any
Revolving Note as the holder thereof until it receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Agent; (ii) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of any Loan Document be a
trustee or fiduciary for any Bank; (iii) shall not be required to initiate any
litigation or collection proceedings under any Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the Banks
for any recitals, statements, representations, or warranties contained in any
Loan Document, or any certificate or other documentation referred to or provided
for in,
AMENDED AND RESTATED CREDIT AGREEMENT - Page 47
54
or received by any of them under, any Loan Document, or for the value, validity,
effectiveness, enforceability, or sufficiency of any Loan Document or any other
documentation referred to or provided for therein or for any failure by any
Person to perform any of its obligations thereunder; (v) may consult with legal
counsel (including counsel for Parent), independent public accountants, and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, or experts; and (vi) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent, certificate, or
other instrument or writing believed by it to be genuine and signed or sent by
the proper party or parties. As to any matters not expressly provided for by any
Loan Document, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by
Required Banks, and such instructions of Required Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks; provided,
however, that Agent shall not be required to take any action which exposes it to
personal liability or which is contrary to any Loan Document or applicable law.
Section 13.2. Rights of Agent as a Bank. With respect to its Revolving
Commitment, the Loans made by it and the Revolving Note issued to it, Chase (and
any successor acting as Agent) in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise the same
as though it were not acting as Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may (without having to account therefor to
any Bank) accept deposits from, lend money to (as disclosed pursuant to Section
13.9 or otherwise), act as trustee under indentures of, provide merchant banking
services to, and generally engage in any kind of banking, trust, or other
business with Borrower, any Obligated Party or any other Subsidiary, and any
other Person who may do business with or own securities of Borrower, any
Obligated Party or any other Subsidiary, all as if it were not acting as Agent
and without any duty to account therefor to the Banks.
Section 13.3. Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless Agent has received
notice from a Bank, Parent or Borrower specifying such Default and stating that
such notice is a "Notice of Default." In the event that Agent receives such a
notice of the occurrence of a Default, Agent shall give prompt notice thereof to
the Banks (and shall give each Bank prompt notice of each such non-payment).
Agent shall (subject to Section 13.1) take such action with respect to such
Default as shall be directed by Required Banks, provided that unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable and in the best interest of the Banks.
Section 13.4. Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY
AGENT FROM AND HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER
SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF BORROWER AND
PARENT UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY AGENT UNDER OR IN RESPECT OF ANY OF THE
LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE
FOREGOING TO THE EXTENT CAUSED BY AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE
AMENDED AND RESTATED CREDIT AGREEMENT - Page 48
55
BANKS THAT AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST
ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES AND
EXPENSES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF AGENT.
WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO
REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE
BASIS OF THE COMMITMENTS PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES) INCURRED BY AGENT IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT,
OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE)
OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
BORROWER OR PARENT.
Section 13.5. Independent Credit Decisions. Each Bank agrees that it
has independently and without reliance on Agent or any other Bank, and based on
such documentation and information as it has deemed appropriate, made its own
credit analysis of Borrower and decision to enter into any Loan Document and
that it will, independently and without reliance upon Agent or any other Bank,
and based upon such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in taking or not
taking action under any Loan Document. Except as otherwise specifically set
forth herein, Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any Obligated Party of any Loan
Document or to inspect the properties or books of Borrower or any Obligated
Party. Except for notices, reports, and other documents and information
expressly required to be furnished to the Banks by Agent hereunder or under the
other Loan Documents, Agent shall not have any duty or responsibility to provide
any Bank with any credit or other financial information concerning the affairs,
financial condition, or business of Borrower or any Obligated Party (or any of
their Affiliates) which may come into the possession of Agent or any of its
Affiliates.
Section 13.6. Several Revolving Commitments. The Revolving Commitments
and other obligations of the Banks under any Loan Document are several. The
default by any Bank in making a Loan in accordance with its Revolving Commitment
shall not relieve the other Banks of their obligations under any Loan Document.
In the event of any default by any Bank in making any Loan, each non-defaulting
bank shall be obligated to make its Loan but shall not be obligated to advance
the amount which the defaulting Bank was required to advance hereunder. No Bank
shall be responsible for any act or omission of any other Bank.
Section 13.7. Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to the Banks and Borrower, and Agent may be removed at
any time by Required Banks if it has breached its obligations under the Loan
Documents. Upon any such resignation or removal, Required Banks will have the
right to appoint a successor Agent with Borrower's consent, which shall not be
unreasonably withheld. If no successor Agent shall have been so appointed by
Required Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and having
combined capital and surplus of at least One Hundred Million Dollars
($100,000,000). Upon the acceptance of its appointment as successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, privileges,
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56
immunities, contractual obligations, and duties of the resigning or removed
Agent, and the resigning or removed Agent shall be discharged from its duties
and obligations under the Loan Documents. After any Agent's resignation or
removal as Agent, the provisions of this Article 13 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was Agent.
Section 13.8. Agent Fee. Parent and Borrower, jointly and severally,
agree that on the initial date (if any) upon which Chase assigns all or any part
of the Loans or Revolving Commitments in accordance with this Agreement that
Borrower and Parent will enter into an agreement with Agent to pay to Agent, on
each anniversary of the Closing Date, the administrative fee established by
Chase at that time.
Section 13.9. Intercreditor Provisions. The Banks acknowledge that the
Obligated Parties are indebted to Chase pursuant to the Guarantees described on
Schedule 10.1 and have granted Liens to Chase to secure obligations arising in
connection therewith as reflected on Schedule 10.2 (such Liens granted pursuant
to the documents described in item 2 on Schedule 10.2 herein the "Lease Liens"
and the property in which the Lease Liens has been granted which is specifically
described on Annex A to Schedule 10.2, herein the "Lease Collateral"). In order
to induce the Banks to enter into this Agreement, Chase subordinates the Lease
Liens and makes them junior, second and inferior to the security interest of
Agent held for the benefit of the Banks under the Loan Documents in the Lease
Collateral. The foregoing subordination shall not impair the rights Chase has as
a Bank hereunder.
ARTICLE XIV.
Miscellaneous
Section 14.1. Expenses. Parent and Borrower hereby, jointly and
severally, agree to pay on demand: (a) all costs and expenses of Agent arising
in connection with the preparation, negotiation, execution, and delivery of the
Loan Documents executed and delivered on the Closing Date, including, without
limitation, the reasonable fees and expenses of legal counsel for Agent; (b) all
costs and expenses of Agent arising in connection with (i) the preparation,
negotiation, execution, and delivery of any of the Loan Documents executed and
delivered after the Closing Date and any and all amendments or other
modifications to the Loan Documents and (ii) the syndication of the Loans,
including in all instances, without limitation, the fees and expenses of legal
counsel for Agent; (b) all costs and expenses of Agent and the Banks in
connection with any Default and the enforcement of any Loan Document, including,
without limitation, the fees and expenses of legal counsel for Agent and each of
the Banks (including the allocated costs of in house counsel); (c) all transfer,
stamp, documentary, or other similar taxes, assessments, or charges levied by
any Governmental Authority in respect of any Loan Document; (d) all costs,
expenses, assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by any Loan Document; and (e) all other costs and expenses incurred
by Agent in connection with any Loan Document, including, without limitation,
all costs, expenses, and other charges incurred in connection with obtaining any
audit or appraisal in respect of the Collateral.
Section 14.2. Indemnification. PARENT AND BORROWER, JOINTLY AND
SEVERALLY, INDEMNIFY AGENT AND EACH BANK AND EACH AFFILIATE (INCLUDING WITHOUT
LIMITATION, CHASE SECURITIES, INC.) THEREOF AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT
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WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION,
EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE
LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS,
(C) ANY BREACH BY BORROWER OR ANY OBLIGATED PARTY OF ANY REPRESENTATION,
WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS,
(D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF
ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE
PROPERTIES OR ASSETS OF PARENT OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING;
PROVIDED THAT THE PERSON ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION SHALL NOT
BE INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, OR EXPENSES ARISING OUT OF
OR RESULTING FROM ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS
OBLIGATIONS UNDER THE LOAN DOCUMENTS. WITHOUT LIMITING ANY PROVISION OF ANY LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES)
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
PERSON.
Section 14.3. Limitation of Liability. None of Agent, any Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and Parent, Borrower and, by the execution of the
Loan Documents to which it is a party each other Obligated Party, hereby waives,
releases, and agrees not to xxx any of them upon, any claim for any special,
indirect, incidental, consequential, or punitive damages suffered or incurred by
Parent, Borrower or any other Obligated Party in connection with, arising out
of, or in any way related to any of the Loan Documents, or any of the
transactions contemplated by any of the Loan Documents.
Section 14.4. No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by Agent or any Bank shall
have the right to act exclusively in the interest of Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to Parent, Borrower or any of
Parent's shareholders or any other Person.
Section 14.5. No Fiduciary Relationship. The relationship between
Borrower and the Obligated Parties on the one hand and Agent and each Bank on
the other is solely that of debtor and creditor, and neither Agent nor any Bank
has any fiduciary or other special relationship with Borrower or any Obligated
Parties, and no term or condition of any of the Loan Documents shall be
construed so as to deem the relationship between Borrower and the Obligated
Parties on the one hand and Agent and each Bank on the other and any Bank to be
other than that of debtor and creditor.
Section 14.6. Equitable Relief. Parent and Borrower recognize that in
the event Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy at
law may prove to be inadequate relief to Agent and the Banks. Parent and
Borrower therefore agree that Agent and the Banks, if Agent or the Required
Banks so request, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 51
58
Section 14.7. No Waiver; Cumulative Remedies. No failure on the part of
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in the Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 14.8. Successors and Assigns.
(a) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Parent nor Borrower may assign or transfer any of its rights or
obligations hereunder without the prior written consent of Agent and all of the
Banks.
(b) Participations. Any Bank may sell participations to one or
more banks or other institutions in or to all or a portion of its rights and
obligations under the Loan Documents (including, without limitation, all or a
portion of its Revolving Commitments and the Loans owing to it); provided,
however, that (i) such Bank's obligations under the Loan Documents (including,
without limitation, its Revolving Commitments) shall remain unchanged, (ii) such
Bank shall remain solely responsible to Borrower for the performance of such
obligations, (iii) such Bank shall remain the holder of its Revolving Notes and
owner of its participation or other interests for all purposes of any Loan
Document, (iv) Borrower shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under the Loan
Documents, and (v) such Bank shall not sell a participation that conveys to the
participant the right to vote or give or withhold consents under any Loan
Document, other than the right to vote upon or consent to (1) any increase of
such Bank's Revolving Commitments, (2) any reduction of the principal amount of,
or interest to be paid on, the Loans or other Obligations of such Bank, (3) any
reduction of any commitment fee, or other amount payable to such Bank under any
Loan Document, (4) any postponement of any date for the payment of any amount
payable in respect of the Loans or other Obligations of such Bank, or (5) the
release of Borrower, any Obligated Party or any Collateral.
(c) Assignments. Parent, Borrower and each of the Banks agree
that any Bank (the "Assigning Bank") may at any time assign to an Eligible
Assignee all, or a proportionate part of all, of its rights and obligations
under the Loan Documents (including, without limitation, its Revolving
Commitments and Loans) (each an "Assignee"); provided, however, that (i) each
such assignment shall be of a consistent, and not a varying, percentage of all
of the assigning Bank's rights and obligations under the Loan Documents, (ii)
except in the case of an assignment of all of a Bank's rights and obligations
under the Loan Documents, the amount of the Revolving Commitments of the
assigning Bank being assigned, the outstanding principal amount of the related
Loans, pursuant to each assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
Five Million Dollars ($5,000,000), (iii) the parties to each such assignment
shall execute and deliver to Agent for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with the
Revolving Notes subject to such assignment, and a processing and recordation fee
of Three Thousand Dollars ($3,000) payable by the assignor or assignee (and not
Borrower); provided that such fee shall not be payable to Agent if the Assigning
Bank is making an assignment to one of its Affiliates; and (iv) Borrower and
Agent must consent to such assignment, which consent shall not be unreasonably
withheld, with such consents to be evidenced by Borrower's and Agent's execution
of the Assignment and Acceptance; provided that Borrower's consent will not be
necessary if the Assigning Bank is making an assignment to one of its
Affiliates. Upon such execution, delivery, acceptance, and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, or, if
AMENDED AND RESTATED CREDIT AGREEMENT - Page 52
59
so specified in such Assignment and Acceptance, the date of acceptance thereof
by Agent, (x) the assignee thereunder shall be a party hereto as a "Bank" and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder and under the Loan Documents, and (y) the Bank that is an
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Documents (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of a Bank's rights and obligations under the Loan Documents, such Bank
shall cease to be a party thereto). Agent shall maintain at its Principal Office
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks and the
Revolving Commitments of, and principal amount of the Loans owing to each Bank
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Agent, and the Banks may treat each Person whose name is recorded in the
Register as a Bank hereunder for all purposes under the Loan Documents. The
Register shall be available for inspection by Borrower or any Bank at any
reasonable time and from time to time upon reasonable prior notice. Upon its
receipt of an Assignment and Acceptance executed by an Assigning Bank and
Assignee representing that it is an Eligible Assignee, together with any
Revolving Notes subject to such assignment, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit "B"
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt written notice thereof
to Borrower. Within five (5) Business Days after its receipt of such notice
Borrower, at its expense, shall execute and deliver to Agent in exchange for the
surrendered Revolving Notes new Revolving Notes to the order of such Eligible
Assignee in an amount equal to the Revolving Commitments or Loans assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained Revolving Commitments or Loans, Revolving Notes to the order of the
assigning Bank in an amount equal to the Revolving Commitments and Loans
retained by it hereunder (each such promissory note shall constitute a
"Revolving Note" for purposes of the Loan Documents). Such new Revolving Notes
shall be in an aggregate principal amount of the surrendered Revolving Notes,
shall be dated the effective date of such Assignment and Acceptance, and shall
otherwise be in substantially the form of Exhibit "A" hereto.
(d) Information. Any Bank may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Parent or its Subsidiaries furnished to
such Bank by or on behalf of Parent or its Subsidiaries.
(e) Pledge to Federal Reserve. Notwithstanding anything in
this Section 14.8 to the contrary, any Bank may, in the ordinary course of its
business, pledge its Revolving Notes to any United States Federal Reserve Bank
to secure advances made by such Federal Reserve Bank to such Bank.
Section 14.9. Survival. All representations and warranties made in any
Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by Agent or any Bank or any closing
shall affect the representations and warranties or the right of Agent or any
Bank to rely upon them. Without prejudice to the survival of any other
obligation of Borrower or Parent hereunder, the obligations of Borrower and
Parent under Article 6 and Sections 14.1 and 14.2 shall survive repayment of the
Revolving Notes and termination of the Revolving Commitments.
Section 14.10. Entire Agreement; Amendment and Restatement;
Ratification. THIS AGREEMENT, THE REVOLVING NOTE, AND THE OTHER LOAN DOCUMENTS
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS,
AMENDED AND RESTATED CREDIT AGREEMENT - Page 53
60
AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF (PROVIDED THAT THE INDEMNITY, EXPENSE REIMBURSEMENT AND FEE PROVISIONS OF
THE COMMITMENT LETTER DATED OCTOBER 2, 2000, FROM CHASE TO PARENT ARE NOT
REPLACED BY THE LOAN DOCUMENTS) AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO. This Agreement amends and restates the Existing Credit Agreement in its
entirety. The execution of this Agreement, the Revolving Note, and the other
Loan Documents executed in connection herewith does not extinguish the
indebtedness outstanding in connection with the Existing Credit Agreement nor
does it constitute a novation. At all times during the period prior to the date
hereof, all of the provisions of the Existing Credit Agreement are hereby
ratified and confirmed and shall remain in full force and effect. Any reference
in any Loan Document to the Existing Credit Agreement is hereby amended to be a
reference to this Agreement. The Parent, Borrower, Agent and the Banks ratify
and confirm each of the Loan Documents entered into prior to the Closing Date
(but excluding the Existing Credit Agreement) and agree that such Loan Documents
continue to be legal, valid, binding and enforceable in accordance with their
respective terms, except as modified hereby as described below. PARENT, BORROWER
AND EACH OTHER OBLIGATED PARTY (BY ITS EXECUTION OF THIS AGREEMENT BELOW),
REPRESENTS AND WARRANTS THAT AS OF THE DATE HEREOF THERE ARE NO CLAIMS OR
OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN
DOCUMENTS. TO INDUCE AGENT AND THE BANKS TO ENTER INTO THIS AGREEMENT, PARENT,
BORROWER AND EACH OTHER OBLIGATED PARTY WAIVES ANY AND ALL CLAIMS, OFFSETS,
DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE
HEREOF AND HEREBY RELEASES AGENT AND THE BANKS AND THEIR OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, AND ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY
AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION
OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH
PARENT, BORROWER OR ANY OTHER OBLIGATED PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE
OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE CLOSING DATE AND
FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY. Without limiting the generality of the foregoing and notwithstanding
anything in any Loan Document to the contrary, Parent, Borrower, the other
Obligated Parties, Agent and the Banks agree and acknowledge that:
(i) the term "Obligations" as used in the Guaranty,
the Parent Security Agreement and the Parent Pledge Agreement means the
"Obligations" as defined herein;
(ii) the term "Obligations" as used in the Parent
Security Agreement and the Parent Pledge Agreement also includes the
obligations, indebtedness and liability of the Parent under this Agreement and
the Guaranty, whether now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several;
(iii) the term "Secured Obligations" as used in the
Subsidiary Security Agreement and the Subsidiary Pledge Agreement, when used
with respect to Borrower only, includes without limitation, the "Obligations,"
as defined herein;
(iv) the term "Borrower" as used in the Guaranty, the
Parent Security Agreement, the Parent Pledge Agreement, the Subsidiary Pledge
Agreements or the Subsidiary Security Agreement means Horizon Mental Health
Management, Inc. as the "Borrower" hereunder and successor by assumption to the
obligations of Parent; and
AMENDED AND RESTATED CREDIT AGREEMENT - Page 54
61
(v) any reference in the Security Documents or the
Guaranty to any Revolving Note, Term Note or Note, shall mean the Revolving
Notes executed pursuant thereto.
Section 14.11. Amendments. No amendment or waiver of any provision of
any Loan Document to which Borrower or Parent is a party, nor any consent to any
departure by Borrower or Parent therefrom, shall in any event be effective
unless the same shall be agreed or consented to by Required Banks, Parent and
Borrower, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, that
no amendment, waiver, or consent shall, unless in writing and signed by all of
the Banks, Parent and Borrower, do any of the following: (a) increase Revolving
Commitments of the Banks; (b) reduce the principal of, or interest on, the
Revolving Notes, or any fees or other amounts payable hereunder; (c) postpone
any date fixed for any payment of principal of, or interest on, the Revolving
Notes, or any fees or other amounts payable hereunder; (d) waive or amend any of
the conditions specified in Article 7; (e) change the percentage of the
Revolving Commitments or of the aggregate unpaid principal amount of the
Revolving Notes or the number of Banks which shall be required for the Banks or
any of them to take any action under any Loan Document; (f) change any provision
contained in this Section 14.11; or (g) release any Collateral or release
Borrower or any Obligated Party from liability. Notwithstanding anything to the
contrary contained in this Section, no amendment waiver, or consent shall be
made with respect to Article 13 hereof without the prior written consent of
Agent.
Section 14.12. Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall at
any time exceed the Maximum Rate. If at any time the interest rate (the
"Contract Rate") for any Obligation shall exceed the Maximum Rate, thereby
causing the interest accruing on such Obligation to be limited to the Maximum
Rate, then any subsequent reduction in the Contract Rate for such Obligation
shall not reduce the rate of interest on such Obligation below the Maximum Rate
until the aggregate amount of interest accrued on such Obligation equals the
aggregate amount of interest which would have accrued on such Obligation if the
Contract Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount permitted
by applicable law. If any excess of interest in such respect is hereby provided
for, or shall be adjudicated to be so provided, in any Loan Document or
otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither Borrower nor the sureties,
guarantors, successors, or assigns of Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any Bank
ever receives, collects, or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by applicable law shall be
applied as a payment and reduction of the principal of the Obligations, and, if
the principal of the Obligations has been paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, Borrower and each Bank shall, to the
extent permitted by applicable law, (a) characterize any non-principal payment
as an expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations so that interest for the entire term
does not exceed the Maximum Rate.
Section 14.13. Notices. All notices and other communications provided
for in any Loan Document to which Borrower or any Obligated Party is a party
shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 55
62
"Address for Notices" specified below its name on the signature pages hereof
and, if to an Obligated Party, at the address for notices for Parent, or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party given in accordance with this Section. Except as
otherwise provided in any Loan Document, all such communications shall be deemed
to have been duly given when transmitted by telecopy, subject to telephone
confirmation of receipt, or when personally delivered or, in the case of a
mailed notice, three (3) Business Days after being duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to
Agent pursuant to Section 5.3 shall not be effective until received by Agent.
Section 14.14. Governing Law; Venue of Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. ANY
ACTION OR PROCEEDING AGAINST PARENT OR BORROWER UNDER OR IN CONNECTION WITH ANY
LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE COURT LOCATED IN DALLAS, TEXAS OR ANY
FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS. PARENT AND BORROWER EACH HEREBY
IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b)
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. PARENT AND BORROWER EACH AGREE THAT SERVICE OF PROCESS UPON IT MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS
SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14.13 OF
THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL
AFFECT THE RIGHT OF AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY BANK TO BRING ANY
ACTION OR PROCEEDING AGAINST PARENT, BORROWER OR WITH RESPECT TO ANY OF THEIR
RESPECTIVE PROPERTY IN COURTS IN OTHER JURISDICTION. ANY ACTION OR PROCEEDING BY
PARENT OR BORROWER AGAINST AGENT OR ANY BANK SHALL BE BROUGHT ONLY IN A COURT
LOCATED IN DALLAS, TEXAS.
Section 14.15. Counterparts. This Agreement may be executed in one or
more counterparts and on telecopy counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 14.16. Severability. Any provision of any Loan Document held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of any Loan Document and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 14.17. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 14.18. Non-Application of Chapter 346 of The Finance Code of
Texas. The provisions of Chapter 346 of The Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 14.19. Construction. Parent, Borrower, each other Obligated
Party (by its execution of the Loan Documents to which its is a party), Agent,
and each Bank acknowledges that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review the
Loan Documents with its legal counsel and that the Loan Documents shall be
construed as if jointly drafted by the parties thereto.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 56
63
Section 14.20. Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 14.21. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PARENT AND BORROWER:
HORIZON HEALTH CORPORATION
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------
Authorized Officer for both Parent and Borrower
Address for Notices:
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Chief Financial Officer
AMENDED AND RESTATED CREDIT AGREEMENT - Page 57
64
AGENT AND BANKS:
---------------
THE CHASE MANHATTAN BANK
(as successor-in-interest
by merger to the Chase Bank
of Texas, National
Association who was
formerly known as TEXAS
COMMERCE BANK NATIONAL
ASSOCIATION), individually
as a Bank and as Agent
By: /s/ D. XXXXX XXXXXX
--------------------------------------
D. Xxxxx Xxxxxx, Senior Vice President
Address for Notices:
MAIL ADDRESS:
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
HAND DELIVERY ADDRESS:
00000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: D. Xxxxx Xxxxxx
Xxxxx Xxxxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
00000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
AMENDED AND RESTATED CREDIT AGREEMENT - Page 58
65
OBLIGATED PARTY CONSENT
Each Obligated Party (i) consents and agrees to this Amended and
Restated Credit Agreement including, without limitation, Section 14.10 of this
Amended and Restated Credit Agreement; (ii) agrees that the Guaranty, Subsidiary
Security Agreement, and the Subsidiary Pledge Agreement to which it is a party
shall remain in full force and effect and shall continue to be the legal, valid,
and binding obligation of such Obligated Party enforceable against it in
accordance with its terms; (iii) agrees that the "Obligations" as defined herein
are "Obligations" as defined in the Guaranty; and (iv) agrees that any reference
to the "Borrower" in the Guaranty, Subsidiary Security Agreement or Subsidiary
Pledge Agreement shall mean Horizon Mental Health Management, Inc. as the
"Borrower" hereunder successor by assumption to the obligations of the Parent.
OBLIGATED PARTIES:
MENTAL HEALTH OUTCOMES, INC.
GERIATRIC MEDICAL CARE, INC.
SPECIALTY REHAB MANAGEMENT, INC.
HHMC PARTNERS, INC.
HORIZON BEHAVIORAL SERVICES, INC.
FLORIDA PSYCHIATRIC ASSOCIATES, INC.
FLORIDA PSYCHIATRIC MANAGEMENT, INC.
FPMBH OF TEXAS, INC.
HMHM of Tennessee, Inc.
Horizon Behavioral Services-Colorado, Inc.
By: /s/ XXXXX X. XxXXXX
------------------------------------------------
Name: Xxxxx X. XxXxxx
-------------------------------------------
Authorized Officer for each Obligated Party
AMENDED AND RESTATED CREDIT AGREEMENT - Page 59
66
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Assignment and Acceptance
"C" Compliance Certificate
"D" Parent Joinder Agreement
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
1.1(a) Revolving Commitments
8.5 Existing Litigation
8.14 List of Subsidiaries
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
INDEX TO EXHIBITS AND SCHEDULES - Solo Page
