Exhibit 10.31
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$4,000,000
CREDIT AGREEMENT
BY AND BETWEEN
CHAMPION FINANCIAL CORPORATION
AND
XXXXXX TRUST AND SAVINGS BANK
DATED AS OF DECEMBER 15, 1997
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TABLE OF CONTENTS
Page
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SECTION 1. THE CREDITS...................................... 1
Section 1.1. Revolving Credit............................. 1
Section 1.2. Loans........................................ 1
Section 1.3. Term Credit.................................. 2
Section 1.4. Manner and Disbursement of Borrowings........ 2
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES............. 2
Section 2.1. Interest Rate Options........................ 2
Section 2.2. Minimum Amounts.............................. 4
Section 2.3. Computation of Interest...................... 4
Section 2.4. Manner of Rate Selection..................... 4
Section 2.5. Change of Law................................ 4
Section 2.6. Unavailability of Deposits or Inability to
Ascertain Adjusted LIBOR..................... 4
Section 2.7. Taxes and Increased Costs.................... 5
Section 2.8. Funding Indemnity............................ 6
Section 2.9. Lending Branch............................... 6
Section 2.10. Discretion of Bank as to Manner of Funding... 6
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND
CAPITAL ADEQUACY................................. 6
Section 3.1. Fees......................................... 6
Section 3.2. Voluntary Prepayments........................ 7
Section 3.3. Mandatory Prepayments........................ 7
Section 3.4. Terminations................................. 8
Section 3.5. Place and Application of Payments............ 8
Section 3.6. Notations.................................... 8
Section 3.7. Change in Capital Adequacy Requirements...... 9
SECTION 4. THE COLLATERAL AND THE GUARANTIES................ 9
Section 4.1. Security..................................... 9
Section 4.2. Guaranties................................... 9
Section 4.3. Further Assurances........................... 9
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SECTION 5. DEFINITIONS...................................... 10
Section 5.1. Definitions.................................. 10
Section 5.2. Interpretation............................... 18
SECTION 6. REPRESENTATIONS AND WARRANTIES................... 18
Section 6.1. Organization and Qualification............... 18
Section 6.2. Subsidiaries................................. 19
Section 6.3. Margin Stock................................. 19
Section 6.4. Financial Reports............................ 19
Section 6.5. Good Title................................... 20
Section 6.6. Litigation and Other Controversies........... 20
Section 6.7. Taxes........................................ 20
Section 6.8. Approvals.................................... 20
Section 6.9. Affiliate Transactions....................... 20
Section 6.10. Investment Company; Public Utility Holding
Company...................................... 21
Section 6.11. ERISA........................................ 21
Section 6.12. Compliance with Laws; Environmental Laws..... 21
Section 6.13. Other Agreements............................. 21
SECTION 7. CONDITIONS PRECEDENT............................. 22
Section 7.1. Each Advance................................. 22
Section 7.2. Initial Advance.............................. 22
SECTION 8. COVENANTS........................................ 24
Section 8.1. Corporate Existence, Etc..................... 24
Section 8.2. Maintenance of Properties.................... 24
Section 8.3. Taxes and Assessments........................ 24
Section 8.4. Insurance.................................... 24
Section 8.5. Financial Reports............................ 24
Section 8.6. Current Ratio................................ 26
Section 8.7. Leverage Ratio............................... 26
Section 8.8. Fixed Charge Coverage Ratio.................. 26
Section 8.9. Indebtedness for Borrowed Money.............. 26
Section 8.10. Liens........................................ 27
Section 8.11. Investments, Acquisitions, Loans, Advances
and Guaranties............................... 28
Section 8.12. Debentures and Subordinated Note............. 29
Section 8.13. Sales and Leasebacks......................... 29
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Section 8.14. Dividends and Certain Other Restricted
Payments..................................... 29
Section 8.15. Mergers, Consolidations and Sales............ 29
Section 8.16. ERISA........................................ 29
Section 8.17. Compliance with Laws......................... 30
Section 8.18. Burdensome Contracts With Affiliates......... 30
Section 8.19. No Changes in Fiscal Year.................... 30
Section 8.20. Formation of Subsidiaries.................... 30
Section 8.21. Inspection and Field Audit................... 30
Section 8.22. Use of Credit................................ 31
SECTION 9. EVENTS OF DEFAULT AND REMEDIES................... 31
Section 9.1. Events of Default............................ 31
Section 9.2. Non-Bankruptcy Defaults...................... 33
Section 9.3. Bankruptcy Defaults.......................... 33
SECTION 10. MISCELLANEOUS.................................... 33
Section 10.1. Holidays..................................... 33
Section 10.2. No Waiver, Cumulative Remedies............... 33
Section 10.3. Amendments, Etc.............................. 34
Section 10.4. Costs and Expenses........................... 34
Section 10.5. Documentary Taxes............................ 34
Section 10.6. Survival of Representations.................. 34
Section 10.7. Survival of Indemnities...................... 34
Section 10.8. Notices...................................... 34
Section 10.9. Headings..................................... 35
Section 10.10. Severability of Provisions................... 35
Section 10.11. Counterparts................................. 35
Section 10.12. Binding Nature, Governing Law, Etc........... 35
Section 10.13. Terms of Collateral Documents not Superseded. 36
Signature................................................................... 37
Exhibit A - Revolving Credit Note
Exhibit B - Term Note
Exhibit C - Borrowing Base
Exhibit D - Opinion of Counsel
Exhibit E - Compliance Certificate
Schedule 6.2 - Subsidiaries
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CHAMPION FINANCIAL CORPORATION
CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank
Chicago, Illinois
Ladies and Gentlemen:
The undersigned, Champion Financial Corporation, a Utah corporation
(the "Company"), applies to you (the "Bank") for your commitment, subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to extend credit to the Company, all as more
fully hereinafter set forth.
SECTION 1. THE CREDITS.
Section 1.1. Revolving Credit. Subject to the terms and conditions
hereof, the Bank agrees to extend a revolving credit (the "Revolving Credit") to
the Company which may be availed of by the Company from time to time during the
period from the date hereof to and including the Termination Date, at which time
the commitment of the Bank to extend credit under the Revolving Credit shall
expire. The Revolving Credit may be utilized by the Company in the form of
Revolving Credit Loans, all as more fully hereinafter set forth, provided that
the aggregate amount of Revolving Credit Loans outstanding at any one time shall
not exceed the lesser of (i) $1,500,000 (such amount, as the same may be reduced
pursuant to Section 3.4 hereof, being hereinafter referred to as the "Revolving
Credit Commitment"); provided, however, that Loans which bear interest with
reference to Adjusted LIBOR shall be in such greater amount as is required by
Section 2 hereof and (ii) the Available Borrowing Base. For all purposes of this
Agreement, where a determination of the unused or available amount of the
Revolving Credit Commitment is necessary, the Revolving Credit Loans shall be
deemed to utilize the Revolving Credit Commitment.
Section 1.2. Loans. Subject to all of the terms and conditions hereof,
the Revolving Credit may be utilized in the form of Revolving Credit Loans. Each
Revolving Credit Loan shall be in a minimum amount of $100,000 or such greater
amount which is an integral multiple of $50,000. Each Loan shall initially
constitute part of the Domestic Rate Portion except to the extent the Company
has otherwise timely elected that such Loan, or any part thereof, constitute
part of a LIBOR Portion as provided in Section 2 hereof. Each Revolving Credit
Loan shall be made against and evidenced by a single promissory note of the
Company in the form (with appropriate insertions) attached hereto as Exhibit A
(the "Revolving Credit Note") payable to the order of the Bank in the face
principal amount of $1,500,000. The
Revolving Credit Note shall be dated the date of issuance thereof, be expressed
to bear interest as set forth in Section 2.1 hereof, and be expressed to mature
on the Termination Date. Without regard to the principal amount of the Revolving
Credit Note stated on its face, the actual principal amount at any time
outstanding and owing by the Company on account of the Revolving Credit Note
shall be the sum of all Revolving Credit Loans made under this Section
(including for such purposes, as aforesaid, the Existing Revolving Credit Loans)
less all payments of principal actually received by the Bank.
Section 1.3. Term Credit. Subject to the terms and conditions hereof,
the Bank also agrees to make a term loan (the "Term Loan") to the Company in an
amount not exceeding $2,500,000 (the "Term Credit Commitment") on or before
December 15, 1997, at which time the Term Credit Commitment shall expire. There
shall be a maximum of one advance under the Term Credit Commitment. The Term
Loan shall be made against and evidenced by a single promissory note of the
Company in the form (with appropriate insertions) attached hereto as Exhibit B
(the "Term Note", and together with the Revolving Credit Note, the "Notes")
payable to the order of the Bank in the original principal amount of the Term
Loan. The Term Note shall be dated the date of issuance thereof, be expressed to
bear interest as set forth in Section 2.1 hereof, and be expressed to mature in
twelve (12) consecutive quarterly installments, commencing on March 31, 1998 and
continuing on the last day of each and every June, September, December and
March, with the final payment due on December 14, 2000, the date on which the
final installment is due, with each installment through and including December
31, 1998 in the amount of $100,000, with each installment from and including
March 31, 1999 through and including December 31, 1999 in the amount of $125,000
and with each installment from and including March 31, 2000 through and
including December 14, 2000 in the amount of $150,000 (except for the last such
installment on December 14, 2000, which shall be in the full amount of the then
unpaid balance of the Term Note). No amount paid or prepaid on the Term Note may
be reborrowed.
Section 1.4. Manner and Disbursement of Borrowings. The Company shall
give written or telephonic notice to the Bank (which notice shall be irrevocable
once given and, if given by telephone, shall be promptly confirmed in writing)
by no later than 11:00 a.m. (Chicago time) on the date the Company requests the
Bank to make a Loan hereunder. Each such notice shall specify the date of the
Loan requested (which must be a Business Day), whether such Loan is the Term
Loan or a Revolving Credit Loan and the amount of such Loan. The Company agrees
that the Bank may rely upon any written or telephonic notice given by any person
the Bank in good faith believes is an Authorized Representative without the
necessity of independent investigation and, in the event any telephonic notice
conflicts with the written confirmation, such notice shall govern if the Bank
has acted in reliance thereon. Subject to the provisions of Section 7 hereof,
the proceeds of each Loan shall be made available to the Company at the
principal office of the Bank in Chicago, Illinois, in immediately available
funds.
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SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1. Interest Rate Options.
(a) Subject to all of the terms and conditions of this Section 2,
portions of the principal indebtedness evidenced by the Notes (all of the
indebtedness evidenced by the Notes bearing interest at the same rate for the
same period of time being hereinafter referred to as a "Portion") may, at the
option of the Company, bear interest with reference to the Domestic Rate (the
"Domestic Rate Portion") or with reference to an Adjusted LIBOR ("LIBOR
Portions"), and Portions may be converted from time to time from one basis to
the other. All of the indebtedness evidenced by the Notes which is not part of a
LIBOR Portion shall constitute a single Domestic Rate Portion. All of the
indebtedness evidenced by the Notes which bears interest with reference to a
particular Adjusted LIBOR for a particular Interest Period shall constitute a
single LIBOR Portion. There shall not be more than three LIBOR Portions
applicable to the Notes outstanding at any one time. Anything contained herein
to the contrary notwithstanding, the obligation of the Bank to create, continue
or effect by conversion any LIBOR Portion shall be conditioned upon the fact
that at the time no Default or Event of Default shall have occurred and be
continuing. The Company hereby promises to pay interest on each Portion at the
rates and times specified in this Section 2.
(b) Domestic Rate Portion. Each Domestic Rate Portion shall bear
interest at the Domestic Rate as in effect from time to time, provided that if
the Domestic Rate Portion or any part thereof is not paid when due (whether by
lapse of time, acceleration or otherwise) such Portion shall bear interest,
whether before or after judgment, until payment in full thereof at the rate per
annum determined by adding 2% to the interest rate which would otherwise be
applicable thereto from time to time. Interest on the Domestic Rate Portion
shall be payable quarterly in arrears on the last day of each March, June,
September and December in each year (commencing March 31, 1998) and at maturity
of the Notes and interest after maturity (whether by lapse of time, acceleration
or otherwise) shall be due and payable upon demand. Any change in the interest
rate on the Domestic Rate Portion resulting from a change in the Domestic Rate
shall be effective on the date of the relevant change in the Domestic Rate.
(c) LIBOR Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding 3% to
the Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion
is not paid when due (whether by lapse of time, acceleration or otherwise) such
Portion shall bear interest, whether before or after judgment, until payment in
full thereof through the end of the Interest Period then applicable thereto at
the rate per annum determined by adding 2% to the interest rate which would
otherwise be applicable thereto, and effective at the end of such Interest
Period such LIBOR Portion shall automatically be converted into and added to the
Domestic Rate Portion and shall thereafter bear
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interest at the interest rate applicable to the Domestic Rate Portion after
default. Interest on each LIBOR Portion shall be due and payable on the last day
of each Interest Period applicable thereto and, with respect to any Interest
Period applicable to a LIBOR Portion in excess of 3 months, on the date
occurring every 3 months after the date such Interest Period began and at the
end of such Interest Period, and interest after maturity (whether by lapse of
time, acceleration or otherwise) shall be due and payable upon demand. The
Company shall notify the Bank on or before 11:00 a.m. (Chicago time) on the
third Business Day preceding the end of an Interest Period applicable to a LIBOR
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Bank of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Bank, such
LIBOR Portion shall automatically be converted into and added to the Domestic
Rate Portion as of and on the last day of such Interest Period.
Section 2.2. Minimum Amounts. Each LIBOR Portion shall be in an amount
equal to $500,000 or such greater amount which is an integral multiple of
$250,000.
Section 2.3. Computation of Interest. All interest on the Notes shall
be computed on the basis of a year of 360 days for the actual number of days
elapsed.
Section 2.4. Manner of Rate Selection. The Company shall notify the
Bank by 11:00 a.m. (Chicago time) at least 3 Business Days prior to the date
upon which the Company requests that any LIBOR Portion be created or that any
part of the Domestic Rate Portion be converted into a LIBOR Portion. If any
request is made to convert a LIBOR Portion into a Domestic Rate Portion, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the creation,
continuance and conversion of Portions under this Agreement shall be
irrevocable. Such requests may be written or oral and the Bank is hereby
authorized to honor telephonic requests for creations, continuances and
conversions received by it from any person the Bank in good faith believes to be
an Authorized Representative without the need of independent investigation, the
Company hereby indemnifying the Bank from any liability or loss ensuing from so
acting.
Section 2.5. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note, if at any time the Bank shall determine that any
change in applicable laws, treaties or regulations or in the interpretation
thereof makes it unlawful for the Bank to create or continue to maintain any
LIBOR Portion, it shall promptly so notify the Company and the obligation of the
Bank to create, continue or maintain any such LIBOR Portion under this Agreement
shall terminate until it is no longer unlawful for the Bank to create, continue
or maintain such LIBOR Portion. The Company, on demand, shall, if the continued
maintenance of any such LIBOR Portion is unlawful, thereupon prepay the
outstanding principal amount of the affected LIBOR Portion, together with all
interest accrued thereon and all other amounts payable
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to the Bank with respect thereto under this Agreement; provided, however, that
the Company may elect to convert the principal amount of the affected Portion
into another type of Portion available hereunder, subject to the terms and
conditions of this Agreement.
Section 2.6. Unavailability of Deposits or Inability to Ascertain
Adjusted LIBOR. Notwithstanding any other provision of this Agreement or any
Note, if prior to the commencement of any Interest Period, the Bank shall
determine that deposits in the amount of any LIBOR Portion scheduled to be
outstanding during such Interest Period are not readily available to the Bank in
the relevant market or, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining Adjusted
LIBOR, then the Bank shall promptly give notice thereof to the Company and the
obligations of the Bank to create, continue or effect by conversion any such
LIBOR Portion in such amount and for such Interest Period shall terminate until
deposits in such amount and for the Interest Period selected by the Company
shall again be readily available in the relevant market and adequate and
reasonable means exist for ascertaining Adjusted LIBOR.
Section 2.7. Taxes and Increased Costs. With respect to any LIBOR
Portion, if the Bank shall determine that any change in any applicable law,
treaty, regulation or guideline (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction over the
Bank or its lending branch or the LIBOR Portions contemplated by this Agreement
(whether or not having the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in
or for the account of, or loans by, or any other acquisition of funds
or disbursements by, the Bank which is not in any instance already
accounted for in computing the interest rate applicable to such LIBOR
Portion;
(ii) subject the Bank, any LIBOR Portion or any Note to the
extent it evidences such a Portion to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt
obligations and any interest or penalties with respect thereto), duty,
charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any LIBOR Portion or any Note to the extent it evidences
such a Portion, except such taxes as may be measured by the overall net
income or gross receipts of the Bank or its lending branches and
imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which the Bank's principal executive office or
its lending branch is located;
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(iii) change the basis of taxation of payments of principal and
interest due from the Company to the Bank hereunder or under any Note
to the extent it evidences any LIBOR Portion (other than by a change in
taxation of the overall net income or gross receipts of the Bank); or
(iv) impose on the Bank any penalty with respect to the
foregoing or any other condition regarding this Agreement, any LIBOR
Portion, or its disbursement, or any Note to the extent it evidences
any LIBOR Portion;
and the Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to the Bank
of creating or maintaining any LIBOR Portion hereunder or to reduce the amount
of principal or interest received or receivable by the Bank (without benefit of,
or credit for, any prorations, exemption, credits or other offsets available
under any such laws, treaties, regulations, guidelines or interpretations
thereof), then the Company shall pay on demand to the Bank from time to time as
specified by the Bank such additional amounts as the Bank shall reasonably
determine are sufficient to compensate and indemnify it for such increased cost
or reduced amount. If the Bank makes such a claim for compensation, it shall
provide to the Company a certificate setting forth the computation of the
increased cost or reduced amount as a result of any event mentioned herein in
reasonable detail and such certificate shall be conclusive if reasonably
determined.
Section 2.8. Funding Indemnity. In the event the Bank shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
the Bank to fund or maintain any LIBOR Portion or the relending or reinvesting
of such deposits or other funds or amounts paid or prepaid to the Bank) as a
result of:
(i) any payment of a LIBOR Portion on a date other than the
last day of the then applicable Interest Period for any reason, whether
before or after default, and whether or not such payment is required by
any provisions of this Agreement; or
(ii) any failure by the Company to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement;
then upon the demand of the Bank, the Company shall pay to the Bank such amount
as will reimburse the Bank for such loss, cost or expense. If the Bank requests
such a reimbursement, it shall provide to the Company a certificate setting
forth the computation of the loss, cost or expense giving rise to the request
for reimbursement in reasonable detail and such certificate shall be conclusive
if reasonably determined.
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Section 2.9. Lending Branch. The Bank may, at its option, elect to
make, fund or maintain Portions of the Loans hereunder at such of its branches
or offices as the Bank may from time to time elect.
Section 2.10. Discretion of Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, the Bank shall
be entitled to fund and maintain its funding of all or any part of any Loan in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder (including, without limitation,
determinations under Sections 2.6, 2.7 and 2.8 hereof) shall be made as if the
Bank had actually funded and maintained each LIBOR Portion during each Interest
Period applicable thereto through the purchase of deposits in the relevant
market in the amount of such LIBOR Portion, having a maturity corresponding to
such Interest Period, and, in the case of any LIBOR Portion, bearing an interest
rate equal to the LIBOR for such Interest Period.
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND CAPITAL
ADEQUACY
Section 3.1. Fees.
(a) Commitment Fee. The Company shall pay to the Bank a commitment fee
at the rate of 1/2 of 1% per annum (computed on the basis of a year of 360 days
and the actual number of days elapsed) on the daily average unused portion of
the Revolving Credit Commitment available hereunder. Such commitment fee shall
be payable quarter-annually in arrears on the last day of each March, June,
September and December in each year (commencing January 31, 1998) and on the
Termination Date, unless the Revolving Credit Commitment is terminated in whole
on an earlier date, in which event the commitment fee for the period to the date
of such termination in whole shall be paid on the date of such termination.
(b) Closing Fee. On the date hereof, the Company shall pay to the Bank
a non-refundable closing fee equal to 1% per annum of the Commitments.
(c) Audit Fees. The Company shall pay for each audit of the Collateral
performed by the Bank or any of its agents or representatives.
Section 3.2. Voluntary Prepayments.
(a) Domestic Rate Portion. The Company shall have the privilege of
prepaying without premium or penalty and in whole or in part (but if in part,
then in an amount not less than $100,000) the Domestic Rate Portion of the Note
at any time upon notice to the Bank prior to 11:00 a.m. (Chicago time) on the
date fixed for prepayment, each such prepayment to be made
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by the payment of the principal amount to be prepaid and accrued interest
thereon to the date of prepayment.
(b) LIBOR Portions. The Company may prepay any LIBOR Portion of the
Notes only on the last date of the then applicable Interest Period, in whole or
in part (but if in part, then in an amount not less than $500,000 or such
greater amount which is an integral multiple of $250,000), upon 3 Business Days'
prior notice to the Bank (which notice shall be irrevocable once given, must be
received by the Bank no later than 11:00 a.m. (Chicago time) on the third
Business Day preceding the date of such prepayment, and shall specify the
principal amount to be repaid); provided, however, that the outstanding
principal amount of any LIBOR Portion of the Notes prepaid in part shall not be
less than $500,000 or such greater amount which is an integral multiple of
$250,000 after giving effect to such prepayment. Any such prepayment shall be
effected by payment of the principal amount to be prepaid and accrued interest
thereon to the end of the applicable Interest Period.
Section 3.3. Mandatory Prepayments. (a) Available Borrowing Base
Deficiency. The Company agrees that if at any time the sum of the then unpaid
principal balance of the Revolving Credit Loans shall be in excess of the
Available Borrowing Base as then determined and computed, the Company shall
immediately and without notice or demand pay over the amount of the excess to
the Bank as and for a mandatory prepayment on such obligations, with such
prepayments to be first applied to the Revolving Credit Note until payment in
full thereof with any remaining balance to be held by the Bank as collateral
security for the obligations owing under the Term Note.
(b) Borrowing Base Deficiency. The Company agrees that if at any time
the outstanding principal amount of the Term Note shall at any time and for any
reason exceed the Borrowing Base as then determined and computed, the Company
shall immediately and without notice or demand pay over the amount of the excess
to the Bank as and for a mandatory prepayment on the Term Note.
Section 3.4. Terminations. The Company shall have the right at any time
and from time to time, upon three (3) Business Days' prior notice to the Bank,
to terminate without premium or penalty and in whole or in part (but if in part,
then in an amount not less than $500,000) the Revolving Credit Commitment,
provided that the Revolving Credit Commitment may not be reduced to an amount
less than the aggregate principal amount of the Revolving Credit Loans then
outstanding. Any termination of the Revolving Credit Commitment pursuant to this
Section may not be reinstated.
Section 3.5. Place and Application of Payments. All payments of
principal, interest, fees and all other amounts payable hereunder shall be made
to the Bank at its principal office in
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Chicago, Illinois no later than 11:00 a.m. (Chicago time) on the date any such
payment is due and payable. All such payments shall be made in lawful money of
the United States of America, in immediately available funds at the place of
payment, without setoff or counterclaim and without reduction for, and free
from, any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any nature
imposed by any government or any political subdivision or taxing authority
thereof (but excluding any taxes imposed on or measured by the net income of the
Bank). Any amount paid or prepaid on the Revolving Credit Note may, subject to
the terms and conditions of this Agreement, be reborrowed. No amount paid or
prepaid on the Term Note may be reborrowed. All prepayments on the Term Note
shall be applied to the several installments thereof in the inverse order of
their maturity. Unless the Company otherwise directs, principal payments shall
be first applied to the Domestic Rate Portion until payment in full thereof,
with any balance applied to the LIBOR Portions in the order in which their
Interest Periods expire.
Section 3.6. Notations. All Loans made against the Notes, the status of
all amounts evidenced by the Note as constituting part of the Domestic Rate
Portion or a LIBOR Portion, and, in the case of any LIBOR Portion, the rates of
interest and Interest Periods applicable to such Portions shall be recorded by
the Bank on its books and records or, at its option in any instance, endorsed on
a schedule to the appropriate Note and the unpaid principal balance and status,
rates and Interest Periods so recorded or endorsed by the Bank shall be prima
facie evidence in any court or other proceeding brought to enforce such Note of
the principal amount remaining unpaid thereon, the status of the Loans evidenced
thereby and the interest rates and Interest Periods applicable thereto; provided
that the failure of the Bank to record any of the foregoing shall not limit or
otherwise affect the obligation of the Company to repay the principal amount of
each Note together with accrued interest thereon. Prior to any negotiation of
any Note, the Bank shall record on a schedule thereto the status of all amounts
evidenced thereby as constituting part of the Domestic Rate Portion or a LIBOR
Portion and, in the case of any LIBOR Portion, the rates of interest and the
Interest Periods applicable thereto.
Section 3.7. Change in Capital Adequacy Requirements. If the Bank shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change in any existing law, rule
or regulation, or any change in the interpretation or administration thereof, by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any of
its branches) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital as a consequence of its obligations hereunder or for the
credit which is the subject matter hereof to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to liquidity and capital
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adequacy) by an amount deemed by the Bank to be material, then from time to
time, within fifteen (15) days after demand by the Bank, the Company shall pay
to the Bank such additional amount or amounts reasonably determined by the Bank
as will compensate the Bank for such reduction.
SECTION 4. THE COLLATERAL AND THE GUARANTIES.
Section 4.1. Security. The Notes and the other Obligations shall be
secured by all of the Company's accounts receivable, and certain other assets
and property related thereto, of the Company pursuant to that certain Security
Agreement dated of even date herewith from the Company to the Bank, as the same
may be amended, modified or supplemented from time to time (the "Security
Agreement"), and a pledge of the stock of the Guarantors pursuant to that
certain Pledge and Security Agreement dated of even date herewith from the
Company to the Bank (the "Pledge Agreement").
Section 4.2. Guaranties. The Notes and the other Obligations shall be
guaranteed by each Guarantor pursuant to separate guaranty agreements which are
in form and substance satisfactory to the Bank (individually a "Guaranty" and
collectively the "Guaranties"). Each Guaranty shall be secured by valid and
perfected first Liens on all of the accounts receivable, equipment and certain
other assets and property related thereto, of the Guarantor executing such
Guaranty. In the event the Company forms or acquires a direct Subsidiary after
the date hereof in accordance with Section 8.20 hereof, the Company shall cause
each such Subsidiary to (i) execute and deliver to the Bank a guaranty agreement
in form and substance satisfactory to the Bank, (ii) secure such guaranty
agreement by valid and perfected first Liens on all of the accounts receivable,
equipment and certain other assets and property related thereto, of such
Subsidiary, and (iii) execute such of the instruments, documents, certificates
and opinions required by the Bank in connection therewith.
Section 4.3. Further Assurances. The Company covenants and agrees that
it shall comply with, and will cause each Subsidiary to comply with, all terms
and conditions of each of the Collateral Documents and that it will, and will
cause each Subsidiary to, at any time and from time to time as requested by the
Bank, execute and deliver such further instruments and do such acts and things
as the Bank may deem necessary or desirable to provide for or protect or perfect
the Liens of the Bank on the Collateral.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall
have the following meanings:
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"Adjusted LIBOR" means a rate per annum determined by the Bank in
accordance with the following formula:
Adjusted LIBOR = LIBOR
-----------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirement by such Board
or its successor, and taking into account any transitional adjustments thereto
becoming effective during such Interest Period. For purposes of this definition,
LIBOR Portions shall be deemed to be Eurocurrency liabilities as defined in
Regulation D without benefit of or credit for prorations, exemptions or offsets
under Regulation D. "LIBOR" means, for each Interest Period, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which
deposits in U.S. Dollars in immediately available funds are offered to the Bank
at 11:00 a.m. (London, England time) two (2) Business Days before the beginning
of such Interest Period by three (3) or more major banks in the interbank
eurodollar market selected by the Bank for a period equal to such Interest
Period and in an amount equal or comparable to the applicable LIBOR Portion
scheduled to be outstanding from the Bank during such Interest Period. "LIBOR
Index Rate" means, for any Interest Period, the rate per annum (rounded upwards,
if necessary, to the next higher one hundred-thousandth of a percentage point)
for deposits in U.S. Dollars for a period equal to such Interest Period, which
appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the
day two (2) Business Days before the commencement of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the Telerate
Service (or such other page as may replace Page 3750 on that service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for U.S. Dollar deposits). Each determination of LIBOR
made by the Bank shall be conclusive and binding absent manifest error.
"Affiliate" means any Person, directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person,
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whether through the ownership of voting securities, common directors, trustees
or officers, by contract or otherwise.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 6.2(a) hereof or on any
update of any such list provided by the Company to the Bank, or any further or
different officer(s) of the Company so named by any Authorized Representative of
the Company in a written notice to the Bank.
"Available Borrowing Base" means the amount (if any) by which (x) the
Borrowing Base as then determined and computed exceeds (y) the principal amount
then outstanding under the Term Loan.
"Bank" is defined in the introductory paragraph hereof.
"Borrowing Base" means, as of any time it is to be determined, the sum
of:
(a) 80% of the then outstanding unpaid amount of Eligible
Accounts of the Company and the Guarantors; plus
(b) 50% of the Eligible Equipment of the Company and the
Guarantors.
The Borrowing Base shall be computed only as against and on so much of the
Collateral as is included on the certificates to be furnished from time to time
by the Company pursuant to Section 8.5(a) hereof and, if required by the Bank
pursuant to any of the terms hereof or of any Collateral Document, as verified
by such other evidence reasonably required to be furnished to the Bank pursuant
hereto or pursuant to any such Collateral Document.
"Business Day" means any day other than a Saturday or Sunday on which
the Bank is not authorized or required to close in Chicago, Illinois and, when
used with respect to LIBOR Portions, a day on which the Bank is also dealing in
United States Dollar deposits in London, England and Nassau, Bahamas.
"Capital Expenditures" means for any Person, for any period, the
capital expenditures of such Person and its Subsidiaries during such period as
defined and classified in accordance with GAAP.
"Capital Lease" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.
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"Capitalized Lease Obligation" means the amount of the liability shown
on the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges
from time to time subject to the Liens granted to the Bank by the Collateral
Documents.
"Collateral Documents" means (i) all guaranties as shall from time to
time guarantee the Notes or any other Obligations, (ii) the Pledge Agreement,
and (iii) the Security Agreement and all other mortgages, deeds of trust,
security agreements, assignments, financing statements and other documents as
shall from time to time secure the Obligations or any such guaranties, all as
the same may from time to time be modified, supplemented or amended.
"Commitments" mean and include the Revolving Credit Commitment and the
Term Credit Commitment.
"Company" is defined in the introductory paragraph hereof.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any Subsidiary, are treated
as a single employer under Section 414 of the Code.
"Current Ratio" means, at any time the same is to be determined, the
ratio of current assets of the Company and its Subsidiaries to current
liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis in accordance with GAAP consistently applied.
"Debentures" means the 8% Series A Senior Subordinated Convertible
Redeemable Debentures of the Company Due December 31, 1999, in an aggregate
principal amount equal to $4,000,000.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Domestic Rate" means, for any day, the rate of interest announced by
the Bank from time to time as its prime commercial rate, as in effect on such
day.
"Domestic Rate Portion" is defined in Section 2.1(a) hereof.
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"EBIT" means for any Person, with reference to any period, Net Income
for such period plus all amounts deducted in arriving at such Net Income amount
in respect of (i) Interest Expense for such period and (ii) federal, state and
local income taxes for such period.
"EBITDA" means for any Person, with reference to any period, EBIT for
such period plus all amounts properly charged for depreciation of fixed assets
and amortization of intangible assets during such period on the books of the
Company and its Subsidiaries.
"Eligible Account" means, as to any Person, each account receivable of
such Person, provided that an account receivable shall only be an Eligible
Account to the extent it:
(a) is included, in the ordinary course of such Person's
business, on the separate accounts receivable records of such Person in
accordance with GAAP;
(b) arises out of the sale (including the rendition of
services in connection with such sale) of finished goods,
work-in-process or other inventory by such Person to an account debtor
located within the United States of America or, if such right has
arisen out of the sale of such goods to an account debtor located in
any other country, such right is secured by a valid and irrevocable
letter of credit pursuant to which any of such Person or its transferee
may draw on a lender reasonably acceptable to the Bank for the full
amount thereof;
(c) is the valid, binding and legally enforceable obligation
of the account debtor obligated thereon and such account debtor is not
(i) a Subsidiary or Affiliate of the Company or such Person, (ii) a
shareholder, director, officer or employee of the Company, such Person
or any Affiliate of the Company or such Person, (iii) the United States
of America or any department, agency or instrumentality thereof unless
such Person has complied with the Assignment of Claims Act to the
satisfaction of the Bank, (iv) a debtor under any proceeding under the
United States Bankruptcy Code or any other comparable bankruptcy or
insolvency law applicable under the law of any other country or
political subdivision thereof, or (v) an assignor for the benefit of
creditors;
(d) is assignable and not evidenced by an instrument or
chattel paper unless the same has been endorsed and delivered to the
Bank;
(e) is subject to a perfected, first priority Lien in favor of
the Bank, and is free and clear of any other Lien;
(f) is net of any credit or allowance given by such Person to
such account debtor;
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(g) is not subject to any offset, counterclaim or other
defense with respect thereto;
(h) is not unpaid more than ninety (90) days after the invoice
date;
(i) is not owed by an account debtor who is obligated on
accounts owed to such Person more than 30% of the aggregate unpaid
balance of which have been past due for longer than the relevant period
specified in clause (h) above unless the Bank has approved the
continued eligibility thereof;
(j) it would not cause the total Eligible Accounts owing from
any one account debtor or its Affiliates to exceed 25% of all Eligible
Accounts; and
(k) does not arise from a sale to an account debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis, provided that this
subsection (k) shall not exclude sales by such Person where such Person
delays delivery of the goods in the ordinary course of its business as
presently conducted for a period no longer than fifteen (15) days after
billing for such sale because the account debtor on such sale is not
ready to accept delivery of such goods.
"Eligible Equipment" means all equipment of any Person acceptable to
the Bank in its sole discretion provided that no such equipment shall be deemed
"eligible" if it is not:
(a) an asset of such Person to which it has good and
marketable title, freely assignable, subject to a perfected, first
priority Lien in favor of the Bank, and is free and clear of any other
Lien other than Liens permitted by Section 8.10(a) and (b) hereof; and
(b) located at such Person's facilities in such locations as
are approved in writing by the Bank and, in the case of facilities not
owned by such Person, which are at all times subject to landlord waiver
agreements in form and substance satisfactory to the Bank; provided,
however, that with respect to the equipment of HealthStar, Inc., such
landlord waiver agreements may be delivered within 60 days of the date
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 8.1 hereof.
"Fixed Charges" means, with reference to any period, the sum of (i) the
aggregate amount of payments required to be made by the Company and its
Subsidiaries during the next
-15-
succeeding twelve-month period in respect of principal on all Indebtedness for
Borrowed Money (whether at maturity, as a result of mandatory sinking fund
redemption, mandatory prepayment, acceleration or otherwise), plus (ii) Interest
Expense for the four fiscal quarters then ended, plus (iii) the aggregate amount
of payments required to be made by the Company and its Subsidiaries during the
next succeeding twelve-month period in respect of leases or similar arrangements
(including without limitation all payments required under operating and Capital
Leases under which the Company or any Subsidiary is liable as lessee).
"GAAP" means generally accepted accounting principles as an effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Bank pursuant to Section 5.4 hereof.
"Guaranties" is defined in Section 6.4 hereof.
"Guarantors" means and includes NHBC, TRPN and HealthStar.
"HealthStar" means HealthStar, Inc., an Illinois corporation.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of
business which are not more than ninety (90) days past due), (iii) all
indebtedness secured by any Lien upon Property of such Person, whether or not
such Person has assumed or become liable for the payment of such indebtedness,
(iv) all Capitalized Lease Obligations of such Person and (v) all obligations of
such Person on or with respect to letters of credit, bankers' acceptances and
other extensions of credit whether or not representing obligations for borrowed
money.
"Interest Expense" means for any Person, with reference to any period,
the sum of all interest charges (including imputed interest charges with respect
to Capitalized Lease Obligations and all amortization of debt discount and
expense) of such Person and its Subsidiaries for such period determined in
accordance with GAAP.
"Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending 1, 3 or 6 months thereafter as
selected by the Company in its notice as provided herein; provided that all of
the foregoing provisions relating to Interest Periods are subject to the
following:
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(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day, unless in the case of an Interest Period
for a LIBOR Portion the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity
date of the Notes;
(iii) the interest rate to be applicable to each Portion for
each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment
scheduled to be made during such Interest Period without paying part of
a LIBOR Portion on a date other than the last day of the Interest
Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan" means a Revolving Credit Loan or the Term Loan, unless the
context in which such term is used shall otherwise require.
"Loan Documents" means this Agreement, the Notes and the Collateral
Documents.
"Material Plan" is defined in Section 9.1(h) hereof.
"Net Income" means for any Person, with reference to any period, the
net income (or net deficit) of such Person and its Subsidiaries for such period
as computed on a consolidated basis in accordance with GAAP, and without
limiting the foregoing, after deduction from gross
-17-
income of all expenses and reserves, including reserves for all taxes on or
measured by income, but excluding any extraordinary profits and also excluding
any taxes on such profits.
"NHBC" means National Health Benefit & Casualty Corporation, a Nevada
corporation.
"Notes" is defined in Section 1.3 hereof.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of the Company arising under or in relation to any Loan
Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group, (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions, or (iii) under which a member of the Controlled
Group has any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years or by reason of being deemed a contributing
sponsor under Section 4064 of ERISA.
"Pledge Agreement" is defined in Section 4.1 hereof.
"Portion" is defined in Section 2.1(a) hereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Restricted Payments" means for any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of such Person, now or hereafter
-18-
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class or (ii) any redemption, retirement, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of such Person.
"Revolving Credit" is defined in Section 1.1 hereof.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Revolving Credit Loan" means a loan under the Revolving Credit.
"Revolving Credit Note" is defined in Section 1.2 hereof.
"Security Agreement" is defined in Section 4.1 hereof.
"Subordinated Note" means the Non-Negotiable Subordinated Promissory
Note, dated December 15, 1997, in an amount not to exceed $200,000, issued by
the Company to Xxxxxx X. Xxxxxxxx.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Term Credit Commitment" is defined in Section 1.3 hereof.
"Termination Date" means December 14, 2000, or such earlier date on
which one or both of the Commitments is terminated in whole pursuant to Sections
3.4, 9.2 or 9.3 hereof.
"Term Loan" is defined in Section 1.3 hereof.
"Term Note" is defined in Section 1.3 hereof.
"Total Liabilities" means for any Person, as of any time the same is to
be determined, the aggregate of all indebtedness, obligations, liabilities,
reserves and any other items which would be listed as a liability on a balance
sheet of such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"TRPN" means Three Rivers Provider Network, a Nevada corporation.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most
-19-
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Voting Stock" of any Person means the capital stock of any class or
classes or other equity interest (however designated) having ordinary voting
power for the election of directors or similar governing body of such Person,
other than stock or other equity interests having such power only by reason of
the happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
"Wholly Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying shares
as required by law) or other equity interests are owned by the Company and/or
one or more Wholly Owned Subsidiaries within the meaning of this definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein" and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Bank as follows:
Section 6.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Utah, has full and adequate corporate power to own its Property
and conduct its business as now conducted, and is duly licensed or qualified and
in good standing in each jurisdiction in which the nature of the business
conducted by it or the nature of the Property owned or leased by it requires
such licensing or qualifying and in which the failure to be so licensed or
qualified could reasonably be expected to have or does in fact have a material
adverse effect on the business, operations or assets of the Company and its
Subsidiaries considered as a whole. The Company has full right and authority to
enter into this Agreement, to make the borrowings herein provided for, to issue
its Notes in evidence thereof, and to perform each and all of the matters and
things herein and therein provided for; and this Agreement and the other Loan
Documents do not, nor does the performance or observance by the Company of any
of the matters and things herein or
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therein provided for, contravene or constitute a default under any provision of
law or any judgment, injunction, order or decree binding upon the Company or any
charter or by-law provision of the Company or any covenant, indenture or
agreement of or affecting the Company or any of its Properties, or result in the
creation or imposition of any Lien on any Property of the Company.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying and in which the failure to be so licensed
or qualified could reasonably be expected to have or does in fact have a
material adverse effect on the business, operations or assets of the Company and
its Subsidiaries considered as a whole. Schedule 6.2 hereto (as updated from
time to time in accordance with Section 8.20 hereof) identifies each Subsidiary,
the jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Company and the Subsidiaries and, if such
percentage is not 100% (excluding directors' qualifying shares as required by
law), a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding.
All of the outstanding shares of capital stock and other equity interests of
each Subsidiary are validly issued and outstanding and fully paid and
nonassessable and all such shares and other equity interests indicated on
Schedule 6.2 as owned by the Company or a Subsidiary are owned, beneficially and
of record, by the Company or such Subsidiary free and clear of all Liens. There
are no outstanding commitments or other obligations of any Subsidiary to issue,
and no options, warrants or other rights of any Person to acquire, any shares of
any class of capital stock or other equity interests of any Subsidiary.
Section 6.3. Margin Stock. Neither the Company nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U 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 such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
Section 6.4. Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as of March 31, 1997 and the related consolidated
statements of income, retained earnings and cash flows of the Company and its
Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of KPMG Peat
Marwick, independent public accountants, and the unaudited interim consolidated
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balance sheet of the Company and its Subsidiaries as at September 30, 1997 and
the related consolidated statements of income, retained earnings and cash flows
of the Company and its Subsidiaries for the six (6) months then ended, and the
balance sheet of HealthStar, dated December 12, 1997, heretofore furnished to
the Bank, fairly present the consolidated financial condition of the Company and
its Subsidiaries as at said dates and the consolidated results of their
operations cash flows for the periods then ended in conformity with GAAP applied
on a consistent basis. Neither the Company nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof. Since March 31, 1997, there has been
no material adverse change in the condition (financial or otherwise) or business
prospects of the Company and its Subsidiaries nor any change to the Company and
its Subsidiaries except those occurring in the ordinary course of business.
Section 6.5. Good Title. The Company and each of its Subsidiaries have
good and defensible title to its assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to the
Bank (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of its business), subject to no Liens other than such thereof as
are permitted by Section 8.10 hereof.
Section 6.6. Litigation and Other Controversies. There is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if adversely
determined would result in any material adverse change in the financial
condition, Properties, business or operations of the Company and its
Subsidiaries taken as a whole.
Section 6.7. Taxes. All federal, state, local and other tax returns of
the Company and each Subsidiary required to be filed have been filed and the
Company and each Subsidiary have paid, or have made adequate provisions for the
payment of all federal, state, local and other taxes, assessments and other
governmental charges upon the Company and its Subsidiaries or their Property,
except such taxes, assessments and charges which are being contested in good
faith and by appropriate proceedings and as to which adequate reserves have been
established therefor. There are no objections to or controversies or assessments
due in respect of the tax returns of the Company and its Subsidiaries pending,
nor to the knowledge of the Company is any such objection, controversy or
assessment threatened.
Section 6.8. Approvals. No authorization, consent, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality (other than those which have already been obtained), nor any
approval or consent of the stockholders of the Company or any other Person, is
or, to the knowledge and belief of the Company, will be
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necessary to the valid execution, delivery or performance by the Company of this
Agreement or the Notes.
Section 6.9. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than with Wholly Owned Subsidiaries) on terms and conditions which are
less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts or agreements between Persons not affiliated with
each other.
Section 6.10. Neither the Company nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "public utility holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 6.11. ERISA. To the knowledge and belief of the Company and its
Subsidiaries, the Company and its Subsidiaries are in compliance in all material
respects with ERISA to the extent applicable to them and have received no notice
to the contrary from the PBGC or any other governmental entity or agency. As of
November 30, 1997, the net liability of the Company and its Subsidiaries to the
PBGC in respect of Unfunded Vested Liabilities would not have been in excess of
$0 if all employee pension benefit plans maintained by the Company and its
Subsidiaries had been terminated as of such date. To the knowledge and belief of
the Company and its Subsidiaries, no condition exists nor has any event or
transaction occurred with respect to any Plan which could reasonably be expected
to result in the incurrence by the Company or any Subsidiary of any material
liability, fine or penalty under ERISA or in connection with any Plan. Neither
the Company nor any Subsidiary has any contingent liability for any
post-retirement benefits under a Welfare Plan, other than liability for
continuation of coverage described in Part 6 of Title I of ERISA.
Section 6.12. To the knowledge and belief of the Company and its
Subsidiaries, the Company and each of its Subsidiaries are in compliance with
the requirements of all federal, state and local laws, rules and regulations
applicable to or pertaining to the Properties or business operations of the
Company and its Subsidiaries (including, without limitation, the Occupational
Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, and
laws and regulations establishing quality criteria and standards for air, water,
land and toxic or
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hazardous wastes and substances), non-compliance with which could have a
material adverse effect on the financial condition, Properties, business or
operations of the Company and its Subsidiaries taken as a whole. Neither the
Company nor any Subsidiary has received notice to the effect that its operations
are not in compliance with any of the requirements of applicable federal, state
or local environmental, health and safety statutes and regulations or are the
subject of any governmental investigation evaluating whether any remedial action
is needed to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could have a
material adverse effect on the financial condition, Properties, business or
operations of the Company and its Subsidiaries taken as a whole.
Section 6.13. Other Agreements. Neither the Company nor any Subsidiary
is in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default
if uncured would have a material adverse effect on the financial condition,
Properties, business or operations of the Company and its Subsidiaries taken as
a whole.
SECTION 7. CONDITIONS PRECEDENT.
The obligation of the Bank to make any Loan under this Agreement is
subject to the following conditions precedent:
Section 7.1. Each Advance. As of the time of the making of each
extension of credit (including the initial extension of credit) hereunder:
(a) each of the representations and warranties set forth in
Section 6 hereof and in the other Loan Documents shall be true and
correct as of such time, except to the extent the same expressly relate
to an earlier date;
(b) the Company shall be in full compliance with all of the
terms and conditions of this Agreement and of the other Loan Documents,
and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of making such extension of
credit;
(c) after giving effect to such extension of credit, the
aggregate principal amount of all Revolving Credit Loans outstanding
under this Agreement shall not exceed the lesser of (i) the Revolving
Credit Commitment and (ii) the Available Borrowing Base; and
(d) no Default or Event of Default shall have occurred and be
continuing hereunder.
The Company's request for any Loan shall constitute its warranty as to the
foregoing effects.
Section 7.2. Initial Advance. At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:
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(a) the Bank shall have received the following (each to be
properly executed and completed) and the same shall have been approved
as to form and substance by the Bank:
(i) the Notes;
(ii) the Collateral Documents, together with any
financing statements requested by the Bank in connection
therewith;
(iii) the Guaranties;
(iv) certified copies of resolutions of the Board of
Directors of the Company and each Guarantor authorizing the
execution and delivery of this Agreement, the Notes, the
Guaranties and the other Loan Documents, as appropriate,
indicating the authorized signers of such documents and all
other documents relating thereto and the specimen signatures
of such signers;
(v) copies of the Articles of Incorporation and
Bylaws of the Company and each Guarantor certified by the
Secretary or other appropriate officer of the Company or such
Guarantor, as the case may be;
(vi) an incumbency certificate containing the name,
title and genuine signatures of each of the Company's
Authorized Representatives; and
(vii) evidence of insurance required by Section 8.4
hereof.
(b) legal matters incident to the execution and delivery of
this Agreement and other Loan Documents and to the transactions
contemplated hereby shall be satisfactory to the Bank and its counsel;
(c) the Bank shall have received the favorable written opinion
of counsel for the Company and the Guarantors in the form attached
hereto as Exhibit D and otherwise satisfactory to the Bank and its
counsel;
(d) the Bank shall have received a Borrowing Base certificate
in the form attached hereto as Exhibit C showing the computation of the
Available Borrowing Base in reasonable detail as of December 15, 1997;
(e) the Bank shall have received good standing certificates
for the Company and each Guarantor (dated as of the date no earlier
than ten (10) days prior to the date
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hereof) from the office of the secretary of state of the state of its
incorporation and each state in which it is qualified to do business as
a foreign corporation;
(f) the Liens granted to the Bank under the Collateral
Documents shall have been perfected in a manner satisfactory to the
Bank and its counsel;
(g) the Bank shall have received the initial fees called for
by Section 3.2(b) hereof;
(h) the acquisition referred to in Section 8.22 hereof shall
have occurred (except for the Bank's funding of a portion of the
purchase price therefor) on terms and conditions substantially similar
to those heretofore provided to the Bank in writing; and
(i) the bank shall have received a subordination agreement in
form and substance satisfactory to the Bank from the payee of the
Subordinated Note.
SECTION 8. COVENANTS.
The Company agrees that, so long as any credit is available to or in
use by the Company hereunder, except to the extent compliance in any case or
cases is waived in writing by the Bank:
Section 8.1. Corporate Existence, Etc. The Company shall, and shall
cause each Subsidiary to, preserve and maintain its corporate existence. The
Company will preserve and keep in force and effect, and cause each Subsidiary to
preserve and keep in force and effect, all licenses, permits and franchises
necessary to the proper conduct of its business.
Section 8.2. Maintenance of Properties. The Company will maintain,
preserve and keep its Properties in good repair, working order and condition
(ordinary wear and tear excepted) and will from time to time make all needful
and proper repairs, renewals, replacements, additions and betterments thereto so
that at all times the efficiency thereof shall be fully preserved and
maintained, and will cause each Subsidiary to do so in respect of Property owned
or used by it.
Section 8.3. Taxes and Assessments. The Company will duly pay and
discharge, and will cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
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Section 8.4. Insurance. The Company will insure and keep insured, and
will cause each Subsidiary to insure and keep insured, with good and responsible
insurance companies, all insurable Property owned by it which is of a character
usually insured by Persons similarly situated and operating like Properties
against loss or damage from such hazards and risks, and in such amounts, as are
insured by Persons similarly situated and operating like Properties; and the
Company will insure, and cause each Subsidiary to insure, such other hazards and
risks (including employers' and public liability risks) with good and
responsible insurance companies as and to the extent usually insured by Persons
similarly situated and conducting similar businesses. The Company will upon
request (which requests, prior to the occurrence of an Event of Default
hereunder, shall be no more frequent than once per calendar year), of the Bank
furnish a certificate setting forth in summary form the nature and extent of the
insurance maintained pursuant to this Section.
Section 8.5. Financial Reports. The Company will, and will cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and will furnish to the Bank and its duly authorized representatives such
information respecting the business and financial condition of the Company and
its Subsidiaries as the Bank may reasonably request; and without any request,
will furnish to the Bank:
(a) as soon as available, and in any event within thirty (30)
days after the close of each calendar month, a Borrowing Base
certificate in the form attached hereto as Exhibit C showing the
computation of the Available Borrowing Base in reasonable detail as of
the close of business on the last day of such month, prepared by the
Company and certified to by the chief financial officer of the Company;
(b) as soon as available, and in any event within (i) thirty
(30) days after the close of each calendar month, and (ii) within
forty-five (45) days after the close of each calendar quarter, prepared
on a consolidated and consolidating basis, copies of the consolidated
and consolidating balance sheets for the Company and its Subsidiaries
as of the close of each such period and the consolidated and
consolidating statements of income, retained earnings and cash flows of
the Company and its Subsidiaries for such period, all in reasonable
detail and, commencing January 31, 1998, showing in comparative form
the figures for the corresponding date and period in the previous
fiscal year, prepared by the Company in accordance with GAAP and
certified to by the chief financial officer of the Company;
(c) as soon as available, and in any event within ninety (90)
days after the close of each annual accounting period of the Company,
copies of the consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such period and the
consolidated and consolidating statements of income, retained earnings
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and cash flows of the Company and its Subsidiaries for such period, and
accompanying notes thereto, all in reasonable detail showing in
comparative form the figures for the previous fiscal year, accompanied
by an unqualified opinion thereon of KPMG Peat Marwick or another firm
of independent public accountants of recognized national standing,
selected by the Company and satisfactory to the Bank, to the effect
that the financial statements have been prepared in accordance with
GAAP and present fairly in accordance with GAAP the consolidated
financial condition of the Company and its Subsidiaries as of the close
of such fiscal year and the results of their operations and cash flows
for the fiscal year then ended and that an examination of such accounts
in connection with such financial statements has been made in
accordance with generally accepted auditing standards and, accordingly,
such examination included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances;
(d) as soon as available and in any event by March 31, 1998,
financial statements of the Company and HealthStar as of the date
hereof prepared by the Company and audited by KPMG Peat Marwick LLP,
for the period from April 1, 1997 through the date hereof, including a
computation of Working Capital as of the date hereof; and
(e) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Company, written notice of
any threatened or pending litigation or governmental proceeding or
labor controversy against the Company or any Subsidiary which, if
adversely determined, would adversely effect the financial condition,
Properties, business or operations of the Company and its Subsidiaries
taken as a whole or of the occurrence of any Default or Event of
Default hereunder.
Each of the financial statements furnished to the Bank pursuant to clauses (b)
and (c) of this Section shall be accompanied by a written certificate in the
form attached hereto as Exhibit E signed by the chief financial officer of the
Company to the effect that to the best of the chief financial officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Company to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 8.6, 8.7 and 8.8 of this
Agreement.
Section 8.6. Current Ratio. The Company shall not, at any time during
the periods specified below, permit the Current Ratio to be less than:
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FROM AND INCLUDING TO AND INCLUDING CURRENT RATIO SHALL NOT BE
LESS THAN
The date hereof 03/31/98 0.65 to 1.0
04/01/98 03/31/99 1.0 to 1.0
04/01/99 all times thereafter 1.1 to 1.0
Section 8.7. Leverage Ratio. The Company shall not, as of the last day
of each fiscal quarter of the Company permit the ratio of Total Indebtedness for
Borrowed Money to EBITDA for the four quarters of the Company then ended to be
more than (i) 3.0 to 1.0 for the fiscal quarter ending Xxxxx 00, 0000, (xx) 2.75
to 1.0 for the fiscal quarter ending June 30, 1998, (iii) 2.50 to 1.0 for the
fiscal quarter ending September 30, 1998, and (iv) 2.25 to 1.0 for each fiscal
quarter thereafter; provided, however, that for purposes of this covenant,
EBITDA shall be computed during the 1998 calendar year, cumulatively for all
fiscal quarters completed as of the date of determination and on an annualized
basis.
Section 8.8. Fixed Charge Coverage Ratio. The Company shall not, as of
the last day of each fiscal quarter of the Company permit the ratio of EBITDA
less capital expenditures for the four fiscal quarters of the Company then ended
plus Fixed Charges to Fixed Charges (the "Fixed Charge Coverage Ratio") to be
less than (i) 1.50 to 1.0 for the fiscal quarters of the Company ending March
31, 1998, June 30, 1998 and September 30, 1998, (ii) 1.75 to 1.0 for the fiscal
quarters of the Company ending December 31, 1998 and March 31, 1999 and (iii)
2.00 to 1.0 for each fiscal quarter of the Company thereafter; provided,
however, that for purposes of this covenant, EBITDA and Interest Expense shall
be computed during the 1998 calendar year, cumulatively for all fiscal quarters
completed as of the date of determination and on an annualized basis.
Section 8.9. Indebtedness for Borrowed Money. The Company will not, nor
will it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing provisions shall not restrict nor operate to prevent:
(a) the indebtedness of the Company on the Notes and other
indebtedness of the Company owing to the Bank;
(b) Capitalized Lease Obligations in an aggregate amount not
to exceed $50,000 at any one time outstanding;
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(c) indebtedness secured by Liens on real property and
equipment (excluding Collateral) permitted by Section 8.10(d) hereof in
an aggregate amount not to exceed $50,000 at any one time outstanding;
and
(d) intercompany indebtedness of Subsidiaries permitted by
Section 8.11 hereof;
(e) the Subordinated Note; and
(f) the Debentures.
Section 8.10. Liens. The Company will not, nor will it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that this
Section shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits or liens in connection with tenders,
contracts or leases to which the Company or any Subsidiary is a party
or other cash deposits or liens to secure performances of statutory
obligations, tenders, contracts or leases all of which are required to
be made in the ordinary course of business, provided in each case that
the obligation is not for borrowed money and that the obligation
secured is not overdue or, if overdue, is being contested in good faith
by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords',
carriers', or other similar Liens arising in the ordinary course of
business with respect to obligations which are not due or which are
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an
appeal, stay or discharge in the course of any legal proceeding,
provided that the aggregate amount of liabilities of the Company and
its Subsidiaries secured by a pledge of assets permitted under this
clause, including interest and penalties thereon, if any, shall not be
in excess of $50,000 at any one time outstanding;
(d) Liens on Property other than Collateral securing
indebtedness permitted by Section 8.9(c) hereof; and
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(e) Liens granted in favor of the Bank by the Collateral
Documents.
Section 8.11. Investments, Acquisitions, Loans, Advances and
Guaranties. The Company will not, nor will it permit any Subsidiary to, directly
or indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other cash advances made to employees in the
ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person, or be or become
liable as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other Person, or otherwise agree to provide funds for payment
of the obligations of another, or supply funds thereto or invest therein or
otherwise assure a creditor of another against loss or apply for or become
liable to the issuer of a letter of credit which supports an obligation of
another, or subordinate any claim or demand it may have to the claim or demand
of any other Person; provided, however, that the foregoing provisions shall not
apply to nor operate to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one
year of the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by
Xxxxx'x Investors Services, Inc. and at least A-1 by Standard & Poor's
Corporation maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any
United States commercial bank having capital and surplus of not less
than $100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of
commercial paper received in the ordinary course of business;
(e) loans and advances by the Company to its Subsidiaries or
loans and advances by the Company's Subsidiaries to the Company or to
another Subsidiary of the Company; and
(f) loans and advances by the Company to employees in the
ordinary course of business aggregating not more than $20,000 at any
one time outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section, investments and acquisitions shall
always be taken at the original
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cost thereof (regardless of any subsequent appreciation or depreciation
therein), loans and advances shall be taken at the principal amount thereof then
remaining unpaid and guarantees shall be taken at the amount of obligations
guaranteed thereby.
Section 8.12. Debentures and Subordinated Note. The Company will not,
without the prior written consent of the Bank, (i) prepay any principal of or
interest on the Debentures or the Subordinated Note prior to the date when due
thereunder, or (ii) amend, modify, supplement or alter the Debentures or the
Subordinated Note. The Company shall pay all amounts due under the Debentures by
issuing common stock of the Company in accordance with the terms of the
Debentures, unless the Bank shall otherwise consent in writing.
Section 8.13. Sales and Leasebacks. The Company will not, nor will it
permit any Subsidiary to, enter into any arrangement with any bank, insurance
company or any other lender or investor providing for the leasing by the Company
or any Subsidiary of any Property theretofore owned by it and which has been or
is to be sold or transferred by such owner to such lender or investor.
Section 8.14. Dividends and Certain Other Restricted Payments. The
Company will not, nor will it permit a Subsidiary to, make any Restricted
Payments.
Section 8.15. Mergers, Consolidations and Sales. The Company will not,
nor will it permit any Subsidiary to, be a party to any merger or consolidation,
or sell, transfer, lease or otherwise dispose of all or any substantial part of
its Property (except for sales of inventory in the ordinary course of business),
or in any event sell or discount (with or without recourse) any of its notes or
accounts receivable; provided, however, that this Section shall not apply to nor
prohibit:
(a) any merger or consolidation so long as the Company is the
surviving corporation and, at the time of such merger or consolidation
or immediately after giving effect thereto, no Default or Event of
Default shall occur or be continuing;
(b) any merger or consolidation of a Subsidiary of the Company
with or into the Company (so long as the Company is the surviving
entity) or any other Subsidiary of the Company (so long as a Wholly
Owned Subsidiary is the surviving entity) so long as, at the time of
such merger or consolidation or immediately after giving effect
thereto, no Default or Event of Default shall occur or be continuing;
(c) the sale, lease, transfer or other disposition by any
Subsidiary of all or any portion of its assets to the Company or any
other Subsidiary.
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The term "substantial" as used herein shall mean to sell, transfer, lease or
other disposition of 10% of the total consolidated assets of the Company.
Section 8.16. ERISA. The Company will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company will, and will
cause each Subsidiary to, promptly notify the Bank of (i) the occurrence of any
reportable event (as defined in ERISA) with respect to a Plan, (ii) receipt of
any notice from the PBGC of its intention to seek termination of any Plan or
appointment of a trustee therefor, (iii) its intention to terminate or withdraw
from any Plan, and (iv) the occurrence of any event with respect to any Plan
which would result in the incurrence by the Company or any Subsidiary of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Company or any Subsidiary with respect to any post-retirement
Welfare Plan benefit.
Section 8.17. Compliance with Laws. The Company will, and will cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to the Properties or business operations of the Company or any
Subsidiary, non-compliance with which could have a material adverse effect on
the financial condition, Properties, business or operations of the Company and
its Subsidiaries or could result in a Lien upon any of their Property in
violation of this Agreement.
Section 8.18. Burdensome Contracts With Affiliates. The Company will
not, nor will it permit any Subsidiary to, enter into any contract, agreement or
business arrangement with any of its Affiliates (other than with Wholly Owned
Subsidiaries) on terms and conditions which are less favorable to the Company or
such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.
Section 8.19. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary will change its fiscal year from its present basis without the prior
written consent of the Bank.
Section 8.20. Formation of Subsidiaries. Except for existing
Subsidiaries designated on Schedule 6.2 hereto, the Company will not, nor will
it permit any Subsidiary to, form or acquire any Subsidiary without the prior
written consent of the Bank. In the event any direct Subsidiary is formed or
acquired by the Company after the date hereof, the Company shall cause any such
newly-formed or acquired direct Subsidiary with assets in excess of $250,000 to
(i) execute and deliver a guaranty agreement in form and substance satisfactory
to the Bank, (ii) secure such guaranty agreement by valid and perfected first
Liens on all of the accounts receivable, equipment and certain other assets and
property related thereto, and (iii) execute and
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deliver such instruments, documents, certificates and opinions required by the
Bank in connection therewith. Thereafter, such direct Subsidiary shall be deemed
a Subsidiary hereunder and Schedule 6.2 of this Agreement shall be deemed
amended to include reference to such Subsidiary.
Section 8.21. Inspection and Field Audit. The Company will, and will
cause each Subsidiary to, permit the Bank and its duly authorized
representatives and agents to visit and inspect any of the Properties, corporate
books and financial records of the Company and each Subsidiary, to examine and
make copies of the books of accounts and other financial records of the Company
and each Subsidiary, and to discuss the affairs, finances and accounts of the
Company and each Subsidiary with, and to be advised as to the same by, its
officers and independent public accountants (and by this provision the Company
authorizes such accountants to discuss with the Bank the finances and affairs of
the Company and of each Subsidiary) at such reasonable times and reasonable
intervals as the Bank may designate. After the occurrence of an Event of
Default, the Company shall pay for all costs and expenses incurred by the Bank
in connection with any such visitation or inspection.
Section 8.22. Use of Credit. The Company will use all credit under this
Agreement solely to (i) finance general corporate purposes and (ii) finance the
acquisition of certain assets and liabilities of HealthStar.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an Event of Default hereunder:
(a) default in the payment when due of all or any part of the
principal of or interest on any Note (whether at the stated maturity
thereof or at any other time provided for in this Agreement) or of any
fee or other Obligation payable by the Company hereunder or under any
other Loan Document; or
(b) default in the observance or performance of any covenant
set forth in Sections 8.4, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13,
8.14, 8.15, 8.16, 8.17, 8.18, 8.19, 8.20, 8.21 or 8.22 hereof or of any
provision of any Loan Document requiring the maintenance of insurance
on the Collateral subject thereto or dealing with the use or remittance
of proceeds of Collateral; or
(c) default in the observance or performance of any other
provision hereof or of any other Loan Document which is not remedied
within thirty (30) days after written notice thereof to the Company by
the Bank; or
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(d) any representation or warranty made by the Company herein
or in any other Loan Document, or in any statement or certificate
furnished by it pursuant hereto or thereto, or in connection with any
extension of credit made hereunder, proves untrue in any material
respect as of the date of the issuance or making thereof; or
(e) any Guarantor shall purport to disavow, revoke, repudiate
or terminate its Guaranty; or
(f) (i) default shall occur under any evidence of Indebtedness
for Borrowed Money issued, assumed or guaranteed by the Company or any
Subsidiary aggregating in excess of $100,000 or under any indenture,
agreement or other instrument under which the same may be issued, and
such default shall continue for a period of time sufficient to permit
the acceleration of the maturity of any such Indebtedness for Borrowed
Money (whether or not such maturity is in fact accelerated) or any such
Indebtedness for Borrowed Money shall not be paid when due (whether by
lapse of time, acceleration or otherwise), or (ii) an event of default,
or an event which, with the giving of notice or passage of time, or
both, shall constitute an event of default under any Debenture shall
have occurred; or
(g) any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $100,000 shall be entered or filed
against the Company or any of its Subsidiaries or against any of their
Property and which remains unvacated, unbonded, unstayed or unsatisfied
for a period of thirty (30) days; or
(h) the Company or any member of its Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess
$100,000 which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan
or Plans having aggregate Unfunded Vested Liabilities in excess of
$100,000 (collectively, a "Material Plan") shall be filed under Title
IV of ERISA by the Company or any other member of its Controlled Group,
any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a
proceeding shall be instituted by a fiduciary of any Material Plan
against the Company or any member of its Controlled Group to enforce
Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have
been dismissed within thirty (30) days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or
-35-
(i) any Person or two or more Persons acting in concert shall
acquire beneficial ownership (within the meaning or Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the issued and outstanding Voting Stock of the
Company (a "20% Holder"), except any Person who is on the date hereof a
20% Holder; or
(j) the Company shall at any time and for any reason cease to
own, both legally and beneficially, 100% of the Voting Stock of any
Guarantor; or
(k) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered
against it an order for relief under the United States Bankruptcy Code,
as amended, to adjudicate it insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(m) hereof; or
(l) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Company or any of its
Subsidiaries or any substantial part of any of their Property, or a
proceeding described in Section 8.1(l)(v) shall be instituted against
the Company or any of its Subsidiaries, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of sixty (60) days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default
described in clauses (a) through (k), both inclusive, of Section 8.1 has
occurred and is continuing, the Bank or any holder of the Notes may, by notice
to the Company, take either or both of the following actions:
(a) terminate the obligation of the Bank to extend any further
credit hereunder on the date (which may be the date thereof) stated in
such notice;
(b) declare the principal of and the accrued interest on the
Notes to be forthwith due and payable and thereupon the Notes,
including both principal and interest and all fees, charges and other
Obligations payable hereunder and under the other Loan
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Document shall be and become immediately due and payable without
further demand, presentment, protest or notice of any kind; and
(c) enforce any and all rights and remedies available to it
under the Loan Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described
in clauses (k) or (l) of Section 9.1 has occurred and is continuing, then the
Notes, including both principal and interest, and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligation of the Bank to extend further credit
pursuant to any of the terms hereof shall immediately terminate. In addition,
the Bank may exercise any and all remedies available to it under the Loan
Documents or applicable law.
SECTION 10. MISCELLANEOUS.
Section 10.1. Holidays. If any payment of principal or interest on any
Note or any fee or other Obligation shall fall due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day on which the same is payable and, in the case of any payment of
principal, interest shall continue to accrue thereon at the rate per annum
determined in accordance with this Agreement during such extension.
Section 10.2. No Waiver, Cumulative Remedies. No delay or failure on
the part of the Bank or on the part of the holder of any of the Obligations in
the exercise of any power or right shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof, or the exercise
of any other power or right. The rights and remedies hereunder of the Bank and
of the holders of any of the Obligations are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.
Section 10.3. Amendments, Etc. No amendment, modification, termination
or waiver of any provision of this Agreement or of the other Loan Documents, nor
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.
Section 10.4. Costs and Expenses. The Company agrees to pay on demand
the reasonable costs and expenses of the Bank in connection with the
negotiation, preparation, execution and delivery of this Agreement, the other
Loan Documents and the other instruments and documents to be delivered hereunder
or thereunder, and in connection with the recording or
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filing of any of the foregoing, and in connection with the transactions
contemplated hereby or thereby, and in connection with any consents hereunder or
waivers or amendments hereto or thereto, including the reasonable fees and
expenses of Messrs. Xxxxxxx and Xxxxxx, counsel for the Bank, with respect to
all of the foregoing (whether or not the transactions contemplated hereby are
consummated), and all reasonable costs and expenses (including attorneys' fees),
if any, incurred by the Bank or any other holder of any of the Obligations in
connection with a default under, or the enforcement of, this Agreement, any
other Loan Document or any other instrument or document to be delivered
hereunder or thereunder or in connection with any action, suit or proceeding
brought against the Bank by any Person which in any way arises out of the
transactions contemplated or financed hereby or out of any action or inaction by
the Bank hereunder or thereunder except for such thereof arising solely from the
Bank's gross negligence or willful misconduct. In addition, at the time of
requesting any amendment hereof or consent or waiver hereunder, the Company must
negotiate with the Bank a fee to the Bank for engaging in and documenting any
such action.
Section 10.5. Documentary Taxes. The Company agrees to pay on demand
any documentary, stamp or similar taxes payable in respect of this Agreement or
any other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 10.6. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 10.7. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Bank of amounts sufficient to
protect the yield of the Bank with respect to the Loans, including, but not
limited to, Sections 2.7 and 2.8 hereof, shall survive the termination of this
Agreement and the payment of the Note.
Section 10.8. Notices. Except as otherwise specified herein, all
notices hereunder shall be in writing (including cable, telecopy or telex) and
shall be given to the relevant party at its address or telecopier number set
forth below, or such other address or telecopier number as such party may
hereafter specify by notice to the other given by United States certified or
registered mail or by other telecommunication device capable of creating a
written record of such notice and its receipt. Notices hereunder shall be
addressed:
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to the Company at:
Champion Financial Corporation
0000 Xxxx Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer/Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
to the Bank at:
Xxxxxx Trust and Savings Bank
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Tax-Exempt Institutions Division
Xx. Xxxxxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; provided that any notice given pursuant
to Section 1 or Section 2 hereof shall be effective only upon receipt.
Section 10.9. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
Section 10.10. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 10.11. Counterparts. This Agreement may be executed in any
number of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 10.12. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Company and its successors and assigns, and shall inure to
the benefit of the Bank and the benefit of its successors and assigns, including
any subsequent holder of the Obligations.
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This Agreement and the rights and duties of the parties hereto shall be governed
by, and construed in accordance with, the internal laws of the State of Illinois
without regard to principles of conflicts of laws. This Agreement constitutes
the entire understanding of the parties with respect to the subject matter
hereof and any prior agreements, whether written or oral, with respect thereto
are superseded hereby. The Company may not assign its rights hereunder without
the written consent of the Bank.
Section 10.13. Terms of Collateral Documents not Superseded. Nothing
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any Collateral Document, the covenants and
agreements contained herein being in addition to and not in substitution for the
covenants and agreements contained in the Collateral Documents.
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 15th day of December, 1997.
CHAMPION FINANCIAL CORPORATION
By /s/ Xxxxxxx X Xxxxxx
-----------------------
Its Executive Vice President
Accepted and agreed to at Chicago, Illinois as of the day and year last
above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxx Xxxxx
-----------------
Its Senior Vice President
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