Exhibit 10.1
================================================================================
CREDIT AGREEMENT
by and among
ORION HEALTHCORP, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
XXXXX FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of December 1, 2006
================================================================================
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as
of December 1, 2006, by and among the lenders identified on the signature pages
hereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), XXXXX FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, "Agent"),
Orion HealthCorp, Inc., a Delaware corporation ("Parent"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
"Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Capitalized terms used in this Agreement shall have
the meanings specified therefor on Schedule 1.1.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.
1.4 Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference herein or in any other Loan Document to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations for which no
claim has been threatened or asserted or can be reasonably identified based on
the then-known facts and circumstances and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and are not required to be repaid or cash
collateralized pursuant to the provisions of this Agreement. Any reference in
this Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1
1.5 Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers exclusively for Borrowers' working capital needs (excluding,
however any use in connection with any acquisition, whether or not constituting
a Permitted Acquisition) in an amount at any one time outstanding not to exceed
such Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage at such time, and (ii) the
Borrowing Base at such time less the Letter of Credit Usage at such time.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves against the
Borrowing Base in such amounts, and with respect to such matters, as Agent in
its Permitted Discretion shall deem necessary or appropriate, including reserves
with respect to (i) sums that Borrowers or their Subsidiaries are required to
pay under any Section of this Agreement or any other Loan Document (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and have failed to pay, and (ii)
amounts owing by Borrowers or their Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral (other than a
Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral.
(c) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.
2.2 Term Loans.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan A Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, the
"Term Loan A") to Borrowers in an amount equal to such Lender's Pro Rata Share
of the Term Loan A Amount. The principal of the Term Loan A shall be repaid in
monthly installments on the first day of each calendar month as set forth below:
================================================================================
Period Installment Amount
--------------------------------------------------------------------------------
From January 1, 2007, through $26,250
December 31, 2007
--------------------------------------------------------------------------------
From January 1, 2008, through $37,500
December 31, 2008
--------------------------------------------------------------------------------
From January 1, 2009, through $56,250
December 31, 2009
--------------------------------------------------------------------------------
From January 1, 2010, until paid in $75,000
full
================================================================================
2
Notwithstanding the foregoing, the outstanding unpaid principal balance and all
accrued and unpaid interest on the Term Loan A shall be due and payable on the
earliest of (i) the Maturity Date, (ii) the date of the acceleration of Term
Loan A in accordance with the terms hereof, and (iii) the date of termination of
this Agreement pursuant to Section 8.1(c).
(b) Subject to the terms and conditions of this Agreement,
including the conditions precedent set forth in Section 3, each Lender with a
Term Loan B Commitment (severally, not jointly or jointly and severally) commits
to make term loans (collectively, the "Term Loan B") to Borrowers on and after
the date Borrowers deliver to Agent financial statements (without footnotes and
schedules for the fourth fiscal quarter) for the fiscal quarter ending December
31, 2006 through and including June 1, 2009, for the exclusive purpose of any
Borrower making one or more Permitted Acquisitions in an aggregate amount equal
to such Lender's Pro Rata Share of the Term Loan B Amount; provided that the
aggregate original principal amount of all loans under Term Loan B shall not
exceed the Term Loan B Amount. The outstanding principal of the Term Loan B
shall be repaid in monthly installments on the first day of each calendar month
as set forth below:
================================================================================
Period Installment Amount
================================================================================
From January 1, 2007, through 0.584% multiplied by the
December 31, 2007 Aggregate Term Loan B Draw Amount
--------------------------------------------------------------------------------
From January 1, 2008, through 0.834% multiplied by the
December 31, 2008 Aggregate Term Loan B Draw Amount
--------------------------------------------------------------------------------
From January 1, 2009, through 1.250% multiplied by the
December 31, 2009 Aggregate Term Loan B Draw Amount
--------------------------------------------------------------------------------
From January 1, 2010, until paid in 1.667% multiplied by the
full Aggregate Term Loan B Draw Amount
================================================================================
Notwithstanding the foregoing, the outstanding unpaid principal balance and all
accrued and unpaid interest on the Term Loan B shall be due and payable on the
earliest of (i) the Maturity Date, (ii) the date of the acceleration of Term
Loan B in accordance with the terms hereof, and (iii) the date of termination of
this Agreement pursuant to Section 8.1(c). Term Loan A and Term Loan B shall
hereinafter be referred to collectively as the "Term Loans"). All principal of,
interest on, and other amounts payable in respect of the Term Loans shall
constitute Obligations. No amounts paid or prepaid in respect of the outstanding
principal amount of the Term Loans may be reborrowed.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent. Unless
Swing Lender is not obligated to make a Swing Loan pursuant to Section 2.3(b)
below, such notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day that is the requested Funding Date
specifying (i) the amount of such Borrowing, which in the case of a draw under
Term Loan B must be an amount not less than $1,000,000, (ii) the requested
Funding Date, which shall be a Business Day, and (iii) in the case of a draw
under Term Loan B, demonstrating compliance with the conditions precedent set
forth in Section 3.2; provided, however, that if Swing Lender is not obligated
to make a Swing Loan as to a requested Borrowing, such notice must be received
by Agent no later than 10:00 a.m. (California time) on the Business Day prior to
the date that is the requested Funding Date. At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time. In such
circumstances, Borrowers agree that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such telephonic notice, but the
failure to provide such written confirmation shall not affect the validity of
the request.
3
(b) Making of Swing Loans. In the case of a request for an
Advance and so long as either (i) the aggregate amount of Swing Loans made since
the last Settlement Date plus the amount of the requested Advance does not
exceed $2,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make an Advance in the amount of such Borrowing (any such Advance made solely by
Swing Lender pursuant to this Section 2.3(b) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans") available to
Borrowers on the Funding Date applicable thereto by transferring immediately
available funds to Borrowers' Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and (except as set forth in Section 2.3(a))
shall be subject to all the terms and conditions applicable to other Advances,
except that all payments on any Swing Loan shall be payable to Swing Lender
solely for its own account. Subject to the provisions of Section 2.3(d)(ii),
Swing Lender shall not make and shall not be obligated to make any Swing Loan if
Swing Lender has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date. Swing Lender shall
not otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base
Rate Loans.
(c) Making of Loans.
(i) In the event that Swing Lender is not obligated to
make a Swing Loan, then promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 1:00
p.m. (California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances or Term Loan B, as the case may be, Agent shall
make the proceeds thereof available to Administrative Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
received by Agent to Administrative Borrower's Designated Account; provided,
however, that, subject to the provisions of Section 2.3(d)(ii), Agent shall not
request any Lender to make, and no Lender shall have the obligation to make, any
Advance or Term Loan B, as the case may be, if Agent shall have actual knowledge
that (1) one or more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender prior to
9:00 a.m. (California time) on the date of a Borrowing, that such Lender will
not make available as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance or portion of Term Loan B, as the case may be, on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to Agent on the Business Day following the Funding Date, Agent will
notify Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent's account, together
with interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Advances or Term Loan B, as the case may be, composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not relieve
any other Lender of any obligation hereunder to make an Advance or fund its
portion of Term Loan B, as the case may be, on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance or
fund its portion of Term Loan B, as the case may be, to be made by such other
Lender on any Funding Date.
4
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the Defaulting Lender,
Agent shall transfer any such payments to each other non-Defaulting Lender
member of the Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender's Advance or Term Loan B, as the
case may be, was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event of Default had
occurred and is continuing (and to the extent such Defaulting Lender's Advance
or Term Loan B, as the case may be, was not funded by the Lender Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender had made
Advances or a draw under Term Loan B, as the case may be, to Borrowers. Subject
to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all such
payments received and retained by Agent for the account of such Defaulting
Lender. Solely for the purposes of voting or consenting to matters with respect
to the Loan Documents, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero. This Section
shall remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become immediately
due and payable, (y) the non-Defaulting Lenders, Agent, and Administrative
Borrower shall have waived such Defaulting Lender's default in writing, or (z)
the Defaulting Lender makes its Pro Rata Share of the applicable Advance or Term
Loan B, as the case may be, and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section shall not be construed
to increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the performance by
Borrowers of their duties and obligations hereunder to Agent or to the Lenders
other than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option, upon written
notice to Agent, to arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be acceptable to Agent in its
Permitted Discretion. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be deemed
to have executed and delivered such document if it fails to do so) subject only
to being repaid its share of the outstanding Obligations (other than Bank
Product Obligations, but including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever; provided however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
(d) Protective Advances and Optional Overadvances.
(A) Agent hereby is authorized by Borrowers
and the Lenders, from time to time in Agent's sole discretion, (A) after the
occurrence and during the continuance of a Default or an Event of Default, or
(B) at any time that any of the other applicable conditions precedent set forth
in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or desirable
(1) to preserve or protect the Collateral, or any portion thereof, (2) to
enhance the likelihood of repayment of the Obligations (other than the Bank
Product Obligations), or (3) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group Expenses and the
costs, fees, and expenses described in Section 9 (any of the Advances described
in this Section 2.3(d)(i) shall be referred to as "Protective Advances").
5
(B) Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and either Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (A) after giving effect to such Advances, the
outstanding Revolver Usage does not exceed the Borrowing Base by more than
$1,000,000, and (B) after giving effect to such Advances, the outstanding
Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount. In the event Agent obtains actual knowledge that the Revolver Usage
exceeds the amounts permitted by the immediately foregoing provisions,
regardless of the amount of, or reason for, such excess, Agent shall notify the
Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent determines
that prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with
Borrowers intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount permitted by the
preceding paragraph. In such circumstances, if any Lender with a Revolver
Commitment objects to the proposed terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders. Each Lender with a
Revolver Commitment shall be obligated to settle with Agent as provided in
Section 2.3(e) for the amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(d)(ii), and any
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
(C) Each Protective Advance and each
Overadvance shall be deemed to be an Advance hereunder, except that no
Protective Advance or Overadvance shall be eligible to be a LIBOR Rate Loan and
all payments on the Protective Advances shall be payable to Agent solely for its
own account. The Protective Advances and Overadvances shall be repayable on
demand, secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate
Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of
Agent, Swing Lender, and the Lenders and are not intended to benefit any
Borrower in any way.
(e) Settlement. It is agreed that each Lender's funded portion
of the Advances, Term Loan A and Term Loan B is intended by the Lenders to
equal, at all times, such Lender's Pro Rata Share of the outstanding Advances,
Term Loan A and Term Loan B, respectively. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of any Borrower) that in order to facilitate the administration
of this Agreement and the other Loan Documents, settlement among the Lenders as
to the Advances, Term Loan A and Term Loan B, the Swing Loans, and the
Protective Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent (1) on behalf of Swing Lender, with respect to the outstanding Swing
Loans, (2) for itself, with respect to the outstanding Protective Advances, and
(3) with respect to Borrowers' or their Subsidiaries' Collections received, as
to each by notifying the Lenders by telecopy, telephone, or other similar form
of transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Term Loan A, Term Loan B, Swing
Loans, and Protective Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances (including Swing Loans
and Protective Advances), Term Loan A, or Term Loan B exceeds such Lender's
respective Pro Rata Share of the Advances (including Swing Loans and Protective
Advances), Term Loan A or Term Loan B as of a Settlement Date, then Agent shall,
by no later than 12:00 p.m. (California time) on the Settlement Date, transfer
6
in immediately available funds to a Deposit Account of such Lender (as such
Lender may designate), an amount such that each such Lender shall, upon receipt
of such amount, have as of the Settlement Date, its respective Pro Rata Share of
the Advances (including Swing Loans and Protective Advances), Term Loan A and
Term Loan B, and (z) if a Lender's balance of the Advances (including Swing
Loans and Protective Advances), Term Loan A or Term Loan B is less than such
Lender's respective Pro Rata Share of the Advances (including Swing Loans and
Protective Advances), Term Loan A or Term Loan B as of a Settlement Date, such
Lender shall no later than 12:00 p.m. (California time) on the Settlement Date
transfer in immediately available funds to the Agent's Account, an amount such
that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its respective Pro Rata Share of the Advances (including Swing
Loans and Protective Advances), Term Loan A and Term Loan B. Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loans or Protective
Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender's Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, Protective Advances, Term Loan A, and Term Loan B is less
than, equal to, or greater than such Lender's respective Pro Rata Share of the
Advances, Swing Loans, Protective Advances, Term Loan A, and Term Loan B as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount shall be
distributed by Agent to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Protective Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for application to
Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since the then
immediately preceding Settlement Date have been applied to Swing Lender's Pro
Rata Share of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender with respect
to Swing Loans, Agent with respect to Protective Advances, and each Lender
(subject to the effect of agreements between Agent and individual Lenders) with
respect to the Advances other than Swing Loans and Protective Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(f) Notation. Agent shall record on its books the principal
amount of the Advances, Term Loan A and Term Loan B owing to each Lender,
including the Swing Loans owing to Swing Lender, and Protective Advances owing
to Agent, and the interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and
accurate.
(g) Lenders' Failure to Perform. All Advances or Term Loan B
draws, as the case may be (other than Swing Loans and Protective Advances) shall
be made by the Lenders contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible for any failure
by any other Lender to perform its obligation to make any Advance or Term Loan
B, as the case may be (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
7
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account of the
Lender Group and shall be made in immediately available funds, no later than
11:00 a.m. (California time) on the date specified herein. Any payment received
by Agent later than 11:00 a.m. (California time), shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full to Agent on
such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.
(b) Apportionment and Application.
(i) So long as no Event of Default has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
(other than fees or expenses that are for Agent's separate account) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
Commitment or Obligation to which a particular fee or expense relates. All
payments to be made hereunder by Borrowers shall be remitted to Agent and all
(subject to Section 2.4(b)(iv) hereof) such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Event of Default
has occurred and is continuing, to reduce the balance of the Advances
outstanding and, thereafter, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(ii) At any time that an Event of Default has occurred
and is continuing and except as otherwise provided with respect to Defaulting
Lenders, all payments remitted to Agent and all proceeds of Collateral received
by Agent shall be applied as follows:
(A) first, to pay any Lender Group Expenses
(including, without limitation, the reasonable attorneys' fees and costs) or
indemnities then due to Agent under the Loan Documents, until paid in full,
(B) second, to pay any fees or premiums then due
to Agent under the Loan Documents until paid in full,
(C) third, to pay interest due in respect of all
Protective Advances until paid in full,
(D) fourth, to pay the principal of all
Protective Advances until paid in full,
(E) fifth, ratably to pay any Lender Group
Expenses (including, without limitation, the reasonable attorneys' fees and
costs) or indemnities then due to any of the Lenders under the Loan Documents,
until paid in full,
8
(F) sixth, ratably to pay any fees or premiums
then due to any of the Lenders under the Loan Documents until paid in full,
(G) seventh, ratably to pay interest due in
respect of the Advances (other than Protective Advances), the Swing Loans, and
the Term Loans until paid in full,
(H) eighth, ratably (i) to pay the principal of
all Swing Loans until paid in full, (ii) to pay the principal of all Advances
until paid in full, (iii) to Agent, to be held by Agent, for the ratable benefit
of Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the Letter of Credit Usage, (iv) to Agent,
to be held by Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount of the Bank Product Reserve established
prior to the occurrence of, and not in contemplation of, the subject Event of
Default, and (v) to pay the outstanding principal balance of Term Loan A and
then Term Loan B (in the inverse order of the maturity of the installments due
thereunder) until the Term Loans are paid in full,
(I) ninth, to pay any other Obligations
(including the provision of amounts to Agent, to be held by Agent, for the
benefit of the Bank Product Providers, as cash collateral in an amount up to the
amount determined by Agent in its Permitted Discretion as the amount necessary
to secure Borrowers' and their Subsidiaries' obligations in respect of Bank
Products), and
(J) tenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.
(iii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.3(e).
(iv) In each instance, so long as no Event of Default
has occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment
made by Borrowers to Agent and specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.
(v) For purposes of Section 2.4(b)(ii), "paid in full"
means payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the
priority provisions of this Section 2.4 and any other provision contained in any
other Loan Document, it is the intention of the parties hereto that such
provisions be read together and construed, to the fullest extent possible, to be
in concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this Section
2.4 shall control and govern.
(c) Mandatory Prepayments.
(i) If, as of the last day of any month (A) that is
other than a day upon which a Term Loan B is being made, (I) the sum of the
outstanding principal balance of Term Loan A and the outstanding principal
balance of Term Loan B on such date plus the Revolver Usage on such date exceeds
(II) the Borrowing Base Multiple multiplied by the TTM EBITDA (the "Loan Limit"
and such excess being referred to as the "Limiter Excess"), then Borrowers shall
immediately prepay the Obligations in accordance with Section 2.4(e)(i) in an
aggregate amount equal to the Limiter Excess or (B) that is a day upon which a
Term Loan B is being made, (I) the sum of the outstanding principal balance of
9
Term Loan A and the outstanding principal balance of Term Loan B on such date
after giving effect to the Term Loan B being made on such day, plus the Revolver
Usage on such date exceeds (II) the Acquisition Multiple multiplied by the TTM
EBITDA (such excess being referred to as the "Term Limiter Excess"), then
Borrowers shall immediately prepay the Obligations in accordance with Section
2.4(e)(i) in an aggregate amount equal to the Term Limiter Excess.
(ii) As promptly as practicable but in no event later
than the end of the next Business Day upon the receipt by Borrowers or any of
their Subsidiaries of the proceeds of any voluntary or involuntary sale or
disposition by Borrowers or any of their Subsidiaries of property or assets
(including casualty losses or condemnations but excluding sales or dispositions
which qualify as Permitted Dispositions under clauses (a), (b), (c), or (d) of
the definition of Permitted Dispositions and excluding sales of contracts),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(e)(ii) in an amount equal to 100% of the Net Cash
Proceeds (including condemnation awards and payments in lieu thereof) received
by such Person in connection with such sales or dispositions; provided that, so
long as (A) no Default or Event of Default shall have occurred and is
continuing, (B) Administrative Borrower shall have given Agent prior written
notice of Borrowers' intention to apply such monies to the costs of replacement
of the properties or assets that are the subject of such sale or disposition,
(C) the monies are held in a cash collateral account in which Agent has a
perfected first-priority security interest, and (D) Borrowers or their
Subsidiaries, as applicable, complete such replacement, purchase, or
construction within 270 days after the initial receipt of such monies, Borrowers
and their Subsidiaries shall have the option to apply all of such monies to the
costs of replacement of the property or assets that are the subject of such sale
or disposition or the costs of purchase or construction of other assets useful
in the business of Borrowers and their Subsidiaries unless and to the extent
that such applicable period shall have expired without such replacement,
purchase or construction being made or completed, in which case, any amounts
remaining in the cash collateral account shall be paid to Agent and applied in
accordance with Section 2.4(e)(ii). Nothing contained in this Section 2.4(c)(ii)
shall permit Borrowers or any of their Subsidiaries to sell or otherwise dispose
of any property or assets other than in accordance with Section 6.4.
(iii) As promptly as practicable but in no event later
than the end of the next Business Day upon the receipt by Borrowers or any of
their Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with Section
2.4(e)(ii) in an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.
(iv) As promptly as practicable but in no event later
than the end of the next Business Day upon the issuance of any stock by any of
the Borrowers or any of their Subsidiaries or the issuance or incurrence by
Borrowers or any of their Subsidiaries of any Indebtedness (other than
Indebtedness permitted under Section 6.1(a), (b), (c), (d), or (e)), Borrowers
shall prepay the outstanding principal amount of the Obligations in accordance
with Section 2.4(e)(ii) in an amount equal to 100% of the Net Cash Proceeds
received by such Person in connection with such issuance or incurrence.
Notwithstanding the foregoing in this Section 2.4 (c)(iv), no prepayment shall
be required from the proceeds of any issuance of equity so long as no Event of
Default has occurred and is continuing and either (a) the proceeds of the equity
issuance are used for a Permitted Acquisition, and (b) the Senior Leverage Ratio
is less that 1.5:1.0 both immediately before and taking into account the
Permitted Acquisition. The provisions of this Section 2.4(c)(iv) shall not be
deemed to be implied consent to any such issuance or incurrence otherwise
prohibited by the terms and conditions of this Agreement.
(v) Within 10 days of delivery to Agent and the Lenders
of audited annual financial statements pursuant to Section 5.3, commencing with
the delivery to Agent and the Lenders of the financial statements for Parent's
fiscal year ended 2006 or, if such financial statements are not delivered to
Agent and the Lenders on the date such statements are required to be delivered
pursuant to Section 5.3, 10 days after the date such statements are required to
be delivered to Agent and the Lenders pursuant to Section 5.3, Borrowers shall
prepay the outstanding principal amount of the Obligations in accordance with
Section 2.4(e)(ii) in an amount equal to 35% of the Excess Cash Flow of
Borrowers and their Subsidiaries for such fiscal year.
10
(vi) Immediately upon the receipt by Borrowers or any of
their Subsidiaries of the proceeds of any voluntary or involuntary sale or
disposition by Borrowers or any of their contracts, Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with Section
2.4(e)(ii) in an amount equal to 100% of the Net Cash Proceeds received by such
Person in connection with such sales or dispositions. The provisions of this
Section 2.4(c)(vi) shall not be deemed to be implied consent to any sale of any
contract otherwise prohibited by the terms and conditions of this Agreement.
(vii) No mandatory prepayment made pursuant to this
Section 2.4(c) that results in a partial prepayment of the Loans shall be
subject to the Applicable Prepayment Premium.
(d) Optional Prepayments. The Borrowers may, upon written notice
to Agent, without premium or penalty, prepay the Term Loans so long as both
immediately before and after giving effect to any such prepayment, the Borrowers
have Excess Availability plus Qualified Cash of not less than $1,000,000. Any
prepayment made under this Section 2.4(d) must be in a minimum amount of
$500,000, or any multiple of $500,000 in excess thereof. Written notice of an
intended prepayment of the Term Loans shall specify the amount of the prepayment
and the Term Loan to which it should be applied, shall be irrevocable once
given, and shall be given at least 5 Business Days prior to planned prepayment
date. Any prepayment under this Section 2.4(d) shall be applied to the
installments due in respect of the applicable Term Loan in the inverse order of
their maturity. If, in connection with any prepayment made pursuant to this
Section 2.4(d), this Agreement is terminated prior to the Maturity Date, the
Borrowers shall pay to the Agent a fee in an amount equal to the Applicable
Prepayment Premium; provided, that, absent such termination, any permitted
prepayment of the Term Loans or reduction of the Revolver Usage shall not reduce
the determination of the Applicable Prepayment Premium that is otherwise
applicable under this Section 2.4(d).
(e) Application of Payments.
(i) Each prepayment pursuant to Section 2.4(c)(i) shall,
(A) so long as no Event of Default shall have occurred and be continuing, be
applied, first, to the outstanding principal amount of the Advances until paid
in full, second, to cash collateralize the Letters of Credit in an amount equal
to 105% of the then extant Letter of Credit Usage, third, to the outstanding
principal amount of Term Loan A until paid in full, fourth, to the outstanding
principal amount of Term Loan B until paid in full and (B) if an Event of
Default shall have occurred and be continuing, be applied in the manner set
forth in Section 2.4(b)(ii). Each such prepayment of the Term Loans shall be
applied against the remaining installments of principal of the Term Loans in the
inverse order of maturity.
(ii) Each prepayment pursuant to Section 2.4(c)(ii),
2.4(c)(iii), 2.4(c)(iv), 2.4(c)(v), or 2.4(c)(vi) above shall (A) so long as no
Event of Default shall have occurred and be continuing, first, to the
outstanding principal amount of the Term Loan A until paid in full, second, to
the outstanding principal amount of the Term Loan B until paid in full, third,
to the outstanding principal amount of the Advances until paid in full, and
fourth, to cash collateralize the Letters of Credit in an amount equal to 105%
of the then extant Letter of Credit Usage (with a corresponding permanent
reduction in the Maximum Revolver Amount), and (B) if an Event of Default shall
have occurred and be continuing, be applied in the manner set forth in Section
2.4(b)(ii). Each such prepayment of the Term Loans shall be applied against the
remaining installments of principal of the Term Loans in the inverse order of
maturity.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or
Section 2.12 is greater than any of the limitations set forth in Section 2.1 or
Section 2.12, as applicable (an "Overadvance"), Borrowers immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). Borrowers promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or,
if earlier, on the date on which the Obligations are declared due and payable
pursuant to the terms of this Agreement.
11
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in Section 2.6(c), all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the Applicable Margin, (ii) if the relevant
Obligation is a portion of the Term Loans that is a LIBOR Rate Loan, at a per
annum rate equal to the LIBOR Rate plus the Applicable Margin, (iii) if the
relevant Obligation is a portion of the Term Loans that is a Base Rate Loan, at
a per annum rate equal to the Base Rate plus the Applicable Margin, and (iv)
otherwise, at a per annum rate equal to the Base Rate plus the Applicable
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any
agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 3.75% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 2 percentage points above the per
annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for in Section
2.6(b) shall be increased to 2 percentage points above the per annum rate
otherwise applicable hereunder.
(d) Payment. Except as provided to the contrary in Section 2.11
or Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loans and including any amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of
the Bank Product Reserve) to Borrowers' Loan Account, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans. Any interest not paid when due
shall be compounded by being charged to the Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
12
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) At all times, Borrowers shall and shall cause each of their
respective Subsidiaries to establish and maintain cash management services of a
type and on terms satisfactory to Agent at one or more of the banks set forth on
Schedule 2.7(a) (each a "Cash Management Bank"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of their and their
Subsidiaries' Account Debtors, Payors, and other third parties forward all
Collections (including payment of the amounts owed by them) directly to such
Cash Management Bank. All payments on Accounts received directly by any of the
Borrowers shall be held by each Borrower, in trust, for the benefit of Agent,
until such amounts are deposited into a Cash Management Account. So long as no
Default or Event of Default has occurred and is continuing, Administrative
Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or
Cash Management Account; provided, however, that (i) such prospective Cash
Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the
time of opening of any Cash Management Account (other than a replacement
Borrower Collection Account), the Administrative Borrower and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement and Agent shall have received such documentation as Agent
may reasonably require to evidence the establishment of the procedures set forth
in this Section 2.7, including, without limitation, copies of applicable Payor
Notices. Borrowers (or their Subsidiaries, as applicable) shall close any of
their Deposit Accounts (and establish any such replacement Deposit Accounts as
may be deemed necessary by Agent in its Permitted Discretion) promptly and in
any event within 30 days of notice from Agent that the creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or
as promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to the Deposit Accounts or
Agent's liability under any Cash Management Agreement with such Cash Management
Bank is no longer acceptable in Agent's reasonable judgment.
(b) Without limiting clause (a) above, within 15 days of the
Closing Date, Administrative Borrower shall establish and thereafter maintain at
all times the following Deposit Accounts (each, a "Cash Management Account") at
a Cash Management Bank with respect to Collections: (i) one for the collection
of Governmental Receivables (the "Borrower Collection Account"), and (ii) one
for the collection of all other Accounts (the "Agent Collection Account"). The
Borrower Collection Account shall be an account in the name of Administrative
Borrower and shall be the property of Borrowers. The Agent Collection Account
shall be in the name of Agent and shall be the sole and exclusive property of
Agent.
(c) Promptly following the establishment of the Borrower
Collection Account, Borrowers agree to notify all Payors on Governmental
Receivables in writing (with a copy to Agent) to remit all payments directly to
the Borrower Collection Account. Borrowers further agree to use commercially
reasonable efforts to cause all such Payors to remit payments to the Borrower
Collection Account at all times thereafter. Each Borrower agrees that it shall
not deposit or cause to be deposited any funds other than payments on
Governmental Receivables into the Borrower Collection Account.
(d) Following the establishment of each of the Borrower
Collection Account and the Agent Collection Account, Borrowers shall deposit or
cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all Collections received by
13
Borrowers directly in respect of Governmental Receivables into the Borrower
Collection Account and all other Collections (including those sent directly by
their Account Debtors to Borrowers or their Subsidiaries) into the Agent
Collection Account.
(e) Borrowers agree that, upon Agent's request, with respect to
all of Borrowers' Deposit Accounts, other than the Borrower Collection Account
and each of the disbursement Deposit Accounts set forth on Schedule 2.7(i), (a)
Borrower will cause each Cash Management Bank to establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) the Cash Management Bank will comply with any instructions (each, a
"Cash Disposition Instruction"), originated by Agent directing the disposition
of the funds in the applicable Deposit Account without further consent by
Borrowers or their Subsidiaries, as applicable, (ii) the Cash Management Bank
has no rights of setoff or recoupment or any other claim against the applicable
Deposit Account, other than for payment of its service fees and other charges
directly related to the administration of such Deposit Account and for returned
checks or other items of payment, and (iii) at any time after which the Agent so
instructs such Cash Management Bank (a "Cash Sweep Instruction"), it immediately
will forward by daily sweep all amounts in the applicable Deposit Account to the
Agent's Account. None of the Borrowers shall have any right to or interest in
Agent's Account. Notwithstanding anything to the contrary contained herein, the
Agent agrees that it will not send a Cash Sweep Instruction until the
occurrence, and during the continuation, of an Event of Default.
(f) Once the Borrower Collection Account is established,
Administrative Borrower shall instruct the applicable Cash Management Bank,
pursuant to a standing wire transfer instruction, to automatically transfer at
the end of each Business Day all amounts in the Borrower Collection Account to
any of Borrowers' other Deposit Accounts that is subject to a Cash Management
Agreement; provided that at the written direction of Agent, after occurrence and
during the continuation of a Event of Default, Administrative Borrower shall
instruct the applicable Cash Management Bank, pursuant to a standing wire
transfer instruction, to automatically transfer at the end of each Business Day
all amounts in the Borrower Collection Account to Agent's Account. Except as
expressly set forth above, no Borrower (including Administrative Borrower) shall
change or cancel any such automatic transfer order at any time. No Borrower
(including Administrative Borrower) may, without the prior written consent of
Agent, change either the identity of the Cash Management Accounts or the
instructions to each Payor on the related Account to make its payments to such
account.
(g) Without limiting Borrowers obligations under clause (c)
above, each Borrower shall notify all Payors using forms of notices approved by
Agent (collectively, the "Payor Notices") to remit payment to the appropriate
Cash Management Account, as Agent may from time to time reasonably request. If
any Payor makes payment in respect of any Account to a location other than the
applicable Cash Management Account (a "Misdirected Payment"), each Borrower (at
its own cost and expense) shall (i) use its best efforts to promptly take all
necessary steps to effect collection of such Misdirected Payment from any other
Person claiming an interest therein or having possession thereof, (ii) hold such
payment in trust for Agent, (iii) segregate such payment and not deposit such
payment in such Borrower's own account, nor commingle such payment with such
Borrower's own funds or other assets, and (iv) deliver such payment to a Cash
Management Bank for deposit in the applicable Cash Management Account no later
than the close of Business on the third Business Day after receipt.
(h) [Reserved].
(i) Except for the Borrower Collection Account and the
disbursement Deposit Accounts set forth on Schedule 2.7(i), following the
delivery of the Cash Management Agreements referenced in clause (e) above,
Borrowers and their respective Subsidiaries shall not maintain any Deposit
Accounts that are not subject to Control Agreements or Cash Management
Agreements, as applicable. Borrowers represent and warrant that each of the
Deposit Accounts set forth on Schedule 2.7(i) is maintained as a payroll
disbursement account only and that no funds other than those necessary to fund
payroll are on deposit therein at any time.
14
2.8 Crediting Payments. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 Designated Account. Agent is authorized to make the Advances and
the Term Loans, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person or, without instructions, if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Protective Advance, or Swing Loan
requested by Borrowers and made by Agent or the Lenders hereunder shall be made
to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loan, all Advances
(including Protective Advances and Swing Loans) made by Agent, Swing Lender, or
the Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued
by Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and reasonable expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
2.11 Fees. Borrowers shall pay to Agent, as and when due and payable
under the terms of the Fee Letter, the fees set forth in the Fee Letter.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
15
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $1,000,000,
or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the outstanding amount of Advances less the Bank
Product Reserve, and less the aggregate amount of reserves, if any, established
by Agent under Section 2.1(b).
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, initially, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans.
To the extent an L/C Disbursement is deemed to be an Advance hereunder,
Borrowers' obligation to reimburse such L/C Disbursement shall be discharged and
replaced by the resulting Advance. Promptly following receipt by Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to Section 2.12(b) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in Section 2.12(a),
or of any reimbursement payment required to be refunded to Borrowers for any
reason. Each Lender with a Revolver Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share of each L/C Disbursement made by the
16
Issuing Lender pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3. If any such Lender fails to make available to
Agent the amount of such Lender's Pro Rata Share of each L/C Disbursement made
by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability (other
than with respect to Excluded Taxes), and reasonable attorneys fees incurred by
the Lender Group arising out of or in connection with any Letter of Credit;
provided, however, that no Borrower shall be obligated hereunder to indemnify
for any loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer's
regulations and interpretations of any Underlying Letter of Credit or by Issuing
Lender's interpretations of any L/C issued by Issuing Lender to or for such
Borrower's account, even though this interpretation may be different from such
Borrower's own, and each Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake, whether of omission
or commission, in following Borrowers' instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto. Each
Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out of
claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees
to indemnify, save, defend, and hold the Lender Group harmless with respect to
any loss, cost, expense (including reasonable attorneys fees), or liability
incurred by the Lender Group under any L/C Undertaking as a result of the Lender
Group's indemnification of any Underlying Issuer; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the Lender Group nor the
Issuing Lender shall be responsible for delays, errors, or omissions resulting
from the malfunction of equipment in connection with any Letter of Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender (other than with respect to Excluded Taxes)
relating to Underlying Letters of Credit shall be Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Agent for the account of the Issuing Lender; it being acknowledged and agreed by
each Borrower that, as of the Closing Date, the issuance charge imposed by the
prospective Underlying Issuer is .825% per annum times the undrawn amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority (other than with respect to
Excluded Taxes), or (ii) compliance by the Underlying Issuer or the Lender Group
with any direction, request, or requirement (irrespective of whether having the
force of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):
17
(i) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or
the Lender Group any other condition regarding any Underlying Letter of Credit
or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
or the Term Loans be charged (whether at the time when made (unless otherwise
provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or
upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of
interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be
payable on the earliest of (i) the last day of the Interest Period applicable
thereto, (ii) the date on which all or any portion of the Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on which this
Agreement is terminated pursuant to the terms hereof. On the last day of each
applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances or the Term Loans bear interest at a rate
based upon the LIBOR Rate and Agent shall have the right to convert the interest
rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from
time to time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the "LIBOR Deadline"). Notice of Administrative
Borrower's election of the LIBOR Option for a permitted portion of the Advances
or the Term Loan and an Interest Period pursuant to this Section shall be made
by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR
Deadline, or by telephonic notice received by Agent before the LIBOR Deadline
(to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior
to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each of the
affected Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding
on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
18
"Funding Losses"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender to be the excess,
if any, of (1) the amount of interest that would have accrued on the principal
amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), minus (2) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section 2.13 shall be conclusive absent
manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate
Loans in effect at any given time. Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $500,000 and integral multiples of $250,000 in
excess thereof.
(c) Conversion. Borrowers may convert LIBOR Rate Loans to Base
Rate Loans at any time; provided, however, that in the event that LIBOR Rate
Loans are converted or prepaid on any date that is not the last day of the
Interest Period applicable thereto, including as a result of any automatic
prepayment through the required application by Agent of proceeds of Borrowers'
and their Subsidiaries' Collections in accordance with Section 2.4(b) or for any
other reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders
and their Participants harmless against any and all Funding Losses in accordance
with Section 2.13 (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect
to any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) other than with respect to Excluded Taxes and changes
in the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage, which
additional or increased costs would increase the cost of funding or maintaining
loans bearing interest at the LIBOR Rate. In any such event, the affected Lender
shall give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Administrative
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under Section 2.13(b)(ii)).
(ii) In the event that any change in market conditions
or any law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, other than with respect to Excluded
Taxes, shall at any time after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to fund or maintain
LIBOR Rate Loans or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall give notice of such
changed circumstances to Agent and Administrative Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender's notice shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrowers shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.
19
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Borrower without preferences or distinction among them.
(c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each Borrower under the provisions of
this Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Advances or Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of Default, or
of any demand for any payment under this Agreement, notice of any action at any
time taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
20
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
Section 2.15 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial condition of Borrowers
and of all other circumstances which a diligent inquiry would reveal and which
bear upon the risk of nonpayment of the Obligations. Each Borrower further
represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Borrower hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) Each Borrower waives all rights and defenses arising out of
an election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent's or such Lender's rights of
subrogation and reimbursement against such Borrower (including, if, for any
reason the laws of the State of California are applied to the Loan Documents,
subrogation rights have been destroyed by the operation of Section 580(d) of the
California Code of Civil Procedure or otherwise).
(h) To the extent applicable, each Borrower waives all rights
and defenses that such Borrower may have because the Obligations are secured by
Real Property. This means, among other things:
(i) Agent and Lenders may collect from such Borrower
without first foreclosing on any Real or Personal Property Collateral pledged by
Borrowers.
(ii) If Agent or any Lender forecloses on any Real
Property Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price, provided, however,
that nothing in this section shall limit Agent's requirement to conduct such
sale in a commercially reasonable manner to the extent required under Article 9
of the Code.
(B) Agent and Lenders may collect from such
Borrower even if Agent or Lenders, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may have to collect from the
other Borrowers.
21
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.15 are made for the benefit
of Agent, Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all Borrowers as often
as occasion therefor may arise and without requirement on the part of Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.15 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.
(j) Each Borrower hereby agrees that it will not enforce any of
its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
(k) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, xxx for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Agent, and such Borrower shall deliver any such amounts to Agent for
application to the Obligations in accordance with Section 2.4(b).
(l) Each Borrower hereby waives all rights by which such
Borrower might be entitled to require suit on an accrued right of action in
respect of any of the Obligations or require suit against any other Borrower or
any Guarantor or any other Person.
(m) Each Borrower, to the extent permitted by applicable law,
waives any rights, benefits, and defenses that are or may become available to
such Borrower (including by reason of California Civil Code Sections 2845 and
2850), based on the claim that Agent is required to proceed against another
Borrower or any other Person, or to proceed against or exhaust any security held
by Agent at any time, or to first apply any security of any Borrower to the
discharge of the Obligations, or to pursue any other remedy in Agent's power
before proceeding against such Borrower hereunder.
22
(n) Each Borrower, to the extent permitted by applicable law,
waives any and all rights, benefits and defenses (including by reason of
California Civil Code ss.2849), based on the claim that a surety is entitled to
the benefit of every security for the performance of the principal obligation
held by the creditor.
(o) Each Borrower, to the extent permitted by applicable law,
waives any rights and defenses that are or may become available to such Borrower
by reason of California Civil Code Section 2856(a)(1)-(3), inclusive, which
includes, without limitation, any rights and defenses which are or may become
available to such Borrower by reason of California Civil Code Sections 2787 to
2855, inclusive.
(p) Each Borrower, to the extent permitted by applicable law,
waives any right or defense it may have at law or equity, (including by reason
of California Code of Civil Procedure Section 580a), to require a fair market
value hearing or action to determine a deficiency judgment after a foreclosure.
(q) Each Borrower, to the extent permitted by applicable law,
waives any rights, benefits, and defenses that are or may become available to
such Borrower to claim that, as a surety, (i) it is not liable if for certain
reasons there is no liability upon the part of the principal or if the principal
ceases to become liable (including by reason of California Civil Code Section
2809) and (ii) its obligations must not be larger nor more burdensome than that
of the principal (including by reason of California Civil Code Section 2810).
Any reference to California code sections shall be deemed to include any
equivalent code provisions under New York law. Without limiting the
applicability of the equivalent code provisions under New York law, the
foregoing references to the California Code of Civil Procedure and the
California Civil Code shall apply if, notwithstanding the provisions of Section
12, the laws of the State of California are applied to the Loan Documents;
provided, that the inclusion of such provisions does not affect or limit in any
way the parties' choice of New York law.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Agent and each
Lender of each of the conditions precedent set forth on Schedule 3.1 (the making
of such initial extension of credit by a Lender being conclusively deemed to be
its satisfaction or waiver of the conditions precedent).
3.2 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make any Advances or any Term Loan
hereunder (or to extend any other credit hereunder) at any time shall be subject
to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement or in the other Loan Documents shall be true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature restricting or prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against any Borrower, Agent, or any Lender;
(d) no Material Adverse Change shall have occurred since August
31, 2006;
23
(e) each draw under Term Loan B hereunder shall be subject to
the following conditions precedent:
(i) Agent is in receipt of a third-party quality of
earnings audit in form and substance acceptable to Lenders;
(ii) Agent shall have received evidence satisfactory in
all respects to the Agent that such draw under Term Loan B is to be used by
Borrowers to finance a Permitted Acquisition;
(iii) Agent shall have received, and be satisfied with,
true and complete copies of all agreements to effect the Permitted Acquisition,
and any other documents reasonably requested by Agent in connection therewith,
to be financed with the proceeds of such draw under Term Loan B;
(iv) the proposed draw under Term Loan B is in an amount
not less than $1,000,000;
(v) any and all agreements, instruments and documents
(including, without limitation, financing statements) required to be executed,
delivered and/or filed in order to create, in favor of Agent, a first priority
fully perfected security interest (A) in the case of an asset purchase, in the
then existing and thereafter arising assets being purchased with the proceeds of
such draw and (B) in the case of a Stock purchase, the Stock and the then
existing and thereafter arising assets of such company being purchased with such
draw, in each case shall have been properly executed, delivered and/or filed in
each office in each jurisdiction necessary to create in favor of Agent a first
priority fully perfected security interest in such assets and/or Stock, and
Agent shall be satisfied, in its sole and absolute discretion, with the nature
and extent of the rights and remedies afforded Agent under applicable law;
(vi) this Agreement (including all financial covenants
and all other affirmative and negative covenants) shall have been amended as
Agent requires in its sole discretion to reflect the Permitted Acquisition and
the draw under Term Loan B and their impact on Borrowers' business, assets,
financial condition and prospects; and
(vii) Borrowers shall have delivered, and the Agent
shall have approved of, a certificate in connection with the Permitted
Acquisition to be financed with the proceeds of such draw under Term Loan B
reflecting that, on a pro forma basis before and after giving effect to such
acquisition, the sum of (i) the outstanding Advances, (ii) the unpaid balance of
Term Loan A, (iii) the unpaid balance of the Term Loan B, and (iv) the proposed
draw under Term Loan B will not exceed the product of the Acquisition Multiple
times the Pro Forma TTM EBITDA.
3.3 Term. This Agreement shall continue in full force and effect for a
term ending on November 30, 2010 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.4 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to outstanding Letters of Credit and including all Bank
Product Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender, (b) providing cash collateral (in
an amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations, and (c) making adequate
provision for any contingent or unliquidated Obligations related to claims,
causes of action, or liabilities that have been asserted or threatened against
the Agent or Lenders, or that otherwise can be reasonably identified based on
the then known
24
facts and circumstances). No termination of this Agreement, however, shall
relieve or discharge Borrowers or their Subsidiaries of their duties,
Obligations, or covenants hereunder or under any other Loan Document and the
Agent's Liens in the Collateral shall remain in effect until all Obligations
have been paid in full and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been paid in full and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.5 Early Termination by Borrowers. Borrowers have the option, at any
time upon 60 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement and terminate the Commitments hereunder by paying to
Agent, in cash, the sum of the full amount of the Obligations (including (a)
either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with
respect to the Bank Product Obligations, and (c) making adequate provision for
any contingent or unliquidated Obligations related to claims, causes of action,
or liabilities that have been asserted or threatened against the Agent or
Lenders, or that otherwise can be reasonably identified based on the then known
facts and circumstances), and the otherwise applicable Early Termination Fee. If
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender, (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be held by
Agent for the benefit of the Bank Product Providers with respect to the Bank
Product Obligations, and (c) making adequate provision for any contingent or
unliquidated Obligations related to claims, causes of action, or liabilities
that have been asserted or threatened against the Agent or Lenders, or that
otherwise can be reasonably identified based on the then known facts and
circumstances), in full, together with the Early Termination Fee, on the date
set forth as the date of termination of this Agreement in such notice.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance or Term Loan (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance or Term Loan
(or other extension of credit) (except to the extent that such representations
and warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
4.1 No Encumbrances. Each Borrower and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.
4.2 Healthcare Matters.
25
(a) Each Borrower and its respective Subsidiaries (i) has all
material permits, licenses, accreditations, certifications, authorizations,
approvals, consents and agreements of all Payors, accreditation agencies and any
other Person(s), necessary or required for each Borrower or such Subsidiary to
own the assets that it now owns, to carry on its business as now conducted, to
execute, deliver and perform its Obligations under the Loan Documents, and to
receive payments on Accounts from the applicable Payors, and (ii) is in
compliance with all laws, rules, regulations, orders, decrees and directions of
any Governmental Authority (including, without limitation, the Medicare Act, the
rules and regulations of HCFA under the Medicare Act, the applicable Medicaid
laws and HIPAA) applicable to the Accounts or any contracts relating thereto, or
applicable to the business and properties of any Borrower or such Subsidiary, a
violation of which would or could materially and adversely affect the ability of
any Borrower or such Subsidiary to carry out its Obligations hereunder or with
respect to the Accounts. Except as has been disclosed to Agent in writing prior
to the Closing Date, no Borrower or any of their respective Subsidiaries has
been notified by any such Payor, accreditation agency or any other Person,
during the 24 month period immediately preceding the date of this Agreement,
that such Person has rescinded or not renewed, or intends to rescind or not
renew, any such permit, license, accreditation, certification, authorization,
approval, consent or agreement granted by it to any Borrower or to which it and
any Borrower or such Subsidiary are parties. Without limiting the generality of
the foregoing, to Borrowers' and each of Borrowers' Subsidiaries' knowledge,
there have not been, and there currently are no pending licensure,
certification, or other enforcement actions by the Centers for Medicare and
Medicaid Services. To Borrowers' and each of Borrowers' Subsidiaries' knowledge,
if Borrowers and their respective Subsidiaries were surveyed for compliance with
relevant licensing criteria, Borrowers and such Subsidiaries would be found to
be in substantial compliance with such requirements, sufficient to maintain
their respective license and Medicare certifications.
(b) None of the Borrowers maintains Medicare provider or
Medicaid provider status nor is any Borrower required to maintain any such
status to carry on its business as now conducted or to carry out its Obligations
hereunder. Schedule 4.2(b) contains, as of the Closing Date, the respective
provider identification numbers of each physician to whom any Borrower provides
billing, practice management or related services. The Borrowers shall provide
Agent with an updated Schedule 4.2(b) as promptly as possible and in any event
within twenty-five (25) days following Agent's request therefor; provided that,
in the absence of a Default or Event of Default, the Borrowers will not be
required to update Schedule 4.2(b) more frequently than twice per calendar year.
(c) No Borrower or any of their respective Subsidiaries is
required to be accredited by JCAHO. Each Borrower and each of their respective
Subsidiaries is in good standing with the respective governmental,
quasi-governmental and other third party Payors and regulatory agencies that now
or hereafter are expected to deal with each such Borrower or such Subsidiaries.
(d) To Borrowers' and each of their respective Subsidiaries'
knowledge, no Borrower or any such Subsidiary has committed any act that has
been or may be deemed an "unlawful act" in violation of or has ever been
notified that it is subject to any suspension or revocation action, or the
subject of any investigation, civil investigative demand, or action.
(e) To Borrowers' and each of their respective Subsidiaries'
knowledge, no Borrower or such Subsidiary has presented or caused to be
presented any claim that is in violation of law.
(f) To Borrowers' and each of their respective Subsidiaries'
knowledge, no Borrower or such Subsidiary has submitted any claim for payment
that violates the federal False Claims Act, as codified at 31 U.S.C. ss. 3729.
(g) No Borrower or any of their respective Subsidiaries, nor any
director, officer, nor to Borrowers' or such Subsidiaries' knowledge, any
employee of any Borrower or such Subsidiary, nor any manager or agent acting on
behalf of or for the benefit thereof, has directly or indirectly solicited,
received, paid or offered to pay any illegal remuneration in violation of the
Medicare and Medicaid Anti-Kickback Statute, as codified at 42 U.S.C. ss.
1320a-7b(b).
26
(h) No Borrower or any of their respective Subsidiaries, nor any
director, officer, nor to Borrowers' or such Subsidiaries' knowledge, any
employee of any Borrower or such Subsidiary, have been convicted of or indicted
for a Medicare, Medicaid or other Federal health care program (as defined in 42
U.S.C. ss. 1320a-7b(f)) offense, or convicted of or indicted for a violation of
federal or state law related to fraud, theft, embezzlement, breach of fiduciary
responsibility, financial misconduct, obstruction of an investigation, or a
crime involving controlled substances, nor have they been debarred, excluded or
suspended from participation in any Medicare, Medicaid or any other Federal
health care program, or been subject to any order or consent decree of, or
criminal or civil fine or penalty imposed by, any court or governmental agency.
At no time during the conduct of Borrowers' or their respective Subsidiaries'
business has any Borrower or such Subsidiary arranged or contracted with (by
employment or otherwise) any individual or entity excluded or suspended from
participation in a Federal health care program for the provision of items or
services for which payment may be made under such Federal health care program.
(i) No Borrower or any of their respective Subsidiaries (or any
executive officer or manager of any of them):
(i) has had a civil monetary penalty assessed against
any of them under the Social Security Act ("SSA") Section 1128(a);
(ii) has been excluded from participation under the
Medicare program or under a State health care program as defined in SSA Section
1128(h) ("State Health Care Program"); or
(iii) has been convicted (as that term is defined in 42
C.F.R. Section 1001.2) of any of the following categories of offenses as
described in SSA Section 1127(a) and (b)(1), (2), or (3); (A) criminal offenses
relating to the delivery of an item or service under Medicare or any State
Health Care Program; (B) criminal offenses under federal or state law relating
to patient neglect or abuse in connection with the delivery of a health care
item or service; (C) criminal offenses under federal or state law relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other
financial misconduct in connection with the delivery of a health care item or
service or with respect to any act or omission in a program operated by or
financed in whole or in part by any federal, state or local governmental agency;
(D) federal or state laws relating to the interference with or obstruction of
any investigations into any criminal offenses described in clauses (A) through
(C) above; or (E) criminal offenses under federal or state law relating to the
unlawful manufacture, distribution, prescription or dispensing of a controlled
substance.
4.3 Equipment. Each material item of Equipment of Borrowers and their
Subsidiaries is used or held for use in their business and is in good working
order, ordinary wear and tear and damage by casualty excepted.
4.4 Location of Inventory and Equipment. The Inventory and Equipment
(other than vehicles or Equipment out for repair) of Borrowers and their
Subsidiaries are not stored with a bailee, warehouseman, or similar party and
are located only at, or in-transit between, the locations identified on Schedule
4.4 (as such Schedule may be updated pursuant to Section 5.9).
4.5 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
4.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.
(a) The name of (within the meaning of Section 9-503 of the
Code) and jurisdiction of organization of each Borrower and each of its
Subsidiaries is set forth on Schedule 4.6(a) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under Section 6.5).
27
(b) The chief executive office of each Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 4.6(b) (as such
Schedule may be updated from time to time to reflect changes permitted to be
made under Section 5.9).
(c) Each Borrower's and each of its Subsidiaries' tax
identification numbers and each Borrower's and each of its Subsidiaries' (other
than the Shell Entities) organizational identification numbers, if any, are
identified on Schedule 4.6(c) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 6.5).
(d) As of the Closing Date, Borrowers and their Subsidiaries do
not hold any commercial tort claims, except as set forth on Schedule 4.6(d).
4.7 Due Organization and Qualification; Subsidiaries.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to result in a Material Adverse Change.
(b) Set forth on Schedule 4.7(b) (as such Schedule may be
updated from time to time to reflect changes permitted to be made under Section
5.16), is a complete and accurate description of the authorized capital Stock of
each Borrower, by class, and, as of the Closing Date, a description of the
number of shares of each such class that are issued and outstanding. Other than
as described on Schedule 4.7(b), there are no subscriptions, options, warrants,
or calls relating to any shares of each Borrower's capital Stock, including any
right of conversion or exchange under any outstanding security or other
instrument. Other than as described on Schedule 4.7(b), no Borrower is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 4.7(c) (as such Schedule may be
updated from time to time to reflect changes permitted to be made under Section
5.16), is a complete and accurate list of each Borrower's direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) other
than the Shell Entities, the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiary, and (iii) other than the
Shell Entities, the number and the percentage of the outstanding shares of each
such class owned directly or indirectly by the applicable Borrower. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.
(d) Except as set forth on Schedule 4.7(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
4.8 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate in any material respect any
provision of federal, state, or local law or regulation applicable to any
Borrower, the Governing Documents of any Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on any Borrower,
28
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
any Borrower, (iii) result in or require the creation or imposition of any Lien
of any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of any Borrower's interestholders
or any approval or consent of any Person under any material contractual
obligation of any Borrower, other than consents or approvals that have been
obtained and that are still in force and effect.
(c) Other than the filing of financing statements, and other
filings or actions necessary to perfect Liens granted to Agent in the
Collateral, the execution, delivery, and performance by each Borrower of this
Agreement and the other Loan Documents to which such Borrower is a party do not
and will not require any registration with, consent, or approval of, or notice
to, or other action with or by, any Governmental Authority, other than consents
or approvals that have been obtained and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected (other than
(i) in respect of motor vehicles and (ii) any Deposit Accounts and Securities
Accounts not subject to a Control Agreement as permitted by Section 6.12, and
subject only to the filing of financing statements and the recordation of the
Mortgages), and first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate in
any material respect any provision of federal, state, or local law or regulation
applicable to such Guarantor, the Governing Documents of such Guarantor, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Guarantor, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of such Guarantor, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any
approval of such Guarantor's interestholders or any approval or consent of any
Person under any material contractual obligation of such Guarantor, other than
consents or approvals that have been obtained and that are still in force and
effect.
(h) Other than the filing of financing statements, and other
filings or actions necessary to perfect Liens granted to Agent in the
Collateral, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority, other than consents or approvals that
have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
29
4.9 Litigation. Other than those matters disclosed on Schedule 4.9 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of each Borrower, threatened
against any Borrower or any of its Subsidiaries.
4.10 No Material Adverse Change. All financial statements relating to
Borrowers and their Subsidiaries that have been delivered by Borrowers to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments and, in the case of Rand Medical Billing, Inc.,
On-Line Alternatives, Inc., and On Line Payroll Services, Inc, were prepared on
a cash, not accrual, basis) and present fairly in all material respects,
Borrowers' and their Subsidiaries' financial condition as of the date thereof
and results of operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrowers and their Subsidiaries since
August 31, 2006.
4.11 Fraudulent Transfer.
(a) Each Borrower, other than Parent, and each Subsidiary of a
Borrower is Solvent.
(b) Parent, on a consolidated basis, is Solvent.
(c) No transfer of property is being made by any Borrower or any
Subsidiary of a Borrower and no obligation is being incurred by any Borrower or
any Subsidiary of a Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrowers or their Subsidiaries.
4.12 Employee Benefits. None of Borrowers, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to
any Benefit Plan.
4.13 Environmental Condition. Except as set forth on Schedule 4.13, (a)
to Borrowers' knowledge, none of Borrowers' or their Subsidiaries' properties or
assets has ever been used by Borrowers, their Subsidiaries, or by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such use, production,
storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to Borrowers'
knowledge, none of Borrowers' nor their Subsidiaries' properties or assets has
ever been designated or identified pursuant to and in violation of any
applicable Environmental Law as a Hazardous Materials disposal site, (c) none of
Borrowers nor any of their Subsidiaries have received notice that a Lien arising
under any Environmental Law has attached to any revenues or to any Real Property
owned or operated by Borrowers or their Subsidiaries, and (d) none of Borrowers
nor any of their Subsidiaries have received a summons, citation, notice, or
directive from the United States Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by any
Borrower or any Subsidiary of a Borrower resulting in the releasing or disposing
of Hazardous Materials into the environment in material violation of any
applicable Environmental Laws.
4.14 Intellectual Property. Each Borrower and each Subsidiary of a
Borrower owns, or holds licenses in, all material trademarks, trade names,
copyrights, patents, patent rights, and licenses that are necessary to the
conduct of its business as currently conducted, and attached hereto as Schedule
4.14 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Borrower or one of its
Subsidiaries is the owner or is an exclusive licensee; provided, however, that
Borrowers may amend Schedule 4.14 to add additional property so long as such
amendment occurs by written notice to Agent not less than 10 days before the
date on which a Borrower or any Subsidiary of Borrower acquires any such
property after the Closing Date.
30
4.15 Leases. Borrowers and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating and all of such material
leases are valid and subsisting and no material default by Borrowers or their
Subsidiaries exists under any of them.
4.16 Deposit Accounts and Securities Accounts. Set forth on Schedule
4.16 is a listing of all of Borrowers' and their Subsidiaries' Deposit Accounts
and Securities Accounts, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b) the account
numbers of the Deposit Accounts or Securities Accounts maintained with such
Person.
4.17 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrowers or their Subsidiaries in writing to Agent or any
Lender will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. On the Closing Date, the Closing Date
Projections represent, and as of the date on which any other Projections are
delivered to Agent, such additional Projections represent Borrowers' good faith
estimate of their and their Subsidiaries' future performance for the periods
covered thereby based upon assumptions believed by Borrowers to be reasonable at
the time of the delivery thereof to Agent (it being understood that such
projections and forecasts are subject to uncertainties and contingencies, many
of which are beyond the control of Borrowers and their Subsidiaries and no
assurances can be given that such projections or forecasts will be realized).
4.18 Indebtedness. Set forth on Schedule 4.18 is a true and complete
list of all Indebtedness of each Borrower and each Subsidiary of a Borrower
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately sets forth the aggregate
principal amount of such Indebtedness and the principal terms thereof.
4.19 Shell Entities. As of the Closing Date, none of the Shell Entities
has any business operations, owns any material assets or has any material
liabilities.
4.20 Rand Accounts. As of the Closing Date, none of Rand's accounts
payable is more than thirty (30) days past due.
4.21 Commerce Bank. As of the Closing Date, no amounts are owing by
Rand to either First Commerce Bank or Bankers/Softech.
5. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, Borrowers shall
and shall cause each of their respective Subsidiaries (including the Shell
Entities solely with respect to Sections 5.7 and 5.10) to do all of the
following:
5.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to their and their Subsidiaries' sales.
5.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with each of the reports set forth on Schedule 5.2
at the times specified therein.
31
5.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, or other items
set forth on Schedule 5.3 at the times specified therein. In addition, Parent
agrees that no Subsidiary of Parent will have a fiscal year different from that
of Parent.
5.4 Guarantor Reports. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements.
5.5 Inspection. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower.
5.6 Maintenance of Properties. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, so as to prevent any loss or
forfeiture thereof or thereunder.
5.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrowers will and will cause their Subsidiaries to make
timely payment or deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that the
applicable Borrower or Subsidiary of a Borrower has made such payments or
deposits.
5.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting their
and their Subsidiaries' assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver binders and, if requested by Agent, copies of all
such policies to Agent with an endorsement naming Agent as the sole loss payee
(under a satisfactory lender's loss payable endorsement) or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss exceeding $250,000 covered by such insurance. So long as no Event of
Default has occurred and is continuing, Borrowers shall have the exclusive right
to adjust any losses payable under any such insurance policies which are less
than $250,000. Following the occurrence and during the continuation of an Event
of Default, or in the case of any losses payable under such insurance exceeding
$250,000, Agent shall have the exclusive right to adjust any losses payable
under any such insurance policies, without any liability to Borrowers whatsoever
in respect of such adjustments.
32
5.9 Location of Inventory and Equipment. Keep Borrowers' and their
Subsidiaries' Inventory and Equipment (other than vehicles and Equipment out for
repair) only at the locations identified on Schedule 4.5 and their chief
executive offices only at the locations identified on Schedule 4.6(b); provided,
however, that Administrative Borrower may amend Schedule 4.4 or Schedule 4.6 so
long as such amendment occurs by written notice to Agent not less than 30 days
prior to the date on which such Inventory or Equipment is moved to such new
location or such chief executive office is relocated, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, the applicable Borrower provides Agent a Collateral
Access Agreement with respect thereto.
5.10 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.
5.11 Leases. Pay when due all rents and other amounts payable under any
material leases to which any Borrower or any Subsidiary of a Borrower is a party
or by which any Borrower's or any of its Subsidiaries' properties and assets are
bound, unless such payments are the subject of a Permitted Protest.
5.12 Existence. At all times preserve and keep in full force and effect
each Borrower's and each of its Subsidiaries', valid existence and good standing
and, except as could not reasonably be expected to result in a Material Adverse
Change, any rights, franchises, permits, licenses, accreditations,
authorizations, or other approvals material to their businesses.
5.13 Environmental.
(a) Keep any property either owned or operated by any Borrower
or any Subsidiary of a Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in violation of Environmental Laws from or onto property
owned or operated by any Borrower or any Subsidiary of a Borrower and take any
Remedial Actions required to xxxxx said release and come into compliance with
applicable Environmental Law, and (d) promptly, but in any event within 5 days
of its receipt thereof, provide Agent with written notice of any of the
following: (i) notice that an Environmental Lien has been filed against any of
the real or personal property of any Borrower or any Subsidiary of a Borrower,
(ii) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Borrower or any Subsidiary of a Borrower, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
5.14 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.
5.15 Control Agreements. Take all reasonable steps in order for Agent
to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and
9-107 of the Code with respect to (subject to the proviso contained in Section
6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel
paper, investment property, and letter-of-credit rights.
33
5.16 Formation of Subsidiaries. At the time that any Borrower or any
Guarantor forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Closing Date, such Borrower or such Guarantor
shall (a) cause such new Subsidiary to provide to Agent a joinder to this
Agreement and the Guaranty and the Security Agreement, as Agent may require in
its discretion, together with such other security documents (including Mortgages
with respect to any Real Property of such new Subsidiary), as well as
appropriate financing statements (and with respect to all property subject to a
Mortgage, fixture filings), all in form and substance satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Agent, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 5.16 shall be a Loan Document.
5.17 Further Assurances. At any time upon the request of Agent,
Borrowers shall execute or deliver to Agent, and shall cause their Subsidiaries
to execute or deliver to Agent, any and all financing statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, mortgages, deeds of trust, opinions of counsel, and all other
documents (collectively, the "Additional Documents") that Agent may request in
form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect the Agent's Liens in all of the
properties and assets of Borrowers and their Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by
Borrowers or their Subsidiaries after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Borrowers
authorize Agent to execute any such Additional Documents in Borrowers' or their
Subsidiaries' names, as applicable, and authorizes Agent to file such executed
Additional Documents in any appropriate filing office.
5.18 Healthcare Covenants.
(a) To the extent they are material or if requested by Agent,
furnish to Agent within thirty (30) days of receipt a copy of any healthcare
related licensure and annual or biannual certification survey report and any
statement of deficiencies and any survey (other than the annual or biannual
survey) indicating a violation or deficiency, and within the time period
required by the particular agency for submission, a copy of the plan of
correction with respect thereto if such plan of correction is required by such
agency issuing the statement of deficiency or notice of violation, and correct
or cause to be corrected any deficiency or violation within the time period
required for cure by such agency, subject to such agency's normal appeal
process, if such deficiency or violation could adversely affect either the right
to continue participation in Medicare, Medicaid or their reimbursement programs
for existing patients or the right to admit new Medicare patients, Medicaid
patients or other reimbursement program patients or result in the loss or
suspension of any licenses and permits to operate the business of any of the
Borrowers or their respective Subsidiaries;
(b) To the extent they are material or if requested by Agent,
furnish to Agent within thirty (30) days of receipt by any Borrower or its
Subsidiaries, any and all notices disclosing an investigation by or adverse
finding from any licensing, certifying or reimbursement agencies including,
without limitation, any finding that such Borrower's or such Subsidiaries'
license, Medicare or Medicaid certification or entitlement to payments pursuant
to any reimbursement contract or program of any of Borrowers or any such
Subsidiary is being downgraded to a substandard category, revoked, or suspended,
or that action is pending or being considered to downgrade to a substandard
category, revoke, or suspend any rights pursuant to the license, certification
or reimbursement contract or program of any of Borrowers or such Subsidiaries;
(c) To the extent they are material or if requested by Agent,
furnish to Agent within thirty (30) days of the date of the required filing of
cost reports of each Borrower and its Subsidiaries with Medicaid, Medicare or
other applicable agency or pursuant to any reimbursement contract or program, or
the date of actual filing of such cost report of each such Borrower and such
Subsidiaries, whichever is earlier, a complete and accurate copy of the annual
34
Medicaid, Medicare and other cost reports for each such Borrower and its
Subsidiaries, which will be prepared by an independent certified public
accountant or by an experienced cost report preparer acceptable to Agent, and
promptly furnish to Agent any amendments filed with respect to such reports and
all responses, audit reports or inquiries with respect to such reports;
(d) Conduct its operations in a prudent manner in compliance
with applicable laws and regulations relating thereto and cause all licenses,
permits, certificates of need, reimbursement contracts and programs, and any
other agreements necessary for such operations or as may be necessary for
participation in Medicaid, Medicare, and other applicable reimbursement
programs;
(e) Promptly notify Agent in the event of any action, suit,
proceeding, dispute, offset, deduction, defense or counterclaim that is or may
be asserted by a Payor with respect to any Account (except for denials of
Governmental Receivables, which shall be disclosed on a monthly basis by each
Borrower to Agent). This Section does not require each Borrower to provide a
notice of denial to Agent in those cases where each such Borrower reasonably
believes that a Payor's notice of denial will be reversed upon the submission of
supplemental information to the Payor; and
(f) Make all payments to the applicable Payor necessary to
prevent such Payor from offsetting any earlier overpayment to each such Borrower
against any amount the Payor may owe on any Accounts.
5.19 Shell Entities. On or before thirty days following the Closing
Date, the Borrowers shall deliver to Agent evidence satisfactory to Agent in its
sole discretion that each of the Shell Entities has been either merged into the
Parent or dissolved.
5.20 Bank Accounts. On or before thirty days following the Closing
Date, Borrowers shall deliver to Agent control agreements in form and substance
satisfactory to Agent in its sole discretion with respect to each bank account
of On Line Payroll Services, Inc., On-Line Alternatives, Inc., and Rand Medical
Billing, Inc.
5.21 Status in Illinois. On or before ten days following the Closing
Date, Borrowers shall deliver to Agent evidence that Integrated Physician
Solutions, Inc. is in good standing with the Secretary of State of Illinois.
5.22 Status in Texas. On or before January 16, 2007, Medical Billing
Services, Inc. shall file its 2006 Franchise Tax Report with the Texas
Comptroller of Public Accounts.
5.23 JPMorgan Chase Accounts. On or before two days following the
Closing Date, Borrowers shall cause to be delivered to Agent control agreements
in form and substance satisfactory to Agent in its sole discretion with regard
to each account of Borrowers at JPMorgan Chase Bank, N.A.
5.24 Prosperity Account. On or before fourteen days following the
Closing Date, Borrowers shall deliver to Agent evidence that bank account number
0000000 at Prosperity Bank has been closed.
5.25 Commerce Bank. On or before five days following the Closing Date,
Borrowers shall deliver to Agent (a) either a termination of Financing Statement
number 06-7079803797 with the California Secretary of State or an authorization
for Agent to terminate same and (b) if such filings have not lapsed, either
terminations of Financing Statements #0133360063 and #0000000000 with the
California Secretary of State or an authorization for Agent to terminate same.
35
6. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, Borrowers will
not and will not permit any of their respective Subsidiaries (other than the
Shell Entities) to do any of the following:
6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 4.18 and any Refinancing
Indebtedness in respect of such Indebtedness,
(c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,
(d) endorsement of instruments or other payment items for
deposit,
(e) Permitted Seller Debt, and
(f) Indebtedness composing Permitted Investments.
6.2 Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
6.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock,
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution),
(c) Suspend or go out of a substantial portion of its or their
business.
6.4 Disposal of Assets. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of (or enter into
an agreement to convey, sell, lease, license, assign, transfer, or otherwise
dispose of) any of the assets of any Borrowers or any Subsidiary of a Borrower.
6.5 Change Name. Change any Borrower's or any of its Subsidiaries'
name, organizational identification number, state of organization or
organizational identity; provided, however, that a Borrower or a Subsidiary of a
Borrower may change its name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Borrower or such Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent's
Liens.
6.6 Nature of Business. Make any change in the nature of their business
as described in Schedule 6.6 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities.
36
6.7 Prepayments and Amendments. Except in connection with Refinancing
Indebtedness permitted by Section 6.1,
(a) optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Borrower or any Subsidiary of a Borrower, other
than the Obligations in accordance with this Agreement,
(b) make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or
(c) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Section 6.1(b) or (c).
6.8 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
6.9 Consignments. Consign any of their Inventory or sell any of their
Inventory on xxxx and hold, sale or return, sale on approval, or other
conditional terms of sale.
6.10 Distributions. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of any Borrower's Stock, of any class, whether
now or hereafter outstanding; notwithstanding the foregoing, if no Default or
Event of Default has occurred and is continuing, a Borrower may, consistent with
past practices of Borrowers, advance or distribute cash to another Borrower;
provided further, however, that notwithstanding anything to the contrary
contained herein, nothing in this Section 6.10 shall operate to prevent payment
by any Borrower to Parent of cash distributions in an amount sufficient to allow
payment to pay the consolidated tax liabilities of Parent.
6.11 Accounting Methods. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into, modify, or terminate any agreement currently existing, or at any time
hereafter entered into with any third party accounting firm or service bureau
for the preparation or storage of Borrowers' or their Subsidiaries' accounting
records without said accounting firm or service bureau agreeing to provide Agent
information regarding Borrowers' and their Subsidiaries' financial condition.
6.12 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Administrative Borrower and its Subsidiaries shall not have
Permitted Investments (other than in the Cash Management Accounts) in Deposit
Accounts or Securities Accounts in an aggregate amount in excess of $25,000 at
any one time unless Administrative Borrower or its Subsidiary, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements governing such Permitted Investments in order to perfect (and further
establish) the Agent's Liens in such Permitted Investments. Subject to the
foregoing proviso Borrowers shall not and shall not permit their Subsidiaries to
establish or maintain any Deposit Account or Securities Account unless Agent
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account. Notwithstanding the foregoing, this Section 6.12 will not be
breached by Investments in any Deposit Account or Securities Account as to which
Agent has not received a Control Agreement but solely during the respective time
periods and solely with regard to the respective depository institutions for
which control agreements are not required under the terms of Sections 5.20, 5.23
and 5.24.
6.13 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower or any
Subsidiary of a Borrower except for:
37
(a) transactions (other the payment of management, consulting,
monitoring, or advisory fees or employment agreements or employee benefit
arrangements) between Borrowers or their Subsidiaries, on the one hand, and any
Affiliate of Borrowers or their Subsidiaries, on the other hand, so long as such
transactions (i) are upon fair and reasonable terms, (ii) are fully disclosed to
Agent if they involve one or more payments by any Borrower or any of Subsidiary
of a Borrower in excess of $100,000 for any single transaction or series of
transactions, and (iii) are no less favorable to Borrowers or their
Subsidiaries, as applicable, than would be obtained in an arm's length
transaction with a non-Affiliate; and
(b) the payment of reasonable fees, compensation, or employee
benefit arrangements to, and any indemnity provided for the benefit of, outside
directors of Parent in the ordinary course of business and consistent with
industry practice.
6.14 Use of Proceeds. (a) Use the proceeds of the Advances and the Term
Loan A for any purpose other than, on the Closing Date (i) to repay, in full,
the outstanding principal, accrued interest, and accrued fees and expenses owing
to Existing Lender, (ii) to finance the acquisitions of On-Line Alternatives,
Inc., On Line Payroll Services, Inc. and Rand and (iii) to pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents, and the transactions contemplated hereby and thereby, (b)
thereafter, use the proceeds of the Advances for any purpose other than working
capital needs, consistent with the terms and conditions hereof; provided,
however, that the proceeds of Advances may not be used in connection with any
acquisition, whether or not constituting a Permitted Acquisition, and (c)
thereafter, use the proceeds of the Term Loan B for any purpose other than
Permitted Acquisitions, consistent with the terms and conditions hereof.
6.15 Inventory and Equipment with Bailees. Store the Inventory or
Equipment of Borrowers or their Subsidiaries at any time now or hereafter with a
bailee, warehouseman, or similar party.
6.16 Financial Covenants.
(a) Minimum TTM EBITDA. Fail to achieve TTM EBITDA, measured on a
month-end basis, of at least the required amount set forth in the following
table for the twelve month period ending as of the measurement date set forth
opposite thereto:
--------------------------------------------------------------------------------
Applicable Amount Measurement Date
--------------------------------------------------------------------------------
$2,250,000 December 31, 2006
--------------------------------------------------------------------------------
$2,300,000 January 31, 2007
--------------------------------------------------------------------------------
$2,300,000 February 28, 2007
--------------------------------------------------------------------------------
$2,300,000 March 31, 2007
--------------------------------------------------------------------------------
$2,300,000 April 30, 2007
--------------------------------------------------------------------------------
$2,300,000 May 31, 2007
--------------------------------------------------------------------------------
$2,300,000 June 30, 2007
--------------------------------------------------------------------------------
$2,300,000 July 31, 2007
--------------------------------------------------------------------------------
$2,300,000 August 31, 2007
--------------------------------------------------------------------------------
$2,450,000 September 30, 2007
--------------------------------------------------------------------------------
$2,450,000 October 31, 2007
--------------------------------------------------------------------------------
$2,500,000 November 30, 2007
--------------------------------------------------------------------------------
$2,500,000 December 31, 2007
--------------------------------------------------------------------------------
$2,600,000 January 31, 2008
--------------------------------------------------------------------------------
$2,700,000 February 29, 2008
--------------------------------------------------------------------------------
$2,800,000 March 31, 2008
--------------------------------------------------------------------------------
$2,900,000 April 30, 2008
--------------------------------------------------------------------------------
$2,900,000 May 31, 2008
--------------------------------------------------------------------------------
$2,900,000 June 30, 2008
--------------------------------------------------------------------------------
38
--------------------------------------------------------------------------------
$3,000,000 July 31, 2008
--------------------------------------------------------------------------------
$3,000,000 August 31, 2008
--------------------------------------------------------------------------------
$3,250,000 September 30, 2008
--------------------------------------------------------------------------------
$3,250,000 October 31, 2008
--------------------------------------------------------------------------------
$3,300,000 November 30, 2008
--------------------------------------------------------------------------------
$3,400,000 December 31, 2008
--------------------------------------------------------------------------------
$3,400,000 January 31, 2009
--------------------------------------------------------------------------------
$3,500,000 February 28, 2009
--------------------------------------------------------------------------------
$3,500,000 March 31, 2009
--------------------------------------------------------------------------------
$3,600,000 April 30, 2009
--------------------------------------------------------------------------------
$3,700,000 May 31, 2009
--------------------------------------------------------------------------------
$3,700,000 June 30, 2009
--------------------------------------------------------------------------------
$3,800,000 July 31, 2009
--------------------------------------------------------------------------------
$3,800,000 August 31, 2009
--------------------------------------------------------------------------------
$3,900,000 September 30, 2009
--------------------------------------------------------------------------------
$4,000,000 October 31, 2009
--------------------------------------------------------------------------------
$4,000,000 November 30, 2009
--------------------------------------------------------------------------------
$4,100,000 December 31, 2009
--------------------------------------------------------------------------------
$4,100,000 January 31, 2010
--------------------------------------------------------------------------------
$4,200,000 February 28, 2010
--------------------------------------------------------------------------------
$4,200,000 March 31, 2010
--------------------------------------------------------------------------------
$4,300,000 April 30, 2010
--------------------------------------------------------------------------------
$4,300,000 May 31, 2010
--------------------------------------------------------------------------------
$4,400,000 June 30, 2010
--------------------------------------------------------------------------------
$4,500,000 July 31, 2010
--------------------------------------------------------------------------------
$4,500,000 August 31, 2010
--------------------------------------------------------------------------------
$4,500,000 September 30, 2010
--------------------------------------------------------------------------------
$4,600,000 October 31, 2010
--------------------------------------------------------------------------------
$4,600,000 November 30, 2010
--------------------------------------------------------------------------------
$4,750,000 December 31, 2010 and for month ending thereafter
--------------------------------------------------------------------------------
Concurrently with the closing of each Permitted Acquisition, the EBITDA levels
for each month shall be adjusted to 85% of TTM EBITDA for such month as set
forth in the most recent Projections of Parent (as adjusted to take into account
Projected Pro Forma Target EBITDA).
(b) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage
Ratio, measured as of quarter-end, less than the required amount set forth in
the following table for the applicable period set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Ratio Applicable Period
--------------------------------------------------------------------------------
1.40:1.00 For the fiscal quarter
ending March 31, 2007
--------------------------------------------------------------------------------
1.40:1.00 For the two fiscal quarter period ending as of June 30,
2007
--------------------------------------------------------------------------------
1.40:1.00 For the three fiscal quarter period ending as of
September 30, 2007
--------------------------------------------------------------------------------
0.70:1.00 For the four fiscal quarter period ending as of
December 31, 2007
--------------------------------------------------------------------------------
0.70:1.00 For the four fiscal quarter period ending
March 31, 2008
--------------------------------------------------------------------------------
0.70:1.00 For the four fiscal quarter period ending as of
June 30, 2008
--------------------------------------------------------------------------------
39
--------------------------------------------------------------------------------
0.70:1.00 For the four fiscal quarter period ending as of
September 30, 2008
--------------------------------------------------------------------------------
1.00:1.00 For the four fiscal quarter period ending as of
December 31, 2008
--------------------------------------------------------------------------------
1.20:1.00 For the four fiscal quarter period ending as of March
31, 2008 and for each four fiscal quarter period ending
thereafter
--------------------------------------------------------------------------------
(c) Senior Leverage Ratio. Have a Senior Leverage Ratio,
measured on a month-end basis, more than the applicable ratio set forth in the
following table for the applicable date set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Ratio Applicable Date
--------------------------------------------------------------------------------
2.50:1.00 December 31, 2006
--------------------------------------------------------------------------------
2.50:1.00 January 31, 2007
--------------------------------------------------------------------------------
2.50:1.00 February 28, 2007
--------------------------------------------------------------------------------
2.50:1.00 March 31, 2007
--------------------------------------------------------------------------------
2.50:1.00 April 30, 2007
--------------------------------------------------------------------------------
2.25:1.00 May 31, 2007
--------------------------------------------------------------------------------
2.25:1.00 June 30, 2007
--------------------------------------------------------------------------------
2.25:1.00 July 31, 2007
--------------------------------------------------------------------------------
2.25:1.00 August 31, 2007
--------------------------------------------------------------------------------
2.25:1.00 September 30, 2007
--------------------------------------------------------------------------------
2.25:1.00 October 31, 2007
--------------------------------------------------------------------------------
2.25:1.00 November 30, 2007 as for each month ending thereafter
--------------------------------------------------------------------------------
(d) Capital Expenditures. Make Capital Expenditures in any
fiscal year in excess of the amount set forth in the following table for the
applicable period:
--------------------------------------------------------------------------------
Fiscal Year 2006 Fiscal Year 2007 Fiscal Year 2008 and each
Fiscal Year ending thereafter
--------------------------------------------------------------------------------
$230,000 $300,000 $250,000
--------------------------------------------------------------------------------
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
7.1 If Borrowers fail to pay when due and payable, or when declared due
and payable, (a) all or any portion of the Obligations consisting of interest,
fees, or charges due the Lender Group, reimbursement of Lender Group Expenses,
or other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations;
40
7.2 If Borrowers or any Subsidiary of any Borrower
(a) fails to perform or observe any covenant or other agreement
contained in any of Sections 2.7, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.14, 5.16,
5.17, 5.18 and 6.1 through 6.16 of this Agreement or Section 6 of the Security
Agreement;
(b) fails to perform or observe any covenant or other agreement
contained in any of Sections 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of this
Agreement and such failure continues for a period of 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
any Borrower or (ii) written notice thereof is given to Administrative Borrower
by Agent; or
(c) fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents, in each
case, other than any such covenant or agreement that is the subject of another
provision of this Section 7 (in which event such other provision of this Section
7 shall govern), and such failure continues for a period of 20 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Borrower or (ii) written notice thereof is given to
Administrative Borrower by Agent;
7.3 If any material portion of any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Borrower or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by any Borrower or any
Subsidiary of a Borrower;
7.5 If an Insolvency Proceeding is commenced against any Borrower or
any Subsidiary of a Borrower, and any of the following events occur: (a) the
applicable Borrower or Subsidiary consents to the institution of such Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof, (d)
an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, any Borrower or any Subsidiary of a Borrower, or (e)
an order for relief shall have been issued or entered therein;
7.6 If any Borrower or any Subsidiary of a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
7.7 If one or more judgments, orders, or awards involving an aggregate
amount of $100,000 or more (except to the extent fully covered by insurance
pursuant to which the insurer has accepted liability therefor in writing) shall
be entered or filed against any Borrower or any Subsidiary of any Borrower or
with respect to any of their respective assets, and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
days after the date it first arises or 5 days prior to the date on which such
asset is subject to being forfeited by the applicable Borrower or the applicable
Subsidiary;
7.8 If there is a default in one or more agreements to which any
Borrower or any Subsidiary of a Borrower is a party with one or more third
Persons relative to Indebtedness of any Borrower or any Subsidiary of any
Borrower involving an aggregate amount of $100,000 or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s), irrespective of whether exercised and
irrespective of whether such right is restricted in a subordination agreement
executed in favor of Agent, to accelerate the maturity of the applicable
Borrower's or Subsidiary's obligations thereunder;
41
7.9 If any warranty, representation, statement, or Record made herein
or in any other Loan Document or delivered to Agent or any Lender in connection
with this Agreement or any other Loan Document proves to be untrue in any
material respect (except that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is limited
or terminated by operation of law or by such Guarantor, or any such Guarantor
becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement or any other Loan Document that purports
to create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;
7.12 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower or any Subsidiary of a Borrower, or a
proceeding shall be commenced by any Borrower or any Subsidiary of a Borrower,
or by any Governmental Authority having jurisdiction over any Borrower or any
Subsidiary of a Borrower, seeking to establish the invalidity or
unenforceability thereof, or any Borrower or any Subsidiary of a Borrower shall
deny that it has any liability or obligation purported to be created under any
Loan Document; or.
7.13 If there is a loss, cancellation, suspension or revocation of, or
failure to renew, any contract now held or hereafter acquired by any Loan Party
or any of its Subsidiaries and such loss, cancellation, suspension, revocation
or failure to renew relates to contracts which, in the aggregate, contribute 10%
or more of the net consolidated revenues of the Parent.
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations; and
(d) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 7.4 or Section 7.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.
42
8.2 Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and with notice to Parent either contemporaneously therewith or promptly
thereafter, may do any or all of the following: (a) make payment of the same or
any part thereof, (b) set up such reserves against the Borrowing Base or the
Maximum Revolver Amount as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 5.8 hereof, obtain and maintain insurance policies of the
type described in Section 5.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
10. WAIVERS; INDEMNIFICATION.
10.1 Demand; Protest; etc.. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any such Borrower may in any way be liable.
10.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages
(other than Excluded Taxes), and all reasonable fees and disbursements of
attorneys, experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrowers' and their Subsidiaries' compliance with the terms of
the Loan Documents, (b) with respect to any investigation, litigation, or
43
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by Parent or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities and
Costs or Remedial Actions related in any way to any such assets or properties of
Parent or any of its Subsidiaries (each and all of the foregoing, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
10.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrowers or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative Borrower: Orion HealthCorp, Inc.
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx
Fax No.: 000 000-0000
with copies to: Xxxxxxx, Xxxxxxxxxxx Xxxxxx & Aronoff LLP
0000 XX Xxxxx, 000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx, Esq.
Fax: No. 000.000.0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, XX 00000
Attn: Specialty Finance Manager
Fax No.: (000) 000-0000
44
with copies to: Jenkens & Xxxxxxxxx, LLP
00000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
Agent and Borrowers may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
11, other than notices by Agent in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWERS AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS AND
EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
(d) NO ACTION SEEKING ENFORCEMENT OF, OR ANY OTHER LEGAL REMEDY
FOUNDED ON, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE COMMENCED IN THE
STATE OF CALIFORNIA IN VIOLATION OF SECTION 12(C); PROVIDED THAT IN THE EVENT
THAT ANY SUCH ACTION IS COMMENCED OR MAINTAINED IN VIOLATION THEREOF AND THE
45
WAIVER OF JURY TRIAL SET FORTH ABOVE IS NOT ENFORCEABLE, BORROWERS AND EACH
MEMBER OF THE LENDER GROUP HEREBY ELECT TO PROCEED AS FOLLOWS: (I) THE COURT
SHALL, AND IS HEREBY DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 TO A REFEREE OR REFEREES TO HEAR
AND DETERMINE ALL OF THE ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT OR
OF LAW) AND TO REPORT A STATEMENT OF DECISION, PROVIDED THAT ANY SUCH ISSUES
PERTAINING TO A "PROVISIONAL REMEDY" AS DEFINED IN CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 1281.8 SHALL BE HEARD AND DETERMINED BY THE COURT, AND (II)
BORROWERS SHALL BE SOLELY RESPONSIBLE TO PAY ALL FEES AND EXPENSES OF ANY
REFEREE APPOINTED IN SUCH ACTION OR PROCEEDING.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 Assignments and Participations.
(a) Any Lender may assign and delegate to one or more assignees
(each an "Assignee") that are Eligible Transferees all or any portion, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount (unless waived
by the Agent) of $5,000,000 (except such minimum amount shall not apply to (x)
an assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each
other or a fund or account managed by any such new Lender or an Affiliate of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in
accordance with Section 13.1(b), and (iii) unless waived by the Agent, the
assigning Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $3,500. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.
(b) From and after the date that Agent notifies the assigning
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to Section 10.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation among Borrowers, the assigning Lender, and the Assignee; provided,
however, that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender's obligations under Section 15 and Section 16.7(a) of this
Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
46
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (vi) such Assignee agrees that it will perform all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing
fee, if applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons (a "Participant") participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a "Lender" for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections of Borrowers or their Subsidiaries, the Collateral,
or otherwise in respect of the Obligations. No Participant shall have the right
to participate directly in the making of decisions by the Lenders among
themselves.
47
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 16.7, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
13.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 hereof and, except as expressly required pursuant to
Section 13.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
14. AMENDMENTS; WAIVERS.
14.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by Borrowers
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any
such waiver or consent shall be effective, but only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders directly affected thereby and Administrative Borrower (on behalf of all
Borrowers), do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the Pro Rata Share that is required to take any
action hereunder,
(e) amend or modify this Section or any provision of this
Agreement providing for consent or other action by all Lenders,
(f) other than as permitted by Section 15.12, release Agent's
Lien in and to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
48
(i) other than in connection with a merger, liquidation,
dissolution or sale of such Person expressly permitted by the terms hereof or
the other Loan Documents, release any Borrower or any Guarantor from any
obligation for the payment of money,
(j) amend any of the provisions of Section 2.4(b)(i) or (ii),
(k) change the definition of Borrowing Base or the definitions
of Maximum Revolver Amount, Term Loan A Amount, Term Loan B Amount, or change
Section 2.1(b), or
(l) amend any of the provisions of Section 15.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.
14.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
49
15. AGENT; THE LENDER GROUP.
15.1 Appointment and Authorization of Agent. Each Lender hereby
designates and appoints WFF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 15.
The provisions of this Section 15 (other than the proviso to Section 15.11(a))
are solely for the benefit of Agent, and the Lenders, and Borrowers and their
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrowers and their Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
15.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
15.3 Liability of Agent. None of the Agent Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Borrowers or the
books or records or properties of any of Borrowers' Subsidiaries or Affiliates.
50
15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
15.5 Notice of Default or Event of Default. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
15.6 Credit Decision. Each Lender acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Borrowers and
their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person party to a Loan Document. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by
Agent, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrowers and any other Person party to a Loan Document that may come into the
possession of any of the Agent Related Persons.
51
15.7 Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Borrowers are obligated to
reimburse Agent or Lenders for such expenses pursuant to this Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of Borrowers and their Subsidiaries received by
Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses by Borrowers or their Subsidiaries, each Lender hereby
agrees that it is and shall be obligated to pay to Agent such Lender's Pro Rata
Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's Pro Rata Share of any costs
or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
15.8 Agent in Individual Capacity. WFF and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrowers or their Affiliates and
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders (unless such notice is waived by the Required Lenders). If Agent
resigns under this Agreement, the Required Lenders shall appoint a successor
Agent for the Lenders. If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 15 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
52
15.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, such Lender
and its respective Affiliates may receive information regarding Borrowers or
their Affiliates and any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them.
15.11 Withholding Taxes.
(a) With respect to all Taxes which are not Excluded Taxes, all
payments made by any Borrower hereunder or under any note or other Loan Document
will be made without setoff, counterclaim, or other defense. In addition, all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future Taxes, and in the event any deduction or
withholding of Taxes is required, each Borrower shall comply with the
penultimate sentence of this Section 15.11(a). If any Non-Excluded Taxes are so
levied or imposed, each Borrower agrees to pay the full amount of such
Non-Excluded Taxes and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement, any note, or Loan Document,
including any amount paid pursuant to this Section 15.11(a) after withholding or
deduction for or on account of any Non-Excluded Taxes, will not be less than the
amount provided for herein; provided, however, that Borrowers shall not be
required to increase any such amounts if the increase in such amount payable
results from Agent's or such Lender's own willful misconduct or gross negligence
(as finally determined by a court of competent jurisdiction) or the Agent's or
Lender's failure to comply with Section 15.11(b) or Section 15.11(c) of this
Agreement. Each Borrower will furnish to Agent as promptly as possible after the
date the payment of any Tax is due written evidence of such payment by any
Borrower. If a Lender or Agent determines, in its sole discretion, that it has
received a refund credit of any Taxes as to which it has been indemnified by the
Borrowers, so long as no Default or Event of Default has occurred and is
continuing, it shall pay over such refund credit to the respective Borrower
(but only to the extent of payments made by such Borrower under this Section
15.11 with respect to Taxes giving rise to such a refund credit), net of all
reasonable out-of-pocket expenses of Agent or Lenders and without interest
(other than any interest paid by the relevant governmental authority with
respect to such a refund); provided, that each Borrower, upon the request of a
Lender or Agent, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges, imposed by the relevant governmental
authority, other than such penalties, interest or other charges imposed as a
result of the willful misconduct or gross negligence of Agent hereunder) to
such Lender or Agent in the event such Lender or Agent is required to repay such
refund to such governmental authority. Except as expressly provided for in this
Section 15.11, this Section shall not be construed to require any Lender or
Agent to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to any Borrower or any other person.
(b) If a Lender claims an exemption from United States income
tax which is required to be withheld by Borrowers ("Withholding Tax"), Lender
agrees with and in favor of Agent and any Borrower, to deliver to Agent and
Borrower:
(i) if such claim for exemption depends on portfolio
interest exception as set forth in Sections 871(h) and 881(c) of the IRC, (A) a
statement of the Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or
53
(III) a controlled foreign corporation related to any Borrower within the
meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and
executed IRS Form W-8BEN, at least fifteen (15) days before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or any Borrower;
(ii) if such claim of an exemption, or a reduction of,
tax under a United States tax treaty, a properly completed and executed IRS Form
W-8BEN at least fifteen (15) days before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or any Borrower;
(iii) if such claim depends on a representation that
interest paid under this Agreement is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI at least fifteen (15) days before receiving its first payment
under this Agreement and at any other time reasonably requested by Agent or any
Borrower; or
(iv) such other form or forms, including IRS Form W-9,
as may be required under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States withholding or
backup withholding tax at least fifteen (15) days before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or any Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from income tax for which
Borrower is required by a jurisdiction other than the United States to withhold
such tax ("Non-US Withholding Tax"), Lender agrees with and in favor of Agent
and Borrowers, to deliver to Agent any such form or forms, as may be required
under the laws of such jurisdiction as a condition to exemption from, or
reduction of, Non-US Withholding Tax at least fifteen (15) days before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of,
withholding tax and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such Lender,
such Lender agrees to notify Agent and Administrative Borrower of the percentage
amount in which it is no longer the beneficial owner of Obligations of Borrowers
to such Lender. To the extent of such percentage amount, Agent and Borrowers
will treat such Lender's documentation provided pursuant to Sections 15.11(b) or
15.11(c) as no longer valid. With respect to such percentage amount, Lender may
provide new documentation, pursuant to Sections 15.11(b) or 15.11(c), if
applicable at least fifteen (15) days prior to the effective date of such
transfer or assignment.
(e) If any Lender is entitled to a reduction in the applicable
Withholding Tax or non-U.S. Withholding Tax, Agent may withhold from any
interest payment to such Lender an amount equivalent to the applicable
Withholding Tax after taking into account such reduction. If the forms or other
documentation required by subsection (b) or (c) of this Section 15.11 are not
delivered to Agent, then Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable Withholding Tax.
(f) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that any Borrower or Agent did not
properly withhold tax from amounts paid to or for the account of any Lender due
to a failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
any Borrower or Agent of a change in circumstances which rendered the exemption
54
from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify and hold any Borrower or Agent harmless for all
amounts paid, directly or indirectly, by any Borrower or Agent, as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to any Borrower or Agent under this
Section 15.11, together with all costs and expenses (including attorneys fees
and expenses). The obligation of the Lenders under this subsection shall survive
the payment of all Obligations and the resignation or replacement of Agent.
15.12 Collateral Matters. (a) The Lenders hereby irrevocably authorize
Agent, at its option and in its sole discretion, to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and if Administrative Borrower certifies to Agent that the sale or
disposition is permitted under Section 6.4 of this Agreement or the other Loan
Documents (and Agent may rely conclusively on any such certificate, without
further inquiry), (iii) constituting property in which no Borrower or its
Subsidiaries owned any interest at the time the Agent's Lien was granted nor at
any time thereafter, or (iv) constituting property leased to a Borrower or its
Subsidiaries under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Administrative Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 15.12; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
15.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share
55
of all such distributions by Agent, such Lender promptly shall (A) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that to the extent that such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
15.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
15.15 Payments by Agent to the Lenders. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the Obligations.
15.16 Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
15.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon Borrowers' and their Subsidiaries' books and
records, as well as on representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 16.7, and
56
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or fail to take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to Administrative Borrower a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.
15.18 Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
15.19 Bank Product Providers. Each Bank Product Provider shall be
deemed a party hereto for purposes of any reference in a Loan Document to the
parties for whom Agent is acting; it being understood and agreed that the rights
and benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
16. GENERAL PROVISIONS.
16.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
16.2 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
57
16.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
16.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
16.5 Counterparts; Electronic Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.6 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (each, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrowers
or Guarantor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
16.7 Confidentiality.
(a) Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding
Borrowers and their Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this Section 16.7, (iii) as may be required by statute, decision,
or judicial or administrative order, rule, or regulation, (iv) as may be agreed
to in advance by Administrative Borrower or its Subsidiaries or as requested or
required by any Governmental Authority pursuant to any subpoena or other legal
process, (v) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the
Lenders), (vi) in connection with any assignment, participation or pledge of any
Lender's interest under this Agreement, provided that any such assignee,
participant, or pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (vii) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents. The
provisions of this Section 16.7(a) shall survive for 2 years after the payment
in full of the Obligations.
58
(b) Anything in this Agreement to the contrary notwithstanding,
Agent may provide information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services.
16.8 Lender Group Expenses. Borrowers agree to pay any and all Lender
Group Expenses promptly after demand therefor by Agent and agrees that their
obligations contained in this Section 16.8 shall survive payment or satisfaction
in full of all other Obligations.
16.9 USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26,
2001)) (the "Act") hereby notifies Borrowers that pursuant to the requirements
of the Act, it is required to obtain, verify and record information that
identifies Borrowers, which information includes the name and address of
Borrowers and other information that will allow such Lender to identify
Borrowers in accordance with the Act.
16.10 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.11 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 16.11 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
[Signature pages to follow.]
59
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
ORION HEALTHCORP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
Title: President
INTEGRATED PHYSICIAN SOLUTIONS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
Title: President
MEDICAL BILLING SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Secretary
ON-LINE ALTERNATIVES, INC.
By: /s/ Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
ON LINE PAYROLL SERVICES, INC.
By: /s/ Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
RAND MEDICAL BILLING, INC.
By: /s/ Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
and as a Lender
By: /s/ Xxxxxx Xxxxxxxx
Title: Vice President
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION..............................................1
1.1 Definitions......................................................1
1.2 Accounting Terms.................................................1
1.3 Code.............................................................1
1.4 Construction.....................................................1
1.5 Schedules and Exhibits...........................................2
2. LOAN AND TERMS OF PAYMENT.................................................2
2.1 Revolver Advances................................................2
2.2 Term Loans.......................................................2
2.3 Borrowing Procedures and Settlements.............................3
2.4 Payments.........................................................8
2.5 Overadvances....................................................11
2.6 Interest Rates and Letter of Credit Fee: Rates,
Payments, and Calculations......................................12
2.7 Cash Management.................................................13
2.8 Crediting Payments..............................................15
2.9 Designated Account..............................................15
2.10 Maintenance of Loan Account; Statements of Obligations..........15
2.11 Fees............................................................15
2.12 Letters of Credit...............................................15
2.13 LIBOR Option....................................................18
2.14 Capital Requirements............................................20
2.15 Joint and Several Liability of Borrowers........................20
3. CONDITIONS; TERM OF AGREEMENT............................................23
3.1 Conditions Precedent to the Initial Extension of Credit.........23
3.2 Conditions Precedent to all Extensions of Credit................23
3.3 Term............................................................24
3.4 Effect of Termination...........................................24
3.5 Early Termination by Borrowers..................................25
4. REPRESENTATIONS AND WARRANTIES...........................................25
4.1 No Encumbrances.................................................25
4.2 Healthcare Matters..............................................25
4.3 Equipment.......................................................27
4.4 Location of Inventory and Equipment.............................27
- i -
TABLE OF CONTENTS
-----------------
(continued)
Page
4.5 Inventory Records...............................................27
4.6 Jurisdiction of Organization; Location of Chief Executive
Office; Organizational Identification Number; Commercial
Tort Claims....................................................27
4.7 Due Organization and Qualification; Subsidiaries................28
4.8 Due Authorization; No Conflict..................................28
4.9 Litigation......................................................29
4.10 No Material Adverse Change......................................30
4.11 Fraudulent Transfer.............................................30
4.12 Employee Benefits...............................................30
4.13 Environmental Condition.........................................30
4.14 Intellectual Property...........................................30
4.15 Leases..........................................................30
4.16 Deposit Accounts and Securities Accounts........................31
4.17 Complete Disclosure.............................................31
4.18 Indebtedness....................................................31
5. AFFIRMATIVE COVENANTS....................................................31
5.1 Accounting System...............................................31
5.2 Collateral Reporting............................................31
5.3 Financial Statements, Reports, Certificates.....................32
5.4 Guarantor Reports...............................................32
5.5 Inspection......................................................32
5.6 Maintenance of Properties.......................................32
5.7 Taxes...........................................................32
5.8 Insurance.......................................................32
5.9 Location of Inventory and Equipment.............................32
5.10 Compliance with Laws............................................33
5.11 Leases..........................................................33
5.12 Existence.......................................................33
5.13 Environmental...................................................33
5.14 Disclosure Updates..............................................33
5.15 Control Agreements..............................................33
5.16 Formation of Subsidiaries.......................................33
5.17 Further Assurances..............................................34
5.18 Healthcare Covenants............................................34
- ii -
TABLE OF CONTENTS
-----------------
(continued)
Page
6. NEGATIVE COVENANTS.......................................................36
6.1 Indebtedness....................................................36
6.2 Liens...........................................................36
6.3 Restrictions on Fundamental Changes.............................36
6.4 Disposal of Assets..............................................36
6.5 Change Name.....................................................36
6.6 Nature of Business..............................................36
6.7 Prepayments and Amendments......................................37
6.8 Change of Control...............................................37
6.9 Consignments....................................................37
6.10 Distributions...................................................37
6.11 Accounting Methods..............................................37
6.12 Investments.....................................................37
6.13 Transactions with Affiliates....................................37
6.14 Use of Proceeds.................................................38
6.15 Inventory and Equipment with Bailees............................38
6.16 Financial Covenants.............................................38
7. EVENTS OF DEFAULT........................................................40
8. THE LENDER GROUP'S RIGHTS AND REMEDIES...................................42
8.1 Rights and Remedies.............................................42
8.2 Remedies Cumulative.............................................43
9. TAXES AND EXPENSES.......................................................43
10. WAIVERS; INDEMNIFICATION.................................................43
10.1 Demand; Protest; etc............................................43
10.2 The Lender Group's Liability for Collateral.....................43
10.3 Indemnification.................................................43
11. NOTICES..................................................................44
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...............................45
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...............................46
13.1 Assignments and Participations..................................46
13.2 Successors......................................................48
14. AMENDMENTS; WAIVERS......................................................48
14.1 Amendments and Waivers..........................................48
- iii -
TABLE OF CONTENTS
-----------------
(continued)
Page
14.2 Replacement of Holdout Lender...................................49
14.3 No Waivers; Cumulative Remedies.................................49
15. AGENT; THE LENDER GROUP..................................................49
15.1 Appointment and Authorization of Agent..........................50
15.2 Delegation of Duties............................................50
15.3 Liability of Agent..............................................50
15.4 Reliance by Agent...............................................51
15.5 Notice of Default or Event of Default...........................51
15.6 Credit Decision.................................................51
15.7 Costs and Expenses; Indemnification.............................52
15.8 Agent in Individual Capacity....................................52
15.9 Successor Agent.................................................52
15.10 Lender in Individual Capacity...................................53
15.11 Withholding Taxes...............................................53
15.12 Collateral Matters..............................................55
15.13 Restrictions on Actions by Lenders; Sharing of Payments.........55
15.14 Agency for Perfection...........................................56
15.15 Payments by Agent to the Lenders................................56
15.16 Concerning the Collateral and Related Loan Documents............56
15.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information..........56
15.18 Several Obligations; No Liability...............................57
15.19 Bank Product Providers..........................................57
16. GENERAL PROVISIONS.......................................................57
16.1 Effectiveness...................................................57
16.2 Section Headings................................................57
16.3 Interpretation..................................................58
16.4 Severability of Provisions......................................58
16.5 Counterparts; Electronic Execution..............................58
16.6 Revival and Reinstatement of Obligations........................58
16.7 Confidentiality.................................................58
16.8 Lender Group Expenses...........................................59
16.9 USA PATRIOT Act.................................................59
16.10 Integration.....................................................59
16.11 Parent as Agent for Borrowers...................................59
- iv -
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-2 Permitted Liens
Schedule S-1 Subordination Agreements
Schedule 1.1 Definitions
Schedule 2.7(a) Cash Management Banks
Schedule 2.7(i) Payroll Accounts
Schedule 3.1 Conditions Precedent
Schedule 4.2(b) Medicaid and Medicare Providers
Schedule 4.4 Locations of Inventory and Equipment
Schedule 4.6(a) States of Organization
Schedule 4.6(b) Chief Executive Offices
Schedule 4.6(c) Organizational Identification Numbers
Schedule 4.6(d) Commercial Tort Claims
Schedule 4.7(b) Capitalization of Borrowers
Schedule 4.7(c) Capitalization of Borrowers' Subsidiaries
Schedule 4.9 Litigation
Schedule 4.13 Environmental Matters
Schedule 4.14 Intellectual Property
Schedule 4.16 Deposit Accounts and Securities Accounts
Schedule 4.18 Permitted Indebtedness
Schedule 5.2 Collateral Reporting
Schedule 5.3 Financial Statements, Reports, Certificates
Schedule 6.6 Description of Business
