Exhibit 10.1
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LOAN AGREEMENT
dated as of
February 6, 2008
By and Among
PALMETTO EXPRESS, L.L.C.
(as Borrower)
LHC GROUP, INC.
(as Guarantor)
and
CAPITAL ONE, NATIONAL ASSOCIATION
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TABLE OF CONTENTS
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Page
ARTICLE 1 - DEFINITIONS AND ACCOUNTING TERMS...................................1
1.1 Defined Terms......................................................1
1.2 Accounting Terms...................................................5
ARTICLE 2 - TERM LOAN COMMITMENT ..............................................5
2.1 The Term Loan Commitment ..........................................5
2.2 Term Note..........................................................5
2.3 Use of Proceeds....................................................6
ARTICLE 3 - CHANGE OF CIRCUMSTANCES............................................6
3.1 Unavailability of Funds or Inadequacy of Pricing...................6
3.2 Change in Laws.....................................................6
3.3 Increased Cost or Reduced Return...................................6
3.4 Breakage Costs.....................................................8
ARTICLE 4 - INTEREST RATE COMPUTATION..........................................8
4.1 Computations.......................................................8
ARTICLE 5 - SECURITY FOR THE INDEBTEDNESS......................................9
5.1 Security...........................................................9
ARTICLE 6 - CONDITIONS PRECEDENT...............................................9
6.1 Precedent to All Loans.............................................9
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES....................................10
7.1 Authority.........................................................10
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7.2 Financial Statements..............................................11
7.3 Title to Collateral...............................................11
7.4 Litigation........................................................11
7.5 Approvals.........................................................12
7.6 Required Insurance................................................12
7.7 Licenses..........................................................12
7.8 Adverse Agreements................................................12
7.9 Event of Default..................................................12
7.10 Employee Benefit Plans............................................12
7.11 Investment Company Act............................................12
7.12 Public Utility Holding Company Act................................12
7.13 Regulations G, T and U............................................12
7.14 Locations of Offices, Records, Equipment and Inventory............13
7.15 Information.......................................................13
7.16 Environmental Matters.............................................13
7.17 Solvency of the Borrower and the Guarantors.......................13
7.18 Governmental Requirements.........................................13
7.19 Survival of Representations and Warranties........................13
ARTICLE 8 - AFFIRMATIVE COVENANTS.............................................14
8.1 Financial Statements..............................................14
8.2 Notice of Default; Litigation, ERISA Matters......................14
8.3 Maintenance of existence, Properties and Liens....................15
8.4 Appraisal of Aircraft.............................................15
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8.5 Taxes.............................................................15
8.6 Performance of Loan Documents.....................................15
8.7 Compliance with Environmental Laws................................15
8.8 Further Assurances................................................16
8.9 Financial Covenants...............................................16
8.10 Operations........................................................17
8.11 Change of Location................................................17
8.12 Employee Benefit Plans............................................17
8.13 Field Audits; Other Information...................................17
8.14 Required Insurance................................................17
ARTICLE 9 - NEGATIVE COVENANTS................................................18
9.1 Limitations on Fundamental Changes................................18
9.2 Deposition of Assets..............................................18
9.3 Restricted Payments...............................................18
9.4 Encumbrances......................................................18
9.5 Debts, Guaranties and Other Obligations...........................19
9.6 Investments, Loans, and Advances..................................19
9.7 Changes in Management and Control.................................20
9.8 Other Agreements..................................................20
9.9 Transactions with Affiliates......................................20
ARTICLE 10 - EVENTS OF DEFAULT................................................20
10.1 Events of Default.................................................20
10.2 Waivers...........................................................22
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ARTICLE 11 - MISCELLANEOUS....................................................22
11.1 No Waiver; Modification in Writing................................22
11.2 Payment on Non-Business Day.......................................22
11.3 Addresses for Notices.............................................22
11.4 Fees and Expenses.................................................23
11.5 Intentionally Deleted.............................................23
11.6 Waiver of Marshaling..............................................23
11.7 Governing Law.....................................................24
11.8 Waiver of Jury Trial; Submission to Jurisdiction..................24
11.9 Severability......................................................24
11.10 Headings..........................................................24
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LOAN AGREEMENT
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THIS LOAN AGREEMENT (the "Agreement") is dated as of February 6, 2008, by and
among PALMETTO EXPRESS, L.L.C., a Louisiana limited liability company (the
"Borrower"), LHC GROUP, INC., a Delaware corporation (the "Guarantor"), and
CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association (the "Bank").
R E C I T A L S:
1. The Borrower has applied to the Bank for a term loan in the
principal amount of up to $5,050,000.00.
2. The Bank, subject to the terms and conditions of this Agreement, has
agreed to make the said loan to the Borrower.
NOW, THEREFORE, in consideration of the mutual covenants hereunder set
forth, the parties do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
Section 1.1. Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Agreement" shall mean this Loan Agreement, as the same may from time
to time be amended, modified or supplemented and in effect.
"Aircraft" shall mean that certain 1999 Cessna 560, FAA Reg. No. N1129L
(which may be renumbered to N994HP at some time in the future),
including all props and engines, and all equipment and avionics
associated with said Aircraft.
"Applicable Margin" shall mean 1.90%.
"Bank" shall mean Capital One, National Association, a national banking
association, and its successors and assigns.
"Borrower" shall mean individually, interchangeably, and collectively,
Palmetto Express, L.L.C., a Louisiana limited liability company,
together with its successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or legal
holiday for commercial banks under the laws of the State of Louisiana
or a day on which national banks are authorized to be or are otherwise
closed in Lafayette and/or New Orleans, Louisiana.
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"Collateral" shall mean the Aircraft.
"Collateral Documents" shall collectively refer to the Security
Agreement, the Guaranty, and any and all other documents in which an
Encumbrance is created on any property of the Borrower, Guarantor, or
of any third person to secure payment of the Indebtedness of the
Borrower or any part thereof.
"Commitment" shall mean the Term Loan Commitment.
"Debt" shall mean any and all amounts and/or liabilities owing from
time to time by the Borrower to any Person, including the Bank, direct
or indirect, liquidated or contingent, now existing or hereafter
arising, including without limitation (i) indebtedness for borrowed
money; (ii) the amounts of all standby and commercial letters of credit
and bankers acceptances, matured or unmatured, issued on behalf of the
Borrower; (iii) guaranties of the obligations of any other Person,
whether direct or indirect, whether by agreement to purchase the
indebtedness of any other Person or by agreement for the furnishing of
funds to any other Person through the purchase or lease of goods,
supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging
the indebtedness of any other Person, or otherwise; (iv) the present
value of all obligations for the payment of rent or hire of property of
any kind (real or personal) under leases or lease agreements required
to be capitalized under GAAP, and (v) trade payables and operating
leases incurred in the ordinary course of business or otherwise.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean the Guarantor's earnings before interest, taxes,
depreciation and amoritization, all as determined in accordance with
GAAP.
"Encumbrances" shall mean individually, collectively and
interchangeably any and all presently existing and/or future mortgages,
liens, privileges, servitudes, rights-of-way and other contractual
and/or statutory security interests and rights of every nature and kind
that, now and/or in the future may affect the property of Borrower or
any part or parts thereof.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et
seq., or other applicable Governmental Requirements or regulations
adopted pursuant to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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"Event of Default" shall mean individually, collectively and
interchangeably any of the Events of Default set forth below in Section
10.1 hereof.
"GAAP" shall mean, at any time, accounting principles generally
accepted in the United States as then in effect.
"Governmental Requirement" shall mean any applicable state, federal or
local law, statute, ordinance, code, rule, regulation, order or decree
applicable to Borrower.
"Guarantor" shall mean LHC Group, Inc., a Delaware corporation, and its
successors and assigns.
"Guaranty" shall collectively mean the unlimited Commercial Guaranty
dated of even date herewith by the Guarantor in favor of Bank.
"Indebtedness" shall mean, at any time, the indebtedness of the
Borrower evidenced by the Note executed by the Borrower pursuant to
this Agreement, including principal, interest, costs, expenses and
reasonable attorneys' fees and all other fees and charges, together
with all commitment fees and other indebtedness and costs and expenses
for which the Borrower is responsible under this Agreement or under any
of the Related Documents. In addition, the words " Indebtedness" also
includes, any and all other loans, extensions of credit, obligations,
debts and liabilities of the Borrower, plus interest thereon, that may
now and in the future be owed to or incurred in favor of the Bank, as
well as all claims by the Bank against the Borrower, whether existing
now or later; whether they are voluntary or involuntary, due or to
become due, direct or indirect or by way of assignment, determined or
undetermined, absolute or contingent, liquidated or unliquidated;
whether the Borrower may be liable individually or jointly with others,
of every nature and kind whatsoever, in principal, interest, costs,
expenses and reasonable attorneys' fees and all other fees and charges;
whether the Borrower may be obligated as principal obligor, guarantor,
surety, accommodation party or otherwise.
"LIBOR Rate" shall mean the One Month London InterBank Offered Rate for
U.S. Dollar Deposits as set and published by the British Banker's
Association ("BBA"), as obtained by Bank from a wire that is sent
through Bloomberg, L.P., which rate is based by the BBA on an average
of interbank offered rates for U.S. Dollar deposits in the London
market based on quotes from designated banks in the London market. In
the event that the One Month LIBOR is no longer available from the BBA
or Bloomberg, L.P., Bank shall select a comparable service to determine
such rate and shall provide notice thereof to Borrower.
"Loans" shall collectively mean the loan advanced under the Term Note
and any and all other loans by Bank to Borrower pursuant to this
Agreement.
"Loan Documents" shall mean this Agreement, the Note, the Guaranty, the
Collateral Documents and any other Related Documents.
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"Material Adverse Change" shall mean, with respect to the Borrower or
Guarantor, an event which causes a material adverse effect on the
business, assets, operations or condition (financial or otherwise) of
such Persons taken as a whole, or which otherwise changes in a
materially adverse way any other facts, circumstances or conditions
which the Bank has relied upon or utilized in making its Commitment
hereunder taken as a whole.
"Term Loan Commitment" shall mean the agreement by the Bank to the
Borrower to make a term loan in accordance with the provisions of
Article II hereof.
"Term Note" shall mean that certain promissory note of even date
herewith, by Borrower in the principal amount of $5,050,000.00 payable
to the order of the Bank with interest at the LIBOR Rate plus the
Applicable Margin, together with any and all extensions, renewals,
modifications, and substitutions therefor.
"Note" shall mean the Term Note as the same may be renewed or extended,
together with all other promissory note or Note given in renewal,
substitution, or as a refinancing of any part of the indebtedness
evidenced thereby.
"Permitted Encumbrances" shall have the meaning ascribed to such term
in Section 9.4 hereof.
"Person" shall mean an individual or a corporation, partnership, trust,
joint venture, incorporated or unincorporated association, joint stock
company, government, or an agency or political subdivision thereof, or
other entity of any kind.
"Related Documents" shall mean and include individually, collectively,
interchangeably and without limitation all promissory notes, credit
agreements, loan agreements, guaranties, security agreements,
mortgages, collateral mortgages, deeds of trust, and all other
instruments and documents, whether now or hereafter existing, executed
in connection with the Indebtedness.
"Security Agreement" shall mean that certain Aircraft Security
Agreement by Borrower in favor of the Bank, dated of even date
herewith, affecting the Aircraft, as the same may be amended from time
to time and in effect.
"Solvent" shall mean, when used with respect to any Person on a
particular day, that on such date (i) the fair value of the property of
such Person is greater than the total amount of liabilities, including
without limitation, contingent liabilities, of such person, (ii) the
present fair salable value of the assets of such person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, and (iii)
such Person is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. In computing the amount of
contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount, which, in light of all of
the facts and circumstances existing at such time, represents the
amount that can be reasonably expected to become an actual or matured
liability.
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"Tangible Net Worth" shall mean the sum of the Guarantor's common
stock, preferred stock, capital surplus and retained earnings less
treasury stock and the sum of all intangible assets (including, without
limitation, good will, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks and brand names).
"Total Liabilities" shall mean the total liabilities of Guarantor, as
determined in accordance with GAAP.
"UCC" shall mean the Uniform Commercial Code, Commercial Laws-Secured
Transactions (La. R.S. 10-9-101 et seq.) in the State of Louisiana, as
amended from time to time, provided that if by reason of mandatory
provisions of law, the perfection or effect of perfection or
non-perfection of the Bank's Encumbrances against the Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of Louisiana "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
ARTICLE II
TERM LOAN
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Section 2.1. The Term Loan Commitment. Subject to the terms and
conditions of this Agreement, the Bank agrees to make a term loan to the
Borrower in a principal amount of up to $5,050,000.00; provided, however, said
term loan will be limited to the lesser of one hundred percent (100%) of the
cost of Borrower to acquire the Aircraft and $5,050,000.00. The said term loan
will be evidenced by the Term Note.
Section 2.2. Payment of the Term Note. The Term Note shall be payable
as follows: (i) in eighty three (83) monthly payments of principal plus interest
(based on a 15-year amoritization), commencing on March 6, 2008; and (ii) in one
final (and 84th) payment due on February 6, 2015 in the amount equal to all
outstanding principal and accrued unpaid interest. The Term Note will bear
interest at the LIBOR Rate (adjusted monthly) plus the Applicable Margin. In
addition, the Borrower and Guarantor understand that Borrower must deliver to
Bank within sixty (60) days after the date of this Agreement an appraisal of the
Aircraft acceptable to Bank. In the event the appraised value of the Aircraft is
less than the principal amount funded by Bank under the Term Note, the Borrower
is obligated to make a mandatory principal payment on the Term Note in the
amount equal to the difference between the original principal amount of the Term
Note and the said appraised value. The said mandatory payment shall be due and
payable within three (3) Business Days of Bank's demand for such payment.
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Section 2.3. Use of Proceeds. The Borrower shall use the proceeds of
the Term Loan Commitment to finance its acquisition of the Aircraft.
ARTICLE III
CHANGE OF CIRCUMSTANCES
-----------------------
Section 3.1. Unavailability of Funds or Inadequacy of Pricing. In the
event that, in connection with the indebtedness evidenced by the Term Note, the
Bank reasonably determines, which determination shall, absent manifest error, be
final, conclusive and binding upon all parties, due to changes in circumstances
since the date hereof, adequate and fair means do not exist for determining the
LIBOR Rate or such rate will not accurately reflect the costs to the Bank of
funding such indebtedness for the affected interest period, the Bank shall give
notice of such determination to the Borrower, whereupon, until the Bank notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist, the obligation of the Bank to make or continue Loans at the LIBOR Rate
shall be suspended.
Section 3.2. Change in Laws. If at any time after the date hereof any
new law or any change in existing laws or in the interpretation by any
governmental authority, central bank, or comparable agency charged with the
administration or interpretation thereof, of any new or existing laws shall make
it unlawful for the Bank to make or continue to maintain or fund Loans hereunder
at the LIBOR Rate, then Bank shall promptly notify Borrower in writing of Bank's
obligation to make or continue Loans as LIBOR Rate Loans under this Agreement
shall be suspended until it is no longer unlawful for Bank to make or maintain
such Loans. Upon receipt of such notice, Borrower shall either repay the
outstanding Loans owed to the Bank, without penalty, on the last day of the
current interest periods (or, if Bank may not lawfully continue to maintain and
fund such Loans, immediately).
Section 3.3. Increased Cost or Reduced Return.
(i) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any applicable law, rule,
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency:
(A) shall subject Bank to any tax, duty, or
other charge with respect to any Loans, the Note, or
its obligation to make Loans, or change the basis of
taxation of any amounts payable to the Bank under
this Agreement, or the Note, in respect of any Loans
(other than franchise taxes and taxes imposed on the
overall net income of Bank);
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(B) shall impose, modify, or deem applicable
any reserve, special deposit, assessment, or similar
requirement (other than reserve requirements, if any,
taken into account in the determination of the LIBOR
Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities
or commitments of Bank, including the Commitment of
Bank hereunder; or
(C) shall impose on Bank or on the London
interbank market any other condition affecting this
Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to Bank of
making, continuing, or maintaining any Loans or to reduce any sum received or
receivable by Bank under this Agreement or its Note, then pursuant to Section
3.3(v) Borrower shall pay to Bank such amount or amounts as will compensate Bank
for such increased cost or reduction. If Bank requests compensation by Borrower
under this Section 3.3., Borrower may, by notice to Bank, suspend the obligation
of Bank to make or continue LIBOR Rate Loans, until the event or condition
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.3. shall be applicable); provided that such suspension shall not
affect the right of Bank to receive the compensation so requested.
(ii) If, after the date hereof, Bank shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of Bank or any corporation controlling Bank as a consequence of Bank's
obligations hereunder to a level below that which Bank or such corporation could
have achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then from time to
time pursuant to Section 3.3(v) Borrower shall pay to Bank such additional
amount or amounts as will compensate Bank for such reduction.
(iii) Bank shall promptly notify Borrower of any event
of which it has knowledge, occurring after the date hereof, which will entitle
Bank to compensation pursuant to this Section 3.3. will designate a separate
lending office, if applicable, if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of Bank,
be otherwise disadvantageous to it. If Bank claims compensation under this
Section 3.3., Bank shall simultaneously furnish to Borrower a statement setting
forth the additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, Bank
may use any reasonable averaging and attribution methods.
(iv) If Bank gives notice to the Borrower pursuant to
Section 3.3. hereof, Bank shall simultaneously give to the Borrower a statement
signed by an officer of Bank setting forth in reasonable detail the basis for,
and the calculation of such additional cost, reduced payments or capital
requirements, as the case may be, and the additional amounts required to
compensate Bank therefor.
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(v) Within fifteen (15) days after receipt by the
Borrower of any notice referred to in Section 3.3., the Borrower shall pay to
Bank such additional amounts as are required to compensate Bank for the
increased cost, reduce payments or increase capital requirements identified
therein, as the case may be; provided, that the Borrower shall not be obligated
to compensate Bank for any increased costs, reduced payments or increased
capital requirements to the extent that Bank incurs the same prior to a date six
(6) months before Bank gives the required notice.
Section 3.4. Breakage Costs. Without duplication under any other
provision hereof, if Bank incurs any actual loss, cost or expense (including,
without limitation, any loss of profit and loss, cost, expense or premium
reasonably incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by Bank to fund or maintain any LIBOR Rate Loan or the
relending or reinvesting of such deposits or amounts paid or prepaid to Bank as
a result of any of the following events other than any such occurrence as a
result in the change of circumstances described in Sections 3.1. and 3.2.:
(i) any payment, prepayment or conversion of a LIBOR
Rate Loan on a date other than the last day of a month
(whether by acceleration, prepayment or otherwise);
(ii) any failure to make a principal payment of a Loan
on the due date thereof; or
(iii) any failure by the Borrower to borrow, continue,
prepay or convert to a LIBOR Rate Loan on the dates specified
in a notice given pursuant to this Agreement;
then the Borrower shall within 15 days after demand pay to Bank such amount as
will reimburse Bank for such loss, cost or expense. If Bank makes such a claim
for compensation, it shall simultaneously furnish to Borrower a statement
setting forth the amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the computation of such loss,
cost or expense) and the amounts shown on such statement shall be conclusive and
binding absent manifest error.
ARTICLE IV
INTEREST RATE COMPUTATION
-------------------------
Section 4.1. Computations. All computations of interest on the Loans
bearing interest at the LIBOR Rate plus the Applicable Margin shall be assessed
based on the actual number of days elapsed over a year composed of 360 days.
Whenever a payment hereunder or under any of the other Related Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Loans as reflected on the Bank's
books and records from time to time shall be prima facie evidence of the amounts
so outstanding.
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ARTICLE V
SECURITY FOR THE INDEBTEDNESS
-----------------------------
Section 5.1. Security. The Indebtedness shall be secured by the
Security Agreement (and the financing statement associated therewith). The
Borrower acknowledges that the Security Agreement constitutes a first priority
security interest affecting the Aircraft in favor of the Bank. In addition, the
Guarantor acknowledges that the Indebtedness is solidarily guaranteed by the
Guarantor pursuant to the Guaranty.
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
Section 6.1. Precedent to All Loans. The obligation of the Bank to make
any Loan hereunder shall be subject to the satisfaction and the continued
satisfaction of the following conditions precedent:
(a) The Borrower shall have executed and delivered to the Bank this
Agreement, the Term Note, the Security Agreement, and all other documents
required by this Agreement, all in form and substance and in such number of
counterparts as may be required by the Bank;
(b) The Guarantor shall have executed and delivered to the Bank this
Agreement and the Guaranty;
(c) The representations, warranties, and covenants of the Borrower
and the Guarantor as set forth in this Agreement, or in any Related Document
furnished to the Bank in connection herewith, shall be and remain true and
correct in all material respects;
(d) If requested by Bank, the Bank shall have received a favorable
legal opinion of counsel to the Borrower and the Guarantor, in form, scope and
substance satisfactory to the Bank;
(e) The Bank shall have received certified resolutions of the
Borrower and the Guarantor authorizing the execution of all documents and
instruments contemplated by this Agreement;
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(f) The Bank shall have received all fees, charges and expenses
(including the payment of its reasonable out of pocket outside counsel's fees
and expenses) which are due and payable as specified in this Agreement and any
Related Documents;
(g) No Event of Default shall exist or shall result from the making
of a Loan;
(h) The Borrower and the Guarantor shall have provided the Bank with
all financial statements, reports and certificates required by this Agreement;
(i) The Bank shall have received the articles of organization and
operating agreement, as amended, of the Borrower, and the articles of
incorporation and by-laws, as amended, of the Guarantor, and the Bank's counsel
shall have reviewed the foregoing documents and be satisfied with the validity,
due authorization and enforceability thereof and of all Related Documents;
(j) The Bank shall have received evidence acceptable to the Bank and
its counsel that its Encumbrances affecting the Collateral shall have a first
priority position, subject only to Permitted Encumbrances;
(k) There shall have occurred no Material Adverse Change with respect
to the Borrower;
(l) The Bank's due diligence and review of all financial information
provided by the Borrower and the Guarantor,
(m) The Borrower shall obtain insurance on the Aircraft acceptable to
the Bank, naming Bank as additional insured and/or loss payee, and delivered to
Bank evidence of such insurance coverages; and
(n) The Bank shall have received a satisfactory inspection of the
Aircraft.
The Bank reserves the right, in its sole discretion, to waive any one
or more of the foregoing conditions precedent.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower and the Guarantor represent and warrant to the Bank as
follows:
Section 7.1. Authority. The Borrower is a limited liability company
duly created, validly existing and in good standing under the laws of Louisiana,
and is duly qualified and in good standing as a foreign limited liability
company in all other jurisdictions where the failure to qualify would have a
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material adverse effect upon its ability to perform its obligations under this
Agreement and all Related Documents. The Borrower has the power to enter into
this Agreement, execute the Note, Security Agreement and grant the liens and
security interests in the Collateral in the manner and for the purpose
contemplated by the Collateral Documents. The Borrower has the power to perform
its obligations hereunder and under the Related Documents. The making and
performance by the Borrower of the Related Documents have all been duly
authorized by all necessary action (including all necessary action by its
members), and do not and will not violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination or award presently in
effect having applicability to the Borrower or the articles of organization
and/or operating agreement of the Borrower. The Guarantor is a corporation duly
created, validly existing, and in good standing under the laws of Delaware, and
is duly qualified and in good standing as a foreign corporation in Louisiana.
The Guarantor has the power to enter into this Agreement and the Guaranty. The
making and performance by the Guarantor have been authorized by all necessary
corporate action (including all necessary shareholder action) by Guarantor, and
do not and will not violate any provision of any law, rule, regulation, order,
writ, judgment, decree, determination or award presently in effect having
applicability to Guarantor or the articles of incorporation and/or by-laws of
Guarantor. The making and performance by each of the Borrower and Guarantor of
the Related Documents to which it is a party do not and will not result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement or instrument to which the Borrower is a party
or by which it may be bound or affected, or result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than as contemplated by the
Related Documents) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or the Guarantor, and the Borrower and
Guarantor are not in default under or in violation of any such order, writ,
judgment, decree, determination, award, indenture, agreement or instrument. Each
of the Related Documents to which the Borrower or Guarantor is a party
constitutes a legal, valid and binding obligations of such party, enforceable in
accordance with its terms.
Section 7.2. Financial Statements. The balance sheet of the Borrower
and Guarantor at the date thereof, and the related statements of income and
retained earnings for the year then ended, copies of which have been delivered
to the Bank, are complete and correct and fairly present the financial condition
of such entities as of the date or dates thereof. Each of said financial
statements were prepared in conformity with GAAP. No Material Adverse Change has
occurred since said dates in the financial position or in the results of
operations of the Borrower and/or the Guarantor in its/their business taken as a
whole.
Section 7.3. Title to Collateral. The Borrower has good and marketable
title to the Collateral affected by the Security Agreement, free and clear of
all Encumbrances other than Permitted Encumbrances. The Collateral Documents
constitute legal, valid and perfected first Encumbrances on the property
interests covered thereby, subject only to Permitted Encumbrances.
Section 7.4. Litigation. Other than as has been disclosed previously to
the Bank in writing, there are no known legal actions, suits or proceedings
pending or threatened against or affecting the Borrower, the Guarantor, or any
of their properties before any court or administrative agency (federal, state or
local), which, if determined adversely to any of the Borrower or the Guarantor
would constitute a Material Adverse Change taken as a whole, and there are no
judgments or decrees affecting the Borrower, the Guarantor or its/their property
(including, without limitation, the Collateral) which are or may become an
Encumbrance against such property.
11
Section 7.5. Approvals. No authorization, consent, approval or formal
exemption of, nor any filing or registration with, any governmental body or
regulatory authority (federal, state or local), and no vote, consent or approval
of the members of the Borrower is or will be required in connection with the
execution and delivery by the Borrower and/or Guarantor of the Related Documents
or the performance by the Borrower and/or Guarantor of its obligations hereunder
and under the other Related Documents other than those made, taken or obtained.
Section 7.6. Required Insurance. The Borrower maintains and will
maintain insurance with insurance companies in such amounts and against such
risks as is usually carried by owners of similar business and properties in the
same general areas in which it operates, and in any event the Borrower shall
maintain insurance on the Aircraft as required by the Security Agreement.
Section 7.7. Licenses. The Borrower possesses adequate franchises,
licenses and permits to own its properties and to carry on its business as
presently conducted.
Section 7.8. Adverse Agreements. The Borrower and the Guarantor are not
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which they are a party, which default would constitute a Material Adverse
Change.
Section 7.9. Event of Default. No Event of Default hereunder has
occurred or is continuing or will occur as a result of the giving effect hereto.
Section 7.10. Employee Benefit Plans. Each employee benefit plan as to
which the Borrower and/or the Guarantor may have any liability complies in all
material respects with all applicable requirements of law and regulations, and
(i) no Reportable Event (as defined in ERISA) has occurred with respect to any
such plan, (ii) the Borrower and Guarantor have not withdrawn from any such plan
or initiated steps to do so, and (iii) no steps have been taken to terminate any
such plan.
Section 7.11. Investment Company Act. The Borrower is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
Section 7.12. Public Utility Holding Company Act. The Borrower is not a
"holding company," or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 7.13. Regulations G, T and U. The Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System), and none of the proceeds of the Loans will be used for the
purpose of purchasing or carrying such margin stock.
12
Section 7.14. Location of Offices, Records, Equipment and Inventory.
The chief place of business of the Borrower and the office where the Borrower
keeps its records concerning the Collateral is 000 Xxxx Xxxxxxx Xxxx, Xxxxx X,
Xxxxxxxxx, Xxxxxxxxx 00000.
Section 7.15. Information. All information heretofore or
contemporaneously herewith furnished by the Borrower and the Guarantor to the
Bank for the purposes of or in connection with this Agreement or any transaction
contemplated hereby is, to Borrower's and such Guarantor's knowledge, and all
information hereafter furnished by or on behalf of the Borrower and the
Guarantor to the Bank will be, to Borrower's and Guarantor's knowledge, true and
accurate in every material respect on the date as of which such information is
dated or certified; and none of such information is or will be incomplete by
omitting to state any material fact necessary to make such information not
misleading.
Section 7.16. Environmental Matters. Except as disclosed in writing to
the Bank prior to the date hereof, to Borrower's knowledge no properties of the
Borrower has ever been, nor will ever be so long as this Agreement remains in
effect, used for the generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance, as those
terms are defined in the Environmental Laws, except in compliance with such
Environmental Laws. Except as disclosed in writing by the Borrower to the Bank
prior to the date hereof, the Borrower represents and warrants that, to its
knowledge, it is in material compliance with all Environmental Laws affecting it
and its properties.
Section 7.17. Solvency of the Borrower and the Guarantor. The Borrower
and Guarantor are, and after consummation of the transactions contemplated by
this Agreement (including the making of the Loans), and after giving effect to
all obligations incurred by the Borrower and the Guarantor in connection
herewith, will be, Solvent.
Section 7.18. Governmental Requirements. The Aircraft is in compliance
with all current governmental requirements affecting in any material respect the
Borrower's property and assets.
Section 7.19. Survival of Representations and Warranties. The Borrower
and Guarantor understand and agree that the Bank is relying upon the above
representations and warranties in making the Loans to the Borrower. The Borrower
and Guarantor further agree that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect until
such time as the Indebtedness shall be paid in full, or until this Agreement
shall be terminated, whichever is the last to occur.
13
ARTICLE VIII
AFFIRMATIVE COVENANTS
---------------------
In addition to the covenants contained in the Collateral Documents,
which covenants are hereby ratified and confirmed by the Borrower (and the
Guarantor as to the Guaranty), the Borrower and the Guarantor, as set forth
below, covenant and agree as follows:
Section 8.1. Financial Statements. The Borrower and the Guarantor, as
set forth below, will furnish or cause to be furnished to the Bank:
(a) as soon as available and in any event within one hundred
twenty (120) days following the close of each fiscal year of
Guarantor, Guarantor shall deliver to Bank unqualified and
audited financial statements of Guarantor consisting of a
balance sheet as at the end of such fiscal year and statements
of income, and statement of cash flow for such fiscal year,
setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, certified
by independent certified public accountants of recognized
standing reasonably acceptable to the Bank;
(b) as soon as available and in any event within sixty (60) days
following the end of each quarter, Guarantor shall deliver to
Bank internally-prepared financial statements consisting of
the balance sheet of Guarantor as of the end of such quarter,
and a statement of income and statement of cash flow of
Guarantor for such quarter, all certified as materially true
and correct by the chief financial officer of Guarantor as
having been prepared in accordance with GAAP consistently
applied;
(c) the Guarantor shall deliver to Bank within sixty (60) days
following the end of each quarter, a compliance certificate
(form attached as Exhibit A), certified as materially true and
correct by the chief financial officer of the Guarantor; and
(d) such other necessary financial information concerning the
Borrower and the Guarantor as the Bank may reasonably request
from time to time.
The requirements of subparts (a) and (b) above are to be fulfilled by
delivery by Guarantor to Bank of Guarantor's annual 10K reports and quarterly
10q reports.
Section 8.2. Notice of Default; Litigation; ERISA Matters. The Borrower
will give written notice to the Bank as soon as reasonably possible and in no
event more than five (5) Business Days of (i) the occurrence of any Event of
Default hereunder of which it has knowledge or should have knowledge, (ii) the
filing of any actions, suits or proceedings against the Borrower and/or
Guarantor in any court or before any governmental authority or tribunal of which
they have knowledge or should have knowledge which could cause a Material
Adverse Change with respect to the Borrower and/or the Guarantor taken as a
whole, (iii) the occurrence of a reportable event under, or the institution of
steps by the Borrower or Guarantor to withdraw from, or the institution of any
steps to terminate, any employee benefit plan as to which the Borrower or
Guarantor may have liability, or (iv) the occurrence of any other action, event
or condition of any nature of which they have knowledge which may cause, or lead
to, or result in, any Material Adverse Change to the Borrower and the Guarantor
taken as a whole.
14
Section 8.3. Maintenance of Existence, Properties and Liens. The
Borrower and Guarantor will each (i) continue to engage in the business
presently being operated by it; (ii) maintain its existence and good standing in
each jurisdiction in which it is required to be qualified; (iii) keep and
maintain all franchises, licenses and properties necessary in the conduct of its
business in good order and condition; and (iv) duly observe and conform to all
material requirements of any governmental authorities relative to the conduct of
its business or the operation of its properties or assets. In addition, the
Borrower shall maintain in favor of the Bank a first perfected lien and security
interest in the Collateral, subject only to Permitted Encumbrances.
Section 8.4. Appraisal of Aircraft. The Borrower covenants and agrees
that it shall deliver an appraisal of the Aircraft to Bank within sixty (60)
days after the date of this Agreement.
Section 8.5. Taxes. Each of the Borrower and the Guarantor shall pay or
cause to be paid when due, all taxes, local and special assessments, and
governmental and other charges of every type and description, that may from time
to time be imposed, assessed and levied against it or its properties. The
Borrower and the Guarantor further agree to furnish the Bank with evidence that
such taxes, assessments, and governmental and other charges due by the Borrower
or the Guarantor, as the case may be, have been paid in full and in a timely
manner. The Borrower or the Guarantor, as the case may be, may withhold any such
payment or elect to contest any lien if the Borrower or the Guarantor, as the
case may be, are in good faith conducting an appropriate proceeding to contest
the obligation to pay and so long as the Bank's interest in the Collateral is
not jeopardized.
Section 8.6. Performance of Loan Documents. The Borrower and the
Guarantor shall duly and punctually pay and perform each of its respective
obligations under the Note, under this Agreement (as the same may at any time be
amended or modified and in effect) and under each of the Related Documents to
which it is a party, in accordance with the terms hereof and thereof.
Section 8.7. Compliance with Environmental Laws. The Borrower shall
comply with and shall cause all of its employees, agents, invitees or sublessees
to comply with all Environmental Laws. The Borrower shall give notice to the
Bank as soon as reasonably possible and in no event more than five (5) Business
Days after it receives any compliance orders, environmental citations, or other
notices from any governmental entity relating to any environmental condition
relating to its properties or elsewhere for which it may have legal
responsibility with a full description thereof; the Borrower agrees to take any
and all reasonable steps, and to perform any and all reasonable actions
necessary or appropriate to promptly comply with any such citations, compliance
orders or Environmental Laws requiring the Borrower to remove, treat or dispose
of such hazardous materials, wastes or conditions at the sole expense of the
Borrower, to provide the Bank with satisfactory evidence of such compliance;
provided, however, that nothing contained herein shall preclude the Borrower
from contesting any such compliance orders or citations if such contest is made
in good faith, appropriate reserves are established for the payment for the cost
of compliance therewith, and the Bank's security interest in any such property
affected thereby (or the priority thereof) is not jeopardized.
15
Regardless of whether any Event of Default hereunder shall have
occurred and be continuing, the Borrower (i) releases and waives any present or
future claims against the Bank for indemnity or contribution in the event the
Borrower becomes liable for remediation costs under any Environmental Laws, and
(ii) agrees to defend, indemnify and hold harmless the Bank from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys fees and
remedial costs), suits, administrative orders, agency demand letters, costs of
any settlement or judgment and claims of any and every kind whatsoever which may
now or in the future (whether before or after the termination of this Agreement)
be paid, incurred, or suffered by, or asserted against the Bank by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, or release from or onto the property of the Borrower of any
hazardous materials, wastes or conditions regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or resulting from, the
environmental condition of such property or the applicability of any
Environmental Laws relating to hazardous materials (including, without
limitation, CERCLA or any so called federal, state or local "super fund" or
"super lien" laws, statute, ordinance, code, rule, regulation, order or decree)
regardless of whether or not caused by or within the control of the Bank (the
costs and/or liabilities described in (i) and (ii) above being hereinafter
referred to as the "Liabilities"). The covenants and indemnities contained in
this Section 8.7 shall survive termination of this Agreement.
Section 8.8. Further Assurances. The Borrower and the Guarantor will,
at any time and from time to time, execute and deliver such further instruments
and take such further action as may reasonably be requested by the Bank, in
order to cure any defects in the execution and delivery of, or to comply with or
accomplish the covenants and agreements contained in this Agreement or the
Collateral Documents.
Section 8.9. Financial Covenants. The Guarantor shall comply with the
following covenants and ratios:
(a) Minimum Fixed Charge Coverage. The Guarantor shall maintain at
all times a fixed charge coverage ratio of not less than 1.5
to 1.00. The ratio shall be calculated as follows: EBITDA plus
lease/rent expense minus unfinanced capital expenditures
divided by prior period current maturities of long-term debt
plus interest expense plus lease/rent expense plus cash taxes.
This covenant will be tested quarterly by Bank on a rolling
four-quarters basis, commencing June 30, 2008.
(b) Total Liabilities to Tangible Net Worth. The Guarantor shall
maintain at all times a ratio of Total Liabilities to Tangible
Net Worth of not more than 1.50 to 1.00. This covenant will be
tested by Bank on a quarterly basis, commencing June 30, 2008.
16
(c) Maximum Senior Debt to EBITDA. The Guarantor shall maintain at
all times a senior debt to EBITDA ratio of not more than 2.50
to 1.00. This ratio will be calculated as follows: EBITDA
divided by prior period current maturities of long term debt
due to Bank plus interest expense. This covenant will be
tested by Bank quarterly on a rolling four quarters basis
commencing June 30, 2008.
(d) Working Capital Ratio. The Guarantor shall maintain at all
times a working capital ratio of not less than 2.00 to 1.00.
This covenant will be calculated as follows: Guarantor's
current assets divided by Guarantor's current liabilities plus
the existing outstanding balance under Guarantor's senior
revolving line of credit with Bank, all as determined in
accordance with GAAP. This covenant will be tested quarterly
by Bank commencing June 30, 2008.
Section 8.10. Operations. The Borrower and the Guarantor shall conduct
their business affairs in a reasonable and prudent manner and in compliance in
all material respects with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting their properties, charters,
businesses and operations, including compliance with all minimum funding
standards and other requirements of ERISA of 1974, and other laws applicable to
any employee benefit plans which they may have.
Section 8.11. Change of Location. The Borrower shall, within ten (10)
Business Days prior to any such addition or change, notify the Bank in writing
of any proposed additions to or changes in the location of its businesses.
Section 8.12. Employee Benefit Plans. So long as this Agreement remains
in effect, the Borrower and Guarantor will maintain each employee benefit plan
as to which it may have any liability, in compliance with all applicable
requirements of law and regulations
Section 8.13. Field Audits; Other Information. The Borrower shall allow
the Bank's employees and agents, upon the Bank's providing advance written
notice thereof, access to its books and records and properties during normal
business hours to perform field audits on a periodic basis and subject to such
employees and agents agreeing in writing to maintain information obtained by
them in connection therewith confidential (the terms of said agreement to be
acceptable to Bank), but not more frequently than once per year unless requested
due to the occurrence of an Event of Default. The Borrower shall pay all
reasonable costs and expenses associated with such field audits. The Borrower
will provide the Bank with such other information as the Bank may reasonably
request from time to time.
Section 8.14. Required Insurance. The Borrower shall maintain insurance
covering Borrower with insurance companies in such amounts and against such
risks as is usually carried by owners of similar businesses and properties in
the same general areas in which each of them operates, and in each case with the
Bank named as the loss payee and/or additional insured, as appropriate. The
17
Borrower agrees to provide the Bank with originals or certified copies of such
policies of insurance. The Borrower further agrees to promptly furnish the Bank
with copies of all renewal notices and, if requested by the Bank, with copies of
receipts for paid premium. The Borrower shall provide the Bank with originals or
certified copies of all renewal or replacement policies of insurance no later
than fifteen (15) days before any such existing policy or policies should
expire. If the Borrower's insurance policies required hereunder and renewals
thereof are held by another person, the Borrower agrees to supply original or
certified copies of the same to the Bank within the time periods required above.
ARTICLE IX
NEGATIVE COVENANTS
------------------
In addition to the negative covenants contained in the Collateral
Documents, which covenants are hereby ratified and confirmed by the Borrower,
the Borrower and the Guarantor (as set forth below) covenant and agree as
follows:
Section 9.1. Limitations on Fundamental Changes. The Borrower shall not
change its line of business, or form any subsidiary without the prior written
consent of the Bank, nor shall the Borrower enter into any transaction of merger
or consolidation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution).
Section 9.2. Disposition of Assets. the Borrower shall not convey,
sell, lease, assign, transfer or otherwise dispose of, any of its property,
business or assets (whether now owned or hereafter acquired) other than in the
ordinary course of business without the prior written consent of the Bank.
Section 9.3. Restricted Payments. Excluding distributions for tax
purposes to the members of Borrower, the Borrower shall not declare or pay (or
set aside reserves for payment of) any dividends or distributions, make any
shareholder, member, or affiliate loans, or pay excessive compensation or enter
into any similar transactions with its members, managers, and/or, officers.
Section 9.4. Encumbrances. The Borrower shall not create, incur, assume
or permit to exist any Encumbrances superior to Bank's Encumbrances on any of
its property now owned or hereafter acquired, except for those Encumbrances
currently existing and of record as listed on Schedule 9.4 attached hereto and
the following (hereinafter referred to as the "Permitted Encumbrances"):
(a) Encumbrances for taxes, assessments, or other governmental
charges not yet due or which are being contested in good faith
by appropriate action promptly initiated and diligently
conducted, if such reserves as shall be required by GAAP shall
have been made therefor;
18
(b) Encumbrances of landlords, vendors, carriers, warehousemen,
mechanics, laborers and materialmen arising by law in the
ordinary course of business for sums either not yet due or
being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall
be required by GAAP shall have been made therefor;
(c) Inchoate liens arising under ERISA to secure the contingent
liabilities, if any, permitted by this Agreement;
(d) The Collateral Documents and any other liens in favor of the
Bank to secure the Indebtedness of the Borrower to the Bank;
and
(e) Encumbrances in favor of GMAC Commercial Finance LLC (and its
assigns, and any replacement senior lender) on all assets of
the Borrower excluding the Aircraft.
Section 9.5. Debts, Guaranties and Other Obligations. The
Borrower will not incur, create, assume or in any manner become or be
liable in respect of any Debt (during a 12-month period), direct or
contingent, except for:
(a) The Indebtedness to the Bank under this Agreement;
(b) Trade payables or operating and facility leases from time to
time incurred in the ordinary course of business; and
(c) Taxes, assessments or other government charges which are not
yet due or are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as shall be required by generally accepted accounting
principles shall have been made therefore; and
(d) All existing indebtedness in favor of GMAC Commercial Finance
LLC (and its assigns, and any replacement senior lender) and
as listed in Schedule 9.5 attached hereto.
Section 9.6. Investments, Loans and Advances. The Borrower and
the Guarantor will not make or permit to remain outstanding any loans
or advances to or investments in any Person, except for:
(a) Investments in direct obligations of the United States of
America or any agency thereof;
(b) Investments in either certificates of deposit of maturities
less than one year, issued by the Bank, or if the Bank is not
substantially competitive (in terms of certificate of deposit
interest rate for comparable amounts) with other banks (having
a credit rating acceptable to the Bank) certificates of
deposit of maturities less than one year, issued by one or
more of such other banks;
19
(c) Investments in commercial paper of maturities less than one
year with the best rating by Standard & Poors, Xxxxx'x
Investors Service, Inc., or any other rating agency
satisfactory to the Bank; and
(d) Routine advances to employees made in the ordinary course of
business.
Section 9.7. Changes in Management and Control. The management and
ownership structure of the Borrower will not change without the prior written
consent of the Bank.
Section 9.8. Other Agreements. The Borrower and the Guarantor will not
enter into any agreement containing any provision, which would be violated or
breached by the performance of its obligations hereunder or under any instrument
or document delivered or to be delivered by any of them hereunder or in
connection herewith.
Section 9.9. Transactions with Affiliates. The Borrower will not enter
into any agreement with any affiliate except to the extent that such agreements
are commercially reasonable which provide for terms, which would normally be
obtainable in an arm's length transaction with an unrelated third party.
ARTICLE X
EVENTS OF DEFAULT
-----------------
Section 10.1. Events of Default. The occurrence of any one or more of
the following shall constitute an Event of Default:
Default under the Indebtedness. Should the Borrower fail to make a
payment of principal or interest under the Indebtedness when due, and such
period continues for a period of ten (10) days.
Default under this Agreement. Should the Borrower or the Guarantor
violate or fail to comply fully with any of the terms and conditions of, or
default under, this Agreement, and such default not be cured within thirty (30)
days after Bank has delivered written notice thereof to Borrower (provided,
however, that no cure period shall be available for a default in the obligation
to maintain insurance coverages required hereby).
Default Under Other Agreements. Should any event of default occur or
exist under any of the Related Documents or should the Borrower or the Guarantor
violate, or fail to comply fully with, any terms and conditions of any of the
Collateral Documents or Related Documents, and such default not be cured within
thirty (30) days after Bank has delivered written notice thereof to Borrower
(provided, however, that no cure period shall be available for a default in the
obligation to maintain insurance coverages required thereby).
Other Defaults in Favor of the Bank. Should the Borrower or Guarantor
default under any other loan, loan or credit agreement, extension of credit,
security agreement, or other obligation in favor of the Bank and fail to cure
same in accordance with any applicable cure periods.
20
Default in Favor of Third Parties. Should the Borrower or the Guarantor
default under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or
person, and such default shall have given rise to the acceleration of payment of
an amount of $100,000.00 or more, and Borrower or Guarantor fails to cure same
in accordance with any applicable cure periods.
Insolvency. The following occurrence shall constitute an Event of
Default hereunder:
(a) Filing by the Borrower or Guarantor of a voluntary petition or
any answer seeking reorganization, arrangement, readjustment
of its debts or for any other relief under any applicable
bankruptcy act or law, or under any other insolvency act or
law, now or hereafter existing, or any action by the Borrower
or Guarantor consenting to, approving of, or acquiescing in,
any such petition or proceeding; the application by the
Borrower or Guarantor for, or the appointment by consent or
acquiescence of, a receiver or trustee of the Borrower or
Guarantor for all or a substantial part of the property of any
such Person; the making by the Borrower or Guarantor, of an
assignment for the benefit of creditors; the inability of the
Borrower or Guarantor or the admission by the Borrower or
Guarantor in writing, of its inability to pay its debts as
they mature (the term "acquiescence" means the failure to file
a petition or motion in opposition to such petition or
proceeding or to vacate or discharge any order, judgment or
decree providing for such appointment within sixty (60) days
after the appointment of a receiver or trustee); or
(b) Filing of an involuntary petition against the Borrower or
Guarantor in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts or for any other relief
under any applicable bankruptcy act or law, or under any other
insolvency act or law, now or hereafter existing and such
petition remains undismissed or unanswered for a period of
sixty (60) days from such filing; or the insolvency
appointment of a receiver or trustee of the Borrower or
Guarantor for all or a substantial part of the property of
such Person and such appointment remains unvacated or
unopposed for a period of sixty (60) days from such
appointment, execution or similar process against any
substantial part of the property of the Borrower or Guarantor
and such warrant remains unbonded or undismissed for a period
of sixty (60) days from notice to the Borrower or Guarantor of
its issuance.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of the Borrower or Guarantor be commenced.
False Statements. Should any representation or warranty of either the
Borrower or Guarantor made in connection with the Indebtedness prove to be
incorrect or misleading in any material respect when made or reaffirmed.
21
Upon the occurrence of an Event of Default, the Commitment of the Bank
under this Agreement will terminate immediately, and, at the Bank's option, the
Note and all Indebtedness of the Borrower will become immediately due and
payable, all without notice of any kind to the Borrower or the Guarantor, except
that in the case of type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional.
Upon the occurrence of an Event of Default, the Bank may proceed to
realize upon the Collateral under the terms of the Collateral Documents and
exercise any other rights which it has by law or contract (which rights shall be
cumulative in nature) subject to applicable laws.
Section 10.2. Waivers. Except as otherwise provided for in this
Agreement and by applicable law, the Borrower and the Guarantor waive
presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by the Bank on which the Borrower or the
Guarantor may in any way be liable and hereby ratify and confirm whatever the
Bank may do in this regard. The Borrower and the Guarantor acknowledge that they
have had opportunity to consult with counsel of their choice with respect to
this Agreement, the other Collateral Documents, and the transactions evidenced
by this Agreement and other Collateral Documents.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1. No Waiver; Modification in Writing. No failure or delay
on the part of the Bank in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. No amendment,
modification or waiver of any provision of this Agreement or of the Note, nor
consent to any departure by the Borrower or the Guarantor therefrom, shall in
any event be effective unless the same shall be in writing signed by or on
behalf of the Bank and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No notice to
or demand on the Borrower or the Guarantor in any case shall entitle the
Borrower or the Guarantor to any other or further notice or demand in similar or
other circumstances.
Section 11.2. Payment on Non-Business Day. Whenever any payment to be
made hereunder or on account of any of the Note shall be scheduled to become due
on a day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in computing interest and fees payable hereunder or on account of the
Note.
Section 11.3. Addresses for Notices. All notices and communications
provided for hereunder shall be in writing and, shall be mailed, by certified
mail, return receipt requested, or delivered as set forth below unless any
person named below shall notify the others in writing of another address, in
which case notices and communications shall be mailed, by certified mail, return
receipt requested, or delivered to such other address.
22
If to the Bank:
Capital One, National Association
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxx Xxxxxxxxx
If to the Borrower:
Palmetto Express, L.L.C.
000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, CEO
Xxxxxxx X. XxxXxxxxx, Xx. Vice President and General
Counsel
If to the Guarantor:
LHC Group, Inc.
000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, CEO
Section 11.4. Fees and Expenses. The Borrower agrees to pay all fees,
costs and expenses of the Bank in connection with the preparation, execution and
delivery of this Agreement, and all Related Documents to be executed in
connection herewith and subsequent modifications or amendments to any of the
foregoing, including without limitation, the reasonable fees and disbursements
of outside counsel to the Bank, and to pay all costs and expenses of the Bank in
connection with the enforcement of this Agreement, the Note or the other Related
Documents, including reasonable legal fees and disbursements arising in
connection therewith. The Borrower also agrees to pay, and to save the Bank
harmless from any delay in paying stamp and other similar taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of this Agreement, the Note, the other Related Documents, or any
modification thereof.
Section 11.5. Intentionally Deleted.
Section 11.6. Waiver of Marshaling. The Borrower and the Guarantor
shall not at any time hereafter assert any right under any law pertaining to
marshaling (whether of assets or liens) and the Borrower and the Guarantor
expressly agree that the Bank may execute or foreclose upon the Collateral in
such order and manner as the Bank, in its sole discretion, deems appropriate.
23
Section 11.7. Governing Law. This Agreement and the Note shall be
deemed to be contracts made under the laws of the State of Louisiana and for all
purposes shall be construed in accordance with the laws of said State.
Section 11.8. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION. (a) THE
BORROWER, THE GUARANTOR, AND THE BANK HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO WHICH THE BORROWER, THE GUARANTOR, AND THE BANK MAY BE PARTIES,
ARISING OUT OF OR IN ANY WAY PERTAINING TO (i) THE NOTE, (ii) THIS AGREEMENT,
(iii) THE COLLATERAL DOCUMENTS OR (iv) THE COLLATERAL. IT IS AGREED AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER, THE GUARANTORS, AND THE BANK,
AND THE BORROWER, THE GUARANTOR, AND THE BANK HEREBY REPRESENT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE
BORROWER, THE GUARANTOR, AND THE BANK EACH FURTHER REPRESENT THAT IT HAS BEEN
REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
(b) THE BORROWER AND THE GUARANTOR HEREBY IRREVOCABLY CONSENT TO THE
JURISDICTION OF THE STATE COURTS OF LOUISIANA AND THE FEDERAL COURTS IN
LOUISIANA AND AGREE THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR BROUGHT TO
ENFORCE THE PROVISIONS OF THE NOTE, THIS AGREEMENT AND/OR THE COLLATERAL
DOCUMENTS MAY BE BROUGHT IN ANY COURT HAVING SUBJECT MATTER JURISDICTION.
Section 11.9. Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
Section 11.10. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
PALMETTO EXPRESS, L.L.C.
By: LHC GROUP, INC.
as Sole Member and Manager
By:
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President and CFO
GUARANTOR:
LHC GROUP, INC.
as Sole Member and Manager
By:
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President and CFO
BANK:
CAPITAL ONE, NATIONAL ASSOCIATION
By:
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
The signature of Xxxxx X. Xxxxx above on behalf of the Borrower and Guarantor is
sworn to and subscribed before me this 6th day of Febuary, 2008.
--------------------------------
Notary Public
25
Exhibit "A"
COMPLIANCE CERTIFICATE
----------------------
-----------------------------
Date
Xx. Xxxxx Xxxxxxxxx
Capital One, National Association
P. O. Xxx 0000 Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This Compliance Certificate is submitted pursuant to the requirements
of that certain Credit Agreement (the "Credit Agreement") dated _______________,
2008, by and among Palmetto Express, L.L.C. (the "Borrower"), LHC Group, Inc.
(the "Guarantor"), and Capital One, National Association.
Under the appropriate paragraphs of the Credit Agreement, we certify
that, to the best of our knowledge and belief, no condition, event, or act
which, with or without notice or lapse of time or both, would constitute an
event of default under the terms of the Credit Agreement, has occurred during
the 3 month period ending ______________________ (the "Reporting Period"). Also,
to the best of our knowledge, the Borrower has complied with all provisions of
the Credit Agreement.
Additionally, the Guarantor submits the following financial information
for the Reporting Period in accordance with the financial covenants and ratios
contained in the Credit Agreement.
I. MINIMUM FIXED CHARGE COVERAGE (Tested Quarterly on rolling 4 quarters
---------------------------------------------------------------------
basis)
------
(a) Guarantor's EBITDA................................$___________
(b) Guarantor's lease/rent expense....................$___________
(c) Guarantor's unfinanced capex......................$___________
(d) Sum of (a) + (b) - (c) ...........................$___________
(e) Sum of prior year-end current maturities of long
term debt.........................................$___________
(f) Interest Expense..................................$___________
(g) Lease/Rent Expense................................$___________
(h) Cash Taxes........................................$___________
(i) Sum of (e) + (f) + (g) + (h)......................$___________
Ratio (d to i)......................................... ___ to 1.00
i
Minimum Fixed Charge Coverage..........................1.50 to 1.00
II. TOTAL LIABILITIES TO TANGIBLE NET WORTH (Tested Quarterly)
----------------------------------------------------------
(a) Guarantor's total liabilities (include minority
interest).........................................$___________
(b) Guarantor's Tangible Net Worth....................$___________
Ratio (a to b)......................................... ___ to 1.00
Maximum Ratio Permitted................................ 1.50 to 1.00
III. MAXIMUM SENIOR FUNDED DEBT TO EBITDA
------------------------------------
(Tested Quarterly on a rolling four quarters basis)
---------------------------------------------------
(a) Guarantor's EBITDA .............................. $___________
(b) Sum of Guarantor's prior year-end current
maturities of long term debt to Bank plus interest
expense...........................................$___________
Ratio (a to b)......................................... ___ to 1.00
Maximum Senior Funded Debt to EBITDA permitted......... 2.50 to 1.00
IV. WORKING CAPITAL RATIO
---------------------
(a) Guarantor's current assets........................$___________
(b) Guarantor's current liabilities...................$___________
(c) Guarantor's outstanding balance (on revolving
line) to Capital One..............................$___________
Ratio (a / b + c) ..................................... ___ to 1.00
Minimum Working Capital Ratio Required................. 2.00 to 1.00
Sincerely,
LHC GROUP, INC.
By:_________________________________
Name:____________________________
Title:___________________________
ii
