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EXHIBIT 10.8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of May ___, 1997 (this "Agreement") is
entered into by and between (i) HEALTHCARE RECOVERIES, INC., a Delaware
corporation (together with all entities that hereafter become Participating
Partnerships or Participating Subsidiaries, hereinafter collectively referred
to each individually as a "Borrower" and collectively as the "Borrowers"), and
(ii) NATIONAL CITY BANK OF KENTUCKY, a national banking association (the
"Lender").
P R E L I M I N A R Y S T A T E M E N T:
A. The Borrowers desire to borrow funds for their corporate
purposes.
B. The Lender has agreed to make available to the Borrowers a
revolving line of credit in the maximum principal amount of $10,000,000 (the
"Revolving Facility").
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
The terms defined in this article have the meanings attributed
to them in this article. Singular terms shall include the plural as
well as the singular, and vice versa. Words of masculine, feminine or
neuter gender shall mean and include the correlative words of other
genders.
All references herein to a separate instrument are to such
separate instrument as the same may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
All accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for
shall be made, in accordance with generally accepted accounting
principles applied on a consistent basis. All references herein to
"generally accepted accounting principles" refer to such principles as
they exist at the date of application thereof.
All references herein to designated "Articles", "Sections" and
other subdivisions or to lettered Exhibits are to
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the designated Articles, Sections and other subdivisions hereof and the
lettered Exhibits annexed hereto unless the context otherwise clearly
indicates. All Article, Section, other subdivision and Exhibit
captions herein are used for reference only and in no way limit or
describe the scope or intent of, or in any way affect, this Agreement.
The terms "herein", "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
The terms "include," "including" and similar terms shall be
construed as if followed by the phrase "without being limited to."
No inference in favor of or against either party shall be
drawn from the fact that such party or its counsel has drafted any
portion hereof.
Actual/360 Basis shall mean a method of computing interest or
other charges hereunder on the basis of an assumed year of 360 days
for the actual number of days elapsed, meaning that interest or other
charges accrued for each day will be computed by multiplying the rate
applicable on that day by the unpaid principal balance (or other
relevant sum) on that day and dividing the result by 360.
Acquisition shall mean each Consolidated Entity that is
hereafter acquired or created in compliance with Section 6.09(5).
Advance shall mean a borrowing under the Revolving Facility
pursuant to Section 2.01.
Affiliate of any specified person shall mean any other person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For purposes of
this definition, "control" when used with respect to any specified
person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement shall mean this Credit Agreement, as the same may be
amended in writing in accordance with Section 8.08.
Anniversary Date shall mean May 31 of each year.
Assumption Agreement shall have the meaning attributed to that
term in Section 2.01(b).
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Availability Fee shall have the meaning attributed to that
term in Section 2.05(b).
Base Rate shall mean the rate per annum equal to higher of (a)
the Prime Rate or (b) the Federal Funds Effective Rate plus 50 basis
points.
Borrower and Borrowers shall have the meanings attributed to
those terms in the preamble to this Agreement.
Business Day shall mean (a) any day on which the Lender's r's
Principal Office is open for business and (b) if such day relates to
the giving of notices or quotes in connection with a LIBOR Quote or to
a borrowing of, a payment or prepayment of principal of or interest on
or a LIBOR-Based Rate Period for, a LIBOR-Based Rate Segment or a
notice by the Borrowers with respect to any such borrowing, payment,
prepayment or LIBOR-Based Rate Period, any day on which dealings in
Dollar deposits are carried out in the London interbank market.
Capital Expenditure shall mean any payment by the Borrowers or
any of the other Consolidated Entities for the purpose of acquiring or
constructing any real property, plant and equipment or other fixed
assets, including any such payment made under a title retention
agreement or capital lease obligation, and any other expenditure or
liability (excluding capital expenditures related to Acquisitions,
capitalized loan costs or other amortized Acquisition costs, to the
extent properly so classified in accordance with generally accepted
accounting principles) that is properly charged to a capital account
or otherwise capitalized on the Borrowers' consolidated balance sheet
in accordance with generally accepted accounting principles.
Capital Stock of any person shall mean any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock of such person.
Capitalized Contingent Obligations shall mean such amounts
payable from future events that arise from Acquisitions and that are
reflected in the Borrowers' financial statements as liabilities.
Closing Date shall mean _____________, 1997.
Commitment Amount shall mean the obligation of the Lender to
make Advances pursuant to Section 2.01 hereof in an aggregate amount
at any one time outstanding up to but not exceeding Ten Million
Dollars ($10,000,000).
Common Stock of any person shall mean Capital Stock of such
person that does not rank prior, as to the payment of dividends or as
to the distribution of assets upon any volun-
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tary or involuntary liquidation, dissolution or winding up of such
person, to shares of Capital Stock of any other class of such person.
Compliance Certificate shall have the meaning attributed to
that term in Section 6.03(3).
Consolidated Entity shall mean any person the financial
statements of which are appropriately consolidated with the Borrowers'
financial statements under generally accepted accounting principles.
Consolidated Net Income shall mean, for any period, the net
income of the Borrowers and its Consolidated Entities (on a
consolidated basis and excluding intercompany items), for such period,
determined in accordance with generally accepted accounting
principles.
Contracts shall mean the agreements entered into by the
Borrowers pursuant to which the Borrowers provide recovery services
for subrogated claims and is compensated for such services based upon
a percentage of the amount of the claims successfully recovered.
Controlled Partnership shall mean a general partnership of
which the Borrowers or a Subsidiary is a general partner, or a limited
partnership whose sole general partner is the Borrowers or a
Subsidiary and with respect to which partnership the Borrowers or a
Subsidiary is entitled to receive not less than 50% of any
distributions of cash made to the partners thereof, other than any
preferred cash distribution arrangement approved by the Lender in
writing.
Credit Obligations shall mean the Revolving Facility
Obligations and all other obligations and debts owing to the Lender
before or after the Maturity Date, and arising under the terms of this
Agreement, the Note, and the other Loan Documents, whether now or
hereafter incurred, existing or arising, including the principal
amount of all Advances, any sums expended by Lender in exercising the
rights and remedies described in Section 7.02, all accrued interest on
Advances, and all costs, fees, charges and expenses incurred and
payable in connection therewith, including fees payable under the
terms of, or in connection with, this Agreement, and all other
obligations and debts owing to the Lender arising in connection with,
ancillary to, or in support of Advances, and all extensions,
alterations, modifications, revisions and renewals of any of the
foregoing.
Debt of any person shall mean (i) the Credit Obligations and
all other indebtedness, whether or not represented by bonds,
debentures, notes or other securities, for the repayment of borrowed
money or for reimbursement of drafts drawn or
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available to be drawn under letters of credit, (ii) all capitalized
lease obligations, (iii) Guaranteed Obligations with respect to Debt
of all persons that are not Consolidated Entities, (iv) all
indebtedness secured by any mortgage or pledge of, or Lien on,
property of such person, whether or not any indebtedness secured
thereby shall have been assumed and (v) Capitalized Contingent
Obligations.
Default shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
Deferred Tax Assets shall mean deferred tax assets as on
the Borrowers' financial statements in a manner consistent with
release number 109 of the Financial Accounting Standards Board.
Dollar and the symbol "$" shall mean dollars constituting
legal tender for the payment of public and private debts in the United
States of America.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
ERISA Affiliate shall mean any corporation, partnership or
other trade or business under common control with the Borrowers within
the meaning of Sections 414(b), (c) or (m) of the Internal Revenue
Code, as amended.
Exchange Act shall mean the Securities Exchange Act of 1934
as amended.
Events of Default shall have the meaning attributed to that
term in Section 7.01.
Federal Funds Effective Rate shall mean, for any day, an
interest rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations at approximately 10:00
a.m. Lender's Local Time on such day on such transactions received by
the Lender from three Federal funds brokers of recognized standing
selected by the Lender in its sole discretion.
Funded Debt shall mean all Debt of the Borrowers and the
Consolidated Entities, on a consolidated basis, that matures by its
terms more than one year after, or is renewable or extendable at the
option of the debtor to a date more than one
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year after, the date as of which Funded Debt is being determined.
Governmental Authority shall mean any national, federal,
state, county, municipal or other agency, authority, department,
commission, bureau, board, court or other instrumentality thereof.
Governmental Requirements shall mean all laws, rules,
regulations, requirements, ordinances, judgments, decrees, codes and
orders of any Governmental Authority applicable to the Borrowers or
any other Consolidated Entity.
Guaranteed Obligations of any person shall mean all guaranties
(including guaranties of guaranties and guaranties of dividends and
other monetary obligations), endorsements, assumptions and other
contingent obligations with respect to, or to purchase or to otherwise
pay or acquire, Debt of others.
Hazardous Substance(s) shall have the meaning ascribed in and
shall include (a) any asbestos or insulation or other material
composed of or containing asbestos and (b) those substances listed
under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq. and the regulations promulgated
thereunder (as amended from time to time) and the Clean Air Act, 42
U.S.C. 7401, et seq. and the regulations promulgated thereunder (as
amended from time to time) and includes oil, waste oil, and used oil
as those terms are defined in the Clean Water Act, 33 U.S.C. 1251
et seq. and regulations promulgated thereunder (as amended from time
to time) and the Resource, Conservation and Recovery Act, 42 U.S.C.
6901 et seq. and regulations promulgated thereunder (as amended from
time to time) and the Oil Pollution Act of 1990, 33 U.S.C. 2701 et
seq. and regulations promulgated thereunder (as amended from time to
time) and shall include any other pollutant or contaminant designated
as such by Congress or the United States Environmental Protection
Agency (EPA) or defined by any other federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereafter in effect.
Interest Expense shall mean all interest incurred on Debt
(including obligations payable under capital leases attributable to
interest) during the period in question.
Lender's Local Time shall mean the time in effect in
Louisville, Kentucky.
Lender shall mean National City Bank of Kentucky, its
successors and assigns.
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Liabilities shall mean all Debt and all other items (including
taxes accrued as estimated) that, in accordance with generally
accepted accounting principles, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet.
LIBOR-Based Rate shall mean a rate per annum equal to the
LIBOR Quote plus 225 basis points.
LIBOR-Based Rate Period shall mean the period of time,
selected by the Borrowers under Section 3.01, with respect to which
the LIBOR-Based Rate is (or is proposed to be) applicable to a
Segment.
LIBOR-Based Rate Segment shall mean a Segment to which the
LIBOR-Based Rate is (or is proposed to be) applicable.
LIBOR Quote shall mean, with respect to any time at which the
LIBOR-Based Rate is to be determined, the rate of interest determined
by the Lender at such time, based upon such factors (including the
LIBOR Reserve Requirement) as the Lender deems relevant, as the
Lender's best estimate of the cost of funds available to the Lender
from the purchase on the London interbank market of funds in the form
of time deposits in Dollars in the approximate amount of the Segment
that is to bear interest at the LIBOR-Based Rate, having a maturity
comparable to the LIBOR-Based Rate Period during which the LIBOR-Based
Rate is to be in effect, it being expressly understood that (a) the
Lender may not actually purchase any such time deposits and obtain
such funds and (b) the LIBOR Quote will be an estimate, and for a
variety of reasons, including changing market conditions, the actual
cost of funds to the Lender (if the Lender elects to purchase funds in
the form of time deposits on such date) might vary from the LIBOR
Quote.
LIBOR Reserve Requirement shall mean the percentage (expressed
as a decimal) prescribed by the Board of Governors of the Federal
Reserve System (or any successor Governmental Authority), on the date
on which the LIBOR-Based Rate is determined, for determining the
reserve requirements of the Lender (including any marginal, emergency,
supplemental, special or other reserves) with respect to liabilities
relating to time deposits purchased in the London interbank market
having a maturity equal to the period during which the LIBOR-Based
Rate will be in effect and in an amount equal to the LIBOR-Based Rate
Segment involved, without any benefit or credit for any proration,
exemptions or offsets under any now or hereafter applicable
regulations.
Lien shall mean any mortgage, pledge, encumbrance, charge,
security interest, assignment or other preferential
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arrangement of any kind, including any conditional sale agreement or
other title retention agreement.
Loan Documents shall mean this Agreement, the Note, the
Assumption Agreements, and all other agreements, instruments and
documents executed or delivered at any time in connection with the
Credit Obligations, or to evidence or secure any of the Credit
Obligations, and all amendments thereto.
Loans shall mean the aggregate outstanding principal amount of
all Advances and all extensions and renewals thereof.
Margin Stock shall have the meaning attributed to that term in
Regulation U of the Board of Governors of the Federal Reserve System,
as amended.
Maturity Date shall mean May 31, 1999, or such later date as
may be mutually agreed upon in writing by the Borrowers and the Lender.
Net Worth shall mean the sum of the amounts set forth on the
Borrowers' consolidated balance sheet determined in accordance with
GAAP as shareholders' equity (including the par or stated value of all
outstanding capital stock, retained earnings, additional paid-in
capital, capital surplus and earned surplus), less the sum of (i) any
surplus resulting from any write-up of assets, and (ii) any amounts
due from or owed by any stockholder or Affiliate in excess of
$100,000.
Note shall have the meaning attributed to such term in
Section 2.01.
Opinion of Counsel shall mean a favorable written opinion,
with such changes and modifications as may be required by the Lender
or its counsel, of the corporate general counsel of the Borrowers or
attorney or firm of attorneys duly licensed to practice law in the
jurisdiction the laws of which are applicable to the legal matters in
question.
Participating Partnership shall mean any Controlled
Partnership approved by the Lender that hereafter executes and
delivers to the Lender an Assumption Agreement, and all other
documents necessary to assume joint and several liability as to the
Credit Obligations to the extent of its Partnership Liabilities.
Participating Subsidiary shall mean any Subsidiary approved by
the Lender that hereafter executes and delivers to the Lender an
Assumption Agreement, and all other documents necessary to assume
joint and several liability as to the Credit Obligations (in the
maximum amount provided for in such Assumption Agreement).
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Partnership Liability shall mean, with respect to a
Participating Partnership, that part, if any, of an Advance (together
with interest thereon and fees, prepayment premiums and other charges
properly attributable thereto) that is received by and used by or for
the benefit of such Participating Partnership, as certified to the
Lender by the Borrowers, under Section 2.02, in connection with the
Borrowers' request for such Advance; and Partnership Liabilities shall
mean the aggregate amount of all such parts of Advances that are
received by and used by or for the benefit of such Participating
Partnership.
Permitted Encumbrances shall mean:
(1) taxes, assessments and other governmental charges
that are not delinquent or that are being contested in good faith by
appropriate proceedings duly pursued;
(2) Liens in favor of the Lender;
(3) the existing Liens described in Schedule 2 hereto; and
(4) Liens in favor of landlords, the amount secured by
which landlords' Liens, in the aggregate, would not materially
adversely affect the Borrowers.
Permitted Investments shall mean investments consistent with
the type of investments permitted by the "Investment Policy" of the
Borrowers as such Investment Policy exists on the Closing Date, and
other investments made with the express prior written approval of the
Lender.
person shall include natural persons, sole proprietorships,
corporations, trusts, unincorporated organizations, associations,
companies, institutions, entities, joint ventures, partnerships and
Governmental Authorities.
Prime Rate means for any day, the "Prime Rate" of interest
generally charged by the National City Bank of Kentucky on such day to
its most substantial and credit-worthy commercial borrowers for 90 day
unsecured loans, it being understood and agreed by the Borrowers that
the "Prime Rate" is the rate of interest designated by the National
City Bank of Kentucky as its "Prime Rate", and such term does not
necessarily mean or imply that it is the lowest or best rate then
available from the National City Bank of Kentucky on floating rate
loans to specific borrowers of the class described above.
Principal Office shall mean the principal office of the Lender
located at National City Tower, 000 X. Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000.
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Quarterly Payment Date shall have the meaning attributed to
that term in Section 2.03.
Related Person of any person means any other person owning (a)
5% or more of the outstanding Common Stock of such person or (b) 5% or
more of the Voting Stock of such person.
Request for Advances shall have the meaning attributed to that
term in Section 2.02.
Revolving Facility shall mean the credit facility made
available to the Borrowers under the terms of Article II.
Revolving Facility Obligations shall mean the outstanding
principal amount of all Advances, all interest accrued thereon, all
costs, charges, fees and expenses payable in connection therewith and
all extensions and renewals thereof.
Segment shall mean a portion of the Advances (or all thereof)
with respect to which a particular interest rate is (or is proposed to
be) applicable. The aggregate amount of all Advances that bear
interest at the Base Rate shall be deemed to constitute a single
Segment. The aggregate amount of all Advances that bear interest at
the same LIBOR-Based Rate and for the same LIBOR-Based Rate Period
shall be deemed to constitute a single LIBOR-Based Rate Segment.
Solvent shall mean, as to any person, on a particular date,
that such person has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to
engage, is able to pay its debts as they mature, owns property having
a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liability on
existing debts as they become mature (including known reasonable
contingencies and contingencies that should be included in notes of
such person's financial statements pursuant to generally accepted
accounting principles), and does not intend to, and does not believe
that it will, incur debts or probable liabilities beyond its ability
to pay such debts or liabilities as they mature.
Subsidiary shall mean any corporation, more than 50% of the
shares of Voting Stock of which is owned and controlled directly or
indirectly by the Borrowers.
Voting Stock of any person shall mean Capital Stock of such
person that ordinarily has voting power for the election of directors
(or persons performing similar functions) of such person, whether at
all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
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ARTICLE II
REVOLVING FACILITY TERMS
SECTION 2.01. Revolving Facility.
(a) From and after the Closing Date, on the terms and subject to
the conditions set forth in this Agreement, the Lender agrees to lend to the
Borrowers (except as limited by the terms of subsection (d) of this Section
2.01 or by the terms of the Assumption Agreements), and the Borrowers may
borrow, repay and reborrow, an amount not exceeding the Commitment Amount in
effect from time to time. All Advances made by the Lender to the Borrowers
under this Agreement shall be evidenced by the master promissory note (the
"Note") in the form attached hereto as Exhibit A dated the Closing Date payable
to the order of the Lender, duly executed by the Borrowers, and joined in by
each Subsidiary and Controlled Partnership that becomes a Participating
Subsidiary or Participating Partnership after the Closing Date under the terms
of an Assumption Agreement, and in a face amount equal to the Commitment
Amount. The Advances shall bear interest as provided in Article III below. The
unpaid principal amount of all Loans hereunder shall not exceed the Commitment
Amount.
(b) Each Subsidiary and Controlled Partnership that is to become
after the Closing Date a Participating Subsidiary or Participating Partnership,
as the case may be, shall, at the time it is to become a Participating
Subsidiary or Participating Partnership, execute and deliver to the Lender, in
accordance with the provisions of Section 6.14, an Assumption Agreement in the
form attached hereto as Exhibit B ("Assumption Agreement").
(c) Each Borrower, Participating Subsidiary and Participating
Partnership, separately and severally, hereby appoints and designates
Healthcare Recoveries, Inc. as such party's agent and attorney-in-fact to act
on behalf of such party for all purposes of the Loan Documents. Healthcare
Recoveries, Inc. shall have authority to exercise on behalf of each Borrower,
Participating Subsidiary and Participating Partnership all rights and powers
that Healthcare Recoveries, Inc. deems necessary, incidental or convenient in
connection with the Loan Documents, including the authority to execute and
deliver certificates, documents, agreements and other instruments referred to
in or contemplated by the Loan Documents, request Advances, receive all
proceeds of Advances, give all notices, approvals and consents required or
requested from time to time by the Lender and take any other actions and steps
that a Borrower, Participating Subsidiary or a Participating Partnership could
take for its own account in connection with the Loan Documents from time to
time, it being the intent of the Borrowers, Participating Subsidiaries and the
Participating Partnerships to grant to Healthcare Recoveries, Inc. plenary
power to act on behalf of the Borrowers, Participating Subsidiaries and the
Participating Partnerships in connection with and pursuant to the Loan
Documents. The appointment of Healthcare Recoveries, Inc. as agent and
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attorney-in-fact for the Borrowers, Participating Sunsidiaries and the
Participating Partnerships hereunder shall be coupled with an interest and be
irrevocable so long as any Loan Document shall remain in effect. The Lender
need not obtain the consent or approval of any Borrower, Participating
Subsidiary or Participating Partnership for any act taken by Healthcare
Recoveries, Inc. pursuant to any Loan Document, and all such acts shall bind
and obligate the Borrowers, the Participating Subsidiaries and the
Participating Partnerships, jointly and severally. Each Borrower,
Participating Subsidiary and Participating Partnership forever waives and
releases any claim (whether now or hereafter arising) against the Lender based
on the lack of authority of Healthcare Recoveries, Inc. to act on behalf of any
Borrower, Participating Subsidiary or Participating Partnership in connection
with the Loan Documents.
(d) The liability of each Participating Partnership with respect
to the Credit Obligations shall be limited to an amount equal to its
Partnership Liabilities. The liability of each Participating Subsidiary with
respect to the Credit Obligations shall be limited to an amount equal to the
greater of (i) $1.00 less than the greatest of (A) the Participating
Subsidiary's Net Worth (as hereinafter defined) as of the end of the most
recently concluded fiscal quarter of the Participating Subsidiary ended on or
prior to the date the Participating Subsidiary became a Co-Borrower, (B) the
highest Net Worth of the Participating Subsidiary at the end of any fiscal
quarter ending after the Participating Subsidiary became a Borrower and prior
to the earlier of the date of the commencement of a case under the United
States Bankruptcy Code (the "Bankruptcy Code") involving the Participating
Subsidiary or the date enforcement of this Agreement or any of the other Loan
Documents is sought against the Participating Subsidiary, and (C) the Net Worth
of the Participating Subsidiary at the earlier of the date of the commencement
of a case under the Bankruptcy Code involving the Participating Subsidiary or
the date enforcement of this Agreement or any of the other Loan Documents is
sought against the Participating Subsidiary, or (ii) the amount that in a legal
proceeding brought within the applicable limitations period is determined by
the final, non-appealable order of a court having jurisdiction over the issue
and the applicable parties to be the amount of value or benefit given by the
Lender, or received by the Participating Subsidiary, in exchange for the
obligations of the Participating Subsidiary under this Agreement and the other
Loan Documents. As used in this subsection (e), "Net Worth" shall mean (x) the
fair value of the property of the Participating Subsidiary from time to time
(taking into consideration the value, if any, of rights of subrogation,
contribution and indemnity), minus (y) the total liabilities of the
Participating Subsidiary (including contingent liabilities [discounted in
appropriate instances], but excluding liabilities of the Participating
Subsidiary under this Agreement and the other Loan Documents) from time to
time.
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(e) No Borrower will exercise any rights that it may acquire by
way of subrogation under this Agreement or any of the other Loan Documents, by
any payment made hereunder or under any of the other Loan Documents or
otherwise, until all the Credit Obligations have been paid in full and this
Agreement has been terminated and is no longer subject to reinstatement under
the final sentence of Section 8.13. If any amount shall be paid to a Borrower
on account of any such subrogation rights at any time when all of the Credit
Obligations shall not have been paid in full and this Agreement terminated,
such amount shall be held in trust for the benefit of the Lender and shall be
paid forthwith to the Lender to be credited and applied upon the Credit
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
SECTION 2.02. Advances. The Advances made by the Lender pursuant to
each request for Advances shall be in an aggregate amount not less than
$500,000 or a greater integral multiple of $100,000; provided, however, that a
request for Advances may be in an amount of less than $500,000 if the
difference between the Commitment Amount and the amount of the Loans then
outstanding is less than $500,000. No more than ten Advances may be
outstanding at any time. The maximum borrowing for each Advance will be
limited to the Commitment Amount. Each request for Advances must be in writing
(which may be by facsimile transmission) and must be received by the Lender not
later than 10:00 a.m. Lender's Local Time, on the day on which the Advances are
to be made, except that, if the Advances are to bear interest at the
LIBOR-Based Rate, the request must be received by the Agent not later than
10:00 a.m., Lender's Local Time, three Business Days prior to the day on which
the Advances are to be made. Each request for Advances shall be in the form
attached hereto as Exhibit C ("Request for Advances or Interest Rate Election")
and shall specify the aggregate amount of the Advances requested, the day as of
which the Advances are to be made and the part or parts, if any, of the
Advances that are to be received by and used by or for the benefit of
Participating Partnerships and Participating Subsidiaries, specifying the part
allocable to each Participating Partnership and Participating Subsidiary and
shall provide the interest rate information called for in Section 3.02. All
the Advances requested in a single Request for Advances or Interest Rate
Election shall be subject to the same interest rate terms. The Lender shall
make available the amount of the Advance to be made by it on such date to the
Borrowers, by (a) depositing the proceeds thereof into an account with the
Lender in the name of Healthcare Recoveries, Inc., acting in its capacity as
agent for itself, the Borrowers and each of the Participating Subsidiaries and
Participating Partnerships pursuant to Section 2.01(c) above. The Lender's
obligation to make Advances shall terminate, if not sooner terminated pursuant
to the provisions of this Agreement, 14 days prior to the Maturity Date. The
Lender shall have no obligation to make Advances if a Default or an Event of
Default has occurred and is continuing. Each Request for Advances shall be
signed by an officer of the Borrowers designated
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as authorized to sign and submit Request for Advances in the documnets
submitted to the Lender pursuant to Section 5.03(a) below. In lieu of
delivering a written Request for Advances, Borrowers may give the Lender
telephonic notice by the required time of the requested Advance under this
Section 2.02; provided that such notice shall be promptly confirmed in writing
by delivery of a Request for Advances to the Lender on or before the
date the Advances are to be made. Lender shall not incur any liability to the
Borrowers in acting upon any telephonic notice referred to herein which the
Lender believes in good faith to have been given by a duly authorized officer
of the Borrowers. The Borrowers may, from time to time, by written notice to
the Lender, terminate the authority of any person to submit Request for
Advances, such termination of authority to become effective upon actual receipt
by the Lender of such notice of termination. The Borrowers may from time to
time authorize other persons to sign and submit Request for Advances by
delivering to the Lender a certificate of the Secretary of the Borrowers
certifying the incumbency and specimen signature of each such person. The
Lender shall be entitled to rely conclusively upon the authority of any person
so designated by the Borrowers.
SECTION 2.03. Payments. All interest accrued at the Base Rate shall
be payable on the first day of each successive July, October, January and April
("Quarterly Payment Date"), commencing on July 1, 1997; and all interest
accrued on each LIBOR-Based Rate Segment shall be payable on the earlier of a
Quarterly Payment Date or last day of the applicable LIBOR-Based Rate Period.
The principal amount of the Advances outstanding shall be due and payable,
together with accrued interest thereon, on the Maturity Date.
SECTION 2.04. Prepayment.
(a) The Borrowers may at any time prepay all or any part of the
Advances, without premium or penalty; provided, however, that (i) no
LIBOR-Based Rate Segment may be prepaid during a LIBOR-Based Rate Period, and
(ii) the amount of any partial prepayment shall be in increments of $100,000.
The Borrowers shall pay, on the date of prepayment, all interest accrued to the
date of prepayment on any amount prepaid in connection with the prepayment in
full of the Credit Obligations and the concurrent termination of this
Agreement.
(b) If at any time the principal amount of the Advances is greater
than the Commitment Amount, the Borrowers shall immediately make a prepayment
(notwithstanding the provisions of clause (a) of this section, but subject to
the provisions of Section 3.07) on the Advances equal to the difference between
said aggregate principal amount of the Advances and the Commitment Amount.
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SECTION 2.05. Other Fees.
(a) The Borrowers shall pay to the Lender on or before the Closing
Date a nonrefundable closing fee in the amount of $25,000.
(b) The Borrowers shall pay to the Lender an availability fee (the
"Availability Fee") computed at the rate of one-quarter of one percent (.25%)
per annum times the daily average difference between (i) the Commitment Amount
and (ii) the sum of the aggregate outstanding principal amount of the Advances
made by the Lender. The Availability Fee shall be payable in arrears on each
Quarterly Payment Date, commencing on July 1, 1997, and on the Maturity Date.
The Availability Fee shall be computed on an Actual/360 Basis.
SECTION 2.06. Time, Place and Application of Payments. The Credit
Obligations shall be payable to the Lender in Dollars on or before 11:00 a.m.
(Lender's Local Time) on the date on which due, at the Principal Office, in
immediately available funds, free and clear of any and all rights of setoff and
counterclaim. Payments received by the Lender shall be applied first to
expenses, fees and charges, then to accrued interest and finally to principal.
ARTICLE III
INTEREST
SECTION 3.01. Applicable Interest Rates. The Borrowers shall have the
option to elect to have any Segment bear interest at the Base Rate or the
LIBOR-Based Rate. For any period of time and for any Segment with respect to
which the Borrowers do not elect the LIBOR-Based Rate, such Segment shall bear
interest at the Base Rate. The Borrowers' right to elect the LIBOR-Based Rate
shall be subject to the following requirements: (a) each LIBOR-Based Rate
Segment shall be in the amount of $500,000 or an integral multiple of $100,000
or more and in an integral multiple thereof, (b) each LIBOR-Based Rate Segment
shall have a maturity selected by the Borrowers of one, two, three or six
months, (c) no more than nine Segments may be outstanding at any time, and (d)
no LIBOR-Based Rate Segment may have a maturity date later than the Maturity
Date.
SECTION 3.02. Procedure for Exercising Interest Rate Options. Health
Care Recoveries, Inc., on behalf of itself and the other Borrowers, may elect
to have a particular interest rate apply to a Segment by notifying the Lender
in writing (which may be by facsimile transmission) not later than 10:00 a.m.,
Lender's Local Time, on the day on which a requested interest rate is to
become-applicable, except that, if the Segment is to bear interest at the
LIBOR-Based Rate, the notice must be received by the Lender not later than
10:00 a.m. Lender's Local Time, three Business Days before the day on which the
requested interest rate is to become applicable. Any notice of interest rate
election hereunder shall
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be irrevocable and shall be in the form of attached hereto as Exhibit C and
shall set forth the following: (a) the amount of the Segment to which the
requested interest rate will apply, (b) the date on which the selected interest
rate will become applicable, (c) whether the interest rate selected is the Base
Rate or the LIBOR-Based Rate and (d) if the interest rate selected is the
LIBOR-Based Rate, the maturity selected for the LIBOR-Based Rate Period. On
the day that the Lender receives a notice hereunder requesting that the
LIBOR-Based Rate be applicable, the Lender shall use its best efforts to notify
Health Care Recoveries, Inc. by telephone or by facsimile transmission of the
applicable LIBOR-Based Rate as early on that day or the next Business Day as
may be practical in the circumstances. The Lender shall not be required to
provide the quote of the LIBOR-Based Rate on any day on which dealings in
deposits in Dollars are not transacted in the London interbank market. If
Health Care Recoveries, Inc. does not immediately accept the LIBOR-Based Rate
quoted by the Lender, the Lender may, in view of changing market conditions,
revise the quoted LIBOR-Based Rate at any time. No LIBOR-Based Rate shall be
effective until mutually agreed upon by Health Care Recoveries, Inc. and the
Lender. If the Lender and Health Care Recoveries, Inc. attempt to agree on the
LIBOR-Based Rate but fail so to agree, or if there is any uncertainty as to
whether or not the Lender and Health Care Recoveries, Inc. have agreed upon the
LIBOR-Based Rate, interest shall accrue on the Segment for which the
LIBOR-Based Rate has been selected at the then applicable Base Rate.
SECTION 3.03. Base Rate. Each Segment subject to the Base Rate shall
bear interest at the Base Rate until payment in full, or until the LIBOR-Based
Rate is selected by the Borrowers and becomes applicable thereto, on the unpaid
principal balance of such Segment on an Actual/360 Basis. Any change in the
Base Rate caused by a change in the Prime Rate or the Federal Funds Effective
Rate shall take effect on the effective date of such change in the Prime Rate
designated by the Lender or the Federal Funds Effective Rate, without notice to
the Borrowers and without any further action by the Lender. Upon and after the
occurrence of an Event of Default, each Segment subject to the Base Rate shall
bear interest from the date of such Event of Default until payment in full at a
per annum rate (computed on an Actual/360 Basis) equal to two percent (2%) in
excess of the Base Rate that would otherwise have been applicable.
Notwithstanding the foregoing, for the purpose of enabling the Lender to send
periodic billing statements in advance of each interest payment date reflecting
the amount of interest payable on such interest payment date, the Prime Rate or
Federal Funds Effective Rate in effect 15 days prior to each interest payment
date shall be deemed to be the Prime Rate or the Federal Funds Effective Rate,
as applicable, as continuing in effect until the date prior to such interest
payment date for purposes of computing the amount of interest payable on such
interest payment date. If the Lender elects to use the Prime Rate or the
Federal Funds Effective Rate, as applicable, 15 days prior to the interest
payment date for billing purposes, and if the Prime Rate or the
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Federal Funds Effective Rate, as Effective Rate, as applicable, changes during
such 15-day period, the difference between the amount of interest that in fact
accrues during such period and the amount of interest actually paid will be
added to or subtracted from, as the case may be, the interest otherwise payable
in preparing the periodic billing statement for the next succeeding interest
payment date. In determining the amount of interest payable at the Maturity
Date or upon full prepayment of the Credit Obligations, all changes in the
Prime Rate or the Federal Funds Effective Rate, as applicable, occurring on or
prior to the day before the Maturity Date or the date of such full prepayment
shall be taken into account.
SECTION 3.04. LIBOR-Based Rate. Each LIBOR-Based Rate Segment shall
bear interest from the date the LIBOR-Based Rate becomes applicable thereto
until the end of the applicable LIBOR-Based Rate Period on the unpaid principal
balance of such LIBOR-Based Rate Segment at the LIBOR-Based Rate on an
Actual/360 Basis. Upon and after the occurrence of an Event of Default, each
LIBOR-Based Rate Segment shall bear interest from the date of such Event of
Default until payment in full at a per annum rate (computed on an Actual/360
Basis) equal to two percent (2) in excess of the LIBOR-Based Rate that would
otherwise have been applicable.
SECTION 3.05. Termination of LIBOR-Based Rate; Increase in LIBOR-Based
Rate; Reduction of Return.
(a) If at any time the Lender shall determine (which determination
shall be final, conclusive and binding upon all parties) that:
(i) by reason of any changes arising after
Closing Date affecting the London interbank market or affecting the
position of the Lender in such market, adequate and fair means do not
exist for ascertaining the LIBOR-Based Rate by reference to the LIBOR
Quote with respect to a LIBOR-Based Rate Segment; or
(ii) the continuation by the Lender of LIBOR-Based
Rate Segments at the LIBOR-Based Rate or the funding thereof in the
London interbank market would be unlawful by reason of any law,
governmental rule, regulation, guidelines or order; or
(iii) the continuation by the Lender of LIBOR-Based
Rate Segments at the LIBOR-Based Rate or the funding thereof in the
London interbank market would be impracticable as a result of a
contingency occurring after the Closing Date that materially and
adversely affects the London interbank market;
then, and in any such event, the Lender shall on such date give notice (by
telephone and confirmed in writing) to Health Care Recoveries, Inc. of such
determination. The obligation of the Lender to make or maintain LIBOR-Based
Rate Segments so affected or
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to permit interest to be computed thereon at the LIBOR-Based Rate,
as the case may be, shall be terminated, and interest shall thereafter be
computed on the affedted Segment or Segments at the then applicable Base Rate.
(b) It is the intention of the parties hereto that the LIBOR-Based Rate
shall accurately reflect the cost to the Lender of maintaining any LIBOR-Based
Rate Segment during the applicable LIBOR-Based Rate Period. Accordingly, if by
reason of any change after the date hereof in any applicable law or
governmental rule, regulation or order (or any interpretation thereof and
including the introduction of any new law, governmental rule, regulation,
guideline or order), including any change in the LIBOR Reserve Requirement, the
cost to Lender of maintaining any LIBOR- Based Rate Segment or funding the same
by means of a London interbank market time deposit, as the case may be, shall
increase, the LIBOR-Based Rate applicable to such LIBOR-Based Rate Segment
shall be adjusted as necessary to reflect such change in cost to the Lender,
effective as of the date on which such change in any applicable law,
governmental rule, regulation, guideline or order becomes effective.
(c) If the Lender shall have determined that the adoption after the
Closing Date of any law, governmental rule, regulation, guideline or order
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender (or any lending office of
the Lender) or the Lender's holding company with 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 Lender's capital or on the
capital of the Lender's holding company, as a consequence of the Lender's
obligations under this Agreement or the Advances made by the Lender pursuant
hereto to a level below that which the Lender or the Lender's holding company
could have achieved but for such adoption, change or compliance (taking into
consideration the Lender's guidelines with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to time the
Borrowers shall pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender's holding company for any such reduction
suffered.
SECTION 3.06. Compensation. The Borrowers shall compensate the
Lender for all losses, expenses and liabilities (including any interest paid by
the Lender to lenders on funds borrowed by the Lender to make or carry any
LIBOR-Based Rate Segment and any loss sustained by the Lender in connection
with the re-employment of such funds), that the Lender may sustain: (a) if for
any reason (other than a default by the Lender) following agreement between
Health Care Recoveries, Inc. and the Lender as to the LIBOR-Based
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Rate applicable to the LIBOR-Based Rate Segment, Health Care Recoveries, Inc.
fails to accept such LIBOR-Based Rate Segment, (b) as a consequence of any
authorized action taken or default by the Borrowers in the repayment of any
LIBOR-Based Rate Segment when required by the terms of this Agreement, or (c)
as a consequence of the prepayment of any LIBOR-Based Rate Segment pursuant to
Section 2.04. A certificate as to the amount of any additional amounts payable
pursuant to this section or Section 3.05(c) (setting forth in reasonable detail
the basis for requesting such amounts) submitted by the Lender to Health Care
Recoveries, Inc. shall be conclusive, in the absence of manifest error. The
Borrowers shall pay to the Lender the amount shown as due on any such
certificate delivered by the Lender within 30 days after receipt of the same by
Health Care Recoveries, Inc.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lender as follows:
SECTION 4.01. Organization, Powers, Existence. etc. Each Borrower
and each Consolidated Entity is duly organized, validly existing and in good
standing under the laws of the state in which it is incorporated or formed.
Each Borrower and each Consolidated Entity (a) has the power and authority to
own its properties and assets and to carry on its business as being conducted
at the Closing Date, (b) has the power to execute, deliver and perform the Loan
Documents to which it is a party, (c) is duly qualified to do business in each
state in which it is required to be so qualified and with respect to which the
failure to be so qualified would have a material adverse effect on its
properties or business and (d) except as set forth in Schedule 4.01 hereto, has
not done business under any other name, trade name or otherwise within the five
years immediately preceding the Closing Date.
SECTION 4.02. Authorization of Borrowings, etc. The execution, delivery and
performance of the Loan Documents by the Borrowers and the borrowings
thereunder by the Borrowers (a) have been duly authorized by all requisite
action (including any required shareholder action) and (b) will not violate any
Governmental Requirement, the articles or certificate of incorporation or
by-laws of the Borrowers, or any indenture, agreement or other instrument to
which the Borrowers or any Consolidated Entity is a party, or by which the
Borrowers or any Consolidated Entity or any of their respective properties and
assets are bound, or be in conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under, any such indenture,
agreement or other instrument, or result in the creation or position of any
Lien upon any of the properties or assets of the Borrowers or any Consolidated
Entity, except as required by the terms of this Agreement and the other Loan
Documents.
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SECTION 4.03. Financial Condition. The Borrowers have furnished to
the Lender a copy of the consolidated balance sheet and the Consolidated
Entities as of March 31, 1997, and related consolidated statements of
operations, stockholders' equity and cash flows, as of March 31, 1997. Such
financial statements have been prepared in conformity with generally accepted
accounting principles applied consistently throughout the period involved, are
in accordance with the books and records of the Borrowers and the Consolidated
Entities, are correct and complete and present fairly the financial condition,
assets, liabilities and stockholders' equity of the Borrowers and the
Consolidated Entities as of the date of such balance sheet, and the results of
operations for the periods covered by such related statements, and, since March
31, 1997, no material adverse change in the financial condition, business or
operations of the Borrowers or any of the Consolidated Entities has occurred.
Neither the Borrowers nor any Consolidated Entity has any Liabilities,
Guaranteed Obligations or other obligations or liabilities, direct or
contingent, that are material in amount, other than the Liabilities reflected
in such balance sheet and the notes thereto.
SECTION 4.04. Taxes. The Borrowers and each Consolidated Entity has
filed or caused to be filed all federal, state and local tax returns that are
required to be filed and has paid all taxes as shown on said returns or on any
assessment received by the Borrowers or any Consolidated Entity to the extent
that such taxes have become due.
SECTION 4.05. Litigation. Except as set forth in Schedule 4.05
hereto, there are no actions, suits or proceedings (whether or not purportedly
on behalf of the Borrowers or any Consolidated Entity) pending or, to the best
knowledge of the Borrowers, threatened against or affecting the Borrowers or
any Consolidated Entity, at law or in equity, by or before any Governmental
Authority that involve any of the transactions provided for in this Agreement
or the possibility of any judgment or liability that may result in a material
adverse change in the operations or financial condition of the Borrowers or any
of the Consolidated Entities; and neither the Borrowers nor any Consolidated
Entity is in default with respect to any material Governmental Requirement.
SECTION 4.06. Agreements. Neither the Borrowers nor any Consolidated
Entity is a party to any agreement or instrument, or subject to any charter,
partnership agreement or other corporate or partnership restriction, that
materially and adversely affects its business, properties or assets, operations
or condition, financial or otherwise, or is in default in the performance,
observance or fulfillment of any of the obligations contained in any agreement
or instrument to which it is a party, which default could have a material
adverse effect upon the operations or financial condition of the Borrowers or
any of the Consolidated Entities.
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SECTION 4.07. Use of Proceeds. The Borrowers do not intend to use any
part of the proceeds of the Advances to purchase or carry, or to reduce or
retire or refinance any credit incurred to purchase or carry, any Margin Stock,
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock, or for any other purpose not permitted under Section 6.13.
SECTION 4.08. ERISA. (a) The execution, delivery and performance of
the Loan Documents will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Internal Revenue Code, as amended, with
respect to any employee benefit plan (as defined in Section 3(3) of ERISA)
maintained by the Borrowers and each ERISA Affiliate, (b) as of the Closing
Date the Borrowers and each ERISA Affiliate have fulfilled their respective
obligations under the minimum funding standards imposed by ERISA and are in
compliance in all material respects with the applicable provisions of ERISA,
and (c) as of the Closing Date neither the Borrowers nor any of the ERISA
Affiliates maintains any plan subject to Title IV of ERISA.
SECTION 4.09. Investment Company Act. The Borrowers are not an
"investment company," or a company "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
SECTION 4.10. Subsidiaries. The Borrowers have no direct or indirect
equity ownership in any person other than Controlled Partnerships and
Subsidiaries, all of which are either Participating Partnerships or
Participating Subsidiaries, except for equity ownerships that constitute
Permitted Investments. None of the Subsidiaries or Controlled Partnerships has
any direct or indirect equity ownership in any person other than Consolidated
Entities, except for equity ownerships that constitute Permitted Investments.
The Stock of and the Partnership Interest in each Subsidiary and Controlled
Partnership is free and clear of all Liens, warrants, options, rights to
purchase and other interests of any person, except as set out in Schedule 2
hereto. All shares of Capital Stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable. All
now-existing Subsidiaries and Controlled Partnerships are listed in Schedule
4.10 hereto.
SECTION 4.11. Principal Place of Business. The principal place of
business and chief executive office of the Borrowers is at their addresses
shown in Schedule 4.11 and will not be changed from each such address unless,
prior to such change, the Borrowers shall have notified the Lender of the
proposed change, and in no event will the Borrowers' principal places of
business or chief executive offices be located outside of Jefferson County,
Kentucky.
SECTION 4.12. Environmental Laws. Except as set forth in Schedule
4.12 hereto (a) the Borrowers and all Consolidated
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Entities are in material compliance with all applicable Governmental
Requirements relating to air, Borrowers nor any Consolidated Entity has ever
caused or permitted any Hazardous Substance to be placed, held, located,
released or disposed of in violation of any Governmental Requirement on, under
or at any facility legally or beneficially owned by the Borrowers or any
Consolidated Entity; (c) neither the Borrowers nor any Consolidated Entity has
received notice that any Hazardous Substance has been placed, held, located,
released or disposed of in violation of any Governmental Requirement on, under
or at any facility or any other real property legally or beneficially owned,
leased or operated by the Borrowers or any Consolidated Entity; (d) no facility
or any other real property legally or beneficially owned, leased or operated by
the Borrowers or any Consolidated Entity has ever been used by the Borrowers or
any Consolidated Entity as a dump site or permanent or temporary storage site,
in violation of any Governmental Requirement, for any Hazardous Substance; and
(e) neither the Borrowers nor any Consolidated Entity has any Liabilities with
respect to Hazardous Substances, and no facts or circumstances exist that could
give rise to any such Liabilities. None of the matters set forth in the
documents listed in Schedule 4.12 individually or in the aggregate, has caused
or will cause a material adverse change in the financial condition, business
or affairs of the Borrowers and the Consolidated Entities.
SECTION 4.13. Licenses. All material certificates of need, licenses,
permits, accreditation and approvals required by all Governmental Authorities
necessary in order for the Borrowers to conduct its business have been obtained
and are in full force and effect.
SECTION 4.14. Title to Properties. The Borrowers and the Consolidated
Entities have good and marketable title to all their properties and assets, and
all such properties and assets are free and clear of all Liens, other than
Permitted Encumbrances and except as otherwise permitted or required by the
provisions of the Loan Documents.
SECTION 4.15. Enforceability. This Agreement and each of the other
Loan Documents, when duly executed and delivered by the Borrowers in accordance
with the provisions of this Agreement, will constitute the legal, valid and
binding, joint and several, obligations of the Borrowers, enforceable in
accordance with their respective terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and similar laws affecting
the rights and remedies of creditors generally.
SECTION 4.16. Consents, Registrations, Approvals. etc. No
registration with or consent or approval of, or other action by, any
Governmental Authority is required for the execution, delivery
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and performance of this Agreement or the other Loan Documents, or the
borrowings under this Agreement, by the Borrowers.
SECTION 4.17. Solvency. The Borrowers is Solvent, and the Borrowers
will not, as a result of the transactions provided for herein (i) become not
Solvent, (ii) be left with unreasonably small capital, (iii) incur debts beyond
its ability to pay them as they mature or (iv) have Liabilities (including
reasonable contingencies) in excess of the fair saleable value of its assets.
SECTION 4.18. Compliance with Laws. The Borrowers and all
Consolidated Entities are in material compliance with all applicable
Governmental Requirements, other than Governmental Requirements covered by
Section 4.12.
SECTION 4.19. Disclosure. To the best knowledge of the Borrowers, no
financial statement, document, certificate or other written communication
furnished to the Lender by or on behalf of the Borrowers in connection with any
Loan Document contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. There is no fact known to the Borrowers that
materially adversely affects the business or condition of the Borrowers or any
Consolidated Entity that has not been disclosed herein or in such financial
statements, other than economic trends or other factors that affect or may
affect the health care industry as a whole.
SECTION 4.20. Consummation of Initial Public Offering. Health Care
Recoveries, Inc. shall have closed on the sale of its common stock in its
initial public offering. As of the time immediately preceding the consummation
of the initial public offering of stock of Health Care Recoveries, Inc., the
Borrowers shall have had a Net Worth of at least $500,000.
ARTICLE V
CONDITIONS OF MAKING ADVANCES
The Lender's obligation to make each Advance hereunder are each subject
to the following conditions precedent:
SECTION 5.01. Representations and Warranties. On the date of each
Advance hereunder, and on the date the Borrowers presents to the Lender each
Request for Advances, the representations and warranties set forth in this
Agreement and in all other Loan Documents shall be true and correct in all
material respects on and as of each such date with the same effect as though
such representations and warranties had been made on the date of the Advance or
on the date the Borrowers presents to the Lender a Request for Advances. Each
such warranty and representation shall be deemed to be continuing in effect so
long as this Agreement remains in effect. The presentation by the Borrowers of
each Request for Ad-
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vances shall constitute a representation and warranty by the Borrowers to
the Lender that no material adverse change in the financial condition of the
Borrowers and the Consolidated Entities, as reflected in the financial
statements referred to in Section 4.03 and each financial statement submitted
by the Borrowers pursuant to Section 4.03 has occurred since the date of such
financial statements.
SECTION 5.02. No Default. On the date of each Advance hereunder, the
Borrowers shall be in compliance with all the terms and conditions set forth in
this Agreement on their part to be observed or performed, and no Default or
Event of Default shall have occurred and be continuing. The presentation by
the Borrowers of each Request for Advances shall constitute a representation
and warranty by the Borrowers to the Lender that no Default or Event of Default
has occurred and is continuing.
SECTION 5.03. Supporting Documents.
(a) The Lender shall have received on the Closing Date (i) a copy
of resolutions of the Board of Directors of the Borrowers, certified as in full
force and effect on the Closing Date by the Secretary of the Borrowers,
authorizing the execution, delivery and performance of the Loan Documents and
authorizing designated officers of the Borrowers to execute and deliver the
Loan Documents on behalf of the Borrowers and to execute and deliver to the
Lender Requests for Advances; (ii) a certificate of the Secretary of the
Borrowers, dated the Closing Date, certifying the incumbency and specimen
signatures of the designated officers referred to in clause (i) above; (iii) a
copy of the Certificate of Incorporation and By-laws of the Borrowers,
certified as true and correct on and as of the date on which Loan Documents are
executed and delivered; (iv) Opinion of Counsel to the Borrowers in
substantially the same form as attached hereto as Exhibit D; (v) Certificate of
the Secretary of Healthcare Recoveries, Inc., and copies of Cross- Receipts
evidencing that Healthcare Recoveries, Inc., has closed on the sale of its
common stock in its initial public offering; and (vi) such additional
supporting documents as the Lender may request.
(b) The Lender shall also have received on or before the date on
which a Subsidiary becomes a Participating Subsidiary (i) a copy of resolutions
of the Board of Directors and, if necessary, the shareholders of such
Subsidiary certified as in full force and effect on the date thereof by the
Secretary of such Subsidiary, authorizing such Subsidiary's execution, delivery
and performance of, the Loan Documents and all other agreements and instruments
that this Agreement requires to be executed, delivered and performed by such
Subsidiary; (ii) a copy of the Certificate of Incorporation or Articles of
Incorporation, as the case may be, and By-laws of such Subsidiary, certified as
true and correct on and as of the date on which loan documents are executed and
delivered by such Subsidiary; (iii) certificates of good standing with respect
to
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such Subsidiary from the appropriate Governmental Authorities in the
jurisdiction under the laws of which such Subsidiary is incorporated; (iv) an
Opinion of Counsel to such Subsidiary consistent with the form of the Opinions
of Counsel to the Borrowers delivered pursuant to subsection (a) of this
Section 5.03 (with such changes therein as are appropriate in the
circumstances) as to the execution and delivery by such Subsidiary of the Loan
Documents and other matters related thereto; (v) fully executed copies of all
Loan Documents that this Agreement requires to be executed or delivered (or
both) by such Subsidiary (including a fully executed Assumption Agreement, in
the case of any Subsidiary that becomes a Participating Subsidiary after the
Closing Date); and (vi) such additional supporting documents as the Lender or
its counsel may request.
(c) The Lender shall also have received on or before the date on
which a Controlled Partnership becomes a Participating Partnership (i) a copy
of the partnership agreement (and a copy of the relevant certificate of limited
partnership, if such Controlled Partnership is a limited partnership) under
which such Controlled Partnership was formed, certified as true and correct on
and as of the date of which Loan Documents are executed and delivered by such
Controlled Partnership; (ii) if such Controlled Partnership is a limited
partnership, certificates of good standing from the appropriate Governmental
Authorities in the jurisdiction under the laws of which such Controlled
Partnership was formed; (iii) an Opinion of Counsel to such Controlled
Partnership consistent with the form of the Opinion of Counsel to the Borrowers
delivered pursuant to subsection (a) of this Section 5.03 (with such changes
therein as are appropriate in the circumstances) as to the execution and
delivery by such Controlled Partnership of the Loan Documents and other matters
related thereto; (iv) fully executed copies of all Loan Documents that this
Agreement requires to be executed or delivered (or both) by such Controlled
Partnership (including a fully executed Assumption Agreement; and (v) such
additional supporting documents as the Lender may request.
(d) All documents delivered to the Lender under this Section 5.03
shall be in form and substance satisfactory to the Lender and its counsel.
SECTION 5.04. No Liens. On the date of each advance, the Borrowers
should have good and marketable title to all their properties and assets (which
includes all accounts maintained with the Lender), and all such properties and
assets shall be free and clear of all liens, other than Permitted Encumbrances
and except as otherwise permitted or required by the provisions of the Loan
Documents.
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ARTICLE VI
COVENANTS OF BORROWERS
The Borrowers covenant and agree that, from the Closing Date until
payment in full of the Credit Obligations and the termination in writing of
this Agreement, except to the extent the Lender may otherwise agree in writing:
SECTION 6.01. Existence, Properties, etc. The Borrowers shall, and
(to the extent of its right to do so) shall cause each other Consolidated
Entity to (a) do or cause to be done all things necessary to preserve and keep
in full force and effect its existence, rights and franchises and comply with
all Governmental Requirements applicable to it and (b) at all times maintain,
preserve and protect all franchises and trade names and preserve all of its
property used or useful in the conduct of its business and keep the same in
good repair, working order and condition, and from time to time make, or cause
to be made, all needful and proper repairs, renewals and replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
and at all times keep its insurable properties adequately insured and maintain
(i) insurance on its properties to such extent and against such risks,
including fire, as is customary with companies the same or a similar business,
(ii) necessary workmen's compensation insurance and (iii) such other insurance
(including liability insurance) as may be required by law or as may otherwise
be customarily maintained by companies in the same or a similar business.
SECTION 6.02. Payment of Indebtedness, Taxes, etc. The Borrowers
shall, and (to the extent of its right to do so) shall cause each other
Consolidated Entity to (a) pay its Liabilities in accordance with normal terms
and (b) pay and discharge or cause to be paid and discharged promptly all
taxes, assessments and other charges or levies of Governmental Authorities
imposed upon it or upon its income and profits or upon any of its properties,
real, personal or mixed before the same shall become in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might become a Lien upon such properties or any part thereof; provided,
however, that the Borrowers and the other Consolidated Entities shall not be
required to pay and discharge or cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be duly
pursued and contested in good faith by appropriate proceedings and the
Borrowers and the other Consolidated Entities shall maintain adequate reserves
for such taxes, assessments, charges or levies during the pendency of such
proceedings.
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SECTION 6.03. Financial Statements, Reports, etc.
The Borrowers shall furnish and deliver to the Lender:
(1) not later than 30 days after the end of each month that is not
the end of a fiscal quarter and not later than 45 days after the end of each
month that is the end of a fiscal quarter, a balance sheet and a statement of
revenues and expenses of the Borrowers and its Consolidated Entities on a
consolidated and consolidating basis for such month and for the period
beginning on the first day of the fiscal year and ending on the last day of
such month and certified by the President, chief financial officer or chief
accounting officer of the Borrowers, and such other information and
documentation contained in a sample delivered by the Borrowers to the Lender
prior to the Closing Date);
(2) not later than 120 days after the end of each fiscal year,
financial statements (including a balance sheet, a statement of operations, a
statement of changes in stockholders' equity and a statement of cash flows) of
the Borrowers and its Consolidated Entities on a consolidated basis (including
consolidating entries) for such fiscal year in sufficient detail to indicate
the Borrowers' and each other Consolidated Entity's compliance with the
financial covenants set forth in this Article, together with statements in
comparative form for the preceding fiscal year, and accompanied by an opinion
of certified public accountants acceptable to the Lender, which opinion shall
state in effect that such financial statements (A) were audited using generally
accepted auditing standards, (B) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis, and (C) present
fairly the financial condition and results of operations of the Borrowers and
its Consolidated Entities for the periods covered;
(3) not later than 45 days after the end of each fiscal quarter, a
compliance certificate duly executed by the President, chief financial officer
or chief accounting officer of the Borrowers in a form acceptable to the Lender
("Compliance Certificate");
(4) promptly upon receipt thereof, copies of all reports,
management letters and other documents submitted to the Borrowers or any other
Consolidated Entity by independent accountants in connection with any annual or
interim audit of the books of the Borrowers or other Consolidated Entity made
by such accountants;
(5) contemporaneously with the distribution thereof to the
stockholders or partners of the Borrowers or other Consolidated Entity (or the
filing thereof with the Securities and Exchange Commission), as the case may
be, copies of all statements, reports, notices and filings distributed by the
Borrowers or other Consolidated Entity to its stockholders or partners (or
filed with the
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Securities and Exchange Commission, including reports on SEC Forms l0-K,
l0-Q and 8-k);
(6) promptly after the Borrowers know or have reason to know of
the occurrence of any "reportable event" under Section 4043 of ERISA applicable
to the Borrowers or other ERISA Affiliate, a certificate of the president or
chief financial officer of the Borrowers setting forth the details as to such
"reportable event" and the action that the Borrowers or other ERISA Affiliate
has taken or will take with respect thereto, and promptly after the filing or
receiving thereof, copies of all reports and notices respecting such reportable
event that the Borrowers or other ERISA Affiliate files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or the
United States Department of Labor;
(7) promptly after the Borrowers or any other Consolidated Entity
becomes aware of the commencement thereof, notice of any investigation, action,
suit or proceeding before any Governmental Authority involving the condemnation
or taking under the power of eminent domain of any of its property or the
revocation or suspension of any permit, license, certificate of need or other
Governmental Requirement;
(8) within ten (10) days of the receipt by the Borrowers or any
other Consolidated Entity, copies of (A) all notices of default or breach under
any subrogation and recovery services agreement; and (B) all other material
notices of noncompliance, adverse reports issued by any Governmental Authority
or private insurance company pursuant to a subrogation and recovery services
agreement, which, if not promptly complied with or cured, could result in the
suspension or forfeiture of any license or certification, necessary for the
Borrowers to carry on its business as then conducted or the termination of any
subrogation and recovery services agreement;
(9) on the Closing Date and at any time the Lender requests,
copies of certificates of insurance issued by the insurers for all insurance
maintained by the Borrowers and its Consolidated Entities and, if the Lender
shall so request, copies of the policies providing such insurance; provided,
however, the Borrowers shall promptly notify the Lender of any material change
in insurance coverages; and
(10) as soon as practicable, such other information regarding the
business affairs, financial condition or operations of the Borrowers or its
Consolidated Entities (including a detailed listing of subrogation and recovery
services agreements and a summary aging of accounts receivable of the Borrowers
and its Consolidated Entities) as the Lender shall request from time to time or
at any time.
The Lender shall have no obligation to make Advances if at any time at
which the Borrowers is delinquent in the preparation
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and delivery of any of the items described above, whether or not such
delinquency constitutes an Event of Default.
SECTION 6.04. Litigation Notice. The Borrowers shall, immediately,
and in no event later than ten (10) days, after the same shall have become
known to any officer of the Borrowers, notify the Lender in writing of any
action, suit or proceeding at law or in equity or by or before any Governmental
Authority that, if adversely determined, might impair the ability of the
Borrowers or any other Consolidated Entity to perform its obligations under
this Agreement or any other loan Document or the ability of the Borrowers or
other Consolidated Entity to carry on its business substantially as now
conducted, or might materially and adversely affect the business, operations,
properties and assets or condition, financial or other, of the Borrowers or
other Consolidated Entity.
SECTION 6.05. Default Notice. Immediately, and in no event later than
three (3) days, after the Borrowers or any officer of the Borrowers becomes
aware of the existence of an Event of Default under any of the Loan Documents
or an event of default under any instrument evidencing or securing any other
indebtedness or contingent liability of the Borrowers or any Consolidated
Entity, or the occurrence and continuation of any event that, with notice or
lapse of time or both, would constitute an Event of Default under any of the
Loan Documents or an event of default under any instrument evidencing or
securing any other indebtedness or contingent liability of the Borrowers or any
Consolidated Entity, if the aggregate amount of indebtedness involved in all
such instruments in default exceeds $150,000, the Borrowers will deliver to the
Lender a written notice specifying the nature and period of existence thereof
and the action being taken and proposed to be taken with respect thereto.
SECTION 6.06. Further Assurances. The Borrowers shall at their cost
and expense, upon the request of the Lender, duly execute and deliver, or cause
to be duly executed and delivered, such further instruments and do and cause to
be done such further acts as may be necessary or proper in the opinion of the
Lender or its counsel to carry out more effectively the provisions and purposes
of the Loan Documents.
SECTION 6.07. Insurance. The Borrowers and each Consolidated Entity
shall at all times maintain in force, and pay all premiums and costs related
to, insurance coverages comparable to the coverages reviewed by the Lender
prior to the Closing Date and any other coverages required under applicable
Governmental Requirements.
SECTION 6.08. Cash Deposits. All cash of the Borrowers (excluding
deposits in transit) shall be consolidated no less frequently than once a week
in an account or accounts maintained with the Lender.
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SECTION 6.09. Covenants Regarding Financial Condition. Except as
otherwise expressly provided in this Section 6.09, the Borrowers shall also
cause and require each of the Consolidated Entities to observe and perform each
of the covenants and agreements of this section to be observed and performed by
the Borrowers, whether or not a specific reference is made to the Consolidated
Entities in each such covenant.
The Borrowers covenant and agree that:
(1) Minimum Net Worth. Net Worth shall not at any time be less
than the sum of (A) the Net Worth of the Borrowers on the Closing Date plus (B)
80% of Consolidated Net Income (if positive), after taxes, for the period from
closing through the date of determination, determined on a quarterly basis,
plus (C) the aggregate amount of all increases, if any, in its capital accounts
resulting from the issuance of capital stock or other securities properly
classified as equity in accordance with generally accepted accounting
principles from closing through the date of determination.
(2) Interest Coverage Ratio. The ratio of (A) Consolidated Net
Income plus Interest Expense and income taxes for the immediately preceding
period of four (4) consecutive quarters to (B) Interest Expense for the
Borrowers and the Consolidated Entities on a consolidated basis for such period
shall not at any time be less than 2.25 to 1.0.
(3) Capital Expenditures. The Borrowers and the Consolidated
Entities on a consolidated basis may, without the necessity for obtaining the
consent of the Lender, make in the aggregate in any consecutive 12-month period
Capital Expenditures that do not exceed $2,000,000.
(4) Debt. The Borrowers and the Consolidated Entities on a
consolidated basis will not incur, create, assume or permit to exist, or
otherwise be or become liable with respect to, any Debt other than (A) the
Credit Obligations and Debt reflected on the Borrowers' consolidated balance
sheet as of March 31, 1997, delivered to the Lender after the Closing Date
(other than Debt to be paid with the proceeds of Advances), and (B) Debt
arising under the endorsement of negotiable instruments in the ordinary course
of business for collection.
(5) Investments and Loans. The Borrowers and the Consolidated
Entities on a consolidated basis will not, directly or indirectly, purchase or
otherwise acquire any stock, security, obligation or evidence of indebtedness
of, make any capital contribution to, own any equity interest in, or make any
loan or advance to, any other person; provided, however, that it may make loans
to its employees in the aggregate amount outstanding at any time not to exceed
$100,000 and hold (A) all Stock of Partnership Interests in the persons that
constitute Consolidated Entities
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on the Closing Date; (B) Stock of, Partnership Interests in, and assets
of, Participating Partnerships and Participating Subsidiaries acquired
subsequent to the Closing Date with the approval of the Lender; and (C)
Permitted Investments.
(6) Disposition of Assets; Merger. The Borrowers and the
Consolidated Entities on a consolidated basis will not (A) sell, lease,
transfer, swap, exchange or otherwise dispose of, in a single transaction or a
series of related transactions, all or substantially all of its business or
assets; or (B) liquidate, wind up or dissolve, or enter into any consolidation,
merger, syndication or other combination or engage in any other reorganization
or recapitalization; provided, however, that (i) any Consolidated Entity
hereafter created or acquired may sell, lease, transfer or otherwise dispose of
all or any portion of its business or assets to the Borrowers or any other
Consolidated Entity or Consolidated Entities or merge into or consolidate with
the Borrowers or one or more other Consolidated Entities, so long as the entity
to which such business or assets are sold, leased, transferred or disposed of
or which survives or results from any such merger or consolidation is the
Borrowers, a Participating Subsidiary or a Participating Partnership; and (ii)
any Consolidated Entity, whether now existing or hereafter created or acquired
(the "Transferring Consolidated Entity") may sell, lease, transfer or otherwise
dispose of all or any portion of its business or assets to, or merge into, the
Borrowers or any other Consolidated Entity that directly or indirectly controls
the Transferring Consolidated Entity. The Borrowers may sell, lease, transfer
or otherwise dispose of furniture, fixtures and equipment in an amount not to
exceed $250,000 in any twelve month period.
(7) Liens. The Borrowers will not, and will not permit any
Consolidated Entity to, incur, create, assume or permit to exist any Lien upon
any of its accounts receivable, contract rights, chattel paper, inventory,
equipment, instruments, documents, general intangibles or other personal or
real property of any character, whether now owned or hereafter acquired, other
than Liens that constitute Permitted Encumbrances.
(8) Dividends and Distributions of Consolidated Entities. The
Borrowers will not permit any Consolidated Entity to be or become subject to
any restriction on the ability of such Consolidated Entity to pay dividends or
to make partnership distributions.
(9) Restricted Payments. The Borrowers will not, directly or
indirectly, declare, pay any dividend, or make any distribution, of any kind or
character (whether in cash, property or securities) on or with respect to any
class of its Capital Stock now or hereafter outstanding or to the holders of
any class of its Capital Stock now or hereafter outstanding (including pursuant
to a merger or consolidation of the Borrowers, but excluding any dividends or
distributions payable solely in shares of its Common
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Stock), or apply, or permit any Consolidated Entity to apply, any of its funds,
property or assets to the purchase, redemption or other retirement of any class
of the Borrowers' Capital Stock, now or hereafter outstanding.
(10) Material Adverse Change. The Borrowers will not permit a
material adverse change in the financial condition (as reflected in the
financial statements referred to in Section 4.03 since the date of such
financial statements), business or operations of the Borrowers or any of the
Consolidated Entities to occur.
SECTION 6.10. Continuation of Current Business. Neither the Borrowers
nor any other Consolidated Entity will change its primary business of providing
health care subrogation and other recovery services under contract.
Notwithstanding the foregoing, nothing contained in this Section 6.10 shall
prohibit the Borrowers or any Consolidated Entity from acquiring any health
care business so long as, after giving effect to such Acquisition, not less
than 90% of the net operating revenues of the Borrowers and the Consolidated
Entities on a consolidated basis can reasonably be expected to be derived from
providing health care subrogation and recovery services.
SECTION 6.11. Management Contracts. Neither the Borrowers nor any
other Consolidated Entity will enter into any agreement whereby the management,
supervision or control of its business as a whole shall be delegated to or
placed in any persons other than its governing body and officers, the Borrowers
or a Consolidated Entity.
SECTION 6.12. Cooperation; Inspection of Properties. The Borrowers
shall, and shall cause the Consolidated Entities to, permit the Lender and its
representatives to inspect the Borrowers' and the Consolidated Entities'
properties and assets, and to inspect, review and audit the Borrowers' and the
Consolidated Entities' books and records from time to time and at any time.
SECTION 6.13. Use of Proceeds. The Borrowers shall use the proceeds
of Advances exclusively to provide financing for general corporate and other
capital needs for expenditures or Acquisitions, or both. None of the proceeds
of the Advances shall be used to purchase or carry, or to reduce or retire or
refinance any credit incurred to purchase or carry, any Margin Stock, or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock. If requested by the Lender, the Borrowers will complete and sign Part I
of a copy of Federal Reserve Form U-1 referred to in Regulation U and deliver
such copy to the Lender.
SECTION 6.14. Additional Consolidated Entities. The Borrowers will
cause each Consolidated Entity that is hereafter acquired or created, promptly
(but in no event more than 30 days) after such Consolidated Entity is acquired
or created, to become a
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Participating Subsidiary or Participating Partnership by execution of an
Assumption Agreement, and all other documents necessary to cause it to become
jointly and severally liable for the Credit Obligations (subject to the
limitations provided in the Assumption Agreement).
SECTION 6.15. Sale of Receivables. Neither the Borrowers nor any
other Consolidated Entity will sell, assign or discount, or grant or permit to
exist any Lien on, any of its accounts receivable or any promissory note held
by it, with or without recourse, other than the discount of notes in the
ordinary course of business for collection, and Liens in favor of the Lender.
SECTION 6.16. Transactions with Affiliates. Neither the Borrowers nor
any other Consolidated Entity will, directly or indirectly, enter into any
lease or other transaction with any Affiliate (other than the Borrowers or
another Consolidated Entity) on terms that are less favorable to the Borrowers
or Consolidated Entity entering into such lease or other transaction than those
that might be obtained at the time from persons who are not Affiliates of the
Borrowers or other Consolidated Entity.
SECTION 6.17. Non-Scheduled Redemption of Preferred Stock, etc. The
Borrowers will not (a) give any notice of election to redeem the outstanding
shares of its preferred stock or make or permit to be made any dividend on
account of, or repurchase, redeem or otherwise retire (whether at the option of
the holder or otherwise), or make or permit to be made any other payment of any
nature with respect to any of the preferred stock.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. The following shall constitute
Events of Default under this Agreement:
(a) the Borrowers shall fail to pay when due any principal or
interest payable under the terms of the Note or any other amount payable under
this Agreement or any other of the Credit Obligations or any other amount owed
to the Lender or in connection with any of the Loan Documents; or
(b) the Borrowers shall default in the observance or performance
of any provision in Sections 6.09, 6.10, 6.11, 6.13, 6.14, 6.15, 6.16, or 6.17;
or
(c) the Borrowers shall default in the performance or observance
of any provision of this Agreement, except those covered by clauses (a) and (b)
above, and shall not cure such default within 30 days after the first to occur
of (i) the date the Lender gives
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written or telephonic notice of the default to the Borrowers or (ii) the date
the Borrowers otherwise has actual notice thereof; or
(d) the Lender shall determine that any statement, certification,
representation or warranty contained herein, or in any of the other Loan
Documents or in any report, financial statement, certificate or other
instrument delivered to the Lender by or on behalf of the Borrowers, was
misleading or untrue in any material respect at the time it was made; or
(e) default shall be made with respect to any Debt or obligations
(other than the Credit Obligations) of the Borrowers or of any other
Consolidated Entity to the Lender, and the Borrowers or other Consolidated
Entity or Affiliate shall not cure such default within 30 days (including any
days of grace available under the documents with respect to which such Debt or
obligations were incurred) after the first to occur of (i) the date the Lender
gives written or telephonic notice of the default to the Borrowers or (ii) the
date the Borrowers otherwise has actual notice thereof; or
(f) default shall be made with respect to any Debt (other than
Debt to the Lender) of the Borrowers or of any other Consolidated Entity when
due or the performance of any other obligation incurred in connection with any
Debt of the Borrowers or other Consolidated Entity, if the effect of such
default is to accelerate the maturity of such Debt or to permit the holder
thereof to cause such Debt to become due prior to its stated maturity, or any
such Debt shall not be paid when due, if the aggregate amount of all such Debt
involved exceeds $150,000; or
(g) an Event of Default, as therein defined, shall occur under any
of the other Loan Documents; or
(h) the Borrowers or any other Consolidated Entity shall (i) apply
for or consent to the appointment of a receiver, trustee, liquidator or other
custodian of it or any of its properties or assets, (ii) fail or admit in
writing its inability to pay its debts generally as they become due, (iii) make
a general assignment for the benefit of creditors, (iv) suffer or permit an
order for relief to be entered against it in any proceeding under the federal
Bankruptcy Code, or (v) file a voluntary petition in bankruptcy, or a petition
or an answer seeking an arrangement with creditors or seeking to take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law
or statute, or if corporate or partnership action shall be taken by the
Borrowers or any other Consolidated Entity for the purpose of effecting any of
the foregoing; or
(i) a petition shall be filed, without the application, approval
or consent of the Borrowers or any other Consolidated Entity, in any court of
competent jurisdiction, seeking bankruptcy,
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reorganization, rearrangement, dissolution or liquidation of the Borrowers or
other Consolidated Entity or of all or a substantial part of the properties or
assets of the Borrowers or other Consolidated Entity, or seeking any other
relief under any law or statute of the type referred to in clause (v) of
paragraph (h) above against the Borrowers or other Consolidated Entity, or the
appointment of a receiver, trustee, liquidator or other custodian of the
Borrowers or any other Consolidated Entity or of all or a substantial part of
the properties or assets of the Borrowers or any other Consolidated Entity, and
such petition shall not have been dismissed within 30 days after the filing
thereof; or
(j) any final judgment for the payment of money shall be rendered
against the Borrowers or any other Consolidated Entity and the same shall
remain undischarged for a period of 30 days during which execution shall not be
effectively stayed, unless such judgment is adequately covered by valid and
collectible insurance, which coverage is approved by the Lender; or
(k) there shall occur the insolvency, dissolution, liquidation or
suspension of business of the Borrowers or any other Consolidated Entity or the
issuance of a writ of execution, attachment or garnishment against the assets
of the Borrowers or any other Consolidated Entity, and such writ of execution,
attachment or garnishment shall not be dismissed, discharged or quashed within
30 days of issuance; or
(l) the Borrowers or any other Consolidated Entity shall default
under any agreement material to the operation of its business as conducted on
the Closing Date or proposed to be conducted;
(m) either (i) any person or any persons, other than persons
holding capital stock or options on the capital stock of either Borrower on the
date hereof, acting together that would constitute a "group" (a "Group") for
purposes of Section 13(d) of the Exchange Act, or any successor provision
thereto, together with any Affiliates or Related Persons thereof, other than
any trust for the employee stock ownership plans of the Borrowers or any of the
Consolidated Entities, shall beneficially own (as defined in Rule 13d-3 of the
Exchange Act or any successor provision thereto) at least 50% of the aggregate
voting power of all classes of Voting Stock of the Borrowers; or (ii) any
person or Group, together with any Affiliates or Related Persons thereof, shall
succeed in having its or their nominees elected to the Board of Directors of
the Borrowers such that such nominees, when added to any existing directors
remaining on the Board of Directors of the Borrowers after such election who is
an Affiliate or Related Person of such person or Group, shall constitute a
majority of the Board of Directors of the Borrowers; or
(n) enactment of health care reform legislation that has, in the
opinion of the Lender, an adverse effect on the collection of (or reduce the
ability to collect) the amounts under the Contracts
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entered into prior to the date of such health care reform legislation.
SECTION 7.02. Remedies. Upon the occurrence of an Event of Default
and at any time thereafter, if such Event of Default shall then be continuing:
(a) either or both of the following actions shall be taken by the
Lender, at its sole option: (i) the Lender shall terminate any obligation to
make further Advances, whereupon the obligation of the Lender to make further
Advances hereunder shall terminate immediately, and/or (ii) the Lender shall
declare by notice to the Borrowers any or all of the Credit Obligations to be
immediately due and payable, and the same, including all interest accrued
thereon and all other obligations of the Borrowers to the Lender, shall
forthwith become immediately due and payable without presentment, demand,
protest, notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument evidencing the
Credit Obligations to the contrary notwithstanding; provided, however, that
notwithstanding the above, if there shall occur an Event of Default under
clause (h) or (i) of Section 7.01, then the obligation of the Lender to lend
hereunder shall automatically terminate and any and all of the Credit
Obligations shall be immediately due and payable without the necessity of any
action by the Lender or notice to the Lender; and
(b) the Lender may exercise any and all rights and remedies
available to the Lender under the Loan Documents and applicable law.
SECTION 7.03. No Election of Remedies. In case any one or more Events
of Default shall occur and be continuing, the Lender may proceed to protect and
enforce its rights or remedies either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, agreement or other
provision contained herein or in any other Loan Document, or to enforce the
payment of the Credit Obligations or any other legal or equitable right or
remedy.
SECTION 7.04. Rights Cumulative. No right or remedy herein conferred
upon the Lender is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute or otherwise.
SECTION 7.05. Allocation of Proceeds. If an Event of Default has
occurred and is continuing, and the maturity of the Note has been accelerated
pursuant to Section 7.02, all payments received by the Lender hereunder with
respect to any principal of or interest on the Credit Obligations or any other
amounts payable
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by the Borrowers hereunder shall be applied by the Lender in the following
order:
(i) amounts due to the Lender pursuant to Section 2.05(b);
(ii) payments of interest, to be applied in accordance with
Section 2.09;
(iii) payments of principal, to be applied in accordance
with Section 2.09; and
(iv) payments of all other amounts due under this
Agreement, if any, to be applied in accordance with the outstanding principal
balance of the Lender's Loans.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted by this Agreement or
the other Loan Documents to be made upon, given or furnished to, or filed with,
the Borrowers or the Lender must (except as otherwise provided in this
Agreement or the other Loan Documents) be in writing and be delivered by one of
the following means: (1) by personal delivery at the hand delivery address
specified below, (2) by first-class, registered or certified mail, postage
prepaid and addressed as specified below, or (3) if facsimile transmission
facilities for such party are identified below or pursuant to a separate notice
from such party, sent by facsimile transmission to the number specified below
or in such notice.
(b) The hand delivery address, mailing address and (if applicable)
facsimile transmission number for receipt of notice or other documents by such
parties are as follows:
If to the Borrowers at:
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Executive Vice President-Finance
and Administration, Chief Financial
Officer and Secretary
Facsimile: (000) 000-0000
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If to the Lender at:
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx, Vice President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Vice
Xxxx Xxxxxxxx Xxxxxx Xxx & Vice
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Any of such parties may change its address or facsimile transmission number for
receiving any such notice or other document by giving notice of the change to
the other parties named in this Section 8.01.
(c) Any such notice or other document shall be deemed delivered
when actually received by an officer, director, partner or other legal
representative of the party) at the address or number specified pursuant to
this Section 8.01, or, if sent by mail, three Business Days after such
notice or document is deposited in the United States mail, addressed as
provided above.
(d) Five Business Days' written notice to the Borrowers as
provided above shall constitute reasonable notification to the Borrowers when
notification is required by law; provided, however, that nothing contained in
the foregoing shall be construed as requiring five Business Days' notice if,
under applicable law and the circumstances then existing, a shorter period of
time would constitute reasonable notice.
SECTION 8.02. Survival; Successors and Assigns. All covenants,
agreements, representations and warranties made in this Agreement or in any of
the other Loan Documents and in the certificates delivered pursuant to any of
the Loan Documents shall survive the making by the Lender of each Advance and
the execution and delivery to the Lender of the Loan Documents and shall
continue in full force and effect so long as any of the Credit Obligations are
outstanding and unpaid and this Agreement has not been terminated by the Lender
and the Borrowers in writing. Whenever in any Loan Document a party is
referred to, such reference shall be deemed to include the successors and
assigns of such party, except that the Borrowers may not assign or transfer any
Loan Document without the prior written consent of the Lender. All covenants,
promises and agreements by or on behalf of the Borrowers that are contained in
any Loan Document shall bind the Borrowers' successors and assigns and shall
inure to the benefit of the respective successors and assigns of the Lender.
Notwithstanding any other provision set forth in this Agreement, the Lender may
at any time (i) create a
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security interest in all or any portion of its rights under this Agreement
(including the Advances owing to it and the Note held by it) in favor of any
Federal Reserve Board in accordance with Regulation A of the Board of Governors
of the Federal Reserve System or (ii) assign or transfer its interests and
rights under this Agreement or any of the other Loan Documents, in whole or in
part, to any Affiliate of the Lender.
SECTION 8.03. Expenses. The Borrowers shall promptly pay all fees and
expenses (including reasonable legal fees and expenses of counsel for the
Lender, insurance premiums, recording, filing and transfer fees and taxes, and
other costs and expenses related to the Credit Obligations or required by any
of the Loan Documents. If the Borrowers fail to pay any such cost or expense,
the Lender may, but shall have no obligation to, pay the same from the Lender's
funds or by making an Advance for such purpose, without notice to the
Borrowers. The Borrowers shall reimburse the Lender on demand for, and
shall indemnify and hold the Lender harmless from and against, all such costs
and expenses paid by the Lender and all other costs and expenses (including the
reasonable fees and disbursements of the Lender's counsel) of every kind
incurred by the Lender in connection with (i) the making or collection of the
Credit Obligations, (ii) the preparation and review of the Loan Documents
(whether or not the transactions provided for in this Agreement shall be
consummated) and any other documents related thereto, (iii) the enforcement of
any of the Loan Documents, the protection of the Lender's rights in any
collateral and the defense of any claim, cross-claim or counterclaim asserted
against the Lender by the Borrowers or any other person that relates to the
Credit Obligations or the Loan Documents, and (iv) the transactions provided
for in the Loan Documents. Any amount paid or advanced by the Lender under
this section or the other Loan Documents shall bear interest until paid at a
rate equal to two percent (2%) in excess of the Base Rate in effect from time
to time, or the highest rate permitted by law, whichever is less. The
Borrowers shall pay all costs and expenses of performing and satisfying their
obligations under this Agreement. The Borrowers' obligations under this
Section 8.03 shall survive the payment in full of the Credit Obligations and
the termination of this Agreement.
SECTION 8.04. Indemnification. The Borrowers agree to indemnify and
hold harmless the Lender, and its employees, officers, directors and other
representatives (the "Indemnified Parties") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including attorneys' fees) (the "Indemnified Obligations") that may at any
time (including at any time following the termination of this Agreement) be
imposed on, incurred by or asserted against any of the Indemnified Parties in
any way relating to or arising out of this Agreement or any of the other Loan
Documents or the transactions provided for herein or therein or any action
taken or omitted
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by any of the Indemnified Parties under or in regulations with respect to
Hazardous Substances and other environmental matters), or as a result of any
inaccurate representation made by the Borrowers in this Agreement or any other
Loan Document (including any inaccurate representation with respect to
Hazardous Substances and other environmental matters) or any breach of any of
the warranties or obligations of the Borrowers under this Agreement or any
other Loan Document (including any breach of any warranty or obligation with
respect to Hazardous Substances or other environmental matters) provided,
however, that no Indemnified Party shall be indemnified for any Indemnified
Obligation arising from its own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
SECTION 8.05. Governing Law. This Agreement and the other Loan
Documents shall be construed in accordance with and governed by the laws of the
Commonwealth of Kentucky.
SECTION 8.06. Non-Waiver. No failure or delay on the part of the
Lender in exercising any right, power or privilege under this Agreement or any
of the other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise or
the exercise of any other right, power or privilege. Without limiting the
generality of the foregoing, the Lender may waive or not enforce any
requirements or condition applicable to the making of any Advance without
waiving the right to require strict compliance with such requirement or
condition in connection with other Advances.
SECTION 8.07. Non-Business Days. If any payment with respect to the
Credit Obligations becomes due and payable on a day that is not a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day, and
in the case of a payment of principal, interest shall be payable thereon at the
then applicable rate specified in this Agreement during such period of
extension.
SECTION 8.08. Modification. etc. Subject to the provisions of
Section 8.02, no modification, amendment or waiver of any provision of this
Agreement or any of the other Loan Documents, and no consent to any departure
by the Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by an authorized officer of the Lender, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Borrowers not otherwise
expressly required hereby in any case shall entitle the Borrowers to any other
or further notice or demand in the same, similar or other circumstances.
SECTION 8.09. Set-off. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby autho-
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rized at any time and from time to time, without notice to the Borrowers
(any such notice being expressly waived by the Borrowers) to set off and apply
any and all deposits (general or special, time or demand, provisional or final
but not deposits of "Restricted Cash" so designated on Schedule 8.09 by the
Borrowers to the Lender and as amended and updated by the Borrowers in the
Compliance Certificate) at any time held and other indebtedness at any time
owing to the Lender (including any branches, agencies or Affiliates of the
Lender, wherever located) to or for the credit or the account of the Borrowers
against any and all of the obligations of the Borrowers now or hereafter
existing under any of the Loan Documents, irrespective of whether or not any
demand shall have been made under the Loan Documents and although such
obligations may be unmatured prior to any acceleration of the maturity date.
The Lender agrees promptly to notify the Borrowers after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application or impose any liability on the Lender.
The rights of the Lender under this Section 8.09 are in addition to all other
rights and remedies (including other rights of set- off or pursuant to any
banker's lien) that the Lender may have.
SECTION 8.10. Severability. Any provision of any of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 8.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but when taken
together all such counterparts shall constitute but one agreement, and any
party may execute this Agreement by executing any one or more of such
counterparts.
SECTION 8.12. Participation. The Borrowers understands that the
Lender may from time to time enter into a participation agreement or agreements
with one or more other participants pursuant to which each such participant
shall be given a participation in the Lender's Note, Loans and interest in the
Credit Obligations and the Loan Documents and that any such participant may
from time to time similarly grant to one or more subparticipants
subparticipations in the Note, Loans and interest in the Credit Obligations and
the Loan Documents; provided, however, that all communications with the
Borrowers shall be solely with the Lender and not with any participant. The
Borrowers agree that any participant or subparticipant (including any branches,
agencies or Affiliates thereof, wherever located) may exercise any and all
rights of banker's lien or set-off with respect to the Borrowers, as fully as
if such participant or subparticipant had made a loan directly to the Borrowers
in the amount of the participation or subparticipation given to such
participant or subparticipant in the Credit Obligations and the Loan Documents.
For purposes of this Section 8.12
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only, the Borrowers shall be deemed to be directly obligated to each
participant or subparticipant in the amount of its participating interest in
the amount of the principal of, and interest on, the Credit Obligations.
Nothing contained in this section shall affect the Lender's right of set-off
(under Section 8.09 or applicable law) with respect to the entire amount of the
Credit Obligations, notwithstanding any such participation or subparticipation.
The Lender may divulge to any participant or subparticipant all information,
reports, financial statements, certificates and documents obtained by the
Lender from the Borrowers or any other person under any provisions of this
Agreement or the other Loan Documents or otherwise.
SECTION 8.13. Termination. This Agreement shall continue until the
Credit Obligations shall have been paid in full and the Lender shall have no
obligation to make any further Advances or extend any other credit hereunder.
This Agreement, and the obligations of the Borrowers hereunder, shall continue
to be effective, or be automatically reinstated, as the case may be, if at any
time payment in whole or in part of any payment made with respect to the Credit
Obligations is rescinded or must otherwise be restored or returned to the
person making such payment upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of such person, or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to such person or with respect to any part of the property
thereof, or otherwise, all as though such payment had not been made.
SECTION 8.14. Obligations of the Borrowers Absolute. The Borrowers
hereby agree that its obligations and liabilities with respect to the Credit
Obligations are continuing, absolute and unconditional. Without limiting the
generality of the foregoing, the obligations and liabilities of the Borrowers
with respect to the Credit Obligations shall not be released, discharged,
impaired, modified or in any way affected by (a) the invalidity or
unenforceability of any Loan Document executed by any other person with respect
to the Credit Obligations, (b) the failure of the Lender to give the Borrowers
a copy of any notice given to any other person, (c) any modification, amendment
or supplement of any obligation, covenant or agreement contained in any Loan
Document executed by any other person with respect to the Credit Obligations,
(d) any compromise, settlement, release or termination of any obligation,
covenant or agreement in any Loan Document executed with respect to the Credit
Obligations, (e) any waiver of payment, performance or observance by or in
favor of any Participating Subsidiary or Participating Partnership of any
obligation, covenant or agreement under any Loan Document, (f) any consent,
extension, indulgence or other action or inaction, or any exercise or
non-exercise of any right, remedy or privilege with respect to any Loan
Document executed by any other person with respect to the Credit Obligations,
(g) the extension of time for payment or performance of any Credit Obligation
by any Participating Subsidiary or Participating Partnership, or (h) the
release or discharge of the Lender's claims
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against any collateral now or at any time hereafter securing any of the Credit
Obligations, or any Participating Subsidiary or Participating Partnership by
operation of law or otherwise.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Credit Agreement to be executed and delivered by their duly authorized
corporate officers as of the day and year first above written.
HEALTHCARE RECOVERIES, INC.
By:
-----------------------------------
Title:
--------------------------------
NATIONAL CITY BANK OF KENTUCKY
By:
-----------------------------------
Xxxxx Xxxxx
Vice President
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