CREDIT AGREEMENT
by and among
SUMMIT BANK
and
CAREADVANTAGE, INC.
as Borrower
and
BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC.,
as Guarantor
June 13, 1997
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of June 13, 1997 by and among Summit Bank,
a banking institution of the State of New Jersey (the "Bank"), CareAdvantage,
Inc., a Delaware corporation (the "Borrower") and Blue Cross and Blue Shield of
New Jersey, Inc., a New Jersey health service corporation (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Bank to extend certain credit and
make certain loans to the Borrower in an aggregate amount not to exceed
$3,000,000; and
WHEREAS, the Guarantor presently owns approximately 50% of the issued and
outstanding capital stock of the Borrower; and
WHEREAS, the Guarantor will derive economic and other financial benefit
from the extension of credit described herein; and
WHEREAS, the Bank is willing to extend such credit and make such loans to
the Borrower upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto hereby agree as follows:
I. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following words and terms
shall have the following meanings:
"Advance" shall have the meaning ascribed to such term in Section 2.2
hereof.
"Agreement" shall mean this Credit Agreement together with any and all
exhibits, amendments or supplements hereto.
"Applicable Margin" shall mean (i) with respect to the Revolving Loan, 45
basis points and (ii) with respect to the Term Loan, 50 basis points.
"Available Commitment" shall mean, at any time, an amount equal to the
excess, if any, of (i) the lesser of the Commitment or the Borrowing Base at
such time, over (ii) the aggregate principal amount of all Advances then
outstanding.
"Bank" shall mean Summit Bank, a banking institution of the State of New
Jersey, and its successors and assigns.
"Bank Costs" shall mean all filing, recording, publication and search fees
incurred in connection with and relating to the Loans paid by the Bank; all
reasonable out-of-pocket costs incurred and sums expended by the Bank, with or
without suit, to correct any default, to enforce any right or remedy of the
Bank, or in connection with any other provision of any Loan Document; all
reasonable out-of-pocket costs of suit incurred by the Bank in enforcing or
defending this Agreement or any other Loan Document or any portion thereof; all
reasonable out-of-pocket costs and expenses including reasonable attorneys' fees
and expenses incurred by the Bank in preparing, reviewing, enforcing, amending,
modifying, administering, defending or otherwise concerning this Agreement or
any other Loan Document or any portion hereof or thereof; and whether or not
suit is brought, all out-of-pocket costs of arbitration and insolvency
proceedings.
"Base LIBO Rate" shall have the meaning ascribed to such term in Section
2.4(e) hereof.
"Base Rate" shall mean the rate of interest announced from time to time by
the Bank as its "base rate" or "base lending rate". This rate of interest is
determined from time to time by the Bank as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged by the Bank
to any particular class or category of customers of the Bank.
"Base Rate Loan" shall mean a Loan bearing interest at the Base Rate.
"Borrower" shall mean CareAdvantage, Inc., a Delaware corporation, and its
successors and assigns.
"Borrowing Base" shall mean, at any time, an amount equal to ninety-one
percent (91%) of the aggregate Fair Market Value of the Government Securities at
such time.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which state or federally chartered banks in the State of New Jersey are
authorized to close.
"Commitment" shall mean $1,500,000.
"Custodian" shall mean Chase Manhattan Bank, and its successors and
assigns.
"Custody Agreement" shall mean that certain Custody and Bailment Agreement
dated the date hereof among the Bank, the
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Guarantor and the Custodian and any amendments, modifications or supplements
thereof.
"Default" shall mean any of the events specified in Article VII hereof
which, with the passage of time or giving of notice or both, would constitute an
Event of Default.
"Effective Date" shall mean the date upon which all of the conditions
precedent set forth in Section 4.1 hereof shall have been satisfied; provided,
however, that such date shall be no later than ten days from the date hereof.
"Event of Default" shall mean any of the events specified in Article VII
hereof, provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Fair Market Value" of any Government Security, as of any date, shall mean
the mean between the closing bid and asked price for such Government Security,
as reported by any established reporting service, on the trading day immediately
preceding such date.
"Fixed LIBO Rate" shall have the meaning ascribed to such term in Section
2.4(e) hereof.
"Government Security(ies)" shall mean obligations of, or unconditionally
guaranteed by, the United States of America, or any instrumentality or agency
thereof, including FNMA Certificates of the type listed on Schedule I hereto;
provided the same are (i) owned by the Guarantor, free and clear of all liens,
claims, encumbrances and rights of others (other than the Bank), (ii) pledged to
the Bank under the terms of the Pledge Agreement and constitute the "Pledged
Collateral" described therein, (iii) held by the Bank or the Custodian on behalf
of the Bank under the terms of the Custody Agreement and (iv) freely tradeable
on any established trading market.
"Guarantor" shall mean Blue Cross and Blue Shield of New Jersey, Inc., a
New Jersey health service corporation, and its successors and assigns.
"Guaranty Agreement" shall mean that certain Guaranty Agreement dated the
date hereof by the Guarantor in favor of the Bank and any amendments,
modifications or supplements thereof.
"Interest Period" shall have the meaning ascribed to such term in Section
2.4(f) hereof.
"LIBO Rate" shall have the meaning ascribed to such term in Section 2.4(e)
hereof.
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"LIBO Rate Loan" shall mean a Loan bearing interest at the LIBO Rate.
"Loans" shall mean the Revolving Loan and the Term Loan, individually and
collectively.
"Loan Documents" shall mean all agreements, instruments, certificates and
documents evidencing or relating to the Obligations arising under this
Agreement, including without limitation, this Agreement, the Notes, the Pledge
Agreement, the Guaranty Agreement and the Custody Agreement.
"Maturity Date" shall mean (i) with respect to the Revolving Loan, the
Revolving Credit Maturity Date and (ii) with respect to the Term Loan, the Term
Loan Maturity Date.
"Notes" shall mean the Revolving Credit Note and the Term Note,
individually and collectively.
"Obligations" shall mean all loans, advances, extensions of credit, debts,
liabilities, obligations, payments, guarantees, covenants and duties owing by
the Borrower to the Bank of any kind and description arising under this
Agreement or any Note, whether direct or indirect, voluntary or involuntary,
absolute or contingent, due or to become due, now existing or hereafter incurred
or created and further including all Bank Costs.
"Person" shall mean any individual, corporation, partnership, association,
joint stock company, trust, unincorporated organization, joint venture, court or
government or political subdivision or agency thereof.
"Pledge Agreement" shall mean that certain Pledge Agreement dated the date
hereof between the Guarantor and the Bank.
"Revolving Loan" shall mean, as at any date, the aggregate Advances then
outstanding.
"Revolving Credit Maturity Date" shall mean the date which is 364 days from
the Effective Date.
"Revolving Credit Note" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Term Advances" shall have the meaning ascribed to such term in Section 2.1
hereof.
"Term Loan" shall have the meaning ascribed to such term in Section 2.1
hereof.
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"Term Loan Drawdown Period" shall mean the nine month period commencing on
the Effective Date.
"Term Loan Maturity Date" shall mean June 30, 2000.
"Term Note" shall have the meaning ascribed to such term in Section 2.1
hereof.
II. TERM LOAN AND REVOLVING LOAN
2.1 Term Loan. From time to time, during the Term Loan Drawdown Period, in
the manner hereinafter set forth, the Borrower may borrow from the Bank, and,
upon the request of the Borrower and upon the terms and conditions contained
herein, the Bank shall lend to the Borrower a sum or sums ("Term Advances")
which will not exceed the aggregate sum of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Term Loan"). The indebtedness of the Borrower to the
Bank resulting from all Term Advances made from time to time hereunder shall be
evidenced by a term note (the "Term Note"), the form of which is attached hereto
as Exhibit A, made payable to the Bank, dated as of the Effective Date, signed
by the Borrower and delivered to the Bank. All Term Advances made by the Bank to
the Borrower shall be noted by the Bank on any schedule or other record
designated by the Bank for such purpose, and the Bank is authorized to make such
notations which shall be prima facia evidence of the principal amount
outstanding thereunder at any time; provided, however, that any failure to make
such a notation (or any errors in notation) shall not limit or otherwise affect
the obligation of the Borrower hereunder or under the Term Note, which is and
shall remain absolute and unconditional. All amounts outstanding under the Term
Note shall be due and payable on the Term Loan Maturity Date.
2.2 Revolving Loan. From time to time, during the period from the Effective
Date until the Revolving Credit Maturity Date, in the manner hereinafter set
forth, the Borrower may borrow from the Bank, and, upon the request of the
Borrower and upon the terms and conditions contained herein, the Bank shall lend
to the Borrower a sum or sums ("Advances") which will not exceed the Available
Commitment at such time.
2.3 Revolving Credit Note. The indebtedness of the Borrower to the Bank
resulting from all Advances made from time to time hereunder shall be evidenced
by a revolving credit note (the "Revolving Credit Note"), the form of which is
attached hereto as Exhibit B, made payable to the Bank, dated as of the
Effective Date, signed by the Borrower and delivered to the Bank. All Advances
made by the Bank to the Borrower shall be noted by the Bank on any schedule or
other record designated by the Bank for such purpose, and the Bank is authorized
to make such notations
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which shall be prima facia evidence of the principal amount outstanding
thereunder at any time; provided, however, that any failure to make such a
notation (or any errors in notation) shall not limit or otherwise affect the
obligation of the Borrower hereunder or under the Revolving Credit Note, which
is and shall remain absolute and unconditional. All amounts outstanding under
the Revolving Credit Note shall be due and payable on the Revolving Credit
Maturity Date.
2.4 Payment of Interest; Interest Rate Options.
(a) Each Note shall bear interest in the manner hereinafter provided
(computed on the basis of the actual number of days elapsed in a year of 360
days) on the principal amount thereof remaining unpaid from time to time.
Interest shall be payable monthly in arrears on the first day of each month,
commencing on the first day of the second month following the date of each Note
and continuing on the first day of each month thereafter until each Note shall
be paid in full; provided, however, that with respect to LIBO Rate Loans,
interest shall also be payable on the last day of the Interest Period applicable
thereto. Notwithstanding the foregoing, if any date upon which interest shall be
paid shall not be a Business Day, then such payment shall be made on (and
interest shall accrue until) the next succeeding Business Day, unless, with
respect to LIBO Rate Loans, the next such succeeding Business Day shall fall in
the next calendar month, in which case such payment shall be made on the next
preceding Business Day.
(b) All Loans hereunder shall be classified by "class" and "type." The
class of Loan refers to whether such Loan is a Revolving Loan or Term Loan, and
the type of Loan refers to whether such Loan is a LIBO Rate Loan or Base Rate
Loan.
(c) Commencing on the first day of the second month following the Effective
Date, and continuing on the first day of each month thereafter, the Borrower
shall repay the Term Loan by paying to the Bank an amount equal to the then
outstanding principal balance thereof, divided by the number of months then
remaining until the Term Loan Maturity Date. No portion of the Term Loan which
has been repaid may be reborrowed.
(d) Except as provided in subsection (e) below, each Note shall bear
interest from the date thereof on the outstanding daily principal balance
thereunder at a fluctuating rate per annum equal to the Base Rate. Each change
in the Base Rate shall be effective, automatically and without notice as of the
opening of business on the day on which such change shall be announced and be
effective.
(e) Provided no Default or Event of Default shall then
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exist, the Borrower may, in accordance with the terms and conditions set forth
herein, elect to have all or any portion of the outstanding principal balance of
each Note bear interest for any Interest Period at a rate per annum (the "LIBO
Rate") equal to the Applicable Margin plus the Base LIBO Rate applicable to such
Interest Period. The "Base LIBO Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to the product arrived at by multiplying the
Fixed LIBO Rate applicable to such Interest Period by a fraction (expressed as a
decimal), the numerator of which shall be the number one (1.0) and the
denominator of which shall be the number one (1.0) minus the aggregate reserve
percentages (expressed as a decimal) from time to time established by the Board
of Governors of the Federal Reserve System of the United States and any other
banking authority to which the Bank is now or hereafter subject, including, but
not limited to any reserve on "Eurocurrency Liabilities" as defined in
Regulation D (or any successor provision) of the Board of Governors of the
Federal Reserve System of the United States at the ratios provided in such
Regulation from time to time, it being agreed that any portion of any Note
bearing interest at the LIBO Rate shall be deemed to constitute Eurocurrency
Liabilities, as defined by such Regulation, and it being further agreed that
such Eurocurrency Liabilities shall be deemed to be subject to such reserve
requirements without benefit of or credit for prorations, exceptions or offsets
that may be available to the Bank from time to time under such Regulation and
irrespective of whether such Bank actually maintains all or any portion of such
reserve. The "Fixed LIBO Rate" applicable to a particular Interest Period shall
mean a rate per annum equal to the rate of interest at which U.S. dollar
deposits in an amount approximately equal to the portion of the Note which will
bear interest at a particular LIBO Rate during such Interest Period, and with
maturities comparable to the last day of such Interest Period, are offered in
immediately available funds in the London Interbank Market by leading banks in
the Eurodollar Market at 11:00 a.m., London time, three Business Days prior to
the commencement of such Interest Period. Each determination of the LIBO Rate,
the Base LIBO Rate and the Fixed LIBO Rate applicable to a particular Interest
Period shall be made by the Bank and shall be conclusive and binding upon the
Borrower absent manifest error.
(f) As used herein, "Interest Period" shall mean one-month, three-months or
six-months, as designated by the Borrower, with respect to Loans which bear
interest at the LIBO Rate. For purposes of the foregoing, the period of time
commencing on any day of any month and continuing until the same date of the
immediately following month shall be deemed a period of one month. No Interest
Period shall extend beyond the Maturity Date.
(g) Unless the Borrower shall have requested a further
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LIBO Rate Loan in accordance with the terms hereof, each LIBO Rate Loan shall
automatically convert to a Base Rate Loan on and as of the last day of the
Interest Period applicable thereto.
(h) Notwithstanding the foregoing, at no time shall either Note bear
interest at more than ten interest rates.
(i) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan shall bear interest at a rate per annum equal to the
Base Rate plus three percent (3%) per annum and shall be payable on demand.
2.5 Prepayments. (a) The Borrower shall have the right to prepay the
principal amount of each Note, in whole or in part, at one time or from time to
time. Except as described in Section 3.2 with respect to LIBO Rate Loans, there
shall be no premium or penalty as the result of such prepayment. Any prepayment
of the Revolving Credit Note shall not permanently reduce the amount which may
be borrowed pursuant to Section 2.2 hereof and the Borrower may borrow, prepay
and reborrow in the manner provided herein. Any prepayment of the Term Note may
not be reborrowed. Each prepayment shall be made in immediately available funds
and shall be made (i) in the case of Base Rate Loans, upon one Business Day's
prior notice and (ii) in the case of LIBO Rate Loans, upon three Business Day's
prior notice, in each case, accompanied by accrued interest to the date of such
prepayment (and, in the case of LIBO Rate Loans, the applicable payments
required under Section 3.2 hereof).
(b) If at any time the outstanding principal amount of the Loans hereunder
exceeds the Borrowing Base at such time, the Borrower shall, within five days of
its receipt of notice thereof, prepay such excess amount, together with accrued
interest thereon (and all other amounts payable under Section 3.2 hereof), so
that, after giving effect thereto, the outstanding principal amount of Loans
hereunder does not exceed the Borrowing Base; provided, however, that at no time
may the aggregate principal amount of Advances hereunder exceed the Available
Commitment.
2.6 Use of Proceeds. All Advances under the Revolving Loan shall be used
for working capital and general corporate purposes for the Borrower and its
subsidiaries, and all Term Advances under the Term Loan shall be used for
capital expenditures and to refinance existing leases for the Borrower and its
subsidiaries.
2.7 Disbursement Procedure for Advances. All requests for Advances, Term
Advances or Loans shall be in writing and shall state (i) the principal amount
requested, (ii) the requested date of advance, (iii) whether such Advance, Term
Advance or Loan shall accrue interest at the Base Rate or the LIBO Rate and (iv)
with
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respect to LIBO Rate Loans, the applicable Interest Period. Each request (i) for
a Base Rate Loan shall be made no later than 11:00 a.m. on the requested date of
advance and (ii) for a LIBO Rate Loan shall be made at least two Business Days
prior to the requested date of advance. Each LIBO Rate Loan shall be in a
minimum principal amount of $50,000. The Borrower shall also deliver to the
Bank, not later than 11:00 a.m. on the requested date of advance, a certificate
(the "Borrowing Base Certificate") substantially in the form of Exhibit C
attached hereto, duly completed, executed and delivered by an authorized officer
of the Borrower.
2.8 Commitment Fee. The Borrower agrees to pay to the Bank a commitment fee
on the amount of the Commitment from time to time, from the date hereof until
the earlier of the Revolving Credit Maturity Date or the termination of the
Commitment as provided in Section 2.9 hereof, at the rate of 1/8 of 1% per
annum, payable, in monthly installments in arrears, on the first day of each
month, commencing on the first day of the second month following the Effective
Date and continuing until the Revolving Credit Maturity Date (or upon such
earlier date as the Commitment shall be terminated). The commitment fee shall be
computed on the basis of the actual number of days elapsed over a year of 360
days (having 12 months of 30 days each). The Borrower shall also pay to the Bank
on the Effective Date a fee of 1/8 of 1% of the principal amount of the Term
Loan.
2.9 Termination or Reduction of the Commitment. The Borrower shall have the
right, upon no less than three Business Days' prior written notice to the Bank,
to terminate in whole or reduce in part the unused portion of the Commitment,
provided that each partial reduction shall be in the amount of $50,000 or an
integral multiple thereof. Simultaneously with any termination or partial
reduction of the Commitment, the Borrower shall pay the aforesaid commitment fee
as accrued and unpaid to the date thereof.
2.10 Net Payments. The Borrower shall make each payment hereunder and under
the Notes not later than 12:00 Noon (New York City time) on the day when due in
lawful money of the United States of America and in immediately available funds
to the Bank at its office set forth in Section 10.1 hereof, without set-off or
counterclaim, and in the case of any LIBO Rate Loan, without deduction or
withholding for any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding any tax imposed on or measured by the net income of the
Bank) and all interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of
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such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due hereunder, under the Notes or under any other Loan
Document, after withholding or deduction for or on account of any Taxes, will be
not less than the amount provided for herein or in the Notes. The Borrower will
furnish to the Bank within 45 days after such payment of any Taxes, or any
withholding or deduction on account thereof, certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower will indemnify and hold
harmless the Bank, and reimburse the Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid or withheld by the Bank.
2.11 Business Days. Whenever any payment to be made hereunder or under the
Notes shall be stated to be due on any day other than a Business Day, then,
except as otherwise provided in Section 2.4 hereof, such payment shall be made
on the next succeeding Business Day and such extension of time shall in such
case be included in the computation of payment of interest (or commitment fee).
2.12 Charge. Without in any way limiting any right of offset, counterclaim
or banker's lien which the Bank may otherwise have at law, the Borrower hereby
irrevocably authorizes and directs the Bank, if and to the extent any payment of
principal, interest or any fee is not otherwise made on any day when due, to
charge against the Borrower's account or accounts at the Bank, an amount or
amounts equal in the aggregate to such aforesaid sums as are due and payable
from time to time to the Bank. The Bank shall use reasonable efforts to notify
the Borrower as soon as practicable following any such action.
2.13 Late Fees. Without limitation of any other term or provision contained
herein or in any of the Loan Documents, in the event any payment due hereunder
or any of the Notes or any other Loan Document is not received by the Bank
within ten days of its due date, the Borrower will pay a late charge of five
percent (5%) of such overdue payment; provided, however, such late charge shall
not be less than $25.00 nor more than $2,500.00.
III. SPECIAL PROVISIONS
3.1 Alternate Interest Rate. If within one Business Day of any date that
the Borrower requests a LIBO Rate Loan, the Bank shall determine in its sole
discretion, reasonably exercised, that it is unable to quote the requested LIBO
Rate or that it is unable to fund the requested LIBO Rate Loan for the Interest
Period requested, the Bank shall promptly notify the Borrower of such
determination pursuant to Section 10.1 and no LIBO Rate Loan shall be made by
the Bank on the borrowing date for which such request was made. Upon receipt of
such notification, the Borrower may withdraw any outstanding request for a LIBO
Rate Loan by
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giving written notice of withdrawal to the Bank pursuant to Section 10.1 prior
to such borrowing date. Unless withdrawn in accordance with this Section 3.1,
any outstanding request for such LIBO Rate Loan shall be deemed to be a request
for a Base Rate Loan in equal principal amount, and such Base Rate Loan shall be
made on such borrowing date. At such time thereafter as the Bank shall be able
to quote the requested LIBO Rate or fund the requested LIBO Rate Loan for the
Interest Period requested, the Bank shall so notify the Borrower whereupon the
Borrower pursuant to Section 10.1 shall have the right to request a LIBO Rate
Loan in accordance with the terms hereof.
3.2 Indemnification. Except as provided in Section 3.1 hereof, each request
for a LIBO Rate Loan shall be irrevocable and binding upon the Borrower. The
Borrower hereby agrees to indemnify the Bank, upon demand by the Bank at any
time, against any and all actual losses (including any actual loss of profit),
costs or expenses which the Bank may at any time or from time to time sustain or
incur as a consequence of: (a) any breach by the Borrower of its obligation to
borrow on the borrowing date specified in any borrowing notice requesting a LIBO
Rate Loan, (b) any failure by the Borrower to pay punctually on the due date
thereof any amount payable by the Borrower to the Bank on LIBO Rate Loans, (c)
the acceleration of the time of payment of any of the Borrower's obligations in
respect of LIBO Rate Loans in accordance with any of the provisions of this
Agreement, (d) the repayment or prepayment of the principal of any of the LIBO
Rate Loans on a date other than the end of the applicable Interest Period or (e)
the conversion of a LIBO Rate Loan to a Base Rate Loan on a date other than the
end of the applicable Interest Period. Such losses, costs or expenses shall
include, without limitation, (i) any costs incurred by the Bank in carrying
funds which were to have been borrowed by the Borrower or in carrying funds to
cover any overdue principal, overdue interest or any other overdue sums payable
by the Borrower to the Bank in respect of LIBO Rate Loans, (ii) any interest
payable by the Bank to the lenders of the funds referred to in the immediately
preceding clause (i), and (iii) any actual losses (including any actual loss of
profit) incurred or sustained by the Bank in liquidating or reemploying funds
acquired from third parties to make any of the LIBO Rate Loans or to fund or
maintain all or any part of the principal of any of the LIBO Rate Loans.
3.3 Changes in Circumstances. If at any time, the Bank shall reasonably
determine that:
(a) the Bank is unable to obtain funds in the principal amount specified in
any request for a LIBO Rate Loan for periods equal to the specified Interest
Period;
(b) the LIBO Rate does not or will not accurately
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reflect the cost to the Bank of obtaining or maintaining any LIBO Rate Loan
during any Interest Period; or
(c) any present or future law or regulation (or in the interpretation
thereof by any governmental authority charged with the administration or
interpretation thereof) has made or will make it unlawful for the Bank to make
or maintain any LIBO Rate Loan or to comply with any of the Bank's obligations
in respect of any LIBO Rate Loans; then, in each case, the Bank may promptly
give notice of such determination and reasons for the determination to the
Borrower. Upon such notification, the Bank's obligation to make LIBO Rate Loans
shall be suspended until the Bank determines that the circumstances described in
subparagraphs (a), (b) and (c) of this Section 3.3 have ceased to exist.
Following the Bank's notice under subparagraphs (b) or (c) of this Section 3.3,
all outstanding applicable LIBO Rate Loans of the Bank shall be converted to
Base Rate Loans at the end of the applicable Interest Period; provided, however,
that if it shall be unlawful for the conversion of such LIBO Rate Loans to Base
Rate Loans to be effective as of the end of the applicable Interest Period, such
conversion shall be deemed to occur as of the date of such notice by the Bank.
3.4 Additional Costs and Expenses. The Borrower recognizes that the cost to
the Bank of making or maintaining LIBO Rate Loans or any portion thereof may
fluctuate, and the Borrower agrees to pay to the Bank, within ten (10) days
after written demand, an additional amount or amounts as the Bank shall
reasonably determine will compensate the Bank for additional costs incurred by
the Bank in maintaining LIBO Rate Loans or any portion thereof as a result of:
(i) the imposition after the date of any LIBO Rate Loan of, or changes
after the date of any LIBO Rate Loan in, the reserve requirements promulgated by
the Board of Governors of the Federal Reserve System of the United States,
including, but not limited to, any reserve on Eurocurrency Liabilities as
defined in Regulation D of the Board of Governors of the Federal Reserve System
of the United States at the ratios provided in such Regulation from time to
time, it being agreed that the portion or portions of any Note bearing interest
at the LIBO Rate shall be deemed to constitute Eurocurrency Liabilities, as
defined by such Regulation, and it being further agreed that such Eurocurrency
Liabilities shall be deemed to be subject to such reserve requirements without
benefit of, or credit for, prorations, exceptions or offsets that may be
available to the Bank or from time to time under such regulations, and
irrespective of whether the Bank actually maintains all or any portion of the
reserve; or
(ii) any change, after the date of any LIBO Rate Loan, in any applicable
laws, rules or regulations or in the
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interpretation or administration thereof by any domestic or foreign governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law) or by any domestic or foreign court changing the
basis of taxation of payments to the Bank of the principal of or the interest on
any LIBO Rate Loan or any other payments made hereunder (other than taxes
imposed on all or any portion of the overall net income of the Bank), or
imposing, modifying or applying any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, credit
extended by, or any other acquisition of funds for loans by the Bank, or
imposing on the Bank or on the London Interbank Market any other condition
affecting this Agreement or the portion or portions of any Note bearing interest
at LIBO Rates so as to increase the cost to the Bank of making or maintaining
LIBO Rate Loans or to reduce the amount of any sum received or receivable by the
Bank under any Note (whether of principal, interest or otherwise); or
(iii) if after the date of any LIBO Rate Loan, the Bank shall have
determined that the applicability of any law, rule, regulation or guideline
adopted or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any domestic or
foreign governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by the Bank with any
request or directive regarding capital adequacy of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the Bank's capital as a consequence of the Bank's obligations with
respect to the Advances or under any Note or this Agreement, to a level below
that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies, if any, with respect
to capital adequacy).
Subject to the provisions of Section 3.2 hereof, in the event of any of the
foregoing, the Borrower shall have the right to convert any LIBO Rate Loan
affected thereby to a Base Rate Loan.
Any amount or amounts payable by the Borrower to the Bank in accordance
with the provisions of this Section shall be paid within ten (10) days of
receipt by the Borrower from the Bank of a statement setting forth the amount or
amounts due and the basis for the determination from time to time of such amount
or amounts, which statement shall be conclusive and binding upon the Borrower
absent manifest error. Failure on the part of the
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Bank to demand compensation for any increased costs in any Interest Period shall
not constitute a waiver of the Bank's right to demand compensation for any
increased costs incurred during any such Interest Period or in any other or
subsequent or prior Interest Period.
IV. CONDITIONS PRECEDENT
4.1 Initial Conditions Precedent. The obligation of the Bank to make the
initial Advance or Term Advance hereunder, whichever is earlier, is subject to
the receipt by the Bank of each and every one of the following on or before the
disbursement of such Advance or Term Advance (as the case may be) in form and
substance satisfactory to the Bank:
(a) An originally executed copy of this Agreement, the Revolving Credit
Note, the Term Note, the Guaranty Agreement, the Pledge Agreement and the
Custody Agreement, duly executed by the respective parties thereto;
(b)(b) An originally executed copy of the Borrowing Base Certificate, duly
executed by the Borrower and dated as of the Effective Date;
(c) A copy of the certificate of incorporation and bylaws of the Borrower
and the Guarantor, in each case, certified as a true copy by the Secretary or an
Assistant Secretary of the Borrower or the Guarantor, as the case may be;
(d) A good standing certificate with respect to each of the Borrower and
the Guarantor issued as of a recent date by the Secretary of State or other
appropriate official of (i) the state or other jurisdiction of its incorporation
and (ii) each state or other jurisdiction in which it is qualified or authorized
to transact business as a foreign corporation;
(e) A certificate of the Secretary or an Assistant Secretary of the
Borrower and the Guarantor certifying the names and true signatures of the
officers of the Borrower and the Guarantor authorized to sign this Agreement and
the other Loan Documents to be signed by it;
(f) A copy of the resolutions approved by the Board of Directors of the
Borrower authorizing the execution, delivery and performance by the Borrower of
each of the Loan Documents to which it may be a party, certified as a true copy
by the Secretary or an Assistant Secretary of the Borrower;
(g) A certificate of the Borrower and the Guarantor, dated as of the
Effective Date, to the effect that (i) each of the representations and
warranties of the Borrower and the Guarantor
-14-
set forth in the Loan Documents to which each may be a party are true, correct
and complete with the same effect as though such representations and warranties
were made on and as of such date and (ii) no Default or Event of Default then
exists and is continuing;
(h) [deleted]
(i) A written opinion of counsel to the Borrower and the Guarantor,
addressed to the Bank and dated as of the Effective Date, covering the matters
set forth in Exhibit D hereto and such other matters as the Bank or its counsel
may reasonably request, which opinion shall be satisfactory in form and
substance to the Bank;
(j) [deleted]
(k) Payment of all fees, costs and expenses incurred by the Bank in
negotiating and preparing the Loan Documents, or otherwise incurred by the Bank
in consummating the transactions described herein, including without limitation,
all counsel fees and disbursements, filing fees and recording fees;
(l) Payment of the fee set forth in Section 2.8 hereof; and
(m) Such other documents, approvals, opinions, certificates or instruments
as the Bank may reasonably require.
4.2 Additional Conditions Precedent for All Advances. In addition to the
conditions precedent set forth in Section 4.1, the Bank shall have no obligation
to make any Advance or Term Advance unless the following conditions precedent
have either been satisfied by the Borrower or waived by the Bank concurrently
with the making of such advance:
(a) The Loan Documents shall be in full force and effect and no Default or
Event of Default shall exist and be continuing;
(b) No event, action or proceeding shall have occurred (and the Bank shall
not have become aware of facts or conditions not previously known) since the
Effective Date which, in the reasonable opinion of the Bank, then has a
materially adverse effect upon, or could reasonably be expected to materially
adversely affect, (i) the operations, business, property, assets, condition
(financial or otherwise) or prospects of the Borrower or the Guarantor or (ii)
the rights and remedies of the Bank, or the ability of the Borrower or the
Guarantor to perform their respective obligations, under any of the Loan
Documents;
-15-
(c) Each of the representations and warranties made by the Borrower and the
Guarantor in or pursuant to the Loan Documents to which each may be a party
shall be true and correct in all material respects on and as of such date as if
made on and as of such date;
(d) After giving effect to the making of such Advance or Term Advance, the
aggregate outstanding principal amount of all Loans shall not exceed the
Borrowing Base and the aggregate outstanding principal amount of all Advances
shall not exceed the Available Commitment; and
(e) The Bank shall have received a Borrowing Base Certificate duly executed
by an authorized officer of the Borrower and dated as of the date of such
Advance or Term Advance.
Each request for an Advance or Term Advance hereunder shall constitute a
representation and warranty by the Borrower as of the date of such Advance or
Term Advance that the conditions contained in this Section 4.2 have been
satisfied.
V. REPRESENTATIONS AND WARRANTIES
5. In order to induce the Bank to enter into this Agreement and, among
other things, make the Term Loan and Advances hereunder, the Borrower and the
Guarantor hereby represent, warrant and agree (each, as to itself) that:
5.1 Organization; Power; Qualification. Each (i) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (ii) has the full power and authority to own and operate its
properties and assets and to carry on the business now conducted by it and (iii)
is qualified or authorized to do business and in good standing in all
jurisdictions wherein the character of the property owned or the nature of the
business conducted by it makes such qualification or authorization necessary,
except such jurisdictions in which the lack of qualification or authorization
does not materially adversely effect its business, assets, liabilities, results
of operations or financial condition. As of the Effective Date (but not as of
any date thereafter), the Guarantor owns approximately 50% of the issued and
outstanding capital stock of the Borrower.
5.2 Authorization of Agreement. The Borrower and the Guarantor have full
power and authority to execute, deliver and perform any action or step which may
be necessary to carry out the terms of the Loan Documents to which each may be a
party; each Loan Document to which each may be a party has been duly executed
and delivered by it and is the legal, valid and binding obligation of such party
enforceable in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy,
-16-
insolvency, or other laws relating to or affecting the enforcement of creditors'
rights generally and general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
5.3 No Legal Bar. The execution, delivery and performance of the Loan
Documents will not (i) violate any provision of any existing law, statute, rule,
regulation or ordinance (ii) conflict with, result in a breach of or constitute
a default under (a) the certificate of incorporation or by-laws of the Borrower
or the Guarantor or (b) any order, judgment, award or decree of any court,
governmental authority, bureau or agency known to the Borrower or the Guarantor,
or (c) any mortgage, indenture, lease, contract or other agreement or
undertaking to which the Borrower or the Guarantor is a party and which is
material to its business or operations or by which it or any of its material
properties or assets may be bound, or (iii) result in the creation or imposition
of any lien or other encumbrance upon or with respect to any property or asset
now owned by the Borrower or the Guarantor other than in favor of the Bank.
5.4 Consent. No consent, license, permit, approval or authorization of,
exemption by, notice to, report to, or registration, filing or declaration with
any Person is required, or, if required, has not been obtained, in connection
with the execution, delivery, performance or validity of the Loan Documents or
the transactions contemplated thereby.
5.5 Compliance With Law. Neither the Borrower nor the Guarantor is in
violation of any applicable law, rule, regulation, statute, ordinance, or any
order, judgment, award or decree of any court, governmental authority, bureau or
agency, the violation of which would reasonably be expected to have a material
adverse affect on its business, assets, liabilities, financial condition or
results of operations.
5.6 Environmental Matters. To the best of their respective knowledge, the
Borrower and the Guarantor have substantially complied with, and on the date
hereof are in substantial compliance with, all applicable environmental laws,
rules and regulations and the requirements of any material permits issued
thereunder, and there are no pending or, to the best of their knowledge,
threatened, claims involving environmental matters against the Borrower or the
Guarantor or any real property owned or operated by them that individually or in
the aggregate could reasonably be expected to materially and adversely affect
its business, assets, liabilities, financial condition or results of operations.
5.7 Properties. The Borrower and the Guarantor have good title to all of
their respective properties and assets
-17-
reflected in the financial statements referred to in Section 5.12 hereof (except
as sold or otherwise disposed of since the date of such financial statements),
free and clear of all liens, claims and encumbrances, except as otherwise
disclosed in said financial statements.
5.8 No Default. Except as otherwise disclosed in annual or periodic reports
filed by the Borrower with the Securities and Exchange Commission, neither the
Borrower nor the Guarantor is in default in any respect in the payment or
performance of any of its obligations or in the performance of any mortgage,
indenture or material lease, contract or other agreement or undertaking to which
it is a party or by which it or any of its properties or assets may be bound,
which default may materially adversely affect its business, assets, liabilities,
financial condition or results of operations, and no Default or Event of Default
has occurred and is continuing. Neither the Borrower nor the Guarantor is in
default under any order, award or decree of any court, arbitrator, or
governmental authority binding upon or affecting it or by which any of its
properties or assets may be bound or affected, and no such order, award or
decree, if any, materially adversely affects its ability to carry on its
business as presently conducted or to perform its obligations under the Loan
Documents to which it may be a party.
5.9 No Litigation. Except as otherwise disclosed in annual or periodic
reports filed by the Borrower with the Securities and Exchange Commission, no
litigation, investigation or proceeding of or before any court, arbitrator or
governmental authority is currently pending, nor, to the best of its knowledge,
threatened, against the Borrower or the Guarantor or any of its properties and
revenues, which, if adversely determined, would materially adversely affect its
ability to carry on its business as presently conducted or to perform its
obligations under the Loan Documents to which it may be a party.
5.10 No Burdensome Restrictions. Neither the Borrower nor the Guarantor is
a party to or is bound by any contract or agreement or instrument or subject to
any restriction which materially and adversely affects its ability to perform
its obligations under the Loan Documents to which it may be a party.
5.11 Tax Returns and Payments. All federal, state and other tax returns of
the Borrower and the Guarantor required by law to be filed have been duly filed,
and all federal, state and other taxes, assessments and governmental charges or
levies upon the Borrower and the Guarantor or any of its properties, income,
profits or assets which are due and payable have been paid, except such tax
returns the nonfiling of which, and such taxes the non-payment of which, would
not have a material adverse effect upon its business, assets, liabilities,
financial condition or results
-18-
of operations and except for such taxes and assessments which the Borrower or
the Guarantor is disputing in good faith and for which the Borrower or the
Guarantor has properly established adequate reserves on its books for the
payment of such disputed taxes or assessments.
5.12 Financial Statements. The Borrower and the Guarantor have furnished to
the Bank true, correct and complete copies of their most recently available (i)
audited fiscal year financial statements, certified by the independent public
accountants whose report is attached thereto and (ii) unaudited interim
financial statements for the most recent fiscal period. Such financial
statements present fairly their financial condition and results of operations as
of the dates and for the periods indicated (subject, with respect to the
unaudited statements, to audit and normal year-end adjustments), and show all
known direct liabilities and all known contingent liabilities of a material
nature of the Borrower and the Guarantor in accordance with the respective
accounting principles applicable to them as of the dates and for the periods
indicated.
5.13 No Adverse Changes. Since the date of the most recent fiscal year
financial statements delivered to the Bank, no material adverse change has
occurred in the business, assets, liabilities, financial condition or results of
operations of the Borrower or the Guarantor.
5.14 ERISA. (a) The Borrower and the Guarantor are in compliance in all
material respects with the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and all regulations issued
thereunder.
(b) No "employee benefit plan", as defined in Section 3 of ERISA,
maintained by Borrower or the Guarantor, as from time to time in effect (the
"Plans"), nor any trusts created thereunder, nor any trustee or administrator
thereof, has engaged in a "prohibited transaction," as defined in Section 4975
of the Internal Revenue Code of 1986, as amended, which could subject the
Borrower or the Guarantor, any Plan or any such trust, or any trustee or
administrator thereof, or any party dealing with any Plan or any such trust to
the tax or penalty on prohibited transactions imposed by said Section 4975.
Neither any of the Plans nor any such trusts have been terminated, nor has there
been any "reportable event," as defined in Section 4043 of ERISA, or any
"accumulated funding deficiency" (as defined therein) with respect thereto.
Neither the Borrower nor the Guarantor has incurred any liability to the Pension
Benefit Guaranty Corporation.
5.15 Federal Reserve Regulations. Neither the Borrower nor the Guarantor is
engaged principally, or as one of its
-19-
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulations U and
X of the Board of Governors of the Federal Reserve System). No part of any of
the Term Loan or any Advance hereunder shall be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
5.16 Solvency. On and as of the date hereof and the date of each Advance,
and after giving effect to all Obligations which may be created hereunder, (i)
the sum of the assets, at a fair valuation, of the Guarantor will exceed its
debts, (ii) the Guarantor has not incurred and does not intend to, or believe
that it will, incur debts beyond its ability to pay such debts as such debts
mature, and (iii) the Guarantor will have sufficient capital and assets with
which to conduct its business. For purposes of this Section, the term "debt"
means any liability on a claim, and the term "claim" means a right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured.
5.17 Acknowledgment of Financial Condition. The Guarantor acknowledges that
it is aware of the financial condition of the Borrower and has made its own
investigation and review thereof, without reliance upon any statement or
representation of the Bank or any officer, employee or agent thereof. The
Guarantor further acknowledges that the Bank is relying upon the guaranty by the
Guarantor of the Obligations and would not have entered into this Agreement in
the absence of such guaranty.
5.18 Use of Proceeds. All Advances shall be used for working capital and
general corporate purposes for the Borrower and its subsidiaries and the
proceeds of the Term Loan shall be used for capital expenditures and the
refinancing of existing leases for the Borrower and its subsidiaries.
5.19 Certain Regulations. Neither the Borrower nor the Guarantor is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, nor a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935.
5.20 Intellectual Property. The Borrower and the Guarantor own or license
all material patents, trademarks, service marks, tradenames, copyrights,
licenses, franchises and formulas, or rights with respect to the foregoing, or
has obtained assignments of all material licenses and other rights of material
nature necessary for the conduct of its business as now and
-20-
contemplated to be conducted, in each case, to its knowledge, without any
conflict with or infringement of the rights of others.
5.21 Accuracy and Completeness of Information. No document furnished or
statement made in writing to the Bank by or on behalf of the Borrower or the
Guarantor in connection with the negotiation, preparation or execution of this
Agreement or any of the other Loan Documents contains any untrue statement of a
material fact or omits to state any such material fact necessary in order to
make the statements contained therein not misleading.
VI. COVENANTS
6. The Borrower and the Guarantor, severally and not jointly, covenant and
agree that until all the Obligations have been satisfied and paid in full and
the Bank has no further obligation to make any Advance hereunder, the Borrower
and the Guarantor will comply with the following covenants:
6.1 Preservation of Existence. The Borrower and the Guarantor will do or
cause to be done all things necessary to preserve and maintain in full force and
effect its corporate existence and all contracts, rights, licenses, permits,
franchises, patents, trademarks and trade names, all of the foregoing to the
extent the same are, in its reasonable judgment, necessary or material to the
proper conduct of its business and shall qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction in which
the character of the property owned or the nature of the business conducted by
it makes such qualification or authorization necessary, except such
jurisdictions in which the lack of qualification or authorization does not
materially adversely affect its business, results of operations or financial
condition.
6.2 Compliance with Laws. The Borrower and the Guarantor will comply with
all laws, ordinances, governmental rules and regulations to which it or its
properties or assets is, or might become subject (unless the same shall be
contested in good faith and by appropriate proceedings and such contest shall
operate to stay any such non-compliance), the noncompliance with which would
materially interfere with the performance of its obligations under the Loan
Documents to which it is a party or with the proper conduct of its business.
6.3 Accounting Methods; Inspections. The Borrower and the Guarantor will
maintain a system of accounting established and administered in all material
respects in accordance with all accounting principles applicable to it and will
keep adequate records and books of account in which complete entries will be
made in all material respects in accordance therewith. The Borrower and the
Guarantor will permit officers
-21-
and representatives of the Bank to visit and inspect any of their respective
properties or assets and to examine and make extracts of its books of account at
all reasonable times and to such reasonable extent as the Bank may reasonably
request.
6.4 Maintenance of Property; Insurance. The Borrower and the Guarantor will
keep all material property necessary in its business in good working order and
condition, subject to ordinary wear and tear and routine maintenance. The
Borrower and the Guarantor will maintain with reputable insurance companies, to
the same extent and in such amounts and manner as do companies engaged in
similar lines of business under similar circumstances, insurance on its
business, fixed assets, inventory and other properties, workers' compensation or
similar insurance as required by law and adequate public liability and
malpractice insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any property
owned, occupied or controlled by it.
6.5 Payment of Taxes. The Borrower and the Guarantor will pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or upon any of its properties or assets before
the same shall become delinquent; provided, however, that none of the foregoing
need be paid while being contested in good faith and by appropriate proceedings,
so long as adequate book reserves have been established in accordance with all
accounting principles applicable to it with respect thereto and its title to,
and its right to use, its properties are not materially adversely affected
thereby.
6.6 Information Covenants. The Borrower and the Guarantor will each furnish
the following information to the Bank (as to itself):
(a) Quarterly Financial Statements. As soon as practicable and, in any
case, within 50 days after the close of each of the first three quarterly
accounting periods in each fiscal year, a balance sheet as at the end of such
quarterly period and the related statement of income for such period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, setting forth in comparative form the figures for the corresponding
periods of the previous fiscal year, which financial statements shall be
certified by an authorized officer of the Borrower or the Guarantor, as the case
may be, including all adjustments (which include only normal recurring
adjustments) necessary to present fairly, in accordance with generally accepted
accounting principles (or, in the case of the Guarantor, statutory accounting
principles), its financial condition as at the end of such period and the
results of operations and changes in cash flows for such period and for the
-22-
elapsed portion of the fiscal year ended with the last day of such period.
(b) Annual Statements. As soon as practicable and, in any case, within 105
days after the end of each fiscal year, a balance sheet as at the end of such
fiscal year and the related statements of income and cash flows for such fiscal
year, setting forth in comparative form the figures as at the end of and for the
previous fiscal year. Such statements are to be in accordance with generally
accepted accounting principles (or, in the case of the Guarantor, statutory
accounting principles) and certified by independent certified public accountants
of recognized standing in accordance with generally accepted auditing standards.
(c) No-Default Certificate. At the time the financial statements are
furnished pursuant to subsections (a) and (b) above, the Borrower and the
Guarantor shall also furnish a Certificate duly executed by an authorized
officer of the Borrower and the Guarantor dated as of the last day of such
quarterly period or fiscal year, as the case may be, substantially in the form
of Exhibit E hereto.
(d) Copies of Other Reports. As soon as practicable, copies of (1) all such
financial statements and reports as the Guarantor shall send to its
policyholders and (2) all reports, registration statements, proxy statements and
other filings made by the Borrower with the Securities and Exchange Commission
or any national securities exchange.
(e) Notice of Litigation and Other Matters. Prompt notice of:
(1) the commencement of any proceeding or investigation by or before
any governmental body or any action or proceeding in any court or before
any arbitrator against or in any other way relating adversely to the
Borrower or the Guarantor or any of their respective properties, assets or
businesses, which, if adversely determined, would materially and adversely
affect its business, assets, liabilities, financial condition or results of
operations;
(2) any written notice received from any administrative official or
agency or any order or ruling which materially and adversely affects the
business, assets, liabilities, financial condition or results of operations
of the Borrower and the Guarantor;
(3) any amendment of the certificate of incorporation or by-laws of
the Borrower or the Guarantor which materially and adversely affects its
ability to perform its Obligations under any of the Loan Documents to which
it may be a
-23-
party; and
(4) any Default or Event of Default hereunder.
(f) ERISA.
(1) As soon as possible, and in any event within 30 days after any
executive officer of the Borrower or the Guarantor knows or has reason to
know that any material reportable event (as defined in Section 4043 of
ERISA) with respect to any Plan has occurred, a statement of the chief
financial officer setting forth details as to such reportable event and the
action that it proposes to take with respect thereto, together with a copy
of the notice of such reportable event given to the Pension Benefit
Guaranty Corporation; and
(2) Promptly after receipt thereof, a copy of any notice the Borrower
or the Guarantor may receive from the Pension Benefit Guaranty Corporation
relating to the intention of said Corporation to terminate any Plan or to
appoint a trustee to administer any Plan.
(g) Other Information. From time to time, such other information or
documents, including without limitation, all "management letters" received from
any certified public accountants, as the Bank may reasonably request.
6.7 Accuracy and Completeness of Information. All written information,
reports, statements and other papers and data furnished to the Bank pursuant to
any provision or term of any of the Loan Documents shall be, at the time the
same is so furnished, complete and correct in all material respects.
6.8 Further Documentation. At any time and from time to time upon the
Bank's written request, the Borrower and the Guarantor will promptly and duly
execute and deliver such further documents and instruments and do such further
acts and things as the Bank may reasonably request in order to obtain the full
benefits of this Agreement and the Loan Documents and the rights and powers
herein and therein granted.
VII. EVENTS OF DEFAULT
7. Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental body.
7.1 The Borrower (i) fails to pay any principal amount payable under any
Note or hereunder on any date when due or (ii)
-24-
fails to make any payment of interest or any other fee or amount payable under
any Note or hereunder within 5 days from any day when due.
7.2 If any warranty or representation made by the Borrower or the Guarantor
contained herein or in any Loan Document or in any document furnished in
compliance with the provisions hereof or thereof is false or incorrect in any
material respect when made.
7.3 The Borrower or the Guarantor shall default in the performance or
observance of any other covenant or agreement contained in this Agreement or in
any Loan Document and such default shall continue unremedied for 30 days after
notice from the Bank of such default.
7.4 The Borrower or the Guarantor shall (i) default in any payment with
respect to any indebtedness for money borrowed which exceeds $1,000,000 in the
aggregate (other than the Notes), beyond the period of grace, if any, provided
in the instrument or agreement under which such indebtedness was created, (ii)
default in the observance or performance of any agreement or condition relating
to any such indebtedness contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur, the effect of
which default or other event is to cause, or to permit the holder or holders of
such indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, with or without the giving of notice if required, such indebtedness to
become due prior to its stated maturity; or any such indebtedness shall be
declared due and payable prior to its stated maturity.
7.5 (i) The Borrower or the Guarantor shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets, or the Borrower or the
Guarantor shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Borrower or the Guarantor any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against the Borrower or the Guarantor
or any of their respective subsidiaries any case,
-25-
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets, which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower or the Guarantor
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clauses (i), (ii) or (iii)
above; or (v) the Borrower or the Guarantor shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due.
7.6 A final non-appealable judgment shall be entered against the Borrower
or the Guarantor by any court for the payment of money which, together with all
other outstanding judgments against the Borrower or the Guarantor exceeds
$1,000,000 in the aggregate, which judgment is not fully covered by insurance,
or a warrant of attachment or execution or similar process shall be issued or
levied against property of the Borrower or the Guarantor which together with
other such property subject to other such process, exceeds in value $1,000,000
in the aggregate and, if within 30 days after the entry, issue or levy thereof,
such judgment, warrant or process shall not have been discharged or stayed
pending appeal, or, if within 30 days after the expiration of any such stay,
such judgment, warrant or process shall not have been discharged.
7.7 (i) A reportable event (as defined in Section 4043(b) of Title IV of
ERISA) shall have occurred with respect to any Plan of the Borrower or the
Guarantor or any Plan of the Borrower or the Guarantor shall have been
voluntarily terminated as provided in Section 4041(a) of ERISA, in either case,
if the pro forma effect thereof shall cause or result in a material adverse
change in or to the business, assets, liabilities, financial condition or
results of operations of the Borrower or the Guarantor; (ii) A trustee shall be
appointed by a United States District Court to administer any Plan; or (iii) the
Pension Benefit Guaranty Corporation shall institute proceedings to terminate
any Plan.
VIII. REMEDIES
8.1 Upon the occurrence of an Event of Default set forth in Section 7.5,
the Bank shall have no obligation to make any further Advance or Term Advance,
and all amounts outstanding (with accrued interest thereon) and all other
amounts owing under the Notes and this Agreement, shall immediately become due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower and the Guarantor.
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8.2 Upon the occurrence of any other Event of Default, the Bank shall have
no obligation to make any further Advance or Term Advance and the Bank may, by
written notice to the Borrower, declare all amounts outstanding (with accrued
interest thereon) and all other amounts owing to it under the Notes and this
Agreement, to be due and payable forthwith, whereupon the same shall immediately
become due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the Borrower and the
Guarantor.
8.3 If any Event of Default shall occur, the Bank may exercise, in addition
to all other rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, any and all rights and remedies to which it may be entitled under
applicable law. Without limiting the generality of the foregoing, the Bank may,
without any requirement of notice, setoff any and all amounts owing by the
Borrower or the Guarantor to it against any deposit or other account, whether
general or special, maintained in the Bank by the Borrower or the Guarantor or
any other property of the Borrower or the Guarantor which may now or hereafter
be in the Bank's possession or control, and such right of setoff shall be deemed
to have been exercised immediately upon such stated or accelerated maturity as
aforesaid even though such setoff is not noted on the Bank's records until a
later time. The Borrower and the Guarantor further grant to the Bank a lien and
security interest in and to the foregoing as collateral security for the
Obligations and agrees that, with respect thereto, the Bank shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code as
in effect in any applicable jurisdiction.
8.4 The Borrower and the Guarantor agree that each shall remain liable for
any deficiency if the proceeds of any sale or disposition of any security for
the Obligations is insufficient to pay all amounts to which the Bank is
entitled, the Borrower and the Guarantor also being liable for the reasonable
fees of any attorneys employed by the Bank to collect such deficiency. The
Borrower and the Guarantor expressly agree that it shall not be necessary or
required for the Bank to file suit or proceed to assert or obtain a claim
against any party or foreclose against or seek to realize upon any security now
or hereafter existing for the Obligations or exercise or assert any other right
or remedy to which the Bank may be entitled in connection with the Obligations
or any security or guarantee relating thereto, before or as a condition of
enforcing the liability of the Borrower and the Guarantor under the Loan
Documents.
8.5 The Borrower and the Guarantor also agree to pay all reasonable Bank
Costs incurred with respect to the collection
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of any of the Obligations and the enforcement of any of the Bank's rights
hereunder.
8.6 The Borrower and the Guarantor hereby waive presentment, demand,
protest or any notice of any kind in connection with this Agreement and the
Notes except as otherwise expressly provided herein.
IX. INDEMNIFICATION
9.1 Indemnification. The Borrower and the Guarantor, jointly and severally,
agree to pay, reimburse, indemnify and hold harmless, the Bank, its directors,
officers, employees, agents and representatives from and against any and all
actions, costs, damages, disbursements, expenses (including reasonable
attorneys' fees), judgments, liabilities, losses, obligations, penalties and
suits of any kind or nature whatsoever with respect to:
(i) the development, preparation, execution, performance, enforcement,
interpretation, amendment, modification, waiver or consent of any of the
Loan Documents;
(ii) the Bank's exercise of any right or remedy granted to it in any
of the Loan Documents, the collection or enforcement of any of the
Obligations and the proof or allowability of any claim arising under any of
the Loan Documents, whether in any bankruptcy or receivership proceeding or
otherwise;
(iii) any claim of third parties, and the prosecution or defense
thereof, arising out of or in any way connected with any of the Loan
Documents; and
(iv) any and all recording and filing fees and taxes, and any and all
liabilities with respect thereto, or resulting from any delay in paying
stamp and other taxes, if any, which may be payable or determined to be
payable in connection with the Loan Documents.
Notwithstanding the foregoing, the Bank shall not be entitled to any
indemnification in the event that it shall be finally determined by a court of
competent jurisdiction that the Bank has breached this Agreement or in any suit
brought by the Borrower or the Guarantor against the Bank in which it shall be
finally determined that the Bank is liable to the Borrower or the Guarantor.
X. MISCELLANEOUS
10.1 Notice. All notices and other communications given to or made upon any
party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be
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in writing (including telex, telecopy or telegraphic communication) and mailed
(by first class, United States mail, postage prepaid), telexed, telecopied,
telegraphed or hand delivered to the respective parties, as follows:
Bank: Summit Bank
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Att: Xxxxx Xxxxxxx
- with a copy to -
Xxxxx & Samson
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx Xxxxxxxxxx, Esq.
Borrower: CareAdvantage, Inc.
000-X Xxxxx 0 Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx X. Xxxxx
- with a copy to -
Xxxxxxx Xxxxxx & Green
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxxx X. Xxxxxx, Esq.
Xxxx Xxxxxx, Esq.
Guarantor: Blue Cross and Blue Shield
of New Jersey, Inc.
Three Xxxx Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx X. Pures
- with a copy to -
Blue Cross and Blue Shield
of New Jersey, Inc.
Three Xxxx Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Att: Xxxxx Xxxxxxx Xxxxxx, Esq.
or to such changed address as may be fixed by notice. All such notices and other
communications shall, except as otherwise expressly herein provided, be
effective when received by the party
-29-
to whom properly addressed, the written receipt by any employee of any such
party constituting sufficient evidence of such receipt, in the case of telex or
telecopy, when received, and in the case of telegraph, when delivered to the
telegraph company, charge prepaid.
10.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Bank, any right, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
10.3 Survival of Agreements. All agreements, representations and warranties
made herein, and in any certificates delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the Notes and the making of any
Advance or Term Advance for so long as any Loan is outstanding or the Bank has
any obligation to make any Advance or Term Advance hereunder.
10.4 Amendment. No modification, amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by the Borrower or the
Guarantor shall in any event be effective unless the same shall be in writing
and signed by the party granting such modification, amendment or waiver, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.
10.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Guarantor, the Bank, all future holders of
the Notes and their respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights under this Agreement without the
prior written consent of the Bank. The Bank shall be free to grant, sell or
transfer one or more assignments, participating interests or participation
rights in, to and under the Notes and its rights hereunder without notice to, or
the consent of, the Borrower or the Guarantor; provided, however, that no
assignment shall be binding upon the Borrower until it receives notice thereof.
10.6 Severability. In case any one or more of the provisions contained in
this Agreement or the Notes should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby.
10.7 Counterparts. This Agreement may be executed by
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the parties hereto on any number of separate counterparts and all such
counterparts taken together shall constitute one and the same instrument.
10.8 Governing Law; No Third Party Rights. This Agreement and the Notes and
the rights and obligations of the parties hereunder and thereunder shall be
governed by and construed and interpreted in accordance with the law of the
State of New Jersey. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other person shall
have any right, benefit, priority or interest in, under or because of the
existence of, this Agreement.
10.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.10 JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY NEW JERSEY STATE OR UNITED STATES FEDERAL COURT
SITTING IN NEW JERSEY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE NOTES, AND EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW JERSEY STATE OR FEDERAL COURT. EACH OF THE
OBLIGORS IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE DELIVERY OF COPIES OF SUCH PROCESS TO SUCH PARTY AT
ITS ADDRESS, AND IN THE MANNER, SPECIFIED IN SECTION 10.1.
10.11 Confidentiality. The Bank agrees to use reasonable precautions to
keep confidential, in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or Guarantor pursuant to
this Agreement which is identified as being confidential at the time the same is
delivered to the Bank, and to limit the use of the same to the transactions and
relationship described herein, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Bank, (iii) to bank
examiners, auditors or accountants, (iv) in connection with any litigation to
which the Bank is a party or (v) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) agrees to use reasonable precautions to keep such
information confidential; and provided finally that in no event shall the Bank
be obligated or required to return any materials furnished by the Borrower or
Guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and
-31-
duly authorized officers as of the day and year first above written.
ATTEST: CAREADVANTAGE, INC.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
ATTEST: BLUE CROSS AND BLUE SHIELD
OF NEW JERSEY, INC.
By: By:
--------------------------- ----------------------------
Name: Name:
Title: Title:
SUMMIT BANK
By:
----------------------------
Name:
Title:
-32-
EXHIBIT A
Form of Revolving Credit Note
[See Exhibit 10(f)(1)]
-33-
EXHIBIT B
Form of Term Note
[See Exhibit 10(f)(2)]
-34-
EXHIBIT C
Form of Borrowing Base Certificate
[Not attached hereto; on file with the Company]
-35-
EXHIBIT D
Form of Opinion of Counsel
[Not attached hereto; on file with the Company]
-36-
EXHIBIT E
Form of No-Default Certificate
[Not attached hereto; on file with the Company]
-37-
