EXHIBIT 10.12
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BORROWERS: ACADIAN HOMECARE, L.L.C.
ACADIAN HOME HEALTH CARE SERVICES, L.L.C.
ACADIAN PREMIERE REGIONAL NURSING, L.L.C.
AHCG MANAGEMENT, LLC
ALABAMA HEALTH CARE GROUP, LLC
ARKANSAS HEALTH CARE GROUP, LLC
CLAY COUNTY HOSPITAL HOME CARE, LLC
DALLAS COUNTY MEDICAL CENTER HOMECARE, L.L.C.
DIABETES SELF MANAGEMENT CENTER, INC.
EUREKA SPRINGS HOSPITAL HOMECARE, LLC
EUREKA SPRINGS HOSPITAL HOSPICE, LLC
HEBERT, THIBODEAUX, XXXXX AND XXXXXXX THERAPY GROUP, INC.
HOME NURSING CARE, L.L.C.
HOOD HOME HEALTH SERVICE, L.L.C.
LEAF RIVER HOME HEALTH CARE, LLC
LHC GROUP, INC.
LHC GROUP PHARMACEUTICAL SERVICES, L.L.C.
LHCG-II, L.L.C.
LHCG-III, L.L.C.
LHCG-IV, L.L.C.
LHCG V, L.L.C.
LHCG VIII, L.L.C.
LOUISIANA EXTENDED CARE HOSPITAL OF WEST MONROE, L.L.C.
LOUISIANA HEALTH CARE GROUP, L.L.C.
LOUISIANA HOMECARE OF DELHI, L.L.C.
LOUISIANA HOMECARE OF XXXXXXX, LLC
LOUISIANA HOMECARE OF MINDEN, L.L.C
LOUISIANA HOMECARE OF MISS-XXX, L.L.C.
LOUISIANA HOMECARE OF NORTH LOUISIANA, L.L.C
LOUISIANA HOMECARE OF NORTHWEST LOUISIANA, L.L.C.
LOUISIANA HOMECARE OF SLIDELL, L.L.C.
LOUISIANA HOSPICE & PALLIATIVE CARE, L.L.C.
LOUISIANA PHYSICAL THERAPY, L.L.C.
XXXXXXXX HOMECARE, X.X.
XXXX MEDICAL CENTER HOME HEALTH, L.L.C.
MENA MEDICAL CENTER HOSPICE, L.L.C.
MISSISSIPPI HEALTH CARE GROUP, L.L.C.
MISSISSIPPI HOMECARE, L.L.C.
MISSISSIPPI HOME CARE OF JACKSON, LLC
XXXXXX MEMORIAL HOSPITAL HOMECARE, LLC
OAK SHADOWS OF XXXXXXXX, L.L.C.
PICAYUNE HOMECARE, L.L.C.
PATIENT'S CHOICE HOSPICE AND PALLIATIVE CARE OF LOUISIANA, L.L.C.
RED RIVER HOMECARE, L.L.C.
ST. XXXXXXX HOMECARE, L.L.C.
ST. XXXXX HOMECARE, L.L.C.
ST. XXXXXX EXTENDED CARE HOSPITAL. L.L.C.
TEXAS HEALTH CARE GROUP HOLDINGS, L.L.C.
TEXAS HEALTH CARE GROUP, L.L.C.
TEXAS HEALTH CARE GROUP OF LONGVIEW, L.L.C.
TEXAS HEALTH CARE GROUP OF TEXARKANA, L.L.C.
TEXAS HEALTH CARE GROUP OF THE GOLDEN TRIANGLE, LLC
TRI-PARISH COMMUNITY HOMECARE, L.L.C.
BORROWER AGENT: LHC GROUP, INC.
Effective Date: April 13, 2005
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered
into and effective as of the above date (the "EFFECTIVE DATE") among RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation (the "SENIOR LENDER"), and each of
the entities listed above as Borrowers (each a "BORROWER" and collectively,
"BORROWER" or "BORROWERS"). This Second Amended and Restated Loan and Security
Agreement, including all Schedules, Exhibits, and Attachments hereto, as any of
the foregoing may be amended or restated from time to time in accordance with
the terms hereof, is referred to herein as this "AGREEMENT."
RECITALS
A. SunBridge Asset Management, L.L.C., Acadian HomeCare, Inc. and St.
Xxxxxx Group L.L.C., d/b/a Louisiana Healthcare Group entered into that certain
Loan and Security Agreement having an effective date of June 1, 2000 (the
"ORIGINAL LOAN AGREEMENT").
B. SunBridge Asset Management, L.L.C., Acadian HomeCare, Inc. and
Louisiana Healthcare Group, Inc., as successor to St. Xxxxxx Group L.L.C.,
entered into that certain Amended and Restated Loan and Security Agreement
having an effective date of April 30, 2001 (as amended, modified and
supplemented by the Amendments and the Joinder Agreements, the "FIRST AMENDED
LOAN AGREEMENT").
C. Senior Lender is the successor in interest to SunBridge Asset
Management, L.L.C.
D. The First Amended Loan Agreement was amended by Amendment Nos. 1, 2,
3, 4 and 5 to Loan and Security Agreement and Reaffirmation of Conversion
Guaranty and Affiliate Subordination (collectively, the "AMENDMENTS").
E. Joinder Agreement Nos. 1 and 2 have been executed by Senior Lender
and additional borrowers (collectively, the "JOINDER AGREEMENTS").
F. The First Amended Loan Agreement, the Amendments and the Joinder
Agreement added additional borrowers, which are presently Borrowers under the
First Amended Loan Agreement.
G. The amount outstanding pursuant to the Revolving Credit in existence
prior to the Effective Date of April 13, 2005 is $14,972,410.00.
Senior Lender and Borrowers desire to amend and restate the First
Amended Loan Agreement, inclusive of all of the Amendments and Joinder
Agreements, in its entirety, and agree that this Agreement will supersede the
Original Loan Agreement and the First Amended Loan Agreement, but without
constituting a novation.
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINED TERMS. Capitalized terms not otherwise defined in the body
of this Agreement shall have the meanings set forth in this Section 1.1:
ACCOMMODATION PAYMENT - has the meaning given such term in Section
14.14.
ADVANCE - means any advance of funds made by Senior Lender to any
Borrower under the Revolving Credit pursuant to the terms of this Agreement.
ADVANCE RATE - means the applicable percentage set forth on Exhibit A
hereto as the "Advance Rate," as determined or adjusted from time to time by
Senior Lender.
ADVANCE REQUEST - has the meaning given such term in Section 2.3.
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AFFILIATE - means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the 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.
ALLOCABLE AMOUNT - has the meanings given such term in Section 14.14.
ASSUMING BORROWERS - has the meaning given such term in Section 14.12.
AUTHORIZED OFFICER - means each officer or other Person (including, as
applicable, general partner, member or manager) authorized to sign the Loan
Documents and other documents and instruments in connection with the Loans on
behalf of the Borrower, and to act on behalf of the Borrower under the Loan
Documents, as reflected in the incumbency certificate and certified resolutions
delivered to Senior Lender pursuant to Section 4.1(b) and as updated from time
to time pursuant to Compliance Certificates delivered by Borrower to Senior
Lender pursuant to Section 9.5(a).
AVAILABILITY RESERVES - means such reserves to the Revolving Credit
Availability as the Senior Lender determines from time to time in its reasonable
credit judgment are necessary or appropriate, which reserves may relate to the
assets used to determine the Revolving Credit Borrowing Base, negative forecasts
and/or trends in the Borrowers' business, industry, profits, operations or
financial condition, or to any other assets, liabilities or other matter or
circumstance deemed appropriate by the Senior Lender in its reasonable
discretion based upon the lending practices of Senior Lender.
BATON ROUGE - means Baton Rouge HomeCare, L.L.C., a Louisiana limited
liability company.
BATON ROUGE EXCLUDED SUBSIDIARY PERIOD - has the meaning given such
term in Section 14.15.
BANKRUPTCY CODE - means The Bankruptcy Reform Act of 1978 (Pub. L. No.
95-598; 11 U.S.C.), as amended or supplemented from time to time, or any
successor statute, and any and all rules and regulations issued or promulgated
in connection therewith.
BENEFIT PLAN - means a management incentive plan entitling officers or
employees of Borrowers to purchase common stock of Parent or providing options,
stock appreciation rights, restricted stock awards or performance awards to
officers or employees of Borrowers duly adopted by the Board of Directors of
LHC.
BOOKS AND RECORDS - means any and all presently existing and hereafter
acquired or created books and records of the Borrowers respecting Borrowers'
businesses, including without limitation all records (including maintenance and
warranty records), ledgers, computer programs, software, disc or tape files,
printouts, runs, and other computer prepared information indicating,
summarizing, or evidencing the Collateral or that is otherwise used to access
and process the Collateral.
BORROWER(s) - has the meaning given such term in the preamble of this
Agreement.
BORROWER AGENT - has the meaning set forth in Section 2.11.
BUSINESS DAY - means each day which is not a day on which banking
institutions in the city of Portland, Oregon or Minneapolis, Minnesota are
authorized or obligated by law or executive order to close.
CMS - means Center for Medicare and Medicaid Services.
CAPITAL EXPENDITURES - means any payment made directly or indirectly
for the purpose of acquiring or constructing fixed assets, real property or
equipment which in accordance with GAAP would be added as a debit to the fixed
asset account of the Person making such expenditure, including, without
limitation, amounts paid or payable under any conditional sale or other title
retention agreement or under any lease or other periodic payment
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arrangement which is of such a nature that payment obligations of the lessee or
obligor thereunder would be required by GAAP to be capitalized and shown as
liabilities on the balance sheet of such lessee or obligor.
CAPITALIZED LEASE - means any lease of property (real, personal or
mixed) which in accordance with GAAP, should be capitalized on the lessee's
balance sheet or for which the amount of the asset and liability thereunder as
if so capitalized should be disclosed in a note to such balance sheet.
CAPITATED CONTRACTS - means all of Borrowers' contracts whether
presently existing or hereafter executed between Borrower and various health
maintenance organizations and all proceeds therefrom. A list of Borrower's
presently existing Capitated Contracts is at Schedule 8.7.
CAPITATED CONTRACT RIGHTS - means all of Borrower's rights to payment
of any kind arising from or out of Capitated Contracts or any other contracts or
rights to payment from health service contracts whether presently existing or
hereafter executed between Borrower and various health maintenance organizations
CAPITAL STOCK - means any and all shares, interests, membership
interests, participations or other ownership equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation, including but not limited to general
partnerships, limited partnerships, and limited liability companies) and any and
all warrants or options to purchase any of the foregoing.
CHANGE OF CONTROL - means the time at which:
(a) With respect to LHC (i) a transaction or series of related
transactions pursuant to which any Person or group of related Persons
acquires shares (or securities exercisable for or convertible into
shares) representing more than fifty percent (50%) of the outstanding
common stock of LHC, pursuant to a tender offer or exchange offer or
otherwise (other than in connection with the IPO so long as a majority
of members of the Board of Directors are Continuing Directors after the
IPO); or (ii) a merger, consolidation, share exchange or other business
combination involving LHC, if, upon consummation of such transaction,
the Persons who were stockholders of LHC immediately prior to such
transaction continue to hold, following such transaction, less than
fifty percent (50%) of the outstanding equity securities of the entity
surviving such merger, consolidation or reorganization, or the parent
of such entity; or (iii) a majority of the members of the Board of
Directors of LHC do not constitute Continuing Directors;
(b) LHC ceases to directly or indirectly own and control all
of the issued and outstanding capital stock of any of the Wholly-Owned
Borrowers (except as otherwise permitted by Section 9.6 or otherwise by
this Agreement);
(c) A material portion of the Borrowers', taken as a whole,
assets shall be sold, leased, conveyed or otherwise disposed of as an
entirety or substantially as an entirety to any Person (other than a
Person who is or becomes a Borrower or Guarantor hereunder) in one or a
series of transactions; or Borrowers cease to have the right or ability
by voting power, contract or otherwise to control any Subsidiary (other
than an Excluded Subsidiary and sales and other dispositions permitted
by Section 9.6) or Controlled Entity; or
(d) Prior to the consummation of the IPO, either Xxxxx X.
Xxxxx or X. Xxxx Xxxxx ceases to be employed as the Chief Executive
Officer or Chief Financial Officer of Borrowers, respectively, or
otherwise becomes disabled and is not replaced within sixty (60) days
by a permanent Chief Executive Officer or Chief Financial Officer, as
applicable, each to Senior Lender's satisfaction, or any such
replacement Chief Executive Officer or Chief Financial Officer, as
applicable, ceases such employment or otherwise becomes disabled unless
replaced in the same time period and to Senior Lender's satisfaction.
CLOSING DATE - means the date on which this Agreement is executed and
each of the conditions set forth in Section 4.1 hereof are satisfied.
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CODE - means the Internal Revenue Code of 1986, as amended, including
any rules or regulations issued in connection therewith.
COLLATERAL - means all of the following with respect to the Borrowers,
whether now owned or hereafter acquired or arising, and wherever located:
(a) All accounts (including healthcare insurance receivables)
and all other forms of obligations owing to a Borrower, whether billed
or unbilled, arising out of the provision of services or the sale,
lease, license or assignment of goods or other property, including all
Receivables (including without limitation all Capitated Contract
Rights) and all Collections and other payments and proceeds with regard
thereto;
(b) All chattel paper (whether tangible or electronic);
(c) All Patient Lists and other lists of any of a Borrower's
customers;
(d) All Capitated Contract Rights and all proceeds therefrom;
(e) All computer hardware and software and all rights with
respect thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights
and indemnifications, and any substitutions, replacements, additions or
model conversions of any of the foregoing, except as prohibited by any
license agreement where Borrower is the licensee;
(f) All Deposit Accounts and all rights with respect thereto,
including, without limitation, any and all rights under deposit
agreements, lockbox agreements, servicing and similar agreements
relative thereto;
(g) All documents and instruments (including promissory
notes);
(h) All federal, state and local tax refunds;
(i) All equipment, including without limitation all vehicles
and all accessions, additions, attachments, improvements, substitutions
and replacements thereto;
(j) All fixtures;
(k) All goods, including without limitation Inventory,
equipment and any and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor;
(l) All general intangibles, including all payment
intangibles, any disproportionate share settlements, risk share
settlements, cost report settlements, capitation settlement payments or
other distributions to Borrower related to the Collateral or any
portion thereof or the related contracts, all trademarks, trademark
applications and registrations, as well as all copyrights, trade names,
patents, service marks and other intellectual property, all associated
good will and the right to xxx for past, present and future
infringement thereof throughout the world;
(m) All investment property;
(n) All licenses, Permits and governmental authorizations,
including all operating and medical licenses and permits, including any
Certificates of Need, provider contracts, general certificates and
other similar type authorizations;
(o) All letter-of-credit rights (whether or not the letter of
credit is evidenced by a writing);
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(p) All Books and Records;
(q) Any other contract rights or rights to the payment of
money of any kind not specifically mentioned above, insurance claims
and proceeds of or related to the foregoing, whether now existing or
hereafter arising; and
(r) proceeds and after-acquired property of any of the above
not otherwise specifically mentioned;
provided, however, Senior Lender acknowledges that the grant of the
Lien under the foregoing shall be subject to all applicable laws and regulations
governing Medicare and Medicaid receivables and assets (and the identifiable
proceeds thereof) and subject to documents evidencing Capitalized Leases and
purchase money Indebtedness to the extent, and only to the extent, such
documents prohibit the creation of a Lien on the assets leased or acquired
thereby. Notwithstanding the foregoing, the Collateral shall not include any of
the Borrowers' right, title and interest in or to the Borrowers' leasehold
interest under either the Gulf South Lease or the Mississippi Baptist Lease.
COLLECTIONS - means all funds received from and on behalf of Obligors
in payment of any amount owed with respect to Receivables; provided, however,
that any cash collections consisting of proceeds from the IPO shall not be
considered "Collections".
COMBINED or COMBINED - means, with reference to any term defined
herein, that term as applied to the accounts of the Borrower, combined in
accordance with GAAP.
CONSOLIDATED or CONSOLIDATED - means, with reference to any term
defined herein, that term as applied to the accounts of the Parent and its
subsidiaries, consolidated in accordance with GAAP.
CONTINUING DIRECTOR - means (a) any member of the board of directors of
LHC who was a director of LHC on the Closing Date, and (b) any individual who
becomes a member of the board of directors of LHC after the Closing Date if such
individual was appointed or nominated for election to the board of directors of
LHC by a majority of the Continuing Directors.
CONTROL AGREEMENT - means an agreement which satisfies the requirements
of "control" in favor of Senior Lender over a Deposit Account, investment
property, electronic chattel paper or letter-of-credit rights, within the
meaning of the UCC.
CONTROLLED ENTITY - shall mean any Person of which fifty percent (50%)
or less of the outstanding equity is owned by any of the Borrowers, but such
Person is controlled by any of the Borrowers as the general partner, managing
member, by means of a management agreement, contract or otherwise.
CUT-OFF PERIOD - as specified on Exhibit A.
DEBTOR RELIEF LAW - means, collectively, the Bankruptcy Code and all
other United States or foreign applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally, as amended from time to time.
DEFAULT - means any event specified in Section 11.1 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.
DEPOSIT ACCOUNT - means any demand, lockbox, time, savings, passbook or
similar account now or hereafter maintained by or for the benefit of Borrower,
with an organization that is engaged in the business of banking (including,
without limitation, banks, savings banks, savings and loan associations, credit
unions and trust companies), and all funds and amounts therein, whether or not
restricted or designated for a particular purpose, including without limitation,
all Lockbox Accounts, and all "deposit accounts" as defined in the UCC.
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EBITDA - means Net Income for any period, plus (i) interest expense,
(ii) taxes, (iii) depreciation, and (iv) amortization for such period, all
determined in accordance with GAAP.
ELIGIBLE RECEIVABLES - means Receivables created by the Borrower that
are not Ineligible Receivables and continue to be acceptable to Senior Lender
based on the Senior Lender's criteria of eligibility. In general, Receivables
shall be Eligible Receivables if they meet all of the criteria set forth below:
(a) Such Receivables arise from the actual and bona fide sale
and delivery of goods or rendition of services by Borrower in the
ordinary course of its business to a Person which is not an Affiliate
of Borrower, for which an invoice has been or will be issued in
accordance with Borrower's customary billing procedures;
(b) Such Receivables are not unpaid more than the Cut-off
Period specified on Exhibit A attached hereto and such Receivables
comply with the terms and conditions contained in Section 7.5 of this
Agreement;
(c) The Obligor with respect to such Receivables has been
directed in writing to make payment of all Collections and to mail all
related correspondence directly to the applicable Lockbox in accordance
with Section 5 hereof;
(d) Such Receivables do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the Obligor may be conditional or contingent;
(e) The chief executive office of the Obligor with respect to
such Receivables is located in the United States of America;
(f) The Obligor with respect to such Receivables has not
asserted or threatened to assert a counterclaim, defense or dispute and
does not have any right of setoff or recoupment against such
Receivables (but the portion of the Receivables of such Obligor in
excess of the amount at any time and from time to time subject to
setoff or counterclaim may be deemed Eligible Accounts);
(g) There are no facts, events or occurrences which would
impair the validity, enforceability or collectibility of such
Receivables or reduce the amount payable or delay payment thereunder;
(h) Such Receivables are subject to the first priority, valid
and perfected security interest of Senior Lender;
(i) There are no proceedings or actions (including, without
limitation, Insolvency Proceedings) which are threatened or pending
against the Obligor with respect to such Receivables which might result
in any material adverse change in any such Obligor's financial
condition;
(j) Such Receivables are not evidenced by or arising under any
instrument or chattel paper (as such terms are defined in the UCC);
(k) Such Receivables for a single Obligor do not have more
than a specified percentage of the total aged beyond the Cut Off
Period, whereby such percentage is specified as the Cross Age
Percentage in Exhibit A attached hereto.
(l) Such Receivables are owed by Obligors whose total
indebtedness to Borrower does not exceed statutory or contractual
limits established by such Obligors;
(m) Such Receivables are owed by Obligors deemed creditworthy
at all times by Senior Lender in good faith; and
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(n) Any other Receivables which Senior Lender, in its sole
discretion, deems Eligible Receivables.
The criteria for Eligible Accounts set forth above may be changed and Senior
Lender may establish any new criteria for Eligible Accounts from time to time in
Senior Lender's reasonable credit judgment exercised in good faith.
EMPLOYEE BENEFIT PLAN - means an employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by any of the
Borrowers.
ENVIRONMENTAL LAW - means the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("XXXX"), the Federal clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment.
ERISA - means the Employee Retirement Income Security Act of 1974, as
amended, including any rules or regulations issued in connection therewith.
ERISA AFFILIATE - means any Person which is treated as a single
employer with Borrower under Section 414 of the Code.
EVENT OF DEFAULT - has the meaning given such term in Section 11.1.
EXCLUDED SUBSIDIARY - means a Subsidiary that (i) has less than
$200,000 in assets, (ii) is named on Schedule 1.1 attached hereto or is
disclosed to be such to Senior Lender in connection with a Permitted
Acquisition, (iii) is not required to be a Borrower hereunder and (iv) has
EBITDA of less than $150,000.
FEES AND EXPENSES - means all present and future fees, costs, charges,
expenses and other amounts (excluding the principal of and interest on the
Loans) payable by or to be reimbursed by Borrowers to Senior Lender hereunder
and under the other Loan Documents. "Fees and Expenses" shall include, without
limitation, (i) all of the fees and other amounts described in Exhibit A as
payable by Borrowers to Senior Lender, including (as applicable), facility
origination fees, unused facility fees, overadvance fees, servicing fees, early
termination fees, annual facility fees, electronic interface fees, collection
clearance days, wire transfer fees, annual audit fees, and renewal fees, (ii)
the costs of lien searches (including tax lien and judgment lien searches),
pending litigation searches and similar items, (iii) fees and taxes impose in
connection with the filing of any financing statements, mortgages or other real
or personal property security documents, (iv) all expenses, costs and fees
incurred by the Senior Lender in connection with any action taken under Section
11 hereof, including all costs and expenses incurred in connection with the
collection, liquidation, enforcement, protection and defense of the Obligations,
the Collateral and the Senior Lender's rights under the Loan Documents, and (v)
all obligations of Borrowers to reimburse and indemnify Senior Lender for costs,
expenses and other amounts incurred by Senior Lender under the Loan Documents.
FISCAL YEAR-END - means the date of Borrowers' fiscal year-end shown on
Exhibit A.
FIXED CHARGE COVERAGE RATIO - means the ratio of (a) EBITDA minus
Capital Expenditures made during the measurement period minus the proportionate
amounts of EBITDA attributable to any minority interest or equity owner of a
Borrower during such period to (b) Fixed Charges.
FIXED CHARGES - means for any period, and each calculated for such
period (without duplication) the sum of (a) cash interest expense of the
Borrowers; (b) scheduled payments of principal with respect to all Indebtedness
of the Borrowers (whether or not such payments are actually made); and (c)
aggregate cash payments for federal, state, local and other income taxes for
such period.
GAAP - means generally accepted accounting principles in the United
States of America, consistently applied, which are in effect as of the date of
this Agreement. If any changes in accounting principles from those in effect on
the date hereof are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions
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by or are otherwise required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), and any of such changes results in a change in
the method of calculation of, or affects the results of such calculation of, any
of the financial covenants, standards or terms found herein, then the parties
hereto agree to enter into and diligently pursue negotiations in order to amend
such financial covenants, standards or terms so as to equitably reflect such
changes, with the desired result that the criteria for evaluating financial
condition and results of operations of Borrower shall be the same after such
changes as if such changes had not been made.
GOVERNING DOCUMENTS - means the certificate of formation, articles or
certificate of incorporation, by-laws, articles or certificate of organization,
operating agreement, or other organizational or governing documents of any
Person.
GOVERNMENT LOCKBOX - means a lockbox and/or deposit account in the name
of Borrower(s) maintained at the Lockbox Bank, or such other bank as is
reasonably acceptable to Senior Lender and Borrowers, to which Collections on
Governmental Receivables are sent.
GOVERNMENTAL AUTHORITY - means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority or subdivision thereof, domestic
or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
GOVERNMENTAL RECEIVABLES - means a Receivable that is payable by any of
the following Obligors: the United States, any individual state, any political
subdivision of a state, any agency or instrumentality of the United States or
any individual state. Governmental Receivables include any claims with respect
to Medicare or Medicaid programs or claims owing under any other program
established by federal or state law which provides for payments for healthcare
goods or services to be made to the providers of such goods or services.
GUARANTOR - means any Person who shall enter into a Guaranty Agreement
with respect to all or any part of the Obligations, in form and substance
satisfactory to the Senior Lender.
GULF SOUTH LEASE - means that certain Lease Agreement dated August 22,
2001 with Mississippi Health Care Group, L.L.C. as lessee and Gulf South Home
Health Care, L.L.C. as lessor.
HAZARDOUS SUBSTANCE - means (i) any "hazardous substance," as defined
by CERCLA, (ii) any "hazardous waste," as defined by RCRA, (iii) any petroleum
product, or (iv) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance regulated by any Environmental Laws.
HEALTH CARE LAWS - means any and all federal, state and local laws and
regulations governing (i) the manufacture, testing, distribution, possession,
assembly, repackaging, sale, administration or dispensing of health care or
medical devices, equipment or supplies, products, biologicals, drugs or goods,
or (ii) the rendering, provision, delivery, or supply of health care services,
or (iii) the ownership or operation of a health care facility or business, or
assets used in connection therewith, or (iii) the billing or submission of
claims, collection of accounts receivable, the handling of Protected Health
Information, and underwriting the cost of, or provision of management or
administrative services in connection with any and all of the foregoing, by
Borrowers and their subsidiaries, including, but not limited to, laws and
regulations under HIPAA and the Privacy Rule, and laws and regulations relating
to practice of medicine and other health care professions, professional fee
splitting, tax-exempt organization and charitable trust law applicable to health
care organizations, certificates of need, certificates of operations and
authority, fraud and abuse, kickbacks and rebates, false claims, physician
self-referral arrangements, fraudulent billing practices, payment under the
Medicare and Medicaid programs, and the federal Food, Drug & Cosmetic Act.
HIPAA - means the Health Insurance Portability and Accountability Act
of 1996, Pub. L. No. 104-191 and any revisions and amendments.
INDEBTEDNESS - means all of Borrowers' present and future (i) all
obligations for borrowed money, (ii) all obligations arising from installment
purchases of property or representing the deferred purchase price of property or
9
services acquired by such Person in respect of which such Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables,
operating lease obligations and other current liabilities incurred in the
ordinary course of business on terms customary in the trade), (iii) all
obligations evidenced by notes, bonds, debentures, acceptances or instruments,
or reimbursement and other obligations arising out of drawn or undrawn letters
of credit or bankers' acceptances issued for such Person's account, (iv) all
obligations, whether or not assumed, secured by any Lien or payable out of the
proceeds or production from any property or assets now or hereafter owned or
acquired by such Person, (v) the capitalized portion of lease obligations under
Capitalized Leases and the present value of rental payments under all synthetic
leases, (vii) all obligations for which such Person is obligated pursuant to any
interest rate swap, collar or other interest rate protection agreements or
derivative agreements or arrangements, and (viii) all obligations of such Person
upon which interest charges are customarily paid or accrued.
INELIGIBLE RECEIVABLES - means any Receivable (i) to which there is
corresponding or offsetting credit due to the applicable Obligor; or (ii) that
is otherwise ineligible under GAAP.
INSOLVENCY PROCEEDING - means any proceeding commenced by or against
any Person, under any provision of the Bankruptcy Code, or under any other
bankruptcy, insolvency or receivership law, including, but not limited to,
assignments for the benefit of creditors, formal or informal moratoriums,
compositions, receiverships, readjustments of debt, dissolutions, liquidations,
or extensions with some or all creditors.
INTEREST STATEMENT - has the meaning given such term in Section 2.6.
INVENTORY - means all present and hereafter acquired inventory (as
defined in the UCC), and including, without limitation, all merchandise,
inventory and goods, and all additions, substitutions and replacements thereof,
wherever located, together with all goods and materials used or usable in
manufacturing, processing, packaging or shipping same in all stages of
production (from raw materials through work-in-process to finished goods) and
all proceeds thereof of whatever sort.
IPO - means the initial public offering of LHC's common stock and the
transactions related thereto, all on terms generally as described in LHC's
Registration Statement on Form S-1as amended and filed with the United States
Securities and Exchange Commission on February 14, 2005.
KNOWLEDGE - has the meaning given such term in Section 1.2(e).
LEVERAGE RATIO - means the ratio of (a) Indebtedness to (b) EBITDA less
the proportionate amounts of EBITDA attributable to any minority interest or
equity owner of a Borrower, all as determined for Borrowers on a consolidated
basis (other than Excluded Subsidiaries), in accordance with generally accepted
accounting principles consistently applied, on a rolling four quarter basis;
provided however, that such calculation as of the fiscal quarter ending June 30,
2005 shall be for the most recent fiscal quarterly period ending on such date on
a cumulative, annualized basis and such calculation for the fiscal quarter
ending September 30, 2005 shall be for the two (2) most recent fiscal quarterly
periods ending on such date on a cumulative, annualized basis and such
calculation for the fiscal quarter ending December 31, 2005 shall be for the
three (3) most recent fiscal quarterly periods ending on such date on a
cumulative, annualized basis.
LHC - means LHC Group, Inc., a Delaware corporation.
LIEN - means any lien, encumbrance, mortgage, deed of trust, pledge,
security interest, hypothecation, assignment, deposit arrangement or other
preferential arrangement, or charge (including, any conditional sale or other
title retention agreement, or finance lease) of any kind.
LOAN - means each Advance made by Senior Lender to Borrowers pursuant
to this Agreement.
LOAN DOCUMENTS - means this Agreement, the Subordination Agreement, the
Business Associate Agreement and all other documents, instruments and
agreements, including lockbox agreements, control agreements, servicing
agreements financing statements, and deeds of trust or mortgages executed in
connection herewith or therewith.
10
LOCKBOX and/or LOCKBOX ACCOUNT - means any Lockbox or Lockbox Account
into which Collections are to be deposited pursuant to Section 5.
LOCKBOX BANK - means Xxxxx Fargo Bank, N.A., or any other depository
institution or institutions, the deposit accounts of which are insured by the
Federal Deposit Insurance Corporation or its successors, which other
institutions shall have been approved in writing by Senior Lender.
MATERIAL ADVERSE CHANGE - means a material adverse change or effect on
(i) the business, assets, financial condition, or results of operations of any
Borrower taken as a whole, including without limitation a material increase in
Receivables written off as uncollectible by a Borrower; (ii) the ability of the
Borrowers, taken as a whole, to perform its obligations under this Agreement and
the other Loan Documents (including, without limitation, repayment of the
Obligations as they come due); (iii) the validity or enforceability of this
Agreement, the other Loan Documents, or the rights or remedies of Senior Lender
hereunder and thereunder (including, without limitation, the ability of Senior
Lender to enforce any Obligations or realize upon any of the Collateral); (iv)
the value of the Collateral; or (v) the priority of Senior Lender's Liens with
respect to the Collateral.
MISSISSIPPI BAPTIST LEASE - means that certain Lease Agreement dated
September 30, 2003 with Mississippi Homecare of Xxxxxxx, LLC as lessee and
Mississippi Baptist Health Systems, Inc. and Mississippi Baptist Medical Center,
Inc. as lessors
MULTIEMPLOYER PLAN - means any multiemployer plan within the meaning of
ERISA maintained or contributed to by any Borrower or any ERISA Affiliate.
NET COLLECTIBLE VALUE (or "NCV") - means, with respect to any Type of
Eligible Receivables, the percentage determined by Senior Lender by which the
gross amount of such Eligible Receivables is multiplied to determine the net
collectible value of such Receivables for purposes of calculating the Revolving
Credit Borrowing Base hereunder. Net Collectible Value is generally calculated
in the manner described in Exhibit B. The initial Net Collectible Value for each
Obligor Type shall be as set forth on Exhibit A. Senior Lender may adjust Net
Collectible Value for any Type of Receivables as provided in Section 2.5.
NET INCOME - means, with respect to any Person, the net income (before
accounting for extraordinary items other than extraordinary nonrecurring items
of loss which would have an impact on current cash flows), after deduction of
all expenses, taxes and other proper charges, determined in accordance with
GAAP.
NON-GOVERNMENTAL RECEIVABLES - mean all Receivables that are not
Governmental Receivables.
OBLIGATIONS - means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations under any outstanding
letters of credit, premiums, liabilities (including all amounts charged to
Borrower's Revolving Credit Balance pursuant hereto), obligations, Fees and
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), costs of collection (including reasonable
professionals' fees and expenses), lease payments, guaranties, covenants, and
duties owing by any Borrower to Senior Lender of any kind and description
(whether pursuant to or evidenced by the Loan Documents or any other related
agreement, and irrespective of whether for the payment of money), whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising.
OBLIGOR - means any Person that is obligated to make payment with
respect to any Receivables.
OFFSET - means any amount, including any overpayment made to Borrower
or any Affiliate, with respect to any Obligor that is to be repaid by offset
against amounts then due to such Borrower by such Obligor. Offsets shall include
any amounts constituting penalties or assessments due to any state or federal
tax authorities, amounts deemed by any Obligor to be recoupments, inter-agency
or inter-creditor offsets and recoupments and any other amounts withheld or paid
to any person or entity other than Senior Lender to offset against any purported
liability of the Borrower.
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OPERATING ACCOUNT - means Borrowers' operating bank account(s)
designated to Senior Lender in writing.
PP&E - means the net book value of personal property and equipment
calculated in accordance with GAAP.
PATIENT LISTS - means all records, documents, lists, electronic media
or any other method of recordation that shows in any way any Person to whom any
Borrower supplies medical services, medical supplies, or medication, the name
and mailing address of such Person, a complete and accurate description of such
medical services, supplies or medication that is supplied to such Person, the
physician at whose direction such medical services, supplies or medication is
delivered, and all other information any Borrower uses in the course of such
Borrower's ordinary course of business to supply such Person.
PENSION PLAN - means an employee pension benefit plan within the
meaning of Section 3(2) of ERISA, including a Multiemployer Plan, maintained or
contributed to by any of the Borrowers or their respective ERISA Affiliates.
PERMITS - means any permit, approval, authorization, license,
registration, certification, certificate of authority, variance, permission or
consent required from a Governmental Authority or other Person under an
applicable Requirement of Law.
PERMITTED ACQUISITIONS - means any of the following:
(a) the acquisition by a Borrower of all of the outstanding Capital
Stock, or all or a substantial portion of the assets, or all or substantially
all of an operating division or business unit, of any other Person;
(b) a merger or consolidation of a Borrower with any other Person in
which such Borrower is the surviving corporation or such surviving corporation
becomes a Borrower hereunder; or
(c) or any other equity investment in any Person;
so long as (v) Borrowers have notified Senior Lenders at least fifteen
(15) days in advance of any such acquisition and provided Senior Lenders with
copies of all documents and other information reasonably requested by Senior
Lender in connection therewith (to the extent that such documents and
information can be provided by Borrowers using commercially reasonable efforts),
(w) such other Person is engaged in a line of business permitted pursuant to
Section 2.10 hereof, (x) within fifteen (15) days of the consummation of such
transaction, so long as such Person is not an Excluded Subsidiary, such other
Person becomes a Borrower and executes a joinder agreement and such other
documents as required by Section 9.17 hereof, (y) Senior Lender has a perfected,
first priority security interest in the assets of such Person (other than
Excluded Subsidiaries) and the equity interests acquired by the Borrowers in the
transaction (subject to Permitted Liens), and (z) no Event of Default exists and
is continuing immediately prior to or immediately after the consummation of such
transaction and, after giving effect to such transaction, the Borrowers are in
pro forma compliance with the Agreement.
PERMITTED LIENS - has the meaning set forth in Section 9.7.
PERSON - means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
PRIVACY RULE - means 45 CFR Part 160 and Part 164, Subparts A and E,
which implement certain provisions of HIPAA and any revisions, amendments or
updates.
PROPERTY - means an interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
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PROTECTED HEALTH INFORMATION - means protected health information
subject to the HIPAA Privacy Rule.
RECEIVABLES - means any right to payment, whether constituting an
account, chattel paper, instrument, general intangible, payment intangible,
healthcare insurance receivable, Capitated Contract Right or otherwise, arising
from the sale, rental or lease of healthcare goods or equipment, or the
provision of services and any ancillary sales, including all rights and remedies
to payment relating thereto, together with any and all proceeds in any way
derived, directly or indirectly therefrom. The term "Receivables" shall include
amounts due under capitation and similar agreements, amounts due any Borrower
for cost adjustments or undercharges for prior services, amounts due as any part
of a disproportionate share or risk share payment, workmen's compensation
claims, or other right to payment for any work, service, work in progress or
other thing of value performed by any Borrower whether billed or not by such
Borrower, and any other claims to payment held by such Borrower.
RECEIVABLES INFORMATION - means the information regarding Receivables
which is to be submitted by to Senior Lender pursuant to Section 2.2 of this
Agreement, which information shall include such documentation, data or other
information as may be specified by Senior Lender from time to time.
REINSTATEMENT DATE - has the meaning given such term in Section 14.15.
REQUIREMENTS OF LAW - means, as to any Person, the Governing Documents
of such Person, and any law, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its assets or to which such Person or
any of its assets is subject including, without limitation, the Securities Act,
the Securities Exchange Act, Regulations T, U and X of the Federal Reserve
Board, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining
Notification Act, Americans with Disabilities Act of 1990, the Social Security
Act, any Health Care Law, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Laws (including, without limitation,
those applicable to the disposal of medical waste).
REVOLVING CREDIT - means the revolving credit facility to be made
available by the Senior Lender to the Borrowers pursuant to Section 2.1 hereof.
REVOLVING CREDIT AVAILABILITY - means (i) the lesser of (A) the
Revolving Credit Borrowing Base, or (B) the Revolving Credit Commitment, minus
(ii) the Availability Reserves, minus (iii) the Revolving Credit Balance.
REVOLVING CREDIT BALANCE - means on the date of determination, the sum
of all outstanding Advances plus any interest, Fees and Expenses or other
amounts due Senior Lender under this Agreement and the other Loan Documents.
REVOLVING CREDIT BORROWING BASE - means the amount, as determined from
time to time by Senior Lender, equal to the sum of the Net Collectible Value of
all Eligible Receivables times the applicable Advance Rate.
REVOLVING CREDIT BORROWING BASE CERTIFICATE - has the meaning given to
such term in Section 2.4.
REVOLVING CREDIT COMMITMENT - means the maximum commitment amount, as
determined by Senior Lender from time to time, for the Advances to be made under
this Agreement as set forth in Exhibit A.
REVOLVING CREDIT MATURITY DATE - means the date on which Senior
Lender's commitment to make Advances shall terminate and the entire outstanding
Revolving Credit Balance shall be due and payable, as set forth on Exhibit A.
SELLER DEBT - shall mean Indebtedness of a Borrower for the deferred
portion of the purchase price or any other consideration payable by such
Borrower to the Seller (or other Person from which assets or Capital Stock or
other ownership interests are acquired) in connection with a Permitted
Acquisition (including, without limitation, promissory notes and any other
amounts owing by any Borrower and payable after the closing or effective date of
a
13
Permitted Acquisition (but excluding (i) reasonable consulting fees, non-compete
payments or salaries, bonuses and other compensation payable to the seller (or
other Person from which assets or Capital Stock or other ownership interests are
acquired) in connection with a Permitted Acquisition as a result of continuing
employment or obligations by such Person), (ii) reasonable and customary
indemnification obligations related to liabilities to third parties and related
expenses and (iii) holdbacks, working capital and similar purchase price
adjustments)); provided that (a) such Seller Debt is in existence at the Closing
Date and set forth on Schedule 9.8 or (b) such Seller Debt and the Permitted
Acquisition giving rise thereto shall comply with the provisions of Section 9.17
hereof.
SENIOR LENDER - means Residential Funding Corporation, a/k/a GMAC-RFC
Health Capital, and any other Person who becomes an assignee of any rights and
obligations of the Senior Lender hereunder.
SOLVENT - means, with respect to any Person on the date any
determination thereof is to be made, that on such date: (a) the present fair
valuation of the assets of such Person is greater than such Person's probable
liability in respect of existing debts; (b) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person's ability to pay
as such debts mature; and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, which
would leave such Person with assets remaining which would constitute
unreasonably small capital after giving effect to the nature of the particular
business or transaction. For purposes of this definition (i) the fair valuation
of any assets means the amount realizable within a reasonable time, either
through collection or sale of such assets at their regular market value, which
is the amount obtainable by a capable and diligent Person from an interested
buyer willing to purchase such assets within a reasonable time under ordinary
circumstances; and (ii) the term debts includes any payment obligation, whether
or not reduced to judgment, equitable or legal, matured or unmatured, liquidated
or unliquidated, disputed or undisputed, secured or unsecured, absolute, fixed
or contingent.
SUBORDINATED DEBT - means Indebtedness of Borrowers (including Seller
Debt) which is subordinated in right of payment to the Obligations pursuant to
the terms of a Subordination Agreement, in a manner satisfactory to Senior
Lender in its sole discretion. The holders of Subordinated Debt as of the
Closing Date are identified at Schedule 9.8.
SUBORDINATION AGREEMENT - means a Subordination Agreement executed by
any holder of Subordinated Debt in favor of the Senior Lender, in form and
substance satisfactory to Senior Lender.
SUBSIDIARY - means any corporation, association, trust or other
business entity of which the designated parent shall at any time own, directly
or indirectly through a Subsidiary or Subsidiaries, at least a majority (by
number of votes) of the outstanding Voting Stock.
TYPE - means, relative to any Receivables, each applicable aging
category (e.g., 0-30 days, 31-60 days, 61-90 days, etc.) up to and exceeding the
Cut-off Period, Obligor type (e.g., Medicare, Medicaid, MediCal, institutional
payors, commercial insurance payors, or individual/self pay (if applicable)),
and/or other category or subset of Receivables used by Senior Lender to
calculate the Net Collectible Value applicable to Receivables pursuant to Senior
Lender's NCV calculation methodology described in Exhibit B.
UCC - means Uniform Commercial Code, as adopted in the State of Oregon,
as amended or supplemented from time to time.
UFCA - has the meaning given such term in Section 14.14.
UFTA - has the meaning given such term in Section 14.14.
VOTING STOCK - means Capital Stock having ordinary voting power to
elect a majority of the board of directors (or Persons holding similar
functions) of the corporation, limited partnership, limited liability company or
other business entity involved, whether or not the right so to vote exists by
reason of the happening of a contingency.
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WHOLLY OWNED BORROWERS - means Persons who are owned 100% by LHC or any
other wholly owned Borrower and are a Borrower hereunder.
1.2. GENERAL CONSTRUCTION.
(a) GAAP - All financial terms used in this Agreement, other than
those specifically defined in the Agreement, shall have the meanings accorded to
them under GAAP.
(b) UCC - All financing terms or terms related to the Collateral,
not otherwise specifically defined, shall have the meanings, if any, accorded to
them under the UCC.
(c) Unless the context clearly requires otherwise, the plural
includes the singular, the singular includes the plural, the part includes the
whole, "including" is not limiting, and "or" has the inclusive meaning of the
phrase "and/or." The words "hereof," "herein," "hereunder" and other similar
terms in this Agreement refer to this Agreement as a whole and not exclusively
to any particular provision of this Agreement. Article, section, subsection,
clause, appendix, exhibit and schedule references are to this Agreement, unless
otherwise specified. Any reference in this Agreement or any of the Loan
Documents to this Agreement or any of the Loan Documents includes any and all
permitted alterations, amendments, changes, extensions, modifications, renewals,
or supplements thereto or thereof, as applicable.
(d) Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Senior Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each of the parties, and each has had the opportunity to have the
Agreement reviewed by its counsel. Accordingly, this Agreement shall be
construed and interpreted in a fair and impartial manner according to the
ordinary meaning of the words used so as to accomplish the stated purposes and
intentions of all parties hereto.
(e) For purposes of this Agreement, an individual will be deemed
to have "Knowledge" of a particular fact or other matter if (i) such individual
is actually aware of such fact or other matter, or (ii) such individual could
reasonably be expected in the normal course of the exercise of his or her duties
of employment using reasonable care to become aware of such fact or other
matter. Borrower will be deemed to have Knowledge of a particular fact or other
matter if the chief executive officer, chief operating officer, chief financial
officer, controller, treasurer, president, senior vice president or other such
senior officer of Borrower has, or at any time had, Knowledge of such fact or
other matter.
SECTION 2. THE LOANS.
2.1. THE REVOLVING CREDIT.
(a) Subject to the terms and conditions of this Agreement, and
provided that no Default or Event of Default has occurred and is continuing,
Senior Lender agrees to make Advances to the Borrowers from time to time in an
aggregate amount not to exceed the lesser of the Revolving Credit Commitment or
the Revolving Credit Availability. Within the limits of Revolving Credit
Availability, Borrowers may borrow, make repayments and re-borrow pursuant to
the terms and conditions of this Agreement. If at any time the Revolving Credit
Balance shall exceed the lesser of the Revolving Credit Availability or the
Revolving Credit Commitment, then Borrowers shall within one (1) Business day
pay to Senior Lender a sum sufficient to eliminate such excess. On the Revolving
Credit Maturity Date, (i) Senior Lender's obligations hereunder to make Advances
to Borrowers shall terminate, (ii) the Revolving Credit Commitment amount shall
be reduced to zero, and (iii) Borrowers shall pay to Senior Lender the entire
outstanding principal balance of the Advances, together with all accrued but
unpaid interest thereon, and any and all other Fees and Expenses and other
amounts then owing in respect of the Revolving Credit.
(b) Borrowers, jointly and severally, shall repay all Advances
made under this Agreement with interest and applicable Fees and Expenses in
accordance with the terms and conditions specified in Exhibit A attached hereto.
The amount of each Advance and all payments of principal, interest and Fees and
Expenses due to be received by Senior Lender shall be recorded in the books and
records of Senior Lender, which books and records
15
shall, in the absence of manifest error, be conclusive as to the outstanding
balance and/or other information related to the Revolving Credit
2.2. SUBMISSION OF RECEIVABLES INFORMATION. No less often than once
each calendar month, Borrowers shall submit to Senior Lender Receivables
Information on all Receivables. Submissions shall be in the format, contain the
information and be transmitted to Senior Lender in the manner reasonably
specified by Senior Lender. Senior Lender must receive any Receivable submission
no later than 5:00 p.m. applicable Pacific Time at least one (1) Business Day
prior to inclusion in the Revolving Credit Borrowing Base for purposes of the
making of an Advance. Senior Lender may require submissions to be accompanied by
a certification of Borrowers as to the accuracy and completeness of the
information in a format substantially similar to that shown in Exhibit D and
such other information and documentation as Senior Lender may require.
2.3. REQUESTS FOR ADVANCES. Each request by any Borrower or the
Borrower Agent for an Advance (each an "ADVANCE REQUEST") must be in writing in
a form and format substantially similar to Exhibit C and signed by an Authorized
Officer of the Borrower or the Borrower Agent. Each Advance Request shall be
received by Senior Lender no later than 10:30 a.m. applicable Pacific Time at
least one (1) Business Day prior to the proposed funding date. Each Advance
Request shall specify the amount of the requested Advance and the proposed
funding date (which shall be a Business Day). Unless otherwise specified in the
applicable Advance Request, each Advance will be made by wire transfer to
Borrower Agent's Operating Account. Any change in Borrower Agent's wire transfer
instructions or designation of a Person to receive proceeds of any Advance shall
be in writing and delivered to Senior Lender at least five (5) Business Days
prior to the change's proposed effective date.
2.4. REVOLVING CREDIT BORROWING BASE CERTIFICATES. For each Advance and
no less often than once each calendar month, Borrower Agent shall give to Senior
Lender a Revolving Credit Borrowing Base Certificate in a format substantially
similar to Exhibit D ("REVOLVING CREDIT BORROWING BASE CERTIFICATE"). Borrower
Agent will have two (2) Business Days after delivery to the Senior Lender to
review the Revolving Credit Borrowing Base Certificate and deliver the final
executed Revolving Credit Borrowing Base Certificate to Senior Lender. Should
Borrower Agent fail to deliver a final executed Revolving Credit Borrowing Base
Certificate to Senior Lender and absent a written notice of dispute delivered by
Borrower Agent to Senior Lender setting forth in detail the basis of dispute,
the Revolving Credit Borrowing Base Certificate will be deemed correct, absent
manifest error, at the end of the two (2) Business Day period. Failure of
Borrower Agent to give notice of any dispute as to any Revolving Credit
Borrowing Base Certificate in this manner shall be deemed a waiver by Borrowers
as to any such dispute. Any failure of Borrower Agent to review the Revolving
Credit Borrowing Base Certificate or return a final executed copy thereof to
Senior Lender shall not negate or affect in any manner any Advance or any
Borrower's liability to Senior Lender as evidenced thereby.
2.5. ADJUSTMENT OF NCV PERCENTAGES; AVAILABILITY RESERVES. Until notice
of a change has been delivered to Borrower Agent, the applicable NCV Percentages
of Eligible Receivables by Obligor Type shall be as set forth in Exhibit A.
Senior Lender has the right to adjust any applicable NCV Percentage at any time,
based upon the criteria, and in accordance with the Senior Lender's methodology
of calculating such NCV Percentages, as set forth in Exhibit B. Each change in
any NCV Percentage shall be effective immediately upon Senior Lender's
notification of such change to Borrower Agent. The amount of the Revolving
Credit available to Borrowers pursuant to the lending formula established
herein, subject to the Revolving Credit Commitment amount and other applicable
limits hereunder, shall be further subject to Senior Lender's continuing right
to establish and revise Availability Reserves in Senior Lender's reasonable
credit judgment.
2.6. INTENTIONALLY OMITTED.
2.7. INTENTIONALLY OMITTED.
2.8. INTEREST ON LOANS. All Loans shall bear interest on the unpaid
principal amount thereof from the date made until paid in full at a fluctuating
per annum rate equal to the rate set forth in Exhibit A attached hereto.
Interest shall be payable monthly in arrears on the first day of each month for
the preceding month. Interest shall be calculated on the basis of a year of 360
days, and for the actual number of days elapsed. At least once each calendar
month, Senior Lender shall cause a report (the "INTEREST STATEMENT") to be
delivered to Borrower in a format substantially similar to the sample attached
hereto as Exhibit E, setting forth a calculation of interest accrued with
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respect to the Loans for the prior period. Absent manifest error, the
calculations set forth on the Interest Statement shall be conclusively deemed
correct.
2.9. FEES AND EXPENSES. In consideration of Senior Lender making the
credit facilities described herein available to the Borrower, Borrower shall pay
to Senior Lender the additional Fees and Expenses described in Section 12,
Exhibit A and any other provisions herein and in the other Loan Documents. Such
Fees and Expenses shall be payable in the amounts and at the times described in
Exhibit A and the other provisions of the Loan Documents.
2.10. USE OF PROCEEDS. The proceeds of the Loans shall be used for
working capital and general business purposes of the Borrowers. No portion of
the Advances or Loan shall be used for personal, private, consumer or any other
non-business use.
2.11. APPOINTMENT OF BORROWER AGENT.
(a) The Borrowers hereby irrevocably designate and authorize LHC
(the "BORROWER AGENT") to act as agent and attorney in fact for each of them
generally for purposes of this Agreement and the other Loan Documents, in such
capacity. This appointment as agent and attorney-in-fact is durable and
irrevocable as long as any Obligations are outstanding, and will not be affected
by any disability or incapacity of any Borrower or any of its employees, agent
or representatives, or the lapse of time.
(b) Each Borrower agrees that Borrower Agent may exercise any
right, or perform any obligation, specified by this Agreement on such Borrower's
behalf, that all documents and instruments executed by the Borrower Agent on
such Borrower's behalf will jointly and severally bind such Borrower, and to be
bound by any communication or request delivered by the Borrower Agent to Senior
Lender or its agents. Without limiting the generality of the foregoing, each
Borrower grants to Borrower Agent authority and power of attorney to act on each
Borrower's behalf to (i) request and receive Advances, which shall conclusively
be deemed for the benefit of all Borrowers jointly and severally and without
regard to which Borrower receives or uses any portion of any Advance; (ii)
execute Lockbox Agreements and other documents and instruments; and (iii)
provide and receive notices, reports, certificates and statements to and from
Senior Lender under the other Loan Documents. The Senior Lender shall be
entitled to rely on any such communication or request delivered by the Borrower
Agent and shall not incur liability to Borrowers as a result thereof.
SECTION 3. REPAYMENT OF THE LOANS.
3.1. PAYMENT OF INTEREST, FEES AND EXPENSES, ETC. Senior Lender may, in
its sole discretion, effect payment by Borrowers of any and all interest, Fees
and Expenses, and other Obligations due hereunder and under the other Loan
Documents by making an Advance in the amount due on and as of the date any such
payment is due, and sending Borrower Agent written advice thereof. At Senior
Lender's option, Senior Lender may notify the Borrower Agent that Senior Lender
will not treat a required payment or other amount as an Advance as provided
above, in which case (i) Senior Lender shall deliver to Borrower Agent an
invoice for such amounts due, and (ii) the entire amount due as set forth in the
applicable invoice shall be due and payable, in cash, within three (3) Business
Days from receipt of such invoice. The amount of any interest, Fees and Expenses
or other Obligations reflected in any advice or invoice delivered by Senior
Lender to Borrower Agent pursuant hereto shall be considered correct and binding
on all Borrowers unless within two (2) Business Days after receipt by Borrower
Agent of any such advice or invoice from Senior Lender, the Borrower Agent shall
notify Senior Lender of any discrepancy in writing, setting forth a calculation
of the amount Borrower Agent asserts is in error.
3.2. MANDATORY REPAYMENT OF LOANS.
(a) The Borrowers jointly and severally promise to pay, and there
shall become absolutely due and payable on the Revolving Credit Maturity Date,
all of the Advances outstanding on such date, together with any and all accrued
and unpaid interest, outstanding Fees and Expenses and other amounts then due
and owing under the Loan Documents.
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(b) If at any time the Revolving Credit Balance exceeds the lesser
of the Revolving Credit Availability or the Revolving Credit Commitment,
Borrowers jointly and severally shall pay within one (1) Business Day, such
excess to Senior Lender for application as provided in Section 3.3.
(c) Each Borrower shall be and is jointly and severally liable
for, and hereby absolutely and unconditionally guarantees to Senior Lender and
its successors and assigns, the full and prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of (i) all Loans made to
any Borrower, (ii) each Advance made by Senior Lender to any Borrower, and (iii)
all Obligations owed or hereafter owing to Senior Lender by all other Borrowers.
Each Borrower shall be a principal debtor with respect to each Advance made to
any Borrower, all Loans made to any Borrower and all of the Obligations of all
of the Borrowers. Each Borrower agrees that its Obligations shall not be
discharged until payment and performance, in full, of the all of the Obligations
from each and every Borrower.
3.3. APPLICATION OF COLLECTIONS. To the extent that Senior Lender
receives Collections according to Section 5 below or any other amounts resulting
from the realization of any Collateral, such amounts shall be applied to reduce
the balance of the Loans, including any Advances, interest, Fees and Expenses,
and other Obligations, upon Senior Lender's receipt of such Collections as good
collected funds, as follows:
(a) First, to the payment of, or the reimbursement of the Senior
Lender for or in respect of all Fees and Expenses, costs, disbursements and
losses which shall have been incurred or sustained by the Senior Lender in
connection with the collection of such monies, or for the exercise, protection
or enforcement by the Senior Lender of any of the rights, remedies or powers of
the Senior Lender hereunder or under any of the other Loan Documents;
(b) next, to the Senior Lender in respect of any and all other
accrued Fees and Expenses payable under any of the Loan Documents;
(c) next, to the Senior Lender in respect of all accrued but
unpaid interest on the Loans;
(d) next, to the Senior Lender in respect of any and all other
Obligations then due;
(e) next, to the Senior Lender in respect of the principal balance
of the Advances; and
(f) next, to the Borrower Agent in respect of all remaining
amounts of Collections.
3.4. TERMINATION OF THE REVOLVING CREDIT. Borrowers may prepay the
Revolving Credit Balance in full and terminate the Revolving Credit prior to the
Revolving Credit Maturity Date upon thirty (30) days' prior written notice to
Senior Lender. The Borrowers acknowledge that any termination of the Revolving
Credit prior to the Revolving Credit Maturity Date would result in loss by
Senior Lender of benefits under this Agreement and that damages incurred as a
result of such credit facility termination would be difficult and impracticable
to ascertain. Therefore, in the event that the Revolving Credit is terminated on
account of any action or inaction by Borrowers or actions and inactions
constituting Events of Default, Borrowers shall pay to Senior Lender the
Revolving Credit Maturity Fee as set forth in Exhibit A. Any termination of the
Revolving Credit shall not affect Senior Lender's security interest in the
Collateral, and this Agreement shall continue to be effective until all the
Obligations (except for Obligations for taxes, costs, indemnifications,
reimbursements, damages and other liabilities in respect of which no claim has
arisen or demand for payment has been made) have been fully paid in full, in
cash or other consideration acceptable to the Lender.
3.5. INTENTIONALLY OMITTED.
3.6. NO OFFSET, ETC. All payments by Borrowers hereunder and under any
of the other Loan Documents shall be made without setoff or counterclaim and
free and clear of any without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
of any political subdivision thereof or taxing or other authority therein unless
the Borrowers are compelled by law to make such deduction or withholding.
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SECTION 4. CONDITIONS PRECEDENT.
4.1. CONDITIONS PRECEDENT TO LOANS. Senior Lender's obligation to make
initial Loans to Borrowers under this Agreement on the Closing Date shall be
subject to the fulfillment to the satisfaction of Senior Lender, in its sole
discretion of each of the following conditions:
(a) Senior Lender shall have received, in form and substance
satisfactory to Senior Lender, all releases, terminations and such other
documents as Senior Lender may request to evidence and effectuate the
termination by all existing Senior Lenders to the Borrowers of their respective
financing arrangements with the Borrowers other than Permitted Indebtedness and
the termination and release of any interest in and to any assets of Borrowers
other than Permitted Liens, duly authorized, executed and delivered by it or
each of them, including, but not limited to UCC termination statements for all
UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrower, as debtor.
(b) All requisite corporate, partnership, limited liability
company and other actions and proceedings in connection with this Agreement and
the other Loan Documents shall be satisfactory in form and substance to Senior
Lender, and Senior Lender shall have received (i) a Certificates of the
Secretaries or Clerks of Borrowers in substantially the form attached hereto as
Exhibit F, as to the Governing Documents, incumbency and authorizing resolutions
of the Borrowers, and (ii) all other information and copies of all documents
which Senior Lender may have requested in connection therewith, such documents
where requested by Senior Lender or its counsel to be certified by appropriate
corporate officers or Governmental Authority;
(c) Since December 31, 2004, no Material Adverse Change has
occurred and no change or event shall have occurred which would impair the
ability of the Borrowers to perform its obligations hereunder or under any of
the other Loan Documents or of Senior Lender to enforce the Obligations or
realize upon the Collateral;
(d) Senior Lender shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit (including NCV
determination by Obligor Type), review of the Borrowers' Books and Records, and
verification of Borrowers' representations and warranties to Senior Lender, (ii)
a complete field examination, and (iii) an inspection of locations selected by
Senior Lender at which Borrowers conduct business, the results of each of which
shall be satisfactory to Senior Lender;
(e) Senior Lender shall have received, in form and substance
satisfactory to Senior Lender, all consents, waivers, acknowledgments, and other
agreements from third parties, including Borrowers' landlord(s), which Senior
Lender deems necessary or desirable in order to permit, protect and perfect its
Liens upon the Collateral (subject to Permitted Liens) or to effectuate the
provisions or purposes of this Agreement and the other Loan Documents;
(f) Revolving Credit Availability as of the Closing Date, as
determined by Senior Lender shall not be less than the amount shown on Exhibit A
after giving effect to the initial Loans made or to be made under this
Agreement;
(g) Senior Lender shall have received, in form and substance
satisfactory to Senior Lender, Control Agreements by and among Senior Lender,
Borrowers and each bank where Borrowers have a Lockbox and/or Deposit Account,
in each case, duly authorized, executed and delivered by such bank and Borrowers
(or Senior Lender shall be the applicable bank's customer with respect to such
Deposit Account as Senior Lender may specify); provided, however, no Control
Agreement shall be executed with respect to the Government Lockbox;
(h) Senior Lender shall have received evidence, in form and
substance satisfactory to Senior Lender, that Senior Lender has a valid
perfected security interest in all of the Collateral, subject only to Permitted
Liens;
(i) Senior Lender shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Loan Documents,
in form and substance satisfactory to Senior Lender, and
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certificates of insurance policies and/or endorsements naming Senior Lender as
loss payee and additional insured, as the case may be;
(j) Borrowers shall have paid to Senior Lender the Facility
Origination Fee and all other Fees and Expenses owing on or before the Closing
Date in accordance with Exhibit A;
(k) Senior Lender shall have received, in form and substance
satisfactory to Senior Lender, such opinion letters of counsel to Borrowers with
respect to the Loan Documents and such other matters as Senior Lender may
request;
(l) Borrowers shall have (subject to applicable laws) executed and
delivered to Senior Lender such Lockbox Agreements and Obligor Notices as Senior
Lender deems necessary or appropriate in order to carry out the terms of this
Agreement;
(m) All required parties shall have executed and delivered the
Loan Documents and all instruments and documents hereunder and thereunder shall
have been duly executed and delivered to Senior Lender, in form and substance
satisfactory to Senior Lender;
(n) Senior Lender shall have received an executed Business
Associate Agreement from Borrowers in form and substance satisfactory to Senior
Lender;
(o) Senior Lender shall have received from The Catalyst Fund, Ltd.
and Southwest/Catalyst, Ltd, written consent to this Agreement and Borrowers
shall have paid all Indebtedness owing to Xxxxxxx X. Xxxxxx, an individual; and
(p) Senior Lender shall have received such other approvals,
information or documents as it may reasonably request.
4.2. CONDITIONS PRECEDENT TO ALL LOANS. Senior Lender shall be under no
obligation to make any Loan if, as of the date of such Loan, all of the
conditions stated in this Section 4.2 of this Agreement have not been satisfied.
Senior Lender's election to make a Loan at a time when all such conditions have
not been satisfied shall not be deemed a waiver of Senior Lender's rights to
refuse to make any such Loan in the future under the same or similar
circumstances. Each of the following is an additional condition precedent to
Senior Lender making a Loan to Borrowers, including the initial Loan on the
Closing Date and any future Loan (the request by Borrowers of each Loan shall
constitute the certification of Borrowers as to the truth and accuracy of each
of the following:
(a) All representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the date of the making of each such Loan and after giving effect thereto,
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and accurate on and as of such earlier date);
(b) No law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans, or (B) the
consummation of the transactions contemplated pursuant to the terms hereof or
the other Loan Documents, or (ii) has or could reasonably be expected to have a
Material Adverse Change;
(c) No Default or Event of Default shall exist or have occurred
and be continuing on and as of the date of the making of such Loan; and
(d) With respect to each Advance, Borrowers or the Borrower Agent
shall have delivered to Senior Lender an Advance Request, together with a
Revolving Credit Borrowing Base Certificate, in accordance with the terms and
conditions of this Agreement.
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SECTION 5. COLLECTIONS, RA/EOB, NOTICES TO OBLIGORS
5.1. MAINTENANCE OF LOCKBOXES AND LOCKBOX ACCOUNTS. Senior Lender shall
maintain such Lockboxes (other than the Government Lockbox) and Lockbox Accounts
for use in the collection of Receivables as Senior Lender shall determine in its
sole discretion. Costs of maintaining the Lockboxes and Lockbox Accounts shall
constitute Fees and Expenses owing by the Borrowers hereunder. Notwithstanding
the foregoing, Borrowers shall maintain the Government Lockbox in a manner
satisfactory to Senior Lender.
5.2. NOTICES TO OBLIGORS; DELIVERY OF COLLECTIONS AND RA/EOBS.
(a) Not later than the Closing Date, Borrowers shall deliver
Obligor Notices to all of their Obligors which, among other things, shall direct
such Obligors to make payments of Collections directly to an applicable Lockbox
(or in the case of payments by wire transfer, the applicable Lockbox Account),
and mail all RA/EOBs directly to the applicable Lockbox. Receivables of Obligors
without appropriate written direction in place as described in this Section 5.2
will be deemed to be Ineligible Receivables. No such direction given by any
Borrower to any Obligor shall be changed, modified or superseded without the
express prior written consent of Senior Lender. Borrowers shall cause all
billing and claim forms sent to Obligors (and return envelopes, if any,
furnished by Borrowers) to set forth only the applicable Lockbox as the address
for payment of Receivables and delivery of the related RA/EOBs, and only the
applicable Lockbox Account as the bank account for receipt of wire transfers for
payment of Receivables. If a payment on a Receivable is made, or the related
RA/EOB is delivered, by an Obligor other than to the appropriate Lockbox and
Lockbox Account, Borrowers shall (i) notify Senior Lender in writing thereof no
later than the Business Day immediately following the day on which any Borrower
has Knowledge thereof, and (ii) promptly take all necessary actions to effect
collection (within one Business Day) of such proceeds from the Person having
possession thereof, if other than a Borrower.
(b) The Borrowers shall cooperate with Senior Lender in the
identification of items received in the Lockboxes and amounts deposited in the
Lockbox Accounts and reconciliation thereof. Senior Lender, at its own expense,
shall provide Borrower Agent copies of all RA/EOBs received by Senior Lender on
a weekly basis. If Borrower Agent wants copies of RA/EOBs more often than once
per week, Senior Lender will provide the same upon Borrower Agent's request, at
Borrowers' expense.
5.3. NO LIABILITY. Senior Lender shall not be liable to any Borrower or
any other Person for any error or mistake in an Interest Statement, Revolving
Credit Borrowing Base Certificate, or in any other report or information
provided hereunder, caused directly or indirectly, by failure of any Borrower,
its officers, agents or employees to perform its or their duties and obligations
under this Agreement. Neither Borrowers nor any Person claiming through
Borrowers shall have any right, title or interest in any costs or fees recovered
by Senior Lender pursuant to this Agreement. In the absence of manifest error,
Senior Lender's determination of amounts owed by Borrowers shall be conclusive.
SECTION 6. GRANT OF SECURITY INTEREST IN COLLATERAL
6.1. GRANT OF SECURITY. In order to secure payment and performance
of all of the Obligations, Borrowers hereby grant to the Senior Lender a
security interest in the Collateral, which security interest shall remain in
full force and effect until all of the Obligations (except for Obligations for
taxes, costs, indemnifications, reimbursements, damages and other liabilities in
respect of which no claim has arisen or demand for payment has been made) are
fully paid and satisfied and the Revolving Credit Commitment is terminated.
6.2. PERFECTION OF SECURITY INTERESTS. Borrowers hereby
irrevocably and unconditionally authorize the Senior Lender at any time and from
time to time to file in any Uniform Commercial Code jurisdiction any initial
financing statements and amendments and continuations thereto that (a) indicate
the Collateral (i) as all assets of the Borrowers or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information required by
part 5 of Article 9 of the Uniform Commercial Code of the state of Borrowers'
locations for the sufficiency or filing office acceptance of any financing
statement or amendment, including whether the particular Borrower is an
organization, the type of organization and any organization identification
number issued to such Borrower. The Borrowers agree to furnish any such
information to the Senior
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Lender promptly upon request. Borrowers also ratify their authorization for the
Senior Lender to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments or continuations thereto if filed
prior to the date hereof.
SECTION 7. RIGHTS OF SENIOR LENDER WITH RESPECT TO THE COLLATERAL.
7.1. RIGHTS OF SENIOR LENDER WITH RESPECT TO RECEIVABLES. Borrowers
hereby irrevocably appoint Senior Lender and its designated agents or
representatives as each Borrower's attorney-in-fact, coupled with an interest,
which irrevocable power of attorney grants the ability to Senior Lender,
regardless of whether an Event of Default has occurred: (a) to endorse or sign
the name of any Borrower as to remittances, invoices, assignments, checks,
drafts or other instruments or documents in any form, such as electronic or
written, with respect to the Receivables; (b) to contact and communicate with
any Obligor about any information regarding Receivables on which the Obligor is
or may be liable, Receivables which the Obligor has received or approved for
payment, and payments made by the Obligor to or for the benefit of any Borrower;
(c) to notify any Obligor to make payments on all Receivables directly to Senior
Lender; (d) to request and receive from any Obligor all information that is
available to Borrower including, but not limited to, any Receivable payment
status, denial, rejection, adjudication, withholding, suspension, non-payment,
and reviews of any nature; (e) to contact, request and receive from any Obligor
all information on any issue related to any Borrower's survey, licensing,
certification, suspension, budget, appeal and exclusion regarding the continuing
participation with any Borrower in any Obligor contract for services; (f) after
an Event of Default has occurred, so long as such Event of Default continues, to
bring suit in the name of any Borrower, enforce all rights and remedies of any
Borrower relating to, and/or settle or negotiate compromises on, Receivables,
settlements, setoffs, recoupments, and other issues related to claim payments;
(g) to contact and communicate with any professional or any third party engaged
by any Borrower to submit information or perform services with respect to any
Receivable, or like kind information preparation; (h) to contact, communicate
with and receive information from any of Borrowers' banks, depository accounts
relationships or automated payroll service providers regarding deposits, tax
deposits, payments, withdrawals, receipts of payments, and balances directly
from all of Borrowers' Deposit Accounts and other general and payroll accounts;
(i) to request and receive information from such banking or depository
institutions to the same extent the information is obtainable by any Borrower by
the same means transmitted or received by such Borrower; (j) to access and
receive "read only" information directed from any Borrower's billing and
collections accounts receivable management system through any means available,
either electronic, telephonic, or otherwise technologically possible; (k) to
receive audit and compliance information in a format and transmission as deemed
necessary by Senior Lender in order to keep the cost of site visits to a
minimum; and (l) to do all things necessary to carry out this Agreement. This
appointment of an attorney-in-fact is durable and irrevocable as long as any
Obligations are outstanding and will not be affected by any disability or
incapacity of Borrower or any of its employees, agents or representatives or the
lapse of time.
7.2. ADMINISTRATION OF RECEIVABLES. The Borrowers and Borrower Agent
shall administer the Receivables in a commercially reasonable manner and
consistent in all respects with the terms of this Agreement and the other Loan
Documents and the rights of Senior Lender granted hereunder and thereunder.
Without limiting any other provisions of the Loan Documents, the obligations of
the Borrowers and the Borrower Agent relative to the Receivables shall include,
without limitation:
(a) Preparation and submission of claims to, and post-billing
liaison with, Obligors;
(b) Arranging for direct remittance of all payments on Receivables
to the applicable Lockbox or Lockbox Account;
(c) Remitting any payments received with respect to Receivables
received directly for deposit in the applicable Lockbox or Lockbox Account no
later than by the Business Day following such receipt;
(d) Maintaining and implementing administrative and operating
procedures (including, without limitation, an ability to re-create records
evidencing the Receivables in the event of the destruction of the originals
thereof) and keeping and maintaining all documents, books, records and other
information reasonably necessary or advisable for the collection of the
Receivables (including, without limitation, records adequate to permit the
identification of new Receivables and all Collections of and adjustments to
existing Receivables);
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(e) Complying in all material respects with all Requirements of
Law applicable to it, its business and properties, and all Receivables and
related contracts and Collections;
(f) Notifying Senior Lender of any action, suit, proceeding,
dispute, Offset, deduction, defense or counterclaim that is or may be asserted
by an Obligor with respect to any Receivables which alone or in the aggregate is
in excess of $100,000; and
(g) Providing Senior Lender with the Receivables Information,
Revolving Credit Borrowing Base Certificates, or any other report required by
Senior Lender under the terms of this Agreement.
7.3. CLAIMS PROCESSING SYSTEM. Reports or information required to be
delivered to Borrowers under this Agreement shall be prepared and furnished by
electronic media, e-mail and/or computer disc format. If, in the reasonable
judgment of Senior Lender, the claims processing system and/or third party
billing system of Borrowers is not performing at a level deemed sufficient by
Senior Lender to implement or continue to implement, for the benefit of
Borrowers and Senior Lender, the benefits of this Agreement, Senior Lender shall
have the right to require Borrowers to modify, replace or substitute such
deficient systems at Borrowers' cost with systems reasonably satisfactory to
Senior Lender.
7.4. PERFORMANCE OF BORROWER OBLIGATIONS; SERVICING COSTS. If any
Borrower fails to perform any obligation contained herein, Senior Lender may
direct Senior Lender's representatives or any other Person or entity selected by
them to perform any such obligations. Borrowers shall be responsible for all
servicing costs resulting from such termination and appointment of a successor.
7.5. SPECIAL REPRESENTATIONS AND COVENANTS REGARDING RECEIVABLES. Upon
(i) each submission of Receivables Information to Senior Lender, and (ii) the
making of each Advance, Borrowers shall conclusively be deemed to have
represented and warranted to, and covenanted with, Senior Lender that:
(a) No amount included as part of any Eligible Receivable
represents or constitutes an amount as to which the related Obligor has made a
payment in whole or in part or which is or was included in or represented by any
other Receivables.
(b) Each Eligible Receivable has been billed to the applicable
Obligor, and all documentation and information necessary or required for payment
thereof has been submitted to the applicable Obligor, and each Borrower has
fulfilled, and will continue to fulfill, all of its other material obligations
in respect thereof, including verification of the eligibility of such Eligible
Receivable for payment by such Obligor. The documentation submitted by Borrowers
is sufficient such that each Eligible Receivable constitutes a legal, valid and
binding obligation of the related Obligor, enforceable against such Obligor,
except as enforceability may be limited pursuant to an Insolvency Proceeding or
equitable principles affecting the rights of creditors generally, and except for
statutory or contractual rights of Offset in favor of such Obligor or
Requirements of Law with respect to Governmental Receivables. Absent an
Insolvency Proceeding or the application of such equitable principles involving
such Obligor, each Eligible Receivable will be paid by the applicable Obligor,
and collected by Senior Lender, in an amount equal to not less than its NCV.
(c) Borrowers have made or caused to be made, and will make and
cause to be made, all payments to each Obligor necessary to prevent such Obligor
from exercising rights of Offset with respect to any prior overpayment to a
Borrower or any Affiliate. Except as previously disclosed in writing to Senior
Lender, no Borrower is a party to any unresolved disputes with any Obligor with
respect to any Receivables the resolution of which dispute may result in the
applicable Obligor reducing the amount payable on account of any Receivables on
which it is the Obligor in an amount greater than $10,000 without prior notice
to Senior Lender. No Receivables have been or will be compromised, adjusted,
extended, satisfied, subordinated, rescinded, set off or modified, and no
Receivables are or will be subject to compromise, adjustment, extension,
satisfaction, subordination, rescission, set off, counterclaim, defense or
modification, whether arising out of transactions concerning the contract or
otherwise in an amount greater than $10,000 without prior written notice to
Senior Lender. Borrowers shall immediately notify Senior Lender of any action,
proceeding, dispute, Offset, deduction, defense or counterclaim that is or may
be asserted by any Obligor relating to any Receivables with respect to Accounts
having, alone or in the aggregate, a value of greater than $10,000.
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(d) Each Eligible Receivable: (i) has a service date prior to the
date of its submission to Senior Lender for inclusion in the Revolving Credit
Borrowing Base; (ii) is submitted to Senior Lender at least 150 days prior to
any statutory limit on the related Obligor's obligation to pay; and (iii) is or
will be due and payable by the applicable Obligor.
(e) All Receivables and underlying contracts and all transactions
underlying all Receivables, including those involving the rendering services or
the sale of goods, comply with all Requirements of Law, and all submissions of
claims to Obligors regarding Receivables are and shall be genuine and in all
respects what they purport to be. Each Eligible Receivable is (i) based on an
actual and bona fide rendition of healthcare services, or the furnishing of
healthcare goods or medical equipment, to a patient or customer by a Borrower or
an Affiliate in the ordinary course of business, or is due under an effective
capitation agreement, (ii) denominated and payable only in lawful currency of
the United States, and (iii) an "account," "general intangible" or an interest
or claim in or under a policy of insurance, and is not evidenced by any
"instrument" or "chattel paper" within the meaning of the UCC, except to the
extent that causing such Receivable to be evidenced by such an instrument is
required for the collection of such Receivable or for the enforcement of any
rights therein and, in such case, a counterpart of any such instrument will be
manually signed and such manually signed counterpart will be promptly delivered
to Senior Lender and endorsed to Senior Lender or its designee if so requested
by Senior Lender.
(f) The goods and services provided and reflected by each Eligible
Receivable, or the medical equipment provided in conjunction therewith, were
medically necessary, and the patient has received such goods, services or
medical equipment and the fees charged for the services or goods constituting
the basis for such Receivable were the usual, customary and reasonable fees
charged by other healthcare service providers in the applicable community of
Borrower for the same or similar services or goods.
(g) No credit, discount, or extension, or agreement therefor has
been or will be granted on any Eligible Receivable in an amount greater than
$10,000, except for such items reported to Senior Lender in accordance with this
Agreement; (ii) any copy of an invoice delivered to Senior Lender by Borrowers
will be a genuine copy of the original invoice sent to the Obligor named
therein; (iii) if the fees charged for the services constituting the basis for
any Eligible Receivable were subject to limitations imposed by contracts for
reimbursement from the related Obligor, each such Receivable for which the fees
are so restricted has been clearly identified to Senior Lender as being subject
to such restriction; and (iv) no direction of a Borrower or any other Person is
in effect directing Obligors (A) to remit payments in respect of any Receivables
other than to the applicable Lockbox or Lockbox Account designated by Senior
Lender, or (B) to remit RA/EOBs in respect of the Receivables to any Person or
address other than to the Lockbox designated by Senior Lender.
(h) Borrowers have not and shall not re-date any invoice or render
services on extended dating beyond that customary in Borrowers' business, or
extend or modify the payment terms of any Eligible Receivable other than in the
ordinary course of business and consistent with the Borrowers' past practices.
If a Borrower obtains Knowledge of any matter that, in Borrower's commercially
reasonable judgment, may materially affect the collectibility of any Receivable
in excess of $10,000, including information regarding the applicable Obligor's
creditworthiness, Borrower will promptly so advise Senior Lender in writing.
Borrowers shall notify Senior Lender promptly of all material disputes and
claims with the Obligor of any Eligible Receivable in excess of $10,000 and
settle or adjust the same in a commercially reasonable manner, or contest such
disputes or claims at no expense to Senior Lender; but no material discount,
credit or allowance shall be granted to any Obligor in respect of any such
dispute or claim without Senior Lender's consent, except, prior to the
occurrence of an Event of Default, for discounts, credits and allowances made or
given in the ordinary course of Borrowers' business.
(i) Borrowers shall not accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Receivable, other than with respect to a Receivable on which the
Obligor is a natural person, without Senior Lender's prior written consent. If
Senior Lender consents to the acceptance of any such instrument, it shall be
considered as evidence of the Receivable and not payment thereof and Borrower
will promptly deliver such instrument to Senior Lender appropriately endorsed,
regardless of the form of presentment, demand, notice of dishonor, protest, and
notice of protest with respect thereto.
7.6. RIGHTS OF SENIOR LENDER WITH RESPECT TO INVENTORY. The Borrowers
shall safeguard, protect and hold all Inventory for the account of the Senior
Lender, and make no disposition thereof except for shipments of
24
Inventory to customers of the Borrowers in the ordinary course of the Borrowers'
business, on open account and on commercially reasonable terms consistent with
the Borrowers' past practices and dispositions permitted by Section 9.6,
provided that all proceeds of all sales (including cash, accounts receivable,
checks, notes, instruments for the payment of money and similar proceeds) are
forthwith deposited in the Lockbox Account. Upon the sale, exchange, or other
disposition of Inventory, as herein provided, the security interest in the
Inventory provided for herein shall, without break in continuity and without
further formality or act, continue in, and attach to, all proceeds, including
any instruments for the payment of money, accounts receivable, contract rights,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sale, exchange or disposition.
SECTION 8. REPRESENTATIONS AND WARRANTIES. Borrowers each represent and warrant
to Senior Lender as follows:
8.1. ORGANIZATION, AUTHORITY, ETC. Borrowers and their Subsidiaries are
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation, with all requisite power, authority and
legal right to: (a) own or lease their assets; (b) conduct their business as
presently conducted; (c) execute, deliver and perform this Agreement and the
other Loan Documents; and (d) consummate the transactions contemplated hereby
and thereby. Borrowers and their Subsidiaries are duly qualified and authorized
to conduct their business and are qualified, authorized and in good standing in
each jurisdiction in which qualification, authorization and good standing are
necessary or desirable for such Person's conduct of its business or each
Borrower's performance of its obligations or in which failure to do so would
have a Material Adverse Change.
8.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery
and performance of this Agreement and the other Loan Documents to which
Borrowers are a party, and the consummation of the transactions contemplated
hereby and thereby, (a) are within such Person's corporate or other powers, (b)
have been duly and validly authorized by all requisite action on the part of
such Person, and (c) do not and will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, constitute the
basis for acceleration of any indebtedness, or result in the creation or
imposition of any Lien (except Permitted Liens) upon any of such Person's
properties or assets pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument by which it is bound or
to which any of its properties or assets are subject, nor will such action
result in any violation of the provisions of any Requirement of Law applicable
to such Person or any of its assets.
8.3. GOVERNMENTAL AND OTHER APPROVALS. Other than any filings necessary
to perfect the Senior Lender's security interest, no consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any Governmental Authority, Obligor or other Person is required in
connection with the due execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents which has not been obtained or made.
8.4. VALIDITY, ETC. This Agreement and the other Loan Documents have
been duly and validly authorized, executed and delivered by Borrowers and
constitute valid and legally binding obligations, enforceable against each such
Person in accordance with their terms, except as such enforceability may be
limited by Requirements of Law applicable to Governmental Receivables and
bankruptcy, insolvency, reorganization, receivership, moratorium and similar
laws and equitable principles affecting the enforcement of creditors' rights
generally.
8.5. LITIGATION, ETC. Except as set forth on Schedule 8.5 attached
hereto, there are no: (a) actions, suits, proceedings or investigations pending
or, to Borrowers' Knowledge, threatened, before any court, administrative
agency, arbitrator, Governmental Authority or other tribunal (i) which, if
determined adversely to a Borrower or any Subsidiary, either singly or in the
aggregate, could reasonably be expected to have a Material Adverse Change, (ii)
asserting the invalidity of this Agreement or any Loan Document, in whole or in
part, or (iii) questioning the consummation by a Borrower or any Subsidiary of
any of the transactions contemplated by this Agreement; (b) pending or, to the
Borrowers' Knowledge, threatened criminal or material civil investigations
involving a Borrower, any Subsidiary, or its or any of their respective
Affiliates, officers or directors, and no Borrower, any Subsidiary or its or any
of their respective officers or directors has been involved in, or is the
subject or target of, any criminal or material civil investigation or pending or
contemplated Insolvency Proceeding, which in either case the adverse
determination of which (x) is likely and (y) could reasonably be expected to
cause a Material Adverse Effect.
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8.6. CONDUCT OF BUSINESS. The primary business of the Borrowers is, and
will at all times continue to be, the provision of healthcare services,
healthcare products, ancillary healthcare support and/or healthcare goods and
equipment. Borrowers have, will continue to have and will maintain all necessary
Permits, licenses, agreements, accreditations, certifications, contracts and
governmental consents necessary to operate and conduct its business as it is
presently being conducted, subject to minor exceptions and deficiencies which
could not reasonably be expected to have a Material Adverse Change.
8.7. BORROWER INFORMATION. Borrowers have delivered to Senior Lender a
completed form of Schedule 8.7 attached hereto with respect to each Borrower,
and all information set forth therein is complete, correct and does not omit a
material fact necessary to make the information contained therein not misleading
in any material respect. The respective address(es) set forth in Schedule 8.7
for Borrowers is, and for at least the past six months has been, such Borrowers'
mailing address, its chief executive office, its principal place of business,
and/or the office where all of the Books and Records of such Borrower are
maintained. All Collateral is located only at the address(es) set forth in
Schedule 8.7. Borrowers do not, and have not during the past five (5) years,
transacted business under any trade, fictitious or assumed name other than those
set forth on Schedule 8.7 or as disclosed to Senior Lender under this Agreement.
During the past 5 years, no Borrower has been a party to a merger or
consolidation and has not acquired all or substantially all of the assets of any
Person except as set forth on Schedule 8.7 or as disclosed to Senior Lender and
permitted by this Agreement.
8.8. COMPLIANCE WITH REQUIREMENTS OF LAWS, ETC. Each governmental
certification, governmental agreement and contract to which Borrowers are a
party or is bound is in full force and effect, has not been amended or otherwise
modified, rescinded, revoked or assigned and does not contain any provision
prohibiting the transfer of the related Obligor's payment obligation thereunder
from the patient to the applicable Borrower or from such Borrower to Senior
Lender. Borrowers and every Subsidiary is in compliance with all Requirements of
Laws and all contracts relating to the Receivables, in each case the
noncompliance with which could reasonably be expected to adversely affect the
collectibility of the Receivables. No condition exists and no event has occurred
and is continuing which, in itself or with the giving of notice or lapse of time
or both, would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any governmental consent or Permit applicable to Borrowers or any
Subsidiary or any facility owned or operated by it or such facility's
participation in the applicable governmental programs. There is no claim or
basis for a claim that any such governmental certification, governmental
agreement, contract or governmental consent is not in full force and effect.
8.9. TAX MATTERS. Borrowers and each of their Subsidiaries (a) have
timely filed all tax reports and returns required by foreign, federal, state and
local law, (b) have timely paid all taxes, assessments, deposits, contributions
and other governmental charges shown or determined to be due on such returns and
reports (including without limitation, payroll, employee withholding and other
similar taxes and charges), except those being contested in good faith and by
appropriate proceedings, and (c) have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns and reports apply. Senior Lender, in its sole
discretion, may require Borrowers to hire an outside payroll service if there is
any question as to the timely payment of payroll and/or payroll taxes.
8.10. OFFSETS. Except as set forth on Schedule 8.10 attached hereto,
there is no basis for (a) any Offsets asserted or, to the Borrowers' Knowledge,
threatened to be asserted against any Borrower or Subsidiaries by any Obligor
(including but not limited to amounts due to Medicare or the IRS) in an amount
in excess of $100,000, or (b) any overdue or delinquent liabilities or
Indebtedness which could give rise to a right of a federal Governmental
Authority or any other Person to offset or levy with respect to such liabilities
or Indebtedness against any Receivables having a value in excess of $100,000, or
payments due thereon.
8.11. FINANCIAL STATEMENTS AND PROJECTIONS.
(a) All financial statements and reports delivered by Borrowers to
Senior Lender (including, without limitation, all such financial statements
delivered in connection with Senior Lender's due diligence and underwriting with
respect to this transaction) have been prepared in accordance with GAAP (except
as set forth therein or the absence of footnotes in the case of unaudited
statements and normal year-end adjustments) and fairly present the financial
position and results of operations of the Borrowers as of the dates and for the
periods indicated.
26
As of the date of such statements, there are no material liabilities (contingent
or otherwise) of the Borrowers which are not disclosed in the balance sheets
included in such financial statements.
(b) All financial projections delivered by Borrowers to Senior
Lender (including, without limitation, all such financial statements delivered
in connection with Senior Lender's due diligence and underwriting with respect
to this transaction) have been prepared in good faith, based on assumptions
which were reasonable when made, all of which assumptions are stated therein,
and reflect reasonable estimates of the Borrowers of the results of operation
and other information projected therein. To the Knowledge of the Borrowers, as
of the date of any such projections no facts exist that (individually or in the
aggregate) would result in any material change in any of such projections.
8.12. EMPLOYEE BENEFIT PLANS. Schedule 8.12 sets forth all Employee
Benefit Plans of the Borrowers, and separately sets forth all Pension Plans of
the Borrowers, and their respective ERISA Affiliates. Each Employee Benefit Plan
has been maintained in all material respects with the provisions of ERISA and,
to the extent, applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions. The Borrowers or their ERISA
Affiliates have not incurred any material liability to the Pension Benefit
Guaranty Corporation or any Employee Benefit Plan on account of any failure to
meet the contribution requirements of any Pension Plan, or as a result of a
complete or partial withdrawal from a Multiemployer Plan, and no event has
occurred and is continuing or conditions exist which present a material risk
that Borrowers or any ERISA Affiliate will incur any material liability as a
result of the foregoing circumstances. The consummation of the transactions
contemplated by this Agreement will not result in any prohibited transaction
under ERISA or the Code for which an exemption is not available.
8.13. SUBSIDIARIES AND AFFILIATES; CAPITALIZATION; SOLVENCY.
(a) Except as set forth on Schedule 8.13 or as otherwise permitted
by this Agreement, no Borrower has any direct or indirect Subsidiaries or
Affiliates and no Borrower is engaged in any joint venture or partnership.
Borrowers are the record and beneficial owners of all of the issued and
outstanding shares of Capital Stock of each of Wholly Owned Subsidiaries listed
on Schedule 8.13, and there are no proxies, irrevocable or otherwise, with
respect to such shares, and no equity securities of any of such Wholly Owned
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature.
(b) Schedule 8.13 correctly sets forth the number of shares of
Borrowers' Capital Stock (other than LHC's) of each class authorized and the
number thereof outstanding, the name of the Borrowers' (other than LHC's)
respective shareholders or other ownership interest holders and the number of
shares of each class of Capital Stock owned by such shareholders. All Capital
Stock is validly issued, fully paid and nonassessable and owned by such
shareholders as specified in such Schedule, free of any Lien except Permitted
Liens. Except as set forth in Schedule 8.13 or as permitted under this
Agreement, there are no subscriptions, warrants, options, calls, commitments,
rights or agreements by which any Borrower, Subsidiary or Controlled Entity, or
any of the Shareholders of any such entity, is bound relating to the issuance,
transfer, voting or redemption of shares of its Capital Stock, membership units
or any pre-emptive rights held by any Person with respect to the shares of
Capital Stock or membership units of any such entity.
(c) Borrowers and Subsidiaries: (i) are and will remain Solvent
after giving effect to the transactions contemplated by this Agreement; (ii)
have not and will not incur debts or liabilities beyond their ability to pay;
(iii) will, after giving effect to the transactions contemplated by this
Agreement, have an adequate amount of capital to conduct their business in the
foreseeable future; and (iv) have made the grant of a security interest in the
Collateral hereunder in good faith and without intent to hinder, delay or
defraud any of its creditors.
8.14. RESTRICTIONS ON SUBSIDIARIES; SECURITY INTERESTS.
(a) Except for restrictions contained in this Agreement or any
other agreement with respect to Indebtedness of the Borrowers permitted
hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on Borrowers or any of their Wholly Owned Subsidiaries
that prohibit or otherwise restrict (i) the transfer of cash or other assets (A)
among Borrowers or between Borrowers and any of their Wholly Owned
27
Subsidiaries or (B) among any Wholly Owned Subsidiaries of Borrowers, or
(ii) the ability of Borrowers to incur Indebtedness or grant Liens to Senior
Lender in the Collateral other than any restrictions contained in any
capitalized lease or purchase money indebtedness (permitted under this
Agreement) relating solely to the assets acquired thereby and the identifiable
proceeds thereof.
(b) Each Borrower has granted to Senior Lender a valid, perfected
first priority and only security interest in the Receivables and the other
Collateral, subject to no other Liens other than Permitted Liens and subject to
applicable laws and regulations governing Medicare and Medicaid receivables,
enforceable against the Borrowers and all creditors of, and purchasers from, the
Borrowers.
8.15. DEPOSIT ACCOUNTS. A complete list of all of Borrowers' Deposit
Accounts (including account numbers and addresses for each Deposit Account bank)
is set forth on Schedule 8.15.
8.16. ENVIRONMENTAL MATTERS. Except as set forth in Schedule 8.16,
neither the Borrowers nor any Subsidiary nor, to Borrowers' Knowledge, any other
Person, has ever caused or permitted any Hazardous Material to be improperly
stored or disposed of on or under any real property owned, leased or operated by
Borrower or Subsidiary, or in which Borrowers or Subsidiary ever held, directly
any legal or beneficial interest or estate, and no such real property has ever
been used by Borrowers, any Subsidiary or, to Borrowers' Knowledge, any other
Person, as a disposal site or permanent or temporary storage site for any
Hazardous Material, except for the storage and use of materials reasonably
necessary for and consistent with normal and ordinary conduct of Borrowers'
business, including, without limitation, the storage and use of cleaning
supplies, toner for photocopying machines and other similar materials. Borrowers
and each Subsidiary has been issued and is in compliance with all material
Permits relating to environmental matters, and have filed all notifications and
reports required under applicable Environmental Laws, the failure to have or
comply with which could reasonably be expected to have a Material Adverse
Change. All Hazardous Materials used or generated by the Borrowers or any
Subsidiary or any business merged into or otherwise acquired by Borrowers or any
Subsidiary have been generated, accumulated, stored, transported, treated,
recycled and disposed of in compliance with all Environmental Laws, except where
the failure so to comply could not reasonably be expected to have a Material
Adverse Change. No Borrower nor any Subsidiary has any liabilities with respect
to Hazardous Materials which could reasonably be expected to have a Material
Adverse Change, and to Borrowers' Knowledge, no facts or circumstances exist
which could give rise to liabilities with respect to Hazardous Materials which
could reasonably be expected to have a Material Adverse Change.
8.17. NO MISSTATEMENT, ETC. The application made by Borrowers to Senior
Lender in connection with this Agreement, and all of Borrowers' statements to
Senior Lender and in any materials furnished in connection with this Agreement
were on the date furnished true and correct in all material respects and are
true and correct in all material respects on the Closing Date.
8.18. NO MATERIAL ADVERSE CHANGE. There has been no Material Adverse
Change from December 31, 2004 to the Closing Date.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS. Each Borrower covenants that
until all of the Borrowers Obligations to Senior Lender are paid and satisfied
in full and the Revolving Commitment has been terminated:
9.1. MAINTENANCE OF EXISTENCE.
(a) Borrowers shall at all times preserve, renew and keep in full
force and effect its legal existence and material rights and franchises with
respect thereto and maintain in full force (except as permitted otherwise
pursuant to Section 9.6) and effect all material Permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted.
(b) No Borrower shall change its name, mailing address, chief
executive office, principal place of business or location of its Books and
Records, close any existing place of business or change the location of any
Collateral, or transact business under any trade, fictitious or assumed names
other than those set forth in
28
Schedule 8.7, or open a new place of business without providing at least thirty
(30) days' prior written notice to Senior Lender.
9.2. COMPLIANCE WITH LAWS AND CONTRACTS. Borrowers shall at all times
comply with all Requirements of Law other than where such non-compliance could
not reasonably be expected to cause a Material Adverse Change. Except as
permitted by this Agreement, Borrowers shall comply with its obligations under
any contracts, including without limitation, those relating to the Receivables,
other than where such non-compliance could not reasonably be expected to cause a
Material Adverse Change.
9.3. PAYMENT OF TAXES AND CLAIMS. Borrowers shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued, and with
respect to which adequate reserves have been set aside on the books of the
applicable Person.
9.4. INSURANCE. Borrowers will keep the Collateral insured with
financially sound and reputable insurers against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks, and in such amounts, as
are ordinarily insured against by other owners in similar businesses. Borrowers
shall maintain business interruption, public liability, and other property
damage insurance relating to Borrowers' ownership and use of the Collateral, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All policies or insurance shall be in such form, with such companies, and in
such amounts as may be reasonably satisfactory to Senior Lender.
Contemporaneously with the execution of this Agreement, and within fifteen (15)
days of any date when any additional or replacement insurance coverage is
obtained or any such policy is renewed (and in any event no less frequently than
annually), Borrowers shall deliver, or cause to be delivered, to Senior Lender
true copies of certificates of insurance with respect to such policies or
additional insurance or replacement policies, which certificates (i) in the case
of property and casualty policies, shall contain an endorsement or rider
satisfactory to Senior Lender showing Senior Lender as loss payee and additional
insured thereof, and (ii) in the case of general liability policies, shall
contain an endorsement or rider showing the Senior Lender as an additional
insured. Every policy of insurance referred to in this Section 9.4 shall contain
an agreement by the insurer that it will not cancel such policy except after
thirty (30) days (ten (10) days in the case of non-payment of premiums) prior
written notice to Senior Lender. Borrowers shall deliver to Senior Lender,
within five (5) Business Days of any request by Senior Lender, certified copies
of such policies of insurance and evidence of the payment of all premiums
therefor.
9.5. FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Financial Statements. Borrowers shall, and shall cause any
Subsidiary to, keep proper Books and Records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of Borrowers and their Subsidiaries in accordance
with GAAP (except in the case of unaudited financial statements for the absence
of footnotes and normal year end adjustments). Borrowers shall furnish Senior
Lender, promptly upon request, such financial and other information and
statements as Senior Lender shall reasonably request from time to time regarding
the Collateral and Borrowers' business affairs, financial condition and
operations, and shall notify the auditors and accountants of Borrowers that
Senior Lender is authorized to obtain such information directly from such
Persons. Without limiting the foregoing, Borrowers shall furnish or cause to be
furnished to Senior Lender each of the financial statements and reports
described below on or before the dates indicated:
(i) Interim Financial Statements. Within thirty (30)
days after the end of each fiscal month, monthly unaudited
consolidated and consolidating financial statements (including
in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders'
equity), all in reasonable detail, fairly presenting the
financial position and the results of the operations of
Borrowers and their Subsidiaries, as of the end of and through
such fiscal month, certified to be correct by the chief
financial officer of Borrowers, subject to normal year-end
adjustments, together with a Compliance Certificate in the
form attached hereto as Exhibit G relating to such monthly
period.
(ii) Audited Financial Statements. Within ninety (90)
days (or such earlier date as the Securities and Exchange
Commission may require such financial statements to be filed
29
following an IPO), audited consolidated and consolidating
financial statements of Borrowers and their respective
Subsidiaries (including in each case balance sheets,
statements of income and loss, cash flow and shareholders'
equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the
results of the operations of Borrowers and such Subsidiaries
as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public
accountants (which accountants shall be an independent
accounting firm selected by Borrowers and reasonably
acceptable to Senior Lender), that such financial statements
have been prepared in accordance with GAAP, and present fairly
the results of operations and financial condition of Borrowers
and such Subsidiaries as of the end of and for the fiscal year
then ended.
(iii) Covenant Compliance Schedules. Together with
the interim financial statements to be delivered at the end of
each fiscal quarter pursuant to clause (i) above, a Compliance
Certificate and accompanying schedule in form reasonably
satisfactory to Senior Lender setting forth the calculations
used in determining whether Borrowers were in compliance with
the covenants set forth in Section 10 for such quarterly
period.
(iv) Projections. No later than thirty (30) days
prior to Borrowers' Fiscal Year End, a detailed budget
(inclusive of balance sheet and income statement) relative to
Borrowers, prepared on a consolidated and consolidating and
month by month basis, for the succeeding fiscal year.
(v) Final Detailed Budget. No later than thirty (30)
days after Borrowers' Fiscal Year End, a final detailed budget
(inclusive of balance sheet and income statement) relative to
Borrowers, prepared on a consolidated and consolidating and
month by month basis, for the succeeding fiscal year
(b) Additional Information. Borrowers shall cause to be delivered
to Senior Lender the following items no later than the dates listed:
(i) Notice of Defaults. Promptly upon any Borrower
obtaining Knowledge thereof, written notification of any Event
of Default or Default, specifying the nature of such Event of
Default or Default, the period of the existence thereof and
the action Borrowers propose to take with respect thereto.
(ii) Governmental Communications. Within ten (10)
Business Days after the sending, filing or receipt thereof,
copies of all reports and statements that any Borrower sends
to or receives from any Governmental Authority or that any
Borrower sends to its shareholders generally, including any
cost reports, audits, and copies of registration statements
that any Borrower files with the Securities and Exchange
Commission or any national securities exchange or the National
Association of Securities Dealers, Inc.
(iii) Healthcare Matters. Within five (5) Business
Days after a Borrower obtaining Knowledge of:
a. Notice of any investigation or pending or
threatened proceedings relating to any violation by
any Borrower, any Subsidiary, or any health care
facility to which Borrowers or any Subsidiary
provides services, of any Health Care Laws
(including, without limitation, any investigation or
proceeding involving violation of any of the Medicare
and/or Medicaid fraud and abuse provisions);
b. Copies of any written recommendation from
any Governmental Authority or other regulatory body
that any Borrower, any Subsidiary, or any Obligor to
which Borrowers or any Subsidiary provides services
should have its licensure or accreditation revoked,
or have its eligibility to participate in the
Civilian Health and
30
Medical Program of the Uniformed Services
("CHAMPUS"), Medicare or Medicaid or to accept
assignments or rights to reimbursement under CHAMPUS,
Medicaid or Medicare regulations revoked;
c. Notice of any claim to recover any
alleged material overpayments with respect to any
Receivables including, without limitation, payments
received from CHAMPUS, Medicare, Medicaid or from any
private insurance carrier;
d. Notice of termination of eligibility of
any Borrower, any Subsidiary, or any health care
facility to which Borrowers provide services to
participate in any reimbursement program of any
private insurance carrier or other Obligor applicable
to it;
e. Notice of any reduction in the level of
reimbursement expected to be received with respect to
any Receivables representing more than $100,000 in
the aggregate of the value of all Eligible
Receivables included in the Revolving Credit
Borrowing Base;
f. Notice of any reimbursement payment
contract or process that results or may result in any
claim against any Borrower or any Subsidiary
(including on account of overpayments, settlement
payments, appeals, repayment plan requests); and
g. Copies of any report or communication
from any Governmental Authority in connection with
any inspection of any facility of any Borrower or any
Subsidiary.
(iv) Enrollment Application. Copies of all documents
within in ten (10) Business Days relating to the execution of
an enrollment application with a new healthcare provider, the
termination or modification of the relationship of any
Borrower with any existing healthcare provider, or any notice
of such new provider or such termination or modification,
including the name, address and provider number for the
affected healthcare provider
(v) Notice of Litigation, Claims against Collateral,
Adverse Events, etc. Promptly (and in any event within one (1)
Business Day) upon obtaining Knowledge thereof, written notice
in reasonable detail of: (A) any Lien, claim, attachment or
legal process asserted or levied against any Borrower or any
Collateral in an amount claiming in excess of $25,000 from
Borrowers, or any of them; (B) the loss or damage to any
material Collateral; (C) any reimbursement or other Offset by
any Governmental Authority, including but not limited, to the
IRS, in an amount in excess of $10,000; (D) the commencement
of any audit, investigation or judicial or administrative
proceeding by any Obligor or Government Authority, or any
criminal or civil investigation initiated, claim filed or
disclosure required by the Office of Inspector General, the
Department of Justice, CMS (formerly HCFA), or any other
Governmental Authority, or any claim filed under the False
Claims Act or any other Requirement of Law; (E) any notice of
default, termination or of any other material nature received
by any Borrower from the owner of any leased premises (1) used
by LHC as its chief executive office, (2) where any books and
records relating to the Receivables are maintained by Borrower
or (3) related to the Borrowers' long term care business; or
(F) the occurrence of any other event which could reasonably
be expected to have a Material Adverse Change.
(vi) Tax Returns. Copies of (A) Borrowers' annual
federal income tax returns as filed with the Internal Revenue
Service, commencing with its first Fiscal Year End after the
Closing Date, such return to be delivered to Senior Lender not
later than thirty (30) days after the filing date, (B)
Borrowers' payroll tax return as filed with the Internal
Revenue Service on Form 941 for each calendar quarter, to be
delivered no later than the last day of the calendar month in
which it is required to be filed, together with monthly
documentation of payment of any sums due in respect of payroll
taxes, and (C) if requested by Senior Lender, any applicable
sale tax filings
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not later than thirty (30) days after the filing date thereof,
together with monthly documentation of payment of any sums due
in respect of sales taxes.
(vii) Accounts Receivable and Payable Aging Reports.
No later than the tenth (10th) day of each calendar month, a
detailed accounts receivable aging by Obligor class and
accounts payable aging for the previous month, including all
month-end reconciliations as reasonably requested by Senior
Lender.
(viii) ERISA Information. Copies of any ERISA reports
or other reports related to any employee pension or benefits
plan within thirty (30) days of the Borrowers' Fiscal Year
End, or if such report is required by either state or federal
law to be filed at a different time or more frequently, within
five (5) Business Day of the filing of any such report.
(ix) Obligor Information. Promptly upon the request
by Senior Lender but in no event more frequently than once
each fiscal quarter, a complete listing of all Obligors of
Borrowers, whether or not the Receivables of such Obligor are
Eligible Receivables, together with a complete listing of all
rates for each Obligor or Obligor class.
(x) Licensing Information. Copies of all required
operating, medical or provider licenses, as they are renewed,
but no less frequently than every year.
(xi) Inspection / Survey Information. Copies of the
results of any licensing survey or other inspection report
within ten (10) Business Days of its receipt by Borrowers.
(xii) Miscellaneous. All other items, documents or
information reasonably required by Senior Lender.
9.6. MERGER, CONSOLIDATION, DISPOSITION OF ASSETS, DISSOLUTION OR
LIQUIDATION.
(a) No Borrower shall sell, lease, license, transfer or otherwise
dispose of its Property other than (i) Property sold in the ordinary course or
ordinary operation of such Borrower's business; (ii) dispositions of obsolete,
worn or nonfunctional Property; (iii) Property sold, leased, licensed,
transferred or otherwise conveyed by a Borrower to another Borrower or an
Excluded Subsidiary (so long as such transfer would not cause such Subsidiary to
no longer be an Excluded Subsidiary); (iv) sales, leases, licenses, transfers
and other dispositions of Property in an amount not to exceed $250,000 in the
aggregate in any calendar year; (v) sales or issuance of Capital Stock by LHC
(including, without limitation, issuances of Capital Stock of LHC in connection
with the IPO) which do not result in a Change of Control; and (vi) sales or
issuances of Capital Stock by a Borrower or Subsidiary so long as such Person
remains a Controlled Entity after the consummation of such sale or issuance or
is an Excluded Subsidiary.
(b) No Borrower shall merge or consolidate with, or acquire, any
other Person or commence a dissolution or liquidation; provided, that with
fifteen (15) days prior written notice to Senior Lender: (i) Borrowers may
engage in Permitted Acquisitions; (ii) a Borrower or an Excluded Subsidiary may
merge with another Borrower if a Borrower is the resulting entity; or (iii)
Shareholders of a Borrower may dissolve such Borrower in the event that (y) such
Borrower has engaged in no business activities for 6 months prior to such
dissolution and (z) such Borrower does not have assets with a value exceeding
$50,000.
9.7. RESTRICTIONS ON LIENS. Borrowers shall not create, incur, assume
or suffer to exist any Lien on any of its assets, except for the following
(collectively, "PERMITTED LIENS"):
(a) Liens in favor of Senior Lender;
(b) Liens for taxes which are not yet overdue or the validity of
which is being contested in good faith by appropriate proceedings diligently
pursued and for which reserves or other appropriate provision as shall be
required by GAAP have been made therefor on Borrower's books and records;
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(c) Liens securing Indebtedness described in Section 9.8(c)
hereof, provided that such Liens attach only to such real or personal property
acquired with the proceeds of such Permitted Indebtedness and the proceeds of
such property;
(d) Deposits or pledges under xxxxxxx'x compensation, unemployment
insurance, social security and similar laws, or to secure the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
leases or to secure indemnity, performance or similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or similar bonds, all in the ordinary course of business;
(e) Non-consensual statutory Liens arising in the ordinary course
of business to the extent such Liens secure Indebtedness (i) which is not
overdue or (ii) relating to claims or liabilities which are fully insured, or
(iii) which are being contested in good faith by appropriate proceedings and for
which the applicable Borrower has taken a reserve on its books in accordance
with GAAP;
(f) Bankers Liens, rights of setoff and similar Liens incurred on
deposits made in the ordinary course of business to the extent permitted in a
Control Agreement or under a Government Lockbox not subject to a Control
Agreement;
(g) Reservations, exceptions, encroachments, easements, rights of
way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any real estate owned or leased by Borrowers; provided
that they could not reasonably be expected to have a Material Adverse Change;
(h) Leases or subleases granted to others not interfering with the
business of the Borrowers that could not reasonably be expected to have a
Material Adverse Change;
(i) Liens granted in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type described above,
provided that any extension, renewal or replacement Lien is limited to the
property encumbered by the Lien and the principal amount of the Indebtedness
being extended, renewed or replaced does not increase, the interest rate on such
Indebtedness does not increase, and if the maturity date of such Indebtedness
being refinanced originally occurred after the Maturity Date, the maturity date
of such Indebtedness after such refinance does not occur prior to the Maturity
Date or if the maturity date of such Indebtedness being refinanced originally
occurred prior to the Maturity Date, such maturity date is not shortened as a
result of such refinancing; and
(j) Liens existing as of the Closing Date that are described on
Schedule 9.7 attached hereto.
9.8. RESTRICTIONS ON INDEBTEDNESS. Without Senior Lender's prior
written consent, no Borrower shall create, incur, assume or suffer to exist any
Indebtedness except (collectively, "PERMITTED INDEBTEDNESS"):
(a) Indebtedness to Senior Lender;
(b) Indebtedness outstanding as of the date hereof and reflected
on Schedule 9.8 hereto;
(c) Indebtedness constituting purchase money indebtedness for the
financing of capital expenditures (including Capitalized Leases) not to exceed
$500,000 at any time outstanding;
(d) Indebtedness of any Borrower to any other Borrower to the
extent not prohibited by Section 9.10;
(e) Indebtedness constituting Subordinated Debt;
(f) Endorsements in the ordinary course of business of negotiable
instruments for deposit or collection;
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(g) Other unsecured Indebtedness in an amount not to exceed
$250,000;
(h) Guarantees by any Borrower of Indebtedness permitted by
clauses (a) through (g).
9.9. RESTRICTED PAYMENTS. Borrowers shall not, directly or indirectly,
declare or pay any dividends on account of any shares of any class of their
Capital Stock, or purchase, redeem, retire, or otherwise acquire for value any
of their Capital Stock, or make any distribution of assets to its shareholders,
whether in cash, property, loans or in other obligations of Borrowers, or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of, any Capital
Stock, or make any other distribution by reduction of capital or otherwise in
respect of any Capital Stock, or, until 180 days after the Maturity Date, make
any payments on account of Subordinated Debt or the Seller Debt (collectively,
"Restricted Payments"), except for:
(i) Restricted Payments made by a Borrower to another
Borrower, as long as after giving effect thereto each such
Borrower is Solvent;
(ii) So long as no Default or Event of Default has
occurred and is continuing, redemptions by LHC of common stock
options, stock appreciation rights, restricted stock awards or
performance awards issued pursuant to the Benefit Plan in
connection with the termination or retirement by the
individual to which such Ownership Interests were issued in an
amount not to exceed $250,000 in any fiscal year;
(iii) Restricted Payments in the form of shares of
Capital Stock consisting solely of common stock;
(iv) Payments made in respect of the Subordinated
Debt with proceeds of the IPO;
(v) So long as no Default or Event of Default has
occurred and is continuing, payments made to minority owners
of Borrowers (other than LHC) in respect of their pro-rata
ownership of such Borrower and relating to earnings from such
Borrower; and
(vi) Provided that no Default or Event of Default has
occurred and continues to exist and Borrowers' sum of
unrestricted cash on hand and the amount of Revolving Credit
Availability (after giving effect thereto) is at least
$2,000,000, regularly scheduled payments of interest due with
respect to the Subordinated Debt.
9.10. TRANSACTIONS WITH AFFILIATES.
(a) Except for transactions under the Benefit Plan, Borrowers
shall not, directly or indirectly, purchase, acquire or lease any property from,
or sell, transfer or lease any property to, any officer, director, agent or
other Affiliate of a Borrower, except transactions in the ordinary course of and
pursuant to the reasonable requirements of Borrowers' business and upon fair and
reasonable terms no less favorable to the applicable Borrower than would be
obtained in a comparable arms' length transaction with an unaffiliated person.
(b) In the event that a Default or an Event of Default has
occurred and is continuing, no Borrower or Borrower Agent shall make to any
other Affiliate of a Borrower (other than a Borrower) and no Affiliate of any
Borrower (other than a Borrower) shall receive from any other Borrower or
Borrower Agent any payment in whatever form, including but not limited to
payments for management fees, consulting fees, fees for services rendered,
administrative costs and expenses, and lease and equipment payments.
(c) Borrowers' investments (whether through loans, guaranties,
equity, contribution or otherwise) in the Excluded Subsidiaries shall not at any
time exceed $500,000 in the aggregate, and the aggregate value of all assets of
all Excluded Subsidiaries shall not at any time exceed $500,000.
(d) The EBITDA (on a trailing twelve-month basis) of all Excluded
Subsidiaries in the aggregate at any one time shall not exceed $250,000.
34
9.11. COMPLIANCE WITH ERISA. Borrowers shall and shall cause each of
its ERISA Affiliates to: (a) maintain each Employee Benefit Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code and
other Requirements of Law; (b) cause each Pension Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any
Pension Plans so as to incur any monetary liability to the Pension Benefit
Guaranty Corporation ("PBGC") in excess of $100,000; (d) not allow or suffer to
exist any prohibited transaction involving any of Employee Benefit Plans or any
trust created thereunder which would subject Borrower or such ERISA Affiliate to
a tax or penalty or other liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA in excess of $100,000; (e) make all required
contributions to any Pension Plan which it is obligated to pay under Section 302
of ERISA, Section 412 of the Code or the terms of such Pension Plan; or (f) not
allow or suffer to exist any occurrence of a reportable event or any other event
or condition which presents a material risk of termination by the PBGC of any
such Pension Plan that is a single employer plan, which termination could result
in any monetary liability to the PBGC in excess of $100,000.
9.12. DEPOSIT ACCOUNTS. Borrowers shall not (a) establish any Deposit
Accounts other than those described on Schedule 8.15, except for the Government
Lockbox Deposit Accounts and Deposit Accounts as to which the applicable
Borrower(s) as applicable, shall have delivered to Senior Lender a Control
Agreement in form and substance satisfactory to Senior Lender, or (b) violate
directly or indirectly any bank agency agreement, Control Agreement or Lockbox
Agreement in favor of Senior Lender.
9.13. INSPECTION OF PROPERTIES AND BOOKS, ETC. Senior Lender and its
representatives (including any appraisers, counsel, auditors and accountants
selected by Senior Lender) shall at all times have, upon five (5) days' prior
notice (unless an Event of Default has occurred and is continuing in which case
no notice shall be required), full and free access during normal business hours
to, and the right to make inspections of, all facilities of any Borrower and any
Subsidiary or Affiliate and to all Books and Records of all such Persons. The
Borrowers shall not be required to reimburse the Senior Lender for more than
$10,000 per year for fees and expenses related to such inspections, and Senior
Lender agrees to conduct no more than four (4) inspections during any calendar
year, each so long as no Event of Default has occurred and is continuing. Senior
Lender and its representatives may examine the same, take extracts therefrom and
make photocopies and abstracts thereof, and Borrowers agree to render to Senior
Lender or its representatives, at the cost and expense of Borrowers, such
clerical and other assistance as may be reasonably requested with regard
thereto. Borrowers and any Affiliate shall permit Senior Lender or its
representatives to discuss matters relating to the Receivables, any other item
of Collateral or Borrowers' performance hereunder or under any relevant
contracts or Requirements of Law with any of its or their officers, employees,
agents and independent accountants having knowledge of such matters. Borrowers
also hereby grant Senior Lender, to the fullest extent permitted by applicable
Requirements of Law, access to all records with respect to such Borrower and any
Affiliate of such Borrower and the Collateral maintained by any Governmental
Authority, including the right to meet with representatives of such Governmental
Authorities and to inspect and make copies or abstracts of any such records.
9.14. FURTHER ASSURANCES. Borrowers shall, at their expense, promptly
execute and deliver all further instruments, financing statements and other
documents, and take all further action that Senior Lender may reasonably request
in order to perfect, protect or more fully evidence Senior Lender's security
interest in any Collateral, or to perform any of its obligations with respect to
this Agreement and the Loan Documents, including but not limited to turning over
to Senior Lender any instruments or chattel paper and cooperating with Senior
Lender in obtaining Control Agreements with respect to any Deposit Accounts,
investment property, letter-of-credit rights and electronic chattel paper.
9.15. RESTRICTIONS REGARDING COLLECTIONS, ETC. No Borrower shall,
without the prior written consent of Senior Lender: (a) make any change in the
character of its business or in its credit and collection policies, which change
would impair the timing of Collections or collectibility of any Receivables; (b)
deposit or otherwise credit, or cause, permit or suffer to be deposited or
credited to any Lockbox or Lockbox Account, any funds whatsoever except the
deposit to or credit of payments and Collections of Receivables or as required
by this Agreement; (c) withdraw or attempt to withdraw, or cause, permit or
suffer the withdrawal of, any amounts from any Lockbox or Lockbox Account, or
instruct any Lockbox Bank or any other Person to transfer any amounts other than
as permitted in this Agreement or any Loan Document; (d) cancel, revoke or
modify, or cause, permit or suffer any cancellation, revocation or modification
of, any sweep of funds instruction established hereunder or under any Loan
Document; (e) amend, supplement or otherwise modify, or permit or suffer the
amendment, supplement or modification of, any
35
depositary agreement with respect to any Deposit Account or any transfer
instruction given thereunder; (f) authorize or participate in, or permit or
suffer the authorization of or participation in, an Obligor reversing or
attempting to reverse or otherwise prevent payment or recovery with respect to
any payment or Collections received by Borrower, Senior Lender, or a Lockbox
Account Bank; (g) fraudulently amend, modify, supplement or delete in any way
any Books and Records; (h) alter or modify, or permit or suffer the alteration
or modification of, its claims processing or third party billing systems; or (i)
change its fiscal year.
9.16. PERMITTED ACQUISITIONS. In the event that a Borrower engages in
any merger, acquisition of all or a material portion of the assets of another
Person or other business combination with Senior Lender's consent or any
Permitted Acquisition, Borrower shall deliver to Senior Lender: (a) at least
fifteen (15) days prior to the closing of the acquisition, a copy of the merger
or acquisition agreement and all related documents, (b) at least fifteen (15)
days prior to the closing of the acquisition, a certificate of good standing of
Borrower and the resulting company, and (c) all of those deliverables pursuant
to Section 9.17 herein in the event that a new Affiliate of a Borrower is
established or acquired with at least $50,000 in assets.
9.17. CREATION OR ACQUISITION OF NEW SUBSIDIARIES OF BORROWER; SELLER
DEBT. In the event that: (a) a Borrower creates or acquires through a Permitted
Acquisition a new Subsidiary or Controlled Entity subject to the terms of this
Agreement, which has $50,000 or more in assets, (b) an Excluded Subsidiary or
other Subsidiary of Borrower, which is not itself a Borrower, increases its
asset value to $50,000 or more or otherwise fails to satisfy the criteria to be
an Excluded Subsidiary, or (c) Borrower elects to have an Excluded Subsidiary
become a Borrower, Borrower shall execute and deliver to Senior Lender within
fifteen (15) days, except as otherwise required below, from the date of such
formation, Permitted Acquisition, increase in asset value or Borrower decision:
(a) an amendment or joinder to this Agreement adding such Person
as a new Borrower,
(b) an amendment or accession to the financing statements,
certificates of title, stock certificates representing the Capital Stock of the
new Borrower with attached stock powers executed in blank and other documents
reasonably required by Senior Lender, including new schedules to the Agreement
and documents pursuant to which such new Borrower shall secure its obligations
under this Agreement by a first priority, perfected Lien in all Property of the
new Borrower (subject to Permitted Liens);
(c) a good standing certificate from the state in which the new
Borrower is incorporated, organized or formed, and any and all states in which
it is authorized to do business;
(d) a certificate executed by the Secretary or other officer of
the new Borrower in form and substance certifying:
(i) that the articles or certificate of
incorporation, certificate of formation or articles of
organization, as applicable, delivered to the Senior Lender
thereto, are in full force and effect, and have not been
modified or amended;
(ii) that the bylaws, agreement of limited
partnership or limited liability company agreement, as
applicable, delivered to the Senior Lender thereto, are in
full force and effect and have not been modified or amended;
and
(iii) that attached thereto is a true and complete
copy of resolutions adopted by the board of directors, general
partner, manager or managing member, as applicable,
authorizing the execution, delivery and performance of the
foregoing agreements and documents;
(e) Obligor Notices and other documents necessary to ensure the
remittance of Receivables of such new Borrower to applicable Lockboxes and
Lockbox Accounts;
(f) legal opinions and lien searches reasonably requested by
Senior Lender; and
36
(g) all financial, legal and other due diligence materials
received or reviewed by Borrowers in connection with any proposed acquisition
(including any legal opinions or lien search results) as reasonably requested by
Senior Lender, and, if required will obtain waiver of any applicable
confidentiality restrictions to enable Senior Lender to receive any of the same.
Notwithstanding the foregoing, all Seller Debt incurred in any such acquisition
shall be junior and subordinate to the Loans and Senior Lender's Liens (provided
that no Seller Debt may be secured by a Lien without Senior Lender's prior
written consent); no Default or Event of Default shall exist on the date of any
Permitted Acquisition or after giving effect to such Permitted Acquisition; and
Borrowers shall be in compliance on a pro forma basis with all covenants set
forth in Section 10 and with all terms and conditions of this Agreement. With
respect to any such Permitted Acquisition, no Receivable shall be an Eligible
Receivable until approved by Senior Lender.
9.18. POST-CLOSING OBLIGATIONS. Borrower shall comply with each of the
following matters within the applicable time specified:
(a) If the Subordinated Debt owing to The Catalyst Fund, Ltd. and
Southwest/Catalyst, Ltd. has not been paid in full by Borrower on or before May
20, 2005 with the proceeds from the IPO, Borrower shall deliver to Senior Lender
on or before May 20, 2005 an amendment to the documents evidencing such
Subordinated Debt, which amendment (i) extends the current maturity of such
Subordinated Debt to at least October 13, 2010 and (ii) makes other revisions to
such documents which make the terms thereof not inconsistent with this
Agreement, each in form and substance reasonably acceptable to Senior Lender;
(b) On or before April 25, 2005, deliver stock certificates and
powers for each Subsidiary of Borrower for equity interests owned by Borrower to
the extent such equity interests are evidenced by certificated securities;
(c) On or before April 25, 2005, a consent and subordination in
form and substance reasonably acceptable to Senior Lender from (i) Gulf South
Home Health Care, L.L.C. (as lessor) under the Gulf South Lease and (ii)
Mississippi Baptist Health Systems, Inc. and Mississippi Baptist Medical Center,
Inc. (as lessors) under the Mississippi Baptist Lease, pursuant to which each of
the lessors will (A) consent to this Agreement and the Liens granted hereunder,
and (B) subordinate any Lien or interest such lessors have in any asset of
Borrower, other than the Licenses and Provider Numbers leased to the Borrowers
by such lessors under such Leases;
(d) On or before May 13, 2005, Borrower shall deliver to Senior
Lender copies of notices to all Obligors of Borrower to make payments to the
Lockbox, for all Obligors who have not previously received such a notice;
(e) On or before April 29, 2005, Borrower shall deliver to Senior
Lender amendments to all of its Control Agreements and Lockbox Agreements
covering all deposit accounts and lockboxes of all Borrowers, to add all
Borrowers not already a party thereto; and
(f) On or before April 29, 2005, Borrower shall deliver to Senior
Lender finalized audited financial statements for Borrower for the year ending
December 31, 2004.
(g) On or before April 29, 2005, Borrower shall deliver to Senior
Lender evidence, in form and substance satisfactory to Senior Lender, that each
of the following financing statements has been terminated: (i) Financing
Statement 28-406234 with VGM Financial Services as Secured Party and Louisiana
Health Care Group, L.L.C. as Debtor; (ii) Financing Statement 28-406771 with VGM
Financial Services as Secured Party and Louisiana Health Care Group, L.L.C. as
Debtor; (iii) Financing Statement 00-00-00000 with MidSouth National Bank as
Secured Party and Hebert, Thibodeaux, Xxxxx and Xxxxxxx Therapy Group, Inc. as
Debtor; (iv) Financing Statement 00-00-00000 with Xxxx Xxxxx Bank as Secured
Party and Hebert, Thibodeaux, Xxxxx and Xxxxxxx Therapy Group, Inc. as Debtor,
and (v) Financing Statement 00-00-00000 with Xxxx Xxxxx Bank as Secured Party
and Hebert, Thibodeaux, Xxxxx and Xxxxxxx Therapy Group, Inc. as Debtor.
37
SECTION 10. FINANCIAL COVENANTS OF BORROWER. Borrowers covenant and agree that,
so long as any Loan is outstanding or the Senior Lender has any obligation to
make Loans hereunder, Borrowers will observe each of the following financial
covenants. These financial covenants will be calculated on a consolidated basis
as of the end of each quarterly period of Borrowers.
10.1. LEVERAGE RATIO. Borrowers shall maintain a Leverage Ratio of not
greater than 1.50:1.00, calculated at the end of each fiscal quarter.
10.2. FIXED CHARGE COVERAGE RATIO. Borrowers shall maintain on a
consolidated basis a Fixed Charge Coverage Ratio on a trailing 12-month basis of
not less than 1.40:1.00.
10.3. EXECUTIVE COMPENSATION
Until the consummation of the IPO, Borrowers shall not make any
payments of management, consulting or other fees for management or similar
services, or any payment on account of any Indebtedness owing to any officer,
employee, shareholder, director or other Affiliate of any Borrower, except
reasonable compensation to officers, employees and directors of Borrowers for
services rendered to such Borrower in the ordinary course of business. Without
limiting the foregoing, until the consummation of the IPO, Borrowers shall not
pay or commit to pay compensation to any member of Borrowers' senior management
in an amount in any fiscal year in excess of 110% of the aggregate cash
compensation paid during the prior fiscal year.
10.4. RESTRICTIONS ON LEASES, ETC. Borrowers shall not create, incur,
assume, or suffer to exist, any obligation as a lessee for the rental or hire of
any real or personal property (which shall exclude any Capitalized Lease, other
than: (a) leases described on Schedule 10 attached hereto; and (b) additional
operating leases requiring payments (including taxes, insurance, maintenance,
and similar expenses) in an aggregate amount not to exceed $500,000 during any
fiscal year.
10.5. CAPITAL EXPENDITURES. Borrowers shall not make or incur Capital
Expenditures that are not for general business purposes of Borrowers in the
ordinary course of their Business and otherwise in compliance with this
Agreement.
10.6. FINANCIAL COVENANT CALCULATIONS. Borrowers shall submit on a
quarterly basis evidence of Borrowers' compliance with the financial covenants
set forth in this Section 10 in form substantially similar to the financial
covenant calculation worksheet attached as Exhibit A to Compliance Certificate.
SECTION 11. EVENTS OF DEFAULT; SENIOR LENDER'S RIGHTS AND REMEDIES.
11.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events are referred to herein individually as an "EVENT OF DEFAULT"
and collectively as "EVENTS OF DEFAULT":
(a) Borrowers fail to pay any of the Obligations when the same
shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) Borrowers fail to continuously observe, meet or perform any
term, covenant, financial covenant or agreement contained in this Agreement,
including specifically Sections 7, 9 and 10 hereof (and all subsections
thereof);
(c) Any Borrower fails to observe or perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other than
those specified elsewhere in this Section 11.1) and such failure continues for
fifteen (15) days after written notice of such failure has been given to
Borrower by Senior Lender;
38
(d) Any representation or warranty of any Borrower contained in
this Agreement or any other Loan Document proves to have been false, erroneous
or misleading in any material respect as of the date made or deemed made;
(e) Any Borrower shall: (i) commence a voluntary Insolvency
Proceeding seeking liquidation, reorganization or other relief with respect to
itself or its Indebtedness or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it or any substantial part
of its property; or (ii) consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary Insolvency Proceeding;
or (iii) generally fail to pay its Indebtedness as it becomes due; or (iv) take
any action to authorize any of the foregoing;
(f) Commencement of an involuntary Insolvency Proceeding against
any Borrower seeking liquidation, reorganization or other relief with respect to
it or its Indebtedness or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and the occurrence of any of the following events: (i) the
petition commencing the Insolvency Proceeding is not timely controverted; (ii)
the petition commencing the Insolvency Proceeding is not dismissed within sixty
(60) calendar days of the date of the filing thereof; (iii) an interim trustee
is appointed to take possession of all or a substantial portion of the assets
of, or to operate all or any substantial portion of the business of, such
Borrower; or (iv) an order for relief shall have been issued or entered therein;
(g) Any Lockbox Agreement or Control Agreement is amended or
terminated or ceases to be in full force and effect without the written consent
of Senior Lender;
(h) Any Lien (other than Permitted Liens), claim or interest in
any Receivables, other item of Collateral, or Collections is validly asserted,
claimed, effected or perfected by any Person or if payment of any amounts due
with respect to the Receivables is made by an Obligor, other than to Borrower or
the appropriate Lockbox or Lockbox Account, which payment is not forwarded to
the Lockbox or Lockbox Account within two Business Days after Borrower obtains
Knowledge of such payment not being made to such Borrower, Lockbox or Lockbox
Account;
(i) (i) Any Borrower suffers any judgment or arbitration award for
the payment of money that (A) is in an amount in excess of $250,000 which is not
covered by a policy of insurance, or (B) could reasonably be expected to cause a
Material Adverse Change to such Borrower; or (ii) any attachment or execution is
rendered against such Borrower's assets that (A) is in an amount in excess of
$100,000, or (B) could reasonably be expected to cause a Material Adverse Change
to such Borrower;
(j) Any Borrower shall default under any agreement, document or
instrument relating to any Indebtedness for borrowed money owing to any Person
other than Senior Lender, or any Capitalized Lease Obligations, contingent
Indebtedness in connection with any guaranty, letter of credit, indemnity or
similar type of instrument in favor of any Person other than Senior Lender, in
any case in an amount outstanding in excess of $250,000.00, which default
continues after the applicable cure period, if any, with respect thereto; or any
Borrower shall default in the payment of any amount due under any lease with
respect to any of its facilities occupied under a lease relating to a long term
acute care facility and such default could reasonably be expected to cause a
termination of such lease;
(k) The occurrence of any Change of Control;
(l) The indictment, or as Senior Lender may reasonably and in good
faith determine, the threatened indictment by any Governmental Authority of any
Borrower, Subsidiary or Affiliate of Borrower, in either case, as to which there
is a reasonable possibility of an adverse determination under any criminal
statute, or commencement or threatened commencement of criminal or civil
proceedings against any Borrower, any Subsidiary or Affiliate of Borrower,
pursuant to which statute or proceeding the penalties or remedies sought or
available include (i) forfeiture of any material portion of the Collateral, or
(ii) forfeiture of any other assets of Borrowers which are necessary or material
to the conduct of their business;
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(m) Senior Lender shall determine that any Borrower has failed to
administer the Receivables in a commercially reasonable manner and in a manner
consistent with the terms of this Agreement and the other Loan Documents, and
Borrowers shall fail to adequately cure or address such failure to the
satisfaction of Senior Lender within the fifteen (15) day period referred to in
Section 7.3 hereof; or
(n) The loss, suspension or revocation of, or failure to renew,
any license or Permit now held or hereafter acquired by any Borrower or
Subsidiary if such loss, suspension, revocation or failure to renew would have a
Material Adverse Change and continues for a period of fifteen (15) days
following such loss, suspension, revocation or failure to renew.
11.2. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, Senior Lender may exercise any and all
remedies available to it under this Agreement, the other Loan Documents, the UCC
and other applicable law. Among other things, Senior Lender may do any one or
more of the following, at its election, all of which Borrowers authorize and
acknowledge are commercially reasonable, and all of which rights and remedies
may be exercised without notice to or consent of Borrowers, except as such
notice or consent is expressly provided for hereunder or required by applicable
law:
(a) Declare any and all of the Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents or otherwise, immediately due
and payable (provided, that, upon occurrence of an Event of Default described in
Sections 11.1(e) and 11.1(f), all Obligations shall automatically become
immediately due and payable);
(b) Cease advancing money or extending credit to or for the
benefit of the Borrowers under this Agreement, any of the other Loan Documents,
or any other agreement between Senior Lender and Borrowers;
(c) Terminate the credit facilities provided by this Agreement and
any of the other Loan Documents, but without affecting Senior Lender's rights
and security interests in the Collateral and without affecting the Obligations
of Borrowers;
(d) Collect, foreclose, receive, appropriate, setoff and realize
upon any and all Collateral;
(e) Settle or adjust disputes and claims directly with any Obligor
or contract debtor for amounts and upon terms which Senior Lender considers
advisable, and in such cases, Senior Lender will apply Collections and other
amounts so received in accordance with the applicable provisions of this
Agreement;
(f) Without notice to or demand upon Borrowers, make such payments
and do such acts as Senior Lender considers necessary or reasonable to protect
its security interests in the Collateral. Borrowers and Borrower Agent agree to
assemble the Collateral if Senior Lender so requires, and to make the Collateral
available to Senior Lender at any place or time, as Senior Lender may designate.
Borrowers authorize Senior Lender to enter any premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien
that in Senior Lender's determination appears to conflict with its security
interests and to pay all expenses incurred in connection therewith. Borrowers
authorize Senior Lender to remove any or all of the Collateral from any premises
on or in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose. With respect
to Borrowers' owned or leased premises, Borrowers hereby grants Senior Lender a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any
of Senior Lender's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Borrowers (such notice being expressly
waived), and without constituting an acceptance of any Collateral in
satisfaction of an obligation (within the meaning of the UCC or any successor
statute or law of similar effect), set off and apply to the Obligations any and
all (i) balances and deposits of Borrowers held by Senior Lender (including any
amounts received in the Lockbox Accounts), or (ii) indebtedness at any time
owing to or for the credit or the account of Borrowers held by Senior Lender;
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(h) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Senior Lender is
hereby granted a license or other right to use, without charge, Borrowers'
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Borrowers' rights under all
licenses and all franchise agreements shall inure to Senior Lender's benefit;
(i) Obtain the appointment of a receiver, trustee, or similar
official over Borrowers to effect the all of transactions contemplated by this
Agreement or as is otherwise necessary to perform this Agreement;
(j) Require Borrowers to assemble the Collateral and make it
immediately available to Senior Lender. Without limiting the generality of the
foregoing with respect to that portion of the Collateral that is comprised of
Patient Lists, Borrowers shall make immediately available all Patient Lists to
Senior Lender; and
(k) Collect any Contracts, Receivables or accounts or sell all or
any part of the Collateral at either a public or private sale or both, by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Borrower's premises) as Senior Lender determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale.
11.3. DISPOSITION OF COLLATERAL, ETC. Senior Lender may sell, lease,
transfer, assign, deliver or otherwise dispose of any of the Collateral
(including entering into contracts with respect thereto, public or private sales
at any exchange, broker's board, at any office of Senior Lender or elsewhere) at
such prices or terms as Senior Lender may deem reasonable, for cash, upon credit
or for future delivery, with Senior Lender having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrowers, which
right or equity of redemption is hereby expressly waived and released by
Borrowers. Senior Lender has no obligation to assemble, repair or otherwise
prepare any Collateral for sale. Senior Lender has no obligation to attempt to
satisfy the Obligations by collecting them from any other Person, including
Guarantors, liable for them. Senior Lender may release, modify or waive any
Collateral without affecting Senior Lender's rights against Borrowers or
Guarantor. Borrowers waive any right that it may have to require Senior Lender
to pursue any third party for any of the Obligations. Senior Lender may sell the
Collateral without giving any warranties as to the Collateral. Senior Lender may
specifically disclaim any warranties of title or the like. If Senior Lender
sells any of the Collateral upon credit, Borrowers will be credited only with
payments actually made by the purchaser, received by Senior Lender and applied
to the Obligations. In the event that a purchaser fails to pay for any item of
Collateral, Senior Lender may resell such item, and Borrowers will be credited
with the proceeds of the sale. Senior Lender will have no obligation to marshal
any assets in favor of Borrowers, or against or in payment of any of the
Obligations. Senior Lender may apply the cash proceeds of Collateral actually
received by Senior Lender from any sale, lease, foreclosure or other disposition
of the Collateral to payment of the Obligations, in whole or in part and in such
order as Senior Lender may elect, whether or not then due. Borrowers shall
remain liable to Senior Lender for the payment of any deficiency with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including attorneys' fees and legal expenses. Borrowers shall
pay immediately any deficiency that exists after disposition of the Collateral
by Senior Lender. Any excess, after payment of all of the Obligations (including
any foreclosure costs and other costs of collection), will be returned, without
interest and subject to the rights of third Persons, by Senior Lender to the
Borrowers or any other person as required by law. The sending of notice by
facsimile transmission or by ordinary mail, postage prepaid, to Borrower's
address set forth herein of the time and place of any public sale or of the time
after which any private sale or other intended disposition is to be made, shall
be deemed reasonable notice thereof if such notice is sent ten (10) days before
the date of such sale or other disposition may occur, provided that Senior
Lender may provide Borrowers shorter notice or no notice, to the extent
permitted by applicable laws.
11.4. TIME ESSENCE; REMEDIES CUMULATIVE. Time is of the essence
respecting all of Borrowers' performance under the Loan Documents. Borrowers
irrevocably agree that the Senior Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements and under applicable law
shall be cumulative and may be exercised singularly, successively or
concurrently on any one or more occasions with such other rights as Senior
Lender may have. Senior Lender shall have all other rights and remedies not
inconsistent herewith as provided under the UCC, by other applicable law, or in
equity. All rights and remedies of Senior Lender may be exercised from time to
time as to all or any part of the Collateral as Senior Lender may, in its
discretion, determine.
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No exercise by Senior Lender of one right or remedy shall be deemed an election,
and no waiver by Senior Lender of any Event of Default shall be deemed a
continuing waiver. No delay by Senior Lender shall constitute a waiver,
election, or acquiescence by it. If, in the exercise of any of its rights and
remedies, Senior Lender shall forfeit any of its rights or remedies, including
its right to enter a deficiency judgment against any Borrower or any other
Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Senior
Lender and waives any claim based upon such action, even if such action by
Senior Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Senior Lender. Any election of remedies that results in the denial or impairment
of the right of Senior Lender to seek a deficiency judgment against any Borrower
shall not impair any other Borrower's duty to pay in full the Obligations.
11.5. EACH BORROWER'S OBLIGATIONS ABSOLUTE. Each Borrower agrees that
its Obligations to Senior Lender are continuing, absolute and unconditional,
irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement or any
other Loan Document or the waiver or consent by Senior Lender with respect to
any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the absence
of any action, by Senior Lender in respect thereof (including the release of any
such security);
(d) the insolvency of any Borrower; or
(e) the extension of time for any performance of any Borrower or
any other action or circumstance that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, all of which are
specifically waived.
11.6. NO SUBROGATION, MARSHALLING. Each Borrower waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, respecting rights of subrogation, or to compel Senior
Lender to marshal assets, to proceed against any other Borrower, or against any
Collateral before proceeding against, or as a condition to proceeding against,
such Borrower.
11.7. WAIVERS. No waiver by Senior Lender of its rights and remedies
shall be effective unless the waiver is in writing and signed by Senior Lender.
A waiver by Senior Lender of any right or remedy on one occasion shall not be
deemed a waiver of such right or remedy on any subsequent occasion. An Advance
to Borrowers during the continuation of an Event of Default shall not obligate
Senior Lender to make any subsequent Advances during the continuation of such or
any other Event of Default. Senior Lender will have no obligation to make any
Advance after the Revolving Credit Maturity Date regardless of whether any Event
of Default has occurred.
SECTION 12. COSTS AND EXPENSES.
12.1. PAYMENT OF FEES AND EXPENSES. Borrowers agree to pay to Senior
Lender upon demand: (a) the reasonable costs of producing this Agreement, the
other Loan documents and the other agreements and instruments mentioned herein;
(b) the reasonable costs and expenses of Senior Lender incurred in connection
with the administration, including electronic interfaces fees and periodic
auditing, Collateral monitoring, modification and amendment of this Agreement;
(c) any taxes (including interest and penalties in respect thereto) payable by
the Senior Lender (other than taxes based upon Senior Lender's net income or
profits) on or with respect to the transactions contemplated by this Agreement;
(d) the reasonable fees, expenses and disbursements of the Senior Lender's
counsel and any local counsel to the Senior Lender incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, the closing of the
42
transactions contemplated hereby, and amendments, modifications, approvals,
consents or waivers hereto or hereunder; (e) the fees, expenses and
disbursements of the Senior Lender incurred by the Senior Lender in connection
with the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, including all title insurance premiums and
surveyor, engineering and appraisal charges; (f) any fees, costs, expenses and
bank charges, including bank charges for returned checks, incurred by the Senior
Lender in establishing, maintaining or handling the Lockbox Accounts and any
other accounts for the disbursement of the Loans and/or the collection of any of
the Collateral; (g) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of the Senior Lender, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by the Senior Lender in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against Borrowers or the
administration thereof after the occurrence of an Event of Default or Default,
and (ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Senior Lender's relationship with Borrowers
or any of their Affiliates; and (h) all reasonable fees, expenses and
disbursements of the Senior Lender incurred in connection with UCC or title
searches, UCC filings or mortgage recordings. All such costs and expenses shall
constitute Obligations hereunder secured by the Senior Lender's Liens in the
Collateral. The covenants of this Section 12 shall survive payment and
satisfaction of the Obligations.
12.2. DEPOSIT ON TERMINATION OF CREDIT FACILITIES. In the event of the
payment in full of the Obligations and termination by Borrowers of the credit
facilities established hereunder, Senior Lender may, in its discretion, require
Borrowers to deposit with Senior Lender a reasonable amount in order to cover
any and all reasonable costs and expenses which may be incurred by Senior Lender
in connection with terminating the credit facilities and Senior Lender's
security interests in the Collateral. Upon the final payment in full of the
Obligations (except for Obligations for taxes, costs, indemnifications,
reimbursements, damages and other liabilities in respect of which no claim has
arisen or demand for payment has been made) and termination of the credit
facilities hereunder, Senior Lender shall take all actions and execute all
documents reasonably required to terminate this Agreement and any and all Liens
of Senior Lender in the Collateral, and all reasonable costs and expenses
incurred by Senior Lender may be deducted from such deposit, with any remaining
balance to be returned by Senior Lender to Borrowers no later than sixty (60)
days after the final payment in full of the Obligations.
SECTION 13. INDEMNIFICATION. Borrowers shall indemnify and hold Senior Lender
and its agents, attorneys, employees, officers, directors, Affiliates,
successors and assigns (the "INDEMNIFIED PARTIES") harmless from and against any
and all claims, actions and suits (whether groundless or otherwise), and from
and against any and all liabilities, losses, damages and expenses of every
nature and character arising out of this Agreement or any of the other Loan
Documents or the transactions contemplated hereby including, without limitation:
(a) actual or proposed use by Borrowers of the proceeds of any of the Loans; (b)
any Advances made based on the availability of any Receivables which do not
qualify as Eligible Receivables; (c) reliance on any representation or warranty
made by Borrower under or in connection with this Agreement or any Loan
Document, any information or report delivered by or on behalf of any Borrower,
its actions or failures to act which shall have been false or incorrect in any
material respect when made or deemed made; (d) the failure by Borrowers to
comply with any applicable law, rule or regulation with respect to any
Receivables or the related contracts, or the nonconformity of any Receivables or
the related contracts with any such applicable law, rule or regulation; (e) the
failure to vest and maintain vested in Senior Lender or its assigns a valid
first priority security interest in the Receivables together with all
Collections related thereto; (f) any and all disputes, claims, Offsets or
defenses of any Obligor to the payment of any Receivables; (g) any claims, costs
or expenses incurred by Senior Lender or any Lockbox Bank as a result of any
Person asserting that this Agreement or any Loan Document, or the performance by
Borrowers or any Guarantor of its or their respective duties and obligations
hereunder or thereunder, including but not limited to the grants of security
pursuant hereto, violate or contravene the terms, provisions or conditions of
any agreement by and between Borrowers and such Person or any provisions of law;
(h) any violation with respect to Borrowers or any Affiliate or any of their
respective properties of any Environmental Law, or the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release or threatened
release of any Hazardous Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to property); or (i)
failure of Borrowers or any Guarantor to perform its duties or obligations in
accordance with the provisions of this Agreement and the Loan Documents; in each
case including, without limitation, the reasonable fees and disbursements of
counsel and other professionals and allocated costs of internal counsel incurred
in connection with any such investigation, litigation or other proceeding or
matter; provided, however, that the Borrowers shall have no obligation to the
Indemnified Parties with respect to amounts resulting from gross negligence or
willful misconduct on the part of the Indemnified
43
Parties to which such indemnified amounts would otherwise be due. Any
indemnified amounts due hereunder may be added to the other Obligations owed to
Senior Lender by Borrowers and if not otherwise paid, shall be payable upon
demand therefore, together with interest at the rate of the Interest Rate +4%,
or the highest rate allowed by law if less than the Interest Rate +4% from the
date of such demand to the date of payment of the indemnified amounts. The
provisions of this Section 13 shall survive termination of this Agreement.
SECTION 14. MISCELLANEOUS.
14.1. NOTICES. Except as otherwise expressly provided in this
Agreement, all notices, demands, instructions and other communications required
or permitted to be given to or made upon any party hereto shall be in writing
and shall be personally delivered or sent by certified mail, postage prepaid,
return receipt requested, or by prepaid overnight private courier service (such
as Federal Express) or by facsimile transmission, and shall be deemed to be
given on the day on which such writing is received by the intended recipient
thereof. Unless otherwise directed in writing, notices, demands, instructions
and other communications in writing shall be given to or made upon the parties
at the addresses set forth below:
If to Senior Lender: GMAC-RFC Health Capital
0000 XX Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Relationship Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxx.xxxxxxxxx@xxxxxxx.xxx
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With Xxxxxx Xxxxx LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 0000-0000
Attn: Xxxxx Xxxxxxx
E-Mail: xxxxxxxx@xxxxxxxxxxx.xxx
And a copy to: GMAC-RFC
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxxx.xxxxxx@xxxxxxx.xxx
If to any Borrower 000 Xxxx Xxxxxxx Xx., Xxxxx X
or Borrower Agent: Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, President and
Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxx.xxxxx@xxxxxxxx.xxx
With a copy to: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxxxxx@xxxxxx.xxx
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile,
and (ii) if sent by registered or certified first-class mail, postage prepaid,
on the third Business Day following the mailing thereof. Electronic mail
addresses are provided herein as a convenience to the parties only. No notices
or demands hereunder shall be effective unless delivered in a manner
contemplated by the foregoing clauses (i) and (ii).
14.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Borrowers and Senior Lender and their respective
permitted successors and assigns; provided, however, that no Borrower shall
assign, delegate, pledge or otherwise dispose of any of its rights, duties or
obligations hereunder and any such prohibited action shall be null and void.
Borrowers acknowledge that Senior Lender has the absolute and incontestable
right to sell, pledge, assign or participate all or any part of Senior Lender's
right, title, interest and obligations with respect to this Agreement or the
Obligations. Borrowers agree to execute and deliver to Senior Lender, as
reasonably necessary, all documents, instruments and amendments presented to
Borrowers by Senior Lender in order to effectuate any such sale, pledge,
assignment or participation. Borrowers agree that the benefits of its
representations, warranties and covenants made or deemed made herein are for the
benefit of and may be enforced against the Borrowers by any Person to which
Senior Lender sells, pledges or assigns any such rights or interests, including
Persons providing funding to Senior Lender, and any and all such persons and
entities shall be third party beneficiaries hereunder. Borrowers agree that
Senior Lender or any transferee may enforce all rights of Senior Lender and all
Obligations, and that Senior Lender or any such transferee shall have the right
to institute proceedings against Borrower in the name of Senior Lender. If
Borrowers fail to perform any of its Obligations
45
under this Agreement, Senior Lender may, but shall not be required to, cause the
performance of such Obligations, and all costs and expenses of Senior Lender
incurred in connection therewith shall be paid promptly by Borrowers as Fees and
Expenses hereunder or, in Senior Lender's discretion, charged to the Revolving
Credit Balance hereunder. Borrowers waive and will not assert against any
assignee or other transferee of Senior Lender any claims, defenses, or setoffs
that such Borrowers could assert against Senior Lender except defenses that
cannot be waived.
14.3. CONFIDENTIALITY. Except as provided in Section 14.9 hereof or to
the extent required by law or applicable regulations, Borrowers and Senior
Lender agree to maintain the confidentiality of this Agreement and not to
disclose the contents hereof or provide a copy hereof to any third party, except
(i) accountants, lawyers and financial advisers of the parties who are informed
of and agree to be bound by this Section 14.3, (ii) that copies hereof may be
provided to any assignee or participant (or potential assignee or participant)
of Senior Lender's interests herein, and (iii) disclosures required pursuant to
subpoena or other applicable law. Senior Lender agrees to maintain the
confidentiality of patient information obtained as a result of its interests in,
or duties with respect to, the Receivables and shall notify Borrowers of any
such requested disclosure, if permitted by applicable law. In addition to the
foregoing, Senior Lender shall hold all non-public information relating to any
Borrower obtained in connection with this Agreement (including, without
limitation, information received in the context of matters described in Article
9 and 10 hereof), any other Loan Document or other documents delivered in
connection herewith or therewith as confidential in accordance with customary
procedures for handling confidential information of its nature and, prior to the
disclosure thereof to any assignee or participant shall require such Persons to
agree to the same. Unless specifically prohibited by applicable law or court
order, the Senior Lender shall notify the Borrowers of any request by any
governmental authority or representative thereof for disclosure of any such
non-public information prior to disclosure of such information.
14.4. SEVERABILITY. The provisions of this Agreement are severable and
if any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall, as to such jurisdiction, affect only such clause or provision without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14.5. CHOICE OF LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
internal laws of the State of Oregon without regard to principles of conflicts
of laws, except to the extent that the perfection or the effect of perfection or
nonperfection of Senior Lender's security interest in each item of Collateral
are governed by laws of a jurisdiction other than the State of Oregon.
14.6. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. EACH PARTY HERETO
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH RESPECT
TO ANY MATTER CONNECTED WITH THIS AGREEMENT, AND EACH PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE COURTS OF
THE STATE OF OREGON AND OF THE FEDERAL COURTS LOCATED IN THE DISTRICT OF OREGON
IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT. IN ANY SUCH LITIGATION, EACH PARTY HERETO WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE
MADE ON SUCH PARTY BY CERTIFIED U.S. FIRST CLASS MAIL, AND OTHERWISE IN
ACCORDANCE WITH APPLICABLE LAWS, POSTAGE PREPAID, ADDRESSED TO THE PARTY AT THE
ADDRESS SPECIFIED IN SECTION 14.3. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS
HAD THE OPPORTUNITY TO OBTAIN THE ADVICE OF EXPERIENCED COUNSEL OF ITS OWN
CHOOSING IN CONNECTION WITH THE NEGOTIATION AND EXECUTION OF THIS AGREEMENT AND
TO OBTAIN ADVICE OF SUCH COUNSEL WITH RESPECT TO ALL MATTERS CONTAINED HEREIN,
INCLUDING ANY PROVISIONS REGARDING WAIVER OF TRIAL BY JURY.
14.7. COUNTERPARTS. This Agreement may be executed in any number of
copies on the same or separate counterparts, each of which shall be deemed to be
an original instrument and each of which, when taken together, shall constitute
one and the same agreement.
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14.8. ENTIRE AGREEMENT. This Agreement evidences the entire
understanding and agreement of the parties concerning the subject matter
contained herein and with respect to the transactions contemplated herein and
may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties. No modifications to this Agreement or any other
Loan Document shall be valid or effective unless the same is in writing and
signed by the party against whom or which enforcement is sought.
14.9. PRESS RELEASES. Senior Lender may make press releases or other
public disclosures or statements with respect to the transactions contemplated
by this Agreement with Borrower's prior written consent, which consent shall not
be unreasonably withheld or delayed. Such press releases or public disclosures
may include the identity of Borrower, the term of this Agreement, a description
of the credit facilities provided by this Agreement and the amounts thereof.
Borrower grants Senior Lender the right to use Borrower's trademarks, trade
names and business logos in press releases, advertisements, and other public
disclosures that identify Borrower's clients and / or transactions.
14.10. NO SPECIAL DAMAGES. Borrowers and any Guarantors and Affiliates
knowingly, voluntarily and intentionally waive the right that any of them may
have to seek punitive, consequential, special, or indirect damages from Senior
Lender and any of Senior Lender's Affiliates, officers, directors, or employees
or any of their successors or assigns with respect to any action, proceeding, or
claim with respect to any matter arising out of or in connection with or
relating to this Agreement or any of the Loan Documents, other than for any acts
or omissions which constitute gross negligence or willful misconduct by Senior
Lender and any of Senior Lender's Affiliates.
14.11. HEADINGS. All of the Appendices, Exhibits and Schedules attached
hereto shall be deemed incorporated herein by reference. Any headings and
captions used in this Agreement and the Appendices, Schedules, Addendums and
Exhibits hereto are for convenience of reference only and shall not affect the
construction or interpretation thereof.
14.12. ASSUMPTION. Each of the Borrowers listed on Schedule 14.12
(collectively, the "Assuming Borrowers"), each hereby irrevocably and
unconditionally (i) accepts and assumes each and all of the obligations of a
"Borrower" pursuant to this Agreement, the other Loan Documents, and all other
agreements, instruments, documents and certificates executed in connection
therewith, (ii) hereby grants a lien upon and security interest in the
Collateral, and (iii) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement, each other Loan
Document, and all other agreements, instruments, documents and certificates
executed in connection therewith are required to be performed by any Borrower.
Without limiting the foregoing, the Assuming Borrowers each hereby accepts and
assumes any indebtedness, liability or other obligation of the Borrowers under
the First Amended Loan Agreement.
14.13. AMENDMENT AND RESTATEMENT. This Agreement is given in amendment,
consolidation, restatement, renewal and extension (but not in novation,
extinguishment or satisfaction) of the First Amended Loan Agreement. All liens
and security interests securing payment of the obligations under the First
Amended Loan Agreement are hereby collectively renewed, extended, rearranged,
ratified and brought forward as security for the payment and performance of the
Obligations. All Obligations under the First Amended Loan Agreement and all
Liens securing payment of Obligations under the First Amended Loan Agreement
shall in all respects be continuing and this Agreement shall not be deemed to
evidence or result in a novation or repayment and re-borrowing of such
Obligations. This Agreement shall supersede the First Amended Loan Agreement.
From and after the Closing Date, this Agreement shall govern the terms of the
Obligations under the First Amended Loan Agreement. To the extent not replaced
by Loan Documents dated as of the Closing Date, any "Loan Documents" (as defined
in the First Amended Loan Agreement) executed in connection with the First
Amended Loan Agreement (other than any such Loan Document that is specifically
terminated by the parties thereto) shall continue to be effective, and all
references in those prior Loan Documents to the "Loan and Security Agreement",
the "Agreement" or similar references, shall be deemed to refer to this
Agreement without further amendment thereof. The parties hereto acknowledge that
each and every reference to "Borrower" in this Agreement, the Loan Documents and
all other instruments, documents and certificates in connection therewith shall
be deemed to include each of the Borrowers party to this Agreement.
14.14. JOINT AND SEVERAL LIABILITY. (a) Each Borrower acknowledges that
it is jointly and severally liable for all of the Obligations under the Loan
Documents. Each Borrower expressly understands, agrees and
47
acknowledges that (i) Borrowers are all Affiliated entities by common ownership,
(ii) each Borrower desires to have the availability of one common credit
facility instead of separate credit facilities, (iii) each Borrower has
requested that Senior Lender extend such a common credit facility on the terms
herein provided, (iv) Senior Lender will be lending against, and relying on a
Lien upon, all of Borrowers' assets even though the proceeds of any particular
Loan made hereunder may not be advanced directly to a particular Borrower, (v)
each Borrower will nonetheless benefit by the making of all such Loans by Senior
Lender and the availability of a single credit facility of a size greater than
each could independently warrant, (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Loan Documents shall be applicable to and shall be binding upon each Borrower
and (vii) it would not be able to obtain the credit provided by Senior Lender
hereunder without the financial support provided by the other Borrowers.
(b) Each Borrower hereby guarantees the prompt payment and
performance in full of all Obligations. Such guarantee constitutes a guarantee
of payment and not of collection. Each Borrower's obligations under this
Agreement shall, to the fullest extent permitted by law, be unconditional
irrespective of (i) the validity or enforceability, avoidance or subordination
of the Obligations of any other Borrower or of any promissory note or other
document evidencing all or any part of the Obligations of any other Borrower,
(ii) the absence of any attempt to collect the Obligations from any other
Borrower, or any other security therefor, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension, forbearance or granting
of any indulgence by Senior Lender with respect to any provision of any
instrument evidencing the Obligations of any other Borrower or any part thereof,
or any other agreement now or hereafter executed by any other Borrower and
delivered to Senior Lender, (iv) the failure by Senior Lender to take any steps
to perfect and maintain its security interest in, or to preserve its rights to,
any security or collateral for the Obligations of any other Borrower, (v) Senior
Lender's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of Senior Lender's claim(s) for the repayment of the Obligations of any
other Borrower under Section 502 of the Bankruptcy Code or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of any other Borrower (other than actual indefeasible payment
in full in cash). With respect to any Borrower's Obligations arising as a result
of the joint and several liability of Borrowers hereunder with respect to Loans
or other extensions of credit made to any of the other Borrowers hereunder, such
Borrower hereby forever waives any right to enforce any right of subrogation or
any remedy which Senior Lender now has or may hereafter have against any other
Borrower, or any endorser of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral given to Senior
Lender to secure payment of the Obligations or any other liability of any
Borrower to Senior Lender. During the existence of any Event of Default, Senior
Lender may proceed directly and at once, without notice, against any Borrower to
collect and recover the full amount, or any portion of the Obligations, without
first proceeding against any other Borrower or any other Person, or against any
security or collateral for the Obligations. Each Borrower consents and agrees
that Senior Lender shall be under no obligation to marshal any assets in favor
of any Borrower or against or in payment of any or all of the Obligations.
(c) Each Borrower is obligated to repay the Obligations as a joint
and several obligor under this Agreement and the other Loan Documents. To the
extent that any Borrower shall, under this Agreement as a joint and several
obligor, repay any of the Obligations constituting Loans made to another
Borrower hereunder or other Obligations incurred directly and primarily by any
other Borrower (an "ACCOMMODATION PAYMENT"), then the Borrower making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Borrowers in an amount, for each
of such other Borrowers, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Borrower's Allocable Amount and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the "ALLOCABLE AMOUNT" of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without (i)
rendering such Borrower "insolvent" within the meaning of Section 101 (31) of
the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act ("UFTA")
or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"), (ii) leaving
such Borrower with unreasonably small capital or assets, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the
UFCA, or (iii) leaving such Borrower unable to pay its debts as they become due
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA
or Section 5 of the UFCA. All rights and claims of contribution,
indemnification, and reimbursement under this Section shall be subordinate in
right of
48
payment to the prior indefeasible payment in full in cash of the Obligations.
The provisions of this Section shall, to the extent inconsistent with any
provision in any Loan Document, supersede such inconsistent provision.
(d) If (i) any court holds that Borrowers are guarantors and not
jointly and severally liable as principal obligors or (ii) bankruptcy or
reorganization proceedings at any time are instituted by or against any Borrower
under any Debtor Relief Law, then each Borrower hereby: (A) expressly and
irrevocably waives, to the fullest extent possible, except as otherwise provided
in Section 14.14, on behalf of such Borrower, any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution,
indemnification, set off or any other rights that could accrue to a surety
against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accommodated, to a holder or transferee
against a maker, or to the holder of a claim against any Person, and which such
Borrower may have or hereafter acquire against any Person in connection with or
as a result of such Borrower's execution, delivery and/or performance of this
Agreement, or any other documents to which such Borrower is a party or
otherwise; (B) expressly and irrevocably waives any "claim" (as such term is
defined in the Bankruptcy Code) of any kind against any other Borrower, and
further agrees that it shall not have or assert any such rights against any
Person (including any surety), either directly or as an attempted set off to any
action commenced against such Borrower by Senior Lender or any other Person; and
(C) acknowledges and agrees (I) that this waiver is intended to benefit Senior
Lender and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Agreement, and (II) that Senior Lender
and its successors and assigns are intended beneficiaries of this waiver, and
the agreements set forth in this Section 14.14 and the rights under this Section
14.14 shall survive payment in full of the Obligations.
(e) EACH BORROWER WAIVES THE FILING OF A CLAIM WITH A COURT IN THE
EVENT OF RECEIVERSHIP OR BANKRUPTCY OF ANY BORROWER, AND WAIVES EVERY DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH ANY BORROWER MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY SENIOR LENDER IN ENFORCING THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, EVERY DEFENSE, COUNTERCLAIM OR SETOFF WHICH SUCH
BORROWER MAY NOW HAVE, OR HEREAFTER MAY HAVE, AGAINST ANOTHER BORROWER OR ANY
OTHER PARTY LIABLE TO SENIOR LENDER IN ANY MANNER. AS FURTHER SECURITY, ANY AND
ALL DEBTS AND LIABILITIES NOW OR HEREAFTER ARISING AND OWING TO ANY BORROWER BY
ANY OTHER BORROWER, OR TO ANY OTHER PARTY LIABLE TO SENIOR LENDER, ARE HEREBY
SUBORDINATED TO SENIOR LENDER'S CLAIMS AND UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT ARE ASSIGNED TO SENIOR LENDER. EACH BORROWER RATIFIES AND CONFIRMS
WHATEVER SENIOR LENDER MAY DO PURSUANT TO THE TERMS HEREOF, AND AGREES THAT
SENIOR LENDER SHALL NOT BE LIABLE FOR ANY ERROR IN JUDGMENT OR MISTAKES OF FACT
OR LAW. EACH BORROWER HEREBY AGREES THAT IT MAY BE JOINED AS A PARTY DEFENDANT
IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A FORECLOSURE
PROCEEDING) INSTITUTED BY SENIOR LENDER AGAINST ANY OTHER BORROWER.
(f) Should a claim be made upon Senior Lender at any time for
repayment of any amount received by Senior Lender in payment of the Obligations,
or any part thereof, whether received from any Borrower or received by Senior
Lender as the proceeds of Collateral, by reason of: (1) any judgment, decree or
order of any court or administrative body having jurisdiction over Senior Lender
or any of its property, or (2) any settlement or compromise of any such claim
effected by Senior Lender, in its sole discretion, with the claimant (including
a Borrower), each Borrower shall remain liable to Senior Lender for the amount
so repaid to the same extent as if such amount had never originally been
received by Senior Lender, notwithstanding any termination hereof or the
cancellation of any note or other instrument evidencing any of the Obligations.
(g) To the extent that any payment to, or realization by, any
Senior Lender on the Obligations exceeds the limitations of this Section 14.14
and is otherwise subject to avoidance and recovery in any such proceeding, the
amount subject to avoidance shall in all events be limited to the amount by
which such actual payment or realization exceeds such limitation, and this
Agreement as limited shall in all events remain in full force and effect and be
fully enforceable against such Borrower. This Section 14.14 is intended solely
to reserve the rights of Senior Lender hereunder against each Borrower, in such
proceeding to the maximum extent permitted by applicable Debtor Relief Laws and
no Borrower, guarantor of the Obligations or other Person shall have any right,
49
claim or defense under this Section 14.14 that would not otherwise be available
under applicable Debtor Relief Laws in such proceeding.
14.15. BATON ROUGE. Notwithstanding anything to the contrary set forth
in this Agreement or any other Loan Document, or anything on the signature pages
hereto or thereto, on and as of the Closing Date and until such time as
Borrowers shall have delivered to Senior Lender, a consent, in form and
substance satisfactory to Senior Lender, from the members of Baton Rouge (the
"Reinstatement Date") (such time period from the Closing Date until the
Reinstatement Date, shall be referred to herein as the "Baton Rouge Excluded
Subsidiary Period"), Baton Rouge shall be deemed to be an Excluded Subsidiary.
As such, during the Baton Rouge Excluded Subsidiary Period, (a) no security
interest shall have been granted by Baton Rouge in its assets as Collateral, (b)
no Borrower shall have pledged its ownership interest in Baton Rouge to Senior
Lender, and (c) Senior Lender shall not have a Lien on the proceeds of
Receivables owned by Baton Rouge and received in the Lockboxes, and Senior
Lender, upon the Request of Baton Rouge, shall promptly remit any such amounts
which Senior Lender has specifically identified to Baton Rouge. On and as of the
Reinstatement Date, Baton Rouge shall thereupon be deemed to be a Borrower, and
thereupon (automatically and without any further action) irrevocably and
unconditionally (i) accepts and assumes each and all of the obligations of a
"Borrower" pursuant to this Agreement, the other Loan Documents, and all other
agreements, instruments, documents and certificates executed in connection
therewith, (ii) grants a lien upon and security interest in the Collateral, and
(iii) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement, each other Loan Document, and
all other agreements, instruments, documents and certificates executed in
connection therewith are required to be performed by any Borrower. Additionally,
on and as of the Reinstatement Date, the applicable Borrower shall have pledged
its ownership interest in Baton Rouge to Senior Lender in accordance with the
applicable Pledge Agreement dated as of the date hereof, and Senior Lender shall
have no obligation to return the proceeds of Receivables generated by Baton
Rouge to Baton Rouge.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]
50
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered all as of the day and year first above written.
SENIOR LENDER:
RESIDENTIAL FUNDING CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxxxx Xxxxxxxxx
EVP Operations
Signature Page to Second Amended and Restated Loan
and Security Agreement
BORROWERS:
ACADIAN HOMECARE, L.L.C.
ACADIAN HOME HEALTH CARE SERVICES, L.L.C.
ACADIAN PREMIERE REGIONAL NURSING, L.L.C.
AHCG MANAGEMENT, LLC
ALABAMA HEALTH CARE GROUP, LLC
HOME NURSING CARE, L.L.C.
HOOD HOME HEALTH SERVICE, L.L.C.
LHC GROUP PHARMACEUTICAL SERVICES, L.L.C.
LHCG-II, L.L.C.
LHCG-III, L.L.C.
LHCG V, L.L.C.
LHCG VIII, L.L.C
LOUISIANA EXTENDED CARE HOSPITAL OF WEST MONROE, L.L.C.
LOUISIANA HEALTH CARE GROUP, L.L.C.
LOUISIANA HOMECARE OF DELHI, L.L.C.
LOUISIANA HOMECARE OF XXXXXXX, LLC
LOUISIANA HOMECARE OF MINDEN, L.L.C.
LOUISIANA HOMECARE OF MISS-XXX, L.L.C.
LOUISIANA HOMECARE OF NORTH LOUISIANA, L.L.C.
LOUISIANA HOMECARE OF NORTHWEST LOUISIANA, L.L.C.
LOUISIANA HOMECARE OF SLIDELL, L.L.C.
LOUISIANA HOSPICE AND PALLIATIVE CARE, L.L.C.
LOUISIANA PHYSICAL THERAPY, L.L.C.
MISSISSIPPI HEALTH CARE GROUP, L.L.C.
MISSISSIPPI HOMECARE, L.L.C.
MISSISSIPPI HOME CARE OF JACKSON, LLC
OAK SHADOWS OF XXXXXXXX, L.L.C.
PATIENT'S CHOICE HOSPICE AND PALLIATIVE CARE OF LOUISIANA, L.L.C.
PICAYUNE HOMECARE, L.L.C.
RED RIVER HOMECARE, L.L.C.
ST. XXXXXXX HOMECARE, L.L.C.
ST. XXXXX HOMECARE, L.L.C.
ST. XXXXXX EXTENDED CARE HOSPITAL, L.L.C.
TEXAS HEALTH CARE GROUP, L.L.C.
TEXAS HEALTH CARE GROUP HOLDINGS, L.L.C.
TEXAS HEALTH CARE GROUP OF LONGVIEW, L.L.C.
TEXAS HEALTH CARE GROUP OF TEXARKANA, L.L.C.
TEXAS HEALTH CARE GROUP OF THE GOLDEN TRIANGLE, LLC
TRI-PARISH COMMUNITY HOMECARE, L.L.C.
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
---------------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
[Signatures continue on next page]
Signature Page to Second Amended and Restated Loan
and Security Agreement
ARKANSAS HEALTH CARE GROUP, LLC
MENA MEDICAL CENTER HOME HEALTH, L.L.C.
MENA MEDICAL CENTER HOSPICE, L.L.C.
DALLAS COUNTY MEDICAL CENTER HOMECARE, L.L.C.
EUREKA SPRINGS HOSPITAL HOMECARE, LLC
EUREKA SPRINGS HOSPITAL HOSPICE, LLC
By: AHCG MANAGEMENT, LLC, its Manager
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
------------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
BATON ROUGE HOMECARE, L.L.C.
XXXXXX MEMORIAL HOSPITAL HOMECARE, LLC
By: LOUISIANA HEALTH CARE GROUP, L.L.C., a Member
By: LHC Group, Inc.., its Manager
By: /s/ X. Xxxx Xxxxx
-----------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
CLAY COUNTY HOSPITAL HOME CARE, LLC
By: Alabama Health Care Group, LLC
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
-----------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
[Signatures continue on next page]
Signature Page to Second Amended and Restated Loan
and Security Agreement
LEAF RIVER HOME HEALTH CARE, LLC
By: Mississippi Health Care Group, L.L.C.
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
---------------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
LHCG-IV, L.L.C.
By: Louisiana Health Care Group, L.L.C., a Member
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
----------------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
HEBERT, THIBODEAUX, XXXXX AND XXXXXXX THERAPY GROUP, INC.
By: /s/ X. Xxxx Xxxxx
---------------------------------
X. Xxxx Xxxxx
Vice President
DIABETES SELF MANAGEMENT CENTER, INC.
By: /s/ X. Xxxx Xxxxx
---------------------------------
X. Xxxx Xxxxx
Vice President
Signature Page to Second Amended and Restated Loan
and Security Agreement
BORROWERS:
LHC GROUP, INC.
By: /s/ X. Xxxx Xxxxx
-------------------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
XXXXXXXX HOMECARE, L.P.
By: Texas Health Care Group, L.L.C., its general partner
By: LHC Group, Inc., its Manager
By: /s/ X. Xxxx Xxxxx
-----------------------
X. Xxxx Xxxxx
Senior Vice President and
Chief Financial Officer
Signature Page to Second Amended and Restated Loan
and Security Agreement
EXHIBIT 10.12
EXHIBIT A
SUPPLEMENTAL TERMS AND CONDITIONS
The following terms and conditions constitute an integral supplemental
part of the Agreement and shall be deemed as controlling only to the extent
otherwise irreconcilably in conflict with any other provision of the Agreement:
I. COMMITMENT
REVOLVING CREDIT COMMITMENT $20,000,000 on the Closing Date.
------- ----------------------------------------------------------
II. MATURITY DATE(s)
----------------------------------------------------------
REVOLVING CREDIT TERMINATION DATE: April 15, 2010
III. PRICING ELEMENTS
A. INITIAL NET COLLECTIBLE VALUE PERCENTAGES
(BY OBLIGOR TYPE):
MEDICARE 88%
MEDICARE 94%
MEDICAL Not Applicable
COMMERCIAL 90%
B. INITIAL ADVANCE RATE(s):
1. RECEIVABLES ADVANCE RATE: 85%
2. INVENTORY ADVANCE RATE: Not applicable
C. ELIGIBLE RECEIVABLES:
1. CUT-OFF PERIOD 150 days after the applicable date of service or invoice
date, whichever is earlier.
2. PER PATIENT LIMITATION (COMMERCIAL $55,000.00
AND SELF-PAY ONLY)
3. CROSS AGING PERCENTAGE Not Applicable
D. MINIMUM REVOLVING CREDIT AVAILABILITY Not Applicable
AS OF THE CLOSING DATE AFTER THE INITIAL
LOANS:
E. WORK DEPOSIT: Not Applicable
A-1
F. UNUSED FACILITY FEE: .35% per annum of the difference between the average daily
Revolving Credit Balance in the applicable period and the
average daily Revolving Credit Commitment as in effect
during such measurement period. This amount is calculated
on a monthly basis and is payable monthly in arrears on the
first day of the month. This Unused Facility Fee is
applicable and payable only for months in which the average
daily Revolving Credit Balance is less than the average
daily Revolving Credit Commitment as in effect during such
measurement period.
G. OVERADVANCE FEE: 2% of any portion of an Advance amount that exceeds the
Revolving Credit Borrowing Base in effect as of the date of
the Advance.
H. SERVICING FEE: Not Applicable
I. EARLY TERMINATION FEE: If Borrower terminates the Revolving Credit within three
(3) years of the Closing Date, Borrower shall pay Senior
Lender a Termination Fee equal to 1% of the Revolving
Credit Commitment (currently $150,000) unless refinanced
with Senior Lender or a group of senior lenders including
Senior Lender.
J. COLLECTION CLEARANCE DAYS: One (1) Business Day clearance on all items deposited in
the Lockboxes or the Lockbox Accounts.
K. MINIMUM BALANCE REQUIREMENTS: Not applicable, but see "Unused Facility Fee" in
subsection F above.
L. ANNUAL FACILITY FEE: .50% of the Revolving Credit Commitment Amount due April
15th of each year prior to the Maturity Date.
M. ELECTRONIC INTERFACE FEES: TO BE DETERMINED
N. MAILING CHARGES: All actual costs and out-of-pocket expenses of Senior
Lender incurred in delivering RA/EOBs to Borrower in excess
of one overnight delivery/express mail per week.
O. BORROWERS' FISCAL YEAR-END: December 31
P. CLOSING AND LEGAL FEES: All expenses of Senior Lender incurred including reasonable
attorneys' fees and expenses) incurred in connection with
this Agreement and the Loan Documents, and the transactions
contemplated hereby, payable on demand. Senior Lender's
expenses related to legal fees to be wired to Senior
Lender's counsel at Closing.
Q. WIRE TRANSFER FEES: $20.00 per wire
R. AUDIT FEE: $850.00 per day per each assigned auditor (plus out-of-
pocket costs).
S. WAIVER FEE: 25 basis points of the Revolving Credit Commitment Amount.
A-2
T. INTEREST RATE: Borrower shall pay interest on the average
outstanding Revolving Credit Balance for the preceding month,
at the per annum rate equal to the Prime Rate plus one hundred
and fifty (150) basis points (the "INTEREST RATE"), with any
change in the Prime Rate effective immediately. The term
"PRIME RATE" shall mean the current Prime Rate publicly
announced by Xxxxx Fargo Bank, N.A. ("XXXXX FARGO"), at its
principal office in San Francisco, California, as its prime
rate, with the understanding that the prime rate is one of the
Xxxxx Fargo base rates (not necessarily the lowest of such
rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its
announcement in such internal or publications as Xxxxx Fargo
may designate. Upon the occurrence and during the continuation
of an Event of Default, all Obligations shall bear interest on
the average outstanding Loan Balance at a per annum rate equal
to four hundred (400) basis points above the Interest Rate
(the "DEFAULT RATE"). Interest shall be calculated on the
basis of a year of 360 days and actual days elapsed.
VI. OPERATIONAL PROVISIONS
A. REVOLVING CREDIT COMMITMENT INCREASE. The Revolving Credit
Commitment shall be increased from time to time as requested
by Borrowers to an amount up to $25,000,000 in the aggregate;
provided that such increments shall be in amounts not less
than $2,500,000 each (each a "REVOLVING CREDIT COMMITMENT
INCREMENT AMOUNT"), no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect
to the same and Borrower Agent shall have provided Senior
Lender with at least 10 Business Days prior written notice
thereof.
1% of the aggregate amount of each Revolving Credit Commitment
Increment Amount, without duplication, shall be due and
payable on the effective date of such increase, including,
without limitation, an amount equal to $50,000 which shall be
due and payable by Borrowers to Senior Lender on or before the
Closing Date with respect to the $5,000,000 increase to the
Revolving Credit Commitment under this Agreement from such
commitment as in effect under the First Amended Loan
Agreement. If Borrowers' request, and Senior Lender consents
to an increase in the Revolving Credit Commitment above
$25,000,000, it shall be entitled to charge to the Borrower a
service fee for processing and approving the increase in the
Revolving Credit Commitment equal to 1.00% of the amount by
which the Revolving Credit Commitment then in effect is
increased, and/or adjust the Interest Rate.
B. ADVANCE RATE AND NCV PERCENTAGES. The Advance Rates or Net
Collectible Values set forth above may be adjusted by Senior
Lender, in its reasonable credit judgment, upon notice
delivered to Borrower, based upon Senior Lender's experience
with respect to collection periods or payment history for
Receivables of Borrower or as a result of an increase or
decrease in the Revolving Credit Commitment then in effect or
a renewal of the Revolving Credit. Senior Lender shall also be
entitled to adjust the Advance rates or Net Collectible Value
in the event of a change in the financial condition of
Borrower or its Obligors, if an Event of Default occurs and is
continuing, or if Borrower is not in compliance with the
reporting and other compliance requirements of the Agreement,
as determined by Senior Lender.
C. ADVANCE REQUESTS. In the event that either (i) the request of
Borrower for an advance is received less than one (1) business
day before the proposed advance date, or (ii) Borrower submits
collateral for inclusion in computation of the borrowing base
to be used with respect to a request for an advance less than
two (2) business days before the proposed advance date, Senior
Lender may, in its sole and absolute discretion, make the
requested advance and shall, if it elects, be entitled to an
additional fee equal to 1% of the amount of the requested
advance.
D. DOCUMENT PROVISION CONFLICTS. In the event of a conflict
between a provision of the Agreement and any provision of this
Exhibit A, the provision of this Exhibit A shall govern.
A-3
EXHIBIT B
NET COLLECTIBLE VALUE CALCULATION
Senior Lender's calculation of Net Collectible Value is based on the result of
the following calculations for each Obligor Type:
i Determination of the raw data percentage for each Type of
Receivable by dividing (x) the net cash received on account of
each individual Zero Balance Invoice (or a representative
sample of Zero Balance Invoices) within such Type by (y) the
net amount of the applicable invoice(s). As used herein, "ZERO
BALANCE INVOICE" means an invoice that is either paid in full
or adjusted to a zero balance within the 150 days preceding
the date of determination.
ii Totaling the raw data percentages determined as provided above
for each Type of Receivable.
iii Allocation of applicable Zero Balance Invoices into groups
based upon the length of time between service and
payment/adjustment dates.
iv Calculation of a weighted average percentage for all of the
groups determined in item (iii) above.
v Derivation of applicable NCV Percentages by multiplying (x)
the weighted average percentage determined in item (iv) above,
by (y) the raw data percentage determined in item (i) above.
If any Eligible Receivables included in the Revolving Credit Borrowing Base
thereafter become Ineligible Receivables, the NCV for all such Ineligible
Receivables shall be deducted from the Revolving Credit Borrowing Base.
The information provided in this Exhibit is representative of the calculations
that Senior Lender uses to calculate Net Collectible Value and is provided as a
guideline only. The methodology employed by Senior Lender in deriving Net
Collectible Value may be applied on a case-by-case basis, dependent upon
changing circumstances relative to Borrower's Receivables and billing and
payment history.
B-1
EXHIBIT C
ADVANCE REQUEST & RECEIVABLES INFORMATION BORROWING CERTIFICATE
D-1
GMAC-RFC HEALTH CAPITAL REVOLVING CREDIT BORROWING BASE CERTIFICATE
===============================================================================
Borrower: Borrower NAME CERTIFICATE NUMBER ______
EXHIBIT D
GMAC-RFC HEALTH CAPITAL REVOLVING CREDIT BORROWING BASE CERTIFICATE
===============================================================================
Borrower: Borrower NAME CERTIFICATE NUMBER ______
1. PREVIOUS BALANCE OF ACCOUNTS RECEIVABLE MEDICARE as of: _______ $
--------------
a. Plus: Invoices/Claims
--------------
b. Plus or Minus: Adjustments
--------------
c. Less: Collections
--------------
d. Ending Balance
--------------
e. Less: Ineligible A/R Over Cutoff Period
--------------
f. Less: NCV Ineligible Amount
--------------
g. ENDING ELIGIBLE ACCOUNTS RECEIVABLE MEDICARE as of: _______ $
--------------
2. PREVIOUS BALANCE OF ACCOUNTS RECEIVABLE MEDICAID as of: _______ $
--------------
a. Plus: Invoices/Claims
--------------
b. Plus or Minus: Adjustments
--------------
c. Less: Collections
--------------
d. Ending Balance
--------------
e. Less: Ineligible A/R Over Cutoff Period
--------------
f. Less: NCV Ineligible Amount
--------------
g. ENDING ELIGIBLE ACCOUNTS RECEIVABLE MEDICAID as of: _______ $
--------------
3. PREVIOUS BALANCE OF ACCOUNTS RECEIVABLE COMMERCIAL as of: _______ $
--------------
a. Plus: Invoices/Claims
--------------
b. Plus or Minus: Adjustments
--------------
c. Less: Collections
--------------
d. Ending Balance
--------------
e. Less: Ineligible A/R Over Cutoff Period
--------------
f. Less: NCV Ineligible Amount
--------------
g. ENDING ELIGIBLE ACCOUNTS RECEIVABLE COMMERCIAL as of: _______ $
--------------
4. AGGREGATE ENDING ELIGIBLE ACCOUNTS RECEIVABLE (total of 1g+2g+3g) as of: _______
--------------
a. Times: Advance Rate %
--------------
5. REVOLVING CREDIT BORROWING BASE BEFORE RESERVES
--------------
a. Less Availability Reserves
--------------
b. Net Revolving Credit Borrowing Base $
--------------
6. MAXIMUM REVOLVING COMMITMENT $
--------------
7. AVAILABILITY (lessor of lines 5b and 6) $
--------------
8. PREVIOUS LOAN BALANCE as of: _______ $
--------------
a. Plus: Advances
--------------
b. Less: Collections
--------------
c. Plus: Adjustments
--------------
9. ENDING LOAN BALANCE as of: _______ $
--------------
10. AVAILABILITY LESS ENDING LOAN BALANCE as of: _______ $
--------------
D-2
GMAC-RFC HEALTH CAPITAL REVOLVING CREDIT BORROWING BASE CERTIFICATE
===============================================================================
Borrower: Borrower NAME CERTIFICATE NUMBER ______
a. Less: Current Advance Requested as of: _______
--------------
b. Less: Other Amounts Due (i.e. Wire Fees) as of: _______
(description) --------------
-------------------------------------------------
-------------------------------------------------
11. ENDING AVAILABILITY as of: _______ $
--------------
D-3
GMAC-RFC HEALTH CAPITAL REVOLVING CREDIT BORROWING BASE CERTIFICATE
===============================================================================
Borrower: Borrower NAME CERTIFICATE NUMBER ______
CERTIFICATION
I, Name , am Title of Borrower, and am authorized to make the following
statements and Certifications pursuant to the Second Amended and Restated Loan
and Security Agreement dated April 13, 2005 (the "LSA") among Residential
Funding Corporation (the "SENIOR LENDER"), and Borrower Name , as the Borrower
(the "BORROWER"). Capitalized terms used in this Certification, unless otherwise
defined, shall have the meaning given them in the LSA.
This Certification is submitted by the Borrower in connection with the
submission by the Borrower to the Senior Lender of the attached Revolving Credit
Borrowing Base Certificate. As of the date of this Certificate, the Borrower
hereby certifies that the following information is true and correct:
1. No Default or Event of Default exists under the LSA or the
other Loan Documents.
2. There have been no modifications in the form of reimbursement
rates, offsets, per beneficiary limits, government budget repayment plan
changes, or other contractual arrangements that would adversely affect the
valuation or collectibility of the Receivables. All Receivables listed in the
Revolving Credit Borrowing Base Certificate are properly classified as Eligible
and Ineligible.
3. All Receivables reflected in Borrower's most recently
submitted Accounts Receivable Aging Report are the subject of properly and
validly billed invoices for services provided and goods sold by the applicable
Borrower in the ordinary course of business All Collections have been applied to
the proper invoices resulting in accurate aging totals for each aging
column/category. There are no known duplicate or fictitious claims or invoices
included in the Receivables. The Borrower has not diverted or permitted to be
diverted any such payments on Receivables, whether such diversion is for the
benefit of the Borrower or any third party, and no Collections have been
received that have not been applied to reduce the Receivables. All Receivables
reflected in such Aging Report and in the attached Revolving Credit Borrowing
Base Certificate comply in all material respects with the provisions of Section
7.6 of the LSA.
4. The Borrower has directed all Obligors to submit all RA/EOB
detail to any location, including Lockboxes, specified in the LSA.
5. The Borrower has directed all Obligors to deliver all
Receivable payments to the proper account (including any Lockbox Account)
specified in the LSA.
6. The Borrower has paid all State and Federal payroll
withholding taxes immediately due and payable through the most recent payroll
period.
7. The representations and warranties contained in the LSA are
true and correct in all material respects as of the date of this Certificate,
with the same effect as though such representations and warranties had been made
on the date hereof.
8. The Borrower is otherwise in compliance with all terms and
conditions set forth in the LSA.
NAME
By:
--------------------------------
Name:
Title:
Date:
--------------------------------
D-4
EXHIBIT E
INTEREST STATEMENT
GMAC-RFC HEALTH CAPITAL INTEREST STATEMENT
Statement Date:[ ]
Borrower Name:
Prepared by: GMAC-RFC Health Capital
0000 XX Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxxx, XX 00000
Account #[ ]
Date Advances Adjustments Collections Loan Balance
Prior Period Balance $0,000,000.00
[date] $0 $0 $0 $0,000,000.00
[date] $0 $0 $0 $0,000,000.00
Totals $0,000,000.00
-----------------------------------------------------------------------------------------------------------------
Average Outstanding Loan Balance $0,000,000.00
Interest $ 0,000.00
Other Fees: $ 0.00
Total Due from Borrower: $ 0,000.00
E-1
EXHIBIT F
FORM OF SECRETARY'S/CLERK CERTIFICATE
[SECRETARY/CLERK]'S CERTIFICATE
The undersigned Secretary/Clerk of ___________________, a
_______________ corporation (the "COMPANY"), hereby certifies as follows:
1. Attached hereto as Exhibit A is a true and complete copy of
the Articles of Incorporation of the Company (the "CHARTER") and any amendments
thereto as presently on file with the Secretary of State of _____________. The
Charter is in full force and effect and there are no pending or proposed changes
to the Charter or proceedings for the merger, consolidation, liquidation, sale
of all or substantially all of the assets or dissolution of the Company .
2. Attached hereto as Exhibit B is a true and complete copy of
the By-laws of the Company as presently in effect (the "By-laws"). No changes to
the By-laws have been made or are pending.
3. Attached hereto as Exhibit C is a true and complete copy of
the resolutions adopted by unanimous written consent of the Board of Directors
of the Company dated as of _________________, 2002. Such resolution is now in
full force and effect and has not been modified, amended or revoked and is the
only resolution of the Board of Directors of shareholders of the Company
relating to the subject matter thereof.
4. Each of the following persons is presently the duly elected,
qualified and acting officer of the Company as specified below, and the
signature of each such person set forth opposite his name is his genuine
signature.
NAME OFFICE SIGNATURE
------------------- --------------------- -----------------------
------------------- --------------------- -----------------------
------------------- --------------------- -----------------------
IN WITNESS WHEREOF, the undersigned has executed this certificate on
this ___ day of _________, 2002.
-------------------------------------
, Secretary/Clerk
--------------------
F-1
EXHIBIT G
FORM OF COMPLIANCE CERTIFICATE
Compliance Certificate
For the Period Ending _______________________, 200_
This Compliance Certificate ("COMPLIANCE CERTIFICATE") is delivered by
_________________________ as Borrower (the "Borrower") to Residential Funding
Corporation (the "SENIOR LENDER"), pursuant to that certain Second Amended and
Restated Loan and Security Agreement dated April 13, 2005 (the "AGREEMENT").
Capitalized terms used in this Compliance Certificate, unless otherwise defined,
shall have the meanings given them in the Agreement. The term "CURRENT PERIOD"
shall mean the period ending on the date first shown above. Any attached sheets
reflecting or listing additional items will be incorporated herein by reference
thereto. The undersigned Authorized Officer certifies:
1. The Accompanying financial statements, reports, and
information submitted for the Current Period are complete,
accurate, and true and are otherwise in accordance with
Section 9.5 of the Agreement.
2. The financial statements submitted for the Current Period have
been prepared consistently with past periods and in accordance
with GAAP. Such financial statements present fairly the
Borrower's financial condition and results of operations as of
the date thereof and there are no material changes therein
through the date of this Compliance Certificate.
3. The persons identified in the most recent Incumbency
Certificate, Authorization Letter, or Compliance Certificate
delivered by the Borrower to Senior Lender listing the
Authorized Officers of Borrower (check one):
(a) _____ HAVE changed
(b) _____ HAVE NOT changed
If (a) above is checked, the following is the complete current list of
Authorized Officers duly appointed to the respective offices or positions set
forth opposite their name below:
Name Signature Office or Position
--------------------- ---------------------- ---------------------
--------------------- ---------------------- ---------------------
--------------------- ---------------------- ---------------------
4. Pursuant to Section 10.1 of the Agreement, as of the reporting
date, Borrowers' Leverage Ratio was _____ to 1:00 which
(a) _____ satisfies,
(b) _____ does not satisfy
the requirement that the ratio not be greater than 1:50:1:00 on the
reporting date as more fully set forth on the covenant calculation worksheet
attached hereto as Exhibit A.
G-1
5. Pursuant to Section 10.2 of the Agreement, as of the reporting
date, Borrowers' Fixed Charge Coverage Ratio was _____ to 1:00
which
(a) _____ satisfies,
(b) _____ does not satisfy
the requirement that the ratio not be less than 1.40:1.00 on the
reporting date as more fully set forth on the covenant calculation worksheet
attached hereto as Exhibit A.
6. The tradenames or other names under which the Borrower
conducts business disclosed in Schedule 8.7 to the Agreement
or in the most recently delivered Compliance Certificate
containing a new list of such names (check one):
(a) _____ HAVE changed
(b) _____ HAVE NOT changed
If (a) above is checked, the following is the complete current list of
all names under which the Borrower conducts business (attach separate list if
information exceeds space available):
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
7. The deposit Accounts disclosed in Schedule 8.15 to the
Agreement or in the most recently delivered Compliance
Certificate containing a new list of Deposit Accounts (check
one):
(a) _____ HAVE changed
(b) _____ HAVE NOT changed
If (a) above is checked, the following is the complete current list of
Deposit Accounts (attach separate list if information exceeds space available):
Bank Name Account Name Account Number
--------------------- --------------------- --------------------
--------------------- --------------------- --------------------
--------------------- --------------------- --------------------
8. As of the date of this Compliance Certificate, and since the
date of the last Compliance Certificate, the Borrower or any
Subsidiary have not created, incurred, assumed or suffered to
exist any indebtedness or guaranteed, assumed, endorsed, or
otherwise become responsible for obligations that would be in
violation of Section 9.8 of the Agreement.
9. As of the date of this Compliance Certificate, and since the
date of the last Compliance Certificate, Borrower has not made
any Restricted Payments, except for those Restricted Payments
expressly permitted, as defined in Section 9.9 of the
Agreement.
G-2
10. As of the date of this Compliance Certificate, and since the
date of the last Compliance Certificate, Borrower have not
made any payments of management, consulting, or other fees for
management or similar services, or any payment on account of
any Indebtedness owed to any officer, employee, shareholder,
director, or other Affiliate of any Borrower that would be in
violation of Section 9.11 of the Agreement.
11. As of the date of this Compliance Certificate, and since the
date of the last Compliance Certificate, the Borrower has not
created, incurred, assumed, or suffered to exist, any
obligation as a lessee for the rental or hire of any real or
personal property, other than those permitted in Section 9.14
of the Agreement.
12. As of the date of this Compliance Certificate, Borrower has
complied with all notice provisions required under the
Agreement and there exists no Event of Default or Default
thereunder.
13. As of the date of this Compliance Certificate and since the
date of the last Compliance Certificate, no event or condition
that constitutes or could reasonably constitute a Material
Adverse Change has occurred and is continuing.
14. Except as provided below, since the date of the last
Compliance Certificate (a) Borrower has not created or
acquired any new Subsidiaries (through an Acquisition or
otherwise), (b) no Excluded Subsidiaries have come to exist,
(c) no Borrowers have become dormant (no operations) and (d)
Borrower has not sold or divested any Borrower or its
business:
NEW NEW EXCLUDED DORMANT DIVESTED
SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES
------------ ------------ ------------ ------------
15. Except as modified herein or in any previously delivered
Compliance Certificate, all of Borrower's representations and
warranties contained in the Agreement, in any Loan Document,
and in any other certificate, instrument, or document
submitted by Borrower to Senior Lender in connection with the
making of the Loans are true and accurate in all material
respects as of the date of this Compliance Certificate, except
to the extent any such representation or warranty expressly
relates to an earlier date.
By: Date:
------------------------------------ ----------------------
(Signature of Authorized Officer)
Printed Name:
------------------------
Title:
-------------------------------
G-3
EXHIBIT A TO COMPLIANCE CERTIFICATE
LHC GROUP, INC.
PREPARATION DATE: 3/1/05
AS OF DATE: 3/1/05
-------------------------------------------------------------------------------
COVENANT CALCULATIONS:
-------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (LSA) COVENANTS
1) FIXED CHARGE COVERAGE RATIO
MONTH/YEAR: Mar-05 Use "data" tab to complete this test.
----------------------------------
EBITDA -
----------------------------------
Less: Capital Expenditures -
----------------------------------
Less: Minority Interest -
----------------------------------
-
----------------------------------
DIVIDED BY:
----------------------------------
Taxes -
----------------------------------
Interest -
----------------------------------
Principal Amortization -
----------------------------------
-
----------------------------------
CALCULATED REQUIRED
-----------------------------------------------------------
Fixed Charge Coverage Ratio 1.40
-----------------------------------------------------------
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
2) LEVERAGE RATIO
MONTH/YEAR: Mar-05
----------------------------------
Total Debt -
----------------------------------
DIVIDED BY:
----------------------------------
EBITDA -
----------------------------------
Less: Minority Interest -
----------------------------------
-
----------------------------------
G-4
CALCULATED REQUIRED
-----------------------------------------------------------
Total Debt/EBITDA 1.50
-----------------------------------------------------------
----------------------------------
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
3) UNTIL THE CONSUMMATION OF THE IPO, BORROWERS SHALL NOT MAY ANY PAYMENTS
OF MANAGEMENT, CONSULTING OR OTHER FEES FOR MANAGEMENT OR SIMILAR
SERVICES, OR ANY PAYMENT ON ACCOUNT OF ANY INDEBTEDNESS OWING TO ANY
OFFICER, EMPLOYEE, SHAREHOLDER, DIRECTOR OR OTHER AFFILIATE OF ANY
BORROWER, EXCEPT REASONABLE COMPENSATION TO OFFICERS, EMPLOYEES AND
DIRECTORS OF BORROWERS FOR SERVICES RENDERED TO SUCH BORROWER IN THE
ORDINARY COURSE OF BUSINESS. WITHOUT LIMITING THE FOREGOING, UNTIL THE
CONSUMMATION OF THE IPO, BORROWERS SHALL NOT PAY OR COMMIT TO PAY
COMPENSATION TO ANY MEMBER OF BORROWERS' SENIOR MANAGEMENT IN AN AMOUNT
IN ANY FISCAL YEAR IN EXCESS OF 110% OF THE AGGREGATE CASH COMPENSATION
PAID DURING THE PRIOR FISCAL YEAR.
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
4) BORROWERS SHALL NOT CREATE, INCUR, ASSUME, OR SUFFER TO EXIST, ANY
OBLIGATION AS A LESSEE FOR THE RENTAL OR HIRE OF ANY REAL OR PERSONAL
PROPERTY (WHICH SHALL EXCLUDE ANY CAPITALIZED LEASE, OTHER THAN: (a)
LEASES DESCRIBED ON SCHEDULE 10 TO THE LSA; AND (b) ADDITIONAL
OPERATING LEASES REQUIRING PAYMENTS (INCLUDING TAXES, INSURANCE,
MAINTENANCE, AND SIMILAR EXPENSES) IN AN AGGREGATE AMOUNT NOT TO EXCEED
$500,000 DURING ANY FISCAL YEAR.
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
5) BORROWERS SHALL NOT MAKE OR INCUR CAPITAL EXPENDITURES THAT ARE NOT FOR
GENERAL BUSINESS PURPOSES OF BORROWERS IN THE ORDINARY COURSE OF THEIR
BUSINESS AND OTHERWISE IN COMPLIANCE WITH THIS AGREEMENT.
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
G-5
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
6) BORROWERS INVESTMENTS (WHETHER THROUGH LOANS, GUARANTIES, EQUITY
CONTRIBUTION OR OTHERWISE) IN THE EXCLUDED SUBSIDIARIES SHALL NOT AT
ANY TIME EXCEED $500,000 IN THE AGGREGATE, AND THE AGGREGATE VALUE OF
ALL ASSETS IN ALL EXCLUDED SUBSIDIARIES SHALL NOT AT ANY TIME EXCEED
$500,000.
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
7) THE EBITDA (ON A TRAILING TWELVE-MONTH BASIS) OF ALL EXCLUDED
SUBSIDIARIES IN THE AGGREGATE AT ANY ONE TIME SHALL NOT EXCEED
$250,000.
COVENANT REQUIREMENT MET:
----------------------------------
IF NO, DESCRIBE CORRECTION PLAN:
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
AS OF THE DATE HEREOF, THE BORROWER AGENT CERTIFIES THAT ALL OF THE FOREGOING IS
TRUE AND CORRECT INFORMATION.
By:
----------------------------
Name: Xxxx Xxxxx
Title: Chief Financial Officer
G-6
TABLE OF CONTENTS
Page
----
Section 1. Definitions and Rules of Interpretation............................................................2
1.1. Defined Terms.........................................................................................2
1.2. General Construction.................................................................................15
Section 2. The Loans.........................................................................................15
2.1. The Revolving Credit.................................................................................15
2.2. Submission of Receivables Information................................................................16
2.3. Requests For Advances................................................................................16
2.4. Revolving Credit Borrowing Base Certificates.........................................................16
2.5. Adjustment of NCV Percentages; Availability Reserves.................................................16
2.6. Intentionally Omitted................................................................................16
2.7. Intentionally Omitted................................................................................16
2.8. Interest on Loans....................................................................................16
2.9. Fees and Expenses....................................................................................17
2.10. Use of Proceeds......................................................................................17
2.11. Appointment of Borrower Agent........................................................................17
Section 3. Repayment of the Loans............................................................................17
3.1. Payment of Interest, Fees and Expenses, etc..........................................................17
3.2. Mandatory Repayment of Loans.........................................................................17
3.3. Application of Collections...........................................................................18
3.4. Termination of the Revolving Credit..................................................................18
3.5. Intentionally Omitted................................................................................18
3.6. No Offset, etc.......................................................................................18
Section 4. Conditions Precedent..............................................................................19
4.1. Conditions Precedent to Loans........................................................................19
4.2. Conditions Precedent to All Loans....................................................................20
Section 5. Collections, RA/EOB, Notices to Obligors..........................................................21
5.1. Maintenance of Lockboxes and Lockbox Accounts........................................................21
5.2. Notices to Obligors; Delivery of Collections and RA/EOBs.............................................21
5.3. No Liability.........................................................................................21
Section 6. Grant of Security Interest in Collateral..........................................................21
6.1. Grant of Security....................................................................................21
6.2. Perfection of Security Interests.....................................................................21
Section 7. Rights of Senior Lender with Respect to the Collateral............................................22
7.1. Rights of Senior Lender with Respect to Receivables..................................................22
7.2. Administration of Receivables........................................................................22
7.3. Claims Processing System.............................................................................23
7.4. Performance of Borrower Obligations; Servicing Costs.................................................23
7.5. Special Representations and Covenants Regarding Receivables..........................................23
7.6. Rights of Senior Lender with Respect to Inventory....................................................24
Section 8. Representations and Warranties....................................................................25
8.1. Organization, Authority, etc.........................................................................25
8.2. Due Authorization, Non-Contravention, etc............................................................25
8.3. Governmental and Other Approvals.....................................................................25
8.4. Validity, etc........................................................................................25
8.5. Litigation, etc......................................................................................25
8.6. Conduct of Business..................................................................................26
8.7. Borrower Information.................................................................................26
i
8.8. Compliance with Requirements of Laws, etc............................................................26
8.9. Tax Matters..........................................................................................26
8.10. Offsets..............................................................................................26
8.11. Financial Statements and Projections.................................................................26
8.12. Employee Benefit Plans...............................................................................27
8.13. Subsidiaries and Affiliates; Capitalization; Solvency................................................27
8.14. Restrictions on Subsidiaries; Security Interests.....................................................27
8.15. Deposit Accounts.....................................................................................28
8.16. Environmental Matters................................................................................28
8.17. No Misstatement, etc.................................................................................28
8.18. No Material Adverse Change...........................................................................28
Section 9. Affirmative and Negative Covenants. Each Borrower covenants that until all of the Borrowers
Obligations to Senior Lender are paid and satisfied in full and the Revolving Commitment has been terminated:....28
9.1. Maintenance of Existence.............................................................................28
9.2. Compliance with Laws and Contracts...................................................................29
9.3. Payment of Taxes and Claims..........................................................................29
9.4. Insurance............................................................................................29
9.5. Financial Statements and Other Information...........................................................29
9.6. Merger, Consolidation, Disposition of Assets, Dissolution or Liquidation.............................32
9.7. Restrictions on Liens................................................................................32
9.8. Restrictions on Indebtedness.........................................................................33
9.9. Restricted Payments..................................................................................34
9.10. Transactions with Affiliates.........................................................................34
9.11. Compliance with ERISA................................................................................35
9.12. Deposit Accounts.....................................................................................35
9.13. Inspection of Properties and Books, etc..............................................................35
9.14. Further Assurances...................................................................................35
9.15. Restrictions Regarding Collections, etc..............................................................35
9.16. Permitted Acquisitions...............................................................................36
9.17. Creation or Acquisition of New Subsidiaries of Borrower; Seller Debt.................................36
9.18. Post-Closing Obligations.............................................................................37
Section 10. Financial Covenants of Borrower...................................................................38
10.1. Leverage Ratio.......................................................................................38
10.2. Fixed Charge Coverage Ratio..........................................................................38
10.3. Executive Compensation...............................................................................38
10.4. Restrictions on Leases, etc..........................................................................38
10.5. Capital Expenditures.................................................................................38
10.6. Financial Covenant Calculations......................................................................38
Section 11. Events of Default; Senior Lender's Rights and Remedies............................................38
11.1. Events of Default....................................................................................38
11.2. Remedies upon Default................................................................................40
11.3. Disposition of Collateral, etc.......................................................................41
11.4. Time Essence; Remedies Cumulative....................................................................41
11.5. Each Borrower's Obligations Absolute.................................................................42
11.6. No Subrogation, Marshalling..........................................................................42
11.7. Waivers..............................................................................................42
Section 12. Costs and Expenses................................................................................42
12.1. Payment of Fees and Expenses.........................................................................42
12.2. Deposit on Termination of Credit Facilities..........................................................43
Section 13. Indemnification...................................................................................43
Section 14. Miscellaneous.....................................................................................44
14.1. Notices..............................................................................................44
14.2. Successors and Assigns...............................................................................45
ii
14.3. Confidentiality......................................................................................46
14.4. Severability.........................................................................................46
14.5. Choice of Law........................................................................................46
14.6. Waiver of Jury Trial; Consent to Jurisdiction........................................................46
14.7. Counterparts.........................................................................................46
14.8. Entire Agreement.....................................................................................47
14.9. Press Releases.......................................................................................47
14.10. No Special Damages................................................................................47
14.11. Headings..........................................................................................47
14.12. Assumption........................................................................................47
14.13. Amendment and Restatement.........................................................................47
14.14. Joint and Several Liability.......................................................................47
iii
