Exhibit 99.2
CREDIT AND SECURITY AGREEMENT
This CREDIT AND SECURITY AGREEMENT (as the same may from time to time
be amended, restated or otherwise modified, this "Agreement") is made effective
as of the 15th day of November, 2001, among RES-CARE, INC., a Kentucky
corporation, 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000
("Res-Care"), those subsidiaries of Res-Care named in SCHEDULE 1 hereto
(together with Res-Care, collectively "Borrowers", and individually,
"Borrower"), the lending institutions named in SCHEDULE 2 hereto (collectively,
"Banks", and individually, "Bank"), NATIONAL CITY BANK OF KENTUCKY, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as Agent for the Banks under this
Agreement ("Agent"), BANK ONE, KENTUCKY, N.A., 000 X. Xxxxxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as syndication agent for the Banks under this
Agreement ("Syndication Agent"), and U.S. BANK, NATIONAL ASSOCIATION, 0
Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, as documentation agent for
the Banks under this Agreement ("Documentation Agent").
WITNESSETH:
WHEREAS, Borrowers and the Banks desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrowers upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Account" shall mean (a) a right to payment of a monetary obligation,
whether or not earned by performance, (i) for property that has been or is to be
sold, leased, licensed, or otherwise disposed of, (ii) for services rendered or
to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for
a secondary obligation incurred or to be incurred (v) for energy provided or to
be provided, (vi) for use or hire of a vessel under a charter or other contract,
(vii) arising out of the use of a credit or charge card or information contained
on or for use with the card, (viii) as winnings in a lottery or other game of
chance operated or sponsored by a State, Governmental Unit of a State, or Person
licensed or authorized to operate the game by a State, or Governmental Unit of a
State, and includes, without limitation, health care receivables, but does not
include (A) rights to payment evidenced by Chattel Paper or an Instrument, (B)
Commercial Tort Claims, (C) Deposit Accounts, (D) Investment Property, (E)
Letter of Credit Rights or letters of credit, (F) rights to payment for money or
funds advanced or sold, other than rights arising out of the use of a credit or
charge card or information contained on or for use with the card, and (b) any
"account" as defined in Article 9 of the UCC as in effect on the date of this
Agreement, provided, that if any amendment to the definition of "account"
contained in such Article 9 shall hereafter become effective and shall amend
such definition so as to include any additional property not included in such
definition prior to the effective date of such amendment, then, and in each such
case, the definition of "Account" as used in
this Agreement shall be deemed to be automatically amended, as of such effective
date, to include, in addition to any property theretofore included, all such
additional property.
"Account Debtor" shall mean any Person who, or any of whose property,
shall at the time in question be obligated in respect of all or any part of a
Receivable or any part thereof and includes, without limitation, co-makers,
indorsers, Guarantors, pledgors, hypothecators, mortgagors, and any other Person
who agrees, conditionally or otherwise, to furnish assurance against loss on any
Receivable.
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person, (b) the acquisition of in excess of fifty
percent (50%) of the stock (or other equity interest) of any Person, or (c) the
acquisition of another Person (other than a Company) by a merger or
consolidation or any other combination with such Person.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in that
Bank having less than its pro rata share of the Debt then outstanding, than was
the case immediately before such payment.
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Company, whether through the ownership of voting securities, by contract or
otherwise.
"Agent Fee Letter" shall mean the Agent Fee Letter between Res-Care and
Agent, dated September 7, 2001.
"Applicable Commitment Fee Rate" shall mean:
(a) for the period from the Closing Date through June 30, 2002, fifty
(50) basis points; and
(b) commencing July 1, 2002, the number of basis points set forth in
the following matrix, based on the result of the computation of the Leverage
Ratio to be used to establish the number of basis points that will go into
effect on July 1, 2002 and thereafter:
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APPLICABLE
LEVERAGE RATIO COMMITMENT FEE RATE
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Greater than or equal to 2.00 to 1.00 50.0 basis points
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Less than 2.00 to 1.00 37.5 basis points
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Changes to the Applicable Commitment Fee Rate shall be effective on the first
day of each month after Agent receives, or if earlier, should have received,
pursuant to Section 5.3(b) and 5.3(c) hereof, the quarterly or annual financial
statements of the Companies. The above matrix does not modify or waive, in any
respect, the requirements of Section 5.7 hereof, the rights of the Banks to
charge the Default Rate, or the rights and remedies of Agent and the Banks
pursuant to Articles VIII and IX hereof.
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through June 30, 2002 two
hundred fifty (250) basis points for LIBOR Loans and one hundred fifty (150)
basis points for Base Rate Loans; and
(b) commencing July 1, 2002, the number of basis points (depending upon
whether Loans are LIBOR Loans or Base Rate Loans) set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on July 1,
2002 and thereafter:
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LEVERAGE RATIO APPLICABLE BASIS APPLICABLE BASIS
POINTS FOR LIBOR POINTS FOR
LOANS BASE RATE LOANS
----------------------------------------------------------------- ---------------------- -----------------------
Greater than or equal to 3.00 to 1.00 250 150
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Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00 225 125
----------------------------------------------------------------- ---------------------- -----------------------
Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00 200 100
----------------------------------------------------------------- ---------------------- -----------------------
Less than 2.00 to 1.00 175 75
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Changes to the Applicable Margin shall be effective on the first day of each
month after Agent receives, or if earlier, should have received, pursuant to
Section 5.3(b) and 5.3(c) hereof, the quarterly or annual financial statements
of the Companies. The above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate, or the rights and remedies of Agent and the Banks pursuant to
Articles VIII and IX hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of the attached EXHIBIT E.
"Base Rate" shall mean a rate per annum equal to the greater of (a) the
Prime Rate or (b) one-half of one percent (1/2%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.
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"Base Rate Loan" shall mean a Loan described in Section 2.1 hereof on
which Borrowers shall pay interest at a rate based on the Base Rate.
"Borrowers' Certificate" shall mean a certificate, substantially in the
form of the attached EXHIBIT D, with any changes thereto made after the Closing
Date to be in the reasonable discretion of Agent.
"Borrowing Base" shall mean an amount not in excess of seventy percent
(70%) of the amount due and owing on Eligible Accounts Receivable.
"Business Day" shall mean any day excluding (i) Saturday, (ii) Sunday
and (iii) any day of the year on which banks are required or authorized to close
in Cleveland, Ohio, and, if the applicable Business Day relates to any LIBOR
Loan, on which dealings are not carried on in the London interbank eurodollar
market.
"Capital Distribution" shall mean a payment made, liability incurred or
other consideration given for the purchase, acquisition, redemption or
retirement of any capital stock or other equity interest of any Company or as a
dividend, return of capital or other distribution (other than any stock
dividend, stock split or other equity distribution payable only in capital stock
or other equity of the Company in question) in respect of such Company's capital
stock or other equity interest.
"Change in Control" shall mean (a) the acquisition of ownership or
voting control, directly or indirectly, beneficially or of record, on or after
the Closing Date, by any Person or group (within the meaning of Rule 13d-3 of
the SEC under the Securities Exchange Act of 1934, as then in effect), of shares
representing more than thirty-five percent (35%) of the aggregate ordinary
Voting Power represented by the issued and outstanding capital stock of
Res-Care; or (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors of Res-Care by Persons who were neither (i)
nominated by the board of directors of Res-Care nor (ii) appointed by directors
so nominated.
"Chattel Paper" shall mean (a) a record or records (other than charters
or other contracts involving the use or hire of a vessel and other than records
that evidence a right to payment arising out of the use of a credit or charge
card or information contained on or for use with the card) that evidence both a
monetary obligation and a security interest in specific goods, a security
interest in specific goods and software used in the goods, a security interest
in specific goods and license of software used in the goods, a lease of specific
goods, or a lease of specific goods and a license of software used in the goods,
and, if a transaction is evidenced by records that include an Instrument or
series of Instruments, the group of records taken together constitutes Chattel
Paper, the term "monetary obligation" meaning, for purposes of determining
whether or not a record or records constitute Chattel Paper, a monetary
obligation secured by the goods or owed under a lease of the goods and includes
a monetary obligation with respect to Software used in the goods, and (b) any
"chattel paper" as defined in Article 9 of the UCC as in effect on the date of
this Agreement, provided, that if any amendment to the definition of "chattel
paper" contained in such Article 9 shall hereafter become effective and shall
amend such definition so as to include any additional property not included in
such definition prior to the effective date of such amendment, then, and in each
such case, the definition of "Chattel Paper" as used in this Agreement shall be
deemed to be automatically
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amended, as of such effective date, to include, in addition to any property
theretofore included, all such additional property.
"Closing Date" shall mean the effective date of this Agreement in
accordance with Section 2.2 and Article IV.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Collateral" shall have the meaning ascribed thereto in Section 6.1.
"Commercial Tort Claim" shall mean any claim arising in tort with
respect to which (a) the claimant is an organization or (b) the claimant is an
individual and the claim (i) arose in the course of the claimant's business or
profession and (ii) does not include damages arising out of personal injury to
or the death of an individual.
"Commitment" shall mean the obligation hereunder of the Banks to make
Loans pursuant to the Revolving Credit Commitments and to participate in the
issuance of Letters of Credit up to the Total Commitment Amount during the
Commitment Period.
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Commitment Percentage"
as described in SCHEDULE 2 hereto.
"Commitment Period" shall mean the period from the Closing Date to
September 30, 2004, or such earlier date on which the Commitment shall have been
terminated pursuant to Article IX hereof.
"Company" shall mean a Borrower or a Subsidiary.
"Companies" shall mean all Borrowers and all Subsidiaries.
"Compliance Certificate" shall mean a certificate, substantially in the
form of the attached EXHIBIT C.
"Consideration" shall mean, in connection with an Acquisition, the
aggregate consideration paid, including cash (from whatever source), the
issuance of securities or notes, the assumption or incurring of liabilities
(direct or contingent), the payment of consulting fees or fees for a covenant
not to compete and any other consideration paid for the purchase.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrowers and their Subsidiaries in accordance with GAAP,
including principles of consolidation consistent with those applied in
preparation of the consolidated financial statements referred to in Section 7.14
hereof.
"Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the aggregate of all depreciation and amortization charges for fixed
assets, leasehold improvements and general intangibles (specifically including
goodwill) of Borrowers and their Subsidiaries for such period, as determined on
a Consolidated basis and in accordance with GAAP.
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"Consolidated EBITDA" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, Consolidated Net Earnings minus any interest
income for such period plus the aggregate amounts deducted in determining such
Consolidated Net Earnings in respect of (a) income taxes, (b) Consolidated
Interest Expense, and (c) Consolidated Depreciation and Amortization Charges For
purposes of determining Consolidated EBITDA for any rolling period of four (4)
fiscal quarters that would include the period ended December 31, 2001, as one of
the relevant fiscal quarters, (i) special charges taken by Res-Care in
connection with the refinancing of its revolving credit facility and the
issuance of the Senior Unsecured Notes and (ii) a special charge in the amount
of One Million Seven Hundred Twenty-Eight Thousand Dollars ($1,728,000), should
be added to Consolidated Net Earnings, provided that the One Million Seven
Hundred Twenty-Eight Thousand Dollars ($1,728,000) charge shall not be added
back after the quarter ending December 31, 2001.
"Consolidated Interest Expense" shall mean, for any period,
Consolidated interest expense of Borrowers and their Subsidiaries for such
period, including interest expense associated with capitalized leases,
determined in accordance with GAAP.
"Consolidated Net Earnings" shall mean the net earnings (losses) of
Borrowers and their Subsidiaries, after taxes and after extraordinary items, as
determined on a Consolidated basis and in accordance with GAAP.
"Consolidated Net Worth" shall mean at any date, the Consolidated
shareholders' equity of the Company determined as of such date as determined in
accordance with GAAP.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Sections 414(b), (c), (m) or (o).
"Copyright" shall mean any copyright, any registration or recording of
any copyright, and any application in connection with any copyright, including,
without limitation, any such registration, recording, or application in the
United States Copyright Office or in any similar office or agency of the United
States, any State thereof, or any other country or political subdivision of such
other country, and any renewal of any of the foregoing.
"Copyright License" shall mean any agreement granting any right in any
copyright, copyrightable work, or copyright registration, as the same may from
time to time be amended, restated or otherwise modified.
"Debt" shall mean, collectively, all Indebtedness incurred by any
Borrower to the Banks pursuant to this Agreement and in connection with
Indebtedness incurred to U.S. Bank, National Association in connection with its
corporate credit card program up to a maximum amount of Three Million Dollars
($3,000,000), and includes the principal of and interest on all Notes and each
extension, renewal or refinancing thereof in whole or in part, the commitment
fees, other fees and any prepayment fees payable hereunder.
"Default" shall mean an event or condition that constitutes, or with
the lapse of any applicable grace period or the giving of notice or both would
constitute, an Event of Default and that has not been waived by the Required
Banks in writing.
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"Default Rate" shall mean a rate per annum equal to two percent (2%) in
excess of the Derived Base Rate from time to time in effect.
"Deposit Account" shall mean (a) any demand, time, savings, passbook,
or like account maintained with a bank, savings and loan association, credit
union, or like organization and (b) any "deposit account" as defined in Article
9 of the UCC as in effect on the date of this Agreement, provided, that if any
amendment to the definition of "deposit account" contained in such Article 9
shall hereafter become effective and shall amend such definition so as to
include any additional property not included in such definition prior to the
effective date of such amendment, then, and in each such case, the definition of
"Deposit Account" as used in this Agreement shall be deemed to be automatically
amended, as of such effective date, to include, in addition to any property
theretofore included, all such additional property.
"Derived LIBOR Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin (from time to time in effect) plus the LIBOR Rate.
"Derived Base Rate" shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) plus the Base Rate.
"Document" shall mean (a) a document that purports to be issued by or
addressed to a bailee and that purports to cover goods that are in the bailee's
possession that are either identified or fungible portions of an identified
mass, and includes a xxxx of lading, dock warrant, dock receipt, warehouse
receipt, or order for the delivery of goods, and any other document that in the
regular course of business or financing is treated as adequately evidencing that
the Person in possession of it is entitled to receive, hold, and dispose of the
document and the goods it covers, (b) a receipt issued by the owner of goods
including distilled spirits or agricultural commodities that are stored under a
statute requiring a bond against withdrawal or a license for the issuance of
receipts in the nature of a warehouse receipt, and (c) any "document" as defined
in Article 9 of the UCC as in effect on the date of this Agreement, provided,
that if any amendment to the definition of "document" contained in such Article
9 shall hereafter become effective and shall amend such definition so as to
include any additional property not included in such definition prior to the
effective date of such amendment, then, and in each such case, the definition of
"Document" as used in this Agreement shall be deemed to be automatically
amended, as of such effective date, to include, in addition to any property
theretofore included, all such additional property.
"Eligible Account Receivable" shall mean an account receivable of a
Borrower to the extent arising out of sales and services performed by such
Borrower, that, at all times until it is collected in full, continuously meets
the following requirements: (a) arose in the ordinary course of a Borrower's
business from the performance of services or bona fide sale of goods that have
been performed for or shipped to the Account Debtor; (b) is not due from any
Account Debtor with respect to which a Borrower has received any written notice
of the filing of a bankruptcy; (c) is not subject to an assignment, pledge,
claim, mortgage, lien, or security interest of any type except that granted to
or in favor of Agent and the Banks; (d) is not the subject of any instrument or
chattel paper offered in payment thereof unless such instrument or chattel paper
is pledged to Agent on terms satisfactory to Agent; (e) is not an account
receivable due from any affiliate, shareholder or employee of a Borrower; (f) is
not a Foreign Account Receivable unless such Foreign Account Receivable is
backed by a letter of credit on terms satisfactory to Agent; (g) is not
evidenced by a promissory note
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or any other negotiable instrument unless such promissory note or negotiable
instrument is pledged to Agent on terms satisfactory to Agent; (h) is not a
Health Care Receivable unless such Health Care Receivable is subject to (1)
procedures for cash management and (2) perfection under the UCC, each
satisfactory to Agent in its reasonable discretion; and (i) Agent, for the
benefit of the Banks, has a valid and enforceable first security interest in the
Account. Agent agrees that, as of the Closing Date, procedures exist that are
acceptable to Agent with respect to cash management and perfection under the UCC
for Health Care Receivables in existence on the Closing Date. Notwithstanding
anything to the contrary contained in this Agreement, Agent shall have the
continuing right, to be reasonably exercised, to require Borrowers to comply
with the Federal Assignment of Claims Act or any comparable state or local
government statute or regulation with respect to any Borrower's Government
Accounts Receivable.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or by any state or municipality thereof or by
any court, agency, instrumentality, regulatory authority or commission of any of
the foregoing concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
"Equipment" shall mean goods other than Inventory, farm products, or
consumer goods.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
"ERISA Event" shall mean (a) the existence of any condition or event
with respect to an ERISA Plan that presents a risk of the imposition of an
excise tax or any other liability on a Company or of the imposition of a Lien on
the assets of a Company; (b) a Controlled Group member has engaged in a
non-exempt "prohibited transaction" (as defined under ERISA Section 406 or Code
Section 4975) or a breach of a fiduciary duty under ERISA that could result in
liability to a Company; (c) a Controlled Group member has applied for a waiver
from the minimum funding requirements of Code Section 412 or ERISA Section 302
or a Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307; (d) a Reportable Event has occurred with
respect to any Pension Plan; (e) a Controlled Group member has withdrawn from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" (as such
terms are defined in ERISA Sections 4203 and 4205, respectively); (f) a
Multiemployer Plan is in or is likely to be in reorganization under ERISA
Section 4241; (g) an ERISA Plan (and any related trust) that is intended to be
qualified under Code Sections 401 and 501 is determined by the Internal Revenue
Service to fail to be so qualified or any "cash or deferred arrangement" under
any such ERISA Plan is determined by the Internal Revenue Service to fail to
meet the requirements of Code Section 401(k); (h) the PBGC takes any steps to
terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or a
Controlled Group member takes steps to terminate a Pension Plan; (i) a
Controlled Group member or an ERISA Plan fails to satisfy any requirements of
law applicable to an ERISA Plan; (j) a claim, action, suit, audit or
investigation is pending or threatened with respect to an ERISA Plan, other than
a routine claim for benefits; or (k) a Controlled Group member incurs or is
expected to incur any liability for post-retirement benefits under any Welfare
Plan, other than as required by ERISA Section 601, ET. SEQ. or Code Section
4980B.
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"ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan.
"Eurocurrency Reserve Percentage" shall mean, for any Interest Period
in respect of any LIBOR Loan, as of any date of determination, the aggregate of
the then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to such
Interest Period (if more than one such percentage is applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) by the Board of Governors of the
Federal Reserve System, any successor thereto, or any other banking authority,
domestic or foreign, to which a Bank may be subject in respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Federal Reserve Board) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that include
the LIBOR Loans. For purposes hereof, such reserve requirements shall include,
without limitation, those imposed under Regulation D of the Federal Reserve
Board and the LIBOR Loans shall be deemed to constitute Eurocurrency Liabilities
subject to such reserve requirements without benefit of credits for proration,
exceptions or offsets that may be available from time to time to any Bank under
said Regulation D.
"Event of Default" shall mean an event or condition that constitutes an
event of default as defined in Article VIII hereof.
"Facility" shall mean each facility, program, group home and training
center now or hereafter owned, leased, operated and/or managed by any of the
Borrowers or their Subsidiaries.
"Federal Assignment of Claims Act" shall mean the Assignment of Claims
Act of 1940, as amended.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president or chief financial officer.
"Foreign Account Receivable" shall mean any Account that arises out of
contracts with or orders from an Account Debtor that is not a resident of, or
domiciled in, the United States, or an Account Debtor that does not have
material assets in the United States.
"Fronting Bank" shall mean, as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or in the event that Agent
is not able or willing to issue a Letter of Credit, such other Bank as shall
agree to issue the Letter of Credit in its own name, but on behalf of the Banks
hereunder.
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"Funded Indebtedness" shall mean all Indebtedness, including, but not
limited to, current, long-term and Subordinated Indebtedness, if any, and all
obligations pursuant to any letter of credit or guaranty.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrowers.
"General Intangible" shall mean any personal property, including
Payment Intangibles, Software and including things in action, Intellectual
Property, and any authorizations, franchises, licenses, or permits heretofore,
hereupon, or hereafter conferred, granted, or issued by any governmental
authority or other Person, but not including Accounts, Chattel Paper, Commercial
Tort Claims, Deposit Accounts, Documents, goods, Instruments, Investment
Property, Letter of Credit Rights, letters of credit, money, oil, gas or other
minerals before extraction.
"Government Account Receivable" shall mean any Account that arises out
of contracts with or orders from the United States, any state or any local
government, or any of their respective departments, agencies or
instrumentalities.
"Guarantor" shall mean a Person that pledges its credit or property in
any manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
agrees conditionally or otherwise to make any purchase, loan or investment in
order thereby to enable another to prevent or correct a default of any kind.
"Guarantor of Payment" shall mean any Person that shall deliver a
Guaranty of Payment to Agent subsequent to the Closing Date.
"Guaranty of Payment" shall mean each of the Guaranties of Payment of
Debt executed and delivered after the Closing Date in connection herewith by the
Guarantors of Payment, as the same may from time to time be amended, restated or
otherwise modified.
"Healthcare Event" shall mean the occurrence of any of the following
with respect to any one or more Facilities which results in a Material Adverse
Effect: (i) the revocation, denial, suspension or non-renewal of any license,
certificate or permit required to operate Facilities (other than Facilities
managed by any Borrower or Subsidiary of a Borrower on behalf of a person other
than any Borrower or Subsidiary thereof), with any appeal having been taken and
denied, provided that, during any such appeal period the Facility at issue is
able to operate; (ii) the termination or suspension of the provider agreements
under Medicare Law or Medicaid Law or any other agreement or contract with any
Official Body or private payor with respect to Facilities (other than Facilities
managed by any Borrower or Subsidiary of a Borrower on behalf of a Person other
than any Borrower or Subsidiary thereof); (iii) the involuntary receivership or
involuntary management by any applicable Official Body of Facilities (other than
Facilities managed by any Borrower or Subsidiary of a Borrower on behalf of a
Person other than any Borrower or Subsidiary thereof); (iv) the imposition by
any applicable Official Body with respect to Facilities (other than Facilities
managed by any Borrower or Subsidiary of a Borrower on behalf of a Person other
than any Borrower or Subsidiary thereof) of administrative holds or similar
restrictions or limitations on the admission of patients or residents (but only
for so long as such holds, restrictions or limitations shall be in effect);
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(v) the interruption or cessation of payments or reimbursement by any applicable
Official Body or private payor, with respect to Facilities (other than
Facilities managed by any Borrower or Subsidiary of a Borrower on behalf of a
Person other than any Borrower or Subsidiary thereof), but only for so long as
such interruption or cessation is in effect; (vi) the cash payment in any fiscal
year by any one or more Companies of any recoupment or demand for recoupment by
any applicable Official Body or (vii) the inability of any Borrower to obtain
adequate professional liability insurance, as determined by Agent in its
reasonable discretion.
"Health Care Receivable" shall mean an account receivable where the
payor is the United States of America, a State, county or municipality, or any
agency or instrumentality thereof which is obligated by to make payment with
respect to Medicare, Medicaid or other accounts receivables representing amounts
owing under any other program established by federal, State, county, municipal
or other local law which requires that payments for healthcare services be made
to the provider of such services in order to comply with any applicable
"anti-assignment" provisions, provider agreement or federal, State, county,
municipal or other local law, rule or regulation.
"Hedge Agreement" shall mean any hedge agreement, interest rate swap,
cap, collar or floor agreement, or other interest rate management device entered
into by a Borrower with Agent or any of the Banks or their Affiliates in
connection with the Debt or in connection with the Senior Unsecured Notes.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business by such Company), (a)
all obligations to repay borrowed money, direct or indirect, incurred, assumed,
or guaranteed, (b) all obligations for the deferred purchase price of capital
assets, (c) all obligations under conditional sales or other title retention
agreements, (d) all obligations (contingent or otherwise) under any letter of
credit, banker's acceptance, currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate management device, (e) all
synthetic leases, (f) all capitalized lease obligations that have been
capitalized on the books of such Company in accordance with GAAP, (g) all
obligations of such Company with respect to asset securitization financing
programs to the extent that there is recourse against such Company or such
Company is liable (contingent or otherwise) under any such program, (h) all
obligations to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
Person, and (i) any other transaction (including forward sale or purchase
agreements) having the commercial effect of a borrowing of money entered into by
such Company to finance its operations or capital requirements.
"Instrument" means a negotiable instrument or any other writing which
evidences a right to the payment of a monetary obligation, is not itself a
security agreement or lease, and is of a type that in the ordinary course of
business transferred by delivery with any necessary indorsement or assignment
provided, that the term "Instrument" does not include (a) Investment Property,
(b) letters of credit, or (c) writings that evidence a right to payment arising
out of the use of a credit or charge card or information contained on or for use
with the card.
"Intellectual Property" shall mean any Copyright, any Copyright
License, any Patent, any Patent License, any Trademark, any Trademark License,
any customer list, any trade secret, any confidential or proprietary
information, any invention (whether or not patented or patentable), any
11
technical information, procedure, design, knowledge, know-how, skill, expertise,
experience, process, model, drawing, or record, and any work (whether or not
copyrighted or copyrightable).
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the last day
of such period, as selected by Borrowers pursuant to the provisions hereof, and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of such period, as selected
by Borrowers pursuant to the provisions hereof. The duration of each Interest
Period for any LIBOR Loan shall be one (1) month, two (2) months, three (3)
months, or six (6) months, or any fraction thereof that is acceptable to Agent,
in each case as Borrowers may select upon notice, as set forth in Section 2.2
hereof, provided that: (a) if Borrowers fail to so select the duration of any
Interest Period, Borrowers shall be deemed to have converted such LIBOR Loan to
a Base Rate Loan at the end of the then current Interest Period; and (b)
Borrowers may not select any Interest Period for a LIBOR Loan that ends after
any date when principal is due on such LIBOR Loan.
"Inventory" shall mean goods, other than farm products, that (a) are
leased by a Person as lessor, (b) are held by a Person for sale or lease or to
be furnished under contracts of service, (c) are furnished by a Person under a
contract of service, or (d) consist of raw materials, work in process, or
materials used or consumed in a business.
"Investment Property" shall mean "investment property" as defined in
Article 9 of the UCC as in effect on the date of this Agreement, provided, that
if any amendment to the definition of "investment property" contained in such
Article 9 shall hereafter become effective and shall amend such definition so as
to include any additional property not included in such definition prior to the
effective date of such amendment, then, and in each such case, the definition of
"Investment Property" as used in this Agreement shall be deemed to be
automatically amended, as of such effective date, to include, in addition to any
property theretofore included, all such additional property.
"Letter of Credit" shall mean any standby letter of credit that shall
be issued by Agent for the benefit of a Borrower, including amendments thereto,
if any, and shall have an expiration date no later than the earlier of (a) one
(1) year after its date of issuance (unless otherwise automatically extended) or
(b) thirty (30) days prior to the last day of the Commitment Period.
"Letter of Credit Exposure" shall mean the sum of (a) the aggregate
undrawn face amount of all issued and outstanding Letters of Credit, and (b) the
aggregate of the draws made on Letters of Credit that have not been reimbursed
by Borrowers or converted to a Revolving Loan pursuant to Section 2.1A hereof.
"Letter of Credit Right" shall mean a right to payment or performance
under a letter of credit, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance, provided, that the term
"Letter of Credit Right" does not include the right of a beneficiary to demand
payment or performance under a letter of credit.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis and
in accordance with GAAP, the ratio of (a) Total Net Funded Indebtedness (based
upon the financial statements of
12
Borrowers and their Subsidiaries for the most recently completed fiscal quarter)
to (b) Consolidated EBITDA (based upon the financial statements of Borrowers and
their Subsidiaries for the most recently completed fiscal quarter and the three
(3) previous fiscal quarters (on a rolling four (4) quarter basis)).
"LIBOR Loan" shall mean a Loan described in Section 2.1 hereof on which
Borrowers shall pay interest at a rate based upon the LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Loan, the quotient (rounded upwards, if necessary, to the nearest one one
hundredth of one percent (1/100th of 1%)) of: (a) the per annum rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) two (2) Business Days prior to the beginning of such
Interest Period pertaining to such LIBOR Loan, as provided by Dow Xxxxx Services
(formerly Telerate Service), Bloomberg's or Reuters (or any other similar
company or service that provides rate quotations comparable to those currently
provided by such companies) as the rate in the London interbank market for
dollar deposits in immediately available funds with a borrowing date and
maturity comparable to such Interest Period, DIVIDED BY (b) a number equal to
1.00 MINUS the Eurocurrency Reserve Percentage. In the event that such rate
quotation is not available for any reason, then the rate (for purposes of clause
(a) hereof) shall be the rate, determined by Agent as of approximately 11:00
A.M. (London time) two (2) Business Days prior to the beginning of such Interest
Period pertaining to such LIBOR Loan, to be the average (rounded upwards, if
necessary, to the nearest one one hundredth of one percent (1/100th of 1%)) of
the per annum rates at which dollar deposits in immediately available funds in
an amount comparable to such LIBOR Loan and with a maturity comparable to such
Interest Period are offered to the prime banks by leading banks in the London
interbank market. The LIBOR Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Percentage.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance or restriction on, pledge or deposit of, or conditional sale or
other title retention agreement with respect to any property (real or personal)
or asset.
"Loan" or "Loans" shall mean the credit extended to Borrowers by the
Banks in accordance with Section 2.1 hereof.
"Loan Documents" shall mean this Agreement, each of the Notes, all
documentation relating to each Letter of Credit, each Pledge Agreement, each
Mortgage, the UCC financing statement described in Article IV hereof, each
Guaranty of Payment, each Security Agreement and any other documents relating to
any of the foregoing, as any of the foregoing may from time to time be amended,
restated or otherwise modified or replaced.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property or condition (financial or otherwise) or
prospects of Res-Care, (b) the business, operations, property or condition
(financial or otherwise) or prospects of Borrowers and their Subsidiaries taken
as a whole, or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights and remedies of Agent or the Banks
hereunder or thereunder.
13
"Maximum Amount" shall mean, for each Bank, the amount set forth
opposite such Bank's name under the column headed "Maximum Amount" as listed on
SCHEDULE 2 hereto.
"Medicaid" shall mean the medical assistance program established by
Title XIX of the Social Security Act (42. U.S.C. ss. 1396 ET SEQ.) and any
successor or similar statutes, as in effect from time to time.
"Medicaid Law" shall mean collectively, Medicaid and Medicaid
Regulations.
"Medicaid Regulations" shall mean, collectively, (a) all federal
statutes (whether set forth in Title XIX of the Social Security Act or
elsewhere) affecting Medicaid, (b) all applicable provisions of all federal
rules, regulations, manuals and orders of governmental authorities promulgated
pursuant to or in connection with the statutes described in clause (a) above
having the force of law and all federal administrative, reimbursement and other
guidelines of all governmental authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (a) above,
including all programs operated under waivers granted from requirements of Title
XIX of the Social Security Act and its implementing regulations, (c) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (a) and (b) above, and (d) all
applicable provisions of all rules, regulations, manuals and orders of all
governmental authorities promulgated pursuant to or in connection with the
statutes described in clause (c) above having the force of law and all state
administrative, reimbursement and other guidelines of all governmental
authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (c) above, in each case as in effect from
time to time.
"Medicare" shall mean the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 U.S.C. ss.
1395 ET SEQ.) and any successor or similar statutes as in effect from time to
time.
"Medicare Law" shall mean collectively, Medicare and Medicare
Regulations
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting Medicare, together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all governmental authorities (including,
without limitation, Health and Human Services ("HHS"), Health Care Finance
Administration, the Office of the Inspector General for HHS, or any Person
succeeding the functions of any of the foregoing) promulgated pursuant to or in
connection with any of the foregoing having the force of law, in each case as in
effect from time to time.
"Moody's" shall mean Xxxxx'x Investor Services, Inc., or any successor
to such company.
"Mortgage" shall mean a mortgage, deed of trust, leasehold mortgage or
other similar instrument, in form and substance satisfactory to Agent, executed
by a Company, on or after the Closing Date, with respect to the Real Property,
as the same may from time to time be amended, restated or otherwise modified.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
14
"Note" shall mean any Revolving Credit Note or any other note
delivered pursuant to this Agreement.
"Notice of Loan" shall mean a Notice of Loan in the form of the
attached EXHIBIT B.
"Obligor" shall mean (a) a Person whose credit or any of whose property
is pledged to the payment of the Debt or Secured Debt and includes, without
limitation, any Guarantor, and (b) any signatory to a Related Writing.
"Official Body" shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Patent" shall mean any letters patent of the United States or any
other country, any registration or recording of any letters patent, any
application for letters patent in the United States or any other country,
including, without limitation, any such registration, recording, or application
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof, or any other country or
political subdivision of such other country, and all reissues, continuations,
continuations-in-part, or extensions of any of the foregoing.
"Patent License" shall mean any agreement granting any right to
practice any invention on which any Patent is in existence, as the same may from
time to time be amended, restated or otherwise modified.
"Payment Intangible" shall mean a General Intangible under which the
Account Debtor's principal obligation is a monetary obligation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan"
(within the meaning of ERISA Section 3(2)).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, corporation, limited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.
"Pledge Agreement" shall mean each of the agreements executed and
delivered to Agent and the Banks by Borrowers on or after the Closing Date in
connection with the Pledged Securities, as the same may be from time to time
amended, restated, or otherwise modified.
"Pledged Securities" shall mean the shares of stock, membership
interests in limited liability companies and partnership interests in
partnerships of any direct or indirect Subsidiary of a Borrower, whether now
owned by a Borrower or hereafter acquired or created by a Borrower, and all
proceeds thereof.
"Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest
15
interest rate charged by Agent for commercial or other extensions of credit.
Each change in the Prime Rate shall be effective immediately from and after such
change.
"Proceeds" shall mean (a) whatever is received or receivable upon sale,
lease, license, exchange, or other disposition of any Collateral or any
Proceeds, whether directly or indirectly, (b) whatever is collected on, or
distributed on account of, any Collateral or any Proceeds, whether directly or
indirectly, (c) rights arising out of any Collateral or any Proceeds, whether
directly or indirectly, (d) to the extent of the value of Collateral or any
Proceeds, claims arising out of the loss, nonconformity, or interference with
the use of defects or infringement of rights in, or damage to, the Collateral or
any Proceeds, directly or indirectly, or (e) to the extent of the value of
Collateral or any Proceeds and to the extent payable to any Person who shall
have granted Agent a security interest or Agent, insurance by reason of the loss
or nonconformity of, defects or infringement of rights in, or damage to, any
Collateral or any Proceeds, directly or indirectly.
"Products" shall mean property directly or indirectly resulting from
any manufacturing, processing, assembling, or commingling of any goods.
"Real Property" shall mean the real property owned by certain of the
Borrowers as set forth on SCHEDULE 4, in each case, together with all
improvements and buildings thereon and all appurtenances, easements or other
rights thereto belonging.
"Receivable" shall mean any claim for or right to payment, however
arising, whether classified as an Account, a Deposit Account, Investment
Property, a Letter of Credit Right, a Payment Intangible, a Supporting
Obligation, or otherwise, whether contingent or fixed, whether or not evidenced
by any writing or other record, and, if so evidenced, whether evidenced by one
or more certificated securities, any Chattel Paper, one or more Instruments, any
letter of credit, or otherwise.
"Related Writing" shall mean each Loan Document and any other
assignment, mortgage, security agreement, guaranty agreement, subordination
agreement, financial statement, audit report or other writing furnished by any
Company or any Obligor, or any of their respective officers, to Agent or the
Banks pursuant to or otherwise in connection with this Agreement.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act, other than any such event with
respect to which a filing with the PBGC is not required.
"Required Banks" shall mean the holders of sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment Amount.
"Revolving Credit Commitment" shall mean the obligation hereunder of
each Bank, during the Commitment Period, to participate in the making of
Revolving Loans and the issuance of Letters of Credit, up to an aggregate
principal amount outstanding at any time equal to the lesser of (a) such Bank's
Commitment Percentage multiplied by the Borrowing Base, or (b) as set forth
opposite such Bank's name under the column headed "Revolving Credit Commitment
Amount" as set forth on SCHEDULE 2 hereof (or such lesser amount as shall be
determined pursuant to Section 2.5 hereof).
"Revolving Credit Exposure" shall mean, at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, and (b) the
Letter of Credit Exposure.
16
"Revolving Credit Note" shall mean any Revolving Credit Note executed
and delivered pursuant to Section 2.1A hereof.
"Revolving Loan" shall mean a Loan granted to Borrowers by the Banks in
accordance with Section 2.1A hereof.
"Revolving Loan Availability" shall mean the Borrowing Base minus the
Revolving Credit Exposure.
"Sale-Leaseback Transactions" shall mean collectively those
transactions involving the sale of real property and related assets by the
Borrowers and their Subsidiaries in transactions which contemplate the leaseback
of such property, by the selling party thereof, following such sale, to the
extent such transactions are identified on SCHEDULE 5.22 hereof.
"Secured Debt" shall mean collectively, (a) the Debt, and (b) all
obligations and liabilities of any Borrower now existing or hereafter incurred
under, arising out of or in connection with any Hedge Agreement.
"Security Agreement" shall mean each of the Security Agreements
executed and delivered, after the Closing Date, as the same may from time to
time be amended, restated or otherwise modified.
"Senior Unsecured Notes" shall mean those certain Senior Unsecured
Notes due November 15, 2008, in the principal amount of One Hundred Fifty
Million Dollars ($150,000,000) issued by Res-Care.
"Software" shall mean any computer program and any supporting
information provided in connection with a transaction relating to the program,
provided, that the term "Software" does not include a computer program embedded
in goods (other than goods that consist solely of the medium with which the
program is embedded) or any information provided in connection with a
transaction relating to the program so embedded if (a) the program is associated
with the goods in such a manner that it customarily is considered a part of the
goods or (b) by becoming the owner of the goods, a Person acquires the right to
use the program in connection with the goods.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
division of XxXxxx-Xxxx, Inc., or any successor to such company.
"State" shall mean a State of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or
insular possession subject to the jurisdiction of the United States.
"Subordinated", as applied to Indebtedness, shall mean that the
Indebtedness has been subordinated (by written terms or written agreement being,
in either case, in form and substance satisfactory to Agent and the Required
Banks) in favor of the prior payment in full of the Secured Debt.
"Subsidiary" of a Borrower or any of its respective Subsidiaries shall
mean (a) a corporation more than fifty percent (50%) of the Voting Power of
which is owned, directly or indirectly, by a
17
Borrower or by one or more other subsidiaries of a Borrower or by a Borrower and
one or more subsidiaries of a Borrower, (b) a partnership or limited liability
company of which a Borrower, one or more other subsidiaries of a Borrower or a
Borrower and one or more subsidiaries of a Borrower, directly or indirectly, is
a general partner or managing member, as the case may be, or otherwise has the
power to direct the policies, management and affairs thereof, or (c) any other
Person (other than a corporation) in which a Borrower, one or more other
subsidiaries of a Borrower or a Borrower and one or more subsidiaries of a
Borrower, directly or indirectly, has at least a majority ownership interest or
the power to direct the policies, management and affairs thereof; provided that
the term "Subsidiary" shall not include any entity listed on SCHEDULE 5 hereof.
"Supporting Obligation" shall mean a Letter of Credit Right or
supporting obligation that supports the payment or performance of an Account,
Chattel Paper, a Document, a General Intangible, an Instrument, or Investment
Property.
"Total Commitment Amount" shall mean the principal amount of Eighty
Million Dollars ($80,000,000) (or such lesser amount as shall be determined
pursuant to Section 2.5 hereof).
"Total Net Funded Indebtedness" shall mean (i) Funded Indebtedness,
minus (ii) all cash of the Borrowers and their Subsidiaries, on a Consolidated
basis, in excess of Ten Million Dollars ($10,000,000).
"Trademark" shall mean any trademark, trade name, corporate name,
business name, domain name, trade style, service xxxx, logo, source identifier,
business identifier, design, or intangible thing of like nature, any
registration or recording of the foregoing or any thereof, and any application
in connection therewith, including, without limitation, any such registration,
recording, or application in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof, or any
other country or political subdivision of such other country, and all reissues,
extensions, or renewals of any of the foregoing.
"Trademark License" shall mean any agreement granting any right to use
any Trademark or Trademark registration, as the same may from time to time be
amended, restated or otherwise modified.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Ohio; provided, however, that if by reason of any mandatory provisions of
law, any or all of the attachment, perfection, or priority of Agent's security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Ohio, then, and in each such
case, the term "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the attachment, perfection, or priority of
Agent's security interest in such Collateral. Except as otherwise specified in
this Agreement or any other Loan Document, the UCC "as in effect" in the State
of Ohio or any other jurisdiction shall mean the UCC as in effect from time to
time in the State of Ohio or such other jurisdiction.
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person, and the holding of a designated percentage of Voting Power of a Person
means the ownership of shares of capital stock, partnership interests,
membership interests or other interests of
18
such Person sufficient to control exclusively the election of that percentage of
the members of the board of directors or similar governing body of such Person.
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3 (l).
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity all of the securities or
other ownership interest, of which having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
Each term defined in the singular in this Agreement shall have the same
meaning when used in the plural and each term defined in the plural in this
Agreement shall have the same meaning when used in the singular. Except as
otherwise defined in this Agreement, or unless the context otherwise requires,
each term that is used in this Agreement and that is defined in Article 9 of the
UCC shall have, for purposes of this Agreement and the other Related Writings,
the meaning ascribed to that term in such Article. Except as otherwise defined
in this Agreement, or unless the context otherwise requires, each accounting
term that is used in this Agreement and that is defined by GAAP shall have, for
purposes of this Agreement and the other Related Writings, the meaning ascribed
to that term by GAAP.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Bank will participate to the extent
hereinafter provided in making Loans to Borrowers, and issuing Letters of Credit
at the request of Borrowers, in such aggregate amount as Borrowers shall request
pursuant to the Commitment; provided, however, that in no event shall the
aggregate principal amount of all Loans and Letters of Credit outstanding under
this Agreement be in excess of the lesser of the Total Commitment Amount or the
Revolving Credit Commitment.
Each Bank, for itself and not one for any other, agrees to participate
in Loans made and Letters of Credit issued hereunder during the Commitment
Period on such basis that (a) immediately after the completion of any borrowing
by Borrowers or issuance of a Letter of Credit hereunder, the aggregate
principal amount then outstanding on the Notes issued to such Bank, when
combined with such Bank's pro rata share of the Letter of Credit Exposure, shall
not be in excess of the lesser of the Maximum Amount for such Bank and the then
existing Borrowing Base, and (b) such aggregate principal amount outstanding on
the Notes issued to such Bank shall represent that percentage of the aggregate
principal amount then outstanding on all Notes (including the Notes held by such
Bank) that is such Bank's Commitment Percentage.
Each borrowing from the Banks hereunder shall be made pro rata
according to the Banks' respective Commitment Percentages. The Loans may be made
as Revolving Loans and Letters of Credit may be issued, as follows:
A. Revolving Credit.
19
1. Revolving Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Banks shall make a Revolving Loan or Revolving Loans to
Borrowers in such amount or amounts as Borrowers may from time to time request,
but not exceeding in aggregate principal amount at any time outstanding
hereunder the Revolving Credit Commitment, when such Revolving Loans are
combined with the Letter of Credit Exposure. Borrowers shall have the option,
subject to the terms and conditions set forth herein, to borrow Revolving Loans,
maturing on the last day of the Commitment Period, by means of any combination
of (a) Base Rate Loans, or (b) LIBOR Loans.
Borrowers shall pay interest on the unpaid principal amount of Base
Rate Loans outstanding from time to time from the date thereof until paid at the
Derived Base Rate from time to time in effect. Interest on such Base Rate Loans
shall be payable, commencing January 1, 2002, and on the first day of each
succeeding April, July, October and January thereafter and at the maturity
thereof.
Borrowers shall pay interest on the unpaid principal amount of each
LIBOR Loan outstanding under this Section 2.1A from time to time, from the date
thereof until paid, at the Derived LIBOR Rate, fixed in advance for each
Interest Period (but subject to changes in the Applicable Margin) as herein
provided for each such Interest Period. Interest on such LIBOR Loans shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period exceeds three (3) months, the interest must
be paid every three (3) months, commencing three (3) months from the beginning
of such Interest Period).
At the request of Borrowers to Agent, subject to the notice and other
provisions of Section 2.2 hereof, the Banks shall convert Base Rate Loans to
LIBOR Loans at any time and shall convert LIBOR Loans to Base Rate Loans on any
Interest Adjustment Date.
The obligation of Borrowers to repay the Base Rate Loans and LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of Borrowers in the form of EXHIBIT A hereto, payable to
the order of such Bank in the principal amount of its Revolving Credit
Commitment, or, if less, the aggregate unpaid principal amount of Revolving
Loans made hereunder by such Bank. Subject to the provisions of this Agreement,
Borrowers shall be entitled under this Section 2.1A to borrow funds, repay the
same in whole or in part and re-borrow hereunder at any time and from time to
time during the Commitment Period.
2. Letters of Credit.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Fronting Bank shall issue such Letters of Credit for the
account of a Borrower, as Borrowers may from time to time request. Borrowers
shall not request any Letter of Credit (and no Fronting Bank shall be obligated
to issue any Letter of Credit) if, after giving effect thereto, (a) the
aggregate undrawn face amount of all issued and outstanding Letters of Credit
would exceed Fifty Million Dollars ($50,000,000) or (b) the Revolving Credit
Exposure shall exceed the aggregate amount of the Revolving Credit Commitments.
The issuance of each Letter of Credit shall confer upon each Bank the benefits
and liabilities of a participation consisting of an undivided pro rata interest
in the Letter of Credit to the extent of such Bank's Commitment Percentage.
20
Each request for a Letter of Credit shall be delivered to Agent not
later than 11:00 A.M. (Cleveland, Ohio time) two (2) Business Days prior to the
day upon which the Letter of Credit is to be issued. Each such request shall be
in a form acceptable to Agent (and the Fronting Bank, if the Fronting Bank is a
Bank other than Agent) and specify the face amount thereof, the account party,
the beneficiary, the intended date of issuance, the expiry date thereof, and the
nature of the transaction to be supported thereby. Concurrently with each such
request, Borrowers shall execute and deliver to Agent (and the Fronting Bank, if
the Fronting Bank is a Bank other than Agent) an appropriate application and
agreement, being in the standard form of the Fronting Bank for such letters of
credit, as amended to conform to the provisions of this Agreement if required by
the Fronting Bank. The Fronting Bank shall give each Bank notice of each such
request for a Letter of Credit.
In respect of each Letter of Credit that is a standby letter of credit
and the drafts thereunder, if any, whether issued for the account of a Borrower,
Borrowers agree (a) to pay to Agent, for the pro rata benefit of the Banks, a
non-refundable commission based upon the face amount of the Letter of Credit,
which shall be paid quarterly in arrears, on the first day of each succeeding
fiscal quarter, at the rate of the Applicable Margin for LIBOR Loans (in effect
on the date such payment is to be made) times the face amount of the Letter of
Credit; (b) to pay to the Fronting Bank, for its sole account, an additional
Letter of Credit fee, which shall be paid on each date that such Letter of
Credit is issued or renewed at the rate of one-eighth of one percent (1/8%) of
the face amount of such Letter of Credit; and (c) to pay to the Fronting Bank
for its sole account, such other issuance, amendment, negotiation, draw,
acceptance, telex, courier, postage and similar reasonable transactional fees as
are generally charged by the Fronting Bank under its fee schedule as in effect
from time to time.
Whenever a Letter of Credit is drawn, the Fronting Bank shall give
Res-Care notice of such draw and Borrowers shall immediately reimburse the
Fronting Bank for the amount drawn. In the event that the amount drawn is not
reimbursed by Borrowers within one (1) Business Day of the drawing of such
Letter of Credit, at the sole option of Agent (and the Fronting Bank, if the
Fronting Bank is a Bank other than Agent), Borrowers shall be deemed to have
requested a Revolving Loan, subject to the provisions of subpart 1 of this
Section 2.1A, in the amount drawn. Such Revolving Loan shall be evidenced by the
Revolving Credit Notes. Each Bank agrees to make a Revolving Loan on the date of
such notice, subject to no conditions precedent whatsoever. Each Bank
acknowledges and agrees that its obligation to make a Revolving Loan pursuant to
subpart 1 of this Section 2.1A when required by this subpart 2 of this Section
2.1A is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or an Event of Default, and that its payment to Agent, for the account
of the Fronting Bank, of the proceeds of such Revolving Loan shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Banks' Revolving Credit Commitment
shall have been reduced or terminated. Borrowers irrevocably authorize and
instruct Agent to apply the proceeds of any borrowing pursuant to this paragraph
to reimburse, in full, the Fronting Bank, for the amount drawn on such Letter of
Credit. Each such Revolving Loan shall be deemed to be a Base Rate Loan unless
otherwise requested by and available to Borrowers hereunder. Each Bank is hereby
authorized to record on its records relating to its Revolving Credit Note such
Bank's pro rata share of the amounts paid and not reimbursed on the Letters of
Credit.
21
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT. The obligation
of each Bank to make a Loan, convert a LIBOR Loan or Base Rate Loan or continue
a LIBOR Loan and of Agent to issue any Letter of Credit is conditioned, in the
case of each borrowing, conversion, continuation or issuance hereunder, upon:
(a) all conditions precedent as listed in Article IV hereof shall have
been satisfied;
(b) with respect to Base Rate Loans, receipt by Agent of a Notice of
Loan, such notice to be received by 11:00 A.M. (Cleveland, Ohio time) on the
proposed date of borrowing or conversion, and, with respect to LIBOR Loans, by
11:00 A.M. (Cleveland, Ohio time) three (3) Business Days prior to the proposed
date of borrowing, conversion or continuation. Agent shall notify each Bank of
the date, amount and initial Interest Period (if applicable) promptly upon the
receipt of such notice, and, in any event, by 2:00 P.M. (Cleveland, Ohio time)
on the date such notice is received. On the date such Loan is to be made, each
Bank shall provide Agent, not later than 3:00 P.M. (Cleveland, Ohio time), with
the amount in federal or other immediately available funds, required of it;
(c) with respect to Letters of Credit, satisfaction of the notice
provisions set forth in subsection 2 of Section 2.1A hereof;
(d) Borrowers' request for (i) a Base Rate Loan shall be in an amount
of not less than Five Hundred Thousand Dollars ($500,000), increased by
increments of Fifty Thousand Dollars ($50,000) and (ii) a LIBOR Loan shall be in
an amount of not less than One Million Dollars ($1,000,000), increased by
increments of One Hundred Thousand Dollars ($100,000);
(e) the fact that immediately after the making, conversion or
continuation of the Loan or issuance of the Letter of Credit, the aggregate
outstanding principal amount of all Loans and Letters of Credit outstanding
under this Agreement will not exceed the aggregate amount of the Revolving
Credit Commitment;
(f) the fact that no Default or Event of Default shall then exist or
immediately after the making, conversion or continuation of the Loan or issuance
of the Letter of Credit would exist; and
(g) the fact that each of the representations and warranties contained
in Article VII hereof shall be true and correct with the same force and effect
as if made on and as of the date of the making, conversion, or continuation of
such Loan, or the issuance of the Letter of Credit, except to the extent that
any thereof expressly relate to an earlier date.
At no time shall Borrowers request that LIBOR Loans be outstanding for
more than eight (8) different Interest Periods at any time, and, if Base Rate
Loans are outstanding, then LIBOR Loans shall be limited to seven (7) different
Interest Periods at any time.
Each request by Borrowers for the making of a Loan, conversion of a
LIBOR Loan or Base Rate Loan or continuation of a LIBOR Loan, or for the
issuance of a Letter of Credit hereunder shall be deemed to be a representation
and warranty by Borrowers as of the date of such request as to the facts
specified in (e), (f) and (g) above.
Each request for a LIBOR Loan shall be irrevocable and binding on
Borrowers and Borrowers shall indemnify Agent and the Banks against any loss or
expense incurred by Agent or the
22
Banks as a result of any failure by Borrowers to consummate such transaction
including, without limitation, any loss (including loss of anticipated profits)
or expense reasonably incurred by reason of liquidation or re-employment of
deposits or other funds acquired by the Banks to fund such LIBOR Loan. A
certificate as to the amount of such loss or expense submitted by the Banks to
Borrowers shall be conclusive and binding for all purposes, absent manifest
error. Back-up documentation for such certificate shall be provided to Borrowers
upon their reasonable request.
SECTION 2.3. PAYMENT ON NOTES, ETC. All payments of principal, interest
and commitment and other fees shall be made to Agent in immediately available
funds for the account of the Banks. Agent, on the same Business Day, shall
distribute to each Bank its ratable share of the amount of principal, interest,
and commitment and other fees received by it for the account of such Bank. Each
Bank shall record (a) any principal, interest or other payment, and (b) the
principal amount of the Base Rate Loans and LIBOR Loans and all prepayments
thereof and the applicable dates with respect thereto, by such method as such
Bank may generally employ; provided, however, that failure to make any such
entry shall in no way detract from Borrowers' obligations under each Note. The
aggregate unpaid amount of Loans set forth on the records of Agent shall be
rebuttably presumptive evidence of the principal and interest owing and unpaid
on each Note. Whenever any payment to be made hereunder, including, without
limitation, any payment to be made on any Note, shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall in each case be
included in the computation of the interest payable on such Note; provided,
however, that, with respect to any LIBOR Loan, if the next succeeding Business
Day falls in the succeeding calendar month, such payment shall be made on the
preceding Business Day and the relevant Interest Period shall be adjusted
accordingly.
SECTION 2.4. PREPAYMENT. Borrowers shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the Banks, all or
any part of the principal amount of the Notes then outstanding, as designated by
Borrowers, plus interest accrued on the amount so prepaid to the date of such
prepayment. Borrowers shall give Agent notice of prepayment of any Base Rate
Loan by not later than 11:00 A.M. (Cleveland, Ohio time) on the Business Day
such prepayment is to be made and written notice of the prepayment of any LIBOR
Loan not later than 1:00 P.M. (Cleveland, Ohio time) two (2) Business Days
before the Business Day on which such prepayment is to be made. Prepayments of
Base Rate Loans shall be without any premium or penalty, other than any
prepayment fees, penalties or other charges that may be contained in any Hedge
Agreement.
In any case of prepayment of a LIBOR Loan, Borrowers agree that if the
LIBOR Rate, as determined as of 11:00 A.M. (London time), two (2) Business Days
prior to the date of prepayment of such LIBOR Loan (hereinafter, "Prepayment
LIBOR"), shall be lower than the last LIBOR Rate previously determined for such
LIBOR Loan with respect to which prepayment is intended to be made (hereinafter,
"Last LIBOR"), then Borrowers shall, upon written notice by Agent, promptly pay
to Agent, for the account of each of the Banks, in immediately available funds,
a prepayment fee equal to the product of (a) a rate (the "Prepayment Rate") that
shall be equal to the difference between the Last LIBOR and the Prepayment
LIBOR, times (b) all or such part of the principal amounts of the Notes as
relate to the LIBOR Loan to be prepaid, times (c) the number of days in the
period commencing with the date on which such prepayment is to be made to that
date which coincides with the last day of the Interest Period previously
established when the LIBOR Loan, that
23
is to be prepaid, was made. In addition, Borrowers shall immediately pay
directly to Agent, for the account of the Banks, the amount of any reasonable
additional costs or expenses (including, without limitation, cost of telex,
wires, or cables) incurred by Agent or the Banks in connection with the
prepayment, upon Borrowers' receipt of a written statement from Agent. Each
Prepayment of a LIBOR Loan shall be in the aggregate principal sum of not less
than One Million Dollars ($1,000,000).
SECTION 2.5. COMMITMENT AND OTHER FEES; REDUCTION OF COMMITMENT.
(a) Borrowers shall pay to Agent, for the ratable account of the Banks,
as a consideration for the Commitment, a commitment fee from the Closing Date to
and including the last day of the Commitment Period, payable quarterly in
arrears, equal to (i) the Applicable Commitment Fee Rate in effect on the
payment date, times (ii) (A) the average daily Revolving Credit Commitment in
effect during such fiscal quarter, less (B) the average daily Revolving Credit
Exposure during such fiscal quarter. The commitment fee shall be payable in
arrears, on January 1, 2002 and on the first day of each succeeding April, July,
October and January thereafter, and on the last day of the Commitment Period.
(b) Borrowers shall pay to Agent, for its sole benefit, all fees set
forth in the Agent Fee Letter.
(c) Borrowers may at any time or from time to time permanently reduce
in whole or ratably in part the Revolving Credit Commitments of the Banks
hereunder to an amount not less than the then existing Revolving Credit Exposure
then outstanding, by giving Agent not fewer than five (5) Business Days' notice
of such reduction, provided that any such partial reduction shall be in an
aggregate amount for all of the Banks of not less than Five Million Dollars
($5,000,000). Agent shall promptly notify each Bank of the date of each such
reduction and such Bank's proportionate share thereof. After each such
reduction, the commitment fees payable hereunder shall be calculated upon the
Revolving Credit Commitment as so reduced. If Borrowers reduce in whole the
Revolving Credit Commitments of the Banks, on the effective date of such
reduction (Borrowers having prepaid in full the unpaid principal balance, if
any, of the Notes, together with all interest and commitment and other fees
accrued and unpaid, and provided that no issued and outstanding Letters of
Credit shall exist), all of the Notes shall be delivered to Agent marked
"Canceled" and Agent shall redeliver such Notes to Borrowers. Any partial
reduction in the Total Commitment Amount shall be effective during the remainder
of the Commitment Period.
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT RATE. With the
exception of Base Rate Loans, interest on Loans, Related Expenses and commitment
and other fees and charges hereunder shall be computed on the basis of a year
having three hundred sixty (360) days and calculated for the actual number of
days elapsed. With respect to Base Rate Loans, interest shall be computed on the
basis of a year having three hundred sixty-five (365) days or three hundred
sixty-six (366) days, as the case may be, and calculated for the actual number
of days elapsed. Anything herein to the contrary notwithstanding, if an Event of
Default shall occur hereunder,(a) the principal of each Note and the unpaid
interest thereon shall bear interest, until paid, at the Default Rate; and (b)
the fee for the aggregate undrawn face amount of all issued and
24
outstanding Letters of Credit shall be increased to two percent (2%). In no
event shall the rate of interest hereunder exceed the maximum rate allowable by
law.
SECTION 2.7. MANDATORY PAYMENT.
(a) If the Revolving Credit Exposure at any time exceeds the lesser of
the Total Commitment Amount or the Revolving Credit Commitment, Borrowers shall,
as promptly as practicable, but in no event later than the next Business Day,
prepay an aggregate principal amount of the Loans equal to the sum of the
aggregate outstanding principal amount of all Loans and the aggregate undrawn
face amount of all issued and outstanding Letters of Credit over the then
existing Commitment of the Banks.
(b) If (with the consent of Agent and the Required Banks or all of the
Banks to the extent required by this Agreement), any Company sells any material
assets in excess of the amount permitted in Section 5.12 hereof, Borrowers shall
pay such net proceeds of sale as are required to allow Borrowers to remain in
compliance with Section 5.12(b) and (c), to Agent, for the benefit of the Banks,
to be applied as a prepayment on the Loans.
(c) If (with the consent of Agent and the Required Banks or all of the
Banks to the extent required by this Agreement) any Company commences and
completes a public or private offering of debt securities, then one hundred
percent (100%) of the net proceeds of any such debt offering, shall be paid, on
the date of receipt of such proceeds by such Company, to Agent, for the benefit
of the Banks, to be applied as a prepayment of the Loans until all Secured Debt
has been repaid, with the balance of such net proceeds, if any, to be retained
by the Borrowers.
(d) Any prepayment of a LIBOR Loan pursuant to this Section 2.7 shall
be subject to the prepayment fees set forth in Section 2.4 hereof. Any
prepayment pursuant to subparagraphs (b) and (c) of this Section 2.7 shall
constitute a permanent reduction of the Revolving Credit Commitment and the
Total Commitment Amount.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR
LOANS; INCREASED CAPITAL; TAXES.
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If, at any time,
any law, treaty or regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central Bank or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem applicable any reserve
and/or special deposit requirement (other than reserves included in the
Eurocurrency Reserve Percentage, the effect of which is reflected in the
interest rate(s) of the LIBOR Loan(s) in question) against assets held by, or
deposits in or for the amount of any LIBOR Loan by, any Bank, and the result of
the foregoing is to increase the cost (whether by incurring a cost or adding to
a cost) to such Bank of making or maintaining hereunder such LIBOR Loan or to
reduce the amount of principal or interest received by such Bank with respect to
such LIBOR Loan, then, upon demand by such Bank, Borrowers shall pay to such
Bank from time to time on Interest Adjustment Dates with respect to such LIBOR
Loan, as additional consideration hereunder, additional amounts sufficient to
fully
25
compensate and indemnify such Bank for such increased cost or reduced amount,
assuming (which assumption such Bank need not corroborate) such additional cost
or reduced amount was allocable to such LIBOR Loan. A certificate as to the
increased cost or reduced amount as a result of any event mentioned in this
Section 3.1, setting forth the calculations therefor, shall be promptly
submitted by such Bank to Borrowers and shall, in the absence of manifest error,
be conclusive and binding as to the amount thereof. Notwithstanding any other
provision of this Agreement, after any such demand for compensation by any Bank,
Borrowers, upon at least three (3) Business Days' prior written notice to such
Bank through Agent, may prepay any affected LIBOR Loan in full or convert such
LIBOR Loan to a Base Rate Loan regardless of the Interest Period thereof. Any
such prepayment or conversion shall be subject to the prepayment fees set forth
in Section 2.4 hereof. Each Bank shall notify Borrowers as promptly as
practicable (with a copy thereof delivered to Agent) of the existence of any
event that will likely require the payment by Borrowers of any such additional
amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to such
Bank of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or commitment fee receivable by such Bank in respect
thereof, then such Bank shall promptly notify Borrowers stating the reasons
therefor. Borrowers shall thereafter pay to such Bank, upon demand from time to
time on Interest Adjustment Dates with respect to such LIBOR Loan, as additional
consideration hereunder, such additional amounts as shall fully compensate such
Bank for such increased cost or reduced amount. A certificate as to any such
increased cost or reduced amount, setting forth the calculations therefor, shall
be submitted by such Bank to Borrowers and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
If any Bank receives such additional consideration from Borrowers
pursuant to this Section 3.2, such Bank shall use reasonable efforts to obtain
the benefits of any refund, deduction or credit for any taxes or other amounts
on account of which such additional consideration has been paid and shall
reimburse Borrowers to the extent, but only to the extent, that such Bank shall
receive a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental charges
(including any taxes imposed on or measured by the total net income of such
Bank) of the United States or any state or subdivision thereof by virtue of any
such deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Bank. If, at the time any audit of such
Bank's income tax return is completed, such Bank determines, based on such
audit, that it was not entitled to the full amount of any refund reimbursed to
Borrowers as aforesaid or that its net income taxes are not reduced by a credit
or deduction for the full amount of taxes reimbursed to Borrowers as aforesaid,
Borrowers, upon demand of such Bank, shall promptly pay to such Bank the amount
so refunded to which such Bank was not so entitled, or the amount by which the
net income taxes of such Bank were not so reduced, as the case may be.
Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrowers, upon at least three (3) Business
Days' prior written notice to
26
such Bank through Agent, may prepay any affected LIBOR Loan in full or convert
such LIBOR Loan to a Base Rate Loan regardless of the Interest Period of any
thereof. Any such prepayment or conversion shall be subject to the prepayment
fees set forth in Section 2.4 hereof.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loan, in the event that Agent shall
have determined in good faith that dollar deposits of the relevant amount for
the relevant Interest Period for such LIBOR Loan are not available to the Bank
in the applicable eurodollar market or that, by reason of circumstances
occurring after the Closing Date affecting such market, adequate and reasonable
means do not exist for ascertaining the LIBOR Rate applicable to such Interest
Period, as the case may be, Agent shall promptly give notice of such
determination to Borrowers and (a) any notice of a new LIBOR Loan (or conversion
of an existing Loan to a LIBOR Loan) previously given by Borrowers and not yet
borrowed (or converted, as the case may be) shall be deemed a notice to make a
Base Rate Loan, and (b) Borrowers shall be obligated either to prepay, or to
convert to a Base Rate Loan, any outstanding LIBOR Loan on the last day of the
then current Interest Period with respect thereto.
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, Borrowers hereby agree to indemnify each Bank against any loss
or expense that such Bank may sustain or incur as a consequence of any default
by Borrowers in payment when due of any amount hereunder in respect of any LIBOR
Loan, including, but not limited to, any loss of profit, premium or penalty
incurred by such Bank in respect of funds borrowed by it for the purpose of
making or maintaining such LIBOR Loan, as determined by such Bank in the
exercise of its sole but reasonable discretion. A certificate as to any such
loss or expense shall be promptly submitted by such Bank to Borrowers and shall,
in the absence of manifest error, be conclusive and binding as to the amount
thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for any Bank to fund any LIBOR Loan that it is committed to make
hereunder with moneys obtained in the eurodollar market, the commitment of such
Bank to fund such LIBOR Loan shall, upon the happening of such event forthwith
be suspended for the duration of such illegality, and such Bank shall by written
notice to Borrowers and Agent declare in good faith that its commitment with
respect to such LIBOR Loan has been so suspended and, if and when such
illegality ceases to exist, such suspension shall cease and such Bank shall
similarly notify Borrowers and Agent. If any such change shall make it unlawful
for any Bank to continue in effect the funding in the applicable eurodollar
market of any LIBOR Loan previously made by it hereunder, such Bank shall, upon
the happening of such event, notify Borrowers, Agent and the other Banks thereof
in writing stating the reasons therefor, and Borrowers shall, on the earlier of
(a) the last day of the then current Interest Period or (b) if required by such
law, regulation or interpretation, on such date as shall be specified in such
notice, either convert such LIBOR Loan to a Base Rate Loan or prepay such LIBOR
Loan to the Banks in full. Any such prepayment or conversion shall be subject to
the prepayment fees described in Section 2.4 hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States; provided,
that if a Bank's
27
use of such funds from outside the United States results in increased reserves
or other events described in Section 3.1 or increased taxes or charges as
described in Section 3.2, Sections 3.1 and 3.2 shall be inapplicable to
Borrowers with respect to such funds from outside the United States.
SECTION 3.7. CAPITAL ADEQUACY. If any Bank shall have reasonably
determined in good faith, after the Closing Date, that the adoption after the
Closing Date of any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital (or the capital of its holding company) as
a consequence of its obligations hereunder to a level below that which such Bank
(or its holding company) could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies or the policies of
its holding company with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time, within fifteen (15) days after
demand by such Bank (with a copy to Agent), Borrowers shall pay to such Bank
such additional amount or amounts as shall compensate such Bank (or its holding
company) for such reduction. Each Bank shall designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods. Failure on the part of any Bank to demand
compensation for any reduction in return on capital with respect to any period
shall not constitute a waiver of such Bank's rights to demand compensation for
any reduction in return on capital in such period or in any other period. The
protection of this Section shall be available to each Bank regardless of any
possible contention of the invalidity or inapplicability of the law, regulation
or other condition that shall have been imposed.
ARTICLE IV. CONDITIONS PRECEDENT
The obligation of each Bank to make the first Loan and of Agent to
issue the first Letter of Credit is subject to Borrowers satisfying each of the
following conditions:
SECTION 4.1. NOTES. Borrowers shall have executed and delivered to each
Bank its Revolving Credit Note.
SECTION 4.2. OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL
DOCUMENTS. Each Borrower shall have delivered to each Bank an officer's
certificate certifying the names of the officers of such Borrower authorized to
sign the Loan Documents, together with the true signatures of such officers and
certified copies of (a) the resolutions of each Borrower evidencing approval of
the execution and delivery of the Loan Documents and the execution of other
Related Writings to which such Borrower, as the case may be, is a party, (b) the
Articles (or Certificate) of Incorporation or similar organizational documents
and all amendments thereto of each Borrower, in each case having been certified,
as of a recent date, by the Secretary of State of the
28
jurisdiction under which such Borrower shall have been organized, and (c) the
By-Laws (or Code of Regulations) or similar organizational documents and all
amendments thereto of each Borrower.
SECTION 4.3. FINANCING STATEMENTS. With respect to the personal
property owned or leased by each Borrower, and each Subsidiary, UCC financing
statements reasonably satisfactory to Agent and the Banks.
SECTION 4.4. LEGAL OPINION. Borrowers shall have delivered to Agent and
the Banks (a) an opinion of counsel for each Borrower, in form and substance
reasonably satisfactory to Agent and the Banks, and (b) local counsel opinions
relating to the laws of Texas, Kansas, Illinois, California, Ohio and Indiana,
each in form and substance reasonably satisfactory to Agent and the Banks.
SECTION 4.5. GOOD STANDING CERTIFICATES. Borrowers shall have delivered
to Agent a good standing certificate for each Borrower, issued on or about the
Closing Date by the Secretary of State in the state(s) where such Borrower is
incorporated or qualified as a foreign corporation.
SECTION 4.6. AGENT AND LEGAL FEES. Borrowers shall have (a) delivered
to Agent the Agent Fee Letter, (b) paid to Agent all fees described in the Agent
Fee Letter that are then due and payable, and (c) paid all reasonable legal fees
and expenses of Agent in connection with the preparation and negotiation of the
Loan Documents.
SECTION 4.7. LIEN SEARCHES. With respect to the property owned or
leased by each Borrower, Borrowers shall have caused to be delivered to each
Bank (a) the results of U.C.C. lien searches, reasonably satisfactory to Agent
and the Banks; (b) the results of federal and state tax lien and judicial lien
searches, reasonably satisfactory to Agent and the Banks; and (c) U.C.C.
termination statements reflecting termination of all financing statements
previously filed by PNC Bank, National Association and any other party having a
security interest in any part of the Collateral or any other property securing
the Secured Debt (or payoff letters, executed by PNC Bank, National Association,
or such other secured party, acceptable to Agent, reflecting a commitment to
execute and deliver U.C.C. termination statements upon receipt of payoff).
SECTION 4.8. INSURANCE CERTIFICATE. Evidence of insurance on XXXXX 27
form, and otherwise reasonably satisfactory to Agent and the Banks, of adequate
personal property and liability insurance of Res-Care and the Subsidiaries,
taken as a whole, with Agent, on behalf of the Banks, listed as loss payee and
additional insured, and evidence reasonably satisfactory to Agent and the Banks
of adequate professional liability insurance of Res-Care and the Subsidiaries,
taken as a whole.
SECTION 4.9. PLEDGE AGREEMENTS. The Pledge Agreements, each to be in
form and substance reasonably satisfactory to Agent and the Banks, and delivery
of the Pledged Securities satisfactory to Agent and the Banks.
SECTION 4.10. [RESERVED]
SECTION 4.11. MINIMUM AVAILABILITY. Borrowers shall provide Agent and
the Banks a Borrower's Certificate dated as of the Closing Date which evidences
to the reasonable
29
satisfaction of Agent and the Banks that at least Twenty-Five Million Dollars
($25,000,000) of Revolving Loan availability exists.
SECTION 4.12. MINIMUM DEBT RATING. Borrowers shall have delivered to
Agent evidence, in form and substance reasonably satisfactory to Agent and the
Banks, that Res-Care has obtained a senior secured debt rating of (a) Ba3 or
better from Xxxxx'x, and (b) BB- or better from Standard & Poor's.
SECTION 4.13. [RESERVED]
SECTION 4.14. SENIOR UNSECURED NOTES. Borrowers shall have delivered to
Agent and the Banks evidence, in form and substance reasonably satisfactory to
Agent, that the issuance of the Senior Unsecured Notes has yielded gross cash
proceeds to the Borrowers in an amount not less than One Hundred Twenty-Five
Million Dollars ($125,000,000).
SECTION 4.15. REAL ESTATE MATTERS. With respect to the Real Property,
Borrowers shall have delivered to Bank each of the following:
(a) two (2) fully executed originals of each Mortgage, in form and
substance satisfactory to Agent and the Banks, for each parcel of the Real
Property;
(b) a Loan Policy of title insurance, ALTA 1970 Form B (amended
10/17/70 and 10/17/84) issued to Agent by a title company acceptable to Bank
(the "Title Company"), in an amount equal to the lesser of the Commitment or the
appraised value of the Real Property insuring such Mortgage to be a valid,
first-priority lien in the Real Property described in such Mortgage, free and
clear of all defects and encumbrances except such matters of record as accepted
by Agent, in its sole discretion, and shown as Permitted Encumbrances in
"Exhibit B" to such Mortgage, with such endorsements and affirmative insurance
as Agent may require, including without limitation:
(i) the deletion of all so-called "standard exceptions" from
such policy;
(ii) a so-called "comprehensive" endorsement in form and
substance acceptable to Agent;
(iii) affirmative insurance coverage regarding access,
compliance with respect to restrictive covenants and any other matters
to which Agent may have objection or require affirmative insurance
coverage; and
(iv) the results of a federal tax lien search in the counties
wherein the Real Property is located and each Borrower has its
principal place of business.
SECTION 4.16. CASH MANAGEMENT PROCEDURES. Borrowers shall have
established cash management procedures, in form and substance reasonably
satisfactory to Agent.
SECTION 4.17. NO MATERIAL ADVERSE CHANGE. No material adverse change,
in the opinion of Agent and the Banks, shall have occurred in the financial
condition, operations or prospects of Res-Care and its Subsidiaries, taken as a
whole, since December 31, 2000.
30
SECTION 4.18. MISCELLANEOUS. Borrowers shall have provided to Agent and
the Banks such other items and shall have satisfied such other conditions as may
be reasonably required by Agent or the Banks.
ARTICLE V. COVENANTS
Each Borrower agrees that so long as the Commitment remains in effect
and thereafter until all of the Secured Debt shall have been paid in full,
Borrowers shall perform and observe, and shall cause each other Company to
perform and observe, each of the following provisions:
SECTION 5.1. INSURANCE. Each Company shall at all times maintain
professional liability insurance and insurance upon its Inventory, Equipment and
other personal and real property in such form, written by such companies, in
such amounts, for such period, and against such risks as may be reasonably
acceptable to Agent, with provisions satisfactory to Agent for payment of all
losses thereunder to Agent, for the benefit of the Banks, and such Company as
their interests may appear (loss payable endorsement in favor of Agent, for the
benefit of the Banks), and, if required by Agent, Borrowers shall deposit the
policies with Agent. Any such policies of insurance shall provide for no fewer
than thirty (30) days prior written notice of cancellation to Agent. Any sums
received by Agent in payment of insurance losses, returns, or unearned premiums
under the policies may, at the option of Agent and the Banks, be applied upon
any Secured Debt whether or not the same is then due and payable, or may be
delivered to Borrowers for the purpose of replacing, repairing, or restoring the
insured property; provided, however, that so long as no Event of Default has
occurred and is then continuing, any sums received by Agent which are less than
Two Hundred Fifty Thousand Dollars ($250,000) per incident, and less than an
aggregate amount for all incidents of Two Million Five Hundred Thousand Dollars
($2,500,000), shall be paid to Borrowers, if Borrowers so request, for the sole
purpose of rebuilding, replacing or restoring the property which has been
damaged or destroyed. Agent is hereby authorized to act as attorney-in-fact for
each Borrower in obtaining, adjusting, settling and canceling such insurance and
indorsing any drafts. In the event of failure to provide such insurance as
herein provided, Agent may, at its option, provide such insurance and Borrowers
shall pay to Agent, upon demand, the cost thereof. Should Borrowers fail to pay
such sum to Agent upon demand, interest shall accrue thereon, from the date of
demand until paid in full, at the Default Rate. Within ten (10) days of Agent's
written request, Borrowers shall furnish to Agent such information about any
Company's insurance as Agent may from time to time reasonably request, which
information shall be prepared in form and detail reasonably satisfactory to
Agent and certified by a Financial Officer of a Borrower.
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate reserves have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its wage obligations
to its employees in compliance with the Fair Labor Standards Act (29 U.S.C.
206-207) or any comparable provisions; and (c) all of its other obligations
calling for the payment of money (except only those so long as and to the extent
that the same shall be contested in good faith and for which adequate reserves
have been established in accordance with GAAP) before such payment becomes
overdue.
31
SECTION 5.3. FINANCIAL STATEMENTS. Borrowers shall furnish to each
Bank:
(a) within thirty (30) days after the end of each month, balance sheets
of Borrowers as of the end of such period and statements of income (loss),
stockholders' equity and cash flow for the month and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail reasonably satisfactory to Agent and certified by a Financial
Officer of Res-Care;
(b) within forty-five (45) days after the end of each of the first
three (3) fiscal quarters of Borrowers, a Form 10-Q, balance sheets of Borrowers
as of the end of such period and statements of income (loss), stockholders
equity and cash flow for such fiscal quarter, all prepared on a Consolidated
basis, in accordance with GAAP, and in form and detail reasonably satisfactory
to Agent and certified by a Financial Officer of Res-Care;
(c) within ninety (90) days after the end of each fiscal year of
Borrowers, a Form 10-K and an annual audit report of Borrowers for that year
prepared on a Consolidated basis, in accordance with GAAP, and in form and
detail reasonably satisfactory to Agent and certified by an independent public
accountant, which report shall include balance sheets and statements of income
(loss), stockholders' equity and cash-flow for that period, together with a
certificate by the accountant setting forth the Default and Events of Default
coming to its attention during the course of its audit or, if none, a statement
to that effect;
(d) concurrently with the delivery of the financial statements in (b)
and (c) above, a Compliance Certificate;
(e) with the delivery of the annual financial statements in (c) above,
a copy of any management report, letter or similar writing furnished to the
Companies by the accountants in respect of the Companies' systems, operations,
financial condition or properties;
(f) within thirty (30) days after the end of each month, a Borrowers'
Certificate prepared by a Financial Officer of Res-Care;
(g) within thirty (30) days after the end of each fiscal year,
pro-forma projections, set forth on a quarterly basis, of Borrowers and their
Subsidiaries on a Consolidated basis for the then current fiscal year, to be in
form acceptable to Agent;
(h) as soon as available, copies of all notices, reports, definitive
proxy or other statements and other documents sent by a Borrower to its
shareholders, to the holders of any of its debentures or bonds or the trustee of
any indenture securing the same or pursuant to which they are issued, or sent by
a Borrower (in final form) to any securities exchange or over the counter
authority or system, or to the Securities and Exchange Commission or any similar
federal agency having regulatory jurisdiction over the issuance of Borrowers'
securities (excluding routine correspondence regarding filings and excluding
preliminary drafts of reports and proxy statements); and
(i) with reasonable promptness, but no longer than thirty (30) days
after any Bank's written request, such other information about the financial
condition, properties and operations of any Company as such Bank may from time
to time reasonably request, which information shall be
32
submitted in form and detail reasonably satisfactory to such Bank and certified
by a Financial Officer of the Company or Companies in question.
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times
maintain a system of accounting, including, without limiting the generality of
the foregoing, appropriate reserves for possible losses and liabilities,
established and administered in accordance with GAAP, and at all reasonable
times (during normal business hours and upon notice to such Company) permit the
Banks to examine that Company's books and records and to make excerpts therefrom
and transcripts thereof.
SECTION 5.5. FRANCHISES. Subject to the provisions of Section 5.12
hereof, each Company shall preserve and maintain at all times its existence,
rights and franchises; provided, however, that Borrowers shall have the right to
cause the dissolution of any Company so long as (i) Borrowers have a business
reason for doing so, such as inactivity of such Company or cost-efficiencies to
be achieved through such dissolution; (ii) the assets of such Company, if any,
shall be distributed to a Borrower; and (iii) Borrowers shall notify the Agent
of such dissolution within thirty (30) days after its occurrence.
SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrowers shall furnish to the Banks (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
Reportable Event with respect to any ERISA Plan has occurred, a statement of the
Financial Officer of such Company, setting forth details as to such Reportable
Event and the action that such Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the PBGC if
a copy of such notice is available to such Company, and (b) promptly after
receipt thereof a copy of any notice such Company, or any member of the
Controlled Group may receive from the PBGC or the Internal Revenue Service with
respect to any ERISA Plan administered by such Company; provided, that this
latter clause shall not apply to notices of general application promulgated by
the PBGC or the Internal Revenue Service. Borrowers shall promptly notify the
Banks of any material taxes assessed, proposed to be assessed or that any
Borrower has reason to believe may be assessed against a Company by the Internal
Revenue Service with respect to any ERISA Plan. As soon as practicable, and in
any event within twenty (20) days, after any Company becomes aware that an ERISA
Event has occurred, such Company shall provide Bank with notice of such ERISA
Event with a certificate by a Financial Officer of such Company setting forth
the details of the event and the action such Company or another Controlled Group
member proposes to take with respect thereto. Borrowers shall, at the request of
Agent or any Bank, deliver or cause to be delivered to Agent or such Bank, as
the case may be, true and correct copies of any documents relating to the ERISA
Plan of any Company.
SECTION 5.7. FINANCIAL COVENANTS.
(a) MINIMUM EBITDA. Borrowers and their Subsidiaries shall not suffer
or permit Consolidated EBITDA at any time, on a Consolidated basis, based upon
Borrowers' and their Subsidiaries financial statements for the most recently
completed fiscal quarter and the three (3) previous fiscal quarters (on a
rolling four (4) quarter basis), to be less than the following:
33
--------------------------------------------------------- ----------------------------------------
Closing Date through September 30, 2002 $53,000,000
--------------------------------------------------------- ----------------------------------------
October 1, 2002 through September 30, 2003 $60,000,000
--------------------------------------------------------- ----------------------------------------
October 1, 2003 and thereafter $70,000,000
--------------------------------------------------------- ----------------------------------------
Provided that notwithstanding anything to the contrary contained in this
Agreement, upon consummation of an Acquisition pursuant to Section 5.13 hereof,
in which EBITDA of such Acquisition for the most recent rolling four (4)
quarters is greater than One Million Dollars ($1,000,000), the covenant levels
set forth in this Section 5.7(a) shall be increased by an amount equal to
eighty-five percent (85%) of the actual EBITDA (as defined in Section 5.13(f))
of the Person or business acquired for the most recently completed fiscal
quarter and the three (3) previous fiscal quarters of such Person or business
acquired, as applicable.
(b) NET WORTH. Borrowers and their Subsidiaries shall not suffer or
permit Consolidated Net Worth at any time, based upon the financial statements
of Borrowers and their Subsidiaries for the most recently completed fiscal
quarter, to be less than the current minimum amount required, which current
minimum amount required shall be One Hundred Fifty-Seven Million Dollars
($157,000,000) on the Closing Date, with such current minimum amount required to
be positively increased by the Increase Amount on the last day of each
succeeding fiscal quarter thereafter. As used herein, the term "Increase Amount"
shall mean an amount equal to seventy-five percent (75%) of Consolidated Net
Earnings for the fiscal quarter then ended with no deduction for losses.
(c) EBITDA TO CONSOLIDATED INTEREST EXPENSE. Borrowers and their
Subsidiaries shall not suffer or permit, at any time, on a Consolidated basis,
the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense to be
less than the following:
--------------------------------------------------------- ----------------------------------------
Closing Date through March 31, 2003 2.50 to 1.00
--------------------------------------------------------- ----------------------------------------
April 1, 2003 through September 30, 2003 2.75 to 1.00
--------------------------------------------------------- ----------------------------------------
October 1, 2003 and thereafter 3.00 to 1.00
--------------------------------------------------------- ----------------------------------------
based upon Borrowers' and their Subsidiaries' financial statements for the most
recently completed fiscal quarter and the three (3) previous fiscal quarters (on
a rolling four (4) quarter basis).
(d) LEVERAGE RATIO. Borrowers and their Subsidiaries shall not suffer
or permit at any time, on a Consolidated basis, the Leverage Ratio to exceed the
following:
--------------------------------------------------------- ----------------------------------------
Closing Date through December 31, 2001 5.00 to 1.00
--------------------------------------------------------- ----------------------------------------
January 1, 2002 through March 31, 2003 4.75 to 1.00
--------------------------------------------------------- ----------------------------------------
April 1, 2003 through September 30, 2003 4.50 to 1.00
--------------------------------------------------------- ----------------------------------------
34
--------------------------------------------------------- ----------------------------------------
October 1, 2003 and thereafter 4.25 to 1.00
--------------------------------------------------------- ----------------------------------------
Provided that notwithstanding anything to the contrary contained in this
Agreement, upon consummation of an Acquisition pursuant to Section 5.13 hereof,
Consolidated EBITDA shall include the actual EBITDA (as defined in Section
5.13(f)) of the Person or business acquired for the most recently completed
fiscal quarter and the three (3) previous fiscal quarters of such Person or
business acquired as applicable.
SECTION 5.8. BORROWING. No Company shall create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any kind;
provided, that this Section shall not apply to (a) the Loans or any other
Indebtedness under this Agreement; (b) any (i) Indebtedness incurred by a
Borrower in connection with any capital lease, so long as the aggregate
principal amount of all such capital leases indebtedness does not exceed Four
Million Dollars ($4,000,000) at any time outstanding; or (ii) Indebtedness
representing the purchase price of assets acquired by any Company after the
Closing Date that is secured by purchase money mortgage or purchase money
security interests, so long as the aggregate principal amount of all such
purchase money indebtedness does not exceed Two Million Dollars ($2,000,000) at
any time outstanding; (c) the Indebtedness existing on the Closing Date as set
forth in SCHEDULE 5.8 hereto and any refinancings, refundings, renewals or
extensions thereof (without increasing, or shortening the maturity of, the
principal amount thereof; provided that the capital leases set forth on Schedule
5.8 may be replaced provided that the aggregate principal amount of the
Indebtedness represented by such replacement capital leases does not exceed
Eight Million Dollars ($8,000,000); (d) loans to a Company from a Company so
long as each such Company is a Borrower and such loan is subordinate to this
Agreement; (e) Indebtedness under any Hedge Agreement; (f) additional unsecured
Indebtedness of any Borrower or any Subsidiary Guarantor, to the extent not
otherwise permitted pursuant to subparts (a) through (e) hereof; provided,
however, that the aggregate principal amount of such Indebtedness shall not
exceed One Million Dollars ($1,000,000) at any time outstanding; (g) any
Indebtedness incurred pursuant to the Senior Unsecured Notes; (h) guarantee
obligations incurred in the ordinary course of business by a Company of
Indebtedness of another Company; (i) guarantee obligations set forth on SCHEDULE
5.8; (j) that certain letter of credit described on SCHEDULE 5.8, (k)
Indebtedness incurred to PNC Bank, National Association for a period not to
exceed fourteen (14) days after the Closing Date in an amount not to exceed the
lesser of (i) Thirty-Seven Million Dollars ($37,000,000) or (ii) one hundred
five percent (105%) of the face amount of letters of credit issued by PNC Bank,
National Association which have not been surrendered and cancelled by the
Closing Date, and (l) Indebtedness incurred to U.S. Bank, National Association
in connection with its corporate credit card program up to a maximum amount of
Three Million Dollars ($3,000,000).
SECTION 5.9. LIENS. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets, including but not limited to any
real property owned by a Company, whether now owned or hereafter acquired;
provided that this Section shall not apply to the following:
(a) Liens for taxes not yet due or that are being actively contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP;
35
(b) other statutory Liens (including statutory landlord Liens)
incidental to the conduct of its business or the ownership or leasing of its
property and assets that (i) were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and (ii) do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(c) Liens on property or assets of a Subsidiary to secure obligations
of such Subsidiary to a Borrower;
(d) purchase money Liens on fixed assets securing the loans, capital
leases, purchase money mortgages or security interests pursuant to Section
5.8(b) hereof, provided that such Lien is limited to the purchase price and only
attaches to the property being acquired;
(e) the Liens existing on the Closing Date as set forth in SCHEDULE 5.9
hereto, provided, that the principal amount secured thereby is not hereafter
increased, and no additional assets become subject to such Lien;
(f) any Lien granted to Agent, for the benefit of the Banks;
(g) any Lien granted to Agent or any of the Banks or their Affiliates
in connection with a Hedge Agreement which Liens the Agent and the Banks agree
may be on a pari passu basis with the Liens granted hereunder;
(h) easements, restrictive covenants or other minor title defects or
irregularities in title of real property not interfering in any material respect
with the use of such property in the business of any Company;
(i) good faith pledges or deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(j) [RESERVED]
(k) any Lien on the Real Property permitted by this Agreement or by any
mortgage or deed of trust executed in connection with this Agreement;
(l) any Lien on Health Care Receivables in connection with Medicare or
Medicaid anti-assignment provisions;
(m) any refinancing, renewal or extension of any Lien permitted
pursuant to the foregoing clauses (a) through (l) of Section 5.9, provided that,
such refinancing, renewal or extension shall not (i) extend to assets or
properties not theretofore covered by such Lien, (ii) secure Indebtedness or
other obligations not otherwise permitted hereby or (iii) increase, or shorten
the maturity of, the principal amount thereof; or
(n) any Lien securing letter of credit obligations pursuant to Section
5.8(k), provided such Liens shall be terminated within fourteen (14) days of the
Closing Date; or
36
(o) any lien, on a pari passu basis, securing credit card obligations
pursuant to Section 5.8(l).
Other than provider agreements with governmental entities and leases of
real property (solely as to any interest of Borrowers' in such real property),
no Company shall enter into any contract or agreement that would prohibit Agent
or the Banks from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of a Company.
SECTION 5.10. REGULATIONS U and X. No Company shall take any action
that would result in any non-compliance of the Loans with Regulations U and X of
the Board of Governors of the Federal Reserve System.
SECTION 5.11. INVESTMENTS AND LOANS. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any stocks,
bonds or securities of any kind, (c) be or become a party to any joint venture
or other partnership without the prior written consent of Agent and the Required
Banks, (d) make or keep outstanding any advance or loan to any Person, or (e) be
or become a Guarantor of any kind, except guarantees only for Indebtedness of
the Companies incurred or permitted pursuant to this Agreement; provided, that
this Section shall not apply to:
(i) any endorsement of a check or other medium of payment for deposit
or collection through normal banking channels or similar transaction in the
normal course of business;
(ii) any investment in direct obligations of the United States of
America or any agency or instrumentality thereof, or obligations backed by the
full faith and credit of the United States of America maturing within twelve
(12) months from the date of such investment;
(iii) any investment in commercial paper or securities that at the time
of such investment is assigned the highest quality rating in accordance with the
rating systems employed by either Xxxxx'x or Standard & Poor's;
(iv) the holding of Subsidiaries listed on SCHEDULE 7.1 hereto;
(v) loans to a Company from a Company so long as each such Company is a
Borrower or a Guarantor of Payment;
(vi) any guaranty of the Indebtedness permitted pursuant to Section
5.8(d) hereof;
(vii) any advance or loan to an officer or employee of a Company made
in the ordinary course of such Company's business, so long as (i) such advances
and loans are in existence as of the Closing Date and are listed on SCHEDULE
5.11, or (ii) all such advances and loans from all Companies extended after the
Closing Date aggregate not more than the maximum principal sum of Five Hundred
Thousand Dollars ($500,000) at any time outstanding;
(viii) the holding of any stock that has been acquired pursuant to an
Acquisition permitted by Section 5.13 hereof;
37
(ix) the creation of a Subsidiary for the purpose of making an
Acquisition permitted by Section 5.13 hereof, so long as such Subsidiary becomes
a Guarantor of Payment promptly following such Acquisition;
(xi) the holding of any Subsidiary as a result of an Acquisition made
pursuant to Section 5.13 hereof so long as such Subsidiary becomes a Guarantor
of Payment promptly following such Acquisition;
(xii) extensions of trade credit in the ordinary course of business;
(xiii) guarantee obligations permitted by Section 5.8(h) and (i);
(xiv) investments acquired by a Borrower in connection with a sale of
assets permitted by Section 5.12;
(xv) investments by a Borrower in Hedge Agreements other than for
speculative purposes;
(xvi) existing or contemplated investments described on SCHEDULE 5.11;
(xvii) demand deposits, time deposits or certificates of deposit
maturing within one (1) year in commercial banks whose obligations are rated
A-1, A or the equivalent or better by Standard & Poor's; or
(xviii) any other investments approved by the Agent and the Required
Banks.
SECTION 5.12. MERGER AND SALE OF ASSETS. No Company shall merge or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business and other than the disposition of obsolete equipment that is no longer
useful in the ordinary course of business, except that, if no Default or Event
of Default shall then exist or immediately thereafter shall begin to exist:
(a) any Subsidiary may merge with (i) a Borrower (provided that such
Borrower shall be the continuing or surviving Person) or (ii) any one or more
Guarantors of Payment, provided that either (A) the continuing or surviving
Person shall be a Wholly-Owned Subsidiary that is a Guarantor of Payment, or (B)
after giving effect to any merger pursuant to this sub-clause (ii), a Borrower
and/or one or more Wholly-Owned Subsidiaries that are Guarantors of Payment
shall own not less than the same percentage of the outstanding Voting Power of
the continuing or surviving Person as such Borrower and/or one or more
Wholly-Owned Subsidiaries (that are Guarantors of Payment) owned of the merged
Subsidiary immediately prior to such merger;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to (i) a Borrower, (ii) any Wholly-Owned Subsidiary that is a
Guarantor of Payment, or (iii) any Guarantor of Payment, of which a Borrower
and/or one or more Wholly-Owned Subsidiaries, that are Guarantors of Payment,
shall own not less than the same percentage of Voting Power as such Borrower
and/or one or more Wholly-Owned Subsidiaries (that are Guarantors of Payment)
then own of the Subsidiary making such sale, lease, transfer or other
disposition; or
38
(c) any Company may sell, lease, transfer or otherwise dispose of any
of its assets to any Person; provided that all of the net proceeds of such sale,
lease or transfer shall, within one year from the date of such sale, lease or
transfer be either (i) invested in the purchase of assets (other than
securities, unless those securities represent equity interests in an entity that
becomes a Guarantor and such purchase of securities is permitted by Section
5.13(e) hereof) to be used by one or more Borrowers in their businesses; or (ii)
if not so invested and if such net proceeds exceed Ten Million Dollars
($10,000,000) in the aggregate, used to permanently prepay the Loans pursuant to
Section 2.7 hereof.
SECTION 5.13. ACQUISITIONS. Unless otherwise agreed to by the Required
Banks, no Company shall effect an Acquisition; provided, however, that a
Borrower may effect an Acquisition without such agreement so long as:
(a) no Default or Event of Default shall then exist or immediately
thereafter shall begin to exist;
(b) the Acquisition shall be made by a Borrower and such Borrower is
the surviving entity of such Acquisition (in the case of a merger, consolidation
or other combination) or the Person to be acquired becomes a Guarantor of
Payment promptly after such Acquisition (in the case of the Acquisition of the
stock (or other equity interest) of a Person);
(c) the business to be acquired shall be similar to, or supportive of,
the lines of business of the Companies;
(d) the Companies shall be in full compliance with the Loan Documents
both prior to and subsequent to such Acquisition;
(e) the aggregate consideration to be paid for all Acquisitions
pursuant to this Section 5.13, shall not exceed an aggregate amount equal to Ten
Million Dollars ($10,000,000) per annum, based on a rolling four (4) quarter
basis; provided that, upon Res-Care's (i) time and attendance system and (ii)
HCS accounts receivable system each becoming fully operational to Agent's
reasonable satisfaction, such Ten Million Dollar ($10,000,000) Acquisition
limitation amount shall be increased to Twenty Million Dollars ($20,000,000);
(f) the Person or business to be acquired has had positive EBITDA, as
hereinafter defined, for the most recently completed fiscal quarter and the
three (3) previous fiscal quarters for which financial statements are available.
As used in this subpart, "EBITDA" means, for any period, in accordance with
GAAP, net earnings for such period plus (i) the aggregate amounts deducted in
determining such net earnings in respect of (a) income taxes, (b) interest
expense, (c) depreciation and amortization charges, (d) the expense associated
with amortization of intangible and other assets, and (ii) the net effect for
cost savings and other charges that will be eliminated following such
Acquisition;
(g) Borrowers shall have provided to Agent and the Banks, at least
thirty (30) days prior to such Acquisition, (i) historical financial statements
of the business to be acquired, (ii) a pro forma financial statement of the
Companies accompanied by a certificate of a Financial Officer of a Borrower
showing pro forma compliance with Section 5.7 hereof, both before and after the
proposed Acquisition; provided that such pro forma compliance with Section
5.7(d) shall be measured by the
39
Leverage Ratio in effect at the time of such pro forma calculation, minus .5;
and (iii) such other information regarding the Acquisition as Agent may
reasonably request; and
(h) Borrowers shall have provided on the date of closing such
Acquisition, evidence satisfactory to Agent in its reasonable discretion, that
Revolving Loan Availability is equal to or greater than Twenty Million Dollars
($20,000,000).
SECTION 5.14. NOTICE. Borrowers shall cause a Financial Officer of
Res-Care to promptly notify Agent and the Banks whenever any Default or Event of
Default may occur hereunder or any representation or warranty made in Article
VII hereof or elsewhere in this Agreement or in any Related Writing may for any
reason cease in any material respect to be true and complete.
SECTION 5.15. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which any Company owns or
operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrowers shall furnish to the Banks, promptly after receipt
thereof, a copy of any notice any Company may receive from any governmental
authority, private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this Section, "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity action, administrative action, investigation
or inquiry whether brought by any governmental authority, private Person or
otherwise. Borrowers shall defend, indemnify and hold Agent and the Banks
harmless against all costs, expenses, claims, damages, penalties and liabilities
of every kind or nature whatsoever (including reasonable attorneys' fees)
arising out of or resulting from the noncompliance of any Company with any
Environmental Law. Such indemnification shall survive any termination of this
Agreement.
SECTION 5.16. AFFILIATE TRANSACTIONS. No Company shall, or shall permit
any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
a Company on terms that are less favorable to such Company or such Subsidiary,
as the case may be, than those that might be obtained at the time in a
transaction with a non-Affiliate; provided, however, that the foregoing shall
not prohibit (a) the payment of customary and reasonable directors' fees to
directors who are not employees of a Company or any Affiliate of a Company; or
(b) any transaction between Borrowers and an Affiliate (if a Guarantor of
Payment) that Borrowers reasonably determine in good faith is beneficial to
Borrowers and their Affiliates as a whole and that is not entered into for the
purpose of hindering the exercise by Agent or the Banks of their rights or
remedies under this Agreement.
SECTION 5.17. CORPORATE NAMES AND LOCATION OF COLLATERAL. No Company
shall change its corporate name, unless, in each case, such Company shall
provide Agent and the Banks with at least thirty (30) days prior written notice
thereof. Other than those listed on
40
SCHEDULE 5.17, no Company shall use trade names, assumed names or fictitious
names without giving Agent and the Banks at least ten (10) days prior written
notice thereof. Borrowers shall also provide Bank with at least ten (10) days
prior written notification of (a) except for movements of Inventory or Equipment
from a Borrower to a Subsidiary of such Borrower, from a Subsidiary of a
Borrower to such Borrower, or from one Borrower to another Borrower, any change
in any location where any Company's Inventory or Equipment is maintained, and
any new locations where any Company's Inventory or Equipment is to be
maintained; (b) any change in the location of the office where any Company's
records pertaining to its Accounts are kept; (c) the location of any new places
of business and the changing or closing of any of its existing places of
business; and (d) any change in any Company's chief executive office. In the
event of any of the foregoing, Borrowers shall promptly execute and deliver to
Agent (or otherwise authenticate if Agent shall require) and deliver to Agent,
and Agent is hereby authorized to file, new UCC financing statements describing
the Collateral and otherwise in form and substance sufficient for recordation
wherever reasonably necessary or appropriate, as determined in Agent's
reasonable discretion, to perfect or continue perfected the security interest of
Agent, for the benefit of the Banks, in the Collateral, based upon such new
places of business or names, and Borrowers shall pay all filing and recording
fees and taxes in connection with the filing or recordation of such financing
statements and shall immediately reimburse Agent therefor if Agent pays the
same. Such amounts shall be Related Expenses hereunder.
SECTION 5.18. FURTHER ASSURANCE. Borrowers will, at no expense to Agent
or any Bank, make and do all such acts and things (including, without
limitation, the delivery to Agent of any Chattel Paper, Document, Instrument, or
other writing or record of any kind the possession of which perfects a security
interest therein, and the taking of any action necessary to give Agent control
of any Chattel Paper, Deposit Account, Investment Property, or Letter of Credit
Rights the control of which perfects a security interest therein) as Agent may
from time to time reasonably require for the better evidencing, perfection,
protection, or validation of, or realization of the benefits of, its security
interest in the Collateral of Borrowers. Without limiting the generality of the
foregoing, Borrowers will, at no expense to Agent or any Bank, upon each request
of Agent:
(i) complete, correct, amend, continue, supplement, sign (or otherwise
authenticate if Agent shall so require), and file in such public offices as
Agent may from time to time deem advisable, such financing statements and
amendments thereto (including, without limitation, continuation statements)
naming Borrowers as debtor and containing such collateral indications
(including, by way of example, but without limitation, "all assets in which
debtor now has or hereafter acquires any rights or any power to transfer rights"
or "all personal property and fixtures in which debtor now has or hereafter
acquires any rights or any power to transfer rights") and other information
(including, without limitation, if Agent shall require, a statement to the
effect that all chattel paper and each and every instrument in which Borrowers
have or at any time acquire any rights or any power to transfer rights has been
assigned to Agent, and any further assignment of all or any part of any such
chattel paper or instrument or any interest therein violates the rights of
Agent) as Agent may from time to time reasonably require,
(ii) sign (or otherwise authenticate if Agent shall so require) and
deliver, and, upon each request of Agent, cause third parties to sign (or
otherwise authenticate if Agent shall so require) and deliver, such affidavits,
assignments, financing statements, indorsements of specific items of the
Collateral of Borrowers, powers of attorney, control agreements, security
agreements, and other
41
writings and other records, as Agent may from time to time
reasonably require, each in form and substance satisfactory to Agent,
(iii) cause all Chattel Paper and Instruments in which Borrowers now
have or hereafter acquire any rights to bear a conspicuous legend, in form and
substance reasonably satisfactory to Agent, indicating that the Chattel Paper or
Instrument, as the case may be, has been assigned to Agent and that further
assignment thereof violates the rights of Agent,
(iv) establish with Agent, or any institution designated by Agent, cash
management procedures reasonably satisfactory to Agent, and
(v) comply with every other requirement deemed reasonably necessary by
Agent for the perfection of its security interest in the Collateral of
Borrowers.
A carbon, photographic, or other reproduction of this Agreement may be
used as a financing statement. Borrowers hereby authorize Agent, on behalf of
the Banks, to file financing statements with respect to the Collateral.
Borrowers hereby authorize Agent or Agent's designated agent (but without
obligation by Agent to do so) to make and do all such acts and things referred
to in this Section 5.18, and to incur Related Expenses (whether prior to, upon,
or subsequent to any Default), and Borrowers shall promptly repay, reimburse,
and indemnify Agent and the Banks for any and all Related Expenses. All Related
Expenses are payable to Agent upon demand therefor; Agent may, at its option,
debit Related Expenses directly to the Revolving Credit Notes or any other
Notes.
SECTION 5.19. CAPITAL DISTRIBUTIONS. Res-Care shall not pay or commit
Res-Care to pay any Capital Distributions at any time.
SECTION 5.20. SUBSIDIARY GUARANTIES, SECURITY AGREEMENTS AND PLEDGES OF
OWNERSHIP INTERESTS. Each Subsidiary created, acquired or held subsequent to the
Closing Date, shall immediately execute and deliver to Agent a Guaranty of
Payment of all of the Secured Debt, and, if requested by Agent, a Security
Agreement covering all assets of such Guarantor as requested by Agent, as
security for the Secured Debt, such agreements to be in form and substance
reasonably acceptable to Agent. In addition, upon request of Agent, Borrowers
shall grant to Agent and the Banks a security interest in all of the issued and
outstanding ownership interests of any Subsidiary owned by a Borrower, such
pledge to be evidenced by a Pledge Agreement or Security Agreement in form and
substance satisfactory to Agent and the Required Banks, with any stock
certificates to be delivered to Agent for the benefit of the Banks.
SECTION 5.21. AMENDMENT OF ARTICLES OF INCORPORATION OR REGULATIONS. No
Company shall amend its Articles of Incorporation, or charter or equivalent
documents without the prior written consent of Agent if such amendment would
have a negative impact on Agent or the Banks in connection with this Agreement.
SECTION 5.22. SALE-LEASEBACK TRANSACTIONS. Except as set forth on
SCHEDULE 5.22, no Company shall enter into any Sale-Leaseback Transaction
whereby the aggregate amount of all such Sale-Leaseback Transactions would
exceed Five Million Dollars ($5,000,000), until the Secured Debt is paid in
full.
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SECTION 5.23. PREPAYMENT OF INDEBTEDNESS. Borrowers shall not be
permitted to use Revolving Loans to prepay the Senior Unsecured Notes or any
Subordinated Indebtedness.
SECTION 5.24 MOST FAVORED BANKS. If Borrowers or any other Company
shall have other Indebtedness (except for such other Indebtedness of Borrowers
or any other Company the aggregate outstanding commitments for which do not
exceed One Million Dollars ($1,000,000) or with or for the benefit of Persons
with commitments to provide loans or other financial accommodations to a
Borrower or any other Company in an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000)), with any financial or restrictive covenants or
events of default which are more restrictive than, or in addition to, the
financial or negative covenants or Defaults or Events of Default contained in
this Agreement, such financial or negative covenants or events of default shall
be, in Agent and the Banks' reasonable discretion, deemed to be set forth in
this Agreement.
ARTICLE VI. SECURITY
SECTION 6.1. SECURITY INTEREST IN COLLATERAL. In consideration of and
as security for the full and complete payment of all of the Secured Debt, each
Borrower hereby creates and provides for in favor of Agent for the benefit of
the Banks, and grants to Agent for the benefit of the Banks, a security interest
in and an assignment of the Collateral of that Borrower. The "Collateral" of
Borrowers shall mean, collectively,
(a) all Accounts, all Chattel Paper, all Deposit Accounts, all
Documents, all Equipment, all fixtures, all General Intangibles, all
Instruments, all Inventory, all Investment Property, all letters of credit, all
Letter of Credit Rights, all Receivables, and all Supporting Obligations in
which Borrowers now have or hereafter acquire any rights or any power to
transfer rights;
(b) all Commercial Tort Claims in which Borrowers now have rights or
any power to transfer rights and which are described on SCHEDULE 7.4 hereto;
(c) all property, tangible or intangible, in which Borrowers now have
or hereafter acquire any rights or any power to transfer rights and which now or
hereafter is in the control (by Document or otherwise) or possession of the
Banks and Agent or any of them or is owed by the Banks and Agent or any of them
to Borrowers, including, without limitation, any Cash Collateral Account and all
other Deposit Accounts; and
(d) all accessions to and Products of all or any part of the goods
hereinbefore described, all replacements and substitutions for, and all
additions to, and all Proceeds of, all or any part of the property described in
the foregoing clauses (a), (b), and (c) or any other accessions, Products,
replacements, substitutions, additions, or Proceeds in which that Borrower now
has or hereafter acquires any rights or any power to transfer rights.
As to any property that would be included among the Collateral of
Borrowers on the date hereof but for the fact that such property does not
presently exist or the fact that Borrowers do not presently have any rights in
such property or any power to transfer rights therein, such property shall
43
be included among the Collateral of Borrowers, and Agent's security interest in
such property shall automatically attach thereto, immediately when such property
comes into existence and Borrowers acquire any rights therein or any rights to
transfer rights therein, in each case without the making or doing of any further
or other act or thing. If, at any time after the date hereof, Borrowers shall
acquire any rights or any power to transfer rights in any Commercial Tort Claim,
or if the UCC shall be amended to include within its scope any property that,
prior to giving effect to such amendment, would not be included among the
Collateral of Borrowers, then, and in each such case, Borrowers shall forthwith
notify Agent and shall execute and deliver to Agent (or otherwise authenticate
if Agent shall require) such security agreements and other writings or records
as Agent shall require, each in form and substance satisfactory to Agent, for
the purpose of granting in favor of Agent, for the benefit of Agent and the
Banks, as security for the Secured Debt, a perfected first priority security
interest in and assignment of such Commercial Tort Claim or other property and
all proceeds thereof, free and clear of any Lien other than any in favor of
Agent. Upon the granting of such security interest, such Commercial Tort Claim
or other property, as the case may be, and all Proceeds thereof shall be deemed
to be included among the Collateral of Borrowers.
SECTION 6.2. COLLECTIONS AND RECEIPT OF PROCEEDS BY BORROWERS. (a)
Prior to exercise by Agent and the Banks of their rights under Article IX of
this Agreement, both (i) the lawful collection and enforcement of all of each
Borrower's Receivables, and (ii) the lawful receipt and retention by each
Borrower of all Proceeds of all of such Borrower's Receivables and Inventory
shall be as the agent of the Banks. Prior to the Closing Date, a Cash Collateral
Account shall be opened by Borrowers at the main office of Agent or its designee
and all such lawful collections of Borrowers' Receivables and such Proceeds of
Borrowers' Receivables and Inventory shall be remitted daily by Borrowers to
Agent or its designee in the form in which they are received by Borrowers,
either by mailing or by delivering such collections and Proceeds to Agent or its
designee, appropriately endorsed for deposit in the Cash Collateral Account.
Borrowers shall not commingle such collections or Proceeds with any of
Borrowers' other funds or property, but shall hold such collections and Proceeds
separate and apart therefrom upon an express trust for Agent for the benefit of
the Banks. In such case, Agent may, in its sole discretion, at any time and from
time to time, apply all or any portion of the account balance in the Cash
Collateral Account as a credit against (a) the outstanding principal or interest
of any Note or Notes that is then due and payable to the Banks, or (b) any other
Secured Debt. If any remittance shall be dishonored, or if, upon final payment,
any claim with respect thereto shall be made against Agent or its designee on
its warranties of collection, Agent may charge the amount of such item against
the Cash Collateral Account or any other Deposit Account maintained by Borrowers
with Agent or its designee or with any other Bank, and, in any event, retain the
same and such Borrower's interest therein as additional security for the Secured
Debt. Agent may, in its sole discretion, at any time and from time to time,
release funds from the Cash Collateral Account to Borrowers for use in
Borrowers' business. Notwithstanding anything in this Section 6.2 to the
contrary, prior to the exercise by Agent and the Banks of their rights under
Article IX, Borrowers shall have the right to withdraw balances in the cash
collateral account that exceed amounts then due and payable to the Banks for
outstanding principal or interest on the Notes or for other Secured Debt. The
balance in the Cash Collateral Account may also be withdrawn by Borrowers upon
termination of this Agreement and payment in full of all of the Secured Debt.
Borrowers shall cause all remittances representing collections and Proceeds of
Collateral to be mailed to a lock box in Louisville, Kentucky, to which Agent or
its designee shall have access for the processing of such items in accordance
with the provisions, terms and conditions of Agent's customary lock box
agreement.
44
Agent shall at all times have the rights and remedies of a secured
party under the UCC, in addition to the rights and remedies of a secured party
provided elsewhere within this Agreement, in any other writing executed by
Borrower or otherwise provided by law. Agent, or Agent's designated agent, is
hereby constituted and appointed each Borrower's attorney-in-fact with authority
and power to endorse any and all instruments, documents, and chattel paper upon
such Borrower's failure to do so. Such authority and power, being coupled with
an interest, shall be (a) irrevocable until all of the Secured Debt is paid, (b)
exercisable by Agent at any time and without any request upon such Borrower by
Agent to so endorse, and (c) exercisable in Agent's name or such Borrower's
name. Each Borrower hereby waives presentment, demand, notice of dishonor,
protest, notice of protest, and any and all other similar notices with respect
thereto, regardless of the form of any endorsement thereof. Neither Agent or the
Banks shall be bound or obligated to take any action to preserve any rights
therein against prior parties thereto.
SECTION 6.3. COLLECTIONS AND RECEIPT OF PROCEEDS BY AGENT. Each
Borrower hereby constitutes and appoints Agent, or Agent's designated agent, as
such Borrower's attorney-in-fact to exercise, at any time, all or any of the
following powers which, being coupled with an interest, shall be irrevocable
until the complete and full payment of all of the Secured Debt:
(a) to receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in Agent's name or such Borrower's name, any and all of
such Borrower's cash, instruments, chattel paper, documents, Proceeds of
Receivables, Proceeds of Inventory, collection of Receivables, and any other
writings relating to any of the Collateral;
(b) to transmit to Account Debtors, on any or all of such Borrower's
Receivables, notice of assignment to Agent for the benefit of the Banks thereof,
and Agent's security interest for the benefit of the Banks therein, and to
request from such Account Debtors at any time, in Agent's name or in such
Borrower's name, information concerning such Borrower's Receivables and the
amounts owing thereon;
(c) after the occurrence and during the continuance of an Event of
Default, to transmit to purchasers of any or all of such Borrower's Inventory,
notice of Agent's security interest therein, and to request from such purchasers
at any time, in Agent's name or in such Borrower's name, information concerning
such Borrower's Inventory and the amounts owing thereon by such purchasers;
(d) after the occurrence and during the continuance of an Event of
Default, to notify and require Account Debtors on such Borrower's Receivables
and purchasers of such Borrower's Inventory to make payment of their
indebtedness directly to Agent;
(e) after the occurrence and during the continuance of an Event of
Default, to take or bring, in Agent's name or such Borrower's name, all steps,
actions, suits, or proceedings deemed by Agent necessary or desirable to effect
the receipt, enforcement, and collection of the Collateral; and
(f) after the occurrence and during the continuance of an Event of
Default, to accept all collections in any form relating to the Collateral,
including remittances which may reflect deductions, and to deposit the same,
into such Borrower's Cash Collateral Account or, at the option of Agent, to
apply them as a payment against any Note or Notes or any other Secured Debt.
45
SECTION 6.4. USE OF INVENTORY AND EQUIPMENT. Until an Event of Default
shall occur, each Borrower may (a) retain possession of and use its Inventory
and Equipment in any lawful manner not inconsistent with this Agreement or with
the terms, conditions, or provisions of any policy of insurance thereon; (b)
sell or lease its property consisting solely of Inventory in the ordinary course
of business; provided, however, that a sale or lease in the ordinary course of
business does not include a transfer in partial or total satisfaction of an
Indebtedness, except for transfers in satisfaction of partial or total purchase
money prepayments by a buyer in the ordinary course of such Borrower's business;
and (c) use and consume any raw materials or supplies, the use and consumption
of which are necessary in order to carry on such Borrower's business.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants that the statements set forth in
this Article VII are true, correct and complete.
SECTION 7.1. EXISTENCE; SUBSIDIARIES; FOREIGN QUALIFICATION. Each
Company is an entity duly organized, validly existing, and in good standing
under the laws of its state of formation and is duly qualified and authorized to
do business and is in good standing as a foreign entity in the jurisdictions set
forth opposite its name on SCHEDULE 7.1 hereto, which are all of the states or
jurisdictions where the character of its property or its business activities
makes such qualification necessary, except where the failure to so qualify will
not cause or result in a Material Adverse Effect. SCHEDULE 7.1 hereto sets forth
each Company and each Person that is an owner of such Company, its name as set
forth in its organization documents, its state of formation, its organizational
identification number, its relationship to a Borrower and its capitalization,
and its principal place of business (or, if the Company has no single principal
place of business, its multiple places of business). Except as set forth in
SCHEDULE 7.1 hereto, no Company has, at any time during the period of five (5)
consecutive years ending on the date of this Agreement, used or done business
under, or been known among creditors by, any name other than the name of such
Company set forth in such Company's organization documents.
SECTION 7.2. AUTHORITY. Each Borrower has the right and power and is
duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Borrower is a party have
been duly authorized and approved by such Borrower's board of directors,
members, managers or general partners and are the valid and binding obligations
of such Borrower, enforceable against such Borrower in accordance with their
respective terms, subject to the effects of (a) bankruptcy, insolvency,
reorganization, moratorium and similar laws effecting creditors rights generally
and (b) general equitable principles (regardless of whether enforcement is
sought in equity or at law). The execution, delivery and performance of the Loan
Documents will not conflict with nor result in any breach in any of the
provisions of, or constitute a default under, or result in the creation of any
Lien (other than Liens permitted under Section 5.9 of this Agreement) upon any
assets or property of any Borrower under the provisions of, such Borrower's
organization documents, or any material agreement.
SECTION 7.3. COMPLIANCE WITH LAWS. Except where the failure would not
have a Material Adverse Effect on its business or operations, each Company:
46
(a) holds all material permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from federal,
state, local, and foreign governmental and regulatory bodies necessary for the
conduct of its business, including the operation of each Facility, and is in
material compliance with all applicable laws relating thereto;
(b) is in material compliance with all federal, state, local, or
foreign applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices; and
(c) is not in violation of or in default under any material agreement
to which it is a party or by which its assets are subject or bound.
SECTION 7.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS. No Company has
any rights in or any power to transfer rights in any Commercial Tort Claim
except for any such claim described on SCHEDULE 7.4 to this Agreement or in any
security agreement executed and delivered to Agent by such Company after the
date of this Agreement as pursuant to this Agreement or another Related Writing.
Except as disclosed on SCHEDULE 7.4 hereto, as to any of which, if determined
adversely, would not have a Material Adverse Effect, there are (a) no lawsuits,
actions, investigations, or other proceedings pending or, to the knowledge of
each Company, threatened against any Company, or in respect of which any Company
may have any liability, in any court or before any governmental authority,
arbitration board, or other tribunal, (b) no orders, writs, injunctions,
judgments, or decrees of any court or government agency or instrumentality to
which any Company is a party or by which the property or assets of any Company
are bound, and (c) no grievances, disputes, or controversies outstanding with
any union or other organization of the employees of any Company, or to the
knowledge of each Company, threats of work stoppage, strike, or pending demands
for collective bargaining.
SECTION 7.5. TITLE TO ASSETS. Each Company has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof. SCHEDULE 7.5
hereof sets forth, as of the date hereof,
(a) the name, address, and telephone number of each Person with which
any Company maintains any Deposit Account, the jurisdiction under the laws of
which such Person is organized, and the number of each such Deposit Account; and
(b) the number and available amount of each letter of credit under
which any Company is a beneficiary, and the name, address, and telephone number
of each issuer and each confirmer, if any, of each such letter of credit.
SECTION 7.6. LOCATION. SCHEDULE 7.6 hereto sets forth, for each
Borrower, as of the date hereof:
(a) the location of each of its chief executive offices existing during
the period of five (5) consecutive years ending upon and including the date of
this Agreement; and
(b) each location at which a Borrower currently maintains a place of
business.
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SECTION 7.7. LIENS AND SECURITY INTERESTS. On and after the Closing
Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement outstanding covering any personal property of any Company,
other than a financing statement in favor of Agent, for the benefit of the
Banks; (b) there is no mortgage outstanding covering any real property owned by
any Company other than a mortgage in favor of Agent for the benefit of the Banks
as permitted by Section 5.9; and (c) no real or personal property of any Company
is subject to any security interest or Lien of any kind other than any security
interest or Lien that may be granted to Agent, for the benefit of the Banks. No
Company has entered into any contract or agreement that exists on or after the
Closing Date that would prohibit Agent or the Banks from acquiring a security
interest, mortgage or other Lien on, or a collateral assignment of, any of the
property or assets of any Company.
SECTION 7.8. TAX RETURNS. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been filed and all taxes,
assessments, fees and other governmental charges that are due and payable have
been paid, except as otherwise permitted herein or where the failure to do so
does not and will not cause or result in a Material Adverse Effect. The
provision for taxes on the books of each Company is adequate for all years not
closed by applicable statutes and for the current fiscal year.
SECTION 7.9. ENVIRONMENTAL LAWS. Each Company is in material compliance
with any and all Environmental Laws applicable to it or its properties,
including, without limitation, all Environmental Laws in all jurisdictions in
which any Company owns or operates, or has owned or operated, a facility or
site, arranges or has arranged for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts or has accepted for transport
any hazardous substances, solid waste or other wastes or holds or has held any
interest in real property or otherwise. No litigation or proceeding arising
under, relating to or in connection with any Environmental Law is pending or, to
the best knowledge of each Company, threatened, against any Company, any real
property in which any Company holds or has held an interest or any past or
present operation of any Company. No release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring, or has occurred
(other than those that are currently being cleaned up in accordance with
Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in violation of any
Environmental Law. As used in this Section, "litigation or proceeding" means any
demand, claim, notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
Person or otherwise.
SECTION 7.10. CONTINUED BUSINESS. Except for the termination of
business relationships upon the completion of services performed by any Company
in the ordinary course of business, there exists no actual, pending, or, to each
Borrower's knowledge, any threatened termination, cancellation or limitation of,
or any modification or change in the business relationship of any Company and
any customer or supplier, or any group of customers or suppliers, whose
purchases or supplies, individually or in the aggregate, are material to the
business of the Companies, taken as a whole, and there exists no present
condition or state of facts or circumstances that would materially affect
adversely the Companies, taken as a whole, in any respect or prevent the
Companies, taken as a whole, from conducting such business or the transactions
contemplated by this Agreement in substantially the same manner in which it was
previously conducted.
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SECTION 7.11. EMPLOYEE BENEFITS PLANS. SCHEDULE 7.11 hereto identifies
each ERISA Plan. No ERISA Event has occurred or is expected to occur with
respect to an ERISA Plan. Full payment has been made of all material amounts
which a Controlled Group member is required, under applicable law or under the
governing documents, to have been paid as a contribution to or a benefit under
each ERISA Plan. The liability of each Controlled Group member with respect to
each ERISA Plan has been fully funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements to the extent required by GAAP. No changes have occurred or
are expected to occur that would cause a material increase in the cost of
providing benefits under any ERISA Plan. With respect to each ERISA Plan that is
intended to be qualified under Code Section 401(a): (a) the ERISA Plan and any
associated trust operationally comply with the applicable requirements of Code
Section 401(a), (b) the ERISA Plan and any associated trust have been amended to
comply with all such requirements as currently in effect, other than those
requirements for which a retroactive amendment can be made within the "remedial
amendment period" available under Code Section 401(b) (as extended under
Treasury Regulations and other Treasury pronouncements upon which taxpayers may
rely), (c) the ERISA Plan and any associated trust have received a favorable
determination letter from the Internal Revenue Service stating that the ERISA
Plan qualifies under Code Section 401(a), that the associated trust qualifies
under Code Section 501(a) and, if applicable, that any cash or deferred
arrangement under the ERISA Plan qualifies under Code Section 401(k), unless the
ERISA Plan was first adopted at a time for which the above-described "remedial
amendment period" has not yet expired, (d) the ERISA Plan currently satisfies
the requirements of Code Section 410(b), without regard to any retroactive
amendment that may be made within the above-described "remedial amendment
period", and (e) no contribution made to the ERISA Plan is subject to an excise
tax under Code Section 4972. With respect to any Pension Plan, the "accumulated
benefit obligation" of Controlled Group members with respect to the Pension Plan
(as determined in accordance with Statement of Accounting Standards No. 87,
"Employers' Accounting for Pensions") does not exceed the fair market value of
Pension Plan assets. No Controlled Group Member has or has had in the past, an
obligation to contribute to a Multiemployer Plan.
SECTION 7.12. CONSENTS OR APPROVALS. No material consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person is required to be obtained or
completed by any Borrower in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed.
SECTION 7.13. SOLVENCY. The Borrowers, taken as a whole, have received
consideration that is the reasonable equivalent value of the obligations and
liabilities that such Borrowers have incurred to the Banks. No Borrower is
insolvent as defined in any applicable state or federal statute, nor will the
Borrowers, taken as a whole, be rendered insolvent by the execution and delivery
of the Loan Documents to Agent and the Banks. No Borrower is engaged or about to
engage in any business or transaction for which the assets retained by it are or
will be an unreasonably small amount of capital, taking into consideration the
obligations to Agent and the Banks incurred hereunder. No Borrower intends to,
nor does it believe that it will, incur debts beyond its ability to pay such
debts as they mature.
SECTION 7.14. FINANCIAL STATEMENTS. The December 31, 2000, audited
financial statements and the July 31, 2001, internally prepared financial
statements of Borrowers,
49
furnished to Agent and the Banks, are true and complete, have been prepared in
accordance with GAAP, and fairly present the Companies' financial condition as
of the dates of such financial statements and the results of their operations
for the periods then ending. Since the dates of such statements, there has been
no material adverse change in any Company's consolidated financial condition,
properties or business nor any change in any Company's accounting procedures or
development or event that has or could reasonably be expected to have a Material
Adverse Effect.
SECTION 7.15. REGULATIONS. No Borrower is engaged principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) nor the
use of the proceeds of any Loan will violate, or be inconsistent with, the
provisions of Regulation U or X of said Board of Governors.
SECTION 7.16. MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 7.16
hereto, no Company is a party to any (a) debt instrument; (b) lease (capital,
operating or otherwise), whether as lessee or lessor thereunder; (c) contract,
commitment, agreement, or other arrangement involving the purchase or sale of
any inventory by it, or the license of any right to or by it; (d) contract,
commitment, agreement, or other arrangement with any of its Affiliates; (e)
management or employment contract or contract for personal services with any of
its Affiliates that is not otherwise terminable at will or on less than ninety
(90) days' notice without liability; (f) collective bargaining agreement; or (g)
other contract, agreement, understanding, or arrangement that if violated,
breached, or terminated for any reason, would have or would be reasonably
expected to have a Material Adverse Effect.
SECTION 7.17. INTELLECTUAL PROPERTY. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
necessary for the conduct of its business without any known conflict with the
rights of others.
SECTION 7.18. INSURANCE. Each Company maintains insurance as required
by Section 5.1 hereof. SCHEDULE 7.18 hereto sets forth all insurance carried by
the Companies, setting forth in detail the amount and type of such insurance.
SECTION 7.19. ACCURATE AND COMPLETE STATEMENTS. Neither the Loan
Documents nor any written statement made by any Company in connection with any
of the Loan Documents contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or in the
Loan Documents not misleading. After due inquiry by each Borrower, there is no
known fact that any Company has not disclosed to Agent and the Banks that has or
would have a Material Adverse Effect.
SECTION 7.20. DEFAULTS. No Default or Event of Default exists
hereunder, nor will any begin to exist immediately after the execution and
delivery hereof.
SECTION 7.21. REAL PROPERTY. SCHEDULE 7.21 attached hereto sets forth,
as of the date hereof, the legal description, address or tax parcel number of
each parcel of Real Property. With respect to each parcel of the Real Property:
50
(a) Such parcel has adequate water, gas and electrical supply, storm
and sanitary sewage facilities, other required public utilities, fire and police
protection, and means of access (both physical and legal) between such parcel
and public highways;
(b) The contemplated use and accessory use of such parcel will not
violate (i) any laws, ordinances or regulations (including subdivision, zoning,
building, environmental protection and wetland protection laws) or (ii) any
building permits, restrictions of record, or agreements affecting such parcel or
any part thereof;
(c) Neither the zoning authorizations, approvals or variances, nor any
other right to construct or use of such parcel is to any extent dependent upon
or related to any real estate other than another parcel of the Real Property;
(d) All consents, licenses or permits and all other authorizations or
approvals required for operation of such parcel as contemplated have been
obtained or will be obtained prior to the Closing Date, and all laws relating to
the operation of such improvements have been complied with;
(e) The lawful use and operation of such parcel does not require any
variances or special use permits;
(f) Such parcel is taxed separately without regard to any other
property, and for all purposes such parcel may be mortgaged, conveyed and
otherwise dealt with as an independent parcel;
(g) No company has entered into any leases, subleases, or other
arrangements for occupancy of space within such parcel, other than the leases
described in SCHEDULE 7.21 hereof and Borrowers have delivered to Agent a true,
correct and complete copy of each lease, sublease, or other arrangement so
described;
(h) Each lease, sublease or other arrangement set forth on SCHEDULE
7.21 hereof, is in full force and effect, and, except as described on SCHEDULE
7.21 hereof, or as otherwise disclosed to Agent in writing after that hereof,
there is not continuing any material default on the part of any such lease,
sublease or other arrangement; and
(i) No building or other improvements encroach upon any property line,
building line, set back line, side yard line, or any recorded or visible
easement (or other easement of which any company is aware or has reason to
believe may exist) with respect to such parcel.
ARTICLE VIII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 8.1. PAYMENTS. If the principal of any Note shall not be paid
in full punctually when due and payable, or the interest on any Note or any
commitment or other fee shall not be paid in full within three (3) days of the
date upon which such interest or such commitment or other fee is due and
payable.
51
SECTION 8.2. SPECIAL COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe Sections 5.7, 5.9, 5.11, 5.12, 5.13, 5.19,
5.21 and 5.22 hereof.
SECTION 8.3. OTHER COVENANTS. If any Company or any Obligor shall fail
or omit to perform and observe any agreement or other provision (other than
those referred to in Sections 8.1 or 8.2 hereof) contained or referred to in
this Agreement or any Related Writing that is on such Company's or Obligor's
part, as the case may be, to be complied with, and that Default shall not have
been fully corrected within thirty (30) days (or fifteen (15) days in the case
of Section 5.8) after the giving of written notice thereof to Borrowers by Agent
or any Bank that the specified Default is to be remedied.
SECTION 8.4. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company or any
Obligor to the Banks or any thereof or any other holder of any Note, shall be
false or erroneous in any material respect to the extent such representation or
warranty is not otherwise modified by a materiality concept.
SECTION 8.5. CROSS DEFAULT. If any Company or any Obligor shall default
in the payment of principal or interest due and owing upon any other obligation
for borrowed money in excess of the aggregate, for all such obligations for all
such Companies and Obligors, of Five Million Dollars ($5,000,000) beyond any
period of grace provided with respect thereto or in the performance or
observance of any other agreement, term or condition contained in any agreement
under which such obligation is created.
SECTION 8.6. ERISA DEFAULT. The occurrence of one or more ERISA Events
that the Required Banks determine could have a Material Adverse Effect.
SECTION 8.7. CHANGE IN CONTROL. If any Change of Control shall occur.
SECTION 8.8. MONEY JUDGMENT. A final judgment or order for the payment
of money shall be rendered against any Company or any Obligor by a court of
competent jurisdiction, that remains unpaid or unstayed and undischarged for a
period (during which execution shall not be effectively stayed) of thirty (30)
days after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments for all such Companies and Obligors shall exceed
Five Million Dollars ($5,000,000).
SECTION 8.9 HEALTHCARE EVENT. If a Healthcare Event should at any time
occur.
SECTION 8.10. VALIDITY OF LOAN DOCUMENTS. (a) Any material provision,
in the sole opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid and binding and enforceable against any Borrower or any
Guarantor of Payment; (b) the validity, binding effect or enforceability of any
Loan Document against any Borrower or any Guarantor of Payment shall be
contested by any Company or any other Obligor; (c) any Borrower or any Guarantor
of Payment shall deny that it has any or further liability or obligation
thereunder; or (d) any Loan Document shall be terminated, invalidated or set
aside, or be declared ineffective or inoperative or in any way cease to give or
provide to Agent and the Banks the benefits purported to be created thereby.
52
SECTION 8.11. SOLVENCY. If any Company or any Obligor shall (a)
discontinue business (except for a consolidation with other Borrowers permitted
pursuant to Section 5.12 hereof or a dissolution permitted pursuant to Section
5.5 hereof), (b) generally not pay its debts as such debts become due, (c) make
a general assignment for the benefit of creditors, (d) apply for or consent to
the appointment of a receiver, a custodian, a trustee, an interim trustee or
liquidator of all or a substantial part of its assets, (e) be adjudicated a
debtor or have entered against it an order for relief under Title 11 of the
United States Code, as the same may be amended from time to time, (f) file a
voluntary petition in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief of debtors, or admit
(by answer, by default or otherwise) the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of debtors, (g) suffer
or permit to continue unstayed and in effect for sixty (60) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction, that
approves a petition seeking its reorganization or appoints a receiver,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or (h) take, or omit to take, any action in order thereby to
effect any of the foregoing.
ARTICLE IX. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 9.1. OPTIONAL DEFAULTS. If any Event of Default referred to in
Section 8.1, 8.2., 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof shall occur,
the Required Banks shall have the right, in their discretion, by directing
Agent, on behalf of the Banks, to give written notice to Borrowers, to:
(a) terminate the Commitment and the credits hereby established, if not
previously terminated, and, immediately upon such election, the obligations of
the Banks, and each thereof, to make any further Loan and the obligation of
Agent to issue any Letter of Credit hereunder immediately shall be terminated,
and/or
(b) accelerate the maturity of all of the Secured Debt (if the Secured
Debt is not already due and payable), whereupon all of the Secured Debt shall
become and thereafter be immediately due and payable in full without any
presentment or demand and without any further or other notice of any kind, all
of which are hereby waived by each Borrower.
SECTION 9.2. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 8.11 hereof shall occur:
(a) all of the Commitment and the credits hereby established shall
automatically and immediately terminate, if not previously terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan, nor
shall Agent be obligated to issue any Letter of Credit hereunder, and
(b) the principal of and interest then outstanding on all Notes, and
all of the Secured Debt to the Banks, shall thereupon become and thereafter be
immediately due and payable in full (if the
53
Secured Debt is not already due and payable), all without any presentment,
demand or notice of any kind, which are hereby waived by each Borrower.
SECTION 9.3. LETTERS OF CREDIT. If the maturity of the Notes is
accelerated pursuant to Sections 9.1 or 9.2 hereof, Borrowers shall immediately
deposit with Agent, as security for any Borrower's obligations to reimburse
Agent and the Banks for any then outstanding Letters of Credit, cash equal to
the sum of the aggregate undrawn balance of any then outstanding Letters of
Credit. Agent and the Banks are hereby authorized, at their option, to deduct
any and all such amounts from any deposit balances then owing by any Bank to or
for the credit or account of any Company, as security for any Borrower's
obligations to reimburse Agent and the Banks for any then outstanding Letters of
Credit.
SECTION 9.4. OFFSETS. If there shall occur or exist any Event of
Default referred to in Section 8.11 hereof or if the maturity of the Notes is
accelerated pursuant to Section 9.1 or 9.2 hereof, each Bank shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Secured Debt then owing by any Borrower to that Bank
(including, without limitation, any participation purchased or to be purchased
pursuant to Section 9.5 hereof), whether or not the same shall then have
matured, any and all deposit balances and all other Indebtedness then held or
owing by that Bank to or for the credit or account of any Borrower, all without
notice to or demand upon any Borrower or any other Person, all such notices and
demands being hereby expressly waived by each Borrower.
SECTION 9.5. EQUALIZATION PROVISION. Each Bank agrees with the other
Banks that if it, at any time, shall obtain any Advantage over the other Banks
or any thereof in respect of the Debt (except under Article III hereof), it
shall purchase from the other Banks, for cash and at par, such additional
participation in the Debt as shall be necessary to nullify the Advantage. If any
such Advantage resulting in the purchase of an additional participation as
aforesaid shall be recovered in whole or in part from the Bank receiving the
Advantage, each such purchase shall be rescinded, and the purchase price
restored (but without interest unless the Bank receiving the Advantage is
required to pay interest on the Advantage to the Person recovering the Advantage
from such Bank) ratably to the extent of the recovery. Each Bank further agrees
with the other Banks that if it at any time shall receive any payment for or on
behalf of any Borrower on any Indebtedness owing by such Borrower to that Bank
by reason of offset of any deposit or other Indebtedness, it will apply such
payment first to any and all Debt owing by such Borrower to that Bank
(including, without limitation, any participation purchased or to be purchased
pursuant to this Section or any other Section of this Agreement). Each Borrower
agrees that any Bank so purchasing a participation from the other Banks or any
thereof pursuant to this Section may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank was a direct creditor of Borrower in the amount of such
participation.
SECTION 9.6. COLLATERAL. Upon the occurrence of an Event of Default and
at all times thereafter, Agent and the Banks may require Borrowers to assemble
the Collateral, which each Borrower agrees to do, and make it available to Agent
and the Banks at a reasonably convenient place to be designated by Agent. Agent
and the Banks may, with or without notice to or demand upon such Borrower and
with or without the aid of legal process, make use of such force as may be
necessary to enter any premises where the Collateral, or any thereof, may be
found and to take possession thereof (including anything found in or on the
Collateral that is not specifically described
54
in this Agreement, each of which findings shall be considered to be an accession
to and a part of the Collateral) and for that purpose may pursue the Collateral
wherever the same may be found, without liability for trespass or damage caused
thereby to such Borrower. After any delivery or taking of possession of the
Collateral, or any thereof, pursuant to this Agreement, then, with or without
resort to any Borrower personally or any other Person or property, all of which
each Borrower hereby waives, and upon such terms and in such manner as Agent may
deem advisable, Agent, in its discretion, may sell, assign, transfer and deliver
any of the Collateral at any time, or from time to time. No prior notice need be
given to any Borrower or to any other Person in the case of any sale of
Collateral which Agent determines to be perishable or to be declining speedily
in value or which is customarily sold in any recognized market, but in any other
case Agent shall give Borrowers not fewer than ten (10) days prior notice of
either the time and place of any public sale of the Collateral or of the time
after which any private sale or other intended disposition thereof is to be
made. Each Borrower waives advertisement of any such sale and (except to the
extent specifically required by the preceding sentence) waives notice of any
kind in respect of any such sale. At any such public sale, Agent or the Banks
may purchase the Collateral, or any part thereof, free from any right of
redemption, all of which rights Borrower hereby waives and releases. After
deducting all Related Expenses, and after paying all claims, if any, secured by
Liens having precedence over this Agreement, Agent may apply the net proceeds of
each such sale to or toward the payment of the Secured Debt, whether or not then
due, in such order and by such division as Agent, in its sole discretion, may
deem advisable. Any excess, to the extent permitted by law, shall be paid to
Borrowers, and each Borrower shall remain liable for any deficiency. Agent shall
at all times have the right to obtain new appraisals of any Borrower or the
Collateral, the reasonable cost of which shall be paid by Borrowers. If Agent
sells, leases, licenses, or otherwise disposes of any Collateral of any Borrower
on credit, then, and in each such case, such Borrower will be credited only with
payments actually received by Agent and, if any Person obligated to make any
payment for any Collateral of such Borrower does not make such payment when due,
Agent may thereafter sell, lease, license, or otherwise dispose of such
Collateral of such Borrower. In connection with any sale or other disposition of
any Collateral of any Borrower, Agent, shall have the right, but no duty, to
disclaim warranties of title, possession, quiet enjoyment, and the like, and
Agent shall have the right to comply with any applicable requirements of law
(whether federal, state, local, or otherwise), and no such disclaimer or
compliance shall be considered to have adversely affected the commercial
reasonableness of any such sale or other disposition.
ARTICLE X. THE AGENT
The Banks authorize National City Bank of Kentucky and National City
Bank of Kentucky hereby agrees to act as agent for the Banks in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:
SECTION 10.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers hereunder as are delegated to Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Neither Agent nor any of its affiliates, directors, officers, attorneys or
employees shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct.
55
SECTION 10.2. NOTE HOLDERS. Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed with
it, signed by such payee and in form satisfactory to Agent.
SECTION 10.3. CONSULTATION WITH COUNSEL. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
SECTION 10.4. DOCUMENTS. Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Documents or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and Agent
shall be entitled to assume that the same are valid, effective and genuine and
what they purport to be.
SECTION 10.5. AGENT AND AFFILIATES. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not Agent, and Agent and its affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with any Company or any affiliate thereof.
SECTION 10.6. KNOWLEDGE OF DEFAULT. It is expressly understood and
agreed that Agent shall be entitled to assume that no Default or Event of
Default has occurred, unless Agent has been notified by a Bank in writing that
such Bank believes that a Default or Event of Default has occurred and is
continuing and specifying the nature thereof.
SECTION 10.7. ACTION BY AGENT. So long as Agent shall be entitled,
pursuant to Section 10.6 hereof, to assume that no Default or Event of Default
shall have occurred and be continuing, Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
that may be vested in it by, or with respect to taking or refraining from taking
any action or actions that it may be able to take under or in respect of, this
Agreement. Agent shall incur no liability (unless such liability is caused by
Agent's gross negligence or willful misconduct) under or in respect of this
Agreement by acting upon any notice, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything that it may do or refrain
from doing in the reasonable exercise of its judgment, or that may seem to it to
be necessary or desirable in the premises.
SECTION 10.8. NOTICES, DEFAULT, ETC. In the event that Agent shall have
acquired actual knowledge of any Default or Event of Default, Agent shall
promptly notify the Banks and shall take such action and assert such rights
under this Agreement as the Required Banks shall direct and Agent shall inform
the other Banks in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Notes.
SECTION 10.9. INDEMNIFICATION OF AGENT. The Banks agree to indemnify
Agent (to the extent not reimbursed by Borrowers) ratably, according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against Agent in its capacity as agent in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or
56
omitted by Agent with respect to this Agreement or any Loan Document,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements resulting from Agent's
gross negligence, willful misconduct or from any action taken or omitted by
Agent in any capacity other than as agent under this Agreement.
SECTION 10.10. SUCCESSOR AGENT. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days prior written notice to Borrowers and the
Banks. If Agent shall resign under this Agreement, then either (a) the Required
Banks shall appoint from among the Banks a successor agent for the Banks (with
the consent of Borrowers so long as an Event of Default has not occurred and
which consent shall not be unreasonably withheld), or (b) if a successor agent
shall not be so appointed and approved within the thirty (30) day period
following Agent's notice to the Banks of its resignation, then Agent shall
appoint a successor agent that shall serve as agent until such time as the
Required Banks appoint a successor agent. Upon its appointment, such successor
agent shall succeed to the rights, powers and duties as agent, and the term
"Agent" shall mean such successor effective upon its appointment, and the former
agent's rights, powers and duties as agent shall be terminated without any other
or further act or deed on the part of such former agent or any of the parties to
this Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 11.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Bank. Each Bank represents that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of the Companies in connection with the extension of
credit hereunder, and agrees that Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto (other than such notices as may be expressly
required to be given by Agent to the Banks hereunder), whether coming into its
possession before the granting of the first Loans hereunder or at any time or
times thereafter.
SECTION 11.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agent, any Bank or the holder of any Note in exercising
any right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents. The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.
SECTION 11.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Required Banks and then such waiver or consent shall be effective
only in the specific instance and for the specific
57
purpose for which given. Anything herein to the contrary notwithstanding,
unanimous consent of the Banks shall be required with respect to (a) any
increase in the Commitment hereunder, (b) the extension of maturity of the
Notes, the payment date of interest thereunder, or the payment of commitment or
other fees or amounts payable hereunder, (c) any reduction in the rate of
interest on the Notes, or in any amount of principal or interest due on any
Note, or the payment of commitment or other fees hereunder or any change in the
manner of pro rata application of any payments made by Borrowers to the Banks
hereunder, (d) any change in any percentage voting requirement, voting rights,
or the Required Banks definition in this Agreement, (e) the release of any
Guarantor of Payment or of any Collateral or any other security for the Secured
Debt, (f) any waiver to Section 4.14 hereof, or (g) any amendment to this
Section 11.3 or Section 9.5 hereof. Notice of amendments or consents ratified by
the Banks hereunder shall immediately be forwarded by Borrowers to all Banks.
Each Bank or other holder of a Note shall be bound by any amendment, waiver or
consent obtained as authorized by this Section, regardless of its failure to
agree thereto.
SECTION 11.4. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to a Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Bank, mailed or delivered to it,
addressed to the address of such Bank specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be given by overnight delivery or first class mail with postage prepaid by
registered or certified mail, addressed as aforesaid, or sent by facsimile with
telephonic confirmation of receipt, except that all notices hereunder shall not
be effective until received.
SECTION 11.5. COSTS, EXPENSES AND TAXES. Borrowers agree to pay on
demand all reasonable costs and expenses of Agent, including, but not limited
to, (a) administration, travel and out-of-pocket expenses, including but not
limited to reasonable attorneys' fees and expenses, of Agent in connection with
the preparation, negotiation and closing of the Loan Documents and the
administration of the Loan Documents, the collection and disbursement of all
funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, and (c) the reasonable fees and out-of-pocket expenses
of special counsel for the Banks, with respect to the foregoing, and of local
counsel, if any, who may be retained by said special counsel with respect
thereto. Borrowers also agree to pay on demand all costs and expenses of Agent
and the Banks, including reasonable attorneys' fees, in connection with the
restructuring or enforcement of the Secured Debt, this Agreement or any Related
Writing. In addition, Borrowers shall pay any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agrees to hold Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes or fees.
SECTION 11.6. INDEMNIFICATION. Each Borrower agrees to defend,
indemnify and hold harmless Agent and the Banks (and their respective
affiliates, officers, directors, attorneys, agents and employees) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable attorneys'
fees) or
58
reasonable disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against Agent or any Bank in connection with
any investigative, administrative or judicial proceeding (whether or not such
Bank or Agent shall be designated a party thereto) or any other claim by any
Person relating to or arising out of any Loan Document or any actual or proposed
use of proceeds of the Loans or any of the Secured Debt, or any activities of
any Company or any Obligor or any of their respective Affiliates; provided that
no Bank nor Agent shall have the right to be indemnified under this Section for
its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction. All obligations provided for in this Section 11.6 shall
survive any termination of this Agreement.
SECTION 11.7. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Agreement and no action taken by Agent or the Banks pursuant hereto
shall be deemed to constitute the Banks a partnership, association, joint
venture or other entity. No default by any Bank hereunder shall excuse the other
Banks from any obligation under this Agreement; but no Bank shall have or
acquire any additional obligation of any kind by reason of such default. The
relationship among Borrowers and the Banks with respect to the Loan Documents
and the Related Writings is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Bank has any fiduciary obligation toward
Borrowers with respect to any such documents or the transactions contemplated
thereby.
SECTION 11.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
SECTION 11.9. BINDING EFFECT; BORROWERS' ASSIGNMENT. This Agreement
shall become effective when it shall have been executed by Borrowers, Agent and
by each Bank and thereafter shall be binding upon and inure to the benefit of
Borrowers, Agent and each of the Banks and their respective successors and
assigns, except that Borrowers shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Agent and
all of the Banks.
SECTION 11.10. BANK ASSIGNMENTS/PARTICIPATIONS.
A. Assignments of Commitments. Each Bank shall have the right at any
time or times to assign to another financial institution, without recourse, all
or a percentage of all of the following: (a) that Bank's Commitment, (b) all
Loans made by that Bank, (c) that Bank's Notes, and (d) that Bank's interest in
any Letter of Credit and any participation purchased pursuant to Section 2.1A or
9.5 hereof; provided, however, in each such case, that the assignor and the
assignee shall have complied with the following requirements:
(i) Prior Consent. No assignment may be consummated pursuant
to this Section 11.10 without the prior written consent of Borrowers
and Agent (other than an assignment by any Bank to any affiliate of
such Bank which affiliate is either wholly-owned by such Bank or is
wholly-owned by a Person that wholly owns, either directly or
indirectly, such Bank), which consent of Borrowers and Agent shall not
be unreasonably withheld; provided, however, that, Borrowers' consent
shall not be required if, at the time of the
59
proposed assignment, any Default or Event of Default shall then exist.
Agent and the Banks acknowledge and agree that Borrowers may reasonably
withhold such consent. Anything herein to the contrary notwithstanding,
any Bank may at any time make a collateral assignment of all or any
portion of its rights under the Loan Documents to a Federal Reserve
Bank, and no such assignment shall release such assigning Bank from its
obligations hereunder;
(ii) Minimum Amount. Each such assignment shall be in a
minimum amount of the lesser of Five Million Dollars ($5,000,000) of
the assignor's Commitment and interest herein or the entire amount of
the assignor's Commitment and interest herein;
(iii) Assignment Fee; Assignment Agreement. Unless the
assignment shall be to an affiliate of the assignor or the assignment
shall be due to merger of the assignor or for regulatory purposes,
either the assignor or the assignee shall remit to Agent, for its own
account, an administrative fee of Three Thousand Five Hundred Dollars
($3,500). Unless the assignment shall be due to merger of the assignor
or a collateral assignment for regulatory purposes, the assignor shall
(A) cause the assignee to execute and deliver to Borrowers and Agent an
Assignment Agreement, and (B) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such
additional amendments, assurances and other writings as Agent may
reasonably require; and
(iv) Non-U.S. Assignee. If the assignment is to be made to an
assignee which is organized under the laws of any jurisdiction other
than the United States or any state thereof, such assignee shall, at
least five (5) Business Days prior to the effective date of such
assignment, (A) deliver to the Borrowers and the Agent certification as
to exemption from deduction or withholding of any United States federal
income taxes with respect to any payments to be made to such assignee
in respect of the Loans hereunder, (B) to furnish to the Borrowers and
the Agent United States Internal Revenue Service Form W-8BEN, W-8ECI,
W-8IMY or W-9, as applicable (wherein such assignee claims entitlement
to complete exemption from U.S. federal withholding tax on all interest
payments hereunder), and (C) agree to provide Borrowers and the Agent a
new United States Internal Revenue Service Form W-8BEN, W-8ECI, W-8IMY
or W-9, as applicable, upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and
completed by such assignee, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding
tax exemption.
Upon satisfaction of the requirements specified in clauses (i) through
(iv) above, Borrowers shall execute and deliver (A) to Agent, the assignor and
the assignee, any consent or release (of all or a portion of the obligations of
the assignor) required to be delivered by Borrowers in connection with the
Assignment Agreement, and (B) to the assignee, an appropriate Note or Notes.
After delivery of the new Note or Notes, the assignor's Note or Notes being
replaced shall be returned to Borrowers marked "replaced".
Upon satisfaction of the requirements of set forth in (i) through (iv),
and any other condition contained in this Section 11.10A, (A) the assignee shall
become and thereafter be deemed to be a "Bank" for the purposes of this
Agreement, (B) in the event that the assignor's entire interest has
60
been assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a "Bank" and (C) the signature pages hereto and SCHEDULE 2 hereto
shall be automatically amended, without further action, to reflect the result of
any such assignment.
Agent shall maintain at its address referred to in Section 11.4 hereof
a copy of each Assignment Agreement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each Bank from time
to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Agent and the Banks may treat each financial
institution whose name is recorded in the Register as the owner of the Loan
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by Borrowers or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
B. Sale of Participations. Each Bank shall have the right at any time
or times, without the consent of Agent or Borrowers, to sell one or more
participations or sub-participations to a financial institution, as the case may
be, in all or any part of (a) that Bank's Commitment, (b) that Bank's Commitment
Percentage, (c) any Loan made by that Bank, (d) any Note delivered to that Bank
pursuant to this Agreement, and (e) that Bank's interest in any Letter of Credit
and any participation, if any, purchased pursuant to Section 2.1A or 9.5 hereof
or this Section 11.10B.
The provisions of Article III and Section 11.6 shall inure to the
benefit of each purchaser of a participation or sub-participation and Agent
shall continue to distribute payments pursuant to this Agreement as if no
participation has been sold.
If any Bank shall sell any participation or sub-participation, that
Bank shall, as between itself and the purchaser, retain all of its rights
(including, without limitation, rights to enforce against Borrowers the Loan
Documents and the Related Writings) and duties pursuant to the Loan Documents
and the Related Writings, including, without limitation, that Bank's right to
approve any waiver, consent or amendment pursuant to Section 11.3, except if and
to the extent that any such waiver, consent or amendment would:
(i) reduce any fee or commission allocated to the participation or
sub-participation, as the case may be,
(ii) reduce the amount of any principal payment on any Loan
allocated to the participation or sub-participation, as the
case may be, or reduce the principal amount of any Loan so
allocated or the rate of interest payable thereon, or
(iii) extend the time for payment of any amount allocated to the
participation or sub-participation, as the case may be.
No participation or sub-participation shall operate as a delegation of
any duty of the seller thereof. Under no circumstance shall any participation or
sub-participation be deemed a novation in respect of all or any part of the
seller's obligations pursuant to this Agreement.
SECTION 11.11. SEVERABILITY OF PROVISIONS; CAPTIONS; ATTACHMENTS. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without
61
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. The several captions
to Sections and subsections herein are inserted for convenience only and shall
be ignored in interpreting the provisions of this Agreement. Each schedule or
exhibit attached to this Agreement shall be incorporated herein and shall be
deemed to be a part hereof.
SECTION 11.12. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrowers that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Bank shall at all times retain full control over the
disposition of its assets.
SECTION 11.13. ENTIRE AGREEMENT. This Agreement, any Note and any other
Loan Document or other agreement, document or instrument attached hereto or
executed on or as of the Closing Date integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
SECTION 11.14. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrowers and the Banks shall be governed by Ohio law,
without regard to principles of conflict of laws. Borrowers hereby irrevocably
submit to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, the Secured Debt or any Related Writing, and
Borrowers hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrowers, on behalf of themselves and their Subsidiaries, hereby irrevocably
waive, to the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue in any action or proceeding in any such
court as well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Borrowers agree that a final, nonappealable judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
SECTION 11.15. LEGAL REPRESENTATION OF PARTIES. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
[The remainder of this page is intentionally left blank.]
62
SECTION 11.16. JURY TRIAL WAIVER. BORROWERS, AGENT AND EACH OF THE
BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWERS, AGENT AND THE
BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY AGENT'S OR ANY
BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY PROVISION CONTAINED IN ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT AMONG BORROWERS, AGENT AND THE
BANKS, OR ANY THEREOF.
Address: 000 Xxxxx Xxxxx Xxxxxx NATIONAL CITY BANK OF KENTUCKY,
Xxxxxxxxxx, Xxxxxxxx 00000 as Agent and as a Bank
Attn: Xxxxx Xxxxx
By: /s/ Xxxxx Xxxxx
Title: SVP
Address: 000 X. Xxxxxxxxx Xxxxxx, 2nd Floor BANK ONE, KENTUCKY, N.A.,
Xxxxxxxxxx, Xxxxxxxx 00000 as Syndication Agent
Attn: Xxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxxx
Title: First Vice President
Address: 1 Financial Square U.S. BANK, NATIONAL ASSOCIATION,
Xxxxxxxxxx, Xxxxxxxx 00000-0000 as Documentation Agent
Attn: Xxxx Xxx
By: /s/ Xxxx Xxx
Title: Vice President
Address: 000 Xxxxxxxxxx Xxxxxxxxx UBS AG, Stamford Branch
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
By: /s/ Xxxxxxxx X'Xxxxx
Title: Director, Banking Products Services
and by: /s/ Xxxxxxxx X. Xxxxxx
Title: Associate Director, Banking Products
Services
63
Address: 000 Xxxxxxxxx Xxxxxx XXXXXX COMMERCIAL PAPER INC.
Xxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx By: /s/ [signature illegible]
Title: AUTHORIZED SIGNATORY
Address: 10140 Linn Station Road RES-CARE, INC.
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: _______________ By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Executive Vice President of Finance
and Administration, Chief Financial
Officer & Assistant Treasurer
ALTERNATIVE XXXXXXX, XXX.
BALD EAGLE ENTERPRISES, INC.
CAPITAL TX INVESTMENTS, INC.
CATX PROPERTIES, INC.
CNC/ACCESS, INC.
COMMUNITY ADVANTAGE, INC.
COMMUNITY ALTERNATIVES ILLINOIS, INC.
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ALTERNATIVES TEXAS PARTNER, INC.
COMMUNITY ALTERNATIVES VIRGINIA, INC.
EDUCARE COMMUNITY LIVING-TEXAS LIVING CENTERS, INC.
J. & J. CARE CENTERS, INC.
NORMAL LIFE, INC.
PEOPLESERVE, INC.
RAISE GEAUGA, INC.
RES-CARE ALABAMA, INC.
RES-CARE CALIFORNIA, INC. d/b/a RCCA SERVICES
RES-CARE ILLINOIS, INC.
RES-CARE KANSAS, INC.
RES-CARE NEW JERSEY, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE OTHER OPTIONS, INC.
RES-CARE PREMIER, INC.
RES-CARE PREMIER CANADA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
RES-CARE WASHINGTON, INC.
64
ROCKCREEK, INC.
RSCR CALIFORNIA, INC.
RSCR INLAND, INC.
RSCR WEST VIRGINIA, INC.
SOUTHERN HOME CARE SERVICES, INC.
TANGRAM REHABILITATION NETWORK, INC.
TEXAS HOME MANAGEMENT, INC.
THM HOMES, INC.
XXXXXXXX GROUP HOMES, INC.
XXXXX MANAGEMENT, INC.
BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
BOLIVAR ESTATES, INC.
EBENEZER ESTATES, INC.
FORT XXXXX ESTATES, INC.
HILLSIDE ESTATES, INC.
HYDESBURG ESTATES, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
MEADOW LANE ESTATES, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
XXXXXX XXXXX XXXXXXX, XXX.
XXXXX XXXXX XXXXXXX, INC.
SHA-REE ESTATES, INC.
SKYVIEW ESTATES, INC.
UPWARD BOUND, INC.
XXXXXXX ESTATES, INC.
CAREERS IN PROGRESS, INC.
EDUCARE COMMUNITY LIVING-NORMAL LIFE, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE OF KENTUCKY, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE XXXXXXX, INC.
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
RES-CARE FLORIDA, INC.
EDUCARE COMMUNITY LIVING CORPORATION-AMERICA
PSI HOLDINGS, INC.
VOCA CORPORATION OF AMERICA
VOCA RESIDENTAL SERVICES, INC.
B.W.J. OPPORTUNITY CENTERS, INC.
THE CITADEL GROUP, INC.
EDUCARE COMMUNITY LIVING CORPORATION-GULF COAST
EDUCARE COMMUNITY LIVING CORPORATION-MISSOURI
65
EDUCARE COMMUNITY LIVING CORPORATION-NEVADA
EDUCARE COMMUNITY LIVING CORPORATION-NEW MEXICO
EDUCARECOMMUNITY LIVING CORPORATION-NORTH CAROLINA
EDUCARE COMMUNITY LIVING CORPORATION-TEXAS
VOCA CORP.
VOCA CORPORATION OF FLORIDA
VOCA CORPORATION OF INDIANA
VOCA CORPORATION OF MARYLAND
VOCA CORPORATION OF NEW JERSEY
VOCA CORPORATION OF NORTH CAROLINA
VOCA CORPORATION OF OHIO
VOCA CORPORATION OF WASHINGTON, D.C.
VOCA CORPORATION OF WEST VIRGINIA, INC.
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Assistant Treasurer
THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
ALTERNATIVE YOUTH SERVICES, INC.
RES-CARE AVIATION, INC.
GENERAL HEALTH CORPORATION
YOUTHTRACK, INC.
EMPLOY-ABILITY UNLIMITED, INC.
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Treasurer
EDUCARE COMMUNITY LIVING LIMITED PARTNERSHIP
By: Community Alternatives Texas Partner, Inc.
Its: General Partner
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Assistant Treasurer
66
NORMAL LIFE OF INDIANA
By: Normal Life of Central Indiana, Inc.
one of its General Partners
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Assistant Treasurer
and
By: Normal Life of Southern Indiana, Inc.
the other General Partner
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Assistant Treasurer
VOCA OF INDIANA, LLC, a limited liability company
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Assistant Treasurer
CREATIVE NETWORKS, LLC
By: /s/ L. Xxxxx Xxxxx
L. Xxxxx Xxxxx
Title: Manager
67
