EXHIBIT 10.4
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CREDIT AGREEMENT
BY AND AMONG
PRIMEDEX HEALTH SYSTEMS, INC.,
AS PARENT,
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
AND
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JULY [ ], 2004
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION..........................................1
1.1 Definitions..................................................1
1.2 Accounting Terms.............................................1
1.3 Code.........................................................1
1.4 Construction.................................................1
1.5 Schedules and Exhibits.......................................2
2. LOAN AND TERMS OF PAYMENT.............................................2
2.1 Revolver Advances............................................2
2.2 Term Loan....................................................3
2.3 Borrowing Procedures and Settlements.........................3
2.4 Payments.....................................................8
2.5 Overadvances................................................11
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments,
and Calculations............................................11
2.7 Cash Management.............................................12
2.8 Crediting Payments;.........................................14
2.9 Designated Account..........................................14
2.10 Maintenance of Loan Account; Statements of Obligations......14
2.11 Fees........................................................15
2.12 Letters of Credit...........................................15
2.13 LIBOR Option................................................18
2.14 Capital Requirements........................................20
2.15 Joint and Several Liability of Borrowers....................20
3. CONDITIONS; TERM OF AGREEMENT........................................23
3.1 Conditions Precedent to the Initial Extension of Credit.....23
3.2 Conditions Precedent to all Extensions of Credit............23
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3.3 Term........................................................23
3.4 Effect of Termination.......................................24
3.5 Early Termination by Borrowers..............................24
4. REPRESENTATIONS AND WARRANTIES.......................................25
4.1 No Encumbrances.............................................25
4.2 Eligible Accounts...........................................25
4.3 [Intentionally Omitted].....................................25
4.4 Equipment...................................................25
4.5 Location of Equipment.......................................25
4.7 State of Incorporation; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort
Claims......................................................26
4.8 Due Organization and Qualification; Subsidiaries............26
4.9 Due Authorization; No Conflict..............................26
4.10 Litigation..................................................28
4.11 No Material Adverse Change..................................28
4.12 Fraudulent Transfer.........................................28
4.13 Employee Benefits...........................................29
4.14 Environmental Condition.....................................29
4.15 Intellectual Property.......................................29
4.16 Leases......................................................29
4.17 Deposit Accounts and Securities Accounts....................29
4.18 Complete Disclosure.........................................29
4.19 Indebtedness................................................30
4.20 Restructuring Documents.....................................30
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4.21 Permits, Etc................................................30
4.22 Material Contracts..........................................30
4.23 Management Agreements.......................................31
4.24 Third Party Payors..........................................31
4.25 Indenture Documents.........................................32
4.26 Compliance with Healthcare Laws and Regulations.............32
4.27 Other Healthcare Regulatory Matters.........................34
4.28 HIPAA Compliance............................................34
4.29 Non-Material Subsidiaries...................................35
4.30 DVI Revolver................................................35
5. AFFIRMATIVE COVENANTS................................................35
5.1 Accounting System...........................................35
5.2 Collateral Reporting........................................35
5.3 Financial Statements, Reports, Certificates.................36
5.4 Guarantor Reports...........................................36
5.5 Inspection..................................................36
5.6 Maintenance of Properties...................................36
5.7 Taxes.......................................................36
5.8 Insurance...................................................36
5.9 Location of Equipment.......................................37
5.10 Compliance with Laws........................................37
5.11 Leases......................................................37
5.12 Existence...................................................38
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5.13 Environmental...............................................38
5.14 Disclosure Updates..........................................38
5.16 Formation of Subsidiaries...................................38
5.17 Material Documents..........................................39
5.18 Obtaining of Permits, Etc...................................39
5.19 Compliance with Management Agreements.......................39
5.20 Accreditation and Licensing.................................39
6. NEGATIVE COVENANTS...................................................40
6.1 Indebtedness................................................40
6.2 Liens.......................................................41
6.3 Restrictions on Fundamental Changes.........................41
6.4 Disposal of Assets..........................................41
6.5 Change Name.................................................41
6.6 Nature of Business..........................................41
6.7 Prepayments and Amendments..................................41
6.8 [Intentionally Omitted].....................................42
6.9 Consignments................................................42
6.10 Distributions...............................................42
6.11 Accounting Methods..........................................42
6.12 Investments.................................................43
6.13 Transactions with Affiliates................................43
6.14 Use of Proceeds.............................................43
6.15 Inventory and Equipment with Bailees........................43
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6.16 Financial Covenants.........................................43
6.17 Non-Material Subsidiaries...................................47
6.18 DVI Revolver Agreement......................................47
7. EVENTS OF DEFAULT....................................................47
8. THE LENDER GROUP'S RIGHTS AND REMEDIES...............................48
8.1 Rights and Remedies.........................................48
8.2 Remedies Cumulative.........................................49
8.3 Court Order With Respect to Governmental Account Debtor.....49
9. TAXES AND EXPENSES...................................................49
10. WAIVERS; INDEMNIFICATION.............................................49
10.1 Demand; Protest; etc........................................49
10.2 The Lender Group's Liability for Borrower Collateral........50
10.3 Indemnification.............................................50
11. NOTICES..............................................................50
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................52
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................52
13.1 Assignments and Participations..............................52
13.2 Successors..................................................55
14. AMENDMENTS; WAIVERS..................................................55
14.1 Amendments and Waivers......................................55
14.2 Replacement of Holdout Lender...............................56
14.3 No Waivers; Cumulative Remedies.............................56
15. AGENT; THE LENDER GROUP..............................................57
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15.1 Appointment and Authorization of Agent......................57
15.2 Delegation of Duties........................................57
15.3 Liability of Agent..........................................58
15.4 Reliance by Agent...........................................58
15.5 Notice of Default or Event of Default.......................58
15.6 Credit Decision.............................................59
15.7 Costs and Expenses; Indemnification.........................59
15.8 Agent in Individual Capacity................................60
15.9 Successor Agent.............................................60
15.10 Lender in Individual Capacity...............................60
15.11 Withholding Taxes...........................................61
15.12 Collateral Matters..........................................63
15.13 Restrictions on Actions by Lenders; Sharing of Payments.....63
15.14 Agency for Perfection.......................................64
15.15 Payments by Agent to the Lenders............................64
15.16 Concerning the Collateral and Related Loan Documents........64
15.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information.......64
15.18 Several Obligations; No Liability...........................65
15.19 Bank Product Providers......................................66
16. GENERAL PROVISIONS...................................................66
16.1 Effectiveness...............................................66
16.2 Section Headings............................................66
16.3 Interpretation..............................................66
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16.4 Severability of Provisions..................................66
16.5 Counterparts; Electronic Execution..........................66
16.6 Revival and Reinstatement of Obligations....................66
16.7 Confidentiality.............................................67
16.8 Integration.................................................67
16.9 Xxxxxxx Radiology Medical Group III as Agent for Borrowers..67
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Equipment
Schedule P-1 Permitted Holders
Schedule P-2 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 1.1 Definitions
Schedule 2.7(a) Cash Management Banks
Schedule 3.1 Conditions Precedent
Schedule 4.5 Locations of Equipment
Schedule 4.7(a) States of Organization
Schedule 4.7(b) Chief Executive Offices
Schedule 4.7(c) Organizational Identification Numbers
Schedule 4.7(d) Commercial Tort Claims
Schedule 4.8(b) Capitalization of Parent and Borrowers
Schedule 4.8(c) Capitalization of Parent's Subsidiaries
Schedule 4.10 Litigation
Schedule 4.14 Environmental Matters
Schedule 4.15 Intellectual Property
Schedule 4.17 Deposit Accounts and Securities Accounts
Schedule 4.19 Permitted Indebtedness
Schedule 4.22..... Material Contracts
Schedule 4.26..... Compliance with Healthcare Regulations
Schedule 4.27 .... Other Healthcare Regulatory Matters
Schedule 5.2 Collateral Reporting
Schedule 5.3 Financial Statements, Reports, Certificates
Schedule 6.13..... Transactions with Affiliates
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT"), is entered into as of July [
], 2004, by and among the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"LENDERS"), and XXXXX FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "AGENT"), and PRIMEDEX HEALTH
SYSTEMS, INC., a New York corporation ("PARENT"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries, are
referred to hereinafter each individually as a "BORROWER", and individually and
collectively, jointly and severally, as the "BORROWERS").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Capitalized terms used in this Agreement shall
have the meanings specified therefor on SCHEDULE 1.1.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
When used herein, the term "financial statements" shall
include the notes and schedules thereto. Whenever the term
"Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be
understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code
unless otherwise defined herein, PROVIDED, HOWEVER, that to
the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the
Code, the definition of such term contained in Article 9 shall
govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to
the plural include the singular, references to the singular
include the plural, the terms "includes" and "including" are
not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder,"
and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of
this Agreement or such other Loan Document, as the case may
be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other
Loan Documents to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein).
Any reference herein to the satisfaction or repayment in full
of the Obligations shall mean the repayment in full in cash
(or cash collateralization in accordance with the terms
hereof) of all Obligations other than contingent
indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable
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Bank Product Provider to remain outstanding and are not
required to be repaid or cash collateralized pursuant to the
provisions of this Agreement. Any reference herein to any
Person shall be construed to include such Person's successors
and assigns. Any requirement of a writing contained herein or
in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein
by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and
severally) to make advances ("ADVANCES") to Borrowers in an
amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal TO THE LESSER OF (i) the
Maximum Revolver Amount LESS the Letter of Credit Usage, or
(ii) the Borrowing Base LESS the Letter of Credit Usage.
(b) Notwithstanding anything to the contrary in this Agreement, in
addition to Advances made pursuant to SECTION 2.1(a), during
the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and
severally) to make additional Advances ("OVERADVANCE SUBLINE
ADVANCES") to Borrowers so long as (A) after giving effect to
all such Advances, the Revolver Usage (inclusive of all extant
Advances made pursuant to this SECTION 2.1(b)) does not exceed
the Borrowing Base by more than (i) from and after the Closing
Date until (but excluding) the date that is the earlier of
October 1, 2005 and the Funding Date, if any, of the Term
Loan, the LESSER of (x) $2,000,000 and (y) one-month of the
average Capitation Receipts for the immediately preceding
six-month period, and (ii) from and after the date that is the
earlier of October 1, 2005 and the Funding Date, if any, of
the Term Loan, the LESSER of (x) $1,000,000 and (y) one-month
of the average Capitation Receipts for the immediately
preceding six-month period; and (B) after giving effect to all
such Advances, the Revolver Usage (inclusive of all extant
Advances made pursuant to this SECTION 2.1(b)) does not exceed
the Maximum Revolver Amount. Except as provided in this
SECTION 2.1(b) and in SECTION 2.6(a), Overadvance Subline
Advances shall be subject to the same terms and conditions as
any other Advance.
(c) Anything to the contrary in this SECTION 2.1 notwithstanding,
Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or appropriate,
against the Borrowing Base, including reserves (i) with
respect to (A) sums that Borrowers are required to pay by any
Section of this Agreement or any other Loan Document (such as
taxes, assessments, insurance premiums, or, in the case of
leased assets, rents or other amounts payable under such
leases) and have failed to pay, and (B) amounts owing by
Borrowers or their Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral
(other than a Permitted Lien), which Lien or trust, in the
Permitted Discretion of Agent likely would have a priority
superior to the Agent's Liens (such as Liens or trusts in
favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for AD
valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral,
and (ii) after the occurrence and during the continuance of an
Event of Default, with respect to such other matters as Agent
in its Permitted Discretion shall deem necessary or
appropriate.
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(d) Notwithstanding anything to the contrary contained herein, no
Lender shall make any Advance or Overadvance Subline Advance
to the extent that, after giving effect to any such Advance or
Overadvance Subline Advance, the sum of the outstanding
principal amount of Advances and Overadvance Subline Advances
exceeds an amount equal to Borrowers' Collections with respect
to Accounts for the immediately preceding two-month period.
(e) Amounts borrowed pursuant to this SECTION 2.1 may be repaid
and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this
Agreement, on or prior to December 31, 2004, at Administrative
Borrower's written request in accordance with SECTION 2.3,
each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans
(collectively, the "TERM LOAN") to Borrowers in an amount
equal to such Lender's Pro Rata Share of the Term Loan Amount;
PROVIDED, however, that the obligations of the Lenders with
Term Loan Commitments to make the Term Loan shall be subject
to the following conditions (in addition to the other
conditions set forth in this Agreement, including SECTION
3.2): (a) Borrowers and Agent shall have mutually agreed on a
schedule of Equipment to be set forth on SCHEDULE E-1 upon
which the Term Loan will be based (such Equipment, "ELIGIBLE
EQUIPMENT"); (b) Agent shall be satisfied with the results of
an appraisal of the Eligible Equipment conducted by a
qualified appraisal company selected by Agent; (c) no Default
or Event of Default shall have occurred and be continuing; (d)
Agent shall be satisfied that all acts necessary to perfect
the Agent's Liens in the Eligible Equipment have been taken;
(e) Administrative Borrower shall have made the request for
the Term Loan on or prior to December 31, 2004; and (f)
Borrowers shall have paid the fee due in connection with the
funding of the Term Loan in accordance with the Fee Letter.
The Term Loan shall be repaid in quarterly installments, each
in an amount equal to 1/20th of the Term Loan Amount, plus
accrued and unpaid interest on such amounts, such installments
to be due and payable on the first day of each such quarter
(commencing on March 1, 2005) and continuing until and
including the date of termination of this Agreement, whether
by its terms, by prepayment, or by acceleration, on which date
the unpaid balance of the Term Loan would be due and payable
in full, together with all accrued and unpaid interest on such
amount. All amounts outstanding under the Term Loan shall
constitute Obligations. Any principal amount of the Term Loan
repaid or prepaid may not be reborrowed.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered
to Agent. Unless Swing Lender is not obligated to make a Swing
Loan pursuant to SECTION 2.3(b) below, such notice must be
received by Agent no later than 10:00 a.m. (California time)
on the Business Day that is the requested Funding Date
specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day;
PROVIDED, HOWEVER, that if Swing Lender is not obligated to
make a Swing Loan as to a requested Borrowing, such notice
must be received by Agent no later than 10:00 a.m. (California
time) on the Business Day prior to the date that is the
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requested Funding Date. At Agent's election, in lieu of
delivering the above-described written request, any Authorized
Person may give Agent telephonic notice of such request by the
required time. In such circumstances, Borrowers agree that any
such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure
to provide such written confirmation shall not affect the
validity of the request.
(b) MAKING OF SWING LOANS. In the case of a request for an Advance
and so long as either (i) the aggregate amount of Swing Loans
made since the last Settlement Date plus the amount of the
requested Advance does not exceed $4,000,000, or (ii) Swing
Lender, in its sole discretion, shall agree to make a Swing
Loan notwithstanding the foregoing limitation, Swing Lender,
as a Lender, shall make an Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a
Lender pursuant to this SECTION 2.3(b) being referred to as a
"SWING LOAN" and such Advances being referred to collectively
as "SWING LOANS") available to Borrowers on the Funding Date
applicable thereto by transferring immediately available funds
to Borrowers' Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all
the terms and conditions applicable to other Advances, except
that all payments on any Swing Loan shall be payable to Swing
Lender as a Lender solely for its own account. Subject to the
provisions of SECTION 2.3(d)(ii), Swing Lender as a Lender
shall not make and shall not be obligated to make any Swing
Loan if Swing Lender has actual knowledge that (i) one or more
of the applicable conditions precedent set forth in SECTION 3
will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date. Swing Lender as
a Lender shall not otherwise be required to determine whether
the applicable conditions precedent set forth in SECTION 3
have been satisfied on the Funding Date applicable thereto
prior to making any Swing Loan. The Swing Loans shall be
secured by the Agent's Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time
to time to Advances that are Base Rate Loans.
(c) MAKING OF LOANS.
(i) In the event that Swing Lender is not obligated to make a
Swing Loan, then promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.3(a), Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the
Business Day immediately preceding the Funding Date applicable
thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall
make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto.
After Agent's receipt of the proceeds of such Advances (or the
Term Loan, as applicable), Agent shall make the proceeds
thereof available to Administrative Borrower on the applicable
Funding Date by transferring immediately available funds equal
to such proceeds received by Agent to Administrative
Borrower's Designated Account; PROVIDED, HOWEVER, that,
subject to the provisions of SECTION 2.3(d)(ii), Agent shall
not request any Lender to make, and no Lender shall have the
obligation to make, any Advance (or its portion of the Term
Loan) if Agent shall have actual knowledge that (1) one or
more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date
for the applicable Borrowing unless such condition has been
waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
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(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m.
(California time) on the date of a Borrowing, that such Lender
will not make available as and when required hereunder to
Agent for the account of Borrowers the amount of that Lender's
Pro Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may
(but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall
not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall
on the Business Day following such Funding Date make such
amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A
notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available,
such payment to Agent shall constitute such Lender's Advance
(or portion of the Term Loan, as applicable) on the date of
Borrowing for all purposes of this Agreement. If such amount
is not made available to Agent on the Business Day following
the Funding Date, Agent will notify Administrative Borrower of
such failure to fund and, upon demand by Agent, Borrowers
shall pay such amount to Agent for Agent's account, together
with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances (or portion of the Term
Loan, as applicable) composing such Borrowing. The failure of
any Lender to make any Advance (or portion of the Term Loan,
as applicable) on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance (or
portion of the Term Loan, as applicable) on such Funding Date,
but no Lender shall be responsible for the failure of any
other Lender to make the Advance (or portion of the Term Loan,
as applicable) to be made by such other Lender on any Funding
Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments
(but only to the extent that such Defaulting Lender's Advance
was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to
the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and
retained by Agent for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters
with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Administrative Borrower
shall have waived such Defaulting Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of
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its duties and obligations hereunder, or to relieve or excuse
the performance by Borrowers of their duties and obligations
hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative
Borrower at its option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that
it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid
its share of the outstanding Obligations (other than Bank
Product Obligations, but including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided however,
that any such assumption of the Commitment of such Defaulting
Lender shall not be deemed to constitute a waiver of any of
the Lender Groups' or Borrowers' rights or remedies against
any such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) PROTECTIVE ADVANCES AND OPTIONAL OVERADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders, from
time to time in Agent's sole discretion, (A) after the
occurrence and during the continuance of a Default or an Event
of Default, or (B) at any time that any of the other
applicable conditions precedent set forth in SECTION 3 are not
satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems
necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the
likelihood of repayment of the Obligations (other than the
Bank Product Obligations), or (3) to pay any other amount
chargeable to Borrowers pursuant to the terms of this
Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in SECTION 10 (any of the
Advances described in this SECTION 2.3(d)(i) shall be referred
to as "PROTECTIVE ADVANCES").
(ii) Any contrary provision of this Agreement notwithstanding, the
Lenders hereby authorize Agent or Swing Lender, as applicable,
and either Agent or Swing Lender, as applicable, may, but is
not obligated to, knowingly and intentionally, continue to
make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be
created, so long as (A) after giving effect to such Advances,
the outstanding Revolver Usage does not exceed the Borrowing
Base by more than $2,000,000, and (B) after giving effect to
such Advances, the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) does not exceed the Maximum
Revolver Amount. In the event Agent obtains actual knowledge
that the Revolver Usage exceeds the amounts permitted by the
immediately foregoing provisions, regardless of the amount of,
or reason for, such excess, Agent shall notify the Lenders as
soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding
amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended
to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrowers to an amount permitted by
the preceding paragraph. In such circumstances, if any Lender
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with a Revolver Commitment disagrees over the proposed terms
of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according
to the determination of the Required Lenders. Each Lender with
a Revolver Commitment shall be obligated to settle with Agent
as provided in SECTION 2.3(e) for the amount of such Lender's
Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as
permitted under this SECTION 2.3(d)(ii), and any Overadvances
resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.
(iii) Each Protective Advance and each Overadvance shall be deemed
to be an Advance hereunder, except that no Protective Advance
or Overadvance shall be eligible to be a LIBOR Rate Loan and
all payments on the Protective Advances shall be payable to
Agent solely for its own account. The Protective Advances and
Overadvances shall be repayable on demand, secured by the
Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances
that are Base Rate Loans. The provisions of this SECTION
2.3(D) are for the exclusive benefit of Agent, Swing Lender,
and the Lenders and are not intended to benefit any Borrower
in any way.
(e) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding
Advances. Such agreement notwithstanding, Agent, Swing Lender,
and the other Lenders agree (which agreement shall not be for
the benefit of any Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents,
settlement among the Lenders as to the Advances, the Swing
Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the Lenders
on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself, with
respect to the outstanding Protective Advances, and (3) with
respect to Borrowers' or their Subsidiaries' Collections
received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested
Settlement being the "SETTLEMENT DATE"). Such notice of a
Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Protective
Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein
(including SECTION 2.3(b)(iii)): (y) if a Lender's balance of
the Advances (including Swing Loans and Protective Advances)
exceeds such Lender's Pro Rata Share of the Advances
(including Swing Loans and Protective Advances) as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in
immediately available funds to a Deposit Account of such
Lender (as such Lender may designate), an amount such that
each such Lender shall, upon receipt of such amount, have as
of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a
Lender's balance of the Advances (including Swing Loans and
Protective Advances) is less than such Lender's Pro Rata Share
of the Advances (including Swing Loans and Protective
Advances) as of a Settlement Date, such Lender shall no later
than 12:00 p.m. (California time) on the Settlement Date
transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances (including Swing Loans and
Protective Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall
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be applied against the amounts of the applicable Swing Loans
or Protective Advances and, together with the portion of such
Swing Loans or Protective Advances representing Swing Lender's
Pro Rata Share thereof, shall constitute Advances of such
Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the
extent required by the terms hereof, Agent shall be entitled
to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lender
Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Protective Advances is less than, equal to,
or greater than such Lender's Pro Rata Share of the Advances,
Swing Loans, and Protective Advances as of a Settlement Date,
Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good
funds by Agent with respect to principal, interest, fees
payable by Borrowers and allocable to the Lenders hereunder,
and proceeds of Collateral. To the extent that a net amount is
owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Protective
Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with
the terms of this Agreement would be applied to the reduction
of the Advances, for application to Swing Lender's Pro Rata
Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since
the then immediately preceding Settlement Date have been
applied to Swing Lender's Pro Rata Share of the Advances other
than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to
the outstanding Advances of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances.
During the period between Settlement Dates, Swing Lender with
respect to Swing Loans, Agent with respect to Protective
Advances, and each Lender (subject to the effect of agreements
between Agent and individual Lenders) with respect to the
Advances other than Swing Loans and Protective Advances, shall
be entitled to interest at the applicable rate or rates
payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Lenders, as
applicable.
(f) NOTATION. Agent shall record on its books the principal amount
of the Advances (or portion of the Term Loan, as applicable)
owing to each Lender, including the Swing Loans owing to Swing
Lender, and Protective Advances owing to Agent, and the
interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed
to be correct and accurate.
(g) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Protective Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased
or decreased as a result of any failure by any other Lender to
perform its obligations hereunder, and (ii) no failure by any
Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
8
(i) Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent's Account for the account of
the Lender Group and shall be made in immediately available
funds, no later than 11:00 a.m. (California time) on the date
specified herein. Any payment received by Agent later than
11:00 a.m. (California time), shall be deemed to have been
received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following
Business Day.
(ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders
that Borrowers will not make such payment in full as and when
required, Agent may assume that Borrowers have made (or will
make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrowers do not
make such payment in full to Agent on the date when due, each
Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal
balance of the Obligations to which such payments relate held
by each Lender) and payments of fees and expenses (other than
fees or expenses that are for Agent's separate account, after
giving effect to any agreements between Agent and individual
Lenders) shall be apportioned ratably among the Lenders having
a Pro Rata Share of the type of Commitment or Obligation to
which a particular fee relates. All payments shall be remitted
to Agent and all such payments, and all proceeds of Collateral
received by Agent, shall be applied as follows:
(1) FIRST, ratably to pay any Lender Group Expenses then due to
Agent or any of the Lenders under the Loan Documents, until
paid in full,
(2) SECOND, ratably to pay any fees or premiums then due to Agent
(for its separate account, after giving effect to any
agreements between Agent and individual Lenders) or any of the
Lenders under the Loan Documents until paid in full,
(3) THIRD, to pay interest due in respect of all Protective
Advances until paid in full,
(4) FOURTH, to pay the principal of all Protective Advances until
paid in full,
(5) FIFTH, ratably to pay interest due in respect of the Advances
(other than Protective Advances), the Swing Loans, and the
Term Loan until paid in full,
(6) SIXTH, ratably to pay all principal amounts then due and
payable (other than as a result of an acceleration thereof)
with respect to the Term Loan until paid in full,
(7) SEVENTH, to pay the principal of all Swing Loans until paid in
full,
(8) EIGHTH, so long as no Event of Default has occurred and is
continuing, and at Agent's election (which election Agent
agrees will not be made if an Overadvance would be created
thereby), to pay amounts then due and owing by Parent or its
Subsidiaries in respect of Bank Products, until paid in full,
9
(9) NINTH, so long as no Event of Default has occurred and is
continuing, to pay the principal of all Advances until paid in
full,
(10) TENTH, if an Event of Default has occurred and is continuing,
ratably (i) to pay the principal of all Advances until paid in
full, (ii) to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the
Letter of Credit Usage until paid in full, and (iii) to Agent,
to be held by Agent, for the benefit of the Bank Product
Providers, as cash collateral in an amount up to the amount of
the Bank Product Reserve established prior to the occurrence
of, and not in contemplation of, the subject Event of Default
until Parent's and its Subsidiaries' obligations in respect of
Bank Products have been paid in full or the cash collateral
amount has been exhausted,
(11) ELEVENTH, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the
Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in
full,
(12) TWELFTH, if an Event of Default has occurred and is
continuing, to pay any other Obligations (including the
provision of amounts to Agent, to be held by Agent, for the
benefit of the Bank Product Providers, as cash collateral in
an amount up to the amount determined by Agent in its
Permitted Discretion as the amount necessary to secure
Parent's and its Subsidiaries' obligations in respect of Bank
Products), and
(13) THIRTEENTH, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under
applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject
to a Settlement delay as provided in SECTION 2.3(e).
(iii) In each instance, so long as no Event of Default has occurred
and is continuing, this SECTION 2.4(b) shall not apply to any
payment made by Borrowers to Agent and specified by Borrowers
to be for the payment of specific Obligations then due and
payable (or prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued
after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements,
whether or not any of the foregoing would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and other provisions contained
in any other Loan Document, it is the intention of the parties
hereto that such priority provisions in such documents shall
be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of
any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this SECTION 2.4 shall
control and govern.
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(c) PREPAYMENTS.
(i) If at any time Agent determines that the outstanding principal
amount of the Term Loan is greater than the Term Loan Formula
Amount, Borrowers shall immediately prepay the outstanding
principal of the Term Loan in accordance with SECTION
2.4(d)(i) in an amount equal to such excess.
(d) APPLICATION OF PROCEEDS.
(i) Each prepayment pursuant to SUBCLAUSE (C)(I) above shall be
applied to the outstanding principal amount of the Term Loan,
until paid in full, in the inverse order of maturity.
(e) INTEREST AND FEES. Any prepayment made pursuant to SECTION
2.4(c) shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment.
2.5 OVERADVANCES. If, at any time or for any reason, other than
pursuant to SECTION 2.1(b), the amount of Obligations owed by
Borrowers to the Lender Group pursuant to SECTION 2.1 or
SECTION 2.12 is greater than any of the limitations set forth
in SECTION 2.1 or SECTION 2.12, as applicable (an
"OVERADVANCE"), Borrowers immediately shall pay to Agent, in
cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the
priorities set forth in SECTION 2.4(b). In addition, Borrowers
hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full as and
when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest
on the Daily Balance thereof as follows (i) if the relevant
Obligation is an Advance that is a LIBOR Rate Loan, at a per
annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin,
(ii) if the relevant Obligation is a portion of the Term Loan
that is a Base Rate Loan, at a per annum rate equal to the
Base Rate plus the Base Rate Term Loan Margin, (iii) if the
relevant Obligation is an Overadvance Subline Advance, at a
per annum rate equal to the Base Rate plus the Overadvance
Subline Advance Margin, and (iv) otherwise, at a per annum
rate equal to the Base Rate plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment,
subject to any agreements between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in SECTION 2.12(E))
which shall accrue at a rate equal to 3.00% per annum times
the Daily Balance of the undrawn amount of all outstanding
Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the
Required Lenders),
11
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to
the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate
equal to 2 percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be increased
to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in SECTION 2.11 or
SECTION 2.13(a), interest, Letter of Credit fees, and all
other fees payable hereunder shall be due and payable in cash,
in arrears, on the first day of each month at any time that
Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to
Borrowers, to charge all interest and fees (when due and
payable), all Lender Group Expenses (as and when incurred),
all charges, commissions, fees, and costs provided for in
SECTION 2.12(e) (as and when accrued or incurred), all fees
and costs provided for in SECTION 2.11 (as and when accrued or
incurred), and all other payments as and when due and payable
under any Loan Document (including the amounts due and payable
with respect to the Term Loan and including any amounts due
and payable to the Bank Product Providers in respect of Bank
Products up to the amount of the Bank Product Reserve) to
Borrowers' Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to
Borrowers' Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360-day year for
the actual number of days elapsed. In the event the Base Rate
is changed from time to time hereafter, the rates of interest
hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement,
plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the
rate or rates of interest and manner of payment stated within
it; PROVIDED, HOWEVER, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under
applicable law, then, IPSO FACTO, as of the date of this
Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum,
whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall and shall cause each of their Subsidiaries to
(i) establish and maintain cash management services of a type
and on terms satisfactory to Agent at one or more of the banks
set forth on SCHEDULE 2.7(a) (each a "CASH MANAGEMENT BANK"),
and shall request in writing and otherwise take such
reasonable steps to ensure that all of their and their
Subsidiaries' Account Debtors forward payment of the amounts
owed by them directly to such Cash Management Bank, and (ii)
deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt
thereof, all of their Collections (including those sent
directly by their Account Debtors to Borrowers or their
Subsidiaries) into a bank account in Agent's name (a "CASH
MANAGEMENT ACCOUNT") at one of the Cash Management Banks.
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(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and
substance acceptable to Agent. Each such Cash Management
Agreement shall provide, among other things, that (i) the Cash
Management Bank will comply with any instructions originated
by Agent directing the disposition of the funds in such Cash
Management Account without further consent by Borrowers or
their Subsidiaries, as applicable, (ii) the Cash Management
Bank has no rights of setoff or recoupment or any other claim
against the applicable Cash Management Account, other than for
payment of its service fees and other charges directly related
to the administration of such Cash Management Account and for
returned checks or other items of payment, and (iii) it will
forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend SCHEDULE 2.7(a)
to add or replace a Cash Management Bank or Cash Management
Account; PROVIDED, HOWEVER, that (i) such prospective Cash
Management Bank shall be reasonably satisfactory to Agent, and
(ii) prior to the time of the opening of such Cash Management
Account, a Borrower or its Subsidiary, as applicable, and such
prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Borrowers (or
their Subsidiaries, as applicable) shall close any of their
Cash Management Accounts (and establish replacement cash
management accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent
that the creditworthiness of any Cash Management Bank is no
longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of
notice from Agent that the operating performance, funds
transfer, or availability procedures or performance of the
Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with
such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts
subject to Control Agreements.
(e) Borrowers and their Subsidiaries hereby represent and warrant
that, as of the Closing Date, all Governmental Account Debtors
make payments on their Accounts in checks sent directly to the
applicable Borrower or Subsidiary and not to a Deposit Account
owned by or in the name of the applicable Borrower or
Subsidiary. Borrowers and their Subsidiaries hereby agree that
upon receipt of any payment from a Governmental Account
Debtor, such Borrower or Subsidiary shall, on a daily basis
(or such other periodic basis as Agent may otherwise agree to
in writing) immediately transfer all such Collections to a
Cash Management Account owned by Agent. Without limiting any
of the foregoing, if, after the Closing Date, Governmental
Account Debtors make payments (whether by wire transfer or
otherwise) on their Accounts to a Deposit Account owned by or
in the name of the applicable Borrower or Subsidiary, then
Borrowers and their Subsidiaries and the applicable depository
bank shall execute an agreement (the "GOVERNMENTAL ACCOUNT
DEBTOR SWEEP AGREEMENT"), reasonably satisfactory in form and
substance to Agent, pursuant to which the applicable
depository bank shall agree that it will, on a daily basis (or
such other periodic basis as Agent may otherwise agree to in
writing) immediately transfer, without further instruction
from Borrowers or their Subsidiaries, all funds that at such
time are on deposit in such Deposit Account to the Agent's
Account.
13
(f) In the event of any conflict or inconsistency between this
SECTION 2.7 and any Management Agreement, this SECTION 2.7
shall govern and control.
2.8 CREDITING PAYMENTS;. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall
not be considered a payment on account unless such payment
item is a wire transfer of immediately available federal funds
made to the Agent's Account or unless and until such payment
item is honored when presented for payment. Should any payment
item not be honored when presented for payment, then Borrowers
shall be deemed not to have made such payment and interest
shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be
deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m.
(California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to
have been received by Agent as of the opening of business on
the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances
and the Term Loan, and Issuing Lender is authorized to issue
the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without
instructions, if pursuant to SECTION 2.6(D). Administrative
Borrower agrees to establish and maintain the Designated
Account with the Designated Account Bank for the purpose of
receiving the proceeds of the Advances requested by Borrowers
and made by Agent or the Lenders hereunder. Unless otherwise
agreed by Agent and Administrative Borrower, any Advance,
Protective Advance, or Swing Loan requested by Borrowers and
made by Agent or the Lenders hereunder shall be made to the
Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of
Borrowers (the "LOAN ACCOUNT") on which Borrowers will be
charged with the Term Loan, all Advances (including Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrowers or for Borrowers' account, the Letters of
Credit issued by Issuing Lender for Borrowers' account, and
with all other payment Obligations hereunder or under the
other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender
Group Expenses. In accordance with SECTION 2.8, the Loan
Account will be credited with all payments received by Agent
from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the
Loan Account to Administrative Borrower, including principal,
interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and
such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within
30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in
any such statements.
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2.11 FEES. Borrowers shall pay to Agent, as and when due and
payable under the terms of the Fee Letter, the fees set forth
in the Fee Letter.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the
account of Borrowers (each, an "L/C") or to purchase
participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C UNDERTAKING") with
respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is
to be Xxxxx Fargo) for the account of Borrowers. Each request
for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit
shall be made in writing by an Authorized Person and delivered
to the Issuing Lender and Agent via hand delivery,
telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance,
amendment, renewal, or extension. Each such request shall be
in form and substance satisfactory to the Issuing Lender in
its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment,
renewal, or extension of such Letter of Credit, (iii) the
expiration date of such Letter of Credit, (iv) the name and
address of the beneficiary thereof (or the beneficiary of the
Underlying Letter of Credit, as applicable), and (v) such
other information (including, in the case of an amendment,
renewal, or extension, identification of the outstanding
Letter of Credit to be so amended, renewed, or extended) as
shall be necessary to prepare, amend, renew, or extend such
Letter of Credit. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application
with respect to any Underlying Letter of Credit that is to be
the subject of an L/C Undertaking. The Issuing Lender shall
have no obligation to issue a Letter of Credit if any of the
following would result after giving effect to the issuance of
such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
LESS the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $1,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum Revolver
Amount LESS the outstanding amount of Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
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bear interest at the rate then applicable to Advances that are Base Rate Loans
under SECTION 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to SECTION 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.12(a), each Lender with a Revolver
Commitment agrees to fund its Pro Rata Share of any Advance
deemed made pursuant to the foregoing subsection on the same
terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of
a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action
on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have
granted to each Lender with a Revolver Commitment, and each
Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an
amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender
agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the
Issuing Lender under such Letter of Credit. In consideration
and in furtherance of the foregoing, each Lender with a
Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date
due as provided in clause (a) of this Section, or of any
reimbursement payment required to be refunded to Borrowers for
any reason. Each Lender with a Revolver Commitment
acknowledges and agrees that its obligation to deliver to
Agent, for the account of the Issuing Lender, an amount equal
to its respective Pro Rata Share of each L/C Disbursement made
by the Issuing Lender pursuant to this SECTION 2.12(b) shall
be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any
condition set forth in SECTION 3 hereof. If any such Lender
fails to make available to Agent the amount of such Lender's
Pro Rata Share of each L/C Disbursement made by the Issuing
Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender
and Agent (for the account of the Issuing Lender) shall be
entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate
until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense,
or liability, and reasonable attorneys fees incurred by the
Lender Group arising out of or in connection with any Letter
of Credit; PROVIDED, HOWEVER, that no Borrower shall be
obligated hereunder to indemnify for any loss, cost, expense,
or liability to the extent that it is caused by the gross
negligence or willful misconduct of the Issuing Lender or any
other member of the Lender Group. Each Borrower agrees to be
bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by
Issuing Lender's interpretations of any L/C issued by Issuing
Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and
each Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrowers'
instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each
Borrower understands that the L/C Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain
costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to
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indemnify, save, defend, and hold the Lender Group harmless
with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group
under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; PROVIDED, HOWEVER,
that no Borrower shall be obligated hereunder to indemnify for
any loss, cost, expense, or liability to the extent that it is
caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the
Lender Group nor the Issuing Lender shall be responsible for
delays, errors, or omissions resulting from the malfunction of
equipment in connection with any Letter of Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments,
documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters
of Credit shall be Lender Group Expenses for purposes of this
Agreement and immediately shall be reimbursable by Borrowers
to Agent for the account of the Issuing Lender; it being
acknowledged and agreed by each Borrower that, as of the
Closing Date, the issuance charge imposed by the prospective
Underlying Issuer is 0.825% per annum times the face amount of
each Underlying Letter of Credit, that such issuance charge
may be changed from time to time, and that the Underlying
Issuer also imposes a schedule of charges for amendments,
extensions, drawings, and renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in
the interpretation or application thereof by any Governmental
Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time
in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
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2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate,
Borrowers shall have the option (the "LIBOR OPTION") to have
interest on all or a portion of the Advances be charged at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto, (ii) the
occurrence of an Event of Default in consequence of which the
Required Lenders or Agent on behalf thereof have elected to
accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant
to the terms hereof. On the last day of each applicable
Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest
rate applicable to such LIBOR Rate Loan automatically shall
convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of
Default has occurred and is continuing, Borrowers no longer
shall have the option to request that Advances bear interest
at a rate based upon the LIBOR Rate and Agent shall have the
right to convert the interest rate on all outstanding LIBOR
Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying
Agent prior to 11:00 a.m. (California time) at least 3
Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR DEADLINE"). Notice of
Administrative Borrower's election of the LIBOR Option for a
permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of
a LIBOR Notice received by Agent before the LIBOR Deadline, or
by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time)
on the same day). Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the
Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each
Borrower shall indemnify, defend, and hold Agent and the
Lenders harmless against any loss, cost, or expense incurred
by Agent or any Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of
an Interest Period applicable thereto (including as a result
of an Event of Default), (b) the conversion of any LIBOR Rate
Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified
in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, "FUNDING LOSSES"). Funding
Losses shall, with respect to Agent or any Lender, be deemed
to equal the amount determined by Agent or such Lender to be
the excess, if any, of (i) the amount of interest that would
have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the LIBOR Rate that would have
been applicable thereto, for the period from the date of such
event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest
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Period therefor), MINUS (ii) the amount of interest that would
accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar
deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered
to Administrative Borrower setting forth any amount or amounts
that Agent or such Lender is entitled to receive pursuant to
this SECTION 2.13 shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the
LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
integral multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
time; PROVIDED, HOWEVER, that in the event that LIBOR Rate
Loans are prepaid on any date that is not the last day of the
Interest Period applicable thereto, including as a result of
any automatic prepayment through the required application by
Agent of proceeds of Borrowers' and their Subsidiaries'
Collections in accordance with SECTION 2.4(B) or for any other
reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the
Obligations pursuant to the terms hereof, each Borrower shall
indemnify, defend, and hold Agent and the Lenders and their
Participants harmless against any and all Funding Losses in
accordance with clause (b)(ii) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs, in each
case, due to changes in applicable law occurring subsequent to
the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the
Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the
LIBOR Rate. In any such event, the affected Lender shall give
Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Administrative Borrower may,
by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth
the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the
LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time
after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to
fund or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent
promptly shall transmit the notice to each other Lender and
(y) in the case of any LIBOR Rate Loans of such Lender that
are outstanding, the date specified in such Lender's notice
shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall
not be entitled to elect the LIBOR Option until such Lender
determines that it would no longer be unlawful or impractical
to do so.
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(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any
Lender, nor any of their Participants, is required actually to
acquire eurodollar deposits to fund or otherwise match fund
any Obligation as to which interest accrues at the LIBOR Rate.
The provisions of this Section shall apply as if each Lender
or its Participants had match funded any Obligation as to
which interest is accruing at the LIBOR Rate by acquiring
eurodollar deposits for each Interest Period in the amount of
the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law,
rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company
with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such
Lender's Commitments hereunder to a level below that which
such Lender or such holding company could have achieved but
for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then
existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any
amount deemed by such Lender to be material, then such Lender
may notify Administrative Borrower and Agent thereof.
Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of
capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail
such Lender's calculation thereof and the assumptions upon
which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining
such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration
of the financial accommodations to be provided by the Lender
Group under this Agreement, for the mutual benefit, directly
and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all
of the Obligations (including any Obligations arising under
this SECTION 2.15), it being the intention of the parties
hereto that all the Obligations shall be the joint and several
obligations of each Borrower without preferences or
distinction among them.
(c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due
or to perform any of the Obligations in accordance with the
terms thereof, then in each such event the other Borrowers
will make such payment with respect to, or perform, such
Obligation.
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(d) The Obligations of each Borrower under the provisions of this
SECTION 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Borrower enforceable against each
Borrower to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of
this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit
issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand
for any payment under this Agreement, notice of any action at
any time taken or omitted by Agent or Lenders under or in
respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement
(except as otherwise provided in this Agreement). Each
Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any
of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence
by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders
in respect of any of the Obligations, and the taking,
addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of
any Borrower. Without limiting the generality of the
foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of any Agent or Lender
with respect to the failure by any Borrower to comply with any
of its respective Obligations, including any failure strictly
or diligently to assert any right or to pursue any remedy or
to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this
SECTION 2.15 afford grounds for terminating, discharging or
relieving any Borrower, in whole or in part, from any of its
Obligations under this SECTION 2.15, it being the intention of
each Borrower that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of each Borrower
under this SECTION 2.15 shall not be discharged except by
performance and then only to the extent of such performance.
The Obligations of each Borrower under this SECTION 2.15 shall
not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any Borrower or any Agent
or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of
nonpayment of the Obligations. Each Borrower further
represents and warrants to Agent and Lenders that such
Borrower has read and understands the terms and conditions of
the Loan Documents. Each Borrower hereby covenants that such
Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other
guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the
Obligations.
(g) Each Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that
election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed
Agent's or such Lender's rights of subrogation and
reimbursement against such Borrower by the operation of
Section 580(d) of the California Code of Civil Procedure or
otherwise:
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(h) Each Borrower waives all rights and defenses that such
Borrower may have because the Obligations are secured by Real
Property. This means, among other things:
(i) Agent and Lenders may collect from such Borrower without first
foreclosing on any Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
(1) The amount of the Obligations may be reduced only by the price
for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
(2) Agent and Lenders may collect from such Borrower even if Agent
or Lenders, by foreclosing on the Real Property Collateral,
has destroyed any right such Borrower may have to collect from
the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this SECTION 2.15 are made for the benefit
of Agent, Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against
any or all Borrowers as often as occasion therefor may arise
and without requirement on the part of any such Agent, Lender,
successor or assign first to marshal any of its or their
claims or to exercise any of its or their rights against any
Borrower or to exhaust any remedies available to it or them
against any Borrower or to resort to any other source or means
of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this SECTION 2.15
shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any
time, any payment, or any part thereof, made in respect of any
of the Obligations, is rescinded or must otherwise be restored
or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise,
the provisions of this SECTION 2.15 will forthwith be
reinstated in effect, as though such payment had not been
made.
(j) Each Borrower hereby agrees that it will not enforce any of
its rights of contribution or subrogation against any other
Borrower with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor until such
time as all of the Obligations have been paid in full in cash.
Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender
hereunder or under any other Loan Documents are hereby
expressly made subordinate and junior in right of payment,
without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full
in cash of the Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of
any jurisdiction relating to any Borrower, its debts or its
assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or
distribution of any character, whether in cash, securities or
other property, shall be made to any other Borrower therefor.
22
(k) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness
owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event
of Default, such Borrower will not demand, xxx for or
otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall
have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such
Borrower as trustee for Agent, and such Borrower shall deliver
any such amounts to Agent for application to the Obligations
in accordance with SECTION 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial extension of
credit provided for hereunder, is subject to the fulfillment,
to the satisfaction of Agent and each Lender of each of the
conditions precedent set forth on SCHEDULE 3.1 (the making of
such initial extension of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the
conditions precedent).
3.2 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make
any Advances or the Term Loan hereunder at any time (or to
extend any other credit hereunder shall be subject to the
following conditions precedent:
(a) the representations and warranties contained in this Agreement
or in the other Loan Documents shall be true and correct in
all material respects on and as of the date of such extension
of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall
either result from the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the
extending of such credit shall have been issued and remain in
force by any Governmental Authority against any Borrower,
Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.3 TERM. This Agreement shall continue in full force and effect
for a term ending on the earlier of (a) the date that is 90
days prior to the maturity date of the Indenture Notes, and
(b) January 31, 2008 (such earlier date, the "MATURITY DATE").
The foregoing notwithstanding, the Lender Group, upon the
election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation
of an Event of Default.
23
3.4 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement
obligations of Borrowers with respect to outstanding Letters
of Credit and including all Bank Product Obligations)
immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to
be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the Letter
of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender, and (b) providing
cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank
Product Providers with respect to the Bank Product
Obligations). No termination of this Agreement, however, shall
relieve or discharge Borrowers or their Subsidiaries of their
duties, Obligations, or covenants hereunder or under any other
Loan Document and the Agent's Liens in the Collateral shall
remain in effect until all Obligations have been paid in full
and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has
been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers' sole expense, execute
and deliver any termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are
reasonably necessary to release, as of record, the Agent's
Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
3.5 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any time upon 90 days prior written notice by Administrative
Borrower to Agent, to terminate this Agreement by paying to
Agent, in cash, the Obligations (including (a) either (i)
providing cash collateral to be held by Agent for the benefit
of those Lenders with a Revolver Commitment in an amount equal
to 105% of the Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Agent for the benefit
of the Bank Product Providers with respect to the Bank
Products Obligations), in full. If Administrative Borrower has
sent a notice of termination pursuant to the provisions of
this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations
(including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the Letter of Credit
Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held
by Agent for the benefit of the Bank Product Providers with
respect to the Bank Products Obligations), in full, on the
date set forth as the date of termination of this Agreement in
such notice
3.6 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to
continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the
date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or
cause to be performed constituting an Event of Default):
(a) on or prior to the date that is 30 days after the Closing
Date, Borrowers shall deliver to Agent satisfactory evidence
that Rancho Xxxxxxxx Advanced Imaging Center, LLC shall have
been dissolved and the assets distributed to Radnet
Management, Inc.; and
24
(b) either (i) on or prior to the date that is 10 days after the
Closing Date, Borrowers shall have executed and delivered a
Cash Management Agreement with City National Bank that is
satisfactory to Agent or (ii) on or prior to the date that is
30 days after the Closing Date, Borrowers shall have moved its
accounts at City National Bank to another bank satisfactory to
Agent and entered into a Cash Management Agreement with such
other bank that is satisfactory to Agent.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Parent and each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement (it being understood and agreed that
any representation and warranty as to a Managed Practice (other than Xxxxxxx
Radiology Medical Group III) shall be made only with respect to such Managed
Practice's provision of radiology or other related professional medical services
at a medical office, clinic or other facility operated by Parent or any of its
Subsidiaries):
4.1 NO ENCUMBRANCES. Parent and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their
personal property assets and good and marketable title to, or
a valid leasehold interest in, their Real Property, in each
case, free and clear of Liens except for Permitted Liens.
4.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by a
Borrower as an Eligible Account in a borrowing base report
submitted to Agent, such Account is (a) a bona fide existing
payment obligation of the applicable Account Debtors created
by the sale and delivery of Inventory or the rendition of
services to such Account Debtors in the ordinary course of
Borrowers' business, (b) owed to Borrowers without any known
defenses, disputes, offsets, counterclaims, or rights of
return or cancellation, and (c) not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in
the definition of Eligible Accounts.
4.3 [INTENTIONALLY OMITTED].
4.4 EQUIPMENT. Each material item of Equipment of Parent and its
Subsidiaries is used or held for use in their business and is
in good working order, ordinary wear and tear and damage by
casualty excepted.
4.5 LOCATION OF EQUIPMENT. The Equipment (other than vehicles or
Equipment out for repair and other Equipment on which Agent
does not have a first priority security interest) of Parent
and its Subsidiaries are not stored with a bailee,
warehouseman, or similar party and are located only at, or
in-transit between, the locations identified on SCHEDULE 4.5
(as such Schedule may be updated pursuant to SECTION 5.9).
4.6 [INTENTIONALLY OMITTED].
25
4.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of Parent and each of its
Subsidiaries is set forth on SCHEDULE 4.7(a).
(b) The chief executive office of Parent and each of its
Subsidiaries is located at the address indicated on SCHEDULE
4.7(b) (as such Schedule may be updated pursuant to SECTION
5.9).
(c) Parent's and each of its Subsidiaries' organizational
identification number, if any, are identified on SCHEDULE
4.7(c).
(d) As of the Closing Date, Parent and its Subsidiaries do not
hold any commercial tort claims, except as set forth on
SCHEDULE 4.7(d).
4.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Parent and each Borrower is duly organized and
existing and in good standing under the laws of the
jurisdiction of its organization and qualified to do business
in any state where the failure to be so qualified reasonably
could be expected to result in a Material Adverse Change.
(b) Set forth on SCHEDULE 4.8(b), is a complete and accurate
description of the authorized capital Stock of Parent and each
Borrower, by class, and, as of the Closing Date, a description
of the number of shares of each such class that are issued and
outstanding. Other than as described on SCHEDULE 4.8(b), there
are no subscriptions, options, warrants, or calls relating to
any shares of Parent's or each Borrower's capital Stock,
including any right of conversion or exchange under any
outstanding security or other instrument. Except as set forth
in the Indenture Notes, none of Parent or any Borrower is
subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable
for any of its capital Stock.
(c) Set forth on SCHEDULE 4.8(c), is a complete and accurate list
of Parent's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares
of each class of common and preferred Stock authorized for
each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned
directly or indirectly by Parent or the applicable Borrower.
All of the outstanding capital Stock of each such Subsidiary
has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 4.8(c), there are no
subscriptions, options, warrants, or calls relating to any
shares of Parent's Subsidiaries' capital Stock, including any
right of conversion or exchange under any outstanding security
or other instrument. None of Parent or any of its Subsidiaries
is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of
Parent's Subsidiaries' capital Stock or any security
convertible into or exchangeable for any such capital Stock.
4.9 DUE AUTHORIZATION; NO CONFLICT.
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(a) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the other Loan
Documents to which it is a party have been duly authorized by
all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the other Loan
Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Borrower,
(ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, (iii) result
in or require the creation or imposition of any Lien of any
nature whatsoever upon any properties or assets of Borrower,
other than Permitted Liens, or (iv) require any approval of
any Borrower's interestholders or any approval or consent of
any Person under any material contractual obligation of any
Borrower, other than consents or approvals that have been
obtained and that are still in force and effect.
(c) Other than the filing of financing statements, and the
recordation of the Mortgages, the execution, delivery, and
performance by each Borrower of this Agreement and the other
Loan Documents to which such Borrower is a party do not and
will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental
Authority, other than consents or approvals that have been
obtained and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other
documents contemplated hereby and thereby, when executed and
delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such
Guarantor.
(g) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or
regulation applicable to such Guarantor, the Governing
Documents of such Guarantor, or any order, judgment, or decree
of any court or other Governmental Authority binding on such
Guarantor, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of such
Guarantor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any
properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under
any material contractual obligation of such Guarantor, other
than consents or approvals that have been obtained and that
are still in force and effect.
27
(h) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and
performance by each Guarantor of the Loan Documents to which
such Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or
other action with or by, any Governmental Authority, other
than consents or approvals that have been obtained and that
are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed
and delivered by such Guarantor will be the legally valid and
binding obligations of such Guarantor, enforceable against
such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors' rights
generally.
4.10 LITIGATION.
(a) Other than those matters disclosed on SCHEDULE 4.10, and other
than matters arising after the Closing Date that reasonably
could not be expected to result in a Material Adverse Change,
there are no actions, suits, or proceedings pending or, to the
best knowledge of Parent and each Borrower, threatened against
Parent or any of its Subsidiaries.
(b) There is no pending investigation of Parent, any of its
Subsidiaries or any Managed Practice by CMS or any other
Governmental Authority, which investigation is not otherwise
conducted in the ordinary course of business and no criminal,
civil or administrative action, audit, or investigation by a
fiscal intermediary or by or on behalf of any Governmental
Authority exists or, to the best knowledge of Parent or any
Borrower, is threatened with respect to Parent, any of its
Subsidiaries or any Managed Practice, which could reasonably
be expected to have a material adverse effect on (A) such
Person's right to receive reimbursement under Medicaid,
Medicare or any other Third Party Payor program to which such
Person would otherwise be entitled, (B) such Person's right to
participate in Medicaid, Medicare or any other Third Party
Payor program or (C) the ability of such Person to engage in
the practice of medicine or to fulfill its obligations as
contemplated under the Loan Documents or any Management
Agreement. None of Parent, its Subsidiaries or any Managed
Practice is subject to any pending but unassessed claim
payment adjustments under Medicaid, Medicare or any other
Third Party Payor program, except to the extent that such
Person is contesting such assessment in good faith by
appropriate proceedings diligently pursued and has established
and will maintain adequate reserves for such adjustments in
accordance with GAAP.
4.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Parent and its Subsidiaries that have been delivered by
Borrowers to the Lender Group have been prepared in accordance
with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material
respects, Parent's and its Subsidiaries' financial condition
as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse
Change with respect to Parent and its Subsidiaries since the
date of the latest financial statements submitted to Agent on
or before the Closing Date.
4.12 FRAUDULENT TRANSFER.
(a) Each Borrower and each Subsidiary of a Borrower is Solvent.
28
(b) No transfer of property is being made by any Borrower or any
Subsidiary of a Borrower and no obligation is being incurred
by any Borrower or any Subsidiary of a Borrower in connection
with the transactions contemplated by this Agreement or the
other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrowers or
their Subsidiaries.
4.13 EMPLOYEE BENEFITS. None of Borrowers, any of their
Subsidiaries, or any of their ERISA Affiliates has maintained
or contributed, or currently maintains or contributes, to any
Benefit Plan.
4.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 4.14,
(a) to Parent's and Borrowers' knowledge, none of Parent's or
its Subsidiaries' properties or assets has ever been used by
Parent, its Subsidiaries, or by previous owners or operators
in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such
use, production, storage, handling, treatment, release or
transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to Parent's and Borrowers'
knowledge, none of Parent's nor its Subsidiaries' properties
or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) none of Parent nor any
of its Subsidiaries have received notice that a Lien arising
under any Environmental Law has attached to any revenues or to
any Real Property owned or operated by Parent or its
Subsidiaries, and (d) none of Parent nor any of its
Subsidiaries have received a summons, citation, notice, or
directive from the United States Environmental Protection
Agency or any other federal or state governmental agency
concerning any action or omission by Parent or any Subsidiary
of Parent resulting in the releasing or disposing of Hazardous
Materials into the environment.
4.15 INTELLECTUAL PROPERTY. Parent and each Subsidiary of Parent
owns, or holds licenses in, all trademarks, trade names,
copyrights, patents, patent rights, and licenses that are
necessary to the conduct of its business as currently
conducted, and attached hereto as SCHEDULE 4.15 (as updated
from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright
registrations as to which Parent or one of its Subsidiaries is
the owner or is an exclusive licensee.
4.16 LEASES. Parent and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their
business and to which they are parties or under which they are
operating and all of such material leases are valid and
subsisting and no material default by Parent or its
Subsidiaries exists under any of them.
4.17 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on
SCHEDULE 4.17 is a listing of all of Parent's and its
Subsidiaries' Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b)
the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.
4.18 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of Parent or its Subsidiaries
in writing to Agent or any Lender (including all information
contained in the Schedules hereto or in the other Loan
Documents) for purposes of or in connection with this
Agreement, the other Loan Documents, or any transaction
contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on
behalf of Parent or its Subsidiaries in writing to Agent or
any Lender will be, true and accurate in all material respects
on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any
29
material respect at such time in light of the circumstances
under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the
date on which any other Projections are delivered to Agent,
such additional Projections represent Parent's and Borrowers'
good faith estimate of their and their Subsidiaries' future
performance for the periods covered thereby.
4.19 INDEBTEDNESS. Set forth on SCHEDULE 4.19 is a true and
complete list of all Indebtedness of Parent and each
Subsidiary of Parent outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing
Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and describes the
principal terms thereof.
4.20 RESTRUCTURING DOCUMENTS. Borrowers have delivered to Agent
true and correct copies of the Restructuring Documents. The
transactions contemplated by the Restructuring Documents will,
as of the Closing Date, have been consummated in accordance
with the terms of the Restructuring Documents and nothing has
come to Borrowers' attention that would indicate that any of
the representations and warranties contained in the
Restructuring Documents are not true and correct. All of the
representations and warranties of Parent and its Subsidiaries
(to the extent they are parties) in the Restructuring
Documents are true and correct.
4.21 PERMITS, ETC.
(a) Each of Parent and its Subsidiaries has, and is in compliance
with, all permits, licenses, authorizations, approvals,
certifications, agreements, entitlements and accreditations
(collectively, "PERMITS") required for such Person lawfully to
own, lease, manage or operate, or to acquire, each business
currently owned, leased, managed or operated, or to be
acquired, by such Person (including, as applicable,
accreditations, licenses, agreements and certifications as a
provider of health care services including those necessary for
it to be eligible to receive payment and compensation and to
participate under Medicaid, Medicare or any other Third Party
Payor program). Each such Permit has been duly obtained, is in
full force and effect without any known conflict with the
rights of others and free from any restrictions. No condition
exists or event has occurred which, in itself or with the
giving of notice or lapse of time or both, would result in the
suspension, revocation, impairment, forfeiture or non-renewal
of any such Permit, and there is no claim that any thereof is
not in full force and effect.
(b) None of Parent, its Subsidiaries or any Managed Practice has
received any notification or communication from any
Governmental Authority or Third Party Payor (i) that any such
Governmental Authority or Third Party Payor has taken or
intends to take action to revoke, withdraw, suspend, modify,
impose material conditions with respect to, terminate or
adversely amend any Permit of such Person to engage in the
practice of medicine, to operate a healthcare facility or to
participate under Medicaid, Medicare or any other Third Party
Payor program, (ii) regarding any violation by Parent or any
of its Subsidiaries of any applicable law, or (iii) regarding
any other limitations on the conduct of business of Parent and
its Subsidiaries.
4.22 MATERIAL CONTRACTS. Set forth on SCHEDULE 4.22 is a complete
and accurate list as of the Closing Date of all Material
Contracts of Parent and its Subsidiaries (including all
Management Agreements to which it is currently or is to become
a party), showing the parties and subject matter thereof and
amendments and modifications thereto. Each Material Contract
set forth on SCHEDULE 4.22 (a) is in full force and effect and
is binding upon and enforceable against each of Parent and its
30
Subsidiaries that is a party thereto and, to the best
knowledge of Parent and Borrowers, all other parties thereto
in accordance with its terms, (b) has not been otherwise
amended or modified (other than in accordance with SECTION
6.7(d)), and (c) is not in default in any material respect due
to the action of Parent or its Subsidiaries or, to the best
knowledge of Parent and Borrowers, any other party thereto.
4.23 MANAGEMENT AGREEMENTS. Each Management Agreement, and each of
the transactions contemplated thereunder, does not violate any
applicable rule or regulation: (a) relating to the eligibility
of a Managed Practice to receive payment and to participate as
an accredited and certified provider of health care services
under Medicaid, Medicare or any other Third Party Payor
program, (b) applicable to such Person as a result of its
participation in such programs, (c) relating to the licenses
and permits required therein in connection therewith, or (d)
relating to the practice of medicine or the sharing of fees
generated in connection therewith.
4.24 THIRD PARTY PAYORS.
(a) None of Parent, its Subsidiaries or any Managed Practice is in
default in the performance, observance, or fulfillment of any
of its obligations, covenants or agreements contained in (i)
any Medicare Provider Agreement, Medicaid Provider Agreement
or any agreement or instrument with any other Third Party
Payor, which default has resulted in, or could be reasonably
be expected to result in, the revocation, termination,
cancellation or suspension of the Medicaid Certification or
Medicare Certification of such Person or the right of such
Person to participate in any other Third Party Payor program.
(b) If Parent or any of its Subsidiaries or any Managed Practice
is or has been audited by any Third Party Payor, (i) none of
such audits provides for adjustments in reimbursable costs or
asserts claims for reimbursement or repayment by such Person
of costs and/or payments theretofore made by such Third Party
Payor that, if adversely determined, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Change and (ii) none of Parent, its Subsidiaries or
any Managed Practice has had requests or assertions of claims
for reimbursement or repayment by it of costs and/or payments
theretofore made by any Third Party Payor that, if adversely
determined, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Change.
(c) The Accounts of Parent and its Subsidiaries and each Managed
Practice have been and will continue to be adjusted to reflect
the reimbursement policies of its Third Party Payors. In
particular, Accounts relating to Third Party Payors do not and
shall not exceed amounts Parent, its Subsidiaries or any
Managed Practice is entitled to receive under any capitation
arrangement, fee schedule, discount formula, cost-based
reimbursement or other adjustment or limitation to such
Person's usual charges.
(d) The healthcare facilities operated by Parent and its
Subsidiaries and each Managed Practice and the services
provided at such facilities are qualified for participation in
the Government Reimbursement Programs, and Parent and its
Subsidiaries and each Managed Practice are entitled to
reimbursement under the Government Reimbursement Programs for
services rendered to qualified beneficiaries, and Parent and
its Subsidiaries and each Managed Practice and the healthcare
facilities operated by Parent and its Subsidiaries and each
Managed Practice comply in all material respects with the
conditions of participation in all Government Reimbursement
Programs and related contracts.
31
4.25 INDENTURE DOCUMENTS. Borrowers incurring Indebtedness from (a)
the loans made by the Lenders to Borrowers on and after the
Closing Date and (b) the issuance of Letters of Credit, in
each case, subject to the limitations set forth in this
Agreement, does not conflict with or result in a default under
any Indenture Document. The Obligations constitute Senior
Indebtedness (as defined in the Indenture). As such, all of
the Obligations (and Agent and the Lenders) are entitled to
the benefits of each of the subordination and other provisions
contained in the Indenture which are available in respect of
Senior Indebtedness (and to the holders thereof), and each of
such subordination and other provisions is in full force and
effect and enforceable in accordance with its terms. Parent
and Borrowers acknowledge that Agent and the Lenders are
entering into this Agreement, and extending their Commitments,
in reliance upon the subordination provisions of the Indenture
Documents and this SECTION 4.25.
4.26 COMPLIANCE WITH HEALTHCARE LAWS AND REGULATIONS.
(a) Each of Parent and its Subsidiaries and each Managed Practice
has timely filed or caused to be timely filed, all cost
reports and other reports of every kind whatsoever required by
a Government Reimbursement Program, to have been filed or made
with respect to Parent's and its Subsidiaries' or such Managed
Practice's business operations. Except as set forth on
SCHEDULE 4.26, there are no claims, actions or appeals pending
(and none of Parent or its Subsidiaries or any Managed
Practice has filed any claims or reports which should result
in any such claims, actions or appeals) before any
Governmental Authority pertaining to Parent's or such
Subsidiary's or such Managed Practice's business operations,
including any intermediary or carrier, the Provider
Reimbursement Review Board or the Administrator of CMS, with
respect to any state or federal Medicare or Medicaid cost
reports or claims filed by Parent or such Subsidiary or such
Managed Practice, or any disallowance by any Governmental
Authority in connection with any audit of such cost reports.
(b) Except as set forth on SCHEDULE 4.26, none of Parent or its
Subsidiaries or any Managed Practice is currently, nor has in
the past been, subject to:
(1) any state or local governmental investigation, inspection or
inquiry related to any license or licensure standards
applicable to Parent or such Subsidiary or such Managed
Practice;
(2) any federal, state, local governmental or private payor civil
or criminal investigations, inquiries or audits involving
and/or related to any federal, state or private payor
healthcare fraud and abuse provisions or contractual
prohibition of healthcare fraud and abuse; or
(3) any federal, state or private payor inquiry, investigation,
inspection or audit regarding Parent or such Subsidiary or
such Managed Practiceor their activities, including any
federal, state or private payor inquiry or investigation of
any Person having "ownership, financial or control interest"
(as that term is defined in 42 C.F.R. ss. 420.201 et seq.) in
Parent or such Subsidiary or such Managed Practice involving
and/or related to healthcare fraud and abuse, false claims
under 31 U.S.C. xx.xx. 3729-3731 or any similar contractual
prohibition, or any qui tam action brought pursuant to 31
U.S.C. ss. 3729 et seq.
32
(c) No director, officer, shareholder, employee or Person with a
"direct or indirect ownership interest" (as that phrase is
defined in 42 C.F.R. ss. 420.201) in Parent or any of its
Subsidiaries or any Managed Practice (it being understood and
agreed that this SECTION 4.26(c) shall not apply to any
shareholder of Parent that is not also a director, officer or
employee of Parent):
(i) except as set forth on SCHEDULE 4.26, has had a civil monetary
penalty assessed against him or her pursuant to 42 X.X.X.xx.
1320a-7a;
(ii) has been excluded from participation in a Federal Health Care
Program (as that term is defined in 42 X.X.X.xx. 1320a-7b);
(iii) except as set forth on SCHEDULE 4.26, has been convicted (as
that term is defined in 42 C.F.R. ss. 1001.2) of any of those
offenses described in 42 U.S.C. ss. 1320a-7b or 18 U.S.C.
xx.xx. 669, 1035, 1347, 1518, including any of the following
categories of offenses:
a. criminal offenses relating to the delivery of an item or
service under any Federal Health Care Program (as that term is
defined in 42 U.S.C. ss. 1320a-7b) or healthcare benefit
program (as that term is defined in 18 U.S.C. ss. 24(b);
b. criminal offenses under federal or state law relating to
patient neglect or abuse in connection with the delivery of a
healthcare item or service;
c. criminal offenses under federal or state law relating to fraud
and abuse, theft, embezzlement, false statements to third
parties, money laundering, kickbacks, breach of fiduciary
responsibility or other financial misconduct in connection
with the delivery of a healthcare item or service or with
respect to any act or omission in a program operated by or
financed in whole or in part by any federal, state or local
governmental agency;
d. federal or state laws relating to the interference with or
obstruction of any investigations into any criminal offenses
described in (a) through (c) above; or
e. criminal offenses under federal or state law relating to the
unlawful manufacturing, distribution, prescription or
dispensing of a controlled substance; or
(iv) has been involved or named in a U.S. Attorney complaint made
or any other action taken pursuant to the False Claims Act
under 31 X.X.X.xx.xx. 3729-3731 or qui tam action brought
pursuant to 31 X.X.X.xx. 3729 et seq.
(d) Each of Parent and its Subsidiaries and each Managed Practice
is and shall continue to be in compliance with all applicable
laws relating to its relationships with physicians, including
42 U.S.C. ss. 1395nn and the regulations issued thereunder.
(e) Each of Parent and its Subsidiaries and each Managed Practice
is and shall continue to be in compliance with all laws,
rules, regulations, orders, decrees and directions of any
Governmental Authority (including the Social Security Act, as
amended, the rules and regulations promulgated by CMS), and
any state laws applicable to the collections on Accounts, any
contracts relating thereto or any other Collateral, or
otherwise applicable to its business and properties, a
violation of which could materially adversely affect its
ability to collect on its Accounts or repay the Obligations.
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(f) All persons providing professional health care services for or
on behalf of Parent or any of its Subsidiaries or any Managed
Practice (either as an employee or independent contractor) are
appropriately licensed in every jurisdiction in which they
hold themselves out as professional health care providers.
(g) Except as set forth on SCHEDULE 4.26, none of Parent or its
Subsidiaries or any Managed Practice has had its state or
local licenses, permits, registrations, certifications and
other approvals relating to providing healthcare services and
other services provided by Parent or such Subsidiary or such
Managed Practice suspended, revoked, limited or denied renewal
at any time.
4.27 OTHER HEALTHCARE REGULATORY MATTERS. Each of Parent and its
Subsidiaries and each Managed Practice has developed and
implemented a current and effective compliance program, to the
extent guidelines for such compliance program have been
developed by CMS for Parent's or such Subsidiary's or such
Managed Practice's business operations. As of the Closing
Date, none of Parent or any of its Subsidiaries or any Managed
Practice (a) is a party to a corporate integrity agreement,
(b) has any reporting obligations pursuant to a settlement
agreement, plan of correction, or other remedial measure
entered into with a Governmental Authority, (c) except as set
forth on SCHEDULE 4.27, is currently, or to Parent's and
Borrowers' best knowledge, has been the subject of any
investigation conducted by any federal or state enforcement
agency, including an investigation involving compliance with
Healthcare Laws, (d) to Parent's and Borrowers' best
knowledge, has been a defendant in any qui tam/false claims
act litigation and (e) has been served with or received any
written search warrant, subpoena, civil investigative demand
or contact letter from any federal or state enforcement agency
related to such business operations.
4.28 HIPAA COMPLIANCE. To the extent that and for so long as Parent
or its Subsidiaries or any Managed Practice is a "covered
entity" as such term is defined under the requirements and
implementing regulations at 45 Code of Federal Regulations
Parts 160-64 for the Administrative Simplification provisions
of Title II, Subtitle F of the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA"), Parent, such
Subsidiaries and such Managed Practice (a) has undertaken or
will promptly undertake all necessary surveys, audits,
inventories, reviews, analyses and/or assessments (including
any necessary risk assessments) of all areas of its business
and operations required by HIPAA and/or that could be
adversely affected by the failure of Parent, such Subsidiary
or such Managed Practice to be HIPAA Compliant (as defined
below); (b) has developed a detailed plan and time line for
becoming HIPAA Compliant (a "HIPAA COMPLIANCE PLAN"); and (c)
has implemented those provisions of such HIPAA Compliance Plan
in all material respects necessary to ensure that Parent, such
Subsidiary or such Managed Practice is or becomes HIPAA
Compliant. For purposes hereof, "HIPAA COMPLIANt" shall mean
that Parent, such Subsidiary or such Managed Practice (x) is
or will be in compliance with each of the applicable
requirements of the so-called "Administrative Simplification"
provisions of HIPAA on and as of each date that any part
thereof, or any final rule or regulation thereunder, becomes
effective in accordance with its or their terms, as the case
may be (each such date, a "HIPAA COMPLIANCE DATE") and (y) is
not and could not reasonably be expected to become, as of any
date following any such HIPAA Compliance Date, the subject of
any civil or criminal penalty, process, claim, action or
proceeding, or any administrative or other regulatory review,
survey, process or proceeding (other than routine surveys or
reviews conducted by any government health plan or other
accreditation entity) that could result in any of the
foregoing or that could reasonably be expected to adversely
affect such Parent's, such Subsidiary's or such Managed
Practice's business, operations, assets, properties or
condition (financial or otherwise), in connection with any
actual or potential violation by Parent, such Subsidiary or
such Managed Practice of the then-effective provisions of
HIPAA.
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4.29 NON-MATERIAL SUBSIDIARIES. Each Non-Material Subsidiary has no
material liabilities, conducts no material operations or
business and owns no material assets or properties.
4.30 DVI REVOLVER.
(a) Administrative Borrower has delivered true, correct and
complete copies of the DVI Revolver Agreement (including all
amendments, modifications and waivers with respect thereto) to
Agent.
(b) The Collateral under the DVI Revolver Agreement does not
include any of the Collateral under the Security Agreement.
(c) Radnet Sub, Inc. does not generate any Accounts.
4.31 None of Parent or its Subsidiaries is an Affiliate of Tower
Radiology Medical Group, Inc., Tower Magnetic Imaging Group,
Inc., Tower San Xxxxxxx Imaging Medical Group, Tower Nuclear
Medical Group, Inc., Cardiac and Vascular Diagnostic Center
Medical Group, Inc. or Xxxxxx Xxxxxxxx, M.D.
4.32 XXXXXXX HILLS MRI.
(a) There are no Accounts generated by or on behalf of Parent or
any of its Subsidiaries on account of the operation of the
imaging facility known as Xxxxxxx Hills MRI.
(b) None of Parent or any of its Subsidiaries operates an imaging
facility known as Xxxxxxx Hills MRI.
5. AFFIRMATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, Parent and
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:
5.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Parent and Borrowers to produce financial statements
in accordance with GAAP and maintain records pertaining to the
Collateral that contain information as from time to time
reasonably may be requested by Agent. Parent and Borrowers
also shall keep a reporting syst em that shows all additions,
sales, claims, returns, and allowances with respect to their
and their Subsidiaries' sales.
5.2 COLLATERAL REPORTING. Provide Agent (and if so requested by
Agent, with copies for each Lender) with each of the reports
set forth on SCHEDULE 5.2 at the times specified therein. In
addition, each Borrower agrees to cooperate fully with Agent
to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of
the items set forth above.
35
5.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent,
with copies to each Lender, each of the financial statements,
reports, or other items set forth on SCHEDULE 5.3 at the time
specified herein. In addition, Parent agrees that no
Subsidiary of Parent will have a fiscal year different from
that of Parent.
5.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its
audited financial statements to Agent, but only to the extent
such Guarantor's financial statements are not consolidated
with Parent's financial statements.
5.5 INSPECTION. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its
properties and inspect any of its assets or books and records,
to examine and make copies of its books and records, and to
discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such
reasonable times and intervals as Agent or any such Lender may
designate and, so long as no Default or Event of Default
exists, with reasonable prior notice to Administrative
Borrower.
5.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct
to their business in good working order and condition,
ordinary wear, tear, and casualty excepted (and except where
the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the
provisions of all material leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or
thereunder.
5.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied,
or assessed against Parent, its Subsidiaries, or any of their
respective assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be
the subject of a Permitted Protest. Parent and Borrowers will
and will cause their Subsidiaries to make timely payment or
deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and
federal income taxes, and will, upon request, furnish Agent
with proof satisfactory to Agent indicating that Parent or the
applicable Subsidiary of Parent has made such payments or
deposits.
5.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting Parent
and its Subsidiaries' assets wherever located, covering loss
or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Parent and
Borrowers also shall maintain business interruption, public
liability, and product liability insurance, as well as
insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in
such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrowers shall deliver
copies of all such policies to Agent with an endorsement
naming Agent as a loss payee (under a satisfactory lender's
loss payable endorsement) or additional insured, as
appropriate, and in each case as Agent's interest may appear.
Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the
policy for any reason whatsoever.
36
(b) Administrative Borrower shall give Agent prompt notice of any
loss exceeding $100,000 covered by such insurance. So long as
no Event of Default has occurred and is continuing, Borrowers
shall have the exclusive right to adjust (i) any losses
payable under any such insurance policies to the extent that
such losses relate to Collateral on which Agent has a first
priority security interest at such time or (ii) any losses
payable under a business interruption insurance policy (any
such losses under clause (i) or (ii), "APPLICABLE LOSSES")
which are less than $250,000. Following the occurrence and
during the continuation of an Event of Default, or in the case
of any Applicable Losses payable under such insurance
exceeding $250,000, Agent shall have the exclusive right to
adjust any Applicable Losses payable under any such insurance
policies, without any liability to Borrowers whatsoever in
respect of such adjustments. Any monies received as payment
for any Applicable Loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by
eminent domain, shall be paid over to Agent to be applied at
the option of the Required Lenders either to the prepayment of
the Obligations or to be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the
Required Lenders for application to the cost of repairs,
replacements, or restorations; PROVIDED, HOWEVER, that, with
respect to any such monies in an aggregate amount during any
12 consecutive month period not in excess of $250,000, so long
as (A) no Default or Event of Default shall have occurred and
is continuing, (B) the sum of Borrowers' Excess Availability
plus Qualified Cash is greater than $2,000,000, (C)
Administrative Borrower shall have given Lender prior written
notice of the Borrowers or their respective Subsidiaries'
intention to apply such monies to the costs of repairs,
replacement, or restoration of the property which is the
subject of the loss, destruction, or taking by condemnation,
(D) the monies are held in a cash collateral account in which
Lender has a perfected first-priority security interest, and
(E) Parent or its Subsidiaries complete such repairs,
replacements, or restoration within 180 days after the initial
receipt of such monies, Borrowers shall have the option to
apply such monies to the costs of repairs, replacement, or
restoration of the property which is the subject of the loss,
destruction, or taking by condemnation unless and to the
extent that such applicable period shall have expired without
such repairs, replacements, or restoration being made, in
which case, any amounts remaining in the cash collateral
account shall be paid to Lender and applied as set forth
above.
5.9 LOCATION OF EQUIPMENT. Keep Parent and its Subsidiaries'
Equipment (other than vehicles and Equipment out for repair
and other Equipment on which Agent does not have a first
priority security interest) only at the locations identified
on SCHEDULE 4.5 and their chief executive offices only at the
locations identified on SCHEDULE 4.7(b); PROVIDED, HOWEVER,
that Administrative Borrower may amend SCHEDULE 4.5 or
SCHEDULE 4.7 so long as such amendment occurs by written
notice to Agent not less than 30 days prior to the date on
which such Equipment is moved to such new location or such
chief executive office is relocated, so long as such new
location is within the continental United States, and so long
as, at the time of such written notification, the applicable
Borrower provides Agent a Collateral Access Agreement with
respect thereto.
5.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any
Governmental Authority, other than laws, rules, regulations,
and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a
Material Adverse Change.
5.11 LEASES. Pay when due all rents and other amounts payable under
any material leases to which Parent or any Subsidiary of
Parent is a party or by which Parent's or any of its
Subsidiaries' properties and assets are bound, unless such
payments are the subject of a Permitted Protest.
37
5.12 EXISTENCE. At all times preserve and keep in full force and
effect Parent's and each of its Subsidiaries' valid existence
and good standing and any rights and franchises material to
their businesses.
5.13 ENVIRONMENTAL. (a) Keep any property either owned or operated
by Parent or any Subsidiary of Parent free of any
Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all
material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably
requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto
property owned or operated by Parent or any Subsidiary of
Parent and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly, but in any event within 5
days of its receipt thereof, provide Agent with written notice
of any of the following: (i) notice that an Environmental Lien
has been filed against any of the real or personal property of
Parent or any Subsidiary of Parent, (ii) commencement of any
Environmental Action or notice that an Environmental Action
will be filed against Parent or any Subsidiary of Parent, and
(iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a
Material Adverse Change.
5.14 DISCLOSURE UPDATES. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, notify Agent
if any written information, exhibit, or report furnished to
the Lender Group contained, at the time it was furnished, any
untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which
made. The foregoing to the contrary notwithstanding, any
notification pursuant to the foregoing provision will not cure
or remedy the effect of the prior untrue statement of a
material fact or omission of any material fact nor shall any
such notification have the affect of amending or modifying
this Agreement or any of the Schedules hereto.
5.15 CONTROL AGREEMENTS. Take all reasonable steps in order for
Agent to obtain control in accordance with Sections 8-106,
9-104, 9-105, 9-106, and 9-107 of the Code with respect to
(subject to the proviso contained in SECTION 6.12) all of its
Securities Accounts, Deposit Accounts, electronic chattel
paper, investment property, and letter of credit rights.
5.16 FORMATION OF SUBSIDIARIES. If any Borrower or any Guarantor
intends to form any direct or indirect Subsidiary or acquire
any direct or indirect Subsidiary after the Closing Date, such
Borrower or such Guarantor shall provide at least five (5)
days prior written notice to Agent. At the time that any
Borrower or any Guarantor forms any direct or indirect
Subsidiary or acquires any direct or indirect Subsidiary after
the Closing Date, such Borrower or such Guarantor shall (a)
cause such new Subsidiary to provide to Agent a joinder to the
Guaranty and the Security Agreement, together with such other
security documents (including Mortgages with respect to any
Real Property of such new Subsidiary), as well as appropriate
financing statements (and with respect to all property subject
to a Mortgage, fixture filings), all in form and substance
satisfactory to Agent (including being sufficient to grant
Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary)
(it being understood and agreed that any such Borrower or
Guarantor shall not be required to pledge the Stock of such
new Subsidiary), and (b) provide to Agent all other
documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate
with respect to the execution and delivery of the applicable
38
documentation referred to above (including policies of title
insurance or other documentation with respect to all property
subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this SECTION 5.16 shall be a
Loan Document. Notwithstanding the foregoing provisions of
this SECTION 5.16, Agent shall not be obligated to consent to
any such formation or acquisition of a Subsidiary unless such
formation or acquisition is otherwise expressly permitted
hereunder.
5.17 MATERIAL DOCUMENTS. Promptly provide Agent with true and
complete copies of any and all material documents delivered to
any Person pursuant to, or in connection with, any Indenture
Document, Management Agreement, Restructuring Document, or any
other Material Contract.
5.18 OBTAINING OF PERMITS, ETC. Obtain, maintain and preserve, and
cause each of its Subsidiaries and each Managed Practice to
obtain, maintain and preserve, and take all necessary action
to timely renew, all permits, licenses, authorizations,
approvals, entitlements and accreditations which are necessary
or useful in the proper conduct of its business.
5.19 COMPLIANCE WITH MANAGEMENT AGREEMENTS. Comply, and cause each
of its Subsidiaries and each Managed Practice to comply, in
all material respects, with the terms of each Management
Agreement to which it is a party.
5.20 ACCREDITATION AND LICENSING.
(a) Keep, and cause each of its Subsidiaries and each Managed
Practice to keep, itself fully licensed with all licenses
required to operate such Person's business under applicable
law, maintain such Person's qualification to practice medicine
in the manner contemplated under the applicable Management
Agreement and for participation in, and payment under
Medicaid, Medicare and any other Third Party Payor program
providing for payment or reimbursement for services rendered
by such Person; and promptly furnish or cause to be furnished
to Agent copies of all reports and correspondence it or any of
its Subsidiaries delivers to or receives from any Person
relating to any loss or revocation (or threatened loss or
revocation) of any qualification described in this Section or
any material claim, audit or complaint received by Parent or
its Subsidiaries or any Managed Practice (excluding
malpractice claims, routine or random audits and routine
license and certification surveys, unless such surveys include
a recommendation that the Government Reimbursement Program
certification or license of a facility should be terminated,
revoked or suspended) by or on behalf of a Government
Reimbursement Program or other Person relating to the delivery
of medical services and payment therefor or billing
procedures.
(b) Xxxxxxx Radiology Medical Group III shall cause each Managed
Practice to: (i) provide professional services to its patients
in compliance with ethical standards, laws, rules and
regulations applicable to the operations of such Managed
Practice; (ii) assure that each physician employee of such
Managed Practice has all required licenses, credentials,
approvals and other certifications to perform his or her
duties and services for such Managed Practice; and (iii)
maintain all licenses required to operate such Managed
Practices' business under applicable law.
39
6. NEGATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, Parent and
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:
6.1 INDEBTEDNESS. Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or
indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying
Issuers with respect to Underlying Letters of Credit,
(b) the Indenture Notes and the Indebtedness set forth on SCHEDULE
4.19,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this SECTION 6.1 (and
continuance or renewal of any Permitted Liens associated
therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of
repayment of the Obligations by Borrowers or materially impair
Borrowers' creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal
amount of, or interest rate with respect to, the Indebtedness
so refinanced, renewed, or extended or add one or more
Borrowers as liable with respect thereto if such additional
Borrowers were not liable with respect to the original
Indebtedness, (iii) such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity
of the Indebtedness so refinanced, renewed, or extended, nor
are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable
Borrower, (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as
favorable to the Lender Group as those that were applicable to
the refinanced, renewed, or extended Indebtedness, and (v) the
Indebtedness that is refinanced, renewed, or extended is not
recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with
respect to the Indebtedness that was refinanced, renewed, or
extended,
(e) Indebtedness issued in connection with any Permitted
Acquisition so long as (i) the incurrence of such Indebtedness
would not, on a pro forma basis, after giving effect to any
such incurrence of Indebtedness, cause Parent and Borrowers to
fail to be in compliance with SECTION 6.16 if such covenants
were tested at such time, (ii) no Default or Event of Default
shall have occurred and be continuing, both before and
immediately after giving effect to the incurrence of such
Indebtedness, and (iii) such Indebtedness (other than
Indebtedness secured solely by Equipment at the time of such
Permitted Acquisition) is subordinated to the Obligations
hereunder on terms and conditions reasonably satisfactory to
Agent,
(f) endorsement of instruments or other payment items for deposit,
and
(g) Indebtedness composing Permitted Investments.
40
6.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets,
of any kind, whether now owned or hereafter acquired, or any
income or profits therefrom, except for Permitted Liens
(including Liens that are replacements of Permitted Liens to
the extent that the original Indebtedness is refinanced,
renewed, or extended under SECTION 6.1(d) and so long as the
replacement Liens only encumber those assets that secured the
refinanced, renewed, or extended Indebtedness).
6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except for Permitted Acquisitions, enter into any merger,
consolidation, reorganization, or recapitalization, or
reclassify its Stock, or purchase all or substantially all of
the assets or Stock of any other Person, in any case, in one
transaction or a series of transactions, or enter into any
agreement in respect of or to undertake any of the foregoing,
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or
(c) Suspend or go out of a substantial portion of its or their
business.
6.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose
of any of the assets of Parent or any Subsidiary of Parent.
6.5 CHANGE NAME. Change Parent's or any of its Subsidiaries' name,
organizational identification number, state of organization,
or organizational identity; PROVIDED, HOWEVER, that Parent or
a Subsidiary of Parent may change its name upon at least 30
days prior written notice by Administrative Borrower to Agent
of such change so long as, (a) at the time of such written
notification, such Borrower or such Subsidiary provides any
financing statements necessary to perfect and continue
perfected the Agent's Liens and (b) immediately after such
name change, Administrative Borrower provides Agent with
evidence of such name change (including copies of any related
public filings).
6.6 NATURE OF BUSINESS. Make any change in the principal nature of
their business.
6.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a
refinancing permitted by SECTION 6.1(d),
(a) optionally prepay, redeem, defease, purchase, or otherwise
acquire (collectively, a "PREPAYMENT") any Indebtedness of
Parent or any Subsidiary of Parent, other than (i) the
Obligations in accordance with this Agreement, (ii) in
accordance with the Restructuring Documents as in effect on
the Closing Date without any modification or amendment
thereof, and (iii) additional Prepayments in an amount not to
exceed $750,000 (or $1,000,000 if the sum of Borrowers' Excess
Availability plus Qualified Cash shall be equal to at least
$5,000,000, both immediately prior to and immediately after
giving effect to any such Prepayment) for any individual
Prepayment or in any calendar year or $3,000,000 in the
aggregate over the term of this Agreement so long as (A) no
Default or Event of Default shall have occurred and be
continuing and (B) the sum of Borrowers' Excess Availability
plus Qualified Cash shall be equal to at least $4,000,000, in
each case both immediately prior to and immediately after
giving effect to any such Prepayment,
41
(b) make any payment on account of any Subordinated Indebtedness,
other than (i) to the extent permitted under clause (a)(iv)
above with respect to the Indenture Notes, (ii) so long as no
Default or Event of Default shall have occurred and be
continuing immediately prior to or after giving effect to any
such payment, (A) interest (but not including any default
interest) due and payable on the Indenture Notes (as in effect
on the Closing Date without any modification or amendment
thereof) and (B) payments due and payable on the Tower
Litigation Note (as in effect on the Closing Date without any
modification or amendment thereof), and (iii) payments
permitted to Xxxxxx Xxxxx in respect of the Xxxxxx Xxxxx
Shareholder Note solely to the extent permitted under the
Xxxxxx Xxxxx Subordination Agreement,
(c) directly or indirectly, amend, modify , alter, increase, or
change any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing
or concerning Indebtedness permitted under SECTION 6.1(B) or
(C) (other than amendments, modifications or changes to
Indebtedness evidenced by, or any instrument or agreement
constituting, an Indenture Document, which shall be governed
by clause (d) below), or
(d) agree to (i) any amendment or other change to or waiver of any
of its rights under any Indenture Document that is adverse to
the Agent and the Lenders or (ii) any material amendment or
other material change to or material waiver of any of its
rights under any Management Agreement, Restructuring Document
or other Material Contract (including the GE Master Lease
Agreement) that is adverse to the Agent and the Lenders.
6.8 [INTENTIONALLY OMITTED].
6.9 CONSIGNMENTS. Consign any of their Inventory or sell any of
their Inventory on xxxx and hold, sale or return, sale on
approval, or other conditional terms of sale.
6.10 DISTRIBUTIONS. Other than distributions or declaration and
payment of dividends by a Borrower or a Subsidiary of a
Borrower to a Borrower, make any distribution or declare or
pay any dividends (in cash or other property, other than
common Stock) on, or purchase, acquire, redeem, or retire any
of any Borrower's Stock, of any class, whether now or
hereafter outstanding (collectively, "DISTRIBUTIONS");
PROVIDED, HOWEVER, that so long as no Default or Event of
Default shall have occurred and be continuing immediately
prior to or after giving effect to any such payment, (a)
Borrowers may make Distributions to Parent (1) in amounts
necessary to pay customary expenses of Parent in the ordinary
course of its business as a public holding company (including
salaries and related reasonable and customary expenses
incurred by employees of Parent) in an aggregate amount not to
exceed $750,000 in any fiscal year, (2) in amounts necessary
to enable Parent to pay taxes when due and owing by it in the
ordinary course of its business as a holding company and (3)
in amounts necessary to enable Parent to pay interest on the
Indenture Notes to the extent permitted by SECTION 6.7(b) and
to make Prepayments in respect of the Indenture Notes to the
extent permitted under SECTION 6.7(a), and (b) Parent may make
Distributions in the form of common Stock.
6.11 ACCOUNTING METHODS. Modify or change their fiscal year or
their method of accounting (other than as may be required to
conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau
for the preparation or storage of Parent's or its
Subsidiaries' accounting records without said accounting firm
or service bureau agreeing to provide Agent information
regarding Borrowers' and their Subsidiaries' financial
condition.
42
6.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any
liabilities (including contingent obligations) for or in
connection with any Investment; PROVIDED, HOWEVER, that
Administrative Borrower and its Subsidiaries shall not have
Permitted Investments (other than in the Cash Management
Accounts) in Deposit Accounts or Securities Accounts in an
aggregate amount in excess of $100,000 at any one time unless
Administrative Borrower or its Subsidiary, as applicable, and
the applicable securities intermediary or bank have entered
into Control Agreements governing such Permitted Investments
in order to perfect (and further establish) the Agent's Liens
in such Permitted Investments. Subject to the foregoing
proviso, Borrowers shall not and shall not permit their
Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities
Account.
6.13 TRANSACTIONS WITH AFFILIATES. Other than the transactions
evidenced by promissory notes entered into as of the Closing
Date and disclosed on SCHEDULE 6.13, directly or indirectly
enter into or permit to exist any transaction with any
Affiliate of any Borrower except for transactions that (a) are
in the ordinary course of Borrowers' business, (b) are upon
fair and reasonable terms, (c) if they involve one or more
payments by any Borrower or any of its Subsidiaries in excess
of $50,000, are fully disclosed to Agent, and (d) are no less
favorable to Borrowers or their respective Subsidiaries, as
applicable, than would be obtained in an arm's length
transaction with a non-Affiliate.
6.14 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loan for any purpose other than (a) on the Closing Date, (i)
to repay in full the outstanding principal, accrued interest,
and accrued fees and expenses owing to Existing Lender and
(ii) to pay transactional fees, costs, and expenses incurred
in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof,
for its lawful and permitted purposes.
6.15 INVENTORY AND EQUIPMENT WITH BAILEES. Store the Inventory or
Equipment of Borrowers or their Subsidiaries at any time now
or hereafter with a bailee, warehouseman, or similar party.
6.16 FINANCIAL COVENANTS.
(a) Fail to maintain or achieve:
(i) MINIMUM EBITDA. EBITDA, measured on a month-end basis, of at
least the required amount set forth in the following table for
the applicable period set forth opposite thereto:
43
-------------------------------------------------------------------------
Applicable Amount Applicable Period
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending July 31, 2004
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending August 31, 2004
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending September 30, 2004
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending October 31, 2004
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending November 30, 2004
-------------------------------------------------------------------------
$26,000,000 For the 12-month period
ending December 31, 2004
-------------------------------------------------------------------------
$26,500,000 For the 12-month period
ending January 31, 2005
-------------------------------------------------------------------------
$26,500,000 For the 12-month period
ending February 28, 2005
-------------------------------------------------------------------------
$27,000,000 For the 12-month period
ending March 31, 2005
-------------------------------------------------------------------------
$27,500,000 For the 12-month period
ending April 30, 2005
-------------------------------------------------------------------------
$28,000,000 For the 12-month period
ending May 31, 2005
-------------------------------------------------------------------------
$28,500,000 For the 12-month period
ending June 30, 2005
-------------------------------------------------------------------------
$29,000,000 For the 12-month period
ending July 31, 2005
-------------------------------------------------------------------------
$29,500,000 For the 12-month period
ending August 31, 2005
-------------------------------------------------------------------------
$30,000,000 For the 12-month period
ending September 30, 2005
-------------------------------------------------------------------------
$30,000,000 For the 12-month period
ending October 31, 2005
-------------------------------------------------------------------------
$30,500,000 For the 12-month period
ending November 30, 2005
-------------------------------------------------------------------------
44
$31,000,000 For the 12-month period
ending December 31, 2005
-------------------------------------------------------------------------
$31,500,000 For the 12-month period
ending January 31, 2006
-------------------------------------------------------------------------
$31,500,000 For the 12-month period
ending February 28, 2006
-------------------------------------------------------------------------
$31,500,000 For the 12-month period
ending March 31, 2006
-------------------------------------------------------------------------
$32,000,000 For the 12-month period
ending April 30, 2006
-------------------------------------------------------------------------
$32,000,000 For the 12-month period
ending May 31, 2006
-------------------------------------------------------------------------
$32,000,000 For the 12-month period
ending June 30, 2006
-------------------------------------------------------------------------
$32,500,000 For the 12-month period
ending July 31, 2006
-------------------------------------------------------------------------
$32,500,000 For the 12-month period
ending August 31, 2006
-------------------------------------------------------------------------
$32,500,000 For the 12-month period
ending September 30, 2006
-------------------------------------------------------------------------
$33,300,000 For the 12-month period
ending October 31, 2006
-------------------------------------------------------------------------
$33,300,000 For the 12-month period
ending each month thereafter
-------------------------------------------------------------------------
(ii) FIXED CHARGE COVERAGE RATIO. A Fixed Charge Coverage Ratio,
measured on a month-end basis, of at least 1.0:1.0 for each
12-month period ending on the last day of each month
(commencing with the month ending May 31, 2004) during the
term of this Agreement.
(b) Permit:
45
(i) MAXIMUM LEVERAGE RATIO. A Leverage Ratio, measured on a fiscal
quarter-end basis, to be greater than the amount set forth in
the following table measured as of the applicable date set
forth opposite thereto:
-----------------------------------------------------------------------
Applicable Ratio Applicable Period
-----------------------------------------------------------------------
5.77:1.00 For the 12-month period
ending July 31, 2004
-----------------------------------------------------------------------
5.59:1.00 For the 12-month period
ending October 31, 2004
-----------------------------------------------------------------------
5.54:1.00 For the 12-month period
ending January 31, 2005
-----------------------------------------------------------------------
4.50:1.00 For the 12-month period
ending April 30, 2005
-----------------------------------------------------------------------
4.50:1.00 For the 12-month period
ending July 31, 2005
-----------------------------------------------------------------------
4.30: 1.00 For the 12-month period
ending October 31, 2005
-----------------------------------------------------------------------
4.30: 1.00 For the 12-month period
ending January 31, 2006
-----------------------------------------------------------------------
4.30: 1.00 For the 12-month period
ending April 30, 2006
-----------------------------------------------------------------------
4.30: 1.00 For the 12-month period
ending July 31, 2006
-----------------------------------------------------------------------
4.00: 1.00 For the 12-month period
ending October 31, 2006
-----------------------------------------------------------------------
4.00: 1.00 For the 12-month period
ending January 31, 2007
-----------------------------------------------------------------------
4.00: 1.00 For the 12-month period
ending April 30, 2007
-----------------------------------------------------------------------
4.00: 1.00 For the 12-month period
ending July 31, 2007
-----------------------------------------------------------------------
3.80: 1.00 For the 12-month period
ending each month thereafter
-----------------------------------------------------------------------
46
6.17 NON-MATERIAL SUBSIDIARIES. No Non-Material Subsidiary will
incur any material liabilities, conduct any material
operations or business or own or acquire any material assets
or properties.
6.18 DVI REVOLVER AGREEMENT.
(a) None of Parent or its Subsidiaries will amend, modify, or
supplement the DVI Revolver Agreement without the prior
written consent of the Agent.
6.19 None of Parent or its Subsidiaries will make any borrowings
under the DVI Revolver Agreement after the Closing Date
6.20 XXXXXXX HILLS MRI. None of Parent or its Subsidiaries will
generate any Accounts on account of the operation of the
imaging facility known as Xxxxxxx Hills MRI.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
7.1 If Borrowers fail to pay when due and payable, or when
declared due and payable, (a) all or any portion of the
Obligations consisting of interest, fees, or charges due the
Lender Group, reimbursement of Lender Group Expenses, or other
amounts (other than any portion thereof constituting
principal) constituting Obligations (including any portion
thereof that accrues after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in
whole or in part as a claim in any such Insolvency
Proceeding), and such failure continues for a period of 3
Business Days, or (b) all or any portion of the principal of
the Obligations);
7.2 If Parent or any Subsidiary of Parent
(a) fail to perform or observe any covenant or other agreement
contained in any of SECTIONS 2.7, 5.2, 5.3, 5.4, 5.5, 5.8,
5.12, 5.14, 5.16, and 6.1 through 6.16 of this Agreement;
(b) fail to perform or observe any covenant or other agreement
contained in any of SECTIONS 5.6, 5.7, 5.9, 5.10, 5.11, and
5.15 of this Agreement and such failure continues for a period
of 10 days after the earlier of (i) the date on which such
failure shall first become known to any officer of any
Borrower or (ii) written notice thereof is given to
Administrative Borrower by Agent; or
(c) fail to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan
Documents; in each case, other than any such covenant or
agreement that is the subject of another provision of this
SECTION 7 (in which event such other provision of this SECTION
7 shall govern), and such failure continues for a period of 20
days after the earlier of (i) the date on which such failure
shall first become known to any officer of any Borrower or
(ii) written notice thereof is given to Administrative
Borrower by Agent;
7.3 If any material portion of Parent's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ
or distress warrant, or is levied upon, or comes into the
possession of any third Person and the same is not discharged
before the earlier of 30 days after the date it first arises
or 5 days prior to the date on which such property or asset is
subject to forfeiture by Parent or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by Parent or any
Subsidiary of Parent;
7.5 If an Insolvency Proceeding is commenced against Parent or any
Subsidiary of Parent, and any of the following events occur:
(a) Parent or the applicable Subsidiary consents to the
institution of such Insolvency Proceeding against it, (b) the
petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency
Proceeding is not dismissed within 60 calendar days of the
date of the filing thereof; (d) an interim trustee is
appointed to take possession of all or any substantial portion
of the properties or assets of, or to operate all or any
substantial portion of the business of, Parent or any
Subsidiary of Parent, or (e) an order for relief shall have
been issued or entered therein;
7.6 If Parent or any Subsidiary of Parent is enjoined, restrained,
or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;
7.7 If one or more judgments or other claims involving an
aggregate amount of $250,000, or more (except to the extent
fully covered by insurance pursuant to which the insurer has
accepted liability therefor in writing) shall be entered or
filed against Parent or any Subsidiary of Parent or with
respect to any of their respective assets, and the same is not
released, discharged, bonded against, or stayed pending appeal
before the earlier of 30 days after the date it first arises
or 5 days prior to the date on which such asset is subject to
being forfeited by Parent or the applicable Subsidiary;
7.8 If there is a default in one or more agreements to which
Parent or any Subsidiary of Parent is a party with one or more
third Persons relative to Indebtedness of Parent or any
Subsidiary of Parent involving an aggregate amount of $250,000
or more, and such default (a) occurs at the final maturity of
the obligations thereunder, or (b) results in a right by such
third Person(s), irrespective of whether exercised, to
accelerate the maturity of Parent's or the applicable
Subsidiary's obligations thereunder;
47
7.9 If any warranty, representation, statement, or Record made
herein or in any other Loan Document or delivered to Lender in
connection with this Agreement or any other Loan Document
proves to be untrue in any material respect as of the date of
issuance or making or deemed making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is
limited or terminated by operation of law or by such Guarantor
or any such Guarantor becomes the subject of an Insolvency
Proceeding;
7.11 If the Security Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or
cease to create a valid and perfected and, except to the
extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral
covered hereby or thereby, except as a result of a disposition
of the applicable Collateral in a transaction permitted under
this Agreement;
7.12 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by Parent or any
Subsidiary of Parent, or a proceeding shall be commenced by
Parent or any Subsidiary of Parent, or by any Governmental
Authority having jurisdiction over Parent or any Subsidiary of
Parent, seeking to establish the invalidity or
unenforceability thereof, or Parent or any Subsidiary of
Parent shall deny that it has any liability or obligation
purported to be created under any Loan Document;
7.13 A Change of Control shall occur;
7.14 The occurrence of (a) any cancellation, revocation, suspension
or termination of any Medicare Certification, Medicare
Provider Agreement, Medicaid Certification or Medicaid
Provider Agreement affecting Parent or any of its Subsidiaries
or any Managed Practice, or (b) the loss of any other Permit
of Parent or any of its Subsidiaries or any Managed Practice
from any Governmental Authority or Third Party Payor or
termination of any contract of Parent or any of its
Subsidiaries or any Managed Practice with any Governmental
Authority or Third Party Payor, in either case, which could
reasonably be expected to have a Material Adverse Change;
7.15 The introduction of, or any change in, any law or regulation
governing or affecting a physician practice, a physician
practice management company or any practice or practice group
managed thereby or a facility providing radiology technical
services or any practice or practice group managed thereby,
including any Healthcare Laws, which could reasonably be
expected to have a Material Adverse Change;
7.16 Any default or breach shall occur under any Management
Agreement, any Restructuring Document or any other Material
Contracts (including the GE Master Lease Agreement) and such
default or breach, individually or when aggregated with all
such defaults or breaches, could reasonably be expected to
have a Material Adverse Change; or
7.17 The revocation by any Borrower or any of their Subsidiaries of
any Governmental Account Debtor Sweep Agreement.
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at
their election but without notice of their election and
without demand) may authorize and instruct Agent to do any one
or more of the following on behalf of the Lender Group (and
Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which
are authorized by Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable;
(b) Cease or restrict advancing money or extending credit to or
for the benefit of Borrowers under this Agreement, under any
of the Loan Documents, or under any other agreement between
Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group,
but without affecting any of the Agent's Liens in the
Collateral and without affecting the Obligations; and
48
(d) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan
Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.
8.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all
other agreements shall be cumulative. The Lender Group shall
have all other rights and remedies not inconsistent herewith
as provided under the Code, by law, or in equity. No exercise
by the Lender Group of one right or remedy shall be deemed an
election, and no waiver by the Lender Group of any Event of
Default shall be deemed a continuing waiver. No delay by the
Lender Group shall constitute a waiver, election, or
acquiescence by it.
8.3 COURT ORDER WITH RESPECT TO GOVERNMENTAL ACCOUNT DEBTOR. In
addition to the other rights and remedies set forth in this
SECTION 8, each of Parent and its Subsidiaries hereby
acknowledges and agrees that, upon the occurrence and
continuance of an Event of Default, the Lender Group shall
have the right to seek and obtain an immediate court order
directing any Governmental Account Debtor to make all future
payments on their Accounts directly to a Cash Management
Account owned by Agent.
9. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves
against the Borrowing Base or the Maximum Revolver Amount as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with SECTION 5.8 hereof, obtain and
maintain insurance policies of the type described in SECTION 5.8 and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
10. WAIVERS; INDEMNIFICATION.
10.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of
payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by
the Lender Group on which any such Borrower may in any way be
liable.
49
10.2 THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Each
Borrower hereby agrees that: (a) so long as Agent complies
with its obligations, if any, under the Code, the Lender Group
shall not in any way or manner be liable or responsible for:
(i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or
fashion from any cause, (iii) any diminution in the value
thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and
(b) all risk of loss, damage, or destruction of the Borrower
Collateral shall be borne by Borrowers.
10.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related
Persons, and each Participant (each, an "INDEMNIFIED PERSON")
harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, costs, fines,
penalties, and damages, and all reasonable fees and
disbursements of attorneys, experts and consultants, and other
costs and expenses actually incurred in connection therewith
or in connection with the enforcement of this indemnification
(as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon,
or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement,
performance, or administration (including any restructuring or
workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby
or thereby or the monitoring of Borrowers' and their
Subsidiaries' compliance with the terms of the Loan Documents,
and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document,
or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any
manner related thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"). The foregoing to the contrary
notwithstanding, Borrowers shall have no obligation to any
Indemnified Person under this SECTION 10.3 with respect to any
Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence
or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and
the repayment of the Obligations. If any Indemnified Person
makes any payment to any other Indemnified Person with respect
to an Indemnified Liability as to which Borrowers were
required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with
respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
50
If to Administrative Borrower: XXXXXXX RADIOLOGY MEDICAL GROUP III
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Fax No.: 000-000-0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Specialty Finance Manager
Fax No.: 000-000-0000
with copies to: XXXXXXXX & XXXXXXXX LLP
1290 Avenue of the Americas, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this SECTION 11,
other than notices by Agent in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Each Borrower acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.
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12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND
THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN
THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. PARENT, BORROWERS AND EACH MEMBER OF
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12(b).
(c) PARENT, BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PARENT,
BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more assignees
(each an "ASSIGNEE") that are Eligible Transferees all, or any
ratable part of all, of the Obligations, the Commitments and
the other rights and obligations of such Lender hereunder and
under the other Loan Documents, in a minimum amount of
$1,000,000; PROVIDED, HOWEVER, that Borrowers and Agent may
continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until
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(i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect
to the Assignee, have been given to Administrative Borrower
and Agent by such Lender and the Assignee, (ii) such Lender
and its Assignee have delivered to Administrative Borrower and
Agent an Assignment and Acceptance, and (iii) the assigning
Lender or Assignee has paid to Agent for Agent's separate
account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the payment
of any fees shall not be required and the Assignee need not be
an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business
or loan portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the assigning
Lender (with a copy to Administrative Borrower) that it has
received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Lender under the Loan Documents,
and (ii) the assigning Lender shall, to the extent that rights
and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to
SECTION 10.3 hereof) and be released from any future
obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under
this Agreement and the other Loan Documents, such Lender shall
cease to be a party hereto and thereto), and such assignment
shall effect a novation between Borrowers and the Assignee;
PROVIDED, HOWEVER, that nothing contained herein shall release
any assigning Lender from obligations that survive the
termination of this Agreement, including such assigning
Lender's obligations under ARTICLE 16 and SECTION 16.7 of this
Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties
hereto as follows: (1) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made
in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other Loan Document
furnished pursuant hereto, (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document
furnished pursuant hereto, (3) such Assignee confirms that it
has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (4) such Assignee will,
independently and without reliance upon Agent, such assigning
Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking
action under this Agreement, (5) such Assignee appoints and
authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the
terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will
perform all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
53
(d) Immediately upon Agent's receipt of the required processing
fee payment and the fully executed Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender PRO
TANTO.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons (a
"PARTICIPANT") participating interests in its Obligations, the
Commitment, and the other rights and interests of that Lender
(the "ORIGINATING LENDER") hereunder and under the other Loan
Documents; PROVIDED, HOWEVER, that (i) the Originating Lender
shall remain a "Lender" for all purposes of this Agreement and
the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments,
and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's
obligations under this Agreement shall remain unchanged, (ii)
the Originating Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrowers, Agent, and
the Lenders shall continue to deal solely and directly with
the Originating Lender in connection with the Originating
Lender's rights and obligations under this Agreement and the
other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document,
except to the extent such amendment to, or consent or waiver
with respect to this Agreement or of any other Loan Document
would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B)
reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C)
release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or
in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D)
postpone the payment of, or reduce the amount of, the interest
or fees payable to such Participant through such Lender, or
(E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums, and (v) all amounts
payable by Borrowers hereunder shall be determined as if such
Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set off in
respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement. The rights of any Participant only shall
be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any
rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the
Collections of Borrowers or their Subsidiaries, the
Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in
the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to
the provisions of SECTION 16.7, disclose all documents and
information which it now or hereafter may have relating to
Borrowers and their Subsidiaries and their respective
businesses.
54
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in
this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or
U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal
Reserve Bank may enforce such pledge or security interest in
any manner permitted under applicable law.
13.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the
parties; PROVIDED, HOWEVER, that Borrowers may not assign this
Agreement or any rights or duties hereunder without the
Lenders' prior written consent and any prohibited assignment
shall be absolutely void AB INITIO. No consent to assignment
by the Lenders shall release any Borrower from its
Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and
thereunder pursuant to SECTION 13.1 hereof and, except as
expressly required pursuant to SECTION 13.1 hereof, no consent
or approval by any Borrower is required in connection with any
such assignment.
14. AMENDMENTS; WAIVERS.
14.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document (other
than Bank Product Agreements), and no consent with respect to
any departure by Borrowers therefrom, shall be effective
unless the same shall be in writing and signed by the Required
Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be
effective, but only in the specific instance and for the
specific purpose for which given; PROVIDED, however, that no
such waiver, amendment, or consent shall, unless in writing
and signed by all of the Lenders affected thereby and
Administrative Borrower (on behalf of all Borrowers), do any
of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan
Document,
(c) reduce the principal of, or the rate of interest on, any loan
or other extension of credit hereunder, or reduce any fees or
other amounts payable hereunder or under any other Loan
Document,
(d) change the Pro Rata Share that is required to take any action
hereunder,
(e) amend or modify this Section or any provision of this
Agreement providing for consent or other action by all
Lenders,
(f) other than as permitted by SECTION 15.12, release Agent's Lien
in and to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or any Guarantor from any obligation for
the payment of money,
55
(j) change the definition of Borrowing Base or the definitions of
Eligible Accounts, Maximum Revolver Amount, Term Loan Amount,
or change SECTION 2.1(c), or
(k) amend any of the provisions of SECTION 15.
and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.
14.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or
agreement of all Lenders, and a Lender ("HOLDOUT LENDER")
fails to give its consent, authorization, or agreement, then
Agent, upon at least 5 Business Days prior irrevocable notice
to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a
"REPLACEMENT LENDER"), and the Holdout Lender shall have no
right to refuse to be replaced hereunder. Such notice to
replace the Holdout Lender shall specify an effective date for
such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver
an Assignment and Acceptance, subject only to the Holdout
Lender being repaid its share of the outstanding Obligations
(including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any
kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior
to the effective date of such replacement, the Holdout Lender
shall be deemed to have executed and delivered such Assignment
and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of SECTION 13.1. Until such
time as the Replacement Lenders shall have acquired all of
rights and obligations of the Holdout Lender hereunder and
under the other Loan Documents, the Holdout Lender shall
remain obligated to make the Holdout Lender's Pro Rata Share
of Advances and to purchase a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
14.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this
Agreement or any other Loan Document, or delay by Agent or any
Lender in exercising the same, will operate as a waiver
thereof. No waiver by Agent or any Lender will be effective
unless it is in writing, and then only to the extent
specifically stated. No waiver by Agent or any Lender on any
occasion shall affect or diminish Agent's and each Lender's
rights thereafter to require strict performance by Borrowers
of any provision of this Agreement. Agent's and each Lender's
rights under this Agreement and the other Loan Documents will
be cumulative and not exclusive of any other right or remedy
that Agent or any Lender may have.
56
15. AGENT; THE LENDER GROUP.
15.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints WFF as its representative under this
Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes Agent to execute and deliver each of
the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to Agent by the
terms of this Agreement or any other Loan Document, together
with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in
this SECTION 15. The provisions of this SECTION 16 (other than
the proviso to SECTION 15.11(a)) are solely for the benefit of
Agent, and the Lenders, and Borrowers and their Subsidiaries
shall have no rights as a third party beneficiary of any of
the provisions contained herein. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan
Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor
shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word
"Agent" is for convenience only, that WFF is merely the
representative of the Lenders, and only has the contractual
duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining
from taking any actions that Agent expressly is entitled to
take or assert under or pursuant to this Agreement and the
other Loan Documents. Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that
Agent shall have the right to exercise the following powers as
long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the
Collateral, the Collections of Borrowers and their
Subsidiaries, and related matters, (b) execute or file any and
all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to
the Loan Documents, (c) make Advances, for itself or on behalf
of Lenders as provided in the Loan Documents, (d) exclusively
receive, apply, and distribute the Collections of Borrowers
and their Subsidiaries as provided in the Loan Documents, (e)
open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender
Group with respect to Borrowers, the Obligations, the
Collateral, the Collections of Borrowers and their
Subsidiaries, or otherwise related to any of same as provided
in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers
pursuant to the Loan Documents.
15.2 DELEGATION OF DUTIES. Agent may execute any of its duties
under this Agreement or any other Loan Document by or through
agents, employees or attorneys in fact and shall be entitled
to advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or
misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or
willful misconduct.
57
15.3 LIABILITY OF AGENT. None of the Agent Related Persons shall
(a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation or warranty made by any
Borrower or any Subsidiary or Affiliate of any Borrower, or
any officer or director thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or
received by Agent under or in connection with, this Agreement
or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement
or any other Loan Document, or for any failure of any Borrower
or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent Related Person
shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or
any other Loan Document, or to inspect the books and records
or properties of Borrowers or the books or records or
properties of any of Borrowers' Subsidiaries or Affiliates.
15.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram,
telefacsimile or other electronic method of transmission,
telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to
have been signed, sent, or made by the proper Person or
Persons, and upon advice and statements of legal counsel
(including counsel to Borrowers or counsel to any Lender),
independent accountants and other experts selected by Agent.
Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document
unless Agent shall first receive such advice or concurrence of
the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by the
Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any
such action. Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or
consent of the requisite Lenders and such request and any
action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
15.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, except with respect to defaults
in the payment of principal, interest, fees, and expenses
required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent
has actual knowledge, unless Agent shall have received written
notice from a Lender or Administrative Borrower referring to
this Agreement, describing such Default or Event of Default,
and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual
knowledge. If any Lender obtains actual knowledge of any Event
of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall
be solely responsible for giving any notices to its
Participants, if any. Subject to SECTION 15.4, Agent shall
take such action with respect to such Default or Event of
Default as may be requested by the Required Lenders in
accordance with SECTION 8; PROVIDED, HOWEVER, that unless and
until Agent has received any such request, Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
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15.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent Related Persons has made any representation or warranty
to it, and that no act by Agent hereinafter taken, including
any review of the affairs of Borrowers and their Subsidiaries
or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness
of Borrowers and any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to Borrowers.
Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any
other Person party to a Loan Document. Except for notices,
reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any
duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects,
operations, property, financial and other condition or
creditworthiness of Borrowers and any other Person party to a
Loan Document that may come into the possession of any of the
Agent Related Persons.
15.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems
necessary or appropriate for the performance and fulfillment
of its functions, powers, and obligations pursuant to the Loan
Documents, including court costs, attorneys fees and expenses,
fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside
collection agencies, auctioneer fees and expenses, and costs
of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to
reimburse Agent or Lenders for such expenses pursuant to this
Agreement or otherwise. Agent is authorized and directed to
deduct and retain sufficient amounts from the Collections of
Borrowers and their Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the
event Agent is not reimbursed for such costs and expenses from
the Collections of Borrowers and their Subsidiaries received
by Agent, each Lender hereby agrees that it is and shall be
obligated to pay to or reimburse Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Agent Related Persons (to the
extent not reimbursed by or on behalf of Borrowers and without
limiting the obligation of Borrowers to do so), according to
their Pro Rata Shares, from and against any and all
Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender
shall be liable for the payment to any Agent Related Person of
any portion of such Indemnified Liabilities resulting solely
from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for
such Lender's Pro Rata Share of any costs or out of pocket
expenses (including attorneys, accountants, advisors, and
59
consultants fees and expenses) incurred by Agent in connection
with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document
contemplated by or referred to herein or therein, to the
extent that Agent is not reimbursed for such expenses by or on
behalf of Borrowers. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
15.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make
loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though WFF were not Agent hereunder, and, in
each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrowers or
their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of
a waiver of such confidentiality obligations, which waiver
Agent will use its reasonable best efforts to obtain), Agent
shall not be under any obligation to provide such information
to them. The terms "Lender" and "Lenders" include WFF in its
individual capacity.
15.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice
to the Lenders. If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the
Lenders. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent
has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required
Lenders may agree in writing to remove and replace Agent with
a successor Agent from among the Lenders. In any such event,
upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the
rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring
Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder
as Agent, the provisions of this SECTION 15 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.
15.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person party
to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of
the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and
its respective Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person party to
any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and
that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender shall not
be under any obligation to provide such information to them.
With respect to the Swing Loans and Protective Advances, Swing
Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as
though it were not the sub-agent of Agent.
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15.11 WITHHOLDING TAXES.
(a) All payments made by any Borrower hereunder or under any note
or other Loan Document will be made without setoff,
counterclaim, or other defense. In addition, all such payments
will be made free and clear of, and without deduction or
withholding for, any present or future Taxes, and in the event
any deduction or withholding of Taxes is required, each
Borrower shall comply with the penultimate sentence of this
SECTION 15.11(a). "TAXES" shall mean, any taxes, levies,
imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction
or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding any tax
imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein measured by or based on
the net income or net profits of Lender) and all interest,
penalties or similar liabilities with respect thereto. If any
Taxes are so levied or imposed, each Borrower agrees to pay
the full amount of such Taxes and such additional amounts as
may be necessary so that every payment of all amounts due
under this Agreement, any note, or Loan Document, including
any amount paid pursuant to this SECTION 15.11(a) after
withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein; provided,
however, that Borrowers shall not be required to increase any
such amounts if the increase in such amount payable results
from Agent's or such Lender's own willful misconduct or gross
negligence (as finally determined by a court of competent
jurisdiction). Each Borrower will furnish to Lender as
promptly as possible after the date the payment of any Tax is
due pursuant to applicable law certified copies of tax
receipts evidencing such payment by any Borrower.
(b) If a Lender claims an exemption from United States withholding
tax, Lender agrees with and in favor of Agent and any
Borrower, to deliver to Agent:
(i) if such Lender claims an exemption from United States
withholding tax pursuant to its portfolio interest exception,
(A) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder of any
Borrower (within the meaning of Section 871(h)(3)(B) of the
IRC), or (III) a controlled foreign corporation related to any
Borrower within the meaning of Section 864(d)(4) of the IRC,
and (B) a properly completed and executed IRS Form W-8BEN,
before receiving its first payment under this Agreement and at
any other time reasonably requested by Agent or any Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly
completed and executed IRS Form W-8BEN before receiving its
first payment under this Agreement and at any other time
reasonably requested by Agent or any Borrower;
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(iii) if such Lender claims that interest paid under this Agreement
is exempt from United States withholding tax because it is
effectively connected with a United States trade or business
of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent
or any Borrower; or
(iv) such other form or forms, including IRS Form W-9, as may be
required under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding or backup withholding tax before receiving its
first payment under this Agreement and at any other time
reasonably requested by Agent or any Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with
and in favor of Agent and Borrowers, to deliver to Agent any
such form or forms, as may be required under the laws of such
jurisdiction as a condition to exemption from, or reduction
of, foreign withholding or backup withholding tax before
receiving its first payment under this Agreement and at any
other time reasonably requested by Agent or Administrative
Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of,
withholding tax and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of Borrowers to such Lender, such Lender agrees to
notify Agent and Administrative Borrower of the percentage
amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender. To the extent of such
percentage amount, Agent and Borrowers will treat such
Lender's documentation provided pursuant to SECTIONS 15.11(b)
or 15.11(c) as no longer valid. With respect to such
percentage amount, Lender may provide new documentation,
pursuant to SECTIONS 15.11(b) or 15.11(c), if applicable.
(e) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If
the forms or other documentation required by subsection (b) or
(c) of this SECTION 15.11 are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender
not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did
not properly withhold tax from amounts paid to or for the
account of any Lender due to a failure on the part of the
Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly,
by Agent, as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction
on the amounts payable to Agent under this SECTION 15.11,
together with all costs and expenses (including attorneys fees
and expenses). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and
the resignation or replacement of Agent.
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15.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any
Collateral (i) upon the termination of the Commitments and
payment and satisfaction in full by Borrowers of all
Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection
therewith and if Administrative Borrower certifies to Agent
that the sale or disposition is permitted under SECTION 6.4 of
this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further
inquiry), (iii) constituting property in which no Borrower or
its Subsidiaries owned any interest at the time the Agent's
Lien was granted nor at any time thereafter, or (iv)
constituting property leased to a Borrower or its Subsidiaries
under a lease that has expired or is terminated in a
transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any
Lien on any Collateral without the prior written authorization
of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders. Upon request by Agent or Administrative Borrower at
any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or
items of Collateral pursuant to this SECTION 15.12; PROVIDED,
HOWEVER, that (1) Agent shall not be required to execute any
document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and
(2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in
respect of) all interests retained by Borrowers, including,
the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by
Borrowers or is cared for, protected, or insured or has been
encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty
of care, disclosure or fidelity, or to continue exercising,
any of the rights, authorities and powers granted or available
to Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the
terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its sole discretion given
Agent's own interest in the Collateral in its capacity as one
of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing,
except as otherwise provided herein.
15.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written
request of Agent, set off against the Obligations, any amounts
owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each
of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or
cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any of the
Collateral.
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(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations,
except for any such proceeds or payments received by such
Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender
promptly shall (1) turn the same over to Agent, in kind, and
with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so
that such excess payment received shall be applied ratably as
among the Lenders in accordance with their Pro Rata Shares;
provided, however, that to the extent that such excess payment
received by the purchasing party is thereafter recovered from
it, those purchases of participations shall be rescinded in
whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
15.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment)
for the purpose of perfecting the Agent's Liens in assets
which, in accordance with Article 8 or Article 9, as
applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver
possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
15.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer of
immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written
notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the
Obligations.
15.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to
enter into this Agreement and the other Loan Documents. Each
member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein,
together with such other powers that are reasonably incidental
thereto, shall be binding upon all of the Lenders.
15.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By
becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field
audit or examination report (each a "REPORT" and collectively,
"REPORTS") prepared by or at the request of Agent, and Agent
shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information
contained in any Report,
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other
party performing any audit or examination will inspect only
specific information regarding Borrowers and will rely
significantly upon the books and records of Borrowers and
their Subsidiaries, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and
their operations, assets, and existing and contemplated
business plans in a confidential manner in accordance with
SECTION 16.7, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold
Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or fail to
take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or
may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a
loan or loans of Borrowers; and (ii) to pay and protect, and
indemnify, defend and hold Agent, and any such other Lender
preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other
amounts (including, attorneys fees and costs) incurred by
Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying
Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to Administrative Borrower a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.
15.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been
or will be executed only by or in favor of Agent in its
capacity as such, and not by or in favor of the Lenders, any
and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and
not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Commitments, to make an
amount of such credit not to exceed, in principal amount, at
any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any
Lender any interest in, or subject any Lender to any liability
for, or in respect of, the business, assets, profits, losses,
or liabilities of any other Lender. Each Lender shall be
solely responsible for notifying its Participants of any
matters relating to the Loan Documents to the extent any such
notice may be required, and no Lender shall have any
obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 16.7, no member of the
Lender Group shall have any liability for the acts of any
other member of the Lender Group. No Lender shall be
responsible to any Borrower or any other Person for any
failure by any other Lender to fulfill its obligations to make
credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any
other action on its behalf hereunder or in connection with the
financing contemplated herein.
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15.19 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be
deemed a party hereto for purposes of any reference in a Loan
Document to the parties for whom Agent is acting; it being
understood and agreed that the rights and benefits of such
Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in
payments and collections out of the Collateral as more fully
set forth herein. In connection with any such distribution of
payments and collections, Agent shall be entitled to assume no
amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount
of any such liability owed to it prior to such distribution.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender
whose signature is provided for on the signature pages hereof.
16.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled
by the context, everything contained in each Section applies
equally to this entire Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group
or Borrowers, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties
hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this
Agreement for the purpose of determining the legal
enforceability of any specific provision.
16.5 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be
executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the
same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile or other electronic method of
transmission shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission also
shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to
each other Loan Document MUTATIS MUTANDIS.
16.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the
transfer to the Lender Group of any property should for any
reason subsequently be declared to be void or voidable under
any state or federal law relating to creditors' rights,
including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property
(collectively, a "VOIDABLE TRANSFER"), and if the Lender Group
is required to repay or restore, in whole or in part, any such
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Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer,
or the amount thereof that the Lender Group is required or
elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related
thereto, the liability of Borrowers or Guarantors
automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been
made.
16.7 CONFIDENTIALITY. Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material,
non-public information regarding Parent and its Subsidiaries,
their operations, assets, and existing and contemplated
business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and
the Lenders to Persons who are not parties to this Agreement,
except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group,
(b) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that
any such Subsidiary or Affiliate shall have agreed to receive
such information hereunder subject to the terms of this
SECTION 16.7, (c) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation, (d) as
may be agreed to in advance by Administrative Borrower or its
Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (e)
as to any such information that is or becomes generally
available to the public (other than as a result of prohibited
disclosure by Agent or the Lenders), (f) in connection with
any assignment, prospective assignment, sale, prospective
sale, participation or prospective participations, or pledge
or prospective pledge of any Lender's interest under this
Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall
have agreed in writing to receive such information hereunder
subject to the terms of this Section, and (g) in connection
with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding
involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents. The
provisions of this SECTION 16.7 shall survive for 2 years
after the payment in full of the Obligations.
16.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties
with respect to the transactions contemplated hereby and shall
not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
16.9 XXXXXXX RADIOLOGY MEDICAL GROUP III AS AGENT FOR BORROWERS.
Each Borrower hereby irrevocably appoints Xxxxxxx Radiology
Medical Group III as the borrowing agent and attorney-in-fact
for all Borrowers (the "ADMINISTRATIVE BORROWER") which
appointment shall remain in full force and effect unless and
until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower.
Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (i) to provide Agent with all notices
with respect to Advances and Letters of Credit obtained for
the benefit of any Borrower and all other notices and
instructions under this Agreement and (ii) to take such action
as the Administrative Borrower deems appropriate on its behalf
to obtain Advances and Letters of Credit and to exercise such
other powers as are reasonably incidental thereto to carry out
the purposes of this Agreement. It is understood that the
handling of the Loan Account and Collateral of Borrowers in a
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combined fashion, as more fully set forth herein, is done
solely as an accommodation to Borrowers in order to utilize
the collective borrowing powers of Borrowers in the most
efficient and economical manner and at their request, and that
Lender Group shall not incur liability to any Borrower as a
result hereof. Each Borrower expects to derive benefit,
directly or indirectly, from the handling of the Loan Account
and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the
Lender Group to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify each
member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or
claim of damage or injury, made against the Lender Group by
any Borrower or by any third party whosoever, arising from or
incurred by reason of (a) the handling of the Loan Account and
Collateral of Borrowers as herein provided, (b) the Lender
Group's relying on any instructions of the Administrative
Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related
Person or Lender-Related Person under this SECTION 17.9 with
respect to any liability that has been finally determined by a
court of competent jurisdiction to have resulted solely from
the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may
be.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
PRIMEDEX HEALTH SYSTEMS, INC.,
a New York corporation, as Parent
By: ___________________________
Name: ___________________________
Title: ___________________________
RADNET MANAGEMENT, INC.,
a California corporation, as a Borrower
By: ___________________________
Name: ___________________________
Title: ___________________________
XXXXXXX RADIOLOGY MEDICAL GROUP III,
a California general partnership, as a Borrower
By: Xxxxxxx Radiology Medical Group, Inc., its
general partner,
By: ___________________________
Name: ___________________________
Title: ___________________________
By: Pronet Imaging Medical Group, Inc., its
general partner,
By: ___________________________
Name: ___________________________
Title: ___________________________
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a
Lender
By: ___________________________
Name: ___________________________
Title: ___________________________
[SIGNATURE PAGE OF CREDIT AGREEMENT]
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