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EXHIBIT 10(k)
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CREDIT AGREEMENT
DATED AS OF FEBRUARY 25, 1997
AMONG
OMEGA HEALTH SYSTEMS, INC.,
THE LENDERS REFERRED TO HEREIN
AND
NATIONSCREDIT COMMERCIAL CORPORATION,
AS AGENT
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS...........................................................................................1
SECTION 1.01. CERTAIN DEFINED TERMS.......................................................................1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS........................................................20
SECTION 1.03. OTHER DEFINITIONAL PROVISIONS..............................................................20
ARTICLE II - REVOLVING CREDIT LOANS..............................................................................21
SECTION 2.01. REVOLVING CREDIT LOANS AND COMMITMENTS.....................................................21
SECTION 2.02. REVOLVING CREDIT NOTES.....................................................................22
SECTION 2.03. INTEREST ON THE REVOLVING CREDIT LOANS.....................................................22
SECTION 2.04. ADVANCING REVOLVING CREDIT LOANS...........................................................23
SECTION 2.05. MANDATORY REPAYMENTS AND PREPAYMENTS.......................................................24
SECTION 2.06. OPTIONAL PREPAYMENTS.......................................................................24
SECTION 2.07. APPLICATION OF PAYMENTS....................................................................25
SECTION 2.08. REDUCTION OF COMMITMENTS...................................................................25
SECTION 2.09. WARRANTS...................................................................................26
ARTICLE III - CONDITIONS.........................................................................................26
SECTION 3.01. CONDITIONS TO CLOSING......................................................................26
SECTION 3.02. CONDITIONS TO ACQUISITION LOANS............................................................28
SECTION 3.03. CONDITIONS TO EACH LOAN....................................................................29
ARTICLE IV - REPRESENTATIONS AND WARRANTIES......................................................................30
SECTION 4.01. CORPORATE EXISTENCE AND POWER..............................................................30
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.................................30
SECTION 4.03. BINDING EFFECT; LIENS OF SECURITY DOCUMENTS................................................31
SECTION 4.04. FINANCIAL INFORMATION......................................................................31
SECTION 4.05. LITIGATION.................................................................................32
SECTION 4.06. OWNERSHIP OF PROPERTY, LIENS...............................................................33
SECTION 4.07. NO DEFAULT.................................................................................33
SECTION 4.08. NO BURDENSOME RESTRICTIONS.................................................................33
SECTION 4.09. LABOR MATTERS..............................................................................34
SECTION 4.10. SUBSIDIARIES; OTHER EQUITY INVESTMENTS.....................................................34
SECTION 4.11. INVESTMENT COMPANY ACT.....................................................................34
SECTION 4.12. MARGIN REGULATIONS.........................................................................34
SECTION 4.13. TAXES......................................................................................35
SECTION 4.14. COMPLIANCE WITH ERISA......................................................................35
SECTION 4.15. BROKERS....................................................................................35
SECTION 4.16. EMPLOYMENT, SHAREHOLDERS AND SUBSCRIPTION AGREEMENTS.......................................35
SECTION 4.17. FULL DISCLOSURE............................................................................36
SECTION 4.18. PRIVATE OFFERING...........................................................................36
SECTION 4.19. COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO HAZARDOUS MATERIALS.........................36
SECTION 4.20. REAL PROPERTY INTERESTS....................................................................37
SECTION 4.21. THIRD PARTY REIMBURSEMENT..................................................................37
SECTION 4.22. ADDITIONAL REPRESENTATIONS; SCHEDULES......................................................38
ARTICLE V - AFFIRMATIVE COVENANTS................................................................................38
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER REPORTS.....................................................38
SECTION 5.02. PAYMENT OF OBLIGATIONS.....................................................................42
SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE...........................................42
SECTION 5.04. MAINTENANCE OF PROPERTY; INSURANCE.........................................................43
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SECTION 5.05. COMPLIANCE WITH LAWS.......................................................................44
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS..................................................44
SECTION 5.07. USE OF PROCEEDS............................................................................44
SECTION 5.08. FURTHER ASSURANCES.........................................................................44
SECTION 5.09. BOARD MEETINGS.............................................................................45
SECTION 5.10. LENDERS' MEETINGS..........................................................................45
SECTION 5.11. HEDGING FACILITIES.........................................................................45
SECTION 5.12. HAZARDOUS MATERIALS; REMEDIATION...........................................................45
SECTION 5.13. COLLATERAL REPORTS.........................................................................46
SECTION 5.14. COLLECTIONS; RIGHT TO NOTIFY ACCOUNT DEBTORS...............................................46
SECTION 5.15. EMPLOYMENT CONTRACTS; ENFORCEMENT OF COVENANTS NOT TO COMPETE..............................46
SECTION 5.16. LANDLORD AND WAREHOUSEMAN WAIVERS..........................................................47
SECTION 5.17. ADDITIONAL SUBSIDIARIES....................................................................47
SECTION 5.18. ACCREDITATION AND LICENSING................................................................47
SECTION 5.19. CASH MANAGEMENT; UNDERTAKING RESPECTING POST-CLOSING MATTERS...............................47
ARTICLE VI - NEGATIVE COVENANTS..................................................................................51
SECTION 6.01. DEBT.......................................................................................51
SECTION 6.02. NEGATIVE PLEDGE............................................................................52
SECTION 6.03. CAPITAL STOCK..............................................................................52
SECTION 6.04. RESTRICTED PAYMENTS........................................................................53
SECTION 6.05. ERISA......................................................................................53
SECTION 6.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS................................................53
SECTION 6.07. PURCHASE OF ASSETS, INVESTMENTS............................................................54
SECTION 6.08. TRANSACTIONS WITH AFFILIATES...............................................................54
SECTION 6.09. AMENDMENTS OR WAIVERS......................................................................54
SECTION 6.10. FISCAL YEAR................................................................................54
SECTION 6.11. MANAGEMENT COMPENSATION....................................................................55
SECTION 6.12. INTEREST COVERAGE..........................................................................55
SECTION 6.13. CAPITAL EXPENDITURES.......................................................................55
SECTION 6.14. TOTAL DEBT SERVICE COVERAGE RATIO..........................................................55
SECTION 6.15. DEBT TO CAPITALIZATION.....................................................................55
SECTION 6.16. TOTAL DEBT TO EBITDA.......................................................................56
SECTION 6.17. MINIMUM NET WORTH..........................................................................56
SECTION 6.18. TRANSITION RULES...........................................................................56
ARTICLE VII -EVENTS OF DEFAULT...................................................................................56
SECTION 7.01. EVENTS OF DEFAULT..........................................................................56
ARTICLE VIII - FEES, EXPENSES AND INDEMNITIES; GENERAL PROVISIONS RELATING TO PAYMENTS...........................60
SECTION 8.01. FEES.......................................................................................60
SECTION 8.02. COMPUTATION OF INTEREST AND FEES...........................................................60
SECTION 8.03. GENERAL PROVISIONS REGARDING PAYMENTS......................................................60
SECTION 8.04. EXPENSES...................................................................................61
SECTION 8.05. INDEMNITY..................................................................................61
SECTION 8.06. TAXES......................................................................................62
SECTION 8.07. FUNDING LOSSES.............................................................................62
SECTION 8.08. MAXIMUM INTEREST...........................................................................62
ARTICLE IX - THE AGENT...........................................................................................64
SECTION 9.01. APPOINTMENT AND AUTHORIZATION..............................................................64
SECTION 9.02. AGENT AND AFFILIATES.......................................................................64
SECTION 9.03. ACTION BY AGENT............................................................................64
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SECTION 9.04. CONSULTATION WITH EXPERTS..................................................................64
SECTION 9.05. LIABILITY OF AGENT.........................................................................64
SECTION 9.06. INDEMNIFICATION............................................................................65
SECTION 9.07. CREDIT DECISION............................................................................65
SECTION 9.08. SUCCESSOR AGENT............................................................................65
ARTICLE X - MISCELLANEOUS........................................................................................65
SECTION 10.01. SURVIVAL...................................................................................65
SECTION 10.02. NO WAIVERS.................................................................................66
SECTION 10.03. NOTICES....................................................................................66
SECTION 10.04. SEVERABILITY...............................................................................66
SECTION 10.05. AMENDMENTS AND WAIVERS.....................................................................66
SECTION 10.06. SUCCESSORS AND ASSIGNS; REGISTRATION.......................................................66
SECTION 10.07. COLLATERAL.................................................................................68
SECTION 10.08. HEADINGS...................................................................................68
SECTION 10.09. GOVERNING LAW; SUBMISSION TO JURISDICTION..................................................68
SECTION 10.10. NOTICE OF BREACH BY AGENT OR LENDER........................................................69
SECTION 10.11. WAIVER OF JURY TRIAL.......................................................................69
SECTION 10.12. COUNTERPARTS; ENTIRE AGREEMENT; EFFECTIVENESS..............................................69
EXHIBIT A - Revolving Credit Note
EXHIBIT B - Notice of Borrowing
EXHIBIT C - Company Security Agreement
EXHIBIT D - Pledge Agreement
EXHIBIT E - Subsidiary Guaranty Agreement
EXHIBIT F - Subsidiary Security Agreement
EXHIBIT G - Professional Service Provider Security Agreement
EXHIBIT H - Borrowing Base Certificate
EXHIBIT I - Opinions of Counsel to the Company
EXHIBIT J - Warrants
EXHIBIT K - Warrantholders Rights Agreement
EXHIBIT L - Managed Practice Security Agreement
EXHIBIT M - Payment Direction
EXHIBIT N - Bank Acknowledgment
SCHEDULE 3.01(o) - Senior Management
SCHEDULE 4.05 - Pending Litigation
SCHEDULE 4.10 - Subsidiaries and Credit Parties
SCHEDULE 4.16 - Employment, Shareholders' and Subscription Agreements
SCHEDULE 4.19 - Environmental Matters
SCHEDULE 4.20 - Real Property Interests
SCHEDULE 6.01 - Outstanding Debt
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of February 25, 1997, among OMEGA
HEALTH SYSTEMS, INC., the LENDERS listed on the signature pages hereof and
NATIONSCREDIT COMMERCIAL CORPORATION, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. The following terms have
the following meanings:
"Account Debtor" shall mean any Person who may become
obligated to the Company or any Subsidiary or any Managed Practice under, with
respect to, or on account of a Receivable of the Borrower or such Subsidiary or
Managed Practice (including without limitation any guarantor of the payment or
performance of a Receivable or any Third Party Payor).
"Acquisition" means the purchase by the Company or any of its
Subsidiaries of any optometry or ophthalmology practice or practice group or
substantially all of the assets of an optometry or ophthalmology practice or
practice group or of any other business, or the assets thereof, the purchase of
which the Required Lenders shall consent to in their sole and absolute
discretion, with the proceeds of an Acquisition Loan provided pursuant to
Section 2.01(c).
"Acquisition Availability" has the meaning specified in
Section 2.01(c).
"Acquisition Loans" means, collectively, the Revolving Credit
Loans of the Lenders to be made to the Company pursuant to Section 2.01(c).
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a "CONTROLLING
PERSON") or (ii) any Person (other than the Company or any of its Subsidiaries)
which is controlled by or is under common control with a Controlling Person. As
used herein, the term "control" of a Person means the possession, directly or
indirectly, of the power to vote 10% or more of any class of voting securities
of such Person or to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
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"Agent" means NationsCredit in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.
"Agreement" means this Credit Agreement.
"Agreement Date" means the date as of which this Agreement is
dated.
"Amortization Commencement Date" shall have the meaning
assigned to it in Section 2.05(c).
"Authorized Signatory" means a Person designated as such by
the Company to the Agent in writing.
"Availability Termination Date" means February 25, 1999, or
any anniversary thereof (not to occur later than the Commitment Termination
Date) to which the Lenders (in the exercise of their sole discretion) and the
Company may mutually agree to extend the Company's ability to incur Revolving
Loans.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Blue Cross/Blue Shield" means any and all contracts or
agreements in force between any Credit Party and any Blue Cross/Blue Shield
plan.
"Borrowing Base" means, on any date, a dollar amount equal to
the sum of (i) the Clinic Component, plus (ii) 80% of Eligible Non-Clinic
Receivables, plus (iii) 80% of all Eligible Clinic Receivables of any Clinic
Subsidiary, in each case determined as of such date.
"Borrowing Base Certificate" means a certificate, duly
executed by the chief financial officer or treasurer of the Company,
appropriately completed and substantially in the form of EXHIBIT H.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Atlanta or New York City are authorized
by law to close.
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as
amended from time to time, and regulations promulgated thereunder.
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"CHAMPUS Receivable" means a Receivable payable pursuant to
CHAMPUS.
"CHAMPUS" means, collectively, the Civilian Health and
Medical Program of the Uniformed Service, a program of medical benefits
covering former and active members of the uniformed services and certain of
their dependents, financed and administered by the United States Departments of
Defense, Health and Human Services and Transportation, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 10 U.S.C.
ss.ss.1071-1106 or elsewhere) affecting such program; and (b) all rules,
regulations (including 32 C.F.R. ss.199), manuals, orders and administrative,
reimbursement and other guidelines of all governmental authorities promulgated
in connection with such program (whether or not having the force of law), in
each case as the same may be amended, supplemented or otherwise modified from
time to time.
"CHAMPVA Receivable" means a Receivable payable pursuant to
CHAMPVA.
"CHAMPVA" means, collectively, the Civilian Health and
Medical Program of the Department of Veteran Affairs, a program of medical
benefits covering retirees and dependents of former members of the armed
services administered by the United States Department of Veteran Affairs, and
all laws, rules, regulations, manuals, orders, guidelines or requirements
pertaining to such program including (a) all federal statutes (whether set
forth in 38 U.S.C. ss.1713 or elsewhere) affecting such program or, to the
extent applicable to CHAMPVA, CHAMPUS; and (b) all rules, regulations
(including 38 C.F.R. ss.17.54), manuals, orders and administrative,
reimbursement and other guidelines of all governmental authorities promulgated
in connection with such program (whether or not having the force of law), in
each case as the same may be amended, supplemented or otherwise modified from
time to time.
"Clinic Component" means (i) for each Managed Practice the
lesser of: (x) 80% of such Managed Practice's Eligible Clinic Receivables and
(y) the Clinic Obligations owed by such Managed Practice, and (ii) for all
Managed Practices, the sum of the Clinic Components of each Managed Practice.
To the extent that any Managed Practice has entered into a Professional Service
Provider Security Agreement and taken steps satisfactory to the Agent to grant
the Agent a perfected security interest, free of other Liens, in such Managed
Practice's Receivables as security for the Obligations, the Clinic Component
with respect to such Managed Practice shall be the amount determined pursuant
to clause (i)(x) of this definition.
"Clinic Obligations" means, at any date, the aggregate amount
due to the Company and its Subsidiaries from any Managed Practice for (i)
management fees and (ii) clinic or practice expenses, that are earned, due and
payable in accordance with the related Management Agreement and recognized as
revenue on the books of the Company, net of any credits, debits, rebates or
commissions owed or payable in respect thereof.
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"Clinic Subsidiary" means a Subsidiary that owns and operates
an ophthalmology or optometry practice or clinic and is responsible for the
delivery of all professional services by such practice or clinic.
"Closing Date" means the date of the initial funding of the
Loans which funding shall not in any event occur later than February 28, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all property mortgaged, pledged or
otherwise purported to be subjected to a Lien pursuant to the Security
Documents.
"Commitment" means the Revolving Credit Commitment.
"Commitment Termination Date" shall have the meaning assigned
to it in Section 2.05.
"Common Stock" means the common stock of the Company, $.06
par value per share.
"Company" means Omega Health Systems, Inc., a Delaware
corporation.
"Company Account" means the account specified on the
signature pages hereof into which the proceeds of all Loans to the Company
shall be deposited, or such other account as the Company shall from time to
time specify by notice to the Lenders.
"Company Security Agreement" means the Security Agreement
dated as of the date hereof between the Company and the Agent, substantially in
the form of EXHIBIT C.
"Compliance Date" has the meaning assigned to such term in
Section 5.19.
"Consolidated Capital Expenditures" means, for any period,
the aggregate amount of expenditures by the Company and its Consolidated
Subsidiaries for plant, property and equipment during such period but excluding
any such expenditures made for the replacement or restoration of assets to the
extent financed by condemnation awards or proceeds of insurance received with
respect to the loss or taking of or damage to the asset or assets being
replaced or restored and excluding any such expenditures made as part of an
acquisition permitted pursuant to Section 6.07.
"Consolidated Capitalization" means at any time of
determination, the sum of (a) the Consolidated Total Debt at such time, and (b)
the Consolidated Net Worth at such time.
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"Consolidated Current Assets" means, at any date, the
consolidated current assets (excluding cash and cash equivalents) of the
Company and its Consolidated Subsidiaries determined as of such date.
"Consolidated Current Liabilities" means, at any date, (i)
the consolidated current liabilities (excluding Debt) of the Company and its
Consolidated Subsidiaries plus (ii) the current liabilities of any Person
(other than the Company or a Consolidated Subsidiary) which are Guaranteed by
the Company or a Consolidated Subsidiary, all determined as of such date.
"Consolidated Free Cash Flow" means, for any period, EBITDA
for such period minus the following amounts:
(a) all cash payments of income taxes by the Company and
its Consolidated Subsidiaries during such period;
(b) Consolidated Capital Expenditures for such period,
to the extent that such Consolidated Capital Expenditures are not
financed during such period (and are not anticipated to be financed in
any future period) with the proceeds of Debt of the Company or such
Consolidated Subsidiary; and
(c) any net gain in respect of asset sales during such
period.
"Consolidated Net Income" means, for any period, net income
of the Company and its Consolidated Subsidiaries for such period as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means as of the date of any
determination thereof, the amount of the shareholder's equity of the Company
and its Consolidated Subsidiaries as would be shown on the consolidated balance
sheet of the Company and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Total Debt" means at any date the Debt of the
Company and its Consolidated Subsidiaries.
"Credit Party" means any of the Company, any Subsidiary or
any Managed Practice.
"Debt" of a Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the
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deferred purchase price of property or services, except trade accounts payable
arising and paid in the ordinary course of business, (iv) all Capital Leases of
such Person, (v) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the issuance or sale
of the same or substantially similar securities (or property), (vi) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument,
(vii) all equity securities of such Person (other than the Warrants) subject to
repurchase or redemption otherwise than at the sole option of such Person,
(viii) all Debt secured by a Lien on any asset of such Person, whether or not
such Debt is otherwise an obligation of such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning set forth in Section 2.03(d).
"EBITDA" means, for any period, the consolidated net income
of the Company and its Consolidated Subsidiaries for such period, after all
expenses and other proper charges except depreciation, interest, amortization
and income taxes, determined in accordance with GAAP eliminating without
duplication: (i) all intercompany items, (ii) all earnings attributable to
equity interests in Persons that are not Subsidiaries or attributable to
earnings of any entity in which the Company or any Subsidiary has an investment
and the transfer of the income of such entity to the Company or such Subsidiary
is subject to any restriction, in each case unless actually received by the
Company or a Consolidated Subsidiary free of any such restriction, (iii) all
income arising from the forgiveness, adjustment, or negotiated settlement of
any indebtedness, (iv) any extraordinary items of income or expense, (v) any
increase or decrease in income arising from any change in the Company's method
of accounting, subject to Section 1.02, and (vi) any interest income.
"Eligible Clinic Receivables" means, at any date of
determination thereof, for any Managed Practice or Clinic Subsidiary, the
aggregate amount of all Receivables at such date due to the Managed Practice or
Clinic Subsidiary for the provision of medical services or the sale of
Inventory other than the following (determined without duplication):
(a) any Receivable due from an Account Debtor that is
not both domiciled in the United States of America and (if not a
natural person) organized under the laws of the United States of
America or any political subdivision thereof and any Receivable that
is not denominated and payable in U.S. dollars;
(b) any Receivable that does not comply with all
applicable legal requirements, including, without limitation, all
laws, rules, regulations and orders of any governmental or judicial
authority (including any Receivable due from an account debtor located
in the States of Indiana, New Jersey or Minnesota, unless the Managed
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Practice or the applicable Clinic Subsidiary (at the time the
Receivable was created and at all times thereafter) (i) had filed and
has maintained effective a current notice of business activities
report with the appropriate office or agency of the State of Indiana,
New Jersey or Minnesota, as applicable, or (ii) was and has continued
to be exempt from filing such report and has provided Agent with
satisfactory evidence thereof);
(c) any Receivable in respect of which there is any
unresolved dispute with the Account Debtor, but only to the extent of
such dispute;
(d) any Receivable payable more than 30 days after the
date of the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 120
days from the date of the original issuance of the invoice therefor;
(f) any unbilled Receivable;
(g) any Receivable arising outside the ordinary course
of business of the Managed Practice or Clinic Subsidiary whose
activities gave rise thereto;
(h) (i) that portion of any Receivable in respect of
which there has been, or should have been, established by the Managed
Practice or Clinic Subsidiary a contra account whether in respect of
contractual allowances, audit adjustments, anticipated discounts or
otherwise, or (ii) which is a Private Receivable and is due from an
Account Debtor to whom the applicable Managed Practice or Clinic
Subsidiary owes a trade payable, but only to the extent of such
Receivable or trade payable or (iii) which Receivable is subject to
any right of rescission, set-off, recoupment, counterclaim or defense,
whether arising out of transactions concerning the provision of
medical services or otherwise, provided that this clause (iii) shall
not apply to adjustments in the ordinary course with respect to
Government Receivables;
(i) any Receivable that is not subject to a first
priority perfected Lien under appropriate Security Documents and any
Receivable evidenced by an "instrument" (as defined in the UCC) not in
the possession of the Agent or a Subsidiary, as applicable;
(j) any Receivable due to any Person from any Third
Party Payor (i) as to which on such date Receivables representing more
than 25% of aggregate amount of all Receivables of such Third Party
Payor to such Person have remained unpaid for more than 120 days from
the original due date specified at the time of the original issuance
of the original invoice therefor, (ii) in respect of which a credit
loss has been recognized or reserved by the Company, any Subsidiary or
any Managed Practice, (iii) in respect of which the Agent shall have
notified the Company that such Third Party Payor does not have a
satisfactory credit standing as determined in good faith by the Agent,
(iv) that is a Subsidiary or Affiliate of the Company, (v) that,
except in the case
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of a Government Receivable, is the United States of America or any
state government or any department, agency or instrumentality thereof,
unless such Person has complied in all respects with the Federal
Assignment of Claims Act of 1940 or the corresponding provision of any
applicable state law, or (vi) that is the subject of a case or
proceeding of the type described in clauses (g) and (h) of Section
7.01 or that is not Solvent;
(k) any Receivables other than Government Receivables
due from a Third Party Payor at any time, to the extent that the
aggregate outstanding amount of Receivables due from such Third Party
Payor and its affiliates at such time exceeds 10% of the aggregate
amount of all Receivables due to the Company, the Subsidiaries and the
Managed Practices at such time, but only to the extent of such excess;
(l) if such Receivable is a Private Receivable, the
Third Party Payor thereon has not received such notice of the
assignment thereof to the Agent as the Agent shall reasonably require;
and
(m) any Receivable with respect to which the Managed
Practice owning such Receivable has not executed a Professional
Service Provider Security Agreement or such other documents as the
Agent shall require assigning its rights to such Receivables to the
Agent as security for the Obligations, or in the case of a Receivable
owned by a Managed Practice that is not required to be pledged to the
Agent, the Managed Practice owning such Receivable has not executed a
Managed Practice Security Agreement or such other documents as the
Agent shall require assigning its rights in such receivable to the
Company or a Subsidiary.
"Eligible Non-Clinic Receivables" means, at any date of determination
thereof, the aggregate amount of all Receivables at such date due to the
Company and each of its Subsidiaries other than Receivables for the provision
of medical services or the sale by a Clinic Subsidiary of Inventory and other
than the following (determined without duplication):
(a) any Receivable due from an Account Debtor that is
not both domiciled in the United States of America and (if not a
natural person) organized under the laws of the United States of
America or any political subdivision thereof and any Receivable that
is not denominated and payable in U.S. dollars;
(b) any Receivable that does not comply with all
applicable legal requirements, including, without limitation, all
laws, rules, regulations and orders of any governmental or judicial
authority (including any Receivable due from an account debtor located
in the States of Indiana, New Jersey or Minnesota, unless the Company
or the applicable Subsidiary (at the time the Receivable was created
and at all times thereafter) (i) had filed and has maintained
effective a current notice of business activities report with the
appropriate office or agency of the State of Indiana, New Jersey or
Minnesota, as applicable, or (ii) was and has continued to be exempt
from filing such report and has provided Agent with satisfactory
evidence thereof);
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(c) any Receivable in respect of which there is any
unresolved dispute with the Account Debtor, but only to the extent of
such dispute;
(d) any Receivable payable more than 30 days after the
date of the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 90
days from the date of the original issuance of the invoice therefor;
(f) any unbilled Receivable;
(g) any Receivable arising outside the ordinary course
of business of the Company or Subsidiary whose activities gave rise
thereto;
(h) (i) that portion of any Receivable in respect of
which there has been, or should have been, established by the Company
or the applicable Subsidiary a contra account whether in respect of
contractual allowances, audit adjustments, anticipated discounts or
otherwise, or (ii) which is due from an Account Debtor to whom the
Company or the applicable Subsidiary owes a trade payable, but only to
the extent of such account or trade payable or (iii) which Receivable
is subject to any right of rescission, set-off, recoupment,
counterclaim or defense, whether arising out of transactions; giving
rise to such Receivable or otherwise;
(i) any Receivable that is not subject to a first
priority perfected Lien under the Security Documents and any
Receivable evidenced by an "instrument" (as defined in the UCC) not in
the possession of the Agent;
(j) any Receivable due from any Account Debtor (i) as to
which on such date Receivables representing more than 25% of aggregate
amount of all Receivables of such Account Debtor have remained unpaid
for more than 90 days from the original due date specified at the time
of the original issuance of the original invoice therefor, (ii) in
respect of which a credit loss has been recognized or reserved by the
Company or any Subsidiary, (iii) in respect of which the Agent shall
have notified the Company that such Account Debtor does not have a
satisfactory credit standing as determined in good faith by the Agent,
(iv) that is a Subsidiary or Affiliate of the Company or a Managed
Practice, (v) that is the United States of America or any state
government or any department, agency or instrumentality thereof,
unless the Company or such Subsidiary has complied in all respects
with the Federal Assignment of Claims Act of 1940 or the corresponding
provision of any applicable state law, or (vi) that is the subject of
a case or proceeding of the type described in clauses (g) and (h) of
Section or that is not Solvent; and
(k) any Receivables due from any Account Debtor at any
time, to the extent that the aggregate outstanding amount of
Receivables
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due from such Account Debtor and its affiliates at such time exceeds
10% of the aggregate amount of all Receivables that would, but for
this clause (k) be included in determining Eligible Receivables and
Eligible Clinic Receivables at such time, but only to the extent of
such excess;
"Employment Contracts" means the employment contracts
delivered by the Company to NationsCredit on the Closing Date pursuant to
Section 3.01(o), and listed on SCHEDULE 4.16 from time to time.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company or any Subsidiary, are treated as a single employer under Section 414
of the Code.
"Event of Default" has the meaning set forth in Section 7.01.
"Excess Cash Flow" means, for any period, an amount equal to
(i) Consolidated Free Cash Flow for such period plus (or minus) (ii) any net
cash extraordinary gains (or extraordinary cash losses) for such period of the
Company and its Consolidated Subsidiaries (except any such gains or losses in
respect of asset sales) plus (or minus) (iii) any decrease (or increase) in the
average of the Net Working Investment at the end of each fiscal month ended
during such period, when compared with the average of the Net Working
Investment at the end of each fiscal month ended during the corresponding
period in the prior Fiscal Year, plus (iv) any interest income of the Company
and its Consolidated Subsidiaries for such period, minus (v) the sum for such
period of (x) Total Debt Service (exclusive of amortization of debt discount or
premium) for such period, and (y) all optional payments of the Loans which
permanently reduced the Revolving Credit Commitment during such period.
"Existing Managed Practice" has the meaning assigned to such
term in Section 5.19.
"Financing Documents" means this Agreement, the Notes, the
Subsidiary Guaranty Agreement, the Warrants, the Warrantholders Rights
Agreement and the Security Documents.
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"Fiscal Year" means a fiscal year of the Company.
"GAAP" has the meaning set forth in Section 1.02.
"Government Receivables" means, collectively, any and all
Receivables which are (a) Medicare Receivables, (b) Medicaid Receivables, (c)
CHAMPUS Receivables, (d) CHAMPVA Receivables, or (e) any other Receivable
payable by a governmental authority approved by the Agent.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"HCFA" shall mean the Health Care Financing Administration,
an agency of HHS, and any successor thereto.
"HHS" means the United States Department of Health and Human
Services or any successor thereto.
"Hazardous Materials" means (i) any "hazardous substance" as
defined in CERCLA; (ii) asbestos; (iii) polychlorinated biphenyls; (iv)
petroleum, its derivatives, by-products and other hydrocarbons; and (v) any
other toxic, radioactive, caustic or otherwise hazardous substance regulated
under Environmental Laws.
"Hazardous Materials Contamination" means contamination
(whether now existing or hereafter occurring) of the improvements, buildings,
facilities, personalty, soil, groundwater, air or other elements on or of the
relevant property by Hazardous Materials, or any derivatives thereof, or on or
of any other property as a result of Hazardous Materials, or any derivatives
thereof, generated on, emanating from or disposed of in connection with the
relevant property.
"Healthcare Law" means, collectively, any and all federal,
state or local laws, rules, regulations, manuals, orders, guidelines and
requirements pertaining to Government
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16
Receivables, including without limitation all laws, rules, regulations,
manuals, orders, guidelines and requirements pertaining to CHAMPUS, CHAMPVA,
Medicaid or Medicare
"Indemnitees" has the meaning set forth in Section 8.05.
"Index Rate" means for any day in any calendar month, the
rate of interest equivalent to the money market yield for the Interest
Determination Date falling in such month on the one month commercial paper rate
for dealer-placed commercial paper of issuers whose corporate bonds are rated
"AA" or its equivalent by a nationally recognized rating agency, as such rate
is made available on a discount basis or otherwise by the Federal Reserve Bank
of New York and published weekly by the Board of Governors of the Federal
Reserve System in its H.15 report, or any successor publication published by
the Board of Governors of the Federal Reserve System or, if such rate for such
date is not yet published in such statistical release, the rate for that date
will be the rate set forth in the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System.
"Interest Determination Date" means February 3, 1997 and the
first Business Day of each calendar month thereafter.
"Inventory" means inventory as defined in Article 9 of the
UCC.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"Key-Person Life Insurance Policy" has the meaning assigned
to it in Section 5.04(d).
"Lender" means NationsCredit and each other Person that
becomes a holder of a Note pursuant to Section 10.06, and their respective
successors, and "Lenders" means all of the foregoing.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the purposes of this Agreement
and the other Financing Documents, the Company or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.
"Loans" means the Revolving Credit Loans.
"Lockbox Accounts" has the meaning set forth in the Security
Agreements.
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"Lockbox Agreement" means, collectively, the Lockbox
Agreements each in form and substance satisfactory to Lender, entered into
among the Agent, the Company and its Subsidiaries and the Lockbox Banks
pursuant to the Security Agreements.
"Lockbox Bank" means, collectively, the banks or other
depository institutions at which lockbox accounts are established and
maintained.
"Managed Practice" means any ophthalmologist, optometrist,
professional corporation, professional association, partnership or similar
Person that provides professional medical services at a medical office, clinic
or other facility owned and operated by the Company or any Subsidiary pursuant
to a Management Agreement.
"Management Agreement" means an agreement between the Company
and/or one or more of its Subsidiaries and one or more Managed Practices
pursuant to which the Company and/or its Subsidiaries agrees to provide certain
management services to such Managed Practice(s).
"Managed Practice Receivables" has the meaning assigned to
such term in Section 5.19.
"Managed Practice Security Agreement" means a security
agreement between a Managed Practice and the Company or a related Subsidiary
Manager in substantially the form of EXHIBIT L, pursuant to which such Managed
Practice grants such Subsidiary or the Company a first priority perfected
security interest in all of its accounts as security for the Clinic Obligations
of such Managed Practice to such Subsidiary or the Company.
"Margin Stock" has the meaning assigned thereto in Regulation
G, T, U or X of the Federal Reserve Board, as the same may be amended,
supplemented or modified from time to time.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any
of (a) the financial condition, operations, business, properties or prospects
of the Company and its Subsidiaries, taken as a whole, (b) the rights and
remedies of the Agent or the Lenders under the Financing Documents, or the
ability of the Company or any Subsidiary to perform its obligations under the
Financing Documents to which it is a party, as applicable, (c) the legality,
validity or enforceability of any Financing Document, or (d) the existence,
perfection or priority of any security interest granted in the Financing
Documents or the value of the Collateral (including its value to the Agent and
the Lenders as security for the Obligations).
"Material Debt" has the meaning set forth in Section 7.01(e).
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"Material Plan" means at any time a Plan having Unfunded
Liabilities.
"Maximum Lawful Rate" has the meaning set forth in Section
8.08.
"Medicaid" means, collectively, the healthcare assistance
program established by Title XIX of the Social Security Act (42 U.S.C.
ss.ss.1396 et seq.) and any statutes succeeding thereto, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in Title XIX of
the Social Security Act or elsewhere) affecting such program; (b) all state
statutes and plans for medical assistance enacted in connection with such
program and federal rules and regulations promulgated in connection with such
program; and (c) all applicable provisions of all rules, regulations, manuals,
orders and administrative, reimbursement, guidelines and requirements of all
government authorities promulgated in connection with such program (whether or
not having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.
"Medicaid Certification" means certification of a facility by
HCFA or a state agency or entity under contract with HCFA that such healthcare
facility fully complies with all the conditions of Medicaid.
"Medicaid Receivable" means a Receivable payable pursuant to
a Medicaid Provider Agreement.
"Medicaid Provider Agreement" means an agreement entered into
between a state agency or other entity administering Medicaid in such state and
a health care facility or physician under which the health care facility or
physician agrees to provide services or merchandise for Medicaid patients.
"Medicare" means, collectively, the health insurance program
for the aged and disabled established by Title XVIII of the Social Security Act
(42 U.S.C. ss.ss.1395 et seq.) and any statutes succeeding thereto, and all
laws, rules, regulations, manuals, orders or guidelines pertaining to such
program including (a) all federal statutes (whether set forth in Title XVIII of
the Social Security Act or elsewhere) affecting such program; and (b) all
applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement, guidelines and requirements of all governmental
authorities promulgated in connected with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.
"Medicare Certification" mean certification of a facility by
HCFA or a state agency or entity under contract with HCFA that such healthcare
facility fully complies with all conditions for such facility's participation
in Medicare.
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19
"Medicare Receivable" means a Receivable payable pursuant to
a Medicare Provider Agreement.
"Medicare Provider Agreement" means an agreement entered into
between a state agency or other entity administering Medicare in such state and
a health care facility or physician under which the health care facility or
physician agrees to provide services or merchandise for Medicare patients.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"NationsCredit" means NationsCredit Commercial Corporation, a
Delaware corporation, and its successors.
"Net Proceeds of Capital Stock" means any consideration
received by the Company or any of its Consolidated Subsidiaries in respect of
the issuance of capital stock (including, without limitation, by way of
conversion of debt into such capital stock), after deducting therefrom all
reasonable and customary costs and expenses incurred by such person directly in
connection with the issuance of such capital stock.
"Net Working Investment" means, at any date, Consolidated
Current Assets minus Consolidated Current Liabilities, all determined at such
date.
"Note" means a Revolving Credit Note.
"Notice of Borrowing" has the meaning set forth in Section
2.04.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Company or any
Subsidiary to the Lenders or to any Lender, the Agent or any indemnified party
hereunder arising under the Financing Documents.
"Officers' Certificate" means a certificate executed on
behalf of a Person by its chairman of the board (if an officer), chief
executive officer or president or one of its vice presidents and by its chief
financial officer, senior vice president-finance or treasurer.
"Payment Account" means, with respect to each Lender, the
account specified on the signature pages hereof into which all payments by or
on behalf of the Company to such Lender under the Financing Documents shall be
made, or such other account as such Lender shall from time to time specify by
notice to the Company.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Contest" means a contest maintained in good faith
by appropriate proceedings promptly instituted and diligently conducted and
with respect to which such reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"Permitted Liens" means Liens permitted pursuant to Section
6.02.
"Person" means any natural person, corporation, limited
partnership, limited liability company, professional association, general
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, and any government agency or political subdivision
thereof.
"Physician Unwind Agreement" means any agreement or
arrangement pursuant to which the Company or any Subsidiary thereof is or may
be required, at the option of one or more optometrists, ophthalmologists or
optometry or ophthalmology physician practice groups or similar entities, to
sell or return all or any substantial portion of the assets, or the stock or
other equity interests of any Subsidiary or other entity holding the assets
utilized by such optometrists, ophthalmologists or optometry or ophthalmology
practice group or similar entity to such physician, practice group or similar
entity.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Pledge Agreement" means the Pledge Agreement dated as of the
date hereof between the Company and the Agent, substantially in the form of
EXHIBIT D.
"Private Receivables" mean, collectively, any and all
Receivables that are not Government Receivables.
"Professional Employee" has the meaning assigned to such term
in Section 5.19.
"Professional Service Provider Security Agreement" means a
Security Agreement between the Agent and any Managed Practice with whom the
Company or any of
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its Subsidiaries has entered into a Management Agreement pursuant to which the
Managed Practice shall have pledged its accounts to the Agent as security for
the Obligations, which agreement shall be in substantially the form of EXHIBIT
G hereto.
"Quarterly Date" means the first Business Day of each
January, April, July and October occurring after the Agreement Date.
"Receivable" means, as at any date of determination thereof,
the unpaid amount of the obligation, as stated in the respective invoice, of
(i) in the case of the Company or any Subsidiary (other than a Clinic
Subsidiary), of a Person to pay money for goods sold or leased or services
rendered, which amount has been earned by performance under the terms of the
related contract and recognized as revenue on the books of the Company or such
Subsidiary, net of any credits, rebates or offsets owed to the Account Debtor
in respect thereof and net of any commissions payable to persons other than the
Company or such Subsidiary or any employee thereof and further excluding any
amounts owed to any Subsidiary by a Managed Practice and (ii) in the case of
any Managed Practice or Clinic Subsidiary, of a patient of such Managed
Practice or Clinic Subsidiary or of any Third Party Payor in respect of
Inventory or medical services rendered in the ordinary course of business,
which amount has been earned by performance under the terms of the related
contract and recognized as revenue on the books of the Managed Practice or
Clinic Subsidiary, net of any credits, rebates or offsets owed to any patient
or any Third Party Payor in respect thereof and also net of any commissions
payable to Persons other than the Company, any Subsidiary or the Managed
Practice or any employee thereof.
"Receivables Report" has the meaning given such term in
Section 5.01(m).
"Required Lenders" means at any time Lenders holding Notes
evidencing at least 51% of the aggregate unpaid principal amount of the Loans
or, if no Loans are outstanding, having at least 51% of the aggregate amount of
the Commitments.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Company's capital stock (except dividends
payable solely in shares of its capital stock of the same class) or (ii) any
payment on account of the purchase, redemption, retirement or acquisition of
(a) any shares of the Company's capital stock or (b) any option, warrant or
other right to acquire shares of the Company's capital stock.
"Revolving Credit Commitment" means (i) for NationsCredit as
Lender, initially $15,000,000, less any amount assigned to another Person that
becomes a Lender after the date hereof (a "SUBSEQUENT LENDER"), (ii) for any
Subsequent Lender, the amount of Revolving Credit Commitment assigned to such
Lender, and (iii) as the context may require the aggregate amount of all the
Lenders' Revolving Credit Commitments, in each case as such amount may be
reduced from time to time in accordance with this Agreement.
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"Revolving Credit Loan" shall have the meaning assigned to it
in Section 2.01(a).
"Revolving Credit Note" shall have the meaning assigned to it
in Section 2.02 and each Revolving Credit Note shall be substantially in the
form of EXHIBIT A hereto.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Security Agreements" means, collectively, the Company
Security Agreement, the Subsidiary Security Agreement, the Managed Practice
Security Agreements and the Professional Service Provider Security Agreements.
"Security Documents" means the Security Agreements, the
Pledge Agreement and any other agreement pursuant to which the Company or any
of its Subsidiaries or Affiliates or any Managed Practice provides a Lien on
its assets in favor of the Agent for the benefit of the Lenders, and all
supplementary assignments, security agreements, pledge agreements,
acknowledgments or other documents delivered or to be delivered pursuant to the
terms hereof or of any other Security Document.
"Senior Management" means, collectively, each of the officers
and managers of the Company listed on SCHEDULE 3.01(O) and each Person from
time to time designated as such by the Agent in its sole good faith discretion.
"Solvent" shall mean, with respect to any Person, such
Person: (i) owns property whose fair salable value is greater than the amount
required to pay all of such Person's liabilities (including contingent
liabilities), (ii) is able to pay all of its liabilities as such liabilities
mature, and (iii) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.
"Subsidiary" means any Person of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company.
"Subsidiary Guaranty Agreement" means a guaranty agreement
between a Subsidiary of the Company and the Agent, substantially in the form of
EXHIBIT E hereto.
"Subsidiary Manager" has the meaning assigned to such term in
Section 5.19.
"Subsidiary Security Agreement" means a Security Agreement
between a Subsidiary of the Company and the Agent, substantially in the form of
EXHIBIT F hereto.
"Temporary Cash Investment" means any Investment in: (i)
direct obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any
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agency thereof, (ii) commercial paper rated at least A-1 by Standard & Poor's
Rating Group and P-1 by Xxxxx'x Investors Service, Inc., (iii) time deposits
with, including certificates of deposit issued by, any office located in the
United States of any bank or trust company which is organized under the laws of
the United States or any State thereof and has capital, surplus and undivided
profits aggregating at least $500,000,000 and which issues (or the parent of
which issues) certificates of deposit or commercial paper with a rating
described in clause (ii) above, (iv) repurchase agreements with respect to
securities described in clause (i) above entered into with an office of a bank
or trust company meeting the criteria specified in clause (iii) above, provided
in each case that such Investment matures within one year from the date of
acquisition thereof by the Company or any of its Subsidiaries or (v) any open
ended, redeemable money market or mutual fund that invests only in the
foregoing, the sponsor of which is nationally recognized as a responsible
sponsor.
"Third Party Payor" means any governmental entity, insurance
company, health maintenance organization, preferred provider organization or
similar entity that is obligated to make payments with respect to a Receivable.
"Total Debt Service" means, for any period, the sum of: (i)
the aggregate interest charges incurred by the Company and its Consolidated
Subsidiaries for such period, whether expensed or capitalized, including the
portion of any obligation under Capital Leases allocable to interest expense in
accordance with GAAP and the portion of any debt discount or premium (but not
expenses of issuance) that shall be amortized in such period, and (ii) the
aggregate amount of all scheduled principal payments on all Debt of the Company
and its Consolidated Subsidiaries for such period, including the portion of any
payment under Capital Leases that is allocable to principal.
"UCC" has the meaning set forth in the Security Agreements.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
"Warrantholders Rights Agreement" means the Warrantholders
Rights Agreement dated as of the date hereof between the Company and
NationsCredit, substantially in the form of EXHIBIT K.
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"Warrants" has the meaning set forth in Section 2.09(a).
"Working Capital Availability" has the meaning specified in
Section 2.01(b).
"Working Capital Loans" means Revolving Credit Loans made to
the Company pursuant to Section 2.01(b).
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time ("GAAP"), applied on a basis consistent (except for changes concurred
in by the Company's independent public accountants) with the most recent
audited consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if the Company notifies
the Lenders that the Company wishes to amend any covenant in Article VI or the
definition of "Excess Cash Flow" or any related definition to eliminate the
effect of any change in GAAP on the operation of such covenant or the
determination of "Excess Cash Flow" (or if the Agent notifies the Company that
the Required Lenders wish to amend Article VI or the definition of "Excess Cash
Flow" or any related definition for such purpose), then the Company's
compliance with such covenant or "Excess Cash Flow", as the case may be, shall
be determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Lenders.
SECTION 1.03. OTHER DEFINITIONAL PROVISIONS. References in
this Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.01 may,
unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof. References to any Person include
the successors and assigns of such Person. References "from" or "through" any
date mean, unless otherwise specified, "from and including" or "through and
including", respectively.
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ARTICLE II
REVOLVING CREDIT LOANS
SECTION 2.01. REVOLVING CREDIT LOANS AND COMMITMENTS. (a)
Upon the terms and subject to the conditions set forth herein, from time to
time prior to the Availability Termination Date, each Lender severally and not
jointly agrees to make revolving credit loans ("REVOLVING CREDIT LOANS") from
time to time to the Company in an aggregate principal amount at any time
outstanding not to exceed such Lender's Revolving Credit Commitment. Such
Revolving Credit Loans shall constitute either Working Capital Loans or
Acquisition Loans.
(b) (i) Working Capital Loans shall be available for
the working capital needs of the Company and its Subsidiaries and shall not
exceed in aggregate principal amount at any time outstanding the least of (the
"WORKING CAPITAL AVAILABILITY"):
(A) $2,000,000,
(B) prior to the Availability Termination Date,
an amount equal to the Borrowing Base, and
(C) the Revolving Credit Commitment then in
effect, less the aggregate outstanding
principal amount of Acquisition Loans.
(ii) Each borrowing of Working Capital Loans
shall be in an aggregate amount of $100,000 or an integral multiple of $10,000
in excess thereof. No more than two borrowings of Working Capital Loans shall
be made within any week beginning on Monday of such week and ending on the last
Business Day of such week.
(c) (i) Acquisition Loans shall be available in the
sole good faith discretion of the Agent and the Required Lenders for the
purpose of financing Acquisitions by the Company and its Subsidiaries, in an
aggregate principal amount not to exceed at any time outstanding (the
"ACQUISITION AVAILABILITY") the Revolving Credit Commitment then in effect,
less the aggregate outstanding principal amount of Working Capital Loans.
(ii) Acquisition Loans may be made in such
amounts and at such times as the Agent and the Required Lenders shall agree in
good faith and upon such terms and conditions in addition to those specified
herein as the Agent and the Required Lenders shall require.
(iii) In connection with the Agent's and the
Required Lenders' approval of any Acquisition or any borrowing of Acquisition
Loans, the Company agrees to provide the Agent and the Lenders, as soon as
practicable following the execution thereof,
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with copies of any term sheet or commitment letter agreed to in connection with
such Acquisition. As promptly as practicable following receipt of such term
sheet and/or commitment letter, the Agent and the Required Lenders agree to
notify the Company whether they can consent to the proposed Acquisition as the
basic terms thereof are outlined in the documents provided. Such indication
shall be subject to approval of the definitive documentation and the results of
any due diligence performed in connection therewith. At the time of such
approval, the Agent shall notify the Company of any due diligence materials
that it wishes to review. Promptly upon the completion of the definitive
documentation and as soon as the due diligence materials required are
available, the Company shall furnish a copy of such documentation and/or such
materials to the Agent and the Agent and the Required Lenders agree to review
the same promptly and respond to the Company as promptly as practicable as to
whether they approve the Acquisition.
(d) Within the foregoing limits, to but excluding the
Availability Termination Date, the Company may borrow under this Section 2.01,
prepay or repay Revolving Credit Loans as required under Section 2.05(b) or to
the extent permitted by Section 2.06, and reborrow pursuant to this Section
2.01.
SECTION 2.02. REVOLVING CREDIT NOTES. The Revolving Credit
Loans of each Lender shall be evidenced by a single Revolving Credit Note,
substantially in the form of EXHIBIT A (each such note, a "REVOLVING CREDIT
NOTE"), dated the Agreement Date in an aggregate principal amount equal to the
amount of such Lender's Revolving Credit Commitment, duly executed and
delivered and payable to such Lender. Each Lender shall record the date and
amount of each Revolving Credit Loan made by it, whether such Revolving Credit
Loan was a Working Capital Loan or an Acquisition Loan, and the date and amount
of each payment of principal made by the Company with respect thereto, and
prior to any transfer of its Revolving Credit Note shall endorse on Schedule A
thereto (or any continuation thereof) forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such
Revolving Credit Loan then outstanding; provided that the failure of any Lender
to make any such recordation or endorsement shall not affect the obligations of
the Company hereunder or under the Revolving Credit Notes. Each Lender is
hereby irrevocably authorized by the Company so to endorse its Revolving Credit
Note and to attach to and make a part of its Revolving Credit Note a
continuation of any such schedule as and when required.
SECTION 2.03. INTEREST ON THE REVOLVING CREDIT LOANS. (a) The
Company shall pay interest on the Revolving Credit Loans to the Lenders monthly
in arrears on the first (1st) day of each calendar month immediately succeeding
the month for which such interest accrues, commencing with the first (1st) day
of the calendar month following the calendar month in which the Closing Date
occurs. In all cases accrued interest on all of the Revolving Credit Loans
shall be payable by the Company to the Lenders on the Commitment Termination
Date. Interest that accrues at the Default Rate shall be payable upon demand by
the Lenders. If any interest on any of the Revolving Credit Loans accrues or
remains payable after the
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Commitment Termination Date, such interest shall be payable by the Company upon
demand by the Lenders.
(b) The Company shall be obligated to pay interest to
the Lenders on the outstanding principal balance of each Revolving Credit Loan
from the date such Revolving Credit Loan is made until such Revolving Credit
Loan is repaid in full. Subject to Section 2.03(d), interest on all Loans
outstanding during any month shall accrue at a floating rate per annum equal to
the Index Rate plus four and one-quarter percentage points (4.25%).
(c) Each determination by the Agent of the interest rate
hereunder shall be presumed correct, absent convincing evidence to the
contrary.
(d) So long as any Event of Default shall have occurred
and be continuing, the interest rate applicable to the Loans or other
Obligations of the Company or any of its Subsidiaries under the Financing
Documents may be increased by the Required Lenders, at their option, by up to
two percentage points (2%) per annum above the rate otherwise applicable (the
"DEFAULT RATE").
SECTION 2.04. ADVANCING REVOLVING CREDIT LOANS. (a) Except
as provided in the last sentence of this Section 2.04(a), each Revolving Credit
Loan shall be made on notice by the Company to the Agent, given no later than
11:00 a.m. (New York time) on the Business Day of the proposed Revolving Credit
Loan. Such notice (each a "NOTICE OF BORROWING") shall be substantially in the
form of EXHIBIT B hereto, shall be duly completed and executed by an Authorized
Signatory, and shall specify therein the requested date and amount of such
Revolving Credit Loan, and such other information as may be required by the
Agent. Each Notice of Borrowing shall be given in writing (by telecopy, telex
or cable) or by telephone and confirmed immediately in writing. Notwithstanding
the foregoing, no Notice of Borrowing that requests an Acquisition Loan shall
be effective until the Agent notifies the Company that the Agent and the
Required Lenders have consented to the proposed Acquisition after having been
provided such information respecting the proposed Acquisition as is required to
be delivered pursuant to Section 3.02 or otherwise hereunder and such time to
review the same as the Agent and the Required Lenders shall reasonably deem
necessary.
(b) Not later than 1:00 p.m. (New York City time) on the date of
each borrowing (i) specified in a Notice of Borrowing (in the case of a Notice
of Borrowing that requests a borrowing of Working Capital Loans), (ii)
specified by the Agent following receipt of notice of approval of such
Acquisition from the Required Lenders (in the case of a Notice of Borrowing
that requests a borrowing of Acquisition Loans), each Lender shall make
available its ratable share of such borrowing of Revolving Credit Loans, in
immediately available funds, to the Company Account.
(c) The failure of any Lender to make a Loan on any date shall
not relieve any other Lender of its obligation, if any, hereunder to make its
Loan on that date. Neither the Agent nor
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any Lender shall be responsible for the failure of any other Person to make any
Loan hereunder on the date required therefor.
SECTION 2.05. MANDATORY REPAYMENTS AND PREPAYMENTS. (a) The
Revolving Credit Commitment of each Lender shall terminate at the opening of
business on December 31, 2002 (the "COMMITMENT TERMINATION DATE"), and there
shall become due and the Company shall pay on the Commitment Termination Date,
the entire outstanding principal amount of each Revolving Credit Loan, together
with accrued and unpaid interest thereon to but excluding the Commitment
Termination Date.
(b) If at any time (i) the aggregate unpaid principal
balance of the Working Capital Loans exceeds the Working Capital Availability,
or (ii) the aggregate unpaid principal balance of the Acquisition Loans exceeds
the Acquisition Availability, then, on the next succeeding Business Day, the
Company shall prepay Working Capital Loans and/or Acquisition Loans in an
aggregate principal amount equal to such excess.
(c) Commencing on April 1, 1999 (the "AMORTIZATION
COMMENCEMENT DATE") and continuing on each Quarterly Date thereafter, the
Company shall repay in equal quarterly installments in each year the percentage
of the aggregate principal amount of the Revolving Credit Loans outstanding on
the Amortization Commencement Date set forth opposite such year below:
Calendar Year Percentage
------------- ----------
1999 20%
2000 20%
2001 30%
2002 30%
(d) There shall become due and payable, and the Company shall
prepay, on the earlier to occur of (i) the 5th day following its receipt of the
annual audit of the financial statements of the Company and (ii) the 90th day
following the last day of each Fiscal Year, an aggregate principal amount of
Revolving Credit Loans equal to fifty percent (50%) of the Excess Cash Flow for
such Fiscal Year, with the first such payment to be made in respect of the
Fiscal Year ending December 31, 1999.
SECTION 2.06. OPTIONAL PREPAYMENTS. The Company may prepay the
Revolving Credit Loans in whole or in part (in minimum principal amounts of
$100,000 or in any larger integral multiple of $10,000, or the total remaining
amount outstanding) upon at least three Business Days' prior irrevocable
written notice to the Lenders, without premium or penalty except as provided
pursuant to Section 2.08. The aggregate principal amount of the Revolving
Credit Loans designated for prepayment in any notice of optional prepayment
given
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pursuant to this section shall become due and payable on the date fixed for
prepayment as specified in such notice.
SECTION 2.07. APPLICATION OF PAYMENTS. Each payment or
prepayment of less than all the outstanding aggregate principal amount of the
Revolving Credit Loans shall be applied pro rata to the Revolving Credit Loans
of each Lender according to their respective outstanding principal amounts. The
principal amount of each payment on Revolving Credit Loans made on or after the
Amortization Commencement Date pursuant to Section 2.05(d) or Section 2.06
shall be applied to reduce the remaining payments required by Section 2.05(c)
in inverse order of the maturity thereof. Except as provided in the definition
of Excess Cash Flow, no payment of the principal amount of Revolving Credit
Loans pursuant to Section 2.05(b), 2.05(c) or 2.06 shall reduce the amount of
any payment required by 2.05(d). Each prepayment under Section 2.05(b) shall be
applied to the Working Capital Loans or the Acquisition Loans as provided in
such Section. Each other payment or prepayment shall be applied as directed by
the Company or if the Company shall fail to so direct, as directed by the
Agent.
SECTION 2.08. REDUCTION OF COMMITMENTS. (a) The Revolving
Credit Commitment shall reduce: (i) to the amount of the aggregate outstanding
principal amount of the Revolving Credit Loans on the Availability Termination
Date, (ii) after such date, by the amount of each payment made pursuant to
Section 2.06, and (iii) by the amount of each payment required pursuant to
Section 2.05 (c) and (d).
(b) The Company shall have the right at any time to terminate in
whole this Agreement, or from time to time, irrevocably to reduce in part the
amount of the Revolving Credit Commitment upon at least 15 days' prior written
notice to the Agent, in each case without penalty or premium, except that if
the Company terminates in whole this Agreement within the first twelve (12)
months following the Closing Date, the Company shall, subject to Section 8.08,
pay to the Lenders an amount equal to three percent (3.00%) of the maximum
Revolving Credit Commitment at any one time prior to such termination (the
"EARLY TERMINATION FEE"). Such notice shall be irrevocable on the part of the
Company and shall specify the effective date of such reduction or termination,
whether a termination or reduction is being made, and, in the case of any
reduction, the amount thereof shall be in an amount of Five Million Dollars
($5,000,000) or an integral multiple thereof. Upon any such reduction, the
Company shall simultaneously prepay any outstanding Revolving Credit Loans to
the extent necessary so that the aggregate outstanding principal amount of the
Revolving Credit Loans does not exceed the amount of the Revolving Credit
Commitment after giving effect to any partial reduction thereof. The aforesaid
prior notice requirement shall not apply to the Agent's exercise of remedies
under Section 7.01. In the event the Company exercises its rights under this
paragraph to prepay the Revolving Credit Loans and terminate this Agreement,
the Company agrees that such prepayment shall be accompanied by the payment by
the Company of all accrued and unpaid interest and all fees and other remaining
Obligations. The amount of the Revolving Credit Commitment may not be
reinstated if it is reduced or if this Agreement is terminated by the Company.
The Company acknowledges and
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agrees that (i) it would be difficult or impracticable to determine the
Lender's actual damages from any early termination of this Agreement, (ii) the
Early Termination Fee is intended to be a fair and reasonable approximation of
such damages and (iii) the Early Termination Fee is not intended to be a
penalty.
SECTION 2.09. WARRANTS. (a) On the Agreement Date, the
Company shall deliver to NationsCredit, in consideration for executing this
Agreement, warrants exercisable for 100,000 shares of Common Stock (the
"WARRANTS"). The Warrants shall be substantially in the form of EXHIBIT J
hereto, and shall be duly executed and registered in such name or names and in
such denominations as NationsCredit shall have notified the Company. The
Warrants shall be fully earned by NationsCredit by its execution hereof.
(b) The Company and NationsCredit agree that, for
Federal income tax purposes (i) the Warrants together with the Revolving Credit
Loans constitute an investment unit and (ii) the aggregate issue price of the
Revolving Credit Loans, is $14,990,000 and the aggregate purchase price of the
Warrants is $10,000. Neither of the Company nor any Lender shall voluntarily
take any action inconsistent with the agreement set forth in the immediately
preceding sentence.
ARTICLE III
CONDITIONS
SECTION 3.01. CONDITIONS TO CLOSING. The obligation of each
Lender to make Loans on the Closing Date shall be subject to the satisfaction
of the following conditions precedent:
(a) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by
the Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart
hereof by such party);
(b) receipt by NationsCredit of a duly executed
Revolving Credit Note for its account, substantially in the form of
EXHIBIT A;
(c) receipt by NationsCredit of the Warrants described
in Section 2.09;
(d) receipt by the Agent of duly executed counterparts
of each Security Document required to be effective on the Closing Date
(including the Lockbox Agreements), together with evidence
satisfactory to it in its sole good faith discretion of the
effectiveness, priority and perfection of the security contemplated
thereby and the lien search reports and any additional documents
requested by the Agent;
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(e) receipt by the Agent of a duly executed Subsidiary
Guaranty Agreement in the form of EXHIBIT E, duly executed by each
Subsidiary of the Company other than the Excluded Subsidiaries;
(f) receipt by the Agent of the initial Borrowing Base
Certificate, in the form of EXHIBIT H, duly executed and completed by
the Company;
(g) receipt by the Agent of opinions of counsel for the
Company and its Subsidiaries for Tennessee, Texas, Florida and
Missouri, substantially in the forms of EXHIBIT I-1(A), EXHIBIT
I-1(B), EXHIBIT I-2(A), EXHIBIT I-2(B), EXHIBIT I-3(A), EXHIBIT
I-3(B), EXHIBIT I-4(A) and EXHIBIT I-4(B), respectively, and covering
such additional matters relating to the transactions contemplated
hereby as the Agent may reasonably request (by its execution and
delivery of this Agreement, the Company and each such Subsidiary
authorizes and directs such counsel to deliver such opinions to the
Agent);
(h) receipt by the Agent of an opinion of Xxxxxxxxxx
Xxxxxxxx LLP, special counsel for the Agent, covering such matters
relating to the transactions contemplated hereby as NationsCredit may
reasonably request;
(i) receipt by NationsCredit, including in its capacity
as Agent, of all fees and any other amounts due and payable hereunder
(including fees and expenses payable pursuant to Section 8.04 of which
the Company has received notice);
(j) receipt by NationsCredit of any information it may
request concerning the financial condition, results of operations,
liabilities (contingent and otherwise, including environmental
liabilities and employee and retiree benefits) and prospects of, and
the financial reporting and accounting systems and the management
information systems of, the Company, and satisfaction of NationsCredit
in its sole good faith discretion with all such information;
(k) satisfaction of NationsCredit in its sole good faith
discretion as to the absence of any event, act, condition or
occurrence of whatever nature that constitutes, or that is reasonably
likely to result in, a Material Adverse Effect;
(l) receipt by NationsCredit of a certificate signed by
the chief financial officer or treasurer of the Company to the effect
that, both before and immediately after the making of the Loans, and
the other transactions contemplated to take place on the Closing Date,
(i) no Default shall have occurred and be continuing and (ii) the
representations and warranties of the Company and each of its
Subsidiaries made in or pursuant to the Financing Documents executed
by such Person are true in all material respects;
(m) receipt by NationsCredit of (i) the financial
statements and pro forma consolidated balance sheet referred to in
Sections 4.04(a) and (b), (ii) a statement of
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sources and uses of funds covering all payments reasonably expected to
be made by the Company in connection with the transactions
contemplated by the Financing Documents to be consummated on or prior
to the Closing Date, including an itemized estimate of all fees,
expenses and other costs, and (iii) payment instructions with respect
to each wire transfer to be made by the Agent on the Closing Date
setting forth the amount of such transfer, the purpose of such
transfer, the name and number of the account to which such transfer is
to be made, the name and ABA number of the bank or other financial
institution where such account is located and the name and telephone
number of an individual that can be contacted to confirm receipt of
such transfer;
(n) receipt by the Agent of copies of the Key-Person
Life Insurance Policies, that are in form and substance satisfactory
to the Agent in its sole good faith discretion, and a duly-executed
instrument of assignment assigning the Key-Person Life Insurance
Policies to the Agent as collateral under the Security Documents;
(o) receipt by the Agent of evidence satisfactory to it
in its sole good faith discretion of the effectiveness of employment
contracts between the Company and each member of Senior Management
which are in form and substance satisfactory to the Agent in its sole
good faith discretion, to include cash and non-cash compensation and
non-compete provisions;
(p) receipt by the Agent of a certificate of the
treasurer of the Company showing in detail the capitalization of the
Company, including all issued and outstanding shares or rights to
equity securities or debt securities, the holders thereof and the
respective amounts of such holdings by each such Person;
(q) receipt by the Agent of all documents it may
reasonably request relating to the existence of the Company and its
Subsidiaries, the corporate authority for and the validity of the
Financing Documents, and any other matters relevant hereto, all in
form and substance satisfactory to the Agent in its sole good faith
discretion; and
(r) receipt by the Agent of complete copies of each
document executed or to be executed by the Company or any Subsidiary
in connection with an acquisition of an optometry or ophthalmology
practice, or the assets thereof, including any Management Agreement to
be executed in connection therewith, in form and substance
satisfactory to the Lenders in their good faith discretion.
The documents referred to in this Section shall be delivered to the Agent no
later than the Closing Date. The certificates and opinions referred to in this
Section shall be dated the Closing Date.
SECTION 3.02. CONDITIONS TO ACQUISITION LOANS. The obligation
of any Lender to make an Acquisition Loan on the occasion of any borrowing is
subject to the satisfaction of the following additional conditions:
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(a) receipt by the Agent of a Notice of Borrowing in
accordance with Section 2.04;
(b) receipt by the Agent of all documents, instruments
and agreements to be delivered in connection with the Acquisition
and/or any financing therefor;
(c) completion of, and satisfaction of the Agent and the
Lenders with, such legal and/or business due diligence review of the
Acquisition, the structure and terms thereof, and the target thereof,
as the Agent and the Lenders reasonably shall deem relevant;
(d) evidence satisfactory to the Agent that all property
to be acquired in the Acquisition, including all property of any
Person that, following such Acquisition, is to become a Subsidiary,
will be pledged to the Agent and the Lenders as security for the
Obligations and that the Liens granted pursuant thereto will
constitute perfected Liens, subject only to Permitted Liens, and that
any Person that will become a Subsidiary as a result of such
Acquisition has executed a guaranty of the Obligations in form and
substance satisfactory to the Agent and the Required Lenders and
otherwise complied with the requirements of Section 6.07;
(e) receipt by the Agent and the Lenders of such
historical financial statements and information and such market
information respecting the target of the Acquisition as the Agent and
the Lenders reasonably shall deem relevant;
(f) receipt by the Agent and the Lenders of pro forma
financial statements showing the target and the Company on a
consolidated basis after giving effect to such Acquisition as of the
date of the closing thereof and a certificate of the chief financial
officer or treasurer of the Company demonstrating that the Company,
both before and after giving effect to the Acquisition, will be in
compliance with the financial and other covenants contained herein and
in the other Loan Documents; and
(g) such other information respecting the Acquisition,
the target or the Company as the Agent and the Lenders reasonably
shall deem relevant.
SECTION 3.03. CONDITIONS TO EACH LOAN. The obligation of any
Lender to make a Loan on the occasion of any borrowing thereof (including on
the Closing Date) is subject to the satisfaction of the following additional
conditions:
(a) receipt by the Agent of a Notice of Borrowing in
accordance with Section 2.04 and, in the case of a Working Capital
Loan, a Borrowing Base Certificate as of the close of business on the
Business Day immediately preceding the date of such borrowing;
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(b) the fact that, immediately before and after such
borrowing, no Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of
the Company contained in the Financing Documents shall be true in all
material respects on and as of the date of such borrowing, except for
such changes therein as are expressly permitted by the terms of this
Agreement.
Each borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such borrowing as to the facts specified in clauses
(b) and (c) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as to itself and each of
its Subsidiaries that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Company and
each Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of its organization, and the Company,
each Subsidiary and each Managed Practice has all corporate powers, if
applicable, and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and as will be
conducted (including, as applicable, accreditations and certifications as a
provider of health care services eligible to receive payment and compensation
and to participate under Medicare, Medicaid, CHAMPUS or CHAMPVA or any Blue
Cross/Blue Shield or equivalent program) except those licenses, authorizations,
consents and approvals, which the failure to have has not had, and is not
reasonably likely to result in, a Material Adverse Effect. The Company and each
Subsidiary is qualified to do business as a foreign corporation in each
jurisdiction in which the failure of the Company or such Subsidiary to be so
qualified could reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Company and each
of its Subsidiaries of the Financing Documents to which it is a party are
within the Company's or such Subsidiary's (as the case may be) corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (other than the filing of UCC-1 financing statements, which have been
made and are in full force and effect) and do not contravene, or constitute a
default under, any provision of applicable law or regulation (including
specifically any applicable rule or regulation relating to the eligibility of
any Credit Party to receive payment and to participate as an accredited and
certified provider of health care services under Medicare, Medicaid, CHAMPUS,
CHAMPVA or any Blue Cross/Blue Shield or equivalent program or relating to the
licenses and permits required therein or in connection therewith) or of the
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certificate of incorporation or by-laws of the Company or any of its
Subsidiaries or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company, any of its Subsidiaries or any other
Credit Party or result in the creation or imposition of any Lien (other than
the Liens created by the Security Documents) on any asset of the Company, any
of its Subsidiaries or any other Credit Party.
SECTION 4.03. BINDING EFFECT; LIENS OF SECURITY DOCUMENTS.
(a) Each of the Financing Documents to which the Company is a party (other than
the Notes and the Warrants) constitutes a valid and binding agreement of the
Company, and each of the Notes and the Warrants, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations
of the Company, in each case enforceable in accordance with its respective
terms, subject to: (i) the effect of any applicable bankruptcy, fraudulent
transfer, moratorium, insolvency, reorganization or other similar laws
affecting the rights of creditors generally; and (ii) the effect of general
principles of equity whether applied by a court of equity or law. The Company
has reserved and will keep available for issuance upon exercise of the
Warrants, the Warrant Shares deliverable upon exercise of all Warrants from
time to time outstanding. The issuance of the Warrant Shares has been duly and
validly authorized and, when issued will be duly and validly issued, fully paid
and nonassessable and free of preemptive rights.
(b) Each of the Financing Documents to which any
Subsidiary of the Company or any other Credit Party is a party constitutes a
valid and binding agreement of such Subsidiary or Credit Party enforceable in
accordance with its terms, subject to: (i) the effect of any applicable
bankruptcy, fraudulent transfer, moratorium, insolvency, reorganization or
other similar laws affecting the rights of creditors generally; and (ii) the
effect of general principles of equity whether applied by a court of equity or
law.
(c) The Security Documents create valid security
interests in the Collateral purported to be covered thereby, which security
interests are perfected security interests, prior to all other Liens other than
Permitted Liens. Each of the representations and warranties made by the
Company, any of its Subsidiaries or any other Credit Party in the Security
Documents is true and correct.
SECTION 4.04. FINANCIAL INFORMATION.
(a) (i) The consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of December 31, 1995 and the related
audited consolidated statements of operations and cash flows for the Fiscal
Year then ended, reported on by KPMG Peat Marwick, L.L.P., and (ii) the
unaudited consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of November 30, 1996 and the related unaudited consolidated
statements of operations and cash flows for the eleven (11) months then ended,
copies of each of which ((i), and (ii)) have been delivered to each of the
Lenders, fairly present, in conformity with GAAP applied on a consistent basis
the consolidated financial position of the Company and its Consolidated
Subsidiaries as of such date and their consolidated results of
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operations and cash flows for the periods then ended (subject, in the case of
the statements described in clause (ii), to normal year-end adjustments). As of
the date of the latest such balance sheet and the date hereof, neither the
Company nor any of its Subsidiaries had or has any material liabilities,
contingent or otherwise, including liabilities for taxes, long-term leases or
forward or long-term commitments, which are not properly reflected on such
balance sheets.
(b) The pro forma balance sheet of the Company and its
Consolidated Subsidiaries as of October 31, 1996, copies of which have been
delivered to each of the Lenders, fairly presents, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
Section 4.04(a), the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date, adjusted to give effect (as if such
events had occurred on such date) to (i) the making of the initial Loans and
the issuance of the Warrants, (ii) the application of the proceeds therefrom,
and (iii) the payment of all legal, accounting and other fees related thereto
to the extent known at the time of the preparation of such balance sheet. As of
the date of such balance sheet and the date hereof, neither the Company nor any
of its Subsidiaries had and has any material liabilities, contingent or
otherwise, including liabilities for taxes, long-term leases or forward or
long-term commitments, which are not properly reflected on such balance sheet.
(c) The information contained in the most recently
delivered Borrowing Base Certificate is complete and correct and the amounts
shown therein as Eligible Clinic Receivables, Eligible Non-Clinic Receivables
and Clinic Obligations have been determined as provided in the Financing
Documents.
(d) Since November 30, 1996, there has been no event,
act, condition or occurrence of whatever nature that constitutes, or that could
reasonably be expected to result in, a Material Adverse Effect.
SECTION 4.05. LITIGATION. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company, any of its Subsidiaries or any other Credit
Party before any court or arbitrator or any governmental body, agency or
official which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect. There is no action, suit or proceeding pending
against, or to the knowledge of the Company threatened against or affecting,
any Credit Party before any court or arbitrator or any governmental body,
agency or official which in any manner draws into question the validity of any
of the Financing Documents. There is no pending investigation of any Credit
Party by HCFA 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 the Company, is threatened with respect to any Credit Party which could
reasonably be expected to materially and adversely affect such Credit Party's
right to receive Medicare, Medicaid, CHAMPUS or CHAMPVA reimbursement to which
such Credit Party would otherwise be entitled, or right
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to participate in the Medicare, Medicaid, CHAMPUS or CHAMPVA programs, or
otherwise have a material adverse effect on the receipt of Medicare, Medicaid,
CHAMPUS or CHAMPVA reimbursement by such Credit Party, and, to the best
knowledge of the Company, no Credit Party is subject to any pending but
unassessed Medicare, Medicaid, CHAMPUS or CHAMPVA claim payment adjustments,
except to the extent that such Credit Party 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.
SECTION 4.06. OWNERSHIP OF PROPERTY, LIENS. On and as of the
Closing Date, the Company and each Subsidiary is the lawful owner of, has good
and marketable title to and is in lawful possession of, or has valid leasehold
interests in, all properties and other assets (real or personal, tangible,
intangible or mixed) purported to be owned or leased (as the case may be) by
such Person on the balance sheet referred to in Section 4.04(a), and none of
such Person's properties and assets is subject to any Liens, except Permitted
Liens and except in each case to the extent that the failure to be such an
owner to have such title and possession or to hold such leasehold interest, or
to the extent that the existence of any such Lien, singly or when aggregated
with all such similar events, could not reasonably be expected to have or
result in a Material Adverse Effect. The Company, its Subsidiaries and the
other Credit Parties conduct their business without infringement or claim of
infringement of any material license, patent, trademark, trade name, service
xxxx, copyright, trade secret or other intellectual property right of others
and there is no infringement or claim of infringement by others of any material
license, patent, trademark, trade name, service xxxx, copyright, trade secret
or other intellectual property right of the Company, any of its Subsidiaries or
any other Credit Party, except any such infringement or claimed infringement by
the Company, its Subsidiaries or the other Credit Parties, or by others, as
singly or in the aggregate could not reasonably be expected to have or result
in a Material Adverse Effect.
SECTION 4.07. NO DEFAULT. No Default has occurred and is
continuing and neither the Company nor any of its Subsidiaries or any other
Credit Party is in default under or with respect to any contract, agreement,
lease or other instrument to which it is a party or by which its property is
bound or affected, except any default under or with respect to any such
contract, agreement, lease or other instrument, which default, singly or in the
aggregate with any other such defaults, could not reasonably be expected to
have or result in a Material Adverse Effect. Neither the Company nor any other
Credit Party has received notification from any governmental authority that any
such governmental authority has taken or intends to take action to revoke,
terminate or adversely amend any license, certificate, accreditation or permit
of such Person to operate a healthcare facility or to participate under
Medicare, Medicaid, CHAMPUS or CHAMPVA, which revocation, termination or
amendment, singly or in the aggregate, with all other such events, could
reasonably be expected to have or result in a Materially Adverse Effect.
SECTION 4.08. NO BURDENSOME RESTRICTIONS. No contract, lease,
agreement or other instrument to which the Company, any of its Subsidiaries or
any other Credit Party is a party or by which any of its property is bound or
affected, no charge, corporate restriction,
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judgment, decree or order and no provision of applicable law or governmental
regulation is reasonably likely to have or result in a Material Adverse Effect.
SECTION 4.09. LABOR MATTERS. There are no strikes or other
labor disputes pending or, to the best knowledge of the Company, threatened,
against the Company, any of its Subsidiaries or any other Credit Party, which
strikes or labor disputes, singly or in the aggregate, could reasonably be
expected to have or result in a Material Adverse Effect. Hours worked and
payments made to the employees of the Company, its Subsidiaries and any other
Credit Party have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from the
Company, any of its Subsidiaries or any other Credit Party, or for which any
claim may be made against any of them, on account of wages and employee and
retiree health and welfare insurance and other benefits have been paid or
accrued as a liability on their books, as the case may be. The consummation of
the transactions contemplated by the Financing Documents will not give rise to
a right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.
SECTION 4.10. SUBSIDIARIES; OTHER EQUITY INVESTMENTS. Other
than as set forth on SCHEDULE 4.10, the Company has no Subsidiaries and there
are no other Credit Parties on the date hereof. Each such Subsidiary is, and,
in the case of any additional corporate Subsidiaries formed after the Closing
Date, each of such additional corporate Subsidiaries will be, at each time that
this representation is made or deemed to be made after the Closing Date, a
wholly-owned Subsidiary that is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as then conducted. Neither the Company nor any of its Subsidiaries is
engaged in any joint venture or partnership with any other Person except those
listed on SCHEDULE 4.10, as such Schedule shall be amended from time to time.
Neither the Company nor any Subsidiary is bound by, or owns or holds assets
that are bound by, a Physician Unwind Agreement, except as listed on SCHEDULE
4.10.
SECTION 4.11. INVESTMENT COMPANY ACT. The Company is not an
"investment company" as defined in the Investment Company Act of 1940, as
amended. The consummation of the transactions contemplated by the Financing
Documents do not and will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder.
SECTION 4.12. MARGIN REGULATIONS. None of the proceeds from
the Loans have been or will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the loans
under this Agreement to be considered a "purpose credit" within the meaning of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve Board.
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SECTION 4.13. TAXES. The Company's federal tax identification
number is 00-0000000 and the federal tax identification number for each
Subsidiary and each other Credit Party is accurately listed for such Person on
SCHEDULE 4.10. All Federal, state and local tax returns, reports and statements
required to be filed by or on behalf of the Company and its Subsidiaries have
been filed with the appropriate governmental agencies in all jurisdictions in
which such returns, reports and statements are required to be filed, and all
taxes (including real property taxes) and other charges shown to be due and
payable have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for nonpayment thereof,
except any of the foregoing as may be subject to a Permitted Contest and except
any of the foregoing, the failure to file or to pay which, singly or in the
aggregate with all such failures, could not reasonably be expected to have or
result in a Material Adverse Effect. All state and local sales and use taxes
required to be paid by the Company, any of its Subsidiaries or any other Credit
Party have been paid, except any of the foregoing as may be subject to a
Permitted Contest. All Federal and state returns have been filed by the
Company, its Subsidiaries and the other Credit Parties for all periods for
which returns were due with respect to employee income tax withholding, social
security and unemployment taxes, and the amounts shown thereon to be due and
payable have been paid in full or adequate provisions therefor have been made.
SECTION 4.14. COMPLIANCE WITH ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code with respect to each Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Code in respect
of any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.15. BROKERS. No broker, finder or other
intermediary has brought about the obtaining, making or closing of the
transactions contemplated by the Financing Documents, and the Company has and
will have no obligation to any Person in respect of any finder's or brokerage
fees in connection herewith or therewith.
SECTION 4.16. EMPLOYMENT, SHAREHOLDERS AND SUBSCRIPTION
AGREEMENTS. Except for the agreements described in SCHEDULE 4.16 (which
schedule may be updated from time to time by the Company with the consent of
the Agent which consent shall not be unreasonably withheld), true and complete
copies of which have been delivered to the Lenders, there are no (i) employment
agreements covering the management of the Company, any of its Subsidiaries or
any other Credit Party, (ii) collective bargaining agreements or other labor
agreements covering any group of employees of the Company, its Subsidiaries or
any other Credit Party or (iii) agreements regarding the Company or any of its
Subsidiaries, their
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respective assets or operations or any investment therein to which any of the
stockholders of the Company or its Subsidiaries is a party.
SECTION 4.17. FULL DISCLOSURE. None of the information
(financial or otherwise) furnished by or on behalf of the Company to the Agent
or any Lender in connection with the consummation of the transactions
contemplated by any of the Financing Documents contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in the light of the
circumstances under which such statements were made. All financial projections
delivered to the Lenders have been prepared on the basis of the assumptions
stated therein. Except as previously disclosed to the Agent in writing, such
projections represent the Company's best estimate of the Company's future
financial performance and such assumptions are believed by the Company to be
fair and reasonable in light of current business conditions at the time such
projections were delivered to the Agent.
SECTION 4.18. PRIVATE OFFERING. Neither the Company nor any
Person acting on its behalf has offered the Notes or the Warrants or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, any Person
other than the Lenders and not more than five other institutional investors.
Neither the Company nor any Person acting on its behalf has taken, or will
take, any action which would subject the issuance or sale of the Notes, the
Warrants or the Warrant Shares to Section 5 of the Securities Act, other than
as provided in the Warrants and Warrantholders Rights Agreement.
SECTION 4.19. COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO
HAZARDOUS MATERIALS. Except as provided on SCHEDULE 4.19 and except for any of
the following that has not had and could not reasonably be expected to have a
Material Adverse Effect:
(a) Other than generation in compliance with all
applicable Environmental Laws, no Hazardous Materials are located on
any properties now or previously owned, leased or operated by the
Company or any of its Subsidiaries or have been released into the
environment, or deposited, discharged, placed or disposed of at, on,
under or near any of such properties. No portion of any such property
is being used in, or has been used at any previous time, for the
disposal, storage, treatment, processing or other handling of
Hazardous Materials (other than processing or handling incidental to
the generation of Hazardous Materials in compliance with all
applicable Environmental Laws), nor is any such property affected by
any Hazardous Materials Contamination.
(b) No asbestos or asbestos-containing materials are
present on any of the properties now or previously owned, leased or
operated by the Company or any of its Subsidiaries.
(c) No polychlorinated biphenyls are located on or in
any properties now or previously owned, leased or operated by the
Company or any of its Subsidiaries, in the
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form of electrical transformers, fluorescent light fixtures with
ballasts, cooling oils or any other device or form.
(d) No underground storage tanks are located on any
properties now or previously owned, leased or operated by the Company
or any of its Subsidiaries, or were located on any such property and
subsequently removed or filled.
(e) Except as disclosed on SCHEDULE 4.19, no notice,
notification, demand, request for information, complaint, citation,
summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous
Materials or Hazardous Materials Contamination is in existence or, to
the Company's knowledge, proposed, threatened or anticipated with
respect to or in connection with the operation of any properties now
or previously owned, leased or operated by the Company or any of its
Subsidiaries. All such properties and their existing and prior uses
comply and at all times have complied with any applicable governmental
requirements relating to environmental matters or Hazardous Materials.
Except as disclosed on SCHEDULE 4.19 there is no condition on any of
such properties which is in violation of any applicable governmental
requirements relating to Hazardous Materials, and neither the Company
nor any of its Subsidiaries has received any communication from or on
behalf of any governmental authority that any such condition exists.
Except disclosed on SCHEDULE 4.19, none of such properties nor any
property to which the Company has, directly or indirectly, transported
or arranged for the transportation of any material is listed or, to
the Company's knowledge, proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined
in CERCLA) or on any similar federal, state or foreign list of sites
requiring investigation or cleanup, nor, to the knowledge of the
Company, is any such property anticipated or threatened to be placed
on any such list.
(f) There has been no environmental investigation,
study, audit, test, review or other analysis conducted of which the
Company has knowledge in relation to the current or prior business of
the Company or any property or facility now or previously owned,
leased or operated by the Company or any of its Subsidiaries which has
not been delivered to the Lenders at least five days prior to the date
hereof.
(g) For purposes of this Section 4.19, the terms
"Company" and "Subsidiary" shall include any business or business
entity (including a corporation) which is, in whole or in part, a
predecessor of the Company or any Subsidiary.
SECTION 4.20. REAL PROPERTY INTERESTS. Except for the
ownership, leasehold or other interests set forth in SCHEDULE 4.20, the Company
and its Subsidiaries have, as of the Agreement Date, no ownership, leasehold or
other interest in real property.
SECTION 4.21. THIRD PARTY REIMBURSEMENT . If any Credit Party
is or has been audited by Medicare, Medicaid, CHAMPUS, CHAMPVA or similar
governmental Third
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Party Payors, (i) none of such audits provides for adjustments in reimbursable
costs or asserts claims for reimbursement or repayment by such Credit Party of
costs and/or payments theretofore made by such governmental Third Party Payor
that, if adversely determined, could reasonably be expected to have or result in
a Material Adverse Effect and (ii) none of the Credit Parties have had requests
or assertions of claims for reimbursement or repayment by it of costs and/or
payments heretofore made by any other Third Party Payor that, if adversely
determined, could reasonably be expected to have or result in a Material Adverse
Effect.
SECTION 4.22. ADDITIONAL REPRESENTATIONS; SCHEDULES. All
certifications, information, statements, conclusions and the like contained in
any Borrowing Base Certificate, Receivables Report, certificate, financial
statement or other instrument delivered by or on behalf of the Company, any
Subsidiary or any other Credit Party pursuant to any of the Financing Documents
(including but not limited to any such made in or in connection with any
amendment to any of such documents) shall constitute representations and
warranties made under this Agreement. Wherever a representation and warranty
made under this Agreement refers to a schedule or an amended schedule, it shall
be deemed to refer to the schedule attached hereto or, if one or more amended
schedules have been furnished, the amended schedule most recently so furnished
prior to the date as of which the representation and warranty is made, and the
later delivery of an amended schedule shall not retroactively effect a
correction of any representation and warranty which was incorrect or untrue
when made.
ARTICLE V
AFFIRMATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER REPORTS. The
Company will maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in accordance with GAAP, and will deliver to each of the Lenders:
(a) as soon as practicable and in any event within 30
days after the end of each month, a consolidated and consolidating
balance sheet of the Company and its Consolidated Subsidiaries as at
the end of such month and the related consolidated and consolidating
statements of operations and cash flows for such month, and for the
portion of the Fiscal Year ended at the end of such month, setting
forth in each case in comparative form the figures for the
corresponding periods of the previous Fiscal Year and the figures for
such month and for such portion of the Fiscal Year ended at the end of
such month that are set forth in the annual operating and capital
expenditure budgets and cash flow forecast delivered pursuant to
Section 5.01(j), all in reasonable detail and certified by the chief
financial officer of the Company as fairly presenting the financial
condition and results of operations of the Company and its
Consolidated Subsidiaries
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and as having been prepared in accordance with GAAP applied on a basis
consistent with the audited financial statements of the Company,
subject to changes resulting from audit and normal year-end
adjustments;
(b) as soon as available and in any event within 90 days
after the end of each Fiscal Year, a consolidated and consolidating
balance sheet of the Company and its Consolidated Subsidiaries as of
the end of such Fiscal Year and the related consolidated and
consolidating statements of operations, stockholders' equity and cash
flows for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year and the figures for such
Fiscal Year that are set forth in the annual operating and capital
expenditure budgets and cash flow forecast delivered pursuant to
Section 5.01(j), certified (solely with respect to such consolidated
statements) without qualification by KPMG Peat Marwick, L.L.P., or
other independent public accountants of nationally recognized
standing;
(c) (i) together with each delivery of financial
statements pursuant to (a) and (b) above, an Officers' Certificate of
the Company stating that the officers executing such certificate have
reviewed the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during
the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of
such accounting period, and that such officers do not have knowledge
of the existence as at the date of such Officers' Certificate, of any
Default, or, if any such Default existed or exists, specifying the
nature and period of existence thereof and what action the Company has
taken or is taking or proposes to take with respect thereto; (ii)
together with each delivery of financial statements for each month and
Fiscal Year, a compliance certificate of the chief financial officer
or treasurer of the Company (x) providing details of all transactions
between the Company and any Person referred to in Section 6.08, (y)
demonstrating in reasonable detail compliance during and at the end of
such accounting period with the covenants contained in Sections 6.12
through 6.17, and (z) if not specified in the financial statements
delivered pursuant to (a) or (b) above, as the case may be, specifying
the aggregate amount of interest paid or accrued and the aggregate
amount of depreciation and amortization charged, during such
accounting period; and (iii) beginning with the delivery of the fiscal
year end 1999 financial statements, together with each delivery of
financial statements pursuant to (b) above, a statement setting forth
in reasonable detail the computation of Excess Cash Flow, if any, for
such Fiscal Year, certified by the chief financial officer or
treasurer of the Company as having been prepared from such financial
statements in accordance with this Agreement;
(d) together with each delivery of financial statements
pursuant to (b) above, a written statement by the independent public
accountants giving the report thereon (i) stating that their audit
examination has included a review of the terms of this Agreement as it
relates to accounting matters, (ii) stating whether, in connection
with their audit examination, any Default has come to their attention,
and if such a condition
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or event has come to their attention, specifying the nature and period
of existence thereof, and (iii) stating that based on their audit
examination nothing has come to their attention which causes them to
believe that the information contained in the certificates delivered
therewith pursuant to (c) above is not correct and that the matters
set forth in the compliance certificate delivered therewith pursuant
to clause (ii) of (c) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(e) promptly upon receipt thereof, copies of all reports
submitted to the Company by independent public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company made by such accountants, including the
comment letter submitted by such accountants to management in
connection with their annual audit;
(f) promptly upon their becoming available, copies of
(i) all financial statements, reports, notices and proxy statements
sent or made available generally by the Company to its security
holders, (ii) all regular and periodic reports and all registration
statements and prospectuses filed by the Company with any securities
exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions and (iii)
all press releases and other statements made available generally by
the Company to the public concerning material developments in the
business of the Company;
(g) promptly upon any officer of the Company obtaining
knowledge (i) of the existence of any Default, or becoming aware that
the holder of any Debt of the Company, any Subsidiary or any other
Credit Party that singly, or when aggregated with all other Debt of
the Company, its Subsidiaries or any other Credit Party the holders of
which have taken similar action, equals or exceeds $200,000 in
principal amount outstanding has given any notice or taken any other
action with respect to a claimed default thereunder, (ii) of any
change in the Company's certified accountant, any resignation, or
decision not to stand for re-election, by any member of the Company's
board of directors or any resignation or change in any Person who is
part of the Company's Senior Management, (iii) that any Person has
given any notice to the Company, any Subsidiary or any other Credit
Party or taken any other action with respect to a claimed default
under any agreement or instrument (other than the Financing Documents)
to which the Company, any of its Subsidiaries or any other Credit
Party is a party or by which any of their assets are bound the
indebtedness or obligation under which either singly or when
aggregated with all other claims of Persons taking similar action, is
equal to or greater than $200,000 or (iv) of the institution of any
litigation or arbitration involving an alleged liability of the
Company, any of its Subsidiaries or any other Credit Party equal to or
greater than $200,000 or any adverse determination in any litigation
or arbitration proceedings that singly or when aggregated with all
other outstanding litigation or arbitration claims involve a potential
liability of the Company, any of its Subsidiaries or any other Credit
Party equal to or greater than $200,000, an Officers' Certificate of
the Company specifying the nature and period of existence of any such
condition or event, or specifying the
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notice given or action taken by such holder or Person and the nature
of such claimed default (including any Default), event or condition,
and what action the Company or any affected Subsidiary has taken, is
taking or proposes to take with respect thereto;
(h) if and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any Plan has given
or is required to give notice of any such reportable event, a copy of
the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy
of such notice; (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the
Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Company setting forth details
as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take;
(i) copies of any reports or notices (but excluding tax
returns) related to taxes and any other material reports or notices
received by the Company, any Subsidiary or any other Credit Party
from, or filed by the Company, any Subsidiary or any other Credit
Party with, any Federal, state or local governmental agency or body
regulating the activities of the Company or such Subsidiary or other
Credit Party;
(j) within 30 days prior to the conclusion of each
Fiscal Year, the Company's annual operating and capital expenditure
budgets and cash flow forecast for the following Fiscal Year presented
on a monthly basis, which shall be in a format reasonably consistent
with projections, budgets and forecasts theretofore provided to the
Lenders;
(k) together with each Notice of Borrowing and on the
first Business Day of each month, a Borrowing Base Certificate as of
the close of business of the last Business Day of the preceding month;
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(l) within two Business Days after any request therefor,
such information in such detail concerning the amount, composition and
manner of calculation of the Borrowing Base as any Lender may
reasonably request;
(m) within twenty days after the end of each month, a
report, in form and substance acceptable to the Required Lenders, as
to all Receivables of the Company, any of its Subsidiaries and any
other Credit Party outstanding as of the last day of such month (a
"RECEIVABLES REPORT"), which shall set forth in summary form an aging
of such Receivables and such other information as the Agent shall
reasonably request;
(n) together with the next delivery of a Receivables
Report after the Company becomes aware thereof, notice of any dispute
between any Third Party Payor and the Company, any Subsidiary or any
other Credit Party, with respect to any amounts due and owing that
singly, or when aggregated with all other similar disputes with other
Third Party Payors of the Company, the Subsidiaries and the other
Credit Parties, equals or exceeds $100,000, with an explanation in
reasonable detail of the reason for the dispute, all claims related
thereto and the amount in controversy;
(o) when required by such Section, the notices required
to be delivered to the Lender pursuant to Sections 5.08 and 5.09; and
(p) with reasonable promptness, such other information
and data with respect to the Company or any of its Subsidiaries or any
other Credit Party as from time to time may be reasonably requested by
any Lender.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Company (i) shall
pay and discharge, and cause each of its Subsidiaries to pay and discharge, at
or before maturity, all of their respective material obligations and
liabilities, including tax liabilities, except where the same may be the
subject of a Permitted Contest, (ii) shall maintain, and cause each of its
Subsidiaries to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same and (iii) shall not breach or permit any of its
Subsidiaries or any other Credit Party to breach, in any material respect, or
permit to exist any default under, the terms of any material lease, commitment,
contract, instrument or obligation to which it is a party, or by which its
properties or assets are bound, subject to Permitted Contests.
SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. The Company will continue, and will cause each of its Subsidiaries
to continue, to engage in business of the same general type as now conducted by
the Company and its Subsidiaries, and will preserve, renew and keep in full
force and effect, and will cause each Subsidiary to preserve, renew and keep in
full force and effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing contained in this Section shall be deemed to
prohibit any merger, consolidation or sale of assets that is otherwise
permitted under Section 6.06.
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SECTION 5.04. MAINTENANCE OF PROPERTY; INSURANCE. (a) The
Company will keep, and will cause each of its Subsidiaries to keep, all
property necessary in its business in good working order and condition,
ordinary wear and tear excepted.
(b) The Company will maintain, and will cause each of
its Subsidiaries and each other Credit Party to maintain, (i) physical damage
insurance on all real and personal property on an all risks basis (including
the perils of flood and earthquake where reasonably required and available at a
reasonable cost), covering the repair and replacement of all such property and
consequential loss coverage for business interruption and extra expense,
covering such risks, for amounts not less than those required by the Agent and
the Required Lenders from time to time in their sole good faith discretion, and
with deductible amounts not greater than those agreed to by the Agent and the
Required Lenders from time to time in their sole good faith discretion, (ii)
public liability insurance (including products/completed operations liability
coverage and professional malpractice insurance) covering such risks, for
amounts not less than those, and with deductible amounts not greater than
those, required by the Agent and the Required Lenders from time to time in
their sole good faith discretion, and (iii) such other insurance coverage in
such amounts and with respect to such risks as the Agent and Required Lenders
may reasonably request. All such insurance shall be provided by insurers having
an A.M. Best policyholders rating of not less than B+ or such other insurers as
the Agent and Required Lenders may approve in writing. The Company and each of
its Subsidiaries will cause each other Credit Party to comply with the
insurance requirements specified in the Management Agreement to which such
Credit Party is a party.
(c) On or prior to the Closing Date, the Company shall
cause the Agent to be named as an additional insured and loss payee on each
insurance policy required to be maintained pursuant to this Section 5.04. The
Company will deliver to the Lenders (i) on the Closing Date, a certificate from
the Company's insurance broker dated such date showing the amount of coverage
as of such date, and certifying that, in the opinion of such broker, such
amounts are reasonable and customary for companies of established repute
engaged in the same or a similar business, that such policies will include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all loss payees and
additional insureds and all rights of subrogation against all loss payees and
additional insureds, and that if all or any part of such policy is canceled,
terminated or expires, the insurer will forthwith give notice thereof to each
additional insured and loss payee and that no cancellation, reduction in amount
or material change in coverage thereof shall be effective until at least 30
days after receipt by each additional insured and loss payee of written notice
thereof, (ii) upon the request of the Agent from time to time full information
as to the insurance carried, (iii) within five days of receipt of notice from
any insurer, a copy of any notice of cancellation, nonrenewal or material
change in coverage from that existing on the date of this Agreement and (iv)
forthwith, notice of any cancellation or nonrenewal of coverage by the Company,
any of its Subsidiaries or any other Credit Party.
(d) The Company will maintain a term life insurance
policy payable to the Agent for the ratable benefit of the Agent and the
Lenders in form and substance and issued by
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a life insurance company, in each case acceptable to the Agent in its sole good
faith discretion, with respect to the life of Xxxxxx X. Xxxxx in an amount not
less than $2,000,000 and with respect to the life of Xxxxxx X. Xxxxxxx in the
amount of $1,000,000 (each a "KEY-PERSON LIFE INSURANCE POLICY"). Any proceeds
payable to the Company under each Key-Person Life Insurance Policy shall be
paid to the Agent for application against the Obligations in the manner
determined by the Agent.
SECTION 5.05. COMPLIANCE WITH LAWS. The Company will comply,
and will cause each of its Subsidiaries and each other Credit Party to comply,
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including Environmental Laws, Healthcare Laws and
ERISA and the rules and regulations thereunder), except for such noncompliances
that, individually or when aggregated with all other noncompliances, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Company will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities and the business and activities of any Managed Practice; and will
permit, and will cause each of its Subsidiaries to permit, representatives of
any Lender, at the Lenders' expense, to visit and inspect any of their
respective properties including the site of any Managed Practice, to examine
and make abstracts or copies from any of their respective books and records
(including the books and records relating to any Managed Practice other than
confidential patient information), to conduct a collateral audit and analysis
of their respective inventories and accounts receivable and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be desired.
SECTION 5.07. USE OF PROCEEDS. The proceeds of Working
Capital Loans shall be used by the Company solely for working capital needs of
the Company and its Subsidiaries. The proceeds of Acquisition Loans shall be
used by the Company solely to fund Acquisitions consented to by the Agent and
the Lenders in their sole good faith discretion and to refund certain Debt
outstanding on the Closing Date. None of such proceeds will be used in
violation of any applicable law or regulation.
SECTION 5.08. FURTHER ASSURANCES. The Company will, and the
Company will cause each of its Subsidiaries and use its best efforts to cause
each other Credit Party to, at the Company's cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances (x) as may from time to time be necessary or as
the Required Lenders may from time to time reasonably request in order to carry
out the intent and purposes of the Financing Documents and the transactions
contemplated thereby, including all such actions to establish, preserve,
protect and perfect the estate, right, title and interest of the Lenders in and
to the Collateral (including Collateral acquired after the date hereof),
including first priority Liens thereon, subject only to Permitted Liens and (y)
as the Required Lenders may from time to time reasonably request, to
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establish, preserve, protect and perfect first priority Liens in favor of the
Lenders on any and all assets of the Company and its Subsidiaries (and on the
Receivables of the other Credit Parties whose Receivables are required to be
pledged to the Lenders under the Financing Documents), now owned or hereafter
acquired, that are not Collateral on the date hereof. The Company shall
promptly give notice to the Agent of the acquisition after the Agreement Date
by the Company or any Subsidiary of any real property (including leaseholds in
respect of real property), trademark, copyright or patent. The Company will
comply in all respects with its obligations under the Warrants and the
Warrantholders Rights Agreement and shall take all steps as shall be necessary
to insure that NationsCredit and any subsequent holder thereof receives all of
the benefits which it is intended to receive thereunder. Upon the release or
termination of the security interest in favor of Xxxx X. Xxxxxxx, M.D. and Xxxx
X. Xxxxxxx, M.D., P.A. in the outstanding shares of the capital stock of
Capital Eye Surgery Center, Inc. pledged by Omega Health Systems of Florida,
Inc. to such Persons, the Company shall cause such Subsidiary (or its
successors or assigns) to pledge such shares to the Agent as collateral under
the Security Documents, pursuant to such documents and instruments (including
delivery of the pledged share certificate(s) and irrevocable stock powers
executed in blank) as the Lenders may request, all in form and substance
reasonably satisfactory to the Agent.
SECTION 5.09. BOARD MEETINGS. The Company will notify the
Lenders of all meetings and actions by written consent of the board of
directors of the Company and each committee thereof at the same time and in the
same manner as notice of any meetings of such board or committee is required to
be given to its directors who do not waive such notice (or, if such action
requires no notice, then 10 days written notice thereof describing the matters
upon which action is to be taken). The Lenders shall have the right to send two
representatives selected by them to each such meeting, who shall be permitted
to attend such meeting and any adjournments thereof (other than any meeting or
portion of such meeting devoted to discussion of the Lenders solely in their
respective capacities as holders of the Notes).
SECTION 5.10. LENDERS' MEETINGS. Within 45 days after the end
of each fiscal quarter, the Company will conduct a meeting of the Lenders to
discuss such fiscal quarter's results and the financial condition of the
Company at which shall be present the chief executive officer and the chief
financial officer of the Company and such other officers of the Company as the
Company's chief executive officer shall designate. Such meetings shall be held
at a time and place convenient to the Lenders and to the Company.
SECTION 5.11. HEDGING FACILITIES. If the aggregate principal
amount of Revolving Credit Loans outstanding reaches at any time an amount
equal to or greater than $10,000,000, the Required Lenders may require that the
Company, at its sole cost and expense, enter into and thereafter maintain in
full force and effect one or more interest rate cap agreements in such amounts
and on such terms as shall reasonably be requested by the Agent and the
Required Lenders.
SECTION 5.12. HAZARDOUS MATERIALS; REMEDIATION. The Company
will (i) promptly give notice to the Lenders in writing of any complaint,
order, citation, notice or
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other written communication from any Person with respect to, or if the Company
becomes aware of, (x) the existence or alleged existence of a violation of any
applicable Environmental Law or the incurrence of any liability, obligation,
loss, damage, cost, expense, fine, penalty or sanction or the requirement to
commence any remedial action resulting from or in connection with any air
emission, water discharge, noise emission, Hazardous Material or any other
environmental, health or safety matter at, upon, under or within any of the
properties now or previously owned, leased or operated by the Company, any of
its Subsidiaries or any other Credit Party, or due to the operations or
activities of the Company, any Subsidiary or any other Person on or in
connection with any such property or any part thereof or (y) any release on any
of such properties of Hazardous Materials in a quantity that is reportable
under any applicable Environmental Law; (ii) promptly comply, subject to
Permitted Contests, with any governmental requirements requiring the removal,
treatment or disposal of such Hazardous Materials or Hazardous Materials
Contamination and provide evidence satisfactory to the Required Lenders of such
compliance; and (iii) provide the Lenders, within 30 days after demand therefor
by the Required Lenders, with a bond, letter of credit or similar financial
assurance evidencing to the reasonable satisfaction of the Required Lenders
that sufficient funds are available to pay the cost of removing, treating and
disposing of such Hazardous Materials or Hazardous Materials Contamination and
discharging any assessment which may be established on any such property as a
result thereof where the projected cost thereof exceeds $100,000.
SECTION 5.13. COLLATERAL REPORTS. The Company shall keep, and
shall cause each of its Subsidiaries to keep, accurate and complete records of
its accounts receivable and the accounts receivable of each other Credit Party
in at least so much detail as to enable the Company to provide the Receivables
Reports and other information described in Section 5.01.
SECTION 5.14. COLLECTIONS; RIGHT TO NOTIFY ACCOUNT DEBTORS.
At any time following the occurrence of an Event of Default and during the
continuance thereof, in addition to the Lenders' rights under the Security
Documents, the Company hereby authorizes the Agent, at any time, to (i) notify
any or all Account Debtors that the Receivables of the Company and its
Subsidiaries and the other Credit Parties who have executed any Security
Document have been assigned to the Agent and that the Agent has a security
interest therein and (ii) to the extent permitted by applicable law direct such
Account Debtors to make all payments due from them to the Company, its
Subsidiaries or such other Credit Parties upon such Receivables directly to the
Agent or to a lockbox designated by the Agent. The Agent shall promptly furnish
the Company with a copy of any such notice sent. Any such notice, in the
Agent's sole discretion, may be sent on the Company's, such Subsidiaries' or
such other Credit Parties' stationery, in which event the Company shall, or
shall cause such Subsidiary or such other Credit Party to, if requested by the
Agent, co-sign such notice with the Agent. At any subsequent time that no Event
of Default is continuing, the Agent will withdraw such notice at the Company's
request.
SECTION 5.15. EMPLOYMENT CONTRACTS; ENFORCEMENT OF COVENANTS
NOT TO COMPETE. The Company shall cause each Person who is or becomes a member
of senior
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management to execute and deliver a non-compete agreement that is in form and
substance satisfactory to the Agent in its sole good faith discretion. The
Company and each of its Subsidiaries shall preserve, protect and defend, to the
extent permitted by applicable law, all of its rights with respect to any such
agreement.
SECTION 5.16. LANDLORD AND WAREHOUSEMAN WAIVERS. Upon the
request of the Agent, the Company shall deliver to the Agent waivers of
contractual and statutory landlord's, landlord's mortgagee's and warehouseman's
Liens in form and substance satisfactory to the Agent under each existing
lease, warehouse agreement or similar agreement to which the Company or any
Subsidiary is a party; provided that such waivers will in any event be
incorporated when the existing lease, warehouse agreement or similar agreement
is amended, renewed or extended and the Company will obtain waivers of both
contractual and statutory landlord's, landlord's mortgagee's and warehouseman's
Liens in form and substance satisfactory to the Agent in connection with each
new lease, warehouse agreement or similar agreement entered into by the Company
or any Subsidiary.
SECTION 5.17. ADDITIONAL SUBSIDIARIES. Promptly after the
creation or acquisition of any Subsidiary by the Company, the Company shall
cause to be executed and delivered, (i) a Subsidiary Guaranty Agreement and a
Subsidiary Security Agreement from such Subsidiary, (ii) one or more
Professional Service Provider Security Agreements for the Managed Practices
acquired, if any, and (iii) such other related documents (including documents
relating to any additional Credit Parties) as the Lenders may request, all in
form and substance reasonably satisfactory to the Agent.
SECTION 5.18. ACCREDITATION AND LICENSING. The Company shall,
and shall cause each other Credit Party to, keep itself fully licensed with all
licenses required to operate such Person's business under applicable law and
maintain such Person's qualification for participation in, and payment under,
Medicare, Medicaid, CHAMPUS, CHAMPVA and any other federal, state or local
governmental program or private program providing for payment or reimbursement
for services rendered by such Person, except to the extent that the loss or
relinquishment of such qualification would not or could not reasonably be
expected to have or result in a Material Adverse Effect; provided, however,
that nothing in this Agreement shall require the Company or any other Credit
Party to participate in the CHAMPUS or CHAMPVA programs if it elects not to
accept patients covered by such programs. The Company will promptly furnish or
cause to be furnished to the Agent copies of all reports and correspondence it
or any Subsidiary or Credit Party sends or receives relating to any loss or
revocation (or threatened loss or revocation) of any qualification described in
this Section.
SECTION 5.19 CASH MANAGEMENT; UNDERTAKING RESPECTING
POST-CLOSING MATTERS.
(a) The Company will and will cause each of its
Subsidiaries and each other Credit Party to establish and maintain the cash
management system described below:
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(i) On or prior to the Date that is 90 days following
the Agreement Date (the "COMPLIANCE DATE"), each
Managed Practice that constitutes a Managed Practice
on the Agreement Date (an "EXISTING MANAGED
PRACTICE") shall have executed and delivered to the
Company and/or to the relevant Subsidiary that is
the manager of such practice (such Subsidiary and
each other Subsidiary that is the manager of a
Managed Practice, a "SUBSIDIARY MANAGER"), and there
shall thereafter at all times remain in full force
and effect, a Managed Practice Security Agreement
granting to the Company and/or the applicable
Subsidiary Manager a security interest in all of the
Receivables of such Managed Practice (such
Receivables and the Receivables of each other
Managed Practice, the "MANAGED PRACTICE
RECEIVABLES"). On or prior to the Compliance Date,
each Existing Managed Practice shall have executed
and delivered a Payment Direction in the form of
EXHIBIT M (a "PAYMENT DIRECTION") with respect to
the proceeds of such Managed Practice's Managed
Practice Receivables, and shall thereafter keep such
Payment Direction in full force and effect. On or
prior to the Compliance Date, each Existing Managed
Practice shall have also caused each bank at which
such Managed Practice maintains accounts into which
the proceeds of its Managed Practice Receivables are
initially deposited to have executed and delivered
to the Agent a Bank Acknowledgment in the form of
EXHIBIT N (a "BANK ACKNOWLEDGMENT"). From and after
the Compliance Date, each Existing Managed Practice
shall at all times maintain such bank accounts and
cause the deposit, in the form received, of all cash
proceeds of its Managed Practice Receivables, and no
other funds, into accounts that are the subject of a
fully executed Payment Direction and Bank
Acknowledgment that are in full force and effect, or
such Managed Practice shall have entered into a
Professional Service Provider Security Agreement or
other arrangements satisfactory to the Agent, and at
no time shall any Managed Practice take any action
inconsistent with such requirement.
(ii) On or prior to the Compliance Date, each Existing
Managed Practice shall have executed and delivered
to the Company and/or the relevant Subsidiary
Manager such Uniform Commercial Code Financing
Statements and other filings as shall be necessary
or reasonably desirable, in the judgment of the
Agent, to perfect the Company's and/or such
Subsidiary Manager's security interest therein as
granted pursuant to the Managed Practice Security
Agreement and to evidence and perfect the further
assignment
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thereof to the Agent pursuant to the Subsidiary
Security Agreement.
(iii) (x) To the extent not prohibited by Applicable
Law and except to the extent that the Agent and the
Required Lenders shall have otherwise agreed in
writing, the Company and/or each Subsidiary Manager
shall use its reasonable best efforts to cause each
Existing Managed Practice to execute and deliver to
the Agent a Professional Service Provider Security
Agreement on or before the Compliance Date, together
with all documents, instruments and exhibits
required to be delivered in connection therewith,
and all filings reasonably requested by the Agent to
perfect and protect the security interests created
thereunder for the benefit of the Agent and the
Lenders.
(y) To the extent not prohibited by Applicable
Law and except to the extent that the Agent and the
Required Lenders shall have otherwise agreed in
writing, the Company and/or each Subsidiary Manager
shall cause each Managed Practice that becomes a
Managed Practice on or after the Agreement Date to
execute and deliver to the Agent a Professional
Service Provider Security Agreement on the date such
Managed Practice becomes a Managed Practice,
together with all documents, instruments and
exhibits required to be delivered in connection
therewith, and all filings reasonably requested by
the Agent to perfect and protect the security
interests created thereunder for the benefit of the
Agent and the Lenders.
(iv) On or prior to the Compliance Date, and from and
after such date, each of the Company and each
Subsidiary Manager will cause all proceeds of
Managed Practice Receivables to be handled in
compliance with all applicable state and federal
laws, to the reasonable satisfaction of the Agent
and the Required Lenders.
(b) From and after the Compliance Date, the Company will
cause each Existing Managed Practice that is not currently organized as a
professional corporation or association, to reorganize in such form, or the
equivalent corporate form thereof under the applicable laws of the state in
which such Existing Managed Practice operates, and will cause each Existing
Managed Practice that is not currently subject to such restrictions to become
and remain subject to restrictions on the incurrence or existence of Liens and
Debt, which form of organization and restrictions shall in each case be in form
and in substance reasonably satisfactory to the Agent and the Required Lenders.
Each Managed Practice that becomes a Managed Practice on or after the Agreement
Date will be organized as a professional corporation or association or the
equivalent corporate form thereof under the applicable laws of the state in
which such Managed Practice operates, and each such Managed Practice will be,
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and at all times remain, subject to restrictions on the incurrence or existence
of Liens and Debt, which form of organization and restrictions on Debt and
Liens shall in each case be in form and in substance satisfactory to the Agent
and the Required Lenders.
(c) On or prior to the Compliance Date, the Company will
cause each Person who is an Existing Managed Practice, and each physician or
optometrist who is an employee of any Managed Practice (a "PROFESSIONAL
EMPLOYEE"), to execute, and at all times thereafter to remain subject to, a
non-compete agreement or a buyback arrangement or other arrangement, in each
case in form and substance satisfactory to the Agent and the Required Lenders,
and will cause each Existing Managed Practice that is a professional
corporation or association or similar entity, to cause to be assigned to the
relevant Subsidiary Manager, all such agreements or arrangements between such
Managed Practice and its Professional Employees upon such terms and conditions
as the Agent shall reasonably require. The Company and its Subsidiaries shall
cause each Person who becomes a Managed Practice on or after the Agreement Date
and each Professional Employee thereof to execute at the time such Person
becomes a Managed Practice or Professional Employee, and at all times
thereafter to remain subject to, a non-compete agreement or a buyback
arrangement or other arrangement, in each case in form and substance
satisfactory to the Agent and the Required Lenders. Each such agreement or
arrangement between a Managed Practice and any of its Professional Employees
shall be assigned to the relevant Subsidiary Manager upon such terms and
conditions as the Agent shall reasonably require.
(d) On or prior to the date which is fourteen (14) days
after the Agreement Date, the Company will, and will cause each of its
Subsidiaries to, to the extent not delivered to the Agent on or before the
Agreement Date, deliver to the Agent:
(i) copies of the Key-Person Life Insurance
Policies, in form and substance satisfactory to the Agent in
its sole good faith discretion, and a duly executed
instrument of assignment assigning the Key-Person Life
Insurance Policies to the Agent as collateral under the
Security Documents;
(ii) any and all Lockbox Agreements required
pursuant to the Security Agreements, in each case duly
executed by all parties thereto; and
(iii) the certificates of insurance required to
be delivered pursuant to Section 5.04(c).
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ARTICLE VI
NEGATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 6.01. DEBT. The Company will not, and will not permit
any of its Subsidiaries or any other Credit Party to, directly or indirectly,
create, incur, assume, guarantee or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except for:
(a) Debt of the Company, any Subsidiary or any Credit
Party outstanding on the Agreement Date as set forth in SCHEDULE 6.01;
(b) Debt of the Company under the Financing Documents;
(c) Purchase money Debt of the Company, any of its
Subsidiaries or any other Credit Party incurred or assumed for the
purpose of financing all or any part of the cost of acquiring any
fixed asset (including through Capital Leases), in an aggregate
principal amount at any time outstanding not greater than $4,000,000
less the outstanding principal amount of Debt listed in Part A of
SCHEDULE 6.01;
(d) Debt of the Company, any of its Subsidiaries or any
other Credit Party to the Company, a wholly-owned Subsidiary of the
Company, or of any Subsidiary of the Company to the Company;
(e) Debt constituting liabilities under letters of
credit, surety bonds or similar instruments issued in the ordinary
course of business to secure bids, purchase orders, statutory
obligations such as workers compensation insurance or sales tax bonds,
operating leases and similar obligations (but not Debt), provided that
the aggregate outstanding obligation (whether fixed or contingent,
drawn or undrawn) of the Company, its Subsidiaries and the other
Credit Parties under all such instruments shall not at any time exceed
$500,000;
(f) Purchase money Debt of the Company incurred in
connection with an acquisition in accordance with the terms and
conditions of Section 6.07, which Debt shall be subordinated in all
respects to any and all Debt of the Company to the Agent and the
Lenders, upon terms and conditions satisfactory to the Lenders, and
the incurrence of which Debt does not result in a Default or an Event
of Default;
(g) Debt of any Existing Managed Practice in an
aggregate amount for all such Managed Practices not to exceed at any
time outstanding $500,000, provided that this Section 6.01 shall not
apply to, and there shall not be included in such aggregate
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limit, the amount of Debt of any individual Person that is a Managed
Practice so long as such Debt is not secured by a Lien on any asset of
the medical or optometry practice of such Person; and
(h) Other Debt of the Company and its Subsidiaries in an
aggregate principal amount (whether fixed or contingent, drawn or
undrawn) not to exceed at any time $50,000.
SECTION 6.02. NEGATIVE PLEDGE. None of the Company, any
Subsidiary or any other Credit Party will create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except the following
(collectively, the "PERMITTED LIENS"):
(a) any Lien on any asset securing Debt permitted under
Section 6.01(c) incurred or assumed for the purpose of financing all
or any part of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within 90 days after
the acquisition thereof, and provided further that the principal
amount of the Debt secured shall not be less than 70% of the value of
the asset subject to such Lien;
(b) Liens existing on the Agreement Date securing Debt
permitted by Section 6.01(a) to the extent described in SCHEDULE 6.01;
(c) Liens arising in the ordinary course of its business
which (i) do not secure Debt, (ii) do not secure any obligation in an
amount exceeding $50,000 and (iii) do not in the aggregate materially
detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(d) Liens on the assets of any Subsidiary or Managed
Practice securing Debt or other liabilities to the Company or one or
more wholly-owned Subsidiaries of the Company;
(e) Liens on the assets of a Managed Practice securing
Debt permitted by Section 6.01(g), provided that this Section 6.02
shall not apply to or restrict Liens on the assets of any individual
Person that is a Managed Practice so long as such Lien does not attach
to any asset used in, or any Receivable arising out of, the medical or
optometry practice of such Person; and
(f) Liens created by the Security Documents.
SECTION 6.03. CAPITAL STOCK. The Company will not permit any
Subsidiary to issue any shares of capital stock except shares of capital stock
issued by any Subsidiary to the Company which are delivered to the Agent in
pledge for the benefit of the Agent and the Lenders.
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SECTION 6.04. RESTRICTED PAYMENTS. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment; provided that the
foregoing shall not restrict or prohibit dividends or distributions by the
Company at such times or in such amounts as are necessary to permit purchases
of shares of (or options to purchase shares of) Common Stock from employees of
the Company, any Subsidiary or any Managed Practice upon their death,
termination or retirement, so long as, (x) before and after giving effect to
any such dividend or distribution for such purpose, no Default shall have
occurred and be continuing and (y) such purchases or payments after the date
hereof do not exceed in any one Fiscal Year $75,000.
SECTION 6.05. ERISA. The Company will not, and will not
permit any of its Subsidiaries to:
(a) engage in any transaction in connection with which
the Company or any of its Subsidiaries could be subject to any
material liability arising from either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code;
(b) terminate any Plan in a manner, or take any other
action, which could result in any material liability of any member of
the ERISA Group to the PBGC;
(c) fail to make full payment when due of all amounts
which, under the provisions of any Plan, it is required to pay as
contributions thereto, or permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan;
(d) permit the present value of all benefit liabilities
under all Plans to exceed the fair market value of the assets of such
Plans; or
(e) fail to make any payments to any Multiemployer Plan
that it may be required to make under any agreement relating to such
Multiemployer Plan or any law pertaining thereto.
SECTION 6.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.
The Company will not, and will not permit any of its Subsidiaries to, (i)
consolidate or merge with or into any other Person other than the merger of a
wholly-owned Subsidiary with and into the Corporation, with the Corporation the
surviving entity, or the merger of a wholly-owned Subsidiary with and into
another wholly-owned Subsidiary, or (ii) sell, lease or otherwise transfer,
directly or indirectly, any of its or their assets, other than (x) sales of
inventory in the ordinary course of their respective businesses, (y)
dispositions of Temporary Cash Investments and (z) other dispositions for cash
and fair value of assets that the board of directors of the Company determines
in good faith are no longer used or useful in the business of the Company and
its Subsidiaries, provided that immediately after any such disposition, the
aggregate fair market value of all such assets disposed of pursuant to this
clause (z) after the date hereof does not exceed $500,000 and the aggregate
fair market value of all such assets
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disposed of during the Fiscal Year in which such disposition is made does not
exceed $200,000.
SECTION 6.07. PURCHASE OF ASSETS, INVESTMENTS. The Company
will not, and will not permit any Subsidiary to, acquire any assets other than
in the ordinary course of business, or to make, acquire or own any Investment
in any Person other than (a) Temporary Cash Investments, (b) Investments in
wholly-owned Subsidiaries, (c) loans or advances to or for the benefit of
Managed Practices in the ordinary course of business, consistent with past
practice pursuant to Management Agreements upon the terms and conditions
specified therein (provided that the aggregate amount of such loans or advances
shall not exceed $500,000 at any time outstanding and such loans or advances
shall be evidenced by a note which shall be delivered to the Agent in pledge as
security for the Obligations), and (d) the acquisition of an optometry or
ophthalmology practice or practice group, or the assets thereof, approved by
the Required Lenders in their sole good faith discretion. Without limiting the
generality of the foregoing, the Company will not, and will not permit any
Subsidiary to, (i) acquire or create any Subsidiary without the consent of the
Required Lenders (except that such consent shall not be required to create a
corporate Subsidiary that is wholly owned by the Company and that is formed
solely for the purpose of an acquisition permitted pursuant to the preceding
sentence) and arrangements satisfactory to the Required Lenders for (w) a
pledge of the stock of such Subsidiary to the Agent for the benefit of the
Lenders, (x) such Subsidiary to execute a joinder to the Subsidiary Guaranty
Agreement, (y) such Subsidiary to execute a joinder to the Subsidiary Security
Agreement and all financing statements and other documents and instruments
required thereunder, and (z) cause each party to a Management Agreement with
such Subsidiary to execute a Professional Service Provider Security Agreement
and all financing statements, documents and instruments required in connection
therewith, or (ii) engage in any joint venture or partnership.
SECTION 6.08. TRANSACTIONS WITH AFFILIATES. The Company will
not, and will not permit any Subsidiary or any other Credit Party to, directly
or indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company, on terms that are less favorable to
the Company, such Subsidiary or such Credit Party, as the case may be, than
those which might be obtained at the time from a Person who is not an Affiliate
of the Company.
SECTION 6.09. AMENDMENTS OR WAIVERS. Without the prior
written consent of the Required Lenders, the Company will not, nor will it
permit any Subsidiary to, agree to (i) any amendment to or waiver of the
certificate of incorporation or Bylaws of the Company or any Financing Document
or (ii) any other amendment to or waiver of any material contract constituting
a part of the Collateral, including any Management Agreement in any manner that
could reasonably be expected to have a Material Adverse Effect.
SECTION 6.10. FISCAL YEAR. The Company shall not change its
fiscal year from a fiscal year ending December 31.
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SECTION 6.11. MANAGEMENT COMPENSATION. The Company shall not,
and shall not permit any Subsidiary to, directly or indirectly, pay or become
obligated to pay, any compensation for services in any form to or for the
account of any Person listed on SCHEDULE 3.01(O), except as expressly provided
on such Schedule. The limitation set forth in the preceding sentence shall not
apply to payments in the form of stock or stock options.
SECTION 6.12. INTEREST COVERAGE. The Company shall not permit
the ratio, calculated on the last day of any fiscal quarter for the number of
consecutive fiscal quarters then most recently ended since the Closing Date
(considered as a single accounting period, but not to exceed four quarters), of
(i) Consolidated Free Cash Flow to (ii) the aggregate interest charges incurred
by the Company and its Consolidated Subsidiaries for such period, whether
expensed or capitalized, including the portion of any obligation under Capital
Leases allocable to interest expense in accordance with GAAP and the portion of
any debt discount or premium (but not expenses of issuance) that shall be
amortized in such period, to be less than the ratio set forth below opposite
the period in which such last day shall fall:
PERIOD RATIO
1997 3.0:1
1998 3.25:1
1999 and thereafter 3.50:1
SECTION 6.13. CAPITAL EXPENDITURES. The aggregate amount of
Consolidated Capital Expenditures for any period of four consecutive fiscal
quarters shall not exceed 1% of the Consolidated Net Revenues of the Company
and its Consolidated Subsidiaries. Any amounts permitted to be spent for
Consolidated Capital Expenditures for any such period in excess of the amounts
actually expended during such period may be carried forward to the next period
of four fiscal quarters as permitted Consolidated Capital Expenditures during
such period.
SECTION 6.14. TOTAL DEBT SERVICE COVERAGE RATIO. The
percentage ratio, calculated on the last day of any fiscal quarter for the
number of consecutive fiscal quarters then most recently ended since the
Closing Date (considered as a single account period, but not to exceed four
quarters), of (i) Consolidated Free Cash Flow to (ii) Total Debt Service, shall
not be less than 1.10:1.
SECTION 6.15. DEBT TO CAPITALIZATION. The ratio of (i)
Consolidated Total Debt at any time to (ii) Consolidated Capitalization shall
not exceed the percentage shown below at any time during the period set forth
below opposite such percentage:
FISCAL YEAR PERCENTAGE
1997 50%
1998 45%
1999 40%
thereafter 25%
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SECTION 6.16. TOTAL DEBT TO EBITDA. The ratio of (i)
Consolidated Total Debt at any time to (ii) EBITDA for the four consecutive
fiscal quarters then most recently ended (considered as a single accounting
period), shall not exceed the ratio 3.50:1.
SECTION 6.17. MINIMUM NET WORTH. At no time shall
Consolidated Net Worth be less than the sum of:
(i) the Consolidated Net Worth of the Company and the
Consolidated Subsidiaries as at December 31, 1996,
plus
(ii) 85% of the positive amount of Consolidated Net
Income for each fiscal period ended after December
31, 1996, plus
(iii) the Net Proceeds of Capital Stock received following
the Agreement Date.
SECTION 6.18. TRANSITION RULES. In delivering pro forma
covenant calculations for or including any entity that is the target of an
acquisition (whether such information is required pursuant to Section 3.02,
Section 6.04, Section 6.07 or otherwise) or when including an acquisition
target that has not been under management by the Company or one of its
Subsidiaries for an entire fiscal quarter in calculating financial covenant
compliance, the Company shall use the actual EBITDA for the target over the
relevant period, as if such target had been a Subsidiary of the Company during
such period. In calculating compliance with Section 6.16, to the extent such
target has been under management by the Company or one of its Subsidiaries for
one or more entire fiscal quarters but less than one year, the Company shall
calculate EBITDA and net revenues with respect to the target based on the
annualized actual performance of the target during the most recently ended
number of complete quarters that such target has been under management of the
Company or one of its Subsidiaries.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any one or more of the
following events (each an "EVENT OF DEFAULT") shall occur and be continuing for
any reason whatsoever (whether voluntary or involuntary, by operation of law or
otherwise):
(a) the Company shall fail to pay any principal,
interest or premium on any Note, or any fees or any other amount
payable hereunder when due;
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(b) the Company shall fail to observe or perform any
covenant contained in Section 5.13, Section 5.19 or Article VI hereof,
or Section 3(B) of the Pledge Agreement or the Company, or any of its
Subsidiaries shall fail to perform or observe any covenant contained
in Section 5 or Sections 4(A), (E) or (I) of the Security Agreements;
(c) the Company, any of its Subsidiaries or any other
Credit Party shall fail to observe or perform any covenant or
agreement contained in the Financing Documents (other than those
covered by clause (a) or (b) above) for 30 days after notice thereof
has been given to the Company by the Agent;
(d) any representation, warranty, certification or
statement made by the Company, any of its Subsidiaries or any other
Credit Party in any Financing Document or in any certificate,
financial statement or other document delivered pursuant to the
Financing Documents shall prove to have been incorrect in any respect
(or in any material respect if such representation, warranty,
certification or statement is not by its terms already qualified as to
materiality) when made (or deemed made);
(e) the Company, any of its Subsidiaries or any other
Credit Party shall fail to make any payment in respect of any Debt
(other than the Notes) the aggregate outstanding principal amount of
which Debt, either singly or when aggregated with all other Debt with
respect to which the Company, any of its Subsidiaries or any other
Credit Party has failed to make a payment equals or exceeds $100,000
(such Debt, hereinafter "MATERIAL DEBT");
(f) any event or condition shall occur which (i) results
in the acceleration of the maturity of any Material Debt of the
Company, any of its Subsidiaries or any other Credit Party, or (ii)
enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of such Debt or any Person acting on such holder's
behalf to accelerate the maturity thereof, or (iii) results in a
violation of, or a default under, any provision of the certificate of
incorporation of the Company, any of its Subsidiaries or any other
Credit Party;
(g) Company, any of its Subsidiaries or any other Credit
Party shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
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(h) an involuntary case or other proceeding shall be
commenced against the Company, any of its Subsidiaries or any other
Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case
or other proceeding shall remain undismissed and unstayed for a period
of 90 days; or an order for relief shall be entered against the
Company, any of its Subsidiaries or any other Credit Party under the
federal bankruptcy laws as now or hereafter in effect;
(i) any one or more members of the ERISA Group shall
fail to pay when due an amount or amounts aggregating in excess of
$100,000 which it shall have become liable to pay under Title IV of
ERISA; or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $100,000;
(j) a judgment or order for the payment of money which
when aggregated with other such judgments or orders equals or exceeds
$100,000, shall be rendered against the Company, any of its
Subsidiaries or any other Credit Party and such judgment or order
shall continue unsatisfied and unstayed for a period of 10 days or any
judgment shall be rendered against the Company, any Subsidiary or any
other Credit Party that exceeds by more than $50,000 any insurance
coverage applicable thereto;
(k) except as the result of any transfer made pursuant
to the Pledge Agreement, the Company shall fail at any time to be the
record and beneficial owner of 100% of the issued and outstanding
capital stock any Subsidiary, free and clear of any Lien other than
inchoate tax Liens and Liens in favor of the Agent and the Lenders;
any person or group of persons (within the meaning of Rule 13d-3
promulgated by the Securities and Exchanges Commission under the
Securities Exchange Act of 1934, as amended), other than the current
owners, other employees of the Company and its Subsidiaries pursuant
to employee stock ownership plans and other than doctors who acquire
Common Stock as consideration for acquisitions, shall have acquired
beneficial ownership (within the meaning of such Rule 13d-3) of 5% or
more of the Common Stock of the Company; or Xxxxxx X. Xxxxxx, Xxxxxx
X. Xxxxx or Xxxxxx X. Xxxxxxx shall cease to perform the functions of
Chairman of the Board of Directors,
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the Chief Executive Officer or Chief Financial Officer, respectively,
of the Company, and a successor shall not have been appointed by the
Company and approved by the Required Lenders within 90 days
thereafter, or Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxx or any affiliate
thereof, shall cease to own beneficially at least two-thirds of the
shares (determined assuming the exercise of all options or warrants to
purchase Common Stock and adjusted for stock splits, combinations and
similar events) of each class of Common Stock owned by each such
Person on the Agreement Date; or, during any period of twelve
consecutive calendar months, individuals who were directors of the
Company on the first day of such period shall cease to constitute a
majority of the board of directors of the Company;
(l) (i) the auditor's report or reports on the audited
statements delivered pursuant to Section 5.01 shall include any
material qualification (including with respect to the scope of audit)
or exception;
(m) the Lien created by any of the Security Documents
shall at any time fail to constitute a valid and perfected Lien on any
portion of the Collateral purported to be secured thereby, subject to
no prior or equal Lien except Permitted Liens, or the Company, any of
its Subsidiaries or any other Credit Party shall so assert in writing;
(n) the Company, any of its Subsidiaries or any other
Credit Party shall be prohibited or otherwise restrained from
conducting the business theretofore conducted by it in any manner that
has or could reasonably expected to have or result in a Material
Adverse Effect by virtue of any determination, ruling, decision,
decree or order of any court or governmental authority of competent
jurisdiction and such determination, ruling, decision, decree or order
remains unstayed and in effect for any period of 10 days beyond any
period for which any business interruption insurance policy of the
Company, such Subsidiary or such Credit Party shall provide full
coverage to the such person of any losses and lost profits; or
(o) any of the Financing Documents shall for any reason
fail to constitute the valid and binding agreement of any party
thereto to the extent described in Section 4.03, or any such party
shall so assert in writing;
then, and in every such event and at any time thereafter during the continuance
of such event, the Agent shall if requested by the Required Lenders, (i) by
notice to the Company terminate the Commitments and they shall thereupon
terminate and/or (ii) by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company; provided
that in the case of any of the Events of Default specified in clause (g) or (h)
above with respect to the Company, without any notice to the Company or any
other act by the Agent or the Lenders, the Commitments shall thereupon
terminate and each Note (together with accrued interest thereon) shall become
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immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company.
ARTICLE VIII
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 8.01. FEES. (a) Participation Fees. On the Closing
Date, the Company shall pay to the Lenders a fee in an aggregate amount (for
all Lenders) equal to the sum of (i) $150,000, minus (ii) the balance, if any,
of the good faith deposit of $25,000 previously paid by the Company in
connection with the initial proposal letter and the fee previously paid by the
Company in connection with the Commitment Letter, in each case after payment of
all costs and expenses of the negotiation, preparation and execution of the
Financing Documents and the consummation of the transactions contemplated
thereby.
(b) Unused Commitment Fee. During the period from the
Agreement Date through the Availability Termination Date, the Company shall pay
the Agent for the ratable account of the Lenders a fee at the rate of 0.50% per
annum on the daily average amount by which the Revolving Credit Commitment
exceeds the aggregate outstanding principal amount of its Revolving Credit
Loans for each day. Accrued fees under this Section shall be payable quarterly
in arrears on each Quarterly Date prior to the Availability Termination Date
and on such date.
SECTION 8.02. COMPUTATION OF INTEREST AND FEES. Commitment
fees pursuant to Section 8.01(b) and all interest hereunder and under the Notes
shall be calculated on the basis of a 360-day year for the actual number of
days elapsed.
SECTION 8.03. GENERAL PROVISIONS REGARDING PAYMENTS. All
payments (including prepayments) to be made by the Company under any Financing
Document, including payments of principal of and premium and interest on the
Notes, fees, expenses and indemnities, shall be made without set-off or
counterclaim and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. The Company shall make all payments in immediately
available funds to each Lender's Payment Account before 11:00 a.m. (New York
City time) on the date when due. Each payment (including prepayments) by the
Company on account of principal of and interest on any Loans shall be made pro
rata according to the respective outstanding principal amounts of Loans held by
each Lender. All amounts payable by the Company hereunder or under any other
Financing Document not paid when due (other than payments of principal and
interest on the Notes, which shall bear interest as set forth therein) shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
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SECTION 8.04. EXPENSES. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to pay on demand
(i) all costs and expenses of preparation of this Agreement, the other
Financing Documents and of the Company's, each Subsidiary's and each other
Credit Party's performance of and compliance with all agreements and conditions
contained herein and therein, (ii) the reasonable fees, expenses and
disbursements of counsel to, and independent appraisers and consultants
retained by, the Lenders in connection with the negotiation, preparation,
execution and administration of this Agreement, the other Financing Documents
and any amendments hereto or thereto and waivers hereof and thereof, (iii) all
costs and expenses of creating, perfecting and/or maintaining the Liens
pursuant to the Financing Documents, including filing and recording fees and
expenses, the costs of any bonds required to be posted in respect of future
filing and recording fees and expenses, title investigations and fees and
expenses of such local counsel as the Agent shall reasonably request, (iv) the
fees, expenses and disbursements of independent accountants or other experts
retained by the Agent in connection with accounting and collateral audits or
reviews of the Company, its Subsidiaries and its and their affairs, provided
that, in the absence of the occurrence and continuance of an Event of Default
such audits and/or reviews shall be made upon reasonable prior notice to the
Company and shall be limited to one per year (it being expressly agreed that
audits and/or reviews conducted during an Event of Default shall not require
such notice or be so limited) and (v) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Agent and each Lender, including fees
and disbursements of counsel based upon time spent, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
SECTION 8.05. INDEMNITY. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to indemnify, pay
and hold harmless the Agent and each Lender and any subsequent holder of any of
the Notes, and the officers, directors, employees and agents of the Agent, each
Lender and such holders (collectively called the "INDEMNITEES") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including the fees and disbursements of counsel for
such Indemnitee) in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be designated a party
thereto and including any such proceeding initiated by or on behalf of the
Company, any Subsidiary or any other Credit Party, and the expenses of
investigation by engineers, environmental consultants and similar technical
personnel and any commission, fee or compensation claimed by any broker (other
than any broker retained by NationsCredit) asserting any right to payment for
the transactions contemplated hereby, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Financing Documents (including
(i)(A) as a direct or indirect result of the presence on or under, or escape,
seepage, leakage, spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by the Company or any of its
Subsidiaries of any Hazardous Materials or any Hazardous Materials
Contamination, (B) arising out of or relating to the offsite disposal of any
materials generated or present on any such property or (C) arising out of or
resulting from the environmental condition of any such property or the
applicability
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of any governmental requirements relating to Hazardous Materials, whether or
not occasioned wholly or in part by any condition, accident or event caused by
any act or omission of the Company or any of its Subsidiaries, and (ii)
proposed and actual extensions of credit under this Agreement) and the use or
intended use of the proceeds of the Notes, except that the Company shall have
no obligation hereunder to an Indemnitee with respect to any liability
resulting from the gross negligence or willful misconduct of such Indemnitee.
To the extent that the undertaking set forth in the immediately preceding
sentence may be unenforceable, the Company shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment
and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them. Without limiting the generality of any provision of
this Section, to the fullest extent permitted by law, the Company hereby waives
all rights for contribution or any other rights of recovery with respect to
liabilities, losses, damages, costs and expenses arising under or relating to
Environmental Laws that it might have by statute or otherwise against any
Indemnitee; except to the extent that any thereof are finally determined by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
SECTION 8.06. TAXES. The Company agrees to pay all
governmental assessments, charges or taxes (except income or other similar
taxes imposed on any Lender or any holder of a Note), including any interest or
penalties thereon, at any time payable or ruled to be payable in respect of the
existence, execution or delivery of this Agreement, the other Financing
Documents, or the issuance of the Notes, the Warrants or the Warrant Shares,
and to indemnify and hold each Lender and each and every holder of the Notes,
the Warrants and the Warrant Shares harmless against liability in connection
with any such assessments, charges or taxes.
SECTION 8.07. FUNDING LOSSES. If the Company fails to borrow
any Loans after notice has been given to any Lender in accordance with Section
2.04 or fails to make any payment when due (including pursuant to a notice of
optional prepayment), the Company shall reimburse each Lender within 15 days
after demand for any resulting loss or expense incurred by it (or by an
existing or prospective participant in the related Loan), including any loss
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such payment or failure
to borrow; provided that such Lender shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error.
SECTION 8.08. MAXIMUM INTEREST. (a) In no event shall the
interest charged with respect to the Notes or any other obligations of the
Company or any Subsidiary under the Financing Documents exceed the maximum
amount permitted under the laws of the State of Georgia or of any other
applicable jurisdiction and notwithstanding anything to the contrary contained
in any of the Financing Documents, none of the terms and provisions of the
Financing Documents shall ever be construed to create a contract or obligation
to pay interest at a rate in excess of the maximum amount permitted under the
laws of the State of Georgia or of any other applicable jurisdiction.
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(b) Notwithstanding anything to the contrary herein or
elsewhere, if at any time the rate of interest payable for the account of any
Lender hereunder or under any Note or other Financing Document (the "STATED
RATE") would exceed the highest rate of interest permitted under any applicable
law to be charged by such Lender (the "MAXIMUM LAWFUL RATE"), then for so long
as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
for the account of such Lender shall be equal to the Maximum Lawful Rate;
provided, that if at any time thereafter the Stated Rate is less than the
Maximum Lawful Rate, the Company shall, to the extent permitted by law,
continue to pay interest for the account of such Lender at the Maximum Lawful
Rate until such time as the total interest received by such Lender is equal to
the total interest which such Lender would have received had the Stated Rate
been (but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable for the account of such Lender shall be
the Stated Rate unless and until the Stated Rate again would exceed the Maximum
Lawful Rate, in which event this provision shall again apply.
(c) In determining whether the interest paid or payable,
under any specific contingency exceeds the Maximum Lawful Rate, the Company and
the Lenders shall, to the maximum extent permitted by applicable law, (i)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Lawful Rate at any time during the term of the Obligations;
provided, that, if the unpaid principal balance is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received by any Lender for the actual period of existence thereof exceeds the
Maximum Lawful Rate, such Lender shall refund to the Company the amount of such
excess and, in such event, such Lender shall not be subject to any penalties
provided by applicable law for contracting for, charging, receiving, taking,
collecting, reserving or applying interest in excess of the Maximum Lawful
Rate.
(d) In no event shall the total interest received by any
Lender exceed the amount which such Lender could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate
with respect to such Lender.
(e) In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.
(f) If any Lender has received interest hereunder in
excess of the Maximum Lawful Rate with respect to such Lender, such excess
amount shall be applied to the reduction of the principal balance of its Loans
or to other amounts (other than interest) payable
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hereunder, and if no such principal or other amounts are then outstanding, such
excess or part thereof remaining shall be paid to the Company.
ARTICLE IX
THE AGENT
SECTION 9.01. APPOINTMENT AND AUTHORIZATION. Each Lender
irrevocably appoints and authorizes the Agent to enter into each of the
Security Documents on its behalf and to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are delegated to
the Agent by the terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 9.02. AGENT AND AFFILIATES. NationsCredit shall have
the same rights and powers under the Financing Documents as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent, and NationsCredit and its affiliates may lend money to and generally
engage in any kind of business with the Company or any Subsidiary or Affiliate
of the Company as if it were not the Agent hereunder.
SECTION 9.03. ACTION BY AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein and under the other
Financing Documents. Without limiting the generality of the foregoing, the
Agent shall not be required to take any action with respect to any Default,
except as expressly provided in Article VII.
SECTION 9.04. CONSULTATION WITH EXPERTS. The Agent may
consult with legal counsel (who may be counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 9.05. LIABILITY OF AGENT. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or not taken by it in connection with the Financing Documents (i) with
the consent or at the request of the Required Lenders or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness, sufficiency or genuineness of any Financing
Document or any other instrument or writing furnished in connection therewith.
The Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a bank wire,
telex, facsimile transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.
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SECTION 9.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its Revolving Credit Commitment (whether or not the Revolving
Credit Commitments have been terminated), indemnify the Agent (to the extent
not reimbursed by the Company) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from the Agent's gross negligence or willful misconduct) that the
Agent may suffer or incur in connection with the Financing Documents or any
action taken or omitted by the Agent hereunder or thereunder.
SECTION 9.07. CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent 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 any action under the Financing Documents.
SECTION 9.08. SUCCESSOR AGENT. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Company. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent which, absent the occurrence and continuance of a Default, must
be reasonably acceptable to the Company. If no successor Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be an institution organized or licensed under the laws of the United
States of America or of any State thereof, and which in the absence of the
occurrence and continuance of an Event of Default, shall be reasonably
acceptable to the Company. Upon the acceptance of its appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. SURVIVAL. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the other Financing Documents and the execution, sale and
delivery of the Notes, the Warrants and the Warrant Shares. The indemnities and
agreements set forth in Articles VIII and IX shall survive the payment of the
Notes, the exercise, redemption or expiration of the Warrants and the
termination of this Agreement.
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SECTION 10.02. NO WAIVERS. No failure or delay by the Agent
or any Lender in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.03. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including prepaid
overnight courier, telex, facsimile transmission or similar writing) and shall
be given to such party at its address or telecopy or telex number set forth on
the signature pages hereof (or, in the case of any such Lender who becomes a
Lender after the date hereof, in a notice delivered to the Company and the
Agent by the assignee Lender forthwith upon such assignment) or at such other
address or telecopy or telex number as such party may hereafter specify for the
purpose by notice to the Agent and the Company. Each such notice, request or
other communication shall be effective (i) if given by telex or telecopy, when
such telex or telecopy is transmitted to the telex or telecopy number specified
in this Section and the appropriate answer back is received (in the case of
telex) or telephonic confirmation of receipt thereof is obtained (in the case
of telecopy) or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the address specified in this Section or when delivery
at such address is refused.
SECTION 10.04. SEVERABILITY. In case any provision of or
obligation under this Agreement or the Notes or any other Financing Document
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 10.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Lenders
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease any Revolving Credit Commitment of any Lender
(except for a ratable decrease in the Revolving Credit Commitments of all
Lenders) or subject any Lender to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or fees hereunder, (iii) postpone
the date fixed for any payment of principal of any Loan, or of interest on any
Loan or any fees hereunder or for any termination of any Commitment or (iv)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes which shall be required for the Lenders or any of them to
take any action under this Section or any other provision of this Agreement.
SECTION 10.06. SUCCESSORS AND ASSIGNS; REGISTRATION. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns (including any
transferee of any Note), except that the
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Company may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Lenders.
(b) The terms and provisions of this Agreement shall
inure to the benefit of any transferee or assignee of any Note or Warrant to
which the Company, in the absence of the occurrence and continuance of an Event
of Default (in which case no consent shall be required), shall have consented
(such consent not to be unreasonably withheld) and, in the event of such
transfer or assignment, the rights and privileges herein conferred upon the
assigning Lender shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. Any assignment
shall be for an equal percentage of such assignor Lender's Loans and its
Revolving Credit Commitment, and any such assignee Lender shall, upon its
registration in the Note Register referred to below, become a "Lender" for all
purposes hereunder. Upon any such assignment, the assignor Lender shall be
released from its Revolving Credit Commitment to the extent assigned to and
assumed by the assignee Lender.
(c) Upon any assignment of any Note(s), the assigning
Lender shall endorse its Note(s) to its assignee which shall present such Note
to the Company for registration of transfer, and, upon request of the assignee,
if any term of the Note has been amended, the Company will promptly execute and
deliver an amended and restated note or notes. In the event an amended and
restated note is created, the original Note will continue as evidence of the
Obligations hereunder so amended and restated.
(d) The Company shall maintain a register (the "NOTE
REGISTER") of the Lenders and all assignee Lenders that are the holders of all
the Notes issued pursuant to this Agreement. The Company will allow any Lender
to inspect and copy such list at the Company's principal place of business
during normal business hours. Prior to the due presentment for registration of
transfer of any Note, the Company may deem and treat the Person in whose name a
Note is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and premium and interest on such Note and for
all other purposes whatsoever, and the Company shall not be affected by notice
to the contrary.
(e) Each Lender (including any assignee Lender at the
time of such assignment) represents that it (i) is acquiring its Note solely
for investment purposes and not with a view toward, or for sale in connection
with, any distribution thereof, (ii) has received and reviewed such information
as it deems necessary to evaluate the merits and risks of its investment in the
Note, (iii) is an "accredited investor" within the meaning of Rule 501(a) under
the Securities Act and (iv) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Note, including a complete loss of its investment.
(f) Each Lender understands that the Notes are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future such Lender decides
to resell, pledge or otherwise transfer any of the
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Notes, such Note may be resold, pledged or transferred only (i) to the Company,
(ii) to a Person who such Lender reasonably believes is a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that such resale, pledge
or transfer is being made in reliance on Rule 144A under the Securities Act or
(iii) pursuant to an exemption from registration under the Securities Act.
(g) Each Lender understands that the Notes will, unless
otherwise agreed by the Company and the holder thereof, bear a legend to the
following effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
(h) If any Note becomes mutilated and is surrendered by
the Lender with respect thereto to the Company, or if any Lender claims that
its Note has been lost, destroyed or wrongfully taken, the Company shall
execute and deliver to such Lender a replacement Note, upon the affidavit of
such Lender attesting to such loss, destruction or wrongful taking with respect
to such Note and such lost, destroyed, mutilated, surrendered or wrongfully
taken Note shall be deemed to be canceled for all purposes hereof. Such
affidavit shall be accepted as satisfactory evidence of the loss, wrongful
taking or destruction thereof and no indemnity shall be required as a condition
of the execution and delivery of a replacement Note. Any costs and expenses of
the Company in replacing any such Note shall be for the account of such Lender.
SECTION 10.07. COLLATERAL. Each of the Lenders represents to
the Agent and each of the other Lenders that it in good faith is not relying
upon any Margin Stock as collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 10.08. HEADINGS. Headings and captions used in the
Financing Documents (including the Exhibits and Schedules hereto and thereto)
are included herein and therein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 10.09. GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA. THE COMPANY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA COURT SITTING IN
THE CITY OF ATLANTA, GEORGIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED
FOR NOTICES IN SECTION 10.03. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
SECTION 10.10. NOTICE OF BREACH BY AGENT OR LENDER. The
Company agrees to give the Agent and the Lenders notice of any action or
inaction by the Agent or any Lender or any agent or attorney of the Agent or
any Lender in connection with this Agreement or any other Financing Document or
the obligations of the Company under this Agreement or any other Financing
Document that may be actionable against the Agent or any Lender or any agent or
attorney of the Agent or any Lender or a defense to payment of any obligations
of the Company under this Agreement or any other Financing Document for any
reason, including commission of a tort or violation of any contractual duty or
duty implied by law. The Company agrees, to the fullest extent that it may
lawfully do so, that unless such notice is given promptly (and in any event
within thirty (30) days after the Company has knowledge, or with the exercise
of reasonable diligence could have had knowledge, of any such action or
inaction), the Company shall not assert, and the Company shall be deemed to
have waived, any claim or defense arising therefrom to the extent that the
Agent or any Lender could have mitigated such claim or defense after receipt of
such notice.
SECTION 10.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY
LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR
SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 10.12. COUNTERPARTS; ENTIRE AGREEMENT; EFFECTIVENESS.
This Agreement may be signed in any number of counterparts, each of which shall
be an original,
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with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement and the other Financing Documents constitute the
entire agreement and understanding among the parties hereto and supersede any
and all prior agreements and understandings, oral or written, relating to the
subject matter hereof. This Agreement and the other Financing Documents shall
become effective and shall be deemed duly executed, when duly executed
counterparts thereof shall have been received and accepted by the Agent at its
office in Atlanta, Georgia; such acceptance to be conclusively evidenced by its
return of the fully executed counterparts to the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
OMEGA HEALTH SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
Address: 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
LENDERS:
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------------
Title: Authorized Signatory
-------------------------------------
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
76
AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
----------------------------------
Title:
---------------------------------
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
