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LOAN AGREEMENT
BY AND BETWEEN
THE CARE GROUP, INC.
AND
KEY BANK OF NEW YORK
DECEMBER 31, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS
ARTICLE 2. COMMITMENT; LOANS; GUARANTY; COLLATERAL.
Section 2.1 Loans .................................. 17
Section 2.2 Notices Relating to Loans............... 18
Section 2.3 Disbursement of Loan Proceeds........... 18
Section 2.4 Note.................................... 18
Section 2.5 Repayment of Principal of Loans......... 19
Section 2.6 Interest................................ 19
Section 2.7 Fees.................................... 21
Section 2.8 Voluntary Changes in Commitment......... 21
Section 2.9 Use of Proceeds of Loans................ 21
Section 2.10 Computations............................ 22
Section 2.11 Minimum Amounts of Borrowings,
Conversions and Repayments............ 22
Section 2.12 Time and Method of Payments............. 22
Section 2.13 Lending Offices......................... 22
Section 2.14 Lock Box Arrangement.................... 22
Section 2.15 Guaranties.............................. 23
Section 2.16 Security................................ 23
Section 2.17 Conversions of Loans.................... 24
Section 2.18 Additional Costs; Capital Requirements.. 24
Section 2.19 Limitation on Types of Loans............ 26
Section 2.20 Illegality.............................. 27
Section 2.21 Certain Converstions Pursuant to
Sections 2.18 and 2.20................ 27
Section 2.22 Indemnification......................... 28
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1 Organization............................ 30
Section 3.2 Power, Authority, Consents.............. 30
Section 3.3 No Violation of Law or Agreements....... 31
Section 3.4 Due Execution, Validity, Enforceability. 31
Section 3.5 Properties, Priority of Liens........... 32
Section 3.6 Judgments, Actions, Proceedings......... 32
Section 3.7 No Defaults, Compliance with Laws....... 32
Section 3.8 Burdensome Documents.................... 33
Section 3.9 Financial Statements; Projections....... 33
Section 3.10 Tax Returns............................. 33
Section 3.11 Intangible Assets....................... 34
Section 3.12 Regulation U............................ 34
Section 3.13 Name Changes; Mergers; Acquisitions..... 34
Section 3.14 Full Disclosure......................... 34
Section 3.15 Government Consents: Medicare; Medicaid. 35
Section 3.16 Labor Disputes; Collective Bargaining
Agreements; Employee Grievances......... 36
Section 3.17 Condition of Assets..................... 36
Section 3.18 ERISA................................... 36
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ARTICLE 4. CONDITIONS TO THE LOANS.
Section 4.1 Conditions to Initial Loans............. 38
Section 4.2 Conditions to Subsequent Loans.......... 41
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION.
Section 5.1 Annual Financial Statements.............. 42
Section 5.2 Quarterly Financial Statements........... 42
Section 5.3 Compliance Information................... 42
Section 5.4 No Default Certificate................... 43
Section 5.5 Certificate of Accountants............... 43
Section 5.6 Accountants' Reports..................... 43
Section 5.7 Copies of Documents...................... 44
Section 5.8 Notices of Defaults...................... 44
Section 5.9 ERISA Notices and Requests............... 44
Section 5.10 Additonal Information; Accounts Receiv-
able Aging; Borrowing Base Certificate... 45
Section 5.11 Asset-Based Audit........................ 45
ARTICLE 6. AFFIRMATIVE COVENANTS.
Section 6.1 Books and Records........................ 46
Section 6.2 Inspections and Audits................... 46
Section 6.3 Maintenance and Repairs.................. 46
Section 6.4 Continuance of Business.................. 46
Section 6.5 Copies of Corporate Documents............ 47
Section 6.6 Perform Obligations...................... 47
Section 6.7 Notice of Litigation..................... 47
Section 6.8 Insurance................................ 47
Section 6.9 Financial Covenants...................... 48
Section 6.10 Notice of Certain Events................. 48
Section 6.11 Comply with ERISA........................ 49
Section 6.12 Environmental Compliance................. 49
Section 6.13 Maintenance of Reimbursement
Eligibility.............................. 49
Section 6.14 Interest Rate Protection................. 49
ARTICLE 7. NEGATIVE COVENANTS.
Section 7.1 Indebtedness............................. 50
Section 7.2 Liens.................................... 50
Section 7.3 Guaranties............................... 51
Section 7.4 Mergers; Acquisitions.................... 52
Section 7.5 Redemptions; Distributions............... 53
Section 7.6 Stock Insurance.......................... 53
Section 7.7 Changes in Business...................... 54
Section 7.8 Prepayments.............................. 54
Section 7.9 Investments.............................. 54
Section 7.10 Fiscal Year.............................. 55
Section 7.11 ERISA Obligations........................ 55
Section 7.12 Amendments of Documents.................. 55
Section 7.13 Capital Expenditures..................... 55
Section 7.14 Rental Obligations....................... 55
Section 7.15 Management Fees.......................... 55
Section 7.16 Transactions with Affiliates............. 55
Section 7.17 No Loss.................................. 56
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ARTICLE 8. EVENTS OF DEFAULTS.
Section 8.1 Payments................................. 57
Section 8.2 Certain Covenants........................ 57
Section 8.3 Other Covenants.......................... 57
Section 8.4 Other Defaults........................... 57
Section 8.5 Representations and Warranties........... 58
Section 8.6 Bankruptcy............................... 58
Section 8.7 Judgments................................ 59
Section 8.8 ERISA.................................... 59
Section 8.9 Liens.................................... 59
Section 8.10 Licenses and Permits..................... 59
Section 8.11 Reimbursement Eligibility................ 60
Section 8.12 Material Adverse Change.................. 60
ARTICLE 9. MISCELLANEOUS PROVISIONS.
Section 9.1 Fees and Expenses; Indemnity............. 61
Section 9.2 Taxes.................................... 62
Section 9.3 Payments................................. 63
Section 9.4 Survival of Agreements and Representa-
tions; Construction...................... 63
Section 9.5 Lien on and Set-off of Deposits.......... 64
Section 9.6 Modifications, Consents and Waivers;
Entire Agreement......................... 64
Section 9.7 Remedies Cumulative...................... 64
Section 9.8 Further Assurances....................... 65
Section 9.9 Notices.................................. 65
Section 9.10 Counterparts............................. 66
Section 9.11 Severability............................. 66
Section 9.12 Binding Effect; No Assignment or
Delegation by Borrower................... 66
Section 9.13 Assignments and Participations by Bank... 67
Section 9.14 Governing Law; Consent to Jurisdiction;
Waiver of Trial By Jury.................. 67
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EXHIBITS
A Form of Note
B Form of Borrowing Base Certificate
SCHEDULES
3.1 States of Incorporation and Qualification of
Borrower and Subsidiaries
3.2 Consents, Waivers, Approvals; Violation of
Agreements
3.6 Judgments, Actions, Proceedings
3.7 Defaults; Compliance with Laws, Regulations,
Agreements
3.8 Burdensome Documents
3.11 Patents, Trademarks, Trade Names, Service
Marks, Copyrights
3.13 Name Changes, Mergers, Acquisitions
3.15 Permits, Licenses, Government Consents
3.16 Labor Disputes, Collective Bargaining Agreements,
Employee Grievances
3.18 Pension Plans
7.1 Permitted Indebtedness
7.2 Permitted Security Interests, Liens and
Encumbrances
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LOAN AGREEMENT
AGREEMENT, made this 31st day of December, 1996, by and between:
THE CARE GROUP, INC., a Delaware corporation, having an office at Xxx
Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 (the "BORROWER"); and
KEY BANK OF NEW YORK, a New York banking corporation, having an office
at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "BANK");
W I T N E S S E T H:
WHEREAS, the Borrower wishes to obtain loans from the Bank in the
aggregate principal amount of up to Nine Million ($9,000,000) Dollars, and the
Bank is willing to make such loans to the Borrower in an aggregate principal
amount of up to such sum on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
ACCOUNT(S): any account, contract right, chattel
paper, instrument or document, and any right to the payment of
money, whether now owned, held, or hereafter acquired by the
Borrower or any Guarantor, as the case may be.
ACCOUNT DEBTOR: at any time, any Person who is
obligated under or on account of an Account.
ADDITIONAL COSTS: as defined in subsection 2.18(b) hereof.
ADJUSTED FIXED CHARGES: with respect to the Borrower, on a
consolidated basis, the sum of Fixed Charges and internally funded Capital
Expenditures (i.e. Capital Expenditures which are not financed with the
proceeds of the Loans hereunder or otherwise); all of the foregoing calculated
as at any date of determination thereof by reference to the immediately
preceding four (4) full fiscal quarters ending on or immediately prior to such
date of determination.
AFFILIATE: as to any Person, any other Person that directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securi ties
or partnership or other ownership interests, by contract or otherwise),
provided that, in any event: (i) any Person that owns directly or indirectly
10% or more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation or other Person; and (ii) each director and officer of the Borrower
shall be deemed to be an Affiliate of the Borrower.
ANNUAL EBITDA: as at any date of determination thereof,
EBITDA of the Borrower for the immediately preceding four (4) full fiscal
quarters for which the Bank has received financial statements in compliance
with Section 5.1 or Section 5.2 hereof (or, if as at any date of determination
the Bank shall not yet have received financial statements delivered in
compliance with Section 5.1 or Section 5.2 hereof, then EBITDA of the Borrower
for such immediately preceding four (4) full fiscal quarters shall be
determined by the Bank in its reasonable judgment based, in the Bank's
discretion, on such financial information as it shall have received from the
Borrower).
APPLICABLE LENDING OFFICE: with respect to each type of Loan,
the Lending Office as designated for such type of Loan below the Bank's name on
the signature pages hereof or such other office of the Bank as it may from time
to time specify to the Borrower as the office at which its Loans of such type
are to be made and maintained.
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APPLICABLE MARGIN: as at any date of determination thereof,
the applicable percentage set forth below opposite the Borrower's Fixed Charge
Coverage Ratio, for the four (4) full fiscal quarters ending on or immediately
prior to such date of determination:
FIXED CHARGE APPLICABLE MARGIN APPLICABLE MARGIN
COVERAGE RATIO FOR BASE RATE LOANS FOR LIBOR LOANS
Greater than 2.20:1.00 --- 2-1/4%
Less than or equal
to 2.20:1.00 but
greater than or
equal to 1.81:1.00 --- 2-1/2%
FIXED CHARGE APPLICABLE MARGIN APPLICABLE MARGIN
COVERAGE RATIO FOR BASE RATE LOANS FOR LIBOR LOANS
Less than or equal
to 1.80:1.00 but
greater than or
equal to 1.40:1.00 --- 2-3/4%
Less than 1.40:1.00 1/4% 3%
The determination of the applicable percentage pursuant to the table
set forth above shall be made on a quarterly basis based on an examination of
the financial statements of the Borrower delivered pursuant to and in
compliance with Section 5.1 or Section 5.2 hereof, which financial statements
shall indicate that there exists no Default or Event of Default hereunder. Each
determination of the Applicable Margin shall be effective as of the first day
of the first quarter immediately following receipt by the Bank of the financial
statements evidencing the applicable Fixed Charge Coverage Ratio and shall
remain in effect only during those periods while the applicable Fixed Charge
Coverage Ratio continues to be met.
The Applicable Margin shall be increased to former levels, as
appropriate (but not in excess of the Base Rate plus 1/4% or the LIBOR Rate
plus 3%, as applicable) immediately upon the determination by the Bank that the
Fixed Charge Coverage Ratio with respect to which the Applicable Margin is
based is not being maintained.
In the event that financial statements for the four full fiscal
quarters most recently completed prior to such date of determination either:
(i) have not been delivered to the Bank in compliance with Section 5.1 or 5.2
hereof, or (ii) if delivered, do not comply in form or substance with Section
5.1 or 5.2 hereof (in the reasonable judgement of the Bank), then the Bank may
determine, in its reasonable judgment, the ratio referred to above that would
have been in effect as at such date, and, consequently, the Applicable Margin
in effect for the period commencing on such date.
BASE RATE: the interest rate established from time to time by
the Bank at the Principal Office as its base rate. Notwithstanding the
foregoing, the Borrower acknowledges that the Bank may regularly make domestic
commercial loans at rates of interest less than the rate of interest referred
to in the preceding sentence. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time such change is adopted by the Bank.
BASE RATE LOANS: Loans that bear interest at a rate
based upon the Base Rate.
BLOCKED ACCOUNT(S): those certain accounts, established with
the Collection Bank pursuant to a Lock Box Agreement (or such other agreement
in form and substance satisfactory to the Bank), into which all collections of
Accounts and all other receipts by Borrower and the Guarantors shall be
deposited for the benefit of the Bank. The Blocked Accounts shall include any
lockbox, dominion account, or other controlled account(s) with respect to which
Borrower and/or any Guarantor is prohibited from making withdrawals.
BORROWER PLEDGE AGREEMENT: as defined in subsection
2.16(a)(ii) hereof.
BORROWER SECURITY AGREEMENT: as defined in subsection
2.16(a)(i) hereof.
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BORROWING BASE: as of the date of any determination
thereof, the sum of:
(i) sixty-five (65%) percent of all Eligible Accounts, which
as of the date of computation thereof, have been outstanding not more than one
hundred twenty (120) days from the date of invoice; plus
(ii) the lesser of: (x) $600,000, or (y) forty (40%) percent
of all Eligible Accounts, which as of the date of computation thereof, have
been outstanding more than one hundred twenty (120) days but less than two
hundred forty (240) days from the date of invoice; plus
(iii) the lesser of: (x) $200,000, or (y) thirty (30%)
percent of Eligible Inventory.
BORROWING BASE CERTIFICATE: a certificate in the form
of Exhibit B hereto.
BORROWING NOTICE: as defined in Section 2.2 hereof.
BUSINESS DAY: any day other than Saturday, Sunday or any
other day on which commercial banks in New York City are authorized or required
to close under the laws of the State of New York.
CAPITAL EXPENDITURES: for any period, the aggregate amount of
all payments made during such period by any Person directly or indirectly for
the purpose of acquiring, constructing or maintaining fixed assets, real
property or equipment that, in accordance with GAAP, would be added as a debit
to the fixed asset account of such Person, including, without limitation, all
amounts paid or payable during such period with respect to Capitalized Lease
Obligations and interest that are required to be capitalized in accordance with
GAAP.
CAPITALIZED LEASE: any lease the obligations to pay
rent or other amounts under which constitute Capitalized Lease
Obligations.
CAPITALIZED LEASE OBLIGATIONS: as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
CASH: as to any Person, such Person's cash and cash
equivalents, as defined in accordance with GAAP.
CERCLA: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss.9601, et seq.
CODE: the Internal Revenue Code of 1986, as it may be
amended from time to time.
COLLATERAL: all of the assets and properties subject to
a Lien pursuant to each of the respective Security Documents.
COLLECTION AGENT: the Bank or any other financial
institution(s) selected at any time or from time to time by the
Bank in its sole discretion, at which any Blocked Account shall
be established and maintained.
COMMITMENT: the obligation of the Bank to make Loans
hereunder in an aggregate principal amount of up to Nine Million
($9,000,000) Dollars, as such amount is subject to reduction in
accordance with the terms hereof.
COMMITMENT FEE: as defined in subsection 2.7(b) hereof.
COMMITMENT TERMINATION DATE: December 31, 1999.
COMPLIANCE CERTIFICATE: a certificate executed by the
president or chief financial officer of the Borrower to the effect that:
(i) as of the effective date of the certificate, no Default or Event of Default
under this Agreement exists or would exist after giving effect to the action
intended to be taken by the Borrower as described in such certificate,
including, without
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limitation, that the covenants set forth in Section 6.9 hereof would not be
breached after giving effect to such action, together with a calculation in
reasonable detail, and in form and substance satisfactory to the Bank, of such
compliance, and (ii) the representations and warranties contained in Article 3
hereof are true and with the same effect as though such representations and
warranties were made on the date of such certificate (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date), except for changes in the ordinary
course of business none of which, either singly or in the aggregate, have had a
Material Adverse Effect on the business of the Borrower taken as a whole.
CONSOLIDATED NET LOSS: for any fiscal quarter, the excess, if
any, of: (i) the aggregate amount of operating expenses of the Borrower and the
Guarantors, on a consolidated basis, during such quarter, over (ii) the
aggregate amount of operating revenues of the Borrower and the Guarantors, on a
consolidated basis, during such quarter; as to all of the foregoing, as
determined in accordance with GAAP.
CREDIT PERIOD: the period commencing on the date of
this Agreement and ending on the Commitment Termination Date.
DEBT INSTRUMENT: as defined in subsection 8.4(a)
hereof.
DEFAULT: an event which with notice or lapse of time,
or both, would constitute an Event of Default.
DOLLARS AND $: lawful money of the United States of
America.
EBITDA: for any period, with respect to the Borrower, on a
consolidated basis, determined in accordance with GAAP, the sum of net income
(or net loss) for such period plus, the sum of all amounts treated as expenses
for: (a) interest, (b) depreciation, (c) amortization, and (d) all accrued
taxes on or measured by income to the extent included in the determination of
such net income (or net loss); provided, however, unless otherwise provided
for in this Agreement, net income (or net loss) shall be computed without
giving effect to extraordinary losses or gains.
ELIGIBLE ACCOUNTS: any Account arising in the ordinary course
of business from bona fide transactions with third parties (who are not
Affiliates of the Borrower or any Guarantor) for the rendering of healthcare
services by the Borrower or any Guarantor and:
(a) as of the date of computation thereof, has been
outstanding not more than two hundred forty (240) days from the date of
invoice;
(b) the Account Debtor has not rejected, returned, revoked
acceptance of, or refused to accept the goods, equipment or services which are
the subject of the Account;
(c) the Account Debtor is located within the United States;
(d) with respect to which the Account Debtor is not
insolvent or the subject of any bankruptcy case or insolvency or similar
proceeding of any kind;
(e) which is a valid, legally enforceable obligation of the
Account Debtor and is not the subject of any reserve, offset, claim for credit,
allowance, adjustment, dispute or other defense on the part of the Account
Debtor denying liability; and
(f) which is not subject to any Lien except for (i) Liens
granted to and in favor of the Bank, and (ii) Liens granted to and in favor of
the United States Government pursuant to the Settlement Agreement described in
subsection 4.1(f) hereto.
Notwithstanding the foregoing, the Bank shall have the right
to limit the amount of Accounts from any one Account Debtor which shall be
included in the Borrowing Base.
ELIGIBLE INVENTORY: Inventory which:
(a) is not obsolete;
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(b) is currently useable or saleable in the ordinary course
of the Borrower's or any Guarantor's business and meets all applicable
governmental standards in all material respects;
(c) is valued at the lower of cost (calculated on a
first-in, first-out basis) or at such Inventory's fair market value);
(d) is located on the premises listed on the schedules to any
security agreement delivered in connection with this Agreement or is inventory
in transit for sale in the ordinary course of business;
(e) is not subject to any Lien whatsoever except for the
Liens granted to and in favor of the Bank, and is not on consignment from any
third party; and
(f) is not now stored or shall not at any time hereafter be
stored with a bailee, warehouseman, or similar party.
EMPLOYEE BENEFIT PLAN: any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates or (b) has at any time within the
preceding six (6) years been maintained for employees of any Loan Party or any
current or former ERISA Affiliate.
ENVIRONMENTAL LAWS AND REGULATIONS: all federal, state and
local environmental, health and safety laws, regulations, ordinances, orders,
judgments and decrees applicable to the Borrower or any other Loan Party, or
any of their respective assets or properties.
ENVIRONMENTAL LIABILITY: any liability under any applicable
Environmental Laws and Regulations for any disposal, release or threatened
release of a Hazardous Substance pollutant or contaminant as those terms are
defined under CERCLA, and any liability which would require a removal,
remedial or response action, as those terms are defined under CERCLA, by any
person or any environmental regulatory body having jurisdiction over the
Borrower or any other Loan Party and/or any liability arising under any
Environmental Laws and Regulations for the Borrower's or any other Loan
Party's failure to comply with such laws and regulations, including without
limitation, the failure to comply with or obtain any applicable environmental
permit.
ENVIRONMENTAL PROCEEDING: any judgment, action, proceeding or
investigation pending before any court or governmental authority, with respect
to the Borrower or any other Loan Party and arising under or relating to any
Environmental Laws and Regulations.
ERISA: the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and the regulations
promulgated thereunder.
ERISA AFFILIATE: with respect to any Loan Party, any
corporation, person or trade or business which is a member of a group which is
under common control with any Loan Party, who together with any Loan Party, is
treated as a single employer within the meaning of Sections 414(b) - (o) of the
Code and, if applicable, Sections 4001(a)(14) and (b) of ERISA.
EVENT OF DEFAULT: as defined in Article 8 hereof.
FACILITY FEE: as defined in subsection 2.7(a) hereof.
FINANCIAL STATEMENTS: with respect to the Borrower: (i) its
audited Balance Sheet as at December 31, 1995, together with the related
audited Income Statement and Statement of Changes in Cash Flow for the fiscal
year then ended, and (ii) its unaudited Balance Sheet as at September 30, 1996,
together with the related unaudited Income Statement and Statement of Changes
in Cash Flow for the nine-month period then ended.
FIXED CHARGES: with respect to the Borrower, on a
consolidated basis, required amortization of current maturities of long-term
Indebtedness, Interest Expense and all accrued income taxes; all of the
foregoing calculated as at any date of determination thereof by reference to
the immediately preceding four (4) full fiscal quarters ending on or
immediately prior to such date of determination.
FIXED CHARGE COVERAGE RATIO: as at any date of
determination thereof, with respect to the Borrower, on a
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consolidated basis, the ratio of: (x) Annual EBITDA, to (y)
Fixed Charges for the four (4) full fiscal quarters ending on or
immediately prior to such date of determination.
GAAP: generally accepted accounting principles, as in
effect in the United States from time to time.
GOVERNMENTAL CONSENTS: as defined in subsection
3.15(a) hereof.
GUARANTOR(S): individually, each of The Care Group of New
York, Inc., a New York corporation, Care Line of New York, Inc., a New York
corporation, The Care Group of Georgia, Inc., a Georgia corporation, Care Line
of Georgia, Inc., a Georgia corporation, The Care Group of Texas, Inc., a Texas
corporation, Care Line of Houston, Inc., a Texas corporation, Care Line of
Dallas, Inc., a Texas corporation, Mail Order Meds, Inc., a Texas corporation,
The Care Group of Los Angeles, Inc., a California corporation, Windsor
Wholesale, Inc., a New York corporation, Commonwealth Certified Home Care,
Inc., a New York corporation, and Advanced Care Associates, Inc., a
Pennsylvania corporation and collectively, all of them.
GUARANTY(IES): as defined in Section 2.15 hereof.
GUARANTOR SECURITY AGREEMENT(S): as defined in
subsection 2.16(b)(i) hereof.
INDEBTEDNESS: with respect to any Person, all:
(a) obligations of such Person for borrowed money, all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments (including, without limitation, obligations under this
Agreement);
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether drawn or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all Capitalized Lease Obligations of such Person;
(d) net liabilities of such Person with respect to Interest
Rate Contracts;
(e) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; and
(f) all contingent liabilities of such Person in respect of
any of the foregoing.
INTEREST COVERAGE: as at any date, the quotient, expressed
as a percentage (which may be in excess of 100%), determined by dividing Annual
EBITDA by Interest Expense.
INTEREST EXPENSE: as to the Borrower (on a consolidated
basis) as at the last day of each fiscal quarter, the sum of all payments of
interest on all items of Indebtedness for borrowed money which were due and
payable during the four (4) full fiscal quarters ending on such date.
INTEREST PERIOD: with respect to any LIBOR Loan, each period
commencing on the date such Loan is made or converted from a Loan of another
type, or the last day of the next preceding Interest Period with respect to
such Loan, and ending on the same day in the first, second or third calendar
month thereafter, as the Borrower may select as provided in Section 2.2 hereof,
except that each such Interest Period that commences on the last LIBOR Business
Day of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on
the last LIBOR Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) each Interest Period that would otherwise
end on a day that is not a LIBOR Business Day shall end on the next succeeding
LIBOR Business Day (or, if such next succeeding LIBOR Business Day falls in the
next succeeding calendar month, on the next preceding LIBOR Business Day); (ii)
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no more than three (3) Interest Periods for LIBOR Loans shall be in effect at
the same time; (iii) any Interest Period that commences before the Commitment
Termination Date shall end no later than the Commitment Termination Date; and
(iv) notwithstanding clause (iii) above, no Interest Period shall have a
duration of less than one month. In the event that the Borrower fails to select
the Interest Period for any LIBOR Loan within the time period and otherwise as
provided in Section 2.2 hereof, such Loan will be automatically converted into
a Base Rate Loan on the last day of the preceding Interest Period for such
LIBOR Loan.
INTEREST RATE CONTRACTS: interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and other agreements or arrangements designed to provide protection
against fluctuation in interest rates, in each case, in form and substance
satisfactory to the Bank and, in each case, with counter-parties satisfactory
to the Bank.
INVENTORY: inventory and equipment (excluding any such asset
which is subject to a Capitalized Lease) owned by the Borrower of any
Guarantor, including durable medical equipment, supplies and replacement parts
and all other items which contribute to the promotion or sale thereof.
INVESTMENT: by any Person:
(a) the amount paid or committed to be paid, or the value of
property or services contributed or committed to be contributed, by such Person
for or in connection with the acquisition by such Person of any stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person; and
(b) the amount of any advance, loan or extension of credit by
such Person, to any other Person, or guaranty or other similar obligation of
such Person with respect to any Indebtedness of such other Person, and (without
duplication) any amount committed to be advanced, loaned, or extended by such
Person to any other Person, or any amount the payment of which is committed to
be assured by a guaranty or similar obligation by such Person for the benefit
of, such other Person.
IRS: Internal Revenue Service.
LATEST BALANCE SHEET: as defined in subsection 3.9(a)
hereof.
LEASES: leases and subleases (other than Capitalized Leases),
licenses for the use of real property, easements, grants, and other attachment
rights and similar instruments under which the Borrower has the right to use
real or personal property or rights of way.
LIBOR BASE RATE: with respect to any LIBOR Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) quoted by the Reference Bank at approximately 10:00
a.m. New York time (or as soon thereafter as practicable) two (2) LIBOR
Business Days prior to the first day of such Interest Period for the Loan as
the rate that the Reference Bank offered Dollar deposits to leading banks in
the London interbank market, such Dollar deposits having a term comparable to
such Interest Period and in an amount comparable to the principal amount of the
LIBOR Loan to be made by the Bank to which such Interest Period relates.
LIBOR BUSINESS DAY: a Business Day on which dealings in
Dollar deposits are carried out in the London interbank market.
LIBOR LOANS: Loans the interest on which is determined on the
basis of rates referred to in the definition of "LIBOR Base Rate" in this
Article 1.
LIBOR RATE: for any LIBOR Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Bank to be equal to: (x) the LIBOR Base Rate for
such Loan for such Interest Period, divided by (y) 1 minus the Reserve
Requirement for such Loan for such Interest Period. The Bank shall use its best
efforts to advise the Borrower of the LIBOR Rate as soon as practicable after
each change in the LIBOR Rate; provided, however, that the failure of the Bank
to so advise the Borrower on any one or more occasions shall not affect the
rights of the Bank or the obligations of the Borrower hereunder.
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LIEN: any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature of any of the foregoing, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction.
LOAN(S): as defined in subsection 2.1(a) hereof. Loans of
different types made or converted from Loans of other types on the same day (or
of the same type but having different Interest Periods) shall be deemed to be
separate Loans for all purposes of this Agreement.
LOAN DOCUMENTS: this Agreement, the Note, the Security
Documents, Interest Rate Contracts to which the Bank is a party and all other
documents executed and delivered in connection herewith or therewith, including
all amendments, modifications and supplements of or to all such documents.
LOAN PARTY: the Borrower, each Guarantor and any other
Person (other than the Bank) which now or hereafter executes and
delivers to the Bank any Loan Document.
LOCK BOX AGREEMENT(S): as defined in Section 2.14
hereof.
MATERIAL ADVERSE EFFECT: with respect to any Person, a
material adverse effect on: (i) its and its Subsidiaries' business, condition
(financial or otherwise), assets, liabilities or operations, taken as a whole,
(ii) its ability to perform its obligations under any Loan Document to which it
is a party, or (iii) the validity or enforceability of this Agreement or the
other Loan Documents or the rights or remedies of the Bank hereunder or
thereunder.
MULTIEMPLOYER PLAN: a "multiemployer plan" as defined in
Section 4001(a)(3) or ERISA to which any Loan Party or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) years.
NOTE: as defined in subsection 2.4(a) hereof.
OBLIGATIONS: collectively, all of the Indebtedness,
liabilities and obligations of the Borrower to the Bank, whether now existing
or hereafter arising, whether or not currently contemplated, in each case that
arise under the Loan Documents.
PBGC: Pension Benefit Guaranty Corporation.
PENSION PLAN: at any time an employee pension benefit plan
that is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is maintained either: (i) by the
Borrower or any ERISA Affiliate for employees of the Borrower, or by the
Borrower for any ERISA Affiliate, or (ii) pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which the Borrower or any ERISA Affiliate is then making
or accruing an obligation to make contributions or has within the preceding
five (5) plan years made contributions.
PERMITTED LIENS: as to any Person: (i) pledges or deposits by
such Person under workers' compensation laws, unemployment insurance laws,
social security laws, or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness of such Person), or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits
of Cash or United States Government Bonds to secure surety, appeal, performance
or other similar bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent; (ii) Liens
imposed by law, such as carriers', warehousemen's, materialmen's and mechanics'
liens, or Liens arising out of judgments or awards against such Person with
respect to which such Person at the time shall currently be prosecuting an
appeal or proceedings for review; (iii) Liens for taxes not yet subject to
penalties for non-payment and Liens for taxes the payment of which is being
contested as permitted by Section 6.6 hereof; and (iv) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of, others for
rights of way, highways and railroad crossings, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to
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the use of real properties; and (v) Liens incidental to the conduct of the
business of such Person or to the ownership of such Person's property that were
not incurred in connection with Indebtedness of such Person, all of which Liens
referred to in the preceding clause (v) do not in the aggregate materially
detract from the value of the properties to which they relate or materially
impair their use in the operation of the business taken as a whole of such
Person, and as to all the foregoing only to the extent arising and continuing
in the ordinary course of business.
PERSON: an individual, a corporation, a limited liability
company, a partnership, a joint venture, a trust or unincorporated
organization, a joint stock company or other similar organization, a government
or any political subdivision thereof, a court, or any other legal entity,
whether acting in an individual, fiduciary or other capacity.
POST-DEFAULT RATE: (i) in respect of any Loans a rate per
annum equal to: (x) if such Loans are Base Rate Loans, 2% above the Base Rate
as in effect from time to time, plus the Applicable Margin for Base Rate Loans
(but in no event less than the interest rate in effect on the due date), or (y)
if such Loans are LIBOR Loans, 2% above the rate of interest in effect thereon
at the time of the Event of Default that resulted in the Post-Default Rate
being instituted until the end of the then current Interest Period therefor
and, thereafter, 2% above the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans (but in no event less than the interest
rate in effect on the due date); and (ii) in respect of other amounts payable
by the Borrower hereunder (other than interest) not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such other amounts are paid in full
equal to 2% above the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans (but in no event less than the interest
rate in effect on the due date).
PRINCIPAL OFFICE: the principal office of the Bank presently
located at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000-0000.
PROJECTIONS: the projections and forecasts relating to the
Borrower and its Subsidiaries for its fiscal years 1997 through 1999 as
furnished by the Borrower to the Bank.
PURCHASE MONEY SECURITY INTEREST: as defined in
subsection 7.2(c) hereof.
QUARTERLY DATES: the first day of each March, June, September
and December, the first of which shall be the first such day after the date of
this Agreement, provided that, if any such date is not a LIBOR Business Day,
the relevant Quarterly Date shall be the next succeeding LIBOR Business Day
(or, if the next succeeding LIBOR Business Day falls in the next succeeding
calendar month, then on the next preceding LIBOR Business Day).
REFERENCE BANK: a major bank appearing on the display
designated as page "LIBOR" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBOR page on that service for the purpose of
displaying London interbank offered rates of major banks); provided that if no
such offered rate shall appear on such display, "Reference Bank" shall mean a
bank in the London interbank market as selected by the Bank.
REGULATION D: Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
REGULATORY CHANGE: any change after the date of this
Agreement in United States federal, state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks, including
the Bank, of or under any United States federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
RESERVE REQUIREMENT: for any LIBOR Loans for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such period under Regulation D by member banks of the Federal Reserve
System in New
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York City with deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against: (i) any category of liabilities that includes
deposits by references to which the LIBOR Rate is to be determined as provided
in the definition of "LIBOR Base Rate" in this Article 1, or (ii) any category
of extensions of credit or other assets that include LIBOR Loans.
SECURITY DOCUMENTS: as defined in subsection 2.16(c)
hereof.
SENIOR DEBT: the aggregate outstanding principal balance of:
(i) all Loans, (ii) all Indebtedness secured by Purchase Money Security
Interests, conditional sale arrangements or other similar security interests,
and (iii) all Capitalized Lease Obligations.
STATE REGULATORY AGENCY: as defined in Section 3.2
hereof.
SUBSIDIARY: with respect to any Person, any corporation,
partnership or joint venture whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a contin-
gency) are at the time owned by such Person and/or one or more Subsidiaries of
such Person, or (ii) in the case of a partnership or joint venture in which
such Person is a general partner or joint venturer or of which a majority of
the partnership or other ownership interests are at the time owned by such
Person and/or one or more of its Subsidiaries. Unless the context otherwise
requires, references in this Agreement to "Subsidiary" or "Subsidiaries" shall
be deemed to be references to a Subsidiary or Subsidiaries of the Borrower.
UNUSED COMMITMENT: as at any date, the difference, if any,
between: (i) the amount of the Commitment as in effect on such date, and (ii)
the then aggregate outstanding principal amount of all Loans made by the Bank.
Any accounting terms used in this Agreement that are not
specifically defined herein shall have the meanings customarily given to them
in accordance with GAAP and otherwise consistent with those utilized in
preparing the financial statements referred to in Article 5.
ARTICLE 2. COMMITMENT; LOANS; GUARANTIES; COLLATERAL.
SECTION 2.1 LOANS.
(a) The Bank hereby agrees, on the terms and
subject to the conditions of this Agreement, to make loans (individually a
"LOAN" and, collectively, the "LOANS") to the Borrower during the Credit Period
to and including the Commitment Termination Date in an aggregate principal
amount at any one time outstanding up to, but not exceeding, the lesser of:
(i) the Borrowing Base, as then in effect; or
(ii) the Commitment.
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Subject to the terms of this Agreement, during the Credit Period the Borrower
may borrow, repay (provided that repayment of LIBOR Loans shall be subject to
the provisions of Section 2.22 hereof) and reborrow up to the amount of the
Commitment (after giving effect to the mandatory and voluntary reductions
required and permitted herein) by means of Base Rate Loans or LIBOR Loans, and
during such period and thereafter until the date of the payment in full of all
of the Loans, the Borrower may convert Loans of one type into Loans of another
type (as provided in Section 2.17 hereof).
(b) Notwithstanding anything to the contrary
contained in subsection 2.1(a) above or in the definitions of Borrowing Base,
Eligible Accounts and Eligible Inventory to the contrary, the Bank may, in its
reasonable discretion, change on thirty (30) days notice to the Borrower, the
advance rates applicable to Eligible Accounts and Eligible Inventory set forth
in the definition of Borrowing Base, and modify the standards for eligibility
of Accounts and Inventory set forth in the definitions of Eligible Accounts and
Eligible Inventory to include other reasonable and customary criteria as the
Bank may reasonably specify, including, without limitation, upon the Bank's
receipt of each of the asset-based audits required to be delivered to the Bank
pursuant to Section 5.11 hereof. The Borrower acknowledges that the flexibility
inherent in this subsection 2.1(b) was of material importance to the Bank with
respect to the Bank's willingness to agree to the advance rates specified in
the definition of Borrowing Base and to the standards for eligibility set forth
in the definitions of Eligible Accounts and Eligible Inventory for the duration
of this Agreement.
SECTION 2.2 NOTICES RELATING TO LOANS.
The Borrower shall give the Bank written notice of
each termination or reduction of the Commitment, each borrowing, conversion and
repayment of each Loan and of the duration of each Interest Period applicable
to each LIBOR Loan (in each case, a "BORROWING NOTICE"). Each such written
notice shall be irrevocable and shall be effective only if received by the Bank
not later than 11 a.m., New York City time, on the date that is: (a) In the
case of each notice of termination or reduction and each notice of borrowing or
repayment of, or conversion into, Base Rate Loans, one (1) Business Day prior
to the date of the related termination, reduction, borrowing, repayment or
conversion; and
(b) In the case of each notice of borrowing or
repayment of, or conversion into, LIBOR Loans, or the duration of an Interest
Period for LIBOR Loans, two (2) LIBOR Business Days prior to the date of the
related borrowing, repayment or conversion or the first day of such Interest
Period.
Each such notice of termination or reduction shall specify the amount thereof.
Each such notice of borrowing, conversion or repayment shall specify the amount
(subject to Section 2.1 hereof) and type of Loans to be borrowed, converted or
repaid (and, in the case of a conversion, the type of Loans to result from such
conversion) and the date of borrowing, conversion or repayment (which shall be:
(x) a Business Day in the case of each borrowing or repayment of Base Rate
Loans, and (y) a LIBOR Business Day in the case of each borrowing or repayment
of LIBOR Loans and each conversion of or into a LIBOR Loan).
SECTION 2.3 DISBURSEMENT OF LOAN PROCEEDS.
The Borrower shall give the Bank notice of each
borrowing hereunder as provided in Section 2.2 hereof. Not later
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than 11:00 a.m., New York City time, on the date specified for each borrowing
hereunder, the Bank shall transfer to the Borrower in immediately available
funds, the amount of the Loan to be made by it on such date by depositing the
amount thereof in an account of the Borrower designated by the Borrower and
maintained with the Bank.
SECTION 2.4 NOTE.
(a) The Loans shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit A hereto
(the "NOTE"). The Note shall be dated the date hereof, shall be payable to the
order of the Bank in a principal amount equal to the Commitment as originally
in effect, and shall otherwise be duly completed. The Note shall be payable as
provided in Sections 2.1 and 2.5 hereof.
(b) The Bank shall enter on a schedule attached
to the Note a notation with respect to each Loan made hereunder of: (i) the
date and principal amount thereof, (ii) each payment and repayment of principal
thereof, (iii) whether the interest rate is initially to be determined in
accordance with subsection 2.6(a)(i) or 2.6(a)(ii) hereof, and (iv) the
Interest Period, if applicable. The failure of the Bank to make a notation on
the schedule to the Note as aforesaid shall not limit or otherwise affect the
obligation of the Borrower to repay the Loans in accordance with their
respective terms as set forth herein.
SECTION 2.5 REPAYMENT OF PRINCIPAL OF LOANS.
(a) The Borrower shall pay to the Bank the
aggregate principal amount of the Loans outstanding on the Commitment
Termination Date in full in a single installment on the Commitment Termination
Date together with all interest and Commitment Fees accrued through such date.
(b) The Loans: (i) shall be repaid as and when
necessary to cause the aggregate principal amount of the Loans outstanding not
to exceed the Borrowing Base, and (ii) may be repaid at any time and from time
to time, in whole or in part, without premium or penalty (subject to the
provisions of Section 2.22 hereof), upon prior written notice to the Bank as
provided in Section 2.2 hereof, in integral multiples of One Hundred Thousand
($100,000) Dollars and any amount so repaid may, subject to the terms and
conditions hereof, including the borrowing limitation imposed by the
Commitment, be reborrowed hereunder during the Credit Period, provided,
however, that LIBOR Loans may be repaid only on the last day of an Interest
Period for such Loans unless the Borrower makes all payments required pursuant
to subsection 2.22(c) hereof.
(c) Except as set forth in Sections 2.18, 2.19
and 2.21 hereof, all payments and repayments made pursuant to the terms hereof
shall be applied first to Base Rate Loans, and shall be applied to LIBOR Loans
only to the extent any such payment exceeds the principal amount of Base Rate
Loans outstanding at the time of such payment.
SECTION 2.6 INTEREST.
(a) The Borrower shall pay to the Bank interest
on the unpaid principal amount of each Loan made by the Bank for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the following rates per annum:
(i) During such periods that such Loan
is a Base Rate Loan, the Base Rate plus the Applicable Margin; and
(ii) During such periods that such Loan
is a LIBOR Loan, for each Interest Period relating thereto, the LIBOR Rate for
such Loan for such Interest Period plus the Applicable Margin.
(b) Notwithstanding the foregoing, whenever an
Event of Default has occurred and is continuing, the Borrower shall pay
interest on any Loan, and on any other amount payable by the Borrower hereunder
(to the extent permitted by law) for the period commencing on the occurrence of
such Event of Default until such Event of Default has been cured or waived as
acknowledged in writing by the Bank at the applicable Post-Default Rate.
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(c) Except as provided in the next sentence,
accrued interest on each Loan shall be payable: (i) in the case of a Base Rate
Loan, quarterly in arrears on the Quarterly Dates, (ii) in the case of a LIBOR
Loan, on the last day of each Interest Period for such Loan, and (iii) in the
case of any Loan, upon the payment or repayment thereof or the conversion
thereof into a Loan of another type (but only on the principal so paid, repaid
or converted). Interest that is payable at the Post-Default Rate shall be
payable from time to time on demand of the Bank. Promptly after the
establishment of any interest rate provided for herein or any change therein,
the Bank will notify the Borrower thereof, provided that the failure of the
Bank to so notify the Borrower shall not affect the obligations of the Borrower
hereunder or under the Note in any respect.
(d) Anything in this Agreement or the Note to
the contrary notwithstanding, the obligation of the Borrower to make payments
of interest shall be subject to the limitation that payments of interest shall
not be required to be made to the Bank to the extent that the Bank's receipt
thereof would not be permissible under the law or laws applicable to the Bank
limiting rates of interest that may be charged or collected by the Bank. Any
such payments of interest that are not made as a result of the limitation
referred to in the preceding sentence shall be made by the Borrower to the Bank
on the earliest interest payment date or dates on which the receipt thereof
would be permissible under the laws applicable to the Bank limiting rates of
interest that may be charged or collected by the Bank. Such deferred interest
shall not bear interest.
SECTION 2.7 FEES.
(a) Simultaneously with the execution and
delivery hereof, the Borrower shall pay to the Bank a non-refundable facility
fee (the "FACILITY FEE") in an amount equal to three-quarters (3/4%) percent of
the original face amount of the Commitment; provided, however, the Bank hereby
acknowledges the prior receipt from the Company of a portion of the Facility
Fee in the amount of $30,000.00 and such amount shall be subtracted from the
Facility Fee payable by the Company on the date hereof; and
(b) The Borrower shall pay to the Bank a
commitment fee (the "COMMITMENT FEE") on the daily average amount of the Unused
Commitment, for the period from the date hereof to and including the earlier of
the date the Commitment is terminated or the Commitment Termination Date, at
the rate of one-quarter (1/4%) percent per annum on the Unused Commitment. The
accrued Commitment Fee shall be payable quarterly on the Quarterly Dates and on
the earlier of the date the Commitment is terminated or the Commitment
Termination Date, and, in the event the Borrower reduces the Commitment as
provided in Section 2.8 hereof, on the effective date of such reduction.
SECTION 2.8 VOLUNTARY CHANGES IN COMMITMENT.
The Borrower shall be entitled to terminate or
reduce the Commitment provided that: (i) the Borrower shall give notice of such
termination or reduction to the Bank as provided in Section 2.2 hereof, and
(ii) any partial reduction of the Commitments shall be in an aggregate amount
equal to One Hundred Thousand ($100,000) Dollars or an integral multiple
thereof. Any such termination or reduction shall be permanent and irrevocable.
SECTION 2.9 USE OF PROCEEDS OF LOANS.
The proceeds of the Loans hereunder may be used by
the Borrower solely for the following purposes:
(a) approximately $5,200,000 shall be used,
simultaneously with the initial drawdown of the Loans hereunder, for the
repayment in full of the outstanding principal of, and all accrued interest on,
certain outstanding indebtedness of the Borrower to The Chase Manhattan Bank
N.A.; and
(b) for: (i) working capital purposes of the
Borrower, and (ii) closing costs and fees incurred in connection with the
consummation of this Agreement.
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SECTION 2.10 COMPUTATIONS.
Interest on all Loans and the Commitment Fee shall
be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last) occurring in the period for
which payable.
SECTION 2.11 MINIMUM AMOUNTS OF BORROWINGS,
CONVERSIONS AND REPAYMENTS.
Except for borrowings, conversions and repayments
that exhaust the full remaining amount of the Commitment (in the case of
borrowings) or result in the conversion or repayment of all Loans of a
particular type (in the case of conversions or repayments) or conversions made
pursuant to Section 2.17 or subsection 2.18(b) or Section 2.20 hereof, each
borrowing from the Bank, each conversion of Loans of one type into Loans of
another type and each repayment of principal of Loans hereunder shall be in an
amount at least equal to One Hundred Thousand ($100,000) Dollars or an integral
multiple thereof (borrowings, conversions and repayments of different types of
Loans at the same time hereunder to be deemed separate borrowings, conversions
and prepayments for purposes of the foregoing, one for each type).
SECTION 2.12 TIME AND METHOD OF PAYMENTS.
All payments of principal, interest, the
Commitment Fee and other amounts (including indemnities) payable by the
Borrower hereunder shall be made in Dollars, in immediately available funds, to
the Bank at the Principal Office not later than 11:00 a.m., New York City time,
on the date on which such payment shall become due (and the Bank may, but shall
not be obligated to, debit the amount of any such payment that is not made by
such time to any ordinary deposit account of the Borrower with the Bank).
Additional provisions relating to payments are set forth in Section 9.3 hereof.
SECTION 2.13 LENDING OFFICES.
The Loans of each type made by the Bank shall be
made and maintained at the Bank's Applicable Lending Office for Loans of such
type.
SECTION 2.14 LOCK BOX ARRANGEMENT.
Upon the request of the Bank, the Borrower and the
Guarantors shall establish Blocked Account(s) with the Collection Bank and
shall direct all of their Account Debtors to make all payments due from them
upon their respective Accounts directly to a lock box designated by the Bank
and maintained by the Collection Agent pursuant to lock box agreements or other
agreements in form and substance satisfactory to the Bank (the "LOCK BOX
AGREEMENT(S)").
SECTION 2.15 GUARANTIES.
The due payment and performance of the Obligations
shall be guaranteed to the Bank by each of the Guarantors, by the execution and
delivery to the Bank, simultaneously with the execution and delivery of this
Agreement, by each Guarantor of a Guaranty in form and substance satisfactory
to the Bank (herein after referred to individually as a "GUARANTY" and
collectively as the "GUARANTIES").
SECTION 2.16 SECURITY.
(a) In order to secure the due payment and
performance by the Borrower of the Obligations, simultaneously with the
execution and delivery of this Agreement, the Borrower shall:
(i) Grant to the Bank a Lien on all of the
Borrower's personal properties and assets, whether now owned or hereafter
acquired, tangible and intangible, by the execution and delivery to the Bank
of a Security Agreement in form and substance satisfactory to the Bank (the
"BORROWER SECURITY AGREEMENT");
(ii) Grant to the Bank a first Lien on, and
pledge with the Bank, all of the issued and outstanding shares of the capital
stock of each of its Subsidiaries now existing or hereafter organized, by the
execution and delivery to the Bank of a Pledge Agreement in form and substance
satisfactory to the Bank (the "BORROWER PLEDGE AGREEMENT"); and
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(iii) Execute and deliver or cause to be executed and
delivered such other agreements, instruments and documents as the Bank may
reasonably require in order to effect the purposes of the Borrower Security
Agreement, the Borrower Pledge Agreement, this Section 2.16 and this Agreement;
(b) In order to secure the due payment and
performance by each Guarantor of all of the Indebtedness, liabilities and
obligations of each Guarantor to the Bank, whether now existing or hereafter
arising, whether or not currently contemplated, including, without limitation,
those arising under the Guaranties, simultaneously with the execution and
delivery of this Agreement, each of the Guarantors shall:
(i) Grant to the Bank a Lien on all of
its personal properties and assets, whether now owned or hereafter acquired,
tangible and intangible, by the execution and delivery to the Bank of a
Security Agreement in form and substance satisfactory to the Bank
(individually, a "GUARANTOR SECURITY AGREEMENT" and collectively, the
"GUARANTOR SECURITY AGREEMENTS"); and
(ii) Execute and deliver, or cause to be
executed and delivered, such other agreements, instruments and documents as the
Bank may reasonably require in order to effect the purposes of the Guaranties,
the Guarantor Security Agreements, this Section 2.16 and this Agreement.
(c) All of the agreements, instruments and
documents provided for or referred to in this Section 2.16, together with the
Lock Box Agreements are hereinafter sometimes referred to collectively as the
"SECURITY DOCUMENTS".
SECTION 2.17 CONVERSIONS OF LOANS.
The Borrower shall have the right to convert Loans
of one type into Loans of another type from time to time, provided that:
(i) the Borrower shall give the Bank notice of each such conversion as
provided in Section 2.2 hereof; (ii) subject to subsection 2.22(c) hereof,
LIBOR Loans may be converted only on the last day of an Interest Period for
such Loans; and (iii) except as required by Sections 2.18 or 2.21 hereof, no
Base Rate Loan may be converted into a LIBOR Loan if on the proposed date of
conversion a Default or an Event of Default exists. The Bank shall use its
best efforts to notify the Borrower of the effectiveness of such conversion,
and the new interest rate to which the converted Loans are subject, as soon as
practicable after the conversion; provided, however, that any failure to give
such notice shall not affect the Borrower's obligations, or the Bank's rights
and remedies, hereunder in any way whatsoever.
SECTION 2.18 ADDITIONAL COSTS; CAPITAL REQUIREMENTS.
(a) In the event that any future law or
regulation, guideline or interpretation thereof, by any court or administrative
or governmental authority charged with the administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such authority shall impose, modify or deem applicable or
result in the application of, any capital maintenance, capital ratio or similar
requirement against loan commitments made by the Bank hereunder, and the result
of any event referred to above is to impose upon the Bank or increase any
capital requirement applicable as a result of the making or maintenance of, the
Commitment or the obligation of the Borrower hereunder with respect to the
Commitment (which imposition of capital requirements may be determined by the
Bank's reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by the Bank as promptly as practicable
after it obtains knowledge that such law, regulation, guideline,
interpretation, request or directive exists and determines to make such demand,
the Borrower shall promptly pay to the Bank from time to time as specified by
the Bank additional amounts which shall be sufficient to compensate the Bank
for such imposition of, or increase in, capital requirements together with
interest on each such amount from the date demanded until payment in full
thereof at the Base Rate. All references to the "Bank" shall be deemed to
include any participant in the Bank's Commitment; provided that the total
amount payable pursuant to this subsection 2.18(a) shall not exceed the amount
that would have otherwise been payable if no participation had been made.
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(b) In the event that any Regulatory Change
shall: (i) change the basis of taxation of any amounts payable to the Bank
under this Agreement or the Note in respect of any Loans including, without
limitation, LIBOR Loans (other than taxes imposed on the overall net income of
the Bank for any such Loans by the United States of America or the jurisdiction
in which the Bank has its principal office); or (ii) impose or modify any
reserve, Federal Deposit Insurance Corporation premium or assessment, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, the Bank (including
any of such Loans or any deposits referred to in the definition of "LIBOR Base
Rate" in Article 1 hereof); or (iii) impose any other conditions affecting this
Agreement in respect of Loans, including, without limitation, LIBOR Loans (or
any of such extensions of credit, assets, deposits or liabilities); and the
result of any event referred to in clause (i), (ii) or (iii) above shall be to
increase the Bank's costs of making or maintaining any Loans, including,
without limitation, LIBOR Loans, or the Commitment, or to reduce any amount
receivable by the Bank hereunder in respect of any of its LIBOR Loans, or the
Commitment (such increases in costs and reductions in amounts receivable are
hereinafter referred to as "ADDITIONAL COSTS") in each case, only to the extent
that such Additional Costs are not included in the LIBOR Base Rate applicable
to such LIBOR Loans, then, promptly after demand is made by the Bank as
promptly as practicable after it obtains knowledge that such a Regulatory
Change exists and determines to make such demand, the Borrower shall pay to the
Bank from time to time as specified by the Bank, additional amounts which shall
be sufficient to compensate the Bank for such increased cost or reduction in
amounts receivable by the Bank from the date of such change, together with
interest on each such amount from the date demanded until payment in full
thereof at the Base Rate. All references to the "Bank" shall be deemed to
include any participant in the Bank's Commitment; provided that the total
amount payable pursuant to this subsection 2.18(b) shall not exceed the amount
that would have otherwise been payable if no participation had been made.
(c) Without limiting the effect of the foregoing
provisions of this Section 2.18, in the event that, by reason of any Regulatory
Change, the Bank either: (i) incurs Additional Costs based on or measured by
the excess above a specified level of the amount of a category of deposits or
other liabilities of the Bank which includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of the Bank which includes
LIBOR Loans, or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets that it may hold, then, if the Bank so elects
by notice to the Borrower, the obligation of the Bank to make, and to convert
Loans of any other type into, Loans of such type hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect (and all Loans of
such type then outstanding shall be converted into Base Rate Loans in
accordance with Sections 2.17 and 2.21 hereof).
(d) Determinations by the Bank for purposes of
this Section 2.18 of the effect of any Regulatory Change on its costs of making
or maintaining Loans or on amounts receivable by it in respect of Loans, and of
the additional amounts required to compensate the Bank in respect of any
Additional Costs, shall be set forth in writing in reasonable detail and shall
be conclusive, absent manifest error as to the determination(s) by the Bank set
forth therein if made reasonably and in good faith.
SECTION 2.19 LIMITATION ON TYPES OF LOANS.
Anything herein to the contrary notwithstanding,
if, on or prior to the determination of an interest rate for any LIBOR Loans
for any Interest Period therefor, the Bank determines (which determination
shall be conclusive):
(a) by reason of any event affecting the money
markets in the United States of America or the London interbank market,
quotations of interest rates for the relevant deposits are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for such LIBOR Loans under this Agreement; or
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(b) the rates of interest referred to in the
definition of "LIBOR Base Rate" in Article 1 hereof upon the basis of which the
rate of interest on any LIBOR Loans for such period is determined, do not
accurately reflect the cost to the Bank of making or maintaining such LIBOR
Loans for such period,
then the Bank shall give the Borrower prompt notice
thereof (and shall thereafter give the Borrower prompt notice of the cessation,
if any, of such condition), and so long as such condition remains in effect,
the Bank shall be under no obligation to make LIBOR Loans or to convert Base
Rate Loans into LIBOR Loans and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding LIBOR Loans either repay
such Loans or convert such LIBOR Loans into Base Rate Loans in accordance with
Section 2.17 hereof.
SECTION 2.20 ILLEGALITY.
Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for the Bank or its Applicable
Lending Office to: (i) honor its obligation to make LIBOR Loans hereunder, or
(ii) maintain LIBOR Loans hereunder, then the Bank shall promptly notify the
Borrower thereof, describing such illegality in reasonable detail (and shall
thereafter promptly notify the Borrower of the cessation, if any, of such
illegality), and the Bank's obligation to make LIBOR Loans and to convert Base
Rate Loans into LIBOR Loans hereunder shall, upon written notice given by the
Bank to the Borrower, be suspended until such time as the Bank may again make
and maintain LIBOR Loans and the Bank's outstanding LIBOR Loans shall be
converted into Base Rate Loans in accordance with Sections 2.17 and 2.21
hereof.
SECTION 2.21 CERTAIN CONVERSIONS PURSUANT
TO SECTIONS 2.18 AND 2.20.
If the LIBOR Loans of the Bank are to be converted
pursuant to Section 2.18 or 2.20 hereof, the LIBOR Loans shall be converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for the LIBOR Loans (or, in the case of a conversion required by subsection
2.18(b) or Section 2.20 hereof, on such earlier date as the Bank may specify to
the Borrower) and, until the Bank gives notice as provided below that the
circumstances specified in Section 2.18 or 2.20 hereof that gave rise to such
conversion no longer exist:
(a) to the extent that the Bank's LIBOR Loans
have been so converted, all payments and repayments of principal that would
otherwise be applied to such LIBOR Loans shall be applied instead to Base Rate
Loans; and
(b) all LIBOR Loans that would otherwise be made
by the Bank shall be made instead as Base Rate Loans and all Loans of the Bank
that would otherwise be converted into LIBOR Loans shall be converted instead
into (or shall remain as) Base Rate Loans.
SECTION 2.22 INDEMNIFICATION.
The Borrower hereby agrees to indemnify the Bank
against any loss or expense which the Bank may sustain or incur
as a consequence of any of the following:
(a) the failure of the Borrower to borrow a
LIBOR Loan after delivery of a Borrowing Notice therefor;
(b) the receipt or recovery by the Bank, whether by
voluntary repayment, acceleration or otherwise, of all or any part of a LIBOR
Loan prior to the last day of an Interest Period applicable thereto; or
(c) the conversion, prior to the last day of an
applicable Interest Period, of a LIBOR Loan into another LIBOR Loan or into a
Base Rate Loan (other than pursuant to subsection 2.18(b) or Section 2.20
hereof).
For the purposes hereof, the amount to be paid by the
Borrower to the Bank in order to so indemnify the Bank for any loss occasioned
by any of the events described in the preceding paragraph, and as liquidated
damages therefor, shall be equal to the excess, discounted to its present value
as of the date paid to the Bank, of (i) the amount of interest which otherwise
would have accrued on the principal amount so received, recovered, converted or
not borrowed during the period (the "INDEMNITY PERIOD") commencing with the date
of such receipt, recovery, conversion, or failure to borrow to the last day of
the applicable Interest Period for such LIBOR Loan at the rate of interest
applicable to such Loan (or the rate of interest agreed to in the case of a
failure to borrow) provided for herein (prior to default) over (ii) the amount
of interest which would be earned by the Bank during the Indemnity Period if it
invested the principal amount so received, recovered, converted or not borrowed
at the rate per annum determined by the Bank as the rate it would bid in the
London interbank market for a deposit of eurodollars in an amount approximately
equal to such principal amount for a period of time comparable to the Indemnity
Period.
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A certificate as to any additional amounts payable pursuant
to this Section 2.22 setting forth in reasonable detail, the basis and method
of determining such amounts shall be conclusive, absent manifest error, as to
the determination by the Bank set forth therein if made reasonably and in good
faith. The Borrower shall pay any amounts so certified to it by the Bank
within 10 days of receipt of any such certificate. For purposes of this
Section 2.22, all references to the "Bank" shall be deemed to include any
participant in the Commitment and/or Loans; provided that the total amount
payable pursuant to this Section 2.22 shall not exceed the amount that would
have otherwise been payable if no participation had been made. The indemnities
set forth herein shall survive payment in full of all LIBOR Loans and all
other Loans made pursuant to this Agreement.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Bank that:
SECTION 3.1 ORGANIZATION.
(a) The Borrower and each Guarantor is duly
organized and validly existing under the laws of its state of organization and
has the power to own its assets and to transact the business in which it is
engaged. Schedule 3.1 hereto accurately and completely lists as of the date
hereof, as to the Borrower and each of its Subsidiaries: (i) its state of
incorporation, and (ii) the classes and number of authorized and outstanding
shares of capital stock of each such corporation, and (other than with respect
to the Borrower) the owners of such outstanding shares of capital stock. All of
the foregoing shares or other equity interests that are issued and outstanding
have been duly and validly issued and are fully paid and non-assessable, and
are owned by the Persons referred to on Schedule 3.1, free and clear of any
Lien except as otherwise provided for herein. Except as set forth on Schedule
3.1, there are no outstanding warrants, options, contracts or commitments of
any kind entitling any Person to purchase or otherwise acquire any shares of
capital stock or other equity interests of the Borrower or any Subsidiary nor
are there outstanding any securities that are convertible into or exchangeable
for any shares of capital stock or other equity interests of the Borrower or
any Subsidiary. Except as set forth on Schedule 3.1, neither the Borrower nor
any Subsidiary has any Subsidiary.
(b) The Borrower and each Guarantor is in good
standing in its state of organization and in each state in which it is
qualified to do business. The Borrower and each Guarantor is qualified to do
business in each jurisdiction in which the failure to so qualify could have a
Material Adverse Effect on each of them.
SECTION 3.2 POWER, AUTHORITY, CONSENTS.
The Borrower and each Guarantor has the power to
execute, deliver and perform the Loan Documents to be executed by it. The
Borrower has the power to borrow hereunder and has taken all necessary
corporate action to authorize the borrowing hereunder on the terms and
conditions of this Agreement. The Borrower and each Guarantor has taken all
necessary action, corporate or otherwise, to authorize the execution, delivery
and performance of the Loan Documents to be executed by it. No consent or
approval of any Person (including, without limitation, any stockholder of the
Borrower), no consent or approval of any landlord or mortgagee, no waiver of
any Lien or right of distraint or other similar right and no consent, license,
certificate of need, approval, authorization or declaration of any governmental
authority, bureau or agency, including, without limitation, any state health
agency having jurisdiction over the healthcare activities of the Borrower or
any Guarantor (hereinafter referred to collectively as the "STATE REGULATORY
AGENCIES") is or will be required in connection with the execution, delivery
or performance by the Borrower or any Guarantor, or the validity, enforcement
or priority, of the Loan Documents or any Lien created and granted thereunder,
except as set forth on Schedule 3.2 hereto, each of which either has been duly
and validly obtained on or prior to the date hereof and is now in full force
and effect, or is designated on Schedule 3.2 as waived by the Bank.
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SECTION 3.3 NO VIOLATION OF LAW OR AGREEMENTS.
The execution and delivery by the Borrower and
each Guarantor of each Loan Document to which it is a party and performance by
it hereunder and thereunder, will not violate any provision of law and will not
conflict with or result in a breach of any order, writ, injunction, ordinance,
resolution, decree, or other similar document or instrument of any court or
governmental authority, bureau or agency, domestic or foreign, including,
without limitation, the State Regulatory Agencies, or any certificate of
incorporation or by-laws of the Borrower or any Guarantor, or create (with or
without the giving of notice or lapse of time, or both) a default under or
breach of any material contractual provision contained in any agreement, bond,
note or indenture to which the Borrower or any Guarantor is a party, or by
which any of them is bound or any of their respective properties or assets is
affected, or result in the imposition of any Lien of any nature whatsoever upon
any of the properties or assets owned by or used in connection with the
business of the Borrower or any Guarantor, except for the Liens created and
granted pursuant to the Security Documents.
SECTION 3.4 DUE EXECUTION, VALIDITY,
ENFORCEABILITY.
This Agreement and each other Loan Document to
which any Loan Party is a party has been duly executed and delivered by the
Borrower and each Guarantor, as the case may be, and each constitutes the valid
and legally binding obligation of the Borrower or such Guarantor that is a
party thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors' rights generally and
except that the remedy of specific performance and other equitable remedies
are subject to judicial discretion.
SECTION 3.5 PROPERTIES, PRIORITY OF LIENS.
All of the properties and assets owned by the
Borrower and each Guarantor are owned by each of them, respectively, free and
clear of any Lien of any nature whatsoever, except as provided for in the
Security Documents, and as permitted by Section 7.2 hereof. The Liens that,
simultaneously with the execution and delivery of this Agreement and the
consummation of the initial Loans, have been created and granted by the
Security Documents constitute valid perfected first Liens on the properties and
assets covered by the Security Documents, subject to no prior or equal Lien
except as permitted by Section 7.2 hereof.
SECTION 3.6 JUDGMENTS, ACTIONS, PROCEEDINGS.
Except as set forth on Schedule 3.6 hereto, as of
the date hereof, there are no outstanding judgments, actions or proceedings,
including, without limitation, any Environmental Proceeding, pending before any
court or governmental authority, bureau or agency, including, without
limitation, any State Regulatory Agency, with respect to or, to the best of the
Borrower's knowledge, threatened against the Borrower or any Guarantor, which
could reasonably be expected to have a Material Adverse Effect on the Borrower
or any Guarantor nor, to the best of the Borrower's knowledge, is there any
reasonable basis for the institution of any such action or proceeding that is
probable of assertion.
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SECTION 3.7 NO DEFAULTS, COMPLIANCE WITH LAWS.
Except as set forth on Schedule 3.7 hereto,
neither the Borrower nor any Guarantor is in default under any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to
which it is a party or by which it is bound, or any other agreement or other
instrument by which any of the properties or assets owned by it or used in the
conduct of its business is affected, which default would have a Material
Adverse Effect on the Borrower or any Guarantor. The Borrower and each
Guarantor has complied and is in compliance in all respects with all applicable
laws, ordinances and regulations, resolutions, ordinances, decrees and other
similar documents and instruments of all courts and governmental authorities,
bureaus and agencies, domestic and foreign, including, without limitation, all
applicable Environmental Laws and Regulations, non-compliance with which would
have a Material Adverse Effect on the Borrower or any Guarantor.
SECTION 3.8 BURDENSOME DOCUMENTS.
Except as set forth on Schedule 3.8 hereto, as of
the date hereof, neither the Borrower nor any Guarantor is a party to or bound
by, nor are any of the properties or assets owned by the Borrower or any
Guarantor used in the conduct of their respective businesses affected by, any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment, including, without limitation, any of the foregoing relating to any
Environmental Matter, that has a Material Adverse Effect on the Borrower or any
Guarantor.
SECTION 3.9 FINANCIAL STATEMENTS; PROJECTIONS.
(a) Each of the Financial Statements is correct
and complete and presents fairly the consolidated financial position of the
Borrower and its Subsidiaries, and each other entity to which it relates, as
at its date, and has been prepared in accordance with GAAP. Neither the
Borrower nor any of the Subsidiaries, nor any other entity to which any of the
Financial Statements relates, has any material obligation, liability or
commitment, direct or contingent (including, without limitation, any
Environmental Liability), that is not reflected in the Financial Statements.
There has been no material adverse change in the financial position or
operations of the Borrower, or any of its Subsidiaries or any other entity to
which any of the Financial Statements relates since the date of the latest
balance sheet included in the Financial Statements (the "LATEST BALANCE
SHEET"). The Borrower's fiscal year is the twelve-month period ending on
December 31 in each year.
(b) The Projections have been prepared on the
basis of the assumptions accompanying them and reflect as of the date thereof
the Borrower's good faith projections, after reasonable analysis, of the
matters set forth therein, based on such assumptions.
SECTION 3.10 TAX RETURNS.
Each of the Borrower and the Guarantors has filed
all federal, state and local tax returns required to be filed by it and has not
failed to pay any taxes, or interest and penalties relating thereto, on or
before the due dates thereof except as otherwise permitted by Section 6.6
hereof. Except to the extent that reserves therefor are reflected in the
Financial Statements: (i) there are no material federal, state or local tax
liabilities of the Borrower or any Guarantor due or to become due for any tax
year ended on or prior to the date of the Latest Balance Sheet relating to such
entity, whether incurred in respect of or measured by the income of such
entity, that are not properly reflected in the Latest Balance Sheet relating to
such entity, and (ii) there are no material claims pending or, to the knowledge
of the Borrower, proposed or threatened against the Borrower or any Guarantor
for past federal, state or local taxes, except those, if any, as to which
proper reserves are reflected in the Financial Statements.
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SECTION 3.11 INTANGIBLE ASSETS.
Each of the Borrower and the Guarantors possesses
all patents, trademarks, service marks, trade names, and copyrights, and rights
with respect to the foregoing, necessary to conduct its business as now
conducted and as proposed to be conducted, without any conflict in any material
respect with the patents, trademarks, service marks, trade names, and
copyrights and rights with respect to the foregoing, of any other Person, and
each of such patents, trademarks, service marks, trade names, copyrights and
rights with respect thereto, together with any pending applications therefor,
in each case as in existence on the date hereof are listed on Schedule 3.11
hereto.
SECTION 3.12 REGULATION U.
No part of the proceeds received by the Borrower
from the Loans will be used directly or indirectly for: (a) any purpose other
than as set forth in Section 2.9 hereof, or (b) the purpose of purchasing or
carrying, or for payment in full or in part of Indebtedness that was incurred
for the purposes of purchasing or carrying, any "margin stock", as such term is
defined in ss.221.3 of Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II, Part 221.
SECTION 3.13 NAME CHANGES, MERGERS, ACQUISITIONS.
Except as set forth on Schedule 3.13 hereto,
neither the Borrower nor any Guarantor has within the six-year period
immediately preceding the date of this Agreement changed its name, been the
surviving entity of a merger or consolidation, or acquired all or substantially
all of the assets of any Person.
SECTION 3.14 FULL DISCLOSURE.
Neither the Financial Statements nor any factual
statement contained in any certificate, opinion or any other statement made or
furnished in writing to the Bank or on behalf of the Borrower or any Guarantor
in connection with this Agreement or the transactions contemplated herein,
contains any untrue statement of a material fact, or omits to state a material
fact necessary in order to make the statements contained therein or herein not
misleading, as of the date such statement was made. There is no fact known to
the Borrower (other than matters affecting the health care industry generally)
that has, or would in the now foreseeable future have, a Material Adverse
Effect on the Borrower or any of the Guarantors, which fact has not been set
forth herein, in the Financial Statements or any certificate, opinion or other
written statement so made or furnished to the Bank.
SECTION 3.15 GOVERNMENT CONSENTS; MEDICARE;
MEDICAID.
(a) Schedule 3.15 hereto accurately and com-
pletely lists as of the date hereof, all permits, licenses, authorizations,
approvals and consents of governmental or public bodies or authorities, federal
(including the Health Care Financing Administration), state and local,
including, without limitation, all licenses, authorizations and permits
relating to Environmental Liability, and all certificates of need and all
approvals of the State Regulatory Agencies (hereinafter referred to
collectively as the "GOVERNMENTAL CONSENTS") necessary in any material respect
for: (i) the activities and business of the Borrower and each Guarantor as
currently conducted and as proposed to be conducted, and (ii) the ownership,
use, operation and maintenance by each of them of its properties and assets,
and the Governmental Consents set forth on Schedule 3.15 are the only
Governmental Consents required for the foregoing purposes.
(b) (i) As of the date hereof, the Borrower
and each Guarantor have all of the Governmental Consents listed on Schedule
3.15 hereto with respect to their assets, properties and operations, and (ii)
all of such Governmental Consents have been duly and validly granted by the
governmental authorities in the jurisdictions where their operations are
located, are in full force and effect and have not been amended, modified,
rescinded, revoked or assigned.
(c) (i) The certifications with respect to each
healthcare operation owned by the Borrower and each Guarantor by the
appropriate federal and state authorities for participation in the Medicare,
Medicaid and related programs applicable thereto, are in full force and effect,
and (ii) each such healthcare operation is in compliance in all material
respects with the requirements of the Medicare, Medicaid and related programs
applicable thereto.
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(d) No condition exists or event has occurred
that, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture, non-renewal of
any Governmental Consent applicable to any healthcare operation owned or
operated by the Borrower or any Guarantor, or such facility's participation in
any Medicare, Medicaid or other similar program, and there is no claim that any
such Governmental Consent, participation or contract is not in full force and
effect which could reasonably be expected to have a Material Adverse Effect on
the Borrower or any Guarantor.
(e) The Borrower and each Guarantor has all
necessary licenses, authorizations and permits relating to Environmental Laws
and Regulations.
SECTION 3.16 LABOR DISPUTES; COLLECTIVE BARGAINING
AGREEMENTS; EMPLOYEE GRIEVANCES.
Except as set forth on Schedule 3.16 annexed
hereto: (a) as of the date hereof, there are no collective bargaining
agreements or other labor contracts covering the Borrower or any Guarantor; (b)
no such collective bargaining agreement or other labor contract will expire
during the term of this Agreement; (c) as of the date hereof, no union or other
labor organization is seeking to organize, or to be recognized as bargaining
representative for, a bargaining unit of employees of the Borrower or any
Guarantor; (d) there is no pending or threatened strike, work stoppage,
material unfair labor practice claim or charge, arbitration or other material
labor dispute against or affecting the Borrower or any Guarantor or their
representative employees which could reasonably be expected to have a Material
Adverse Effect on the Borrower or any Guarantor; (e) there has not been, during
the five (5) year period prior to the date hereof, a strike, work stoppage,
material unfair labor practice claim or charge, arbitration or other material
labor dispute against or affecting the Borrower or any Guarantor or any of
their representative employees, and (f) there are no actions, suits, charges,
demands, claims, counterclaims or proceedings pending or, to the best of the
Borrower's knowledge, threatened against the Borrower or any Guarantor, by or
on behalf of, or with, its employees, other than employee grievances arising in
the ordinary course of business which could reasonably be expected to have a
Material Adverse Effect on the Borrower or any Guarantor.
SECTION 3.17 CONDITION OF ASSETS.
All of the assets and properties of the Borrower
and each Guarantor that are reasonably necessary for the operation of its
respective business, are in good working condition, ordinary wear and tear
excepted, and are able to serve the function for which they are currently being
used.
SECTION 3.18 ERISA.
(a) Except as set forth on Schedule 3.18 annexed
hereto, no Employee Benefit Plan is maintained or has ever been maintained by
any Loan Party or any ERISA Affiliate, nor has any Loan Party or any ERISA
Affiliate ever contributed to a Multi-employer Plan in connection with which
there could arise a direct or contingent liability of the Borrower to the PBGC,
the Department of Labor or the IRS.
(b) There are no agreements which will provide
payments to any officer, employee, shareholder or highly compensated individual
which will be "parachute payments" under 280G of the Code that are
nondeductible to any Loan Party and which will be subject to tax under Section
4999 of the Code for which any Loan Party will have a material withholding
liability.
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ARTICLE 4. CONDITIONS TO THE LOANS.
SECTION 4.1 CONDITIONS TO INITIAL LOANS.
The obligation of the Bank to make the initial
Loan to be made by it hereunder shall be subject to the fulfillment (to the
satisfaction of the Bank) of the following conditions precedent:
(a) The Borrower shall have executed and
delivered to the Bank the Note.
(b) The Borrower shall have:
(i) executed and delivered to the Bank
the Borrower Security Agreement;
(ii) executed and delivered to the Bank
appropriate Uniform Commercial Code financing statements in order to enable the
Bank to perfect and preserve its security interest in the Collateral;
(iii) delivered to the Bank a certificate(s)
of insurance evidencing: (A) policies of insurance owned by the Borrower
covering or in any manner relating to the Collateral together with endorsements
thereto that comply with the terms of the Borrower Security Agreement and are
otherwise in form and substance satisfactory to the Bank, naming the Bank, in
its capacity as such, as additional insured as its interests may appear; and
(B) the Borrower's liability insurance policies;
(iv) executed and delivered to the Bank the
Borrower Pledge Agreement together with the certificates evidencing the capital
stock pledged by it, accompanied by stock powers endorsed in blank and
irrevocable proxies relating thereto; and
(v) otherwise duly complied with all of
the terms and conditions of the Security Documents to be executed by it.
(c) Each of the Guarantors shall have:
(i) executed and delivered to the Bank
its Guaranty;
(ii) executed and delivered to the Bank
its Guarantor Security Agreement;
(iii) executed and delivered to the Bank
appropriate Uniform Commercial Code financing statements in order to enable the
Bank to perfect and preserve its security interest in the Collateral;
(iv) delivered to the Bank a certificate(s)
evidencing: (A) policies of insurance owned by each Guarantor covering or in
any manner relating to the Collateral together with endorsements thereto that
comply with the terms of the Guarantor Security Agreements and are otherwise in
form and substance satisfactory to the Bank, naming the Bank, in its capacity
as such, as additional insured as its interests may appear; and (B) each
Guarantor's liability insurance policies; and
(v) otherwise duly complied with all of
the terms and conditions of the Security Documents to be executed by
them.
(d) The Borrower shall have completed the Bank's
"Environmental Questionnaire" on behalf of itself and the Guarantors and the
results thereof shall be satisfactory to the Bank.
(e) The Borrower shall have consummated its
pending private placement and in connection therewith the investor(s) in the
Borrower shall have contributed to the capital of the Borrower an amount in
cash of not less than $2,500,000. In connection with such private placement,
the Borrower shall have delivered to the Bank a copy of the Proxy Statement as
filed with the Securities and Exchange Commission.
(f) The Bank shall have received a copy of the
Settlement Agreement dated June 5, 1996 entered into by the Borrower with the
United States Department of Justice in connection with the settlement of a
certain civil lawsuit relating to Advanced Care Associates, Inc.
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(g) The Borrower shall have paid to the Bank the
balance of the Facility Fee as set forth in subsection 2.7(a).
(h) XxXxxxxxx, Will & Xxxxx, general counsel to
the Borrower and the Guarantors, shall have delivered its opinion to, and in
form and substance satisfactory to, the Bank.
(i) The Bank shall have received true and
complete copies of the Financial Statements, the Projections and the Borrower's
1997 annual operating budget, each certified as such in a certificate executed
by the president or vice president of the Borrower.
(j) The Bank shall have received copies of the
following:
(i) All of the consents, approvals and
waivers referred to on Schedule 3.2 hereto (except only those which, as stated
on Schedule 3.2, shall not be delivered);
(ii) The certificates of incorporation of
the Borrower and the Guarantors, certified by the Secretary of State of their
respective states of incorporation;
(iii) The by-laws of the Borrower and the
Guarantors, certified by their respective secretaries;
(iv) All corporate action taken by the
Borrower and the Guarantors to authorize the execution, delivery and
performance of each of the Loan Documents to which it is a party and the
transactions contemplated thereby, certified by their respective secretaries;
(v) Good standing certificates as of
dates not more than thirty (30) days prior to the date of the initial Loan,
with respect to each of the Borrower and the Guarantors, from the Secretary of
State of their respective states of incorporation and each state in which each
of them is qualified to do business; and
(vi) An incumbency certificate (with
specimen signatures) with respect to the Borrower and the Guarantors.
(k) (i) The Borrower shall have complied
and shall then be in compliance with all of the terms, covenants and
conditions of this Agreement;
(ii) After giving effect to the
initial Loan, there shall exist no Default or Event of Default hereunder; and
(iii) The representations and
warranties contained in Article 3 hereof shall be true and correct on the
date hereof;
and the Bank shall have received a Compliance Certificate dated the date hereof
certifying, inter alia, that the conditions set forth in this subsection 4.1(k)
are satisfied on such date.
(l) All legal matters incident to the initial
Loans shall be satisfactory to counsel to the Bank.
SECTION 4.2 CONDITIONS TO SUBSEQUENT LOANS.
The obligation of the Bank to make each Loan
subsequent to the initial Loan shall be subject to the fulfillment (to the
satisfaction of the Bank) of the following conditions precedent:
(a) The Bank shall have received a Borrowing
Notice in accordance with Section 2.2 hereof.
(b) The Bank shall have received a Borrowing
Base Certificate in the form of Exhibit B annexed hereto.
(c) The Bank shall have received a Compliance
Certificate.
(d) No Default or Event of Default shall have
occurred and be continuing on the date of such Loan or after giving effect to
the Loans requested to be made on such date.
(e) All legal matters incident to such Loan
shall be satisfactory to counsel for the Bank.
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Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in subsections 4.2(c) and (d) above have been satisfied.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION.
While the Commitment is outstanding, and, in the event any
Loan remains outstanding, so long as the Borrower is indebted to the Bank and
until payment in full of the Note and full and complete performance of all of
its other obligations arising hereunder, the Borrower shall deliver to the
Bank:
SECTION 5.1 ANNUAL FINANCIAL STATEMENTS.
(a) Annually, as soon as available, but in any
event within ninety (90) days after the last day of each of its fiscal years, a
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at such last day of the fiscal year, and consolidated and
consolidating statements of income and retained earnings and statement of cash
flow, for such fiscal year, each prepared in accordance with GAAP, in
reasonable detail, and, as to the consolidated statements, certified without
qualification by Deloitte & Touche or other firm of independent certified
public accountants reasonably satisfactory to the Bank, or certified, as to the
consolidating statements, by the chief financial officer of the Borrower, as
fairly presenting the financial position and the results of operations of the
Borrower and its Subsidiaries as at and for the year ending on its date and as
having been prepared in accordance with GAAP; provided, however, the Borrower
may satisfy its obligations to deliver the financial statements described in
this Section 5.1 by furnishing to the Bank a copy of the Borrower's annual
report on Form 10-K in respect of such fiscal year together with the financial
statements required to be attached thereto, provided the Borrower is required
to file such annual report on Form 10-K with the Securities and Exchange
Commission and such filing is actually made.
SECTION 5.2 QUARTERLY FINANCIAL STATEMENTS.
(a) As soon as available, but in any event
within forty-five (45) days after the end of the Borrower's first three fiscal
quarterly periods, a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the last day of such quarter and
consolidated and consolidating statements of income and retained earnings and
statements of cash flow, for such quarter, and on a comparative basis figures
for the corresponding period of the immediately preceding fiscal year, all in
reasonable detail, each such statement to be certified by the chief financial
officer of the Borrower as accurately presenting the financial position and
the results of operations of the Borrower and its Subsidiaries as at its date
and for such quarter and as having been prepared in accordance with GAAP
(subject to year-end adjustments); provided, however, the Borrower may satisfy
its obligations to deliver the financial statements described in this Section
5.2 by furnishing to the Bank a copy of the Borrower's quarterly report on Form
10-Q in respect of such fiscal quarter together with the financial statements
required to be attached thereto, provided the Borrower is required to file such
quarterly report on Form 10-Q with the Securities and Exchange Commission and
such filing is actually made.
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SECTION 5.3 COMPLIANCE INFORMATION.
Promptly after a written request therefor, such
other financial data or information evidencing compliance with the requirements
of this Agreement, the Note and the other Loan Documents, as the Bank may
reasonably request from time to time.
SECTION 5.4 NO DEFAULT CERTIFICATE.
At the same time as it delivers the financial
statements required under the provisions of Section 5.1 and Section 5.2 hereof,
a certificate of the chief financial officer of the Borrower to the effect that
no Default or Event of Default hereunder exists as of the date of such
financial statements, or, if such cannot be so certified, specifying in
reasonable detail the exceptions, if any, to such statement. Such certificate
shall be accompanied by a detailed calculation indicating compliance with the
covenants contained in Sections 6.9 hereof.
SECTION 5.5 CERTIFICATE OF ACCOUNTANTS.
At the same time as it delivers the financial
statements required under the provisions of Section 5.1 hereof, a certificate
of the independent certified public accountants of the Borrower addressed
specifically to both the Borrower and the Bank to the effect that during the
course of their audit of the operations of the Borrower and its condition as
of the end of the fiscal year, nothing has come to their attention which would
indicate that a Default or an Event of Default hereunder has occurred or that
there was any violation of the covenants of the Borrower contained in Section
6.9 or Article 7 of this Agreement, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement.
SECTION 5.6 ACCOUNTANTS' REPORTS.
Promptly upon receipt thereof, copies of all
"management letters" and other reports submitted to the Borrower by its
independent accountants in connection with any annual or interim audit or
review of the books of the Borrower made by such accountants.
SECTION 5.7 COPIES OF DOCUMENTS.
Promptly upon their becoming available, copies of
any: (i) correspondence or notices received by the Borrower from any federal,
state or local governmental authority that regulates the operations of the
Borrower or any of its Subsidiaries, including, without limitation, any State
Regulatory Agency, relating to an actual or threatened change or development
that would be materially adverse to the Borrower or any of its Subsidiaries;
(ii) registration statements and any amendments and supplements thereto, and
any regular and periodic reports, if any, filed by the Borrower with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any or all of the functions of the said
Commission; (iii) letters of comment or correspondence sent to the Borrower or
any of its Subsidiaries, by any such securities exchange or such Commission in
relation to the Borrower or any of its Subsidiaries, and its affairs; and (iv)
written reports submitted to the Borrower or any of its Subsidiaries, by its
independent accountants in connection with any annual or interim audit of the
books of the Borrower or its Subsidiaries made by such accountants.
SECTION 5.8 NOTICES OF DEFAULTS.
Promptly, after obtaining knowledge thereof, notice
of the occurrence of any Default or Event of Default, or any event that would
constitute or cause a material adverse change in the condition, financial or
otherwise, or the operations of the Borrower or any of its Subsidiaries.
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SECTION 5.9 ERISA NOTICES AND REQUESTS.
(a) Concurrently with such filing, a copy of
each Form 5500 that is filed with respect to each Plan with the IRS;
and
(b) Promptly, upon their becoming available,
copies of: (i) all correspondence with the PBGC, the Secretary of Labor or any
representative of the IRS with respect to any Pension Plan, relating to an
actual or threatened change or development that would be materially adverse to
the Borrower; (ii) all actuarial valuations received by the Borrower with
respect to any Pension Plan; and (iii) any notices of Pension Plan termination
filed by any Plan Administrator (as those terms are used in ERISA) with the
PBGC and of any notices from the PBGC to the Borrower with respect to the
intent of the PBGC to institute involuntary termination proceedings.
SECTION 5.10 ADDITIONAL INFORMATION; ACCOUNTS
RECEIVABLE AGING; BORROWING BASE
CERTIFICATE.
The Borrower will also furnish or cause to be
furnished to the Bank such other information regarding the business, affairs
and condition of the Borrower and its Subsidiaries as the Bank may from time to
time reasonably request, including, without limitation, the following reports,
each of which shall be certified as true and correct by the president or chief
financial officer of the Borrower:
(a) Not less than twenty (20) days after the end
of each calendar month during the period commencing on the date hereof through
the first anniversary of the date hereof and not less than fifteen (15) days
after the end of each calendar month thereafter, a detailed aged accounts
receivable trial balance showing accounts receivable according to payor mix of
the Borrower and the Guarantors as of the last day of the immediately preceding
month in the following categories: 0-120 days; 121-240 days; 241-360 days and
over 360 days.
(b) Not less than twenty (20) days after the end
of each calendar month during the period commencing on the date hereof through
the first anniversary of the date hereof and not less than fifteen (15) days
after the end of each calendar month thereafter, a Borrowing Base Certificate.
(c) Not later than January 15, 1997, a copy of
the Borrowers's management prepared internal policy with respect
to the collection of Accounts.
SECTION 5.11 ASSET-BASED AUDIT.
Not later than thirty (30) days after the end of
each fiscal quarter in 1997 and not later than sixty (60) days after the end of
each fiscal year thereafter, an asset-based audit performed at the Borrower's
expense by an appraiser satisfactory to the Bank.
ARTICLE 6. AFFIRMATIVE COVENANTS.
While the Commitment is outstanding, and, in the event any
Loan remains outstanding, so long as the Borrower is indebted to the Bank, and
until payment in full of the Restated Note and full and complete performance of
all of its other obligations arising hereunder, the Borrower shall and shall
cause and each Subsidiary to:
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SECTION 6.1 BOOKS AND RECORDS.
Keep proper books of record and account in which
full, true and correct entries shall be made of all dealings or transactions in
relation to its business and activities.
SECTION 6.2 INSPECTIONS AND AUDITS.
Permit the Bank to make or cause to be made (and,
except as otherwise set forth in Section 5.11, at the Borrower's expense after
the occurrence of and during the continuance of an Event of Default),
inspections and audits of any books, records and papers of the Borrower and its
Subsidiaries and to make extracts therefrom and copies thereof, or to make
inspections and examinations of any properties and facilities of the Borrower
and its Subsidiaries, on reasonable notice, at all such reasonable times and as
often as the Bank may reasonably require, in order to assure that the Borrower
is and will be in compliance with its obligations under the Loan Documents or
to evaluate the Bank's investment in the Note.
SECTION 6.3 MAINTENANCE AND REPAIRS.
Maintain in good repair, working order and condi-
tion, subject to normal wear and tear, all material properties and assets from
time to time owned by it and used in or necessary for the operation of its
business, and make all reasonable repairs, replacements, additions and
improvements thereto.
SECTION 6.4 CONTINUANCE OF BUSINESS.
Do, or cause to be done, all things reasonably
necessary to preserve and keep in full force and effect its
corporate existence and all material permits, rights and privileges necessary
for the proper conduct of its business including, without limitation, the
Governmental Consents, and continue to engage in the same line of business or
any line of business reasonably related thereto and comply in all material
respects with all applicable laws, regulations and orders.
SECTION 6.5 COPIES OF CORPORATE DOCUMENTS.
Subject to the prohibitions set forth in Section
7.12 hereof, promptly deliver to the Bank copies of any amendments or
modifications to its and any Guarantor's certificate of incorporation and
by-laws, certified with respect to the certificate of incorporation by the
Secretary of State of its state of incorporation and, with respect to the
by-laws, by the secretary or assistant secretary of such corporation.
SECTION 6.6 PERFORM OBLIGATIONS.
Pay and discharge in all material respects all of
its obligations and liabilities, including, without limitation, all taxes,
assessments and governmental charges upon its income and properties when due,
unless and to the extent only that such obligations, liabilities, taxes,
assessments and governmental charges shall be contested in good faith and by
appropriate proceedings and that, to the extent required by GAAP, proper and
adequate book reserves relating thereto are established by the Borrower, or, as
the case may be, by the appropriate Subsidiary, and then only to the extent
that a bond is filed in cases where the filing of a bond is necessary to avoid
the creation of a Lien against any of its properties.
SECTION 6.7 NOTICE OF LITIGATION.
Promptly notify the Bank in writing of any
litigation, legal proceeding or dispute, other than disputes in the ordinary
course of business or, whether or not in the ordinary course of business,
involving amounts in excess of Two Hundred Fifty Thousand ($250,000) Dollars,
affecting the Borrower or any Subsidiary whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding, however,
any actions relating to workers' compensation claims or negligence claims
relating to use of motor vehicles, if fully covered by insurance, subject to
deductibles).
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SECTION 6.8 INSURANCE.
(a)(i) Maintain with responsible insurance
companies acceptable to the Bank such insurance on such of its properties, in
such amounts and against such risks as is customarily maintained by similar
businesses, including, without limitation, professional liability insurance;
(ii) file with the Bank upon its request a detailed list of the insurance then
in effect, stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and
risks covered thereby; and (iii) within thirty (30) days after notice in
writing from the Bank, obtain such additional insurance as the Bank may
reasonably request; and
(b) Carry all insurance available through the
PBGC or any private insurance companies covering its obligations, if any, to
the PBGC.
SECTION 6.9 FINANCIAL COVENANTS.
As at the last day of each fiscal quarter of the
Borrower, have or maintain, with respect to the Borrower, on a consolidated
basis with the Guarantors:
(a) a Fixed Charge Coverage Ratio of not less
than 1.30:1.00.
(b) a ratio of (x) Annual EBITDA, to (y)
Adjusted Fixed Charges of not less than 1.00:1.00.
(c) a ratio of (x) Senior Debt, to (y) Annual
EBITDA of not more than 3.00:1.00.
(d) a ratio of (x) total interest-bearing
Indebtedness, to (y) Annual EBITDA of not more than 4.50:1.00 at all times
through and including December 31, 1997 and not more than 4.00:1.00 thereafter.
(e) Interest Coverage of not less than 300% at
all times through and including December 31, 1997 and not less than 375%
thereafter. For purposes of computation of the financial covenants set forth
above (and the Fixed Charge Coverage Ratio referred to in the definition of
"Applicable Margin" in Article 1 hereof), non-cash charges in an aggregate
amount not in excess of $9,600,000 as reflected in the Borrower's annual
financial statement for the fiscal year ended December 31, 1996 shall be
eliminated in all calculations.
SECTION 6.10 NOTICE OF CERTAIN EVENTS.
(a) Promptly notify the Bank in writing of the
occurrence of any Reportable Event, as defined in Section 4043 of ERISA, if a
notice of such Reportable Event is required under ERISA to be delivered to the
PBGC within 30 days after the occurrence thereof, together with a description
of such Reportable Event and a statement of the action the Loan Party or the
ERISA Affiliate intends to take with respect thereto, together with a copy of
the notice thereof given to the PBGC.
(b) Promptly notify the Bank in writing if any
Loan Party or ERISA Affiliate receives an assessment of withdrawal liability in
connection with a complete or partial withdrawal with respect to any
Multiemployer Plan, together with a statement of the action that such Loan
Party or ERISA Affiliate intends to take with respect thereto.
(c) Promptly notify the Bank in writing if any
Loan Party receives: (i) any notice of any violation or administrative or
judicial complaint or order having been filed or about to be filed against it
alleging violations of any Environmental Law and Regulation, or (ii) any notice
from any governmental body or any other Person alleging that the Borrower or
any Guarantor is or may be subject to any Environmental Liability; and promptly
upon receipt thereof, provide the Bank with a copy of such notice together with
a statement of the action the Borrower or any such Guarantor intends to take
with respect thereto.
SECTION 6.11 COMPLY WITH ERISA.
Materially comply with all applicable provisions
of ERISA and the Code now or hereafter in effect.
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SECTION 6.12 ENVIRONMENTAL COMPLIANCE.
Operate all property owned or leased by it such
that no obligation, including a clean-up obligation, shall arise under any
Environmental Law and Regulation, which obligation would constitute a Lien on
any property of the Borrower or any Guarantor; provided, however, that in the
event that any such claim is made or any such obligation arises based upon a
final unappealable judicial determination, the Borrower or such Guarantor
shall, at its own cost and expense, promptly satisfy such claim or obligation.
SECTION 6.13 MAINTENANCE OF REIMBURSEMENT ELIGIBILITY.
Maintain its status as a provider of healthcare
services eligible for reimbursement under the Medicare and Medicaid and
equivalent insurance programs in each state in which it is certified on the
date hereof; unless the failure to do so would have a Material Adverse Effect
on the Borrower and the Guarantors, taken as a whole.
SECTION 6.14 INTEREST RATE PROTECTION.
Cause an amount equal to not less than fifty (50%)
percent of the outstanding principal balance of the Loans advanced on the date
hereof to be subject to Interest Rate Contracts for a term concluding not less
than three (3) years after the date hereof which Interest Rate Contracts shall
result in effectively fixing the interest costs to the Borrower for such Loans
in an amount and on terms and conditions reasonably satisfactory to the Bank.
ARTICLE 7. NEGATIVE COVENANTS.
While the Commitment is outstanding, and, in the event any
Loan remains outstanding, so long as the Borrower is indebted to the Bank and
until payment in full of the Note and full and complete performance of all of
its other obligations arising hereunder, neither the Borrower nor any
Subsidiary shall do, agree to do, or permit to be done, any of the following:
SECTION 7.1 INDEBTEDNESS.
Create, incur, permit to exist or have outstanding
any Indebtedness, except:
(a) Indebtedness of the Borrower to the Bank
under this Agreement and the Note;
(b) Taxes, assessments and governmental charges,
non-interest bearing accounts payable and accrued liabilities, in any case not
more than 90 days past due from the original due date thereof, and non-interest
bearing deferred liabilities other than for borrowed money (e.g., deferred
compensation and deferred taxes), in each case incurred and continuing in the
ordinary course of business;
(c) Indebtedness secured by the security inter-
ests referred to in subsection 7.2(c) hereof and Capitalized Lease Obligations,
in each case incurred only if, after giving effect thereto, the limit on
Capital Expenditures set forth in Section 7.13 hereof would not be breached;
(d) Indebtedness for unsecured loans and
advances for working capital purposes by and among the Borrower and the
Guarantors;
(e) Indebtedness consisting of contingent
obligations permitted by Section 7.3 hereof;
(f) Indebtedness incurred or assumed in
connection with any transactions permitted under Section 7.4 hereof, which
Indebtedness is subordinated to the prior payment in full of the Obligations
owing to the Bank under terms and pursuant to documentation in form and
substance satisfactory to the Bank; and
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(g) As set forth on Schedule 7.1 hereto and
renewals, extensions and refinancings thereof which do not increase the
principal amount thereof.
SECTION 7.2 LIENS.
Create, or assume or permit to exist, any Lien on
any of the properties or assets of the Borrower or any Subsidiary, whether now
owned or hereafter acquired, except:
(a) Those created and granted by the Security
Documents;
(b) Permitted Liens;
(c) Purchase money mortgages or security
interests, conditional sale arrangements and other similar security interests,
on motor vehicles and equipment acquired by the Borrower or any Subsidiary
(hereinafter referred to individually as a "PURCHASE MONEY SECURITY INTEREST")
with the proceeds of the Indebtedness referred to in subsection 7.1(c) hereof;
provided, however, that:
(i) The transaction in which any
Purchase Money Security Interest is proposed to be created is not then
prohibited by this Agreement;
(ii) Any Purchase Money Security Interest
shall attach only to the property or asset acquired in such transaction and
shall not extend to or cover any other assets or properties of the Borrower or
any Subsidiary;
(iii) The Indebtedness secured or covered
by any Purchase Money Security Interest shall not exceed the lesser of the cost
or fair market value of the property or asset acquired and shall not be renewed,
extended or prepaid from the proceeds of any borrowing; and
(iv) The aggregate amount of all
Indebtedness secured by Purchase Money Security Interests on a consolidated
basis for the Borrower shall not at any time exceed $500,000;
(d) The interests of the lessor under any Capi-
talized Lease permitted hereunder;
(e) Liens on assets securing Indebtedness
permitted under subsection 7.1(f) hereof, regardless of whether such Lien
existed prior to the acquisition of such property by the Borrower or was
created in contemplation thereof, so long as such Lien is and will remain
confined to the assets being acquired; and
(f) As set forth on Schedule 7.2 hereto.
SECTION 7.3 GUARANTIES.
Except as set forth on Schedule 7.1 hereto,
assume, endorse, be or become liable for, or guarantee, the obligations of any
Person, except by the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business. For the purposes hereof, the
term "guarantee" shall include any agreement, whether such agreement is on a
contingency or otherwise, to purchase, repurchase or otherwise acquire
Indebtedness of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another Person, or to supply funds to or in any manner invest in another Person
in connection with such Person's Indebtedness.
SECTION 7.4 MERGERS, ACQUISITIONS.
Merge or consolidate with any Person (whether or
not the Borrower or any Subsidiary is the surviving entity), or acquire all or
substantially all of the assets or any of the capital stock of any Person,
except (a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly-owned
Subsidiaries of the Borrower (provided that the wholly-owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation) and after giving
effect to any of such transactions, no Default or Event of Default shall exist,
and (b) the Borrower may acquire all or substantially all of the assets or
capital stock of any Person if and only if:
-31-
(i) after giving effect thereto, no
Default or Event of Default shall have occurred or would exist as a
result of such purchase;
(ii) each such acquisition shall be of
operating assets utilized by the transferor thereof in rendering health care
services or of 51% of the stock or other equity interests in a corporation or
other entity substantially all of whose properties consist of such operating
assets;
(iii) the aggregate consideration payable
(inclusive of cash payable, notes payable and Indebtedness assumed) in
respect of all such acquisitions shall not exceed $1,000,000 for any single
acquisition or $10,000,000 on a cumulative basis over the term of this
Agreement.
(iv) the Borrower shall have given the
Bank not less than thirty (30) days prior written notice of its intention
to make an acquisition pursuant to this Section 7.4, such notice to include
the proposed amount, date and form of the proposed transaction, a reasonable
description of the assets or stock or other equity interest to be acquired, a
description of the liabilities to be assumed (if any) and the location of all
assets to be acquired; and
(v) concurrently with the consummation
of any such acquisition pursuant to this Section 7.4, the Borrower shall, as
additional collateral security for the Obligations:
(A) grant to the Bank a first
lien on all of its right, title and interest in and to the acquired assets or
capital stock or other equity interests, by the execution and delivery to the
Bank of such agreements, instruments and documents as shall be satisfactory in
form and substance to the Bank; and
(B) with respect to the
acquisition by the Borrower of any entity deemed a "Subsidiary" hereunder, the
Borrower shall cause each such Subsidiary to execute and deliver to the Bank a
guarantee, together with a security agreement and any other similar documents
and instruments executed and delivered to the Bank by each existing Guarantor.
SECTION 7.5 REDEMPTIONS; DISTRIBUTIONS.
(a) Purchase, redeem, retire or otherwise
acquire, directly or indirectly, or make any sinking fund payments with
respect to, any shares of any class of stock of the Borrower or any Subsidiary
now or hereafter outstanding or set apart any sum for any such purpose; or
(b) Declare or pay any dividends or make any
distribution of any kind on the Borrower's or any Subsidiary's outstanding
stock other than split-ups and reclassifications with respect to the Borrower's
stock, or set aside any sum for any such purpose, except that any wholly-owned
Subsidiary may declare and pay dividends to the Borrower and the Borrower or
any Subsidiary may declare or pay any dividend payable solely in shares of its
common stock.
SECTION 7.6 STOCK INSURANCE.
Issue any additional shares or any right or option
to acquire any shares, or any security convertible into any shares, of the
capital stock of any Subsidiary, except in connection with stock dividends as
permitted under subsection 7.5(b) hereof.
SECTION 7.7 CHANGES IN BUSINESS.
Except as otherwise permitted under this
Agreement, make any material change in its business, or in the nature of its
operation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, assets or business except for the disposition of obsolete
assets in the ordinary course of business and for a fair consideration, whether
now owned or hereafter acquired, or discount, sell, pledge, hypothecate or
otherwise dispose of accounts receivable.
SECTION 7.8 PREPAYMENTS.
Make any voluntary or optional prepayment of any
Indebtedness for borrowed money incurred or permitted to exist under the terms
of this Agreement, other than Indebtedness evidenced by the Note.
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SECTION 7.9 INVESTMENTS.
Make, or suffer to exist, any Investment in any
Person, including, without limitation, any shareholder, director, officer or
employee of the Borrower or any of its Subsidiaries, except as otherwise
expressly permitted by this Agreement (including subsection 7.1(d) hereof) and
except:
(a) Investments in:
(i) obligations issued or guaranteed by
the United States of America;
(ii) certificates of deposit, bankers
acceptances and other "money market instruments" issued by any bank or trust
company organized under the laws of the United States of America or any
State thereof and having capital and surplus in an aggregate amount of not less
than $100,000,000;
(iii) open market commercial paper bearing
the highest credit rating issued by Standard & Poor's Corporation or by
another nationally recognized credit rating agency;
(iv) repurchase agreements entered into
with any bank or trust company organized under the laws of the United States of
America or any State thereof and having capital and surplus in an aggregate
amount of not less than $100,000,000 relating to United States of America
government obligations; and
(v) shares of "money market funds", each
having net assets of not less than $100,000,000;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof;
(b) Investments by the Borrower in any Subsidiary
and by any Subsidiary in the Borrower or another Subsidiary as in effect on
the date hereof.
SECTION 7.10 FISCAL YEAR.
Change its fiscal year.
SECTION 7.11 ERISA OBLIGATIONS.
Permit the establishment of any Employee Benefit
Plan or amend any Employee Benefit Plan which establishment or amendment could
result in liability to any Loan Party or increase the obligation for
post-retirement welfare benefits of any Loan Party which liability or increase,
individually or together with all similar liabilities and increases, is
material to any Loan Party.
SECTION 7.12 AMENDMENTS OF DOCUMENTS.
Modify, amend, supplement or terminate, or agree
to modify, amend, supplement or terminate, the Borrower's or any Guarantor's
certificate of incorporation or by-laws, in any way which would impair or
adversely affect the ability of the Borrower or such Guarantor to perform its
Obligations hereunder.
SECTION 7.13 CAPITAL EXPENDITURES.
Make or be or become obligated to make Capital
Expenditures in excess of $1,500,000 in the aggregate for the Borrower, on a
consolidated basis, during each fiscal year of the Borrower; provided, however,
that amounts permitted to be expended in a fiscal year that are not expended in
such fiscal year shall be permitted to be expended only in the immediately
following fiscal year.
SECTION 7.14 RENTAL OBLIGATIONS.
Enter into, or permit to remain in effect, any
Lease (other than Capitalized Leases that are governed by Section 7.13 hereof),
if, after giving effect thereto, the aggregate amount of all rentals and other
obligations, including, without limitation, all percentage rents and additional
rent, due from the Borrower, on a consolidated basis, thereunder would exceed
$3,000,000 during each fiscal year of the Borrower.
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SECTION 7.15 MANAGEMENT FEES.
Pay, or be or become obligated to pay, any
management fees to any Person, or any interest on any deferred obligation
therefor, including, without limitation, to any shareholder, director, officer
or employee of the Borrower.
SECTION 7.16 TRANSACTIONS WITH AFFILIATES.
Except as expressly permitted by this Agreement,
directly or indirectly: (a) make any Investment in an Affiliate; (b) transfer,
sell, lease, assign or otherwise dispose of any assets to an Affiliate; (c)
merge into or consolidate with or purchase or acquire assets from an Affiliate;
or (d) enter into any other transaction directly or indirectly with or for the
benefit of any Affiliate (including, without limitation, guarantees and
assumptions of obligations of an Affiliate); PROVIDED, HOWEVER, that: (i)
payments on Investments expressly permitted by Section 7.9 hereof may be made,
(ii) any Affiliate who is a natural person may serve as an employee or director
of the Borrower or any Guarantor and receive reasonable compensation for his
services in such capacity, and (iii) the Borrower or any Guarantor may enter
into any transaction with an Affiliate providing for the leasing of property,
the rendering or receipt of services or the purchase or sale of product,
inventory and other assets in the ordinary course of business or any of the
other activities referred to above if the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower or
such Guarantor as the monetary or business consideration that would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
SECTION 7.17 NO LOSS.
Have a Consolidated Net Loss in any fiscal quarter
of the Borrower.
ARTICLE 8. EVENTS OF DEFAULT.
If any one or more of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing, the Commitment shall terminate and the
entire unpaid balance of the principal of and interest on the Note outstanding
and all other obligations and Indebtedness of the Borrower to the Bank arising
hereunder and under the other Loan Documents shall immediately become due and
payable upon written notice to that effect given to the Borrower by the Bank
(except that in the case of the occurrence of any Event of Default described in
Section 8.6 no such notice shall be required), without presentment or demand
for payment, notice of non-payment, protest or further notice or demand of any
kind, all of which are expressly waived by the Borrower:
SECTION 8.1 PAYMENTS.
Failure to make any payment or mandatory repayment
of principal or interest upon the Note or to make any payment of
the Commitment Fee when due; or
SECTION 8.2 CERTAIN COVENANTS.
Failure to perform or observe any of the agree-
ments of the Borrower or any Guarantor contained in Section 6.9
or Article 7 hereof; or
SECTION 8.3 OTHER COVENANTS.
(a) Failure by the Borrower to perform or
observe any other term, condition or covenant of this Agreement or of any of
the other Loan Documents to which it is a party, which shall remain unremedied
for a period of thirty (30) days after notice thereof shall have been given to
the Borrower by the Bank; or
(b) Failure by any Guarantor to perform or
observe any term, condition or covenant of any of the Loan Documents to which
it is a party, which shall remain unremedied for a period of thirty (30) days
after notice thereof shall have been given to the Borrower by the Bank; or
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SECTION 8.4 OTHER DEFAULTS.
(a) Failure to perform or observe any term,
condition or covenant of any bond, note, debenture, loan agreement, indenture,
guaranty, trust agreement, mortgage or similar instrument to which the Borrower
or any Guarantor is a party or by which it is bound, or by which any of its
properties or assets may be affected (a "DEBT INSTRUMENT") beyond any
applicable period of grace provided in any such Debt Instrument, so that, as a
result of any such failure to perform, the Indebtedness included therein or
secured or covered thereby may be declared due and payable prior to the date on
which such Indebtedness would otherwise become due and payable; or
(b) Any event or condition referred to in any
Debt Instrument shall occur or fail to occur, so that, as a result thereof, the
Indebtedness included therein or secured or covered thereby may be declared due
and payable prior to the date on which such Indebtedness would otherwise become
due and payable; or
(c) Failure to pay any Indebtedness for borrowed
money due at final maturity or pursuant to demand under any Debt Instrument
beyond any applicable period of grace provided in any such Debt Instrument;
provided, however, that the provisions of this Section 8.4 shall not be
applicable to any Debt Instrument that on the date this Section 8.4 would
otherwise be applicable thereto, relates to or evidences Indebtedness in a
principal amount of less than One Hundred Thousand ($100,000) Dollars; or
SECTION 8.5 REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in writing to
the Bank in any of the Loan Documents or in connection with the making of the
Loans, or any certificate, statement or report made or delivered in compliance
with this Agreement, shall have been false or misleading in any material
respect when made or delivered; or
SECTION 8.6 BANKRUPTCY.
(a) The Borrower or any Guarantor shall make an
assignment for the benefit of creditors, file a petition in bankruptcy, be
adjudicated insolvent, petition or apply to any tribunal for the appointment of
a receiver, custodian, or any trustee for it or him or a substantial part of
its assets, or shall commence any proceeding under any bankruptcy, reorganiza-
tion, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect, or the
Borrower or any Guarantor shall take any corporate action to authorize any of
the foregoing actions; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it, that
remains undismissed for a period of sixty (60) days or more; or any order for
relief shall be entered in any such proceeding; or the Borrower or any
Guarantor by any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or the appointment
of a custodian, receiver or any trustee for it or any substantial part of any
of its properties, or shall suffer any custodianship, receivership or
trusteeship to continue undischarged for a period of sixty (60) days or more;
or
(b) The Borrower or any Guarantor shall
generally not pay its debts as such debts become due; or
(c) The Borrower or any Guarantor shall have
concealed, removed, or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors or any of them
or made or suffered a transfer of any of its property that may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or shall have
suffered or permitted, while insolvent, any creditor to obtain a Lien upon any
of its property through legal proceedings or distraint that is not vacated
within sixty (60) days from the date thereof; or
SECTION 8.7 JUDGMENTS.
Any uninsured judgment against the Borrower or any
Guarantor or any attachment, levy or execution against any of its properties
for any amount in excess of Two Hundred Fifty Thousand ($250,000) Dollars shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of thirty (30) days or more; or
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SECTION 8.8 ERISA.
(a) The termination of any Pension Plan or the
institution by the PBGC of proceedings for the involuntary termination of any
Pension Plan, in either case, that results in a liability exceeding $250,000;
or
(b) Failure by the Borrower to make required
contributions in excess of $250,000 in the aggregate, in accordance with the
applicable provisions of ERISA, to each of the Pension Plans hereafter
established or assumed by it; or
SECTION 8.9 LIENS.
Any of the Liens created and granted to the Bank
under the Security Documents shall fail to be valid, first, perfected Liens,
subject to no prior or equal Lien, except as permitted by Section 7.2 hereof;
or
SECTION 8.10 LICENSES AND PERMITS.
(i) Except as otherwise provided in Section 6.13
hereof, any license, permit, certificate, consent, approval or authorization
granted by any Federal authority or by any state or local commission or
authority (including, without limitation, the State Regulatory Agencies),
whether presently existing or hereafter granted to or obtained by the Borrower
or any Guarantor that is, in the reasonable judgment of the Bank, material to
the operations of the Borrower and the Guarantors, taken as a whole, shall
expire without renewal or shall be suspended or revoked and such expiration,
suspension or revocation is not fully remedied or cured within thirty (30) days
thereafter or otherwise stayed by legal proceedings, or (ii) the Borrower or
any Guarantor shall become subject to any injunction or other order prohibiting
it from operating under any such material license, permit, certificate,
consent, approval, authorization or agreement and such injunction or order is
not fully terminated, dissolved or rescinded within thirty (30) days thereafter
or otherwise stayed by legal proceedings; or (iii) the Borrower or any
Guarantor shall fail to apply for any license, permit, certificate, consent,
approval or authorization that is, in the reasonable judgment of the Bank,
material to the operations of the Borrower and the Guarantors, taken as a
whole, within thirty (30) days of the date required to be obtained; or
SECTION 8.11 REIMBURSEMENT ELIGIBILITY.
Except as otherwise provided in Section 6.13
hereof, the Borrower or any Guarantor shall lose its eligibility for
reimbursement as a provider of health care services under the Medicare or
Medicaid program or any other equivalent government insurance program that is a
successor thereto; or
SECTION 8.12 MATERIAL ADVERSE CHANGE.
Any material adverse change in the financial
condition of the Borrower and the Guarantors, taken as a whole.
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ARTICLE 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1 FEES AND EXPENSES; INDEMNITY.
(a) The Borrower will promptly pay all reasonable
costs of the Bank in preparing the Loan Documents and all reasonable costs
and expenses of the issue of the Note and of the Borrower's and the other
Loan Parties' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including,
without limitation, all costs of filing or recording any assignments,
mortgages, financing statements and other documents), and the reasonable fees
and expenses and disbursements of counsel to the Bank in connection with the
preparation, execution and delivery, administration, interpretation and
enforcement of this Agreement, the other Loan Documents and all other
agreements, instruments and documents relating to this transaction, the
consummation of the transactions contemplated by all such documents, the
preservation of all rights of the Bank, the negotiation, preparation,
execution and delivery of any amendment, modification or supplement of or to,
or any consent or waiver under, any such document (or any such instrument that
is proposed but not executed and delivered) and with any claim or action
threatened, made or brought against the Bank arising out of or relating to any
extent to this Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby.
(b) The Borrower will promptly pay all reasonable
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel) suffered or incurred by the Bank in connection
with its enforcement of the payment of the Note or any other sum due to it
under this Agreement or any of the other Loan Documents or any of its other
rights hereunder or thereunder.
(c) The Borrower shall indemnify the Bank and
its directors, officers, employees, attorneys, agents and Affiliates against,
and hold each of them harmless from, any loss, liabilities, damages, claims,
costs and expenses (including reasonable attorneys' fees and disbursements)
suffered or incurred by any of them arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of each of the
Loan Documents, the Loans and any and all transactions related to or
consummated in connection with the Loans (PROVIDED, HOWEVER, the Borrower
shall not be so required to indemnify the Bank for any such amounts which are
payable as a result of the gross negligence or wilfull misconduct of the
Bank), including, without limitation, losses, liabilities, damages, claims,
costs and expenses suffered or incurred by the Bank or its respective
directors, officers, employees, attorneys, agents or Affiliates arising out of
or related to any Environmental Liability or Environmental Proceeding, or in
investigating, preparing for, defending against, or providing evidence,
producing documents or taking any other action in respect of any commenced or
threatened litigation, administrative proceeding or investigation under any
federal securities law or any other statute of any jurisdiction, or any
regulation, or at common law or otherwise, that is alleged to arise out of or
is based upon: (i) any untrue statement or alleged untrue statement of any
material fact of the Borrower and its Affiliates in any document or schedule
filed with the Securities and Exchange Commission or any other governmental
body; (ii) any omission or alleged omission to state any material fact
required to be stated in such document or schedule, or necessary to make the
statements made therein, in light of the circumstances under which made, not
misleading; (iii) any acts, practices or omission or alleged acts, practices
or omissions the Borrower or its Affiliates related to the making of any
acquisition, purchase of shares or assets pursuant thereto, financing of such
purchases or the consummation of any other transactions contemplated by any
such acquisitions that are alleged to be in violation of any federal
securities law or of any other statute, regulation or other law of any
jurisdiction applicable to the making of any such acquisition, the purchase of
shares or assets pursuant thereto, the financing of such purchases or the
consummation of the other transactions contemplated by any such acquisition;
or (iv) any withdrawals, termination or cancellation of any such proposed
acquisition for any reason whatsoever.
(d) The indemnity set forth herein shall be in
addition to any other obligations or liabilities of the Borrower to the Bank
hereunder or at common law or otherwise. The provisions of this Section 9.1
shall survive the payment of the Note and the termination of this Agreement.
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SECTION 9.2 TAXES.
If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of any law
subsequently enacted, it shall be determined that any Federal, state or local
tax (other than taxes on income) is payable in respect of the issuance of the
Note, or in connection with the filing or recording of any assignments,
mortgages, financing statements, or other documents (whether measured by the
amount of Indebtedness secured or otherwise) as contemplated by this Agreement,
then the Borrower will pay any such tax and all interest and penalties, if any,
and will indemnify the Bank against and save it harmless from any loss or
damage resulting from or arising out of the nonpayment or delay in payment of
any such tax. If any such tax or taxes shall be assessed or levied against the
Bank or any other holder of the Note, the Bank, or such other holder, as the
case may be, may notify the Borrower and make immediate payment thereof,
together with interest or penalties in connection therewith, and shall
thereupon be entitled to and shall receive prompt reimbursement therefor from
the Borrower. Notwithstanding any other provision contained in this Agreement,
the covenants and agreements of the Borrower in this Section 9.2 shall survive
payment of the Note and the termination of this Agreement.
SECTION 9.3 PAYMENTS.
As set forth in Article 2 hereof, all payments by
the Borrower on account of principal, interest, fees and other charges
(including any indemnities) shall be made to the Bank at the Principal Office
of the Bank, in lawful money of the United States of America in immediately
available funds, by wire transfer or otherwise, not later than 11:00 A.M. New
York City time on the date such payment is due. Any such payment made on such
date but after such time shall, if the amount paid bears interest, be deemed to
have been made on, and interest shall continue to accrue and be payable thereon
until, the next succeeding Business Day. If any payment of principal or
interest becomes due on a day other than a Business Day, such payment may be
made on the next succeeding Business Day and such extension shall be included
in computing interest in connection with such payment. All payments hereunder
and under the Note shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments shall not be less
than the amounts otherwise specified to be paid under this Agreement and the
Note (after withholding for or on account of: (i) any future taxes, levies,
imposts, duties or other similar charges of whatever nature imposed by any
government or any political subdivision or taxing authority thereof, other
than any tax (except those referred to in clause (ii) below) on or measured by
the net income of the Bank to which any such payment is due pursuant to
applicable federal, state and local income tax laws, and (ii) deduction of
amounts equal to the taxes on or measured by the net income of the Bank
payable by the Bank with respect to the amount by which the payments required
to be made under this sentence exceed the amounts otherwise specified to be
paid in this Agreement and the Note). Upon payment in full of the Note, the
Bank shall xxxx the Note "Paid" and return it to the Borrower.
SECTION 9.4 SURVIVAL OF AGREEMENTS AND
REPRESENTATIONS; CONSTRUCTION.
All agreements, representations and warranties
made herein shall survive the delivery of this Agreement and the Note. The
headings used in this Agreement and the table of contents are for convenience
only and shall not be deemed to constitute a part hereof. All uses herein of
the masculine gender or of singular or plural terms shall be deemed to include
uses of the feminine or neuter gender, or plural or singular terms, as the
context may require.
SECTION 9.5 LIEN ON AND SET-OFF OF DEPOSITS.
As security for the due payment and performance of
all the Obligations, the Borrower hereby grants to Bank a Lien on any and all
deposits or other sums at any time credited by or due from the Bank to the
Borrower, whether in regular or special depository accounts or otherwise, and
any and all monies, securities and other property of the Borrower, and the
proceeds thereof, now or hereafter held or received by or in transit to the
Bank from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any such deposits, sums, monies,
securities and other property, may at any time after the occurrence and during
the continuance of any Event of Default be set-off, appropriated and applied by
the Bank against any of the Obligations. The Bank shall promptly notify the
Borrower of any set-off, appropriated and applied by the Bank against any of
the Obligations.
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SECTION 9.6 MODIFICATIONS, CONSENTS AND
WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of or with
respect to any provision of this Agreement, the Note, the Security Documents,
or any of the other Loan Documents and all other agreements, instruments and
documents delivered pursuant hereto or thereto, nor consent to any departure by
the Borrower from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by the Bank. Any such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No consent to or demand on the Borrower in any case shall, of
itself, entitle it to any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents embody the entire
agreement and understanding between the Bank and the Borrower and supersede all
prior agreements and understandings relating to the subject matter hereof.
SECTION 9.7 REMEDIES CUMULATIVE.
Each and every right granted to the Bank hereunder
or under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of the Bank or the holder of the Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due
payment and performance of the Obligations shall be without regard to any
counterclaim, right of offset or any other claim whatsoever that the Borrower
may have against the Bank and without regard to any other obligation of any
nature whatsoever that the Bank may have to the Borrower, and no such
counterclaim (other than compulsory counterclaims) or offset shall be asserted
by the Borrower in any action, suit or proceeding instituted by the Bank for
payment or performance of the Obligations.
SECTION 9.8 FURTHER ASSURANCES.
At any time and from time to time, upon the
request of the Bank, the Borrower shall execute, deliver and acknowledge or
cause to be executed, delivered and acknowledged, such further documents and
instruments and do such other acts and things as the Bank may reasonably
request in order to fully effect the purposes of this Agreement, the other Loan
Documents and any other agreements, instruments and documents delivered
pursuant hereto or in connection with the Loans.
SECTION 9.9 NOTICES.
All notices, requests, reports and other communi-
cations pursuant to this Agreement shall be in writing, either by letter
(delivered by hand or commercial messenger service or sent by certified mail,
return receipt requested, except for routine reports delivered in compliance
with Article 5 hereof which may be sent by ordinary first-class mail) or
telegram or telecopy, addressed as follows:
(a) If to the Borrower:
The Care Group, Inc.
Xxx Xxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
XxXxxxxxx Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) if to the Bank:
Key Bank of New York
0000 Xxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
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Vice President
Telecopier No: (000) 000-0000
with a copy (other than in the case
of Borrowing Notices and reports
and other documents delivered in
compliance with Article 5 hereof) to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is telecopied to such party at the telecopier
number specified above or delivered by hand or such commercial messenger
service to such party at its address specified above, or, if sent by mail, on
the third Business Day after the day deposited in the mail, postage prepaid, or
in the case of telegraphic notice, when delivered to the telegraph company,
addressed as aforesaid. Any party may change the person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
SECTION 9.10 COUNTERPARTS.
This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
SECTION 9.11 SEVERABILITY.
The provisions of this Agreement are severable,
and if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent and compliance by the Borrower with any of them
shall not excuse non-compliance by the Borrower with any other. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
SECTION 9.12 BINDING EFFECT; NO ASSIGNMENT
OR DELEGATION BY BORROWER.
This Agreement shall be binding upon and inure to
the benefit of the Borrower and its successors and to the benefit of the Bank
and its successors and assigns. The rights and obligations of the Borrower
under this Agreement shall not be assigned or delegated without the prior
written consent of the Bank, and any purported assignment or delegation without
such consent shall be void.
SECTION 9.13 ASSIGNMENTS AND PARTICIPATIONS
BY BANK.
The Bank may (i) assign its rights and delegate
its obligations under this Agreement with the prior consent of the Borrower,
which consent shall not be unreasonably withheld provided, such consent of the
Borrower shall not be required in the event of the occurrence of an Event of
Default hereunder, and (ii) further may assign or sell participations in all or
any part of the Commitment and/or the Loans made by it or any other interest
herein or in the Note to another bank or other entity on such terms and
conditions and to such participants as the Bank, in its sole discretion, shall
deem appropriate; and, in connection with any assignment or participation, the
Bank may disclose to the assignee or participant, any information relating to
the Borrower furnished to the Bank by or on behalf of the Borrower and the
Guarantors; provided that, prior to any such disclosure, the assignee or
participant shall agree to preserve the confidentiality of any confidential
information relating to the Borrower received by it from the Bank.
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SECTION 9.14 GOVERNING LAW; CONSENT TO JURIS-
DICTION; WAIVER OF TRIAL BY JURY.
(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND
ALL OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION
HEREWITH AND THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS.
(b) THE BORROWER IRREVOCABLY CONSENTS THAT ANY
LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER
RELATING TO THIS AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY
COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION
OR PROCEEDING. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY
COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED
FOR IN SECTION 9.9 HEREOF. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES
ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR
BASIS. THE BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO
ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE
STATE OF NEW YORK UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF
THE STATE OF NEW YORK. NOTHING IN THIS SECTION 9.14 SHALL AFFECT OR IMPAIR IN
ANY MANNER OR TO ANY EXTENT THE RIGHT OF THE BANK TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY JURISDICTION OR TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.
(c) THE BORROWER AND THE BANK WAIVE TRIAL BY
JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the date first above written.
THE CARE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------
Name: Xxxxxxx X. Xxxx
Title: President
KEY BANK OF NEW YORK
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
-41-
EXHIBITS AND SCHEDULES
TO LOAN AGREEMENT
BY AND BETWEEN
THE CARE GROUP, INC.
AND
KEY BANK OF NEW YORK
EXHIBITS
A Form of Note
B Form of Borrowing Base Certificate
SCHEDULES
3.1 States of Incorporation and Qualification of Borrower
and Subsidiaries
3.2 Consents, Waivers, Approvals; Violation of Agreements
3.6 Judgments, Actions, Proceedings
3.7 Defaults; Compliance with Laws, Regulations, Agreements
3.8 Burdensome Documents
3.11 Patents, Trademarks, Trade Names, Service
Marks, Copyrights
3.13 Name Changes, Mergers, Acquisitions
3.15 Permits, Licenses, Government Consents
3.16 Labor Disputes, Collective Bargaining Agreements,
Employee Grievances
3.18 Pension Plans
7.1 Permitted Indebtedness
7.2 Permitted Security Interests, Liens and Encumbrances
