1
EXHIBIT 4.5
CREDIT AGREEMENT
among
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
as Agent
VARIOUS LENDERS
and
BRIM, INC.
as Borrower
$35,000,000 Term Loan Facility
$65,000,000 Revolving Credit Facility
December 17, 1996
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TABLE OF CONTENTS
Page
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RECITALS -1-
ARTICLE I
DEFINITIONS -2-
1.1. Defined Terms -2-
1.2. Accounting Terms -27-
1.3. Singular/Plural -28-
1.4. Other Terms -28-
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;LETTERS OF CREDIT -28-
2.1. The Loans -28-
2.2. Borrowings -29-
2.3. Notes -33-
2.4. Termination and Reduction of Commitments and Swingline Commitment -33-
2.5. Payments; Voluntary, Mandatory -34-
2.6. Interest -37-
2.7. Fees -38-
2.8. Interest Periods -39-
2.9. Conversions and Continuations -40-
2.10. Method of Payments; Computations -41-
2.11. Increased Costs, Change in Circumstances, Etc. -42-
2.12. Taxes. -44-
2.13. Compensation -46-
2.14. Use of Proceeds -47-
2.15. Recovery of Payments -47-
2.16. Pro Rata Treatment -47-
2.17. Letters of Credit -48-
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING -54-
3.1. Closing -54-
3.2. Conditions of Loans and Advances -54-
3.2.1. Executed Loan Documents -54-
3.2.2. Closing Certificates; Etc. -55-
3.2.3. Consents; No Adverse Change -57-
3.2.4. Financial Matters -57-
3.2.5. Certain Transactions -58-
3.2.6. Principal Loan Termination -59-
3.2.7. Miscellaneous -59-
3.3. Conditions to All Loans and Advances -59-
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3.4. Waiver of Conditions Precedent -60-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES -60-
4.1. Corporate Organization and Power; Capital Structure -60-
4.2. Subsidiaries -61-
4.3. Enforceability of Loan Documents; Compliance with Other Instruments -61-
4.4. Use of Proceeds -61-
4.5. Governmental Authorization -62-
4.6. Financial Statements -62-
4.7. Solvency -63-
4.8. Places of Business -63-
4.9. Leased Properties -63-
4.10. Realty -64-
4.11. Assets for Conduct of Business -64-
4.12. Insurance -64-
4.13. Ownership of Properties -64-
4.14. First Priority -64-
4.15. Litigation; Government Regulation -65-
4.16. Taxes -65-
4.17. ERISA; Employee Benefits -65-
4.18. Compliance with Laws -66-
4.19. Environmental Matters -66-
4.20. Margin Securities -67-
4.21. Full Disclosure -68-
4.22. Contracts; Labor Disputes -68-
4.23. Reimbursement from Third Party Payors -68-
4.24. Fraud and Abuse -68-
4.25. Certain Agreements -69-
4.26. Event of Default -69-
4.27. Ownership of Stock of Borrower -69-
4.28. Single Business Enterprise -69-
4.29. Updates to Schedules -69-
ARTICLE V
AFFIRMATIVE COVENANTS -70-
5.1. Financial and Business Information about the Borrower -70-
5.2. Notice of Certain Events -72-
5.3. Corporate Existence and Maintenance of Properties -73-
5.4. Maintenance of Insurance -74-
5.5. Maintenance of Books and Records; Inspection -75-
5.6. Compliance with ERISA -75-
5.7. Payment of Taxes -75-
5.8. Compliance with Laws -75-
5.9. Name Change -76-
5.10. Disbursement of Proceeds by the Borrower -76-
5.11. Creation or Acquisition of New Subsidiaries -76-
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5.12. Certain Permitted Acquisitions; Asset Purchases -77-
5.13. Swap Agreement -78-
5.14. Acquisition of Realty -78-
5.15. Further Assurances -79-
5.16. Cash Deposits -79-
5.17. Purchase of Ojai Valley Community Hospital -79-
ARTICLE VI
NEGATIVE COVENANTS -79-
6.1. Merger, Consolidation -79-
6.2. Debt -80-
6.3. Contingent Obligations -81-
6.4. Liens and Encumbrances -82-
6.5. Disposition of Assets -82-
6.6. Transactions with Related Persons -82-
6.7. Restricted Investments -82-
6.8. Restricted Payments; Certain Distributions -83-
6.9. Consolidated Adjusted Debt to Annualized Consolidated EBITDAR -84-
6.10. Consolidated Adjusted Senior Debt to Annualized Consolidated EBITDAR -84-
6.11. Minimum Consolidated EBITDAR -84-
6.12. Minimum Net Worth -85-
6.13. Annualized Consolidated EBITDAR to Annualized Interest Expense and Annualized Lease
Expense -85-
6.14. Fixed Charge Coverage -85-
6.15. Capital Expenditures -85-
6.16. Sale and Leaseback -85-
6.17. New Business -86-
6.18. Subsidiaries or Partnerships -86-
6.19. Management Contracts -86-
6.20. Limitation on Certain Restrictions -86-
6.21. No Other Negative Pledges -86-
6.22. Hazardous Wastes -86-
6.23. Fiscal Year -87-
6.24. Amendments; Prepayments of Debt, Etc. -87-
6.25. Location of Assets; Places of Business -87-
6.26. Account Documents -87-
6.27. No Inconsistent Transactions or Agreements -88-
6.28. Fraud and Abuse. -88-
6.29. Parkview Regional Hospital/EBITDAR to Facility Rent Expense. -88-
ARTICLE VII
EVENTS OF DEFAULT -88-
7.1. Events of Default -88-
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ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT -91-
8.1. Remedies; Termination of Commitments, Acceleration, Etc. -91-
8.2. Right of Setoff -92-
8.3. Rights and Remedies Cumulative; Non-Waiver; Etc. -92-
ARTICLE IX
THE AGENT -92-
9.1. Appointment -92-
9.2. Nature of Duties -93-
9.3. Exculpatory Provisions -93-
9.4. Reliance by the Agent -93-
9.5. Non-Reliance on Agent and Other Lenders -94-
9.6. Notice of Default -94-
9.7. Indemnification -94-
9.8. The Agent in its Individual Capacity -95-
9.9. Successor Agent -95-
9.10. Collateral Matters -96-
9.11. Issuing Bank and Swingline Lender -96-
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ARTICLE X
MISCELLANEOUS -96-
10.1. Survival -96-
10.2. Governing Law; Consent to Jurisdiction -97-
10.3. Arbitration; Remedies -97-
10.4. Notice -98-
10.5. Assignments, Participations -100-
10.6. Fees and Expenses -102-
10.7. Indemnification -103-
10.8. Amendments, Waivers, Etc. -104-
10.9. Rights and Remedies Cumulative, Non-Waiver, Etc. -104-
10.10. Binding Effect, Assignment -105-
10.11. Severability -105-
10.12. Entire Agreement -105-
10.13. Interpretation -105-
10.14. Counterparts; Effectiveness -105-
10.15. Conflict of Terms -105-
10.16. Injunctive Relief -106-
10.17. Confidentiality -106-
10.18. Post-Closing Matters -106-
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EXHIBITS
A-1 Form of Term Note
A-2 Form of Revolving Credit Note
A-3 Form of Swingline Note
B-1 Notice of Borrowing
B-2 Notice of Conversion/Continuation
B-3 Notice of Swingline Borrowing
B-4 Letter of Credit Request
C Compliance Certificate
Attachment A: Covenant Compliance Worksheet
Attachment B: Interest Rate Calculation Worksheet
D Assignment and Acceptance Agreement
E Financial Condition Certificate
F Revolving Credit Borrowing Availability Certificate
SCHEDULES
1.1(a) Existing Liens
4.1 Foreign Jurisdiction; Names
4.1(b) Convertible and Other Securities
4.2 Subsidiaries
4.3 Compliance with Other Instruments
4.8 Principal Places of Business
4.9 Leased Properties
4.10 Realty
4.12 Insurance
4.13 Title to Assets
4.15 Litigation; Government Regulation
4.16 Taxes
4.17 ERISA Matters
4.19 Environmental Matters
4.27 Ownership of Stock of Borrower
6.2 Existing Debt
6.3 Contingent Obligations
6.6 Transactions with Related Persons
6.7(e) Restricted Investments
6.8 Distributions
6.19 Intercompany Note
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 17th day of December, 1996 (the
"Credit Agreement" or "Agreement"), is made among BRIM, INC., an Oregon
corporation with its principal offices in Nashville, Tennessee, which will
change its name after the Closing Date to "Principal Hospital Company" (the
"Borrower"); the banks and other financial institutions from time to time
parties hereto (each, a "Lender," and collectively, the "Lenders"); and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the "Agent") and as Issuing
Bank.
RECITALS
A. The Borrower has applied to the Lenders for (i) a term loan in the
principal amount of $35,000,000, and (ii) a revolving credit loan in the
aggregate principal amount of up to $65,000,000, to be advanced by the Lenders
in accordance with the terms hereof.
B. The Subsidiaries of the Borrower will jointly and severally
guarantee all of the obligations of the Borrower hereunder and under the other
Loan Documents (as hereinafter defined). The Borrower and all guarantors will
each pledge their respective assets to secure its obligations hereunder and
under the other Loan Documents.
C. Immediately prior to the date hereof, certain officers and
shareholders of the Borrower formed Carryco, Inc., an Oregon corporation, and
contributed to the capital of Carryco, Inc. their shares of the Borrower valued
at approximately $4,000,000. Carryco, Inc. then merged with and into the
Borrower, with the Borrower as the surviving entity. Under the terms of such
merger, the shareholders of Carryco, Inc. received common stock of the Borrower
in exchange for their shares in Carryco, Inc., the remaining shareholders of
the Borrower received or continued to hold certain preferred and redeemable
preferred stock, and the treasury shares (formerly held by Carryco, Inc.) were
cancelled.
D. Immediately prior to the date hereof, pursuant to a plan of merger,
the Borrower merged its wholly-owned subsidiary, Brim Senior Living, Inc. with
and into Encore Senior Living, LLC and sold to Encore Senior Living, LLC certain
assets of the Borrower used in connection with the operation of the senior
living business for cash in the aggregate approximate amount of $15,000,000.
E. Prior to the date hereof, the Borrower also sold certain other
assets, as identified in the Investment Agreement (as hereafter defined) for
aggregate consideration of approximately $3,400,000 plus assumed liabilities.
F. As of the date hereof, and simultaneously with the closing of the
transactions under this Agreement, Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
and certain other investors shall purchase junior preferred and common stock of
the Borrower for approximately $7,500,000 in cash, Leeway & Co. shall purchase
senior and junior preferred stock, common stock and warrants to purchase common
stock of the Borrower for approximately $24,100,000 in cash and the Borrower
shall use the proceeds of such stock issuance, together with a portion of the
proceeds of the loans to be provided hereunder, to redeem all of the previously
outstanding shares of redeemable preferred stock and preferred stock for
approximately $74,000,000 in cash.
G. As of the date hereof and immediately following the closing of the
transactions under this Agreement, Principal Hospital Company will merge with
Principal Merger Company, a subsidiary of the
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Borrower, and Principal, which will change its name subsequent to the Closing,
as the surviving corporation, will also become a Guarantor (as hereinafter
defined) of the Borrower's obligations hereunder.
H. The parties acknowledge that this Credit Agreement and each of the
other Loan Documents (as hereinafter defined) have been negotiated and delivered
in Charlotte, North Carolina.
I. The Lenders are willing to make the Loans described herein based
on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders, the
Issuing Bank and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Credit Agreement,
in addition to the terms defined elsewhere in this Credit Agreement, the
following terms shall have the meanings set forth below:
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer of the Borrower,
listing any one or more accounts to which the Borrower may from time to time
request the Agent to forward the proceeds of any Loans made hereunder.
"Accounts" shall mean all "accounts," within the meaning of the Uniform
Commercial Code, of the Borrower and each of its Subsidiaries, including,
without limitation, (to the extent permitted by law) any existing and future
Medicare, Medicaid, MediCal and other similar accounts receivable.
"Acquisition" shall mean any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more of its Subsidiaries, or any combination thereof, of (i) all or a
substantial part of the assets, equity or a going business or division, of any
Person, whether through purchase of assets or securities, by merger or
otherwise, (ii) control of at least a majority of the outstanding securities of
an existing corporation ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors or (iii)
control of a greater than 50% ownership interest in any existing partnership,
joint venture or other Person.
"Acquisition Amount" shall mean, with respect to any Permitted
Acquisition, the sum (without duplication) of (i) the amount of cash paid by the
Borrower and its Subsidiaries in connection with such Permitted Acquisition,
(ii) the Fair Market Value of all capital stock or other ownership interests of
the Borrower or any of its Subsidiaries issued or given in connection with such
Permitted Acquisition, (iii) the amount (determined by using the face amount or
the amount payable at maturity, whichever is greater) of all Debt incurred,
assumed or acquired in connection with such Permitted Acquisition, (iv) all
additional purchase price amounts in the form of earnouts and other contingent
obligations, (v) all amounts paid in respect of covenants not to compete,
consulting agreements and other affiliated contracts in connection with such
Permitted Acquisition other than bona fide employment and similar agreements not
a part of the allocation of the purchase price, and (vi) the aggregate fair
market value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Permitted Acquisition. All Capital
Expenditures made or projected to be incurred by the Borrower or its
Subsidiaries within ninety (90) days and in connection with any Permitted
Acquisition shall be included in the
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Acquisition Amount attributable to such Permitted Acquisition and shall not be
included in the calculation of Capital Expenditures for purposes of SECTION
6.15.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate per annum equal to the Base Rate plus the Applicable Margin
for Base Rate Loans, each as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate plus the Applicable Margin for
LIBOR Loans, each as in effect at such time.
"Affiliate" shall mean, as to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean First Union, in its capacity as agent as appointed
in ARTICLE IX hereof, and its permitted successors and assigns.
"Agreement" or "this Agreement" or "Credit Agreement" shall mean this
Credit Agreement and any amendments, modifications and supplements hereto, any
replacements, renewals, extensions and restatements hereof, and any substitutes
herefor, in whole or in part, and all schedules and exhibits hereto, and shall
refer to this Agreement as the same may be in effect at the time such reference
becomes operative.
"Annualized Capital Expenditures" shall mean (i) as of March 31, 1997,
Capital Expenditures for the fiscal quarter ending on such date, multiplied by
four (4), and (ii) as of June 30, 1997 and as of the last day of any fiscal
quarter thereafter, Capital Expenditures for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2).
"Annualized Cash Taxes" shall mean (i) as of March 31, 1997, Cash Taxes
for the fiscal quarter ending on such date, multiplied by four (4), and (ii) as
of June 30, 1997 and as of the last day of any fiscal quarter thereafter, Cash
Taxes for the two (2) consecutive fiscal quarters ending on such date,
multiplied by two (2).
"Annualized Consolidated EBITDAR" shall mean (i) as of March 31, 1997,
Consolidated EBITDAR for the fiscal quarter ending on such date, multiplied by
four (4), and (ii) as of June 30, 1997 and as of the last day of any fiscal
quarter thereafter, Consolidated EBITDAR for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2).
"Annualized Facility Rent Expense" shall mean (i) as of March 31, 1997,
Facility Rent Expense for the fiscal quarter ending on such date, multiplied by
four (4), and (ii) as of June 30, 1997 and as of the last day of any fiscal
quarter thereafter, Facility Rent Expense for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2).
"Annualized Interest Expense" shall mean (i) as of March 31, 1997,
Interest Expense for the fiscal quarter ending on such date, multiplied by four
(4), and (ii) as of June 30, 1997 and as of the last day of any fiscal quarter
thereafter, Interest Expense for the two (2) consecutive fiscal quarters ending
on such date, multiplied by two (2).
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"Annualized Lease Expense" shall mean (i) as of March 31, 1997, Lease
Expense for the fiscal quarter ending on such date, multiplied by four (4), and
(ii) as of June 30, 1997 and as of the last day of any fiscal quarter
thereafter, Lease Expense for the two (2) consecutive fiscal quarters ending on
such date, multiplied by two (2).
"Applicable Margin" shall mean, at any time with respect to any Loan,
the applicable percentage points as determined under the following matrix with
reference to the ratio of Consolidated Adjusted Debt to Annualized Consolidated
EBITDAR calculated as provided below:
Ratio of Consolidated Adjusted
Debt to Annualized Applicable Margin Applicable Margin
Consolidated EBITDAR (Base Rate) (LIBOR Rate)
-------------------- ------------------ -----------------
Equal or greater than
3.75 to 1.0 1.00% 2.50%
Less than 3.75 to 1.0
but greater than or equal
3.25 to 1.0 0.75% 2.25%
Less than 3.25 to 1.0
but greater than or equal
2.75 to 1.0 0.50% 2.00%
Less than 2.75 to 1.0
but greater than or equal
2.0 to 1.0 0.25% 1.75%
Less than 2.0 to 1.0 0.00% 1.50%
From the Closing Date until the fifth (5th) Business Day after receipt by the
Agent of the financial statements for the fiscal quarter ended June 30, 1997
pursuant to SECTION 5.1(A) below, the Applicable Margin shall be 2.50% for LIBOR
Loans and 1.00% for Base Rate Loans. The Applicable Margins shall be reset from
time to time in accordance with the above matrix on the fifth (5th) Business Day
after receipt by the Agent in accordance with SECTIONS 5.1(A) or (B) of
financial statements together with a Compliance Certificate attaching an
Interest Rate Calculation Worksheet (reflecting the computation of the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR as of the last day
of the preceding fiscal quarter or fiscal year, as appropriate) that provides
for different Applicable Margins than those then in effect.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement entered into between a Lender and an Eligible Assignee, and accepted
by the Agent, in substantially the form of EXHIBIT D.
"Assignment Restrictions" shall mean (i) with respect to any contracts
or agreements assigned to the Agent, on behalf of the Lenders, as Collateral by
the Borrower or any of its Subsidiaries, any restriction or prohibition on
assignment that has not been waived or consented to by the Person for whose
benefit such restriction or prohibition exists; provided that such restriction
or prohibition will not be permitted if the Agent has required such waiver or
consent, such requirement of waiver or consent not to unreasonably interfere
with the ordinary course of business of the Borrower and its Subsidiaries and
may only be required with respect to a
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material contract, and (ii) with respect to Medicare, Medicaid and MediCal
accounts receivable, assignment restrictions as provided in the Medicare
Regulations, the Medicaid Regulations and the MediCal Regulations.
"Authorized Officer" shall mean any of (i) the President, Chief
Financial Officer, Vice President-Controller or Treasurer, and (ii) any other
officer of the Borrower authorized by resolution of the board of directors of
the Borrower to take the action specified herein with respect to such officer
and whose signature and incumbency shall have been certified to the Agent by the
secretary or an assistant secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as amended,
and any successor statute or statute having substantially the same function.
"Base Rate" shall mean the higher of (i) the Prime Rate, or (ii)
one-half percentage point (0.5%) in excess of the Federal Funds Rate, as
adjusted to conform to changes as of the opening of business on the date of any
such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the Adjusted Base Rate.
"Bloodborne Pathogens Standard" shall mean the Final Standard for
Occupational Exposure to Bloodborne Pathogens promulgated by OSHA at 56 Federal
Register 64004 et seq. (December 6, 1991) and codified at 29 C.F.R. ss.
1910.1030, or any similar regulation promulgated by any Governmental Authority.
"Borrower" shall mean Brim, Inc., an Oregon corporation, and its
successors and assigns which will change its name after the Closing Date to
"Principal Hospital Company."
"Borrowing" shall mean the incurrence by the Borrower on a given date
(including as a result of conversions of outstanding Loans pursuant to SECTION
2.9) of one Type of Loan (or a Swingline Loan made by the Swingline Lender)
under a single Credit Facility, having in the case of LIBOR Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to SECTION
2.11(C) shall be considered part of the related Borrowing of LIBOR Loans.
"Borrowing Date" shall have the meaning assigned to such term in
SECTION 2.2(B).
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan or any Swap Agreement, any such day that is also a day
on which tradings are conducted in the London interbank Eurodollar market.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Expenditures" shall mean the aggregate amount of all
expenditures and liabilities (including, without limitation, Capital Lease
Obligations) made and incurred in respect of the acquisition by any Borrower or
any of its Subsidiaries of Capital Assets, but excluding Capital Assets acquired
in the form of a Permitted Acquisition.
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"Capital Lease" shall mean any lease of any property that would, in
accordance with Generally Accepted Accounting Principles, be required to be
classified and accounted for as a capital lease on the balance sheet of the
lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with Generally Accepted Accounting Principles, appear on a balance
sheet as a liability of such lessee in respect of such Capital Lease.
"Capitalized Costs" shall mean the aggregate amount of all cash
expenditures that would, in accordance with Generally Accepted Accounting
Principles, be required to be classified and accounted for on a capitalized
basis, except those cash expenditures that are included in plant, property and
equipment on the balance sheet.
"Cash Collateral Account" shall have the meaning assigned to such term
in SECTION 2.17(I).
"Cash Investments" shall mean (i) marketable direct obligations (x)
issued or unconditionally guaranteed by the United States of America or (y)
issued by any agency thereof having a rating of A or higher by Standard & Poor's
or A-2 or higher by Xxxxx'x Investors Service, Inc., in each case maturing
within one year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Services or Xxxxx'x Investors Service, Inc.; (iii) marketable commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 or the equivalent
thereof by Standard & Poor's Rating Services or at least P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc.; (iv) demand deposits, time deposits
and certificates of deposit maturing within one (1) year from the date of
issuance thereof and issued by a Lender or a bank or trust company organized
under the laws of the United States of America or any state thereof and having a
long term debt rating by Standard & Poor's Rating Services of A or higher; (v)
repurchase agreements with a term not exceeding seven days with respect to
underlying securities of the types described in clause (I) above entered into
with a bank or trust company meeting the qualifications specified in clause (IV)
above; and (vi) mutual funds that invest solely in any of the items described
above.
"Cash Taxes" shall mean, for any fiscal quarter, the aggregate amount
of cash payments made by or on behalf of the Borrower or any Subsidiaries to
Governmental Authorities for taxes, levies, charges or withholdings during such
fiscal quarter.
"Change of Control" shall mean (i) GTCR shall cease to be the
"beneficial owner" (within the meanings of Rules 13d-3 and 13d-5 under the
Exchange Act) of securities of the Borrower representing twenty percent (20%) or
more of the combined voting power of the then outstanding securities of the
Borrower ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, assuming the conversion,
exchange or exercise into or for voting stock of all outstanding shares so
convertible, or (ii) any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), shall, directly or indirectly, as a result of a
tender or exchange offer, open market purchases, privately negotiated purchases
or otherwise, other than GTCR, have become, after the Closing Date, the
"beneficial owner" of securities of the Borrower representing 30% or more of the
combined voting power of the then outstanding securities of the Borrower
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors, assuming the conversion,
exchange or exercise into or for voting stock of all outstanding shares so
convertible, or (iii) the members of the Board of Directors of the Borrower
shall cease to consist of a majority of the individuals (y) who constituted the
Board of Directors as of the date hereof or (z) who shall have become members
thereof subsequent to the date hereof after having been nominated, or otherwise
approved in
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writing, by at least a majority of individuals who constituted the Board of
Directors of the Borrower as of the date hereof. For purposes of this
definition, "voting power" shall be determined with reference to the then
outstanding securities of the Borrower ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors, assuming the conversion, exchange or exercise into or for voting
stock of all outstanding securities of the Borrower other than voting stock.
"Closing" shall have the meaning assigned to such term in SECTION 3.1.
"Closing Date" shall mean the date referred to in SECTION 3.1 hereof.
"Collateral" shall mean all assets, property and interests in property
of the Borrower and its Subsidiaries, whether now owned or hereafter acquired,
that shall, from time to time, directly or indirectly secure the Credit
Obligations or the Guaranty Obligations, including, without limitation, the
assets, property or interests in property described in the Security and Pledge
Agreement.
"Commitment" shall mean, for any Lender, such Lender's Term Loan
Commitment plus its Revolving Credit Commitment.
"Commitment Letter" shall mean the commitment letter to Principal from
First Union National Bank of North Carolina dated September 13, 1996, confirming
its commitment to provide the Revolving Credit Facility and the Term Loan
Facility pursuant to this Agreement.
"Compliance Certificate" shall mean a fully completed certificate in
the form of EXHIBIT C.
"Consolidated Adjusted Debt" shall mean the sum of (a) Consolidated
Debt, and (b) the product of (i) Annualized Facility Rent Expense, multiplied by
(ii) eight (8).
"Consolidated Adjusted Senior Debt" shall mean, at any time,
Consolidated Adjusted Debt less Subordinated Debt.
"Consolidated Debt" shall mean, at any date, the aggregate (without
duplication) of all Debt of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis.
"Consolidated EBITDAR" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any period, EBITDAR
for the period ending on such date determined in accordance with Generally
Accepted Accounting Principles. Consolidated EBITDAR shall be deemed to include,
without duplication, historical Consolidated EBITDAR, of any business acquired
and operated by the Borrower or any Subsidiary after the commencement of the
relevant measurement period, as if such business had been acquired by the
Borrower or such Subsidiary as of the first day of such measurement period,
subject to pro forma expense adjustments as set forth below; provided that such
Consolidated EBITDAR is supported by financial statements, tax returns or other
financial data acceptable to the Agent in its sole discretion. Calculations of
Consolidated EBITDAR shall exclude the results of operations of any entity
disposed of by the Borrower or any Subsidiary at any time after the first day of
the relevant measurement period. Consolidated EBITDAR shall be adjusted for pro
forma expense adjustments in connection with newly acquired entities, if and
only to the extent approved in writing by the Required Lenders.
"Consolidated Net Income" shall mean, for any fiscal quarter, the net
income (or loss) of the Borrower and its Subsidiaries, on a consolidated basis
and excluding intercompany items, for such quarter, determined in accordance
with Generally Accepted Accounting Principles, but excluding the effect of: (a)
gains on the sale,
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conversion or other disposition of Capital Assets, (b) gains on the acquisition,
retirement, sale or other disposition of stock of the Borrower or any of its
Subsidiaries, (c) gains on the collection of life insurance proceeds, (d) any
write-up of any asset, (e) any other gain or credit of an extraordinary nature,
(f) transaction fees and expenses not to exceed $5,000,000 in connection with
the transactions contemplated by this Agreement, the Investment Agreement, the
Securities Purchase Agreement and the Principal Merger Transaction, and (g)
noncash losses approved in writing by the Agent.
"Consolidated Net Revenues" shall mean, for any fiscal quarter, the net
revenues of the Borrower and its Subsidiaries, on a consolidated basis and
excluding intercompany items, for such quarter, determined in accordance with
Generally Accepted Accounting Principles.
"Consolidated Net Worth" shall mean, as of the last day of any fiscal
year, the net worth of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Debt, lease,
dividend, guaranty, letter of credit (other than a standby letter of credit with
no reasonable likelihood of draw, in the reasonable opinion of the Agent) or
other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligations, (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor in respect thereof to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss or failure or inability of
the primary obligor to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Corporate Overhead" shall mean all costs and expenses of the Borrower
and its Subsidiaries of an overhead, or general and administrative, nature (but
specifically excluding the overhead, or general and administrative, costs and
expenses of the hospitals and facilities operated by the Borrower and its
Subsidiaries).
"Covenant Compliance Worksheet" shall mean a fully completed
certificate in the form of Attachment A to EXHIBIT C.
"Credit Facility" shall mean the Term Loan Facility or the Revolving
Credit Facility, as the context may require.
"Credit Obligations" shall mean and include (i) the Loans, any
Reimbursement Obligations and all other loans, advances, indebtedness,
liabilities and obligations owing, arising, due or payable from the Borrower to
the Agent, the Issuing Bank or any Lender of any kind or nature, present or
future, howsoever evidenced, created, incurred, acquired or owing, that arise
under this Agreement, the Notes or the other Loan Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, and (ii) all interest (including, to the extent permitted
by law, all post-petition interest), charges, expenses, fees, attorneys' fees
and any other sums payable by the Borrower to the Agent, the Issuing Bank or any
Lender under this Agreement or any of the other Loan Documents.
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"Debt" shall mean, with respect to any Person or group of Persons,
without duplication, (i) all indebtedness of such Person for money borrowed,
(ii) all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not
matured), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iv) all obligations of such Person to pay
the deferred purchase price of property or services (including earnouts and
other similar contingent obligations, calculated in accordance with Generally
Accepted Accounting Principles), other than trade payables, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (vi) all Capital Lease
Obligations of such Person, (vii) all obligations under any Swap Agreement or
other interest rate protection or hedging arrangement, (viii) all obligations of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any capital stock or other equity securities that, by their stated
terms (or by the terms of any equity securities issuable upon conversion thereof
or in exchange therefor), or upon the occurrence of any event, mature or are
mandatorily redeemable, or are redeemable at the option of the holder thereof,
in whole or in part, (ix) all indebtedness referred to in clauses (I) through
(VIII) above secured by any lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by such Person or is nonrecourse to the credit of such Person, and (x)
any Contingent Obligation of such Person to the extent that such Contingent
Obligation that in accordance with Generally Accepted Accounting Principles
would be set forth in a specific dollar amount on the liability side of a
balance sheet, and excluding any guaranty of Debt related to an operating lease,
provided that such guaranty will be included as a Contingent Obligation if the
guaranty is called and there is not a corresponding forgiveness of lease
payments in like amounts commencing in the order due.
"Default" shall mean any event that, with the passage of time or giving
of notice, or both, would constitute an Event of Default.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDAR" shall mean, for any Person for any fiscal quarter, (i)
Consolidated Net Income, plus (ii) the sum of Interest Expense, taxes,
depreciation, amortization, and Facility Rent Expense.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the OECD or a political subdivision of any
such country and having total assets in excess of $1,000,000,000, provided that
such bank is acting through a branch or agency located in the United States, in
the country under the laws of which it is organized or in another country that
is also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual fund, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $250,000,000, (v) any Affiliate of an existing Lender
or (vi) any other Person (other than an Affiliate of any Borrower) approved by
the Agent and the Borrower, which approval shall not be unreasonably withheld.
"Employee Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA maintained by the Borrower or any of its
Subsidiaries.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than internal
reports prepared by the Borrower or any of its Subsidiaries solely in the
ordinary course of its business and not in response to any third party action or
request of any kind) or proceedings relating in any way to any
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Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereinafter, "Claims"), including, without limitation, (i)
any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human safety, health or the environment, (iii) any
violation or alleged violation of any Environmental Law or other legal
requirement by Borrower or its Subsidiaries with respect to any property owned,
leased or operated by Borrower or its Subsidiaries (in the past, currently or in
the future), and/or (iv) any presence, suspected presence, generation,
treatment, storage, disposal, transport, movement, release, suspected release or
threatened release of any Hazardous Material in, on, to or from any property (or
any part thereof including without limitation the soil and groundwater thereon
and thereunder) owned, leased or operated by Borrower or its Subsidiaries (in
the past, currently or in the future).
"Environmental Laws" shall mean any and all applicable laws, subsequent
enactments, amendments and modifications, including, without limitation,
federal, state and local laws, statutes, ordinances, rules, regulations,
permits, licenses, approvals, and orders of courts or Governmental Authorities,
relating to the protection of human health or the environment, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances. Environmental Laws include, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et
seq.) ("CERCLA"), the Hazardous Material Transportation Act (49 U.S.C. ss. 1801
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et
seq.) ("RCRA"), the Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et
seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), the Safe Drinking Water Act (42 U.S.C.
ss. 300f, et seq.), the Environmental Protection Agency's regulations relating
to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational
Safety and Health Act (29 U.S.C. ss. 651 et seq.), to the extent that it
regulates exposure to Hazardous Substances, ("OSHA"), as such laws have been
amended or supplemented, and any analogous future federal or state, or present
or future applicable local, statutes and the rules and regulations promulgated
thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan (as defined in SECTION 4.17); (b) a withdrawal by the Borrower or any of
its Subsidiaries from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA); (c) a complete or partial withdrawal by the Borrower or
any of its Subsidiaries from a Multiemployer Plan; (d) the filing of a notice of
intent to terminate, the treatment of a plan amendment as a termination under
Section 4041 or 4041A of ERISA or the commencement of proceedings by the Pension
Benefit Guaranty Corporation to terminate a Qualified Plan or Multiemployer Plan
subject to Title IV of ERISA; (e) a failure to make required contributions to a
Qualified Plan or Multiemployer Plan; (f) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Qualified
Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than Pension Benefit Guaranty Corporation premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any of its
Subsidiaries; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Internal Revenue Code with
respect to any Qualified Plan; (i) the Borrower or any of its Subsidiaries
engages in or otherwise becomes liable for a nonexempt prohibited transaction;
or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA
or the exclusive benefit rule under Section 401(a) of the Internal Revenue Code
by any fiduciary with respect to any Qualified Plan for which the Borrower or
any of its Subsidiaries may be directly or indirectly liable.
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"Event of Default" shall have the meaning specified in ARTICLE VII
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"Facility" shall mean a hospital or other health care facility,
together with other ancillary businesses, all buildings and improvements
associated therewith, that are owned or leased in whole or in part, by the
Borrower or any of its Subsidiaries.
"Facility Rent Expense" shall mean, for any fiscal quarter, all amounts
paid, payable or accrued during such fiscal quarter by the Borrower and its
Subsidiaries on a consolidated basis with respect to all operating leases of
hospitals and the operating lease of any other facility with a Lease Expense in
excess of $200,000 annually.
"Fair Market Value" shall mean, with respect to any capital stock or
other ownership interests issued or given by the Borrower or any of its
Subsidiaries in connection with a Permitted Acquisition, (i) in the case of
common stock of the Borrower that is then designated as a national market system
security by the National Association of Securities Dealers, Inc. ("NASDAQ") or
is listed on a national securities exchange, the average of the last reported
bid and ask quotations or prices reported thereon for such common stock or (ii)
in all other cases, the determination of the fair market value thereof in good
faith by a majority of members of the board of directors of the Borrower or such
Subsidiary with no direct or indirect (other than by virtue of being a director)
economic interest in such Permitted Acquisition, in each case effective as of
the close of business on the Business Day immediately preceding the closing date
of such Permitted Acquisition.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of Richmond, or
if such rate is not so published on the relevant Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by the Agent.
"Fee Letter" shall mean the letter, dated September 13, 1996, as
amended, from First Union to Principal, relating to the fees payable to First
Union as of the Closing Date for its own account and the administrative fee
payable to the Agent from time to time for its own account, the obligations
under which have been assumed by the Borrower.
"Financial Condition Certificate" shall mean a fully completed
certificate, with the attachments required thereby, in the form of EXHIBIT E.
"Financials" or "Financial Statements" shall mean the audited
consolidated balance sheet of the Borrower and its Subsidiaries as of December
31, 1994 and December 31, 1995, and related statements of operations,
stockholders' equity and cash flows for the fiscal year then ended; the reviewed
consolidated balance sheet of the Borrower and its Subsidiaries (excluding the
Excluded Assets and the Senior Living Transaction (as both such terms are
defined in the Investment Agreement) as of June 30, 1996, and related statements
of operations, stockholders' equity and cash flows for the six months then
ended; and the unaudited consolidated financial statements dated as of September
30, 1996 statements for the Borrower for the nine-month period then ended, and,
upon consummation of the Principal Merger Transaction, the unaudited
consolidated financial statements of Principal and its Subsidiaries for the 8
months ended October 31, 1996, the unaudited Financial Statement for
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Principal Xxxx Company for the 1 month ending October 31, 1996 and the unaudited
Financial Statements of Memorial Hospital for the 3 months ending October 31,
1996.
"Financing Statements" shall mean financing statements approved for
filing in accordance with the applicable adopted version of the Uniform
Commercial Code and all other titles, documents and certificates that the Agent
may reasonably require from the Borrower or any Guarantor to describe and
perfect the security interests created hereunder or under the other Loan
Documents, and all assignments thereof and amendments thereto, in form and
substance satisfactory to the Agent.
"First Union" shall mean First Union National Bank of North Carolina, a
national banking association, and its successors and assigns.
"Fixed Charges" shall mean, as of the last day of any fiscal quarter,
(a) Scheduled Principal Payments, plus (b) the sum of the following as of the
fiscal quarter then ending: (i) Annualized Interest Expense payable in cash,
(ii) Annualized Lease Expense, (iii) Annualized Capital Expenditures and (iv)
Annualized Cash Taxes.
"GTCR" shall mean Golder, Thoma, Xxxxxxx, Xxxxxx Fund, IV, L.P., an
Illinois limited partnership.
"Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles, as recognized by the American Institute of
Certified Public Accountants, consistently applied and maintained on a
consistent basis for the Borrower and its Subsidiaries on a consolidated basis
throughout the period indicated and consistent with the financial practice of
the Borrower and its Subsidiaries after the date hereof.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantors" shall mean any Subsidiary of the Borrower that jointly and
severally guarantees the Credit Obligations of the Borrower. As of the Closing
and after giving effect to the Principal Merger Transaction, the Guarantors
shall include, without limitation, Brim Fifth Avenue, Inc., Brim Healthcare,
Inc., Brim Hospitals, Inc., Brim Outpatient Services, Inc., Brim Pavilion, Inc.,
Care Health Company, Inc., Palestine Limited Partnership, Palestine-Principal,
Inc., Principal and Principal Xxxx Company.
"Guaranty Agreement" shall mean the Guaranty Agreement dated as of the
date hereof, executed by each Guarantor in favor of the Agent, whereby each
Guarantor guarantees to the Lenders the payment and performance of the Credit
Obligations, together with any amendments, accessions, modifications and
supplements thereto, any replacements, renewals, extensions and restatements
thereof, and any substitutes therefor, in whole or in part.
"Guaranty Documents" shall mean the Guaranty Agreement and the security
agreements, pledge agreements, collateral assignments of agreements and any
other documents or agreements between the Agent and any of the Guarantors,
whereby the Guarantors have pledged Collateral to the Agent as security for the
obliga tions of the Guarantors under the Guaranty Agreement, including, without
limitation, the Security and Pledge Agreement and the Mortgages, together with
any amendments, modifications, accessions and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
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"Guaranty Obligations" shall mean the obligations of the Guarantors
pursuant to the Guaranty Agreement and the Guaranty Documents.
"HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.
"Hazardous Substances" means any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law; (ii) that are
toxic, explosive, corrosive, flammable, infectious, radioactive, mutagenic or
otherwise hazardous and are or become regulated by any Governmental Authority;
(iii) the presence of which requires investigation or remediation under any
Environmental Law or common law; or (iv) that contain, without limitation,
asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation,
petroleum hydrocarbons, petroleum derived substances or waste, crude oil,
nuclear fuel, natural gas or synthetic gas.
"IRS" shall mean the Internal Revenue Service and any successor
thereto.
"Indemnified Costs" shall have the meaning assigned to such term in
SECTION 10.7.
"Indemnified Person" shall have the meaning assigned to such term in
SECTION 10.7.
"Intercompany Management Agreements" shall mean and include any and all
management agreement now or hereafter existing between the Borrower and any of
its Subsidiaries or between such Subsidiaries under which the Borrower or a
Subsidiary receives management, consulting or other similar fees for services
rendered thereunder, and includes without limitation those management agreements
described on SCHEDULE 6.19 attached hereto, together with all amendments,
supplements and restatements thereof.
"Interest Expense" shall mean, for any fiscal quarter, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
fiscal quarter (including, without limitation, interest expense attributable to
Capital Lease Obligations), determined in accordance with Generally Accepted
Accounting Principles.
"Interest Period" shall have the meaning assigned to such term in
SECTION 2.8.
"Interest Rate Calculation Worksheet" shall mean a fully completed
worksheet in the form of Attachment B to EXHIBIT C.
"Interests" shall mean all ownership or profit-sharing interests
(howsoever designated) in any general or limited partnership, limited liability
company or joint venture, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"Investment Agreement" shall mean the Investment Agreement dated as of
November 21, 1996, between the Borrower and GTCR pursuant to which GTCR shall
invest in and purchase Stock of the Borrower.
"Issuing Bank" shall mean First Union, in its capacity as issuer of the
Letters of Credit, and its successors and assigns in such capacity.
"L/C Participant" shall have the meaning assigned to such term in
SECTION 2.17(C).
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"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next higher 1/100 of one percentage
point) obtained by dividing (a) the rate of interest determined by Agent to be
the rate for deposits in U.S. dollars for the applicable Interest Period which
appears on the Telerate Page 3750 or successor page or successor service at
approximately 11:00 a.m. London time, two (2) Business Days prior to the first
date of the applicable Interest Period, or if such rate is not available, the
rate per annum at which, in the reasonable opinion of Agent, U.S. dollars
substantially in the amount of the corresponding Borrowing are being offered to
leading reference banks in the London interbank market for settlement at
approximately 11:00 a.m. London time, two (2) Business Days prior to the first
date of the applicable Interest Period, by (b) the percentage equal to one
hundred percent (expressed as a decimal fraction) minus the Reserve Requirement
for such Interest Period. Each calculation by the Agent of the applicable LIBOR
Rate shall be conclusive and binding for all purposes, absent bad faith or
manifest error.
"Landlord Consents" shall mean (i) a waiver and consent from each
landlord with respect to the hospital Leased Properties of the Borrower and its
Subsidiaries listed on SCHEDULE 4.9 and (ii) all other landlord consents that
the Agent or the Required Lenders may reasonably require of the Borrower or any
of its Subsidiaries from time to time in respect of amendments, modifications or
renewals of the leases referred to in clause (i) above or in respect of any
other leases to which the Borrower or any of its Subsidiaries is now or
hereafter a party, in each case in form and substance reasonably satisfactory to
the Agent, together with any amendments, modifications and supplements thereto
and restatements thereof, in whole or in part.
"Lease Expense" shall mean, for any fiscal quarter, all amounts paid,
payable or accrued during such fiscal quarter by the Borrower and its
Subsidiaries on a consolidated basis with respect to all leases and rental
agreements, including, without limitation, all amounts paid as Facility Rent
Expense, of the Borrower and its Subsidiaries, other than Capital Leases,
determined in accordance with Generally Accepted Accounting Principles.
"Leased Properties" shall mean the real properties leased and occupied
by the Borrower and its Subsidiaries, as of the date hereof and at any time
hereafter and consisting, as of the date hereof, of the properties set forth in
SCHEDULE 4.9 hereof.
"Leeway & Co." shall mean Leeway & Co., a Massachusetts general
partnership.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereto pursuant to
SECTION 10.5, and their permitted successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the branch or
branches (or Affiliates) from which any of such Lender's Loans are made or
maintained.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit at such time
and (ii) the aggregate amount of all Reimbursement Obligations at such time.
"Letter of Credit Request" shall have the meaning assigned to such term
in SECTION 2.17(B).
"Letters of Credit" shall have the meaning assigned to such term in
SECTION 2.17(A).
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"Line of Business" shall mean the business of owning or operating
nonurban hospitals and managing hospitals and engaging in businesses ancillary
to the aforesaid line of business that enhance or support it and that are not
materially different from the foregoing.
"Loan Documents" shall mean and collectively refer to this Agreement,
the Notes, the Security and Pledge Agreement, the Guaranty Documents, the
Financing Statements, the Mortgages, the Landlord Consents, the Letters of
Credit, the Fee Letter, Swap Agreements (if any) between the Borrower and any
Lender, and any and all other agreements, and instruments including, without
limitation, notes, guaranties, mortgages, deeds to secure debt, deeds of trust,
chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, security agreements, trust account agreements, heretofore, now or
hereafter executed by or on behalf of the Borrower or any of its Subsidiaries
and heretofore, now or hereafter delivered to the Agent or any Lender with
respect to this Agreement, and in each case, together with any amendments,
modifications and supplements thereto, any replacements, renewals, extensions
and restatements thereof, and any substitutes therefor, in whole or in part.
"Loans" shall mean and collectively refer to the Term Loans, the
Revolving Credit Loans, and the Swingline Loans.
"Material Adverse Effect" or "Material Adverse Change" shall mean,
subject to any applicable cure or grace periods, a material adverse effect upon,
or a material adverse change in, any of (a) the financial condition, operations,
business, properties of the Borrower and its Subsidiaries, taken as a whole; (b)
the ability of the Borrower or any of its Subsidiaries to perform under any Loan
Document; (c) the legality, validity or enforceability of any Loan Document; (d)
the perfection or priority of the liens of the Agent granted under the Loan
Documents or the rights and remedies of the Agent or the Lenders under the Loan
Documents; or (e) the condition or value of any material portion of the
Collateral (other than market fluctuations in the values of such Collateral).
"Medicaid Certification" shall mean, with respect to any health care
facility, certification by HCFA or another Governmental Authority, or any Person
under contract with HCFA, that such health care facility is in compliance with
all conditions of participation set forth in the Medicaid Regulations, except
where the failure to so comply would not have a Material Adverse Effect.
"Medicaid Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicaid program and a health care facility
under which the health care facility agrees to provide services for Medicaid
patients in accordance with the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC
xx.xx. 1396 et seq., or elsewhere) affecting the medical assistance program
established by Title XIX of the Social Security Act, and any statutes succeeding
thereto; (ii) all applicable provisions of all federal rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (i) above; (iii) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (iii) above,
in each case as may be amended, supplemented or otherwise modified from time to
time.
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"MediCal Regulations" shall mean collectively, all California state
statutes (whether set forth in Cal. Welf. & Inst. Code xx.xx. 14000 et seq., or
elsewhere) affecting the health insurance program for the aged and disabled
established in connection with Title XIX of the Social Security Act, and any
statutes succeeding thereto; together with all applicable provisions of all
rules, regulations, manuals and orders and administrative, reimbursement and
other guidelines having the force of law of all Governmental Authorities
(including without limitation, the California Department of Health Services)
promulgated pursuant to or in connection with any of the foregoing having the
force of law, in each case as may be amended, supplemented or otherwise modified
from time to time.
"Medicare Certification" shall mean, with respect to any health care
facility, certification by HCFA or any other Governmental Authority, or any
Person under contract with HCFA, that such health care facility is in compliance
with all the conditions of participation set forth in the Medicare Regulations,
except where the failure to so comply would not have a Material Adverse Effect.
"Medicare Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicare program and a health care facility
under which the health care facility agrees to provide services for Medicare
patients in accordance with the terms of the agreement and Medicare Regulations.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC xx.xx. 1396
et seq., or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities (including
without limitation, Health and Human Services ("HHS"), HCFA, the Office of the
Inspector General for HHS, or any Person succeeding to the functions of any of
the foregoing) promulgated pursuant to or in connection with any of the
foregoing having the force of law, in each case as may be amended, supplemented
or otherwise modified from time to time.
"Mortgages" shall mean all fee and leasehold mortgages, deeds of trust
and similar instruments pursuant to which the Borrower or any Guarantor grants
to the Agent, for the benefit of the Lenders, a mortgage lien, or an assignment
of any mortgage lien obtain by such Person from another Person, to secure any or
all of the Credit Obligations or the Guaranty Obligations, and shall include,
without limitation, the deeds of trust and security agreements dated as of the
date hereof, executed by the Borrower and its Subsidiaries with respect to the
parcels of Realty located at (i) General Hospital, Eureka, Humboldt County,
California; (ii) Palo Verde Community Hospital, Blythe, Riverside County,
California; (iii) Parkview Regional Hospital, Mexia, Limestone County, Texas;
(iv) Colorado Plains Medical Center, Fort Xxxxxx, Xxxxxx County, Colorado; (v)
Memorial Hospital, Palestine, Xxxxxxxx, Xxxx and Houston Counties, Texas; (vi)
Xxxxxx Memorial Hospital, Knox, Xxxxxx County, Indiana and (vii) Headquarters
Building, Portland, Multnomah County, Oregon, in all cases together with any
amendments, modifications and supplements thereto, any replacements, renewals,
extensions and restatements thereof, and any substitutes therefor, in whole or
in part.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any of its
Subsidiaries is required to make contributions.
"Notes" shall mean the Term Notes, the Revolving Credit Notes and the
Swingline Note.
"Notice of Borrowing" shall have the meaning assigned to such term in
SECTION 2.2(B).
"Notice of Conversion/Continuation" shall have the meaning assigned
to such term in SECTION 2.9(B).
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"Notice of Swingline Borrowing" shall have the meaning given to such
term in SECTION 2.2(F).
"OSHA" shall mean the Occupational Safety and Health Act, as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
"Palestine Limited Partnership" shall mean Palestine Principal
Healthcare Limited Partnership, a Texas limited partnership and a Subsidiary of
Principal.
"Palestine Limited Partnership Agreement" shall mean the Agreement of
Limited Partnership of the Palestine Limited Partnership dated as of July 17,
1996, between Principal, as general partner, and Palestine- Principal, Inc., a
Tennessee corporation and a subsidiary of Principal, and Mother Xxxxxxx Hospital
Regional Health Care Center, as limited partners.
"Palestine Limited Partnership Note" shall mean the promissory note of
the Palestine Limited Partnership dated July 26, 1996, in the principal amount
of $13,700,000, payable to Principal, together with any supplements, amendments,
restatements or modifications thereof to the extent approved in writing by the
Required Lenders.
"Participant" shall mean any Person, now or at any time hereafter,
participating with any Lender in the Loans pursuant to this Agreement, and its
permitted successors and assigns.
"Pension Plan" shall mean any "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA maintained by the Borrower or any of its
Subsidiaries (other than any Multiemployer Plan that is subject to the
provisions of Title IV of ERISA).
"Percentage" shall mean, with respect to any Lender at any time, such
Lender's Term Loan Percentage or Revolving Credit Percentage at such time, as
the context may require.
"Permitted Acquisition" shall mean an Acquisition approved in writing
by the Required Lenders pursuant to SECTION 6.7; provided however, that the
approval of the Required Lenders shall not be required for any Acquisition for
which the Acquisition Amount is $1,000,000 or less, subject to an aggregate
Acquisition Amount of $3,000,000 for all Acquisitions consummated without the
approval of the Required Lenders. Notwithstanding anything to the contrary
contained in the immediately preceding sentence, an Acquisition shall be a
Permitted Acquisition only if all requirements of SECTIONS 5.11 (if any new
Subsidiaries are acquired or created in connection with such Acquisition) and
5.12 are met with respect thereto.
"Permitted Liens" shall mean any of the following liens, restrictions
or encumbrances securing any liability or indebtedness of the Borrower or any of
its Subsidiaries on, or otherwise affecting, any of the Borrower's or such
Subsidiary's property, real or personal, whether now owned or hereafter
acquired:
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) Liens for taxes, assessments or other governmental charges that are
not delinquent or remain payable without any penalty or that are being contested
in good faith and with due diligence by appropriate proceedings, provided that
if reasonably requested by the Agent, the Borrower or such Subsidiary has
established reserves with respect thereto in accordance with Generally Accepted
Accounting Principles;
(c) Liens upon property leased under a Capital Lease (including
sale/leaseback transactions permitted by SECTION 6.16) and placed upon such
property at the time of, or within sixty (60) days after, the commencement of
the lease thereof to secure the lease payments under such Capital Lease,
provided that any such
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lien (i) shall not encumber any other property of the Borrower or any of its
Subsidiaries, and (ii) shall not exceed the total of such lease payments;
(d) Liens set forth on SCHEDULE 1.1(A) attached hereto (as modified
from time to time in accordance with SECTION 4.29 in connection with
Acquisitions or otherwise), provided that the Debt related to such liens is not
increased above the amount then outstanding;
(e) Purchase money liens incurred or assumed in the purchase of
equipment permitted under SECTION 6.15 hereof, provided that any such lien (i)
attaches to such asset concurrently with or within ten (10) days after the
acquisition thereof, (ii) shall not encumber any other property of the Borrower
or any of its Subsidiaries and (iii) shall not exceed the purchase price of such
asset;
(f) Assignment Restrictions;
(g) Easements, rights of way, restrictive covenants, conditions, zoning
restrictions and other similar title, survey or other encumbrances on real
estate that do not materially impair the current use and value of the property
to which they relate;
(h) Carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's or other like non-consensual liens arising in the ordinary course of
business that are not overdue for a period of more than thirty (30) days, or, if
overdue for more than thirty (30) days, (i) which are being contested in good
faith and by appropriate proceedings; and (ii) for which adequate reserves in
accordance with Generally Accepted Accounting Principles have been established
on the books of the Borrower or appropriate Subsidiary; provided however, that
any such landlord liens shall be subject to the Landlord Consents to the extent
applicable;
(i) Pledges or deposits in connection with workers' compensation
insurance, unemployment insurance and like matters;
(j) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(k) Liens in respect of any writ of execution, attachment, garnishment,
judgment or award in an amount less than $500,000, the time for appeal or
petition for rehearing of which shall not have expired, or in respect of which
an appeal or appropriate proceeding for review is being prosecuted in good faith
and a stay of execution pending such appeal or proceeding for review has been
secured;
(l) Liens of a lessor with respect to an operating lease of equipment
or machinery; and
(m) Any other liens or encumbrances as the Required Lenders may
approve in writing from time to time.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, limited liability company, an organization, a business, an
individual, a trust or a government or political subdivision thereof or any
government agency or any other legal entity.
"Prime Rate" shall mean the per annum interest rate publicly announced
from time to time by First Union from its principal office in Charlotte, North
Carolina, to be its Prime Rate, which may not necessarily be its best lending
rate, as adjusted to conform to changes as of the opening of business on the
date of any such change in
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the Prime Rate. In the event First Union shall abolish or abandon the practice
of announcing its Prime Rate or should the same be unascertainable, the Agent
shall designate a comparable reference rate that, upon the Borrower's consent
(which shall not be unreasonably withheld), shall be deemed to be the Prime Rate
under this Credit Agreement and the other Loan Documents.
"Principal" shall mean Principal Hospital Company, a Delaware
corporation, together with its successors and assigns, which will change its
name following the Closing Date.
"Principal Merger Agreement" shall mean the merger and purchase
agreement, dated as of December 17, 1996, between Principal Merger Company and
Principal, which document sets forth the terms of the Principal Merger
Transaction.
"Principal Merger Transaction" shall mean the merger, on the Closing
Date, of Principal with Principal Merger Company, a wholly-owned Subsidiary of
the Borrower.
"Pro Rata Share" of any amount shall mean, with respect to any Lender
at any time, the product of (i) such amount, multiplied by (ii) such Lender's
Percentage at such time under the Credit Facility or Credit Facilities under
which such amount is being paid or advanced or to which such amount relates.
"Professional Services Agreement" shall mean the Professional Services
Agreement dated as of December 17, 1996, between the Borrower and GTCR.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or
(ii) Section 4975(c) of the Internal Revenue Code that is not exempt by reason
of Section 4975(c) or 4975(d).
"Projections" shall mean the financial projections delivered to the
Agent by the Borrower pursuant to SECTION 4.6(B) hereof.
"Realty" shall mean all of the right, title and interest of the
Borrower or any of its Subsidiaries in and to land, improvements and fixtures,
including any leasehold interests (whether as lessor or lessee).
"Refunded Swingline Loans" shall have the meaning given to such term in
SECTION 2.2(G).
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 207, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation G and having
substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Reimbursement Obligation" shall have the meaning assigned to such
term in SECTION 2.17(D).
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"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA (other than an event for which notice is waived under the ERISA
regulations).
"Required Lenders" shall mean, at any time, the Lenders owning or
holding 66 2/3% or more of the sum of the then aggregate principal amount of the
Term Loans and the Revolving Credit Commitments then outstanding; or, if no
Loans or Letters of Credit are then outstanding, the Lenders with 66-2/3% or
more of the aggregate of all Commitments at such time. For purposes of this
definition, the Letter of Credit Outstandings shall be considered to be owed to
the Lenders according to their Revolving Credit Percentages.
"Requirement of Law" means, as to any Person, the charter, articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any statute, law, treaty, rule, regulation, order,
decree, writ, injunction or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) applicable two (2) Business Days
before the first day of such Interest Period determined by the Agent to be in
effect on such day, as provided by the Board of Governors of the Federal Reserve
System (or any successor governmental body), applied for determining the maximum
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to the Lenders under Regulation D
with respect to "Eurocurrency liabilities" within the meaning of Regulation D,
or under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding.
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"Revolving Credit Borrowing Availability" shall have the following
meaning, for the periods indicated:
Calculation of Revolving
Time Period Credit Borrowing Availability
----------------------------------------------------------------------------------------------------------------
Closing Date to and including the date
of of documents required by SECTION 5.1(B), A. The sum of (i) 1996 annualized pro forma delivery
(C) and (E) for the fiscal quarter ending EBITDAR for the Borrower of $20,814,000,
March 31, 1997 and fiscal year ending less corporate overhead of $2,867,000,
December 31, 1996 multiplied by 4.25 = $76,275,000, (ii) the
lesser of annualized pro forma EBITDAR of
Palestine Limited Partnership of $3,263,000,
multiplied by 4.25 = $13,863,000, or the maximum
amount of Credit Obligations guaranteed by
Palestine Limited Partnership (on the
Closing Date $13,700,000) and (iii) annualized
pro forma EBITDAR of Principal Xxxx Company of
$1,630,000, multiplied by 4.25 = $6,928,000, less
B.* The sum of (i) Debt outstanding under the
Credit Agreement on Borrowing Date,
(ii) Contingent Obligations on the Borrowing
Date, (iii) Capital Leases outstanding on the
Borrowing Date and (iv) other Debt on the
Borrowing Date; provided that such amounts
in (i), (ii) and (iii) may not exceed
$75,900,000, less
----
C. Pro forma Annualized Facility Rent of
$1,835,000, multiplied by 8 = $14,680,000,
less
D.* Outstanding working capital advances of up to
$5,000,000.
* The sum of B and D shall not exceed
$80,900,000
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Date after delivery of documents required by A. The sum of (i) 1996 annualized pro forma EBITDAR
SECTION 5.1(B) and (E) for the fiscal quarter for the Borrower of $20,814,000, less corporate
ending March 31, 1997 to June 30, 1997. overhead of $2,867,000, multiplied by 4.25 = $76,275,000,
(ii) the lesser of actual annualized EBITDAR for Palestine
Limited Partnership, multiplied by 4.25, or the maximum of
the Credit Obligations guaranteed by Palestine Limited
Partnership = $13,700,000 and (iii) actual annualized
EBITDAR for Principal Xxxx Company, multiplied by 4.25, less
B. The sum of (i) Debt outstanding under the Credit Agreement
on Borrowing Date, (ii) Contingent Obligations on the
Borrowing Date, (iii) Capital Leases outstanding on the
Borrowing Date and (iv) other Debt on the Borrowing Date,
less
C. Annualized Facility Rent, multiplied by 8.
July 1, 1997 to date of delivery of the A. The sum of (i) 1996 annualized pro forma documents required
SECTION 5.1(B) and (E) for the fiscal quarter by EBITDAR for the Borrower of $76,275, (ii) the lesser of
ending June 30, 1997. actual annualized EBITDAR for Palestine Limited Partnership,
multiplied by 4.25, or the maximum of the Credit Obligations
guaranteed by Palestine Limited Partnership and (iii) actual
annualized EBITDAR for Principal Xxxx Company, multiplied by
4.25, less
B. The sum of (i) Debt outstanding under the Credit Agreement on
Borrowing Date, (ii) Contingent Obligations on the Borrowing
Date, (iii) Capital Leases outstanding on the Borrowing Date
and (iv) other Debt on the Borrowing Date, less
C. Annualized Facility Rent, multiplied by 8.
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Date after delivery of documents required by A. The actual annualized EBITDAR for the
SECTION 5.1(B) and (E) for the fiscal quarter Borrower and its Subsidiaries multiplied by
ending June 30, 1997 and thereafter the relevant covenant in SECTION 6.9; provided
that the annualized EBITDAR attributable to
Palestine Limited Partnership shall not exceed
the maximum amount of the Credit Obligations
guaranteed by Palestine Limited Partnership, less
B. The sum of (i) Debt outstanding under the Credit
Agreement on Borrowing Date, (ii) Contingent Obligations
on the Borrowing Date, (iii) Capital Leases outstanding
on the Borrowing Date and (iv) other Debt on the Borrowing
Date, less
C. Annualized Facility Rent, multiplied by 8.
"Revolving Credit Borrowing Availability Certificate" shall mean a
certificate in the form of EXHIBIT F attached hereto.
"Revolving Credit Commitment" shall mean, with respect to any Lender at
any time, the amount set forth under such Lender's name on its signature page
hereto under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, the amount set forth for
such Lender at such time in the Register maintained by the Agent pursuant to
SECTION 10.5(C) as such Lender's "Revolving Credit Commitment," as such amount
may be reduced at or prior to such time pursuant to the terms hereof.
"Revolving Credit Facility" shall mean the revolving line of credit
established by the Lenders under SECTION 2.1(B).
"Revolving Credit Facility Maturity Date" shall mean December 16, 1999.
"Revolving Credit Facility Termination Date" shall mean such earlier
date of December 16, 1999, or termination of the Total Revolving Credit
Commitment in accordance with SECTION 2.4(D) or SECTION 8.1.
"Revolving Credit Loans" shall have the meaning assigned to such term
in SECTION 2.1(B).
"Revolving Credit Notes" shall mean the promissory notes of the
Borrower in substantially the form of EXHIBIT A-2, executed and delivered to the
Lenders with Revolving Credit Commitments pursuant to SECTION 2.3(C) or, in
connection with an Assignment and Acceptance, pursuant to SECTION 10.5(D),
together with any amendments, modifications and supplements thereto and
restatements thereof, in whole or in part.
"Revolving Credit Percentage" shall mean, with respect to any Lender at
any time, a fraction (expressed as a percentage) the numerator of which is the
Revolving Credit Commitment of such Lender at such time and
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the denominator of which is the Total Revolving Credit Commitment at such time;
provided that if the Revolving Credit Percentage of any Lender is to be
determined after the Revolving Credit Commitments have been terminated, then
such Revolving Credit Percentage shall be determined immediately prior (and
without giving effect) to such termination.
"Scheduled Principal Payments" shall mean all scheduled principal
payments on long-term Debt due and payable in the subsequent twelve-month
period.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of December 17, 1996, between the Borrower and Leeway & Co.
pursuant to which Leeway & Co. shall invest in and purchase Stock of the
Borrower.
"Security and Pledge Agreement" shall mean the Security and Pledge
Agreement, dated as of the date hereof, between the Borrower, the Guarantors and
the Agent, whereby the Borrower and the Guarantors have granted to the Agent a
security interest in certain Collateral described therein as security for the
Credit Obligations of the Borrower and the Guaranty Obligations of the
Guarantors, together with any amendments, accessions, modifications and
supplements thereto, any replacements, renewals, extensions and restatements
thereof, and any substitutes therefor, in whole or in part.
"Solvent" shall mean, as to any Person on any particular date, that
such Person (i) has capital reasonably sufficient to carry on its business as
presently conducted and all business in which it is about to engage, (ii) is
able to pay its debts as they mature, (iii) owns property having a fair saleable
value on a going concern basis that is greater than the amount required to pay
its probable liability on existing debts as they mature (including known
reasonable contingencies and contingencies that should be included in notes of
the financial statements of such Person pursuant to Generally Accepted
Accounting Principles considering all financing alternatives and potential asset
sales reasonably available to such Person), and (iv) does not intend to, and
does not believe that it will, incur debts or probable liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or nonvoting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Subordinated Debt" shall mean unsecured Debt of the Borrower or any of
its Subsidiaries that is expressly subordinated and made junior to the payment
and performance of the Credit Obligations and the Guaranty Obligations on terms
(including, without limitation, covenants, terms of subordination and payment
terms) approved in writing by the Required Lenders, including without limitation
the Professional Services Agreement, the Intercompany Management Agreements and
notes issued to shareholders of the Borrower in compliance with SECTION 6.8.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, or other entity of which more than 50% of
the Interests or voting power, is at the time, directly or indirectly, owned by
any Person or one or more of its Subsidiaries (irrespective of whether, at the
time, the ownership interests or Stock of any other class or classes of such
entity or corporation shall have or might have voting power by reason of the
happening of any
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31
contingency). When used without reference to a parent, the term "Subsidiary"
shall be deemed to refer to a Subsidiary of the Borrower.
"Swap Agreement" shall mean any and all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance or other hedging arrangements and all other similar agreements or
arrangements between the Borrower and any Lender designed to protect against
fluctuations in interest rates.
"Swingline Commitment" shall mean $5,000,000 or, if less, the aggregate
Revolving Credit Commitments at the time of determination, as such amount may be
reduced at or prior to such time pursuant to the terms hereof.
"Swingline Lender" shall mean First Union in its capacity as maker of
Swingline Loans, and its successors in such capacity.
"Swingline Loans" shall have the meaning given to such term in SECTION
2.1(C).
"Swingline Maturity Date" shall mean the date that is five (5) Business
Days prior to the Revolving Credit Facility Maturity Date.
"Swingline Note" shall mean the promissory note of the Borrower in
substantially the form of XXXXXXX X- 0, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Syndication Completion Date" shall have the meaning assigned to such
term in SECTION 2.2(A).
"Target" shall have the meaning assigned to such term in SECTION
5.12(C)(I).
"Taxes" shall have the meaning assigned to such term in SECTION
2.12(A).
"Term Loan Commitment" shall mean, with respect to any Lender at any
time, the amount set forth under such Lender's name on its signature page hereto
under the caption "Term Loan Commitment" or, if such Lender has entered into one
or more Assignment and Acceptances, the amount set forth for such Lender at such
time in the Register maintained by the Agent pursuant to SECTION 10.5(C) as such
Lender's "Term Loan Commitment," as such amount may be reduced at or prior to
such time pursuant to the terms hereof.
"Term Loan Facility" shall mean the Term Loans extended by the Lenders
under SECTION 2.1(A).
"Term Loan Facility Maturity Date" shall mean December 16, 2002.
"Term Loan Percentage" shall mean, with respect to any Lender at any
time, a fraction (expressed as a percentage) the numerator of which is the Term
Loan Commitment of such Lender at such time and the denominator of which is the
Total Term Loan Commitment at such time; provided that if the Term Loan
Percentage of any Lender is to be determined after the Term Loan Commitments
have been terminated, then such Term Loan Percentage shall be determined
immediately prior (and without giving effect) to such termination.
"Term Loans" shall have the meaning assigned to such term in SECTION
2.1(A).
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"Term Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A-1, executed and delivered to the Lenders
with Term Loan Commitments pursuant to SECTION 2.3(B) or, in connection with an
Assignment and Acceptance, pursuant to SECTION 10.5(D), together with any
amendments, modifications and supplements thereto and restatements thereof, in
whole or in part.
"Total Commitment" shall mean, at any time, the sum of all Commitments
at such time.
"Total Revolving Credit Commitment" shall mean, at any time, the sum of
the Revolving Credit Commitments of all Lenders at such time.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of all Lenders at such time.
"Total Unutilized Revolving Credit Commitment" shall mean, at any time,
the sum of the Unutilized Revolving Credit Commitments of all Lenders at such
time.
"Type" shall have the meaning assigned to such term in SECTION 2.2(A).
"Uniform Commercial Code" shall mean the Uniform Commercial Code of the
State of North Carolina, as amended from time to time, unless in any particular
instance the Uniform Commercial Code of another state is applicable, in which
case it shall mean the Uniform Commercial Code of such state.
"Unutilized Revolving Credit Commitment" shall mean, with respect to
any Lender at any time, such Lender's Revolving Credit Commitment at such time
less the sum of (i) the aggregate principal amount of all Revolving Credit Loans
made by such Lender that are outstanding at such time and (ii) such Lender's Pro
Rata Share (calculated based on its Revolving Credit Percentage) of all Letter
of Credit Outstandings at such time. The Unutilized Revolving Credit Commitment
of the Swingline Lender shall not be reduced by the amount of any Swingline
Loans outstanding at any time.
"Unutilized Swingline Commitment" shall mean, with respect to the
Swingline Lender at any time, the Swingline Commitment at such time less the
aggregate principal amount of all Swingline Loans that are outstanding at such
time.
1.2. Accounting Terms. Any accounting terms used in this Agreement
that are not specifically defined shall have the meanings customarily given them
in accordance with Generally Accepted Accounting Principles; provided, however,
that, in the event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the
Borrower's certified public accountants, to the extent that such changes would
modify or could modify such accounting terms or the interpretation or
computation thereof, such changes shall be followed in defining such accounting
terms only from and after the date this Agreement shall have been amended to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement. In the event of any such changes,
the Borrower, the Agent and the Required Lenders shall endeavor in good faith to
promptly agree to appropriate amendments hereto.
1.3. Singular/Plural. Unless the context otherwise requires, words
in the singular include the plural and words in the plural include the singular.
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1.4. Other Terms. All other terms contained in this Agreement shall,
when the context so indicates, have the meanings provided for by the Uniform
Commercial Code of the State of North Carolina to the extent the same are used
or defined therein.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans.
(a) Each Lender having a Term Loan Commitment severally agrees, subject
to and on the terms and conditions of this Agreement, to make a loan (each, a
"Term Loan" and collectively the "Term Loans") to the Borrower on the Closing
Date in the principal amount not to exceed its Term Loan Commitment. No Term
Loans shall be made at any time after the Closing Date. To the extent repaid,
Term Loans may not be reborrowed.
(b) Each Lender having a Revolving Credit Commitment severally agrees,
subject to and on the terms and conditions of this Agreement, to make loans
(each, a "Revolving Credit Loan" and collectively, the "Revolving Credit Loans")
to the Borrower, from time to time on any Business Day during the period from
the date hereof to the Revolving Credit Facility Termination Date, provided that
(i) the aggregate principal amount of Revolving Credit Loans at any time
outstanding for any Lender shall not exceed the difference between (1) such
Lender's Revolving Credit Commitment at such time less (2) such Lender's Pro
Rata Share (calculated based on its Revolving Credit Percentage) of the
aggregate Letter of Credit Outstandings at such time (exclusive of Reimbursement
Obligations that are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Credit Loans) and (ii) no Borrowing of Revolving Credit
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Revolving Credit Loans, Letter of Credit Outstandings
(exclusive of Reimbursement Obligations that are repaid with the proceeds of,
and simultaneously with, the incurrence of Revolving Credit Loans) and Swingline
Loans (excluding the aggregate amount of any Swingline Loans to be repaid with
proceeds of Revolving Credit Loans made pursuant to such Borrowing) outstanding
at such time would exceed the lesser of the Total Revolving Credit Commitment or
the Revolving Credit Borrowing Availability, and (iii) no advance of any
Borrowing of Revolving Credit Loans shall be required if, immediately after
giving effect thereto, a Default or Event of Default exists. Subject to and on
the terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow Revolving Credit Loans until the Revolving Credit Facility Termination
Date.
(c) The Swingline Lender agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Swingline Loan," and
collectively, the "Swingline Loans") to the Borrower, from time to time on any
Business Day during the period from the Closing Date to but not including the
Swingline Maturity Date (or, if earlier, the Revolving Credit Facility
Termination Date), in an aggregate principal amount not exceeding the Swingline
Commitment, notwithstanding that the aggregate principal amount of Swingline
Loans outstanding at any time, when added to the aggregate principal amount of
the Revolving Credit Loans made by the Swingline Lender in its capacity as a
Lender outstanding at such time and its Letter of Credit Outstandings at such
time, may exceed its Revolving Credit Commitment at such time; provided,
however, that no Borrowing of Swingline Loans shall be made if, immediately
after giving effect thereto, the sum of the aggregate principal amount of
Revolving Credit Loans, Letter of Credit Outstandings (exclusive of
Reimbursement Obligations that are repaid with the proceeds of, and
simultaneously with, the incurrence of Revolving Credit Loans), and Swingline
Loans (excluding the aggregate amount of any Swingline Loans to be repaid with
proceeds of
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Revolving Credit Loans made pursuant to such Borrowing) outstanding at such time
would exceed the lesser of the Total Revolving Credit Commitment or the
Revolving Credit Borrowing Availability. Subject to and on the terms and
conditions of this Agreement, the Borrower may borrow, repay (including by means
of a Borrowing of Revolving Credit Loans pursuant to SECTION 2.2(B)) and
reborrow Swingline Loans.
2.2. Borrowings.
(a) The Loans (other than the Swingline Loans) shall, at the option of
the Borrower and subject to the terms and conditions of this Agreement, be
either Base Rate Loans or LIBOR Loans (each such type of Loan, a "Type"),
provided that (i) all Loans comprising the same Borrowing shall, unless
otherwise specifically provided herein, be of the same Type and (ii)
notwithstanding any other provision of this Agreement, no LIBOR Loans having an
Interest Period of longer than one (1) month may be borrowed at any time prior
to the earlier of the 30th day after the Closing Date and the date upon which
the Agent determines in its sole discretion, and notifies the Borrower, that the
primary syndication of the Credit Facility provided for hereunder has been
completed (the earlier of such dates, the "Syndication Completion Date"). The
Swingline Loans shall be made and maintained as Base Rate Loans at all times.
(b) In order to make a Borrowing (other than continuations of
outstanding Loans which shall be made pursuant to SECTION 2.9, mandatory
Borrowings of Revolving Credit Loans pursuant to SECTION 2.17(E), Borrowings of
Swingline Loans pursuant to SECTION 2.2(F), and Borrowings for the purpose of
repaying Refunded Swingline Loans, which shall be made pursuant to SECTION
2.2(G)), the Borrower will give the Agent written notice (by telecopier or
otherwise), not later than 12:00 noon, Charlotte, North Carolina local time, at
least three (3) Business Days prior to each Borrowing to be comprised of LIBOR
Loans and at least one (1) Business Day prior to each Borrowing to be comprised
of Base Rate Loans; provided, however, that requests for the Borrowing of the
Term Loans and any Revolving Credit Loans to be made on the Closing Date may, at
the discretion of the Agent, be given later than the times specified
hereinabove. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall be
appropriately completed to specify (i) the Credit Facility under which such
Borrowing is to be made, (ii) the aggregate principal amount and Type of the
Loans to be made pursuant to such Borrowing (and, in the case of a Borrowing of
LIBOR Loans, the initial Interest Period to be applicable thereto), (iii) the
purpose and proposed use of the proceeds of the Borrowing, and (iv) the
requested date of the Borrowing (the "Borrowing Date"), which shall be a
Business Day.
Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
hereunder (x) in the case of Borrowings of Revolving Credit Loans and
Term Loans comprised of Base Rate Loans (excluding Borrowings for the
purpose of repaying Refunded Swingline Loans, and mandatory Borrowings
of Revolving Credit Loans pursuant to SECTION 2.17(E)), shall not be
less than $1,000,000 and, if greater, shall be in an integral multiple
of $500,000 in excess thereof, (y) in the case of Borrowings of
Swingline Loans, shall not be less than $250,000 and, if greater, shall
be in an integral multiple of $100,000 in excess thereof, and (z) in
the case of Borrowings comprised of LIBOR Loans, shall not be less than
$3,000,000 and, if greater, shall be in an integral multiple of
$1,000,000 in excess thereof (or, in all cases of a Borrowing of
Revolving Credit Loans, if less, in the amount of the Total Unutilized
Revolving Credit Commitment);
(ii) if the Borrower shall have failed to designate
the Type of Loans comprising a Borrowing, the Borrower shall be deemed
to have requested a Borrowing comprised of Base Rate Loans;
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(iii) if the Borrower shall have failed to select the
duration of the Interest Period to be applicable to any Borrowing of
LIBOR Loans, then the Borrower shall be deemed to have selected an
Interest Period with a duration of one month; and
(iv) LIBOR Loans under the Revolving Credit Facility
may not be outstanding under more than five (5) separate Interest
Periods at any one time and LIBOR Loans under the Term Loan Facility
may not be outstanding under more than three (3) separate Interest
Periods at any one time.
(c) Upon its receipt of a Notice of Borrowing, the Agent will promptly
notify each Lender with a Commitment under the relevant Credit Facility of the
proposed Borrowing. Not later than 2:00 p.m., Charlotte time, on the requested
Borrowing Date, each such Lender will make available to the Agent at its office
referred to in SECTION 10.4 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by such Lender. To the extent the relevant
Lenders have made such amounts available to the Agent as provided hereinabove,
the Agent will make the aggregate of such amounts available to the Borrower in
accordance with subsection (D) below and in like funds as received by the Agent.
Each Lender may, at its option, make and maintain any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make or maintain such
LIBOR Loan, provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement; provided, further, that the Borrower shall not be responsible
for costs arising under SECTIONS 2.11, 2.12, 2.13 or otherwise payable hereunder
resulting from any such transfer of its Loans to the extent such costs would not
otherwise be applicable to such Lender in the absence of such transfer.
(d) The Borrower hereby authorizes the Agent to disburse the proceeds
of each Borrowing in accordance with the terms of any written instructions from
any of the Authorized Officers, provided that the Agent shall not be obligated
under any circumstances to forward amounts to any account not listed in an
Account Designation Letter. The Borrower may at any time deliver to the Agent an
Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
(e) Unless the Agent has received, prior to 12:00 noon, Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion, if any, of
the relevant Borrowing, the Agent may assume that such Lender has made such
portion available to the Agent in immediately available funds on such Borrowing
Date in accordance with subsection (C) above, and the Agent may, in reliance
upon such assumption, make a corresponding amount available to the Borrower on
such Borrowing Date. If and to the extent that such Lender shall not have made
such portion available to the Agent, and the Agent shall have made such
corresponding amount available to the Borrower, such Lender, on the one hand,
and the Borrower, on the other, severally (but without duplication of payments
made by the applicable Lender) agree to pay to the Agent forthwith on demand
such corresponding amount, together with interest thereon for each day from the
date such amount is made available to the Borrower until the date such amount is
repaid to the Agent, (i) in the case of such Lender, at the Federal Funds Rate,
and (ii) in the case of the Borrower, at the rate of interest applicable at such
time to Loans comprising such Borrowing, as determined under the provisions of
SECTION 2.6. If such Lender shall repay to the Agent such corresponding amount,
such amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement and the Borrower shall have no further obligation to
make any repayment of such Borrowing pursuant to this SECTION 2.2(E). The
failure of any Lender to make any Loan required to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan as part of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender as part of any Borrowing.
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(f) In order to make a Borrowing of a Swingline Loan, the Borrower will
give the Agent and the Swingline Lender written notice (or oral notice promptly
confirmed in writing) not later than 12:00 noon, Charlotte time, on the Business
Day of such Borrowing. Each such notice (each, a "Notice of Swingline
Borrowing") shall be irrevocable, shall be given in the form of EXHIBIT B-3 and
shall specify (i) the principal amount of the Swingline Loan to be made pursuant
to such Borrowing (which shall not be less than $250,000 and, if greater, shall
be in an integral multiple of $100,000 in excess thereof (or, if less, in the
amount of the Unutilized Swingline Commitment)) and (ii) the requested Borrowing
Date, which shall be a Business Day. Not later than 2:00 p.m., Charlotte time,
on the requested Borrowing Date, the Swingline Lender will make available to the
Agent at its office referred to in SECTION 10.4 (or at such other location as
the Agent may designate) an amount, in Dollars and in immediately available
funds, equal to the amount of the requested Swingline Loan. The Agent will make
such amount available to the Borrower in accordance with SECTION 2.2(C).
(g) With respect to any outstanding Swingline Loans, the Swingline
Lender may at any time (whether or not an Event of Default has occurred and is
continuing) in its sole and absolute discretion, and is hereby authorized and
empowered by the Borrower to, cause a Borrowing of Revolving Credit Loans to be
made for the purpose of repaying such Swingline Loans by delivering to the Agent
(if the Agent is different from the Swingline Lender) and each other Lender (on
behalf of, and with a copy to, the Borrower), not later than 12:00 noon,
Charlotte time, one (1) Business Day prior to the proposed Borrowing Date
therefor, a notice (which shall be deemed to be a Notice of Borrowing given by
the Borrower but not a new representation) requesting the Lenders to make
Revolving Credit Loans (which shall be made initially as Base Rate Loans) on
such Borrowing Date in an aggregate amount equal to the amount of such Swingline
Loans (the "Refunded Swingline Loans") outstanding on the date such notice is
given that the Swingline Lender requests to be repaid. Not later than 2:00 p.m.,
Charlotte time, on the requested Borrowing Date, each Lender (other than the
Swingline Lender) will make available to the Agent at its office referred to in
SECTION 10.4 (or at such other location as the Agent may designate) an amount,
in Dollars and in immediately available funds, equal to the amount of the
Revolving Loan to be made by such Lender. To the extent the Lenders have made
such amounts available to the Agent as provided hereinabove, the Agent will make
the aggregate of such amounts available to the Swingline Lender in like funds as
received by the Agent, which shall apply such amounts in repayment of the
Refunded Swingline Loans. Notwithstanding any provision of this Agreement to the
contrary, on the relevant Borrowing Date, the Refunded Swingline Loans
(including the Swingline Lender's ratable share thereof, in its capacity as a
Lender) shall be deemed to be repaid with the proceeds of the Revolving Credit
Loans made as provided above (including a Revolving Loan deemed to have been
made by the Swingline Lender), and such Refunded Swingline Loans deemed to be so
repaid shall no longer be outstanding as Swingline Loans but shall be
outstanding as Revolving Credit Loans. If any portion of any such amount repaid
(or deemed to be repaid) to the Swingline Lender shall be recovered by or on
behalf of the Borrower from the Swingline Lender in any bankruptcy, insolvency
or similar proceeding or otherwise, the loss of the amount so recovered shall be
shared ratably among all the Lenders in the manner contemplated by SECTION
2.2(H).
(h) If, as a result of any bankruptcy, insolvency or similar proceeding
with respect to the Borrower, Revolving Credit Loans are not made pursuant to
subsection (G) above in an amount sufficient to repay any amounts owed to the
Swingline Lender in respect of any outstanding Swingline Loans, or if the
Swingline Lender is otherwise precluded for any reason from giving a notice on
behalf of the Borrower as provided for hereinabove, the Swingline Lender shall
be deemed to have sold without recourse, representation or warranty, and each
Lender shall be deemed to have purchased and hereby agrees to purchase, a
participation in such outstanding Swingline Loans in an amount equal to its
ratable share (based on the proportion that its Revolving Credit Commitment
bears to the Total Revolving Credit Commitments at such time) of the unpaid
amount thereof together with accrued interest thereon. Upon one (1) Business
Day's prior notice from the Swingline Lender, each Lender (other than the
Swingline Lender) will make available to the Agent at its office referred to in
SECTION 10.4 (or at such other location as the Agent may designate) an amount,
in Dollars and in immediately available funds,
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equal to its participation. To the extent the Lenders have made such amounts
available to the Agent as provided hereinabove, the Agent will make the
aggregate of such amounts available to the Swingline Lender in like funds as
received by the Agent. In the event any such Lender fails to make available to
the Agent the amount of such Lender's participation as provided in this
subsection (H), the Swingline Lender shall be entitled to recover such amount on
demand from such Lender, together with interest thereon for each day from the
date such amount is required to be made available for the account of the
Swingline Lender until the date such amount is made available to the Swingline
Lender at the Federal Funds Rate. Promptly following its receipt of any payment
by or on behalf of the Borrower in respect of a Swingline Loan, the Swingline
Lender will pay to each Lender that has acquired a participation therein such
Lender's ratable share of such payment.
(i) Notwithstanding any provision of this Agreement to the contrary,
the obligation of each Lender (other than the Swingline Lender) to make
Revolving Credit Loans for the purpose of repaying any Refunded Swingline Loans
pursuant to subsection (G) above and each such Lender's obligation to purchase a
participation in any unpaid Swingline Loans pursuant to subsection (H) above
shall be absolute and unconditional and shall not be affected by any
circumstance or event whatsoever, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right that such Lender may
have against the Swingline Lender, the Agent, the Borrower or any other Person
for any reason whatsoever, (ii) the occurrence or continuance of any Default or
Event of Default, (iii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries, or (iv) any breach of this Agreement by any
party hereto.
2.3. Notes.
(a) The Loans made by each Lender shall be evidenced (i) if Term Loans,
by a Term Note appropriately completed in substantially the form of EXHIBIT A-1,
(ii) if Revolving Credit Loans, by a Revolving Credit Note appropriately
completed in substantially the form of EXHIBIT A-2, and (iii) if Swingline
Loans, by a Swingline Note appropriately completed in substantially the form of
EXHIBIT A-3.
(b) The Term Note issued to each Lender with a Term Loan Commitment
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender, (iii) be dated as of the Closing Date (or, in the case of Term Notes
issued pursuant to an Assignment and Acceptance, as of the date thereof), (iv)
be in a stated principal amount equal to such Lender's Term Loan Commitment, (v)
bear interest in accordance with the provisions of SECTION 2.6, as the same may
be applicable to the Term Loans made by such Lender from time to time, and (vi)
be entitled to all of the benefits of this Agreement and the other Loan
Documents and subject to the provisions hereof and thereof.
(c) The Revolving Credit Note issued to each Lender with a Revolving
Credit Commitment shall (i) be executed by the Borrower, (ii) be payable to the
order of such Lender, (iii) be dated as of the Closing Date (or, in the case of
Revolving Credit Notes issued pursuant to an Assignment and Acceptance, as of
the date thereof), (iv) be in a stated principal amount equal to such Lender's
Revolving Credit Commitment, (v) bear interest in accordance with the provisions
of SECTION 2.6, as the same may be applicable to the Revolving Credit Loans made
by such Lender from time to time, and (vi) be entitled to all of the benefits of
this Agreement and the other Loan Documents and subject to the provisions hereof
and thereof.
(d) The Swingline Note issued to the Swingline Lender shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline Lender,
(iii) be dated as of the Closing Date, (iv) be in a stated principal amount
equal to the Swingline Commitment, (v) bear interest in accordance with the
provisions of SECTION 2.6, as the same may be applicable to the Swingline Loans
made by the Swingline Lender from time to
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time, and (vi) be entitled to all of the benefits of this Agreement and the
other Loan Documents and subject to the provisions hereof and thereof.
(e) Each Lender will record on its internal records the amount of each
Loan made by it and each payment received by it in respect thereof and will, in
the event of any transfer of any of its Notes, either endorse on the reverse
side thereof or on a schedule attached thereto (or any continuation thereof) the
outstanding principal amount of the Loans evidenced thereby as of the date of
transfer or provide such information on Annex I to the Assignment and Acceptance
relating to such transfer; provided, however, that the failure of any Lender to
make any such recordation or provide any such information, or any error in such
recordation or information, shall not affect the Borrower's obligations in
respect of such Loans. The register maintained by the Agent shall be deemed
correct absent manifest error.
2.4. Termination and Reduction of Commitments and Swingline
Commitment.
(a) The Lenders' obligation to advance Term Loans shall be
automatically and permanently terminated at 5:00 p.m., Charlotte time, on the
Closing Date.
(b) The Lenders' obligation to advance Revolving Credit Loans shall be
automatically and permanently terminated on the Revolving Credit Facility
Termination Date.
(c) The Swingline Lender's obligation to advance Swingline Loans shall
be automatically and permanently terminated on the Swingline Maturity Date.
(d) At any time and from time to time, upon at least five (5) Business
Days' prior written notice to the Agent (and, in the case of a termination or
reduction of the Unutilized Swingline Commitment, the Swingline Lender), the
Borrower may, without premium or penalty, terminate in whole or reduce in part
the Total Unutilized Revolving Credit Commitment or the Unutilized Swingline
Commitment, provided that any such partial reduction shall be in an aggregate
amount of not less than $5,000,000 ($1,000,000 in the case of the Unutilized
Swingline Commitment) or, if greater, in multiples of $1,000,000 in excess
thereof. The amount of any termination or reduction made under this subsection
(D) may not thereafter be reinstated.
(e) Each reduction of the Total Revolving Credit Commitment under this
SECTION 2.4 shall be applied ratably among the Lenders according to their
relative Revolving Credit Commitments. After any such reduction, the fee
provided in SECTIONS 2.7(B) shall be calculated with respect to the reduced
Commitments. Notwithstanding any provision of this Agreement to the contrary,
any reduction of the Total Revolving Credit Commitments pursuant to this SECTION
2.4 that has the effect of reducing the Total Revolving Credit Commitments to an
amount less than the amount of the Swingline Commitment at such time shall
result in an automatic corresponding reduction of the Swingline Commitment to
the amount of the Total Revolving Credit Commitments (as so reduced), without
any further action on the part of the Borrower or the Swingline Lender.
2.5. Payments; Voluntary, Mandatory.
(a) At any time and from time to time, the Borrower shall have the
right to voluntarily prepay the Loans, in whole or in part, without premium or
penalty (except as provided in clause (III) below), upon written notice to the
Agent given not later than 12:00 noon, Charlotte time, (x) at least three (3)
Business Days prior to each intended prepayment of any loans that are LIBOR
Loans and (y) at least one (1) Business Day prior to each intended prepayment of
any Loans that are Base Rate Loans; provided that Swingline Loans may be prepaid
on a same day basis; provided further that (i) each partial voluntary prepayment
of Revolving Credit Loans and Term Loans shall be in an aggregate principal
amount of not less than $500,000 or, if greater, an integral multiple
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of $500,000 in excess thereof, and each partial voluntary prepayment of
Swingline Loans shall be in an aggregate principal amount of not less than
$100,000, or if greater, an integral multiple thereof, (ii) no partial voluntary
prepayment of LIBOR Loans made pursuant to any single Borrowing shall reduce the
aggregate outstanding principal amount of the remaining LIBOR Loans under such
Borrowing to less than $3,000,000 or to any greater amount not an integral
multiple of $1,000,000 in excess thereof, and (iii) unless made together with
all amounts required under SECTION 2.13 to be paid as a consequence of such
prepayment, a prepayment of a LIBOR Loan may be made only on the last day of the
Interest Period applicable thereto. Each such notice shall specify the proposed
date of such prepayment and the aggregate principal amount and the Types of the
Loans to be prepaid (and, in the case of LIBOR Loans, the Interest Period of the
Borrowing pursuant to which made), and shall be irrevocable and shall bind the
Borrower to make such prepayment on the terms specified therein. During the
continuance of any Event of Default, all prepayments pursuant to this subsection
(A) shall be applied, first, to the Term Loans, second, upon payment in full of
the Term Loans, to the Swingline Loans, and third, after payment in full of the
Swingline Loans, to the Revolving Credit Loans, all as more particularly set
forth in subsection (B) below. In the absence of an Event of Default, voluntary
prepayments pursuant to this subsection (A) shall be applied as the Borrower
determines. Revolving Credit Loans and Swingline Loans (but not Term Loans)
prepaid pursuant to this subsection (A) may be reborrowed, subject to the terms
and conditions of this Agreement.
(b) Each prepayment of the Term Loans made pursuant to subsection (A)
above shall be applied to reduce the aggregate outstanding principal amount of
the Term Loans, ratably among the Lenders holding Term Loans in proportion to
the principal amount held by each, with each such reduction to be applied to
each scheduled principal payment to reduce the scheduled payment on the Term
Loans due under SECTION 2.5(C) on a pro rata basis across maturities. Each
prepayment of the Revolving Credit Loans made pursuant to subsection (A) above
shall be applied to reduce the aggregate outstanding principal amount of the
Revolving Credit Loans, ratably among the Lenders holding Revolving Credit Loans
in proportion to the principal amount held by each.
(c) Except to the extent due or made sooner pursuant to the provisions
of this Agreement, the Borrower will repay the aggregate outstanding principal
of the Term Loans in the amounts (as such amount may be reduced as provided in
this Agreement) and on the dates set forth below:
Date Quarterly Payment
---- -----------------
April 1, 1998 $1,250,000
July 1, 1998 $1,250,000
October 1, 1998 $1,250,000
January 1, 1999 $1,250,000
April 1, 1999 $1,500,000
July 1, 1999 $1,500,000
October 1, 1999 $1,500,000
January 1, 2000 $1,500,000
April 1, 2000 $1,750,000
July 1, 2000 $1,750,000
October 1, 2000 $1,750,000
January 1, 2001 $1,750,000
April 1, 2001 $2,000,000
July 1, 2001 $2,000,000
October 1, 2001 $2,000,000
January 1, 2002 $2,000,000
April 1, 2002 $2,250,000
July 1, 2002 $2,250,000
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October 1, 2002 $2,250,000
December 16, 2002 $2,250,000
To the extent not previously paid, the aggregate outstanding principal of the
Term Loans shall be due and payable on the Term Loan Facility Maturity Date.
(d) Except to the extent due or made sooner pursuant to the provisions
of this Agreement, the Borrower will repay the aggregate outstanding principal
amount of the Revolving Credit Loans in full on the Revolving Credit Facility
Maturity Date. Except to the extent due or made sooner pursuant to the
provisions of this Agreement, the Borrower will repay the aggregate outstanding
principal amount of the Swingline Loans in full on the Swingline Maturity Date.
(e) In the event that, at any time, the sum of (i) the aggregate
principal amount of the Revolving Credit Loans outstanding on any date (after
giving effect to all repayments thereof on such date), (ii) the aggregate Letter
of Credit Outstandings (after giving effect to all repayments thereof on such
date), and (iii) the aggregate Swingline Loans outstanding at such time
(excluding the aggregate amount of any Swingline Loans to be repaid with
proceeds of Revolving Credit Loans made on the date of determination after
giving effect to all repayments on such date) at such time exceeds the lesser of
the Total Revolving Credit Commitment at such time (after giving effect to any
termination or reduction thereof as of such date) or the Revolving Credit
Borrowing Availability, the Borrower will immediately repay the principal amount
of the Swingline Loans in the amount of such excess and, to the extent of any
excess remaining after prepayment in full of outstanding Swingline Loans, the
Borrower will immediately prepay the outstanding principal amount of the
Revolving Credit Loans in the amount of such excess; provided, however, such
payment shall be accompanied by all amounts required under SECTION 2.13 if
applied to a LIBOR Loan and such payment is not made on the last day of the
Interest Period applicable thereto, and (B) to the extent such excess amount
required to be repaid is greater than the aggregate principal amount of the
Swingline Loans and Revolving Credit Loans outstanding immediately prior to the
application of such repayment, the amount so repaid shall be retained by the
Agent and held in the Cash Collateral Account as security for the Borrower's
Credit Obligations, as more particularly described in SECTION 2.17(I), and
thereupon such cash shall be deemed to reduce the aggregate Reimbursement
Obligations by an equivalent amount.
(f) On the date of receipt by the Borrower or any of its Subsidiaries
of any net cash proceeds from (i) any issuance of equity securities in excess of
$25,000,000 per individual issuance or series of related issuances (other than
an issuance of equity securities to the investors under the Investment Agreement
and the Shareholders Agreements and to Leeway & Co. under the Securities
Purchase Agreement) or (ii) debt securities (other than Debt expressly permitted
by SECTION 6.2 hereof and not requiring consent of the Required Lenders); the
Borrower shall make a mandatory repayment of principal of the Term Loans and
Revolving Credit Loans (as set forth in subsection (I) below) in an amount equal
to one hundred percent (100%) of such net cash proceeds (net of any underwriting
discounts and commissions and other reasonable costs associated with such
issuance); provided, however, in connection with a qualified initial public
offering of the Borrower's common stock with an underwriter of national
reputation, the Borrower shall only be required to make a mandatory prepayment
of principal on the Term Loans and Revolving Credit Loans (as set forth in
subsection (I) below) in an amount equal to the first $20,000,000 of net cash
proceeds thereof.
(g) On the date of receipt by the Borrower or any of its Subsidiaries
of any net cash proceeds from any sale or disposition of assets, other than
sales or dispositions permitted under clauses (I), (II), (IV) AND (V) of SECTION
6.5, the sale of permitted temporary overnight investments or the sale of
certain assets as contemplated by the Investment Agreement, the Borrower shall
make a mandatory repayment of principal of the
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Term Loans and Revolving Credit Loans (as set forth in subsection (I) below) in
an amount equal to one-hundred percent (100%) of such net cash proceeds.
(h) On the date of receipt by the Borrower or any of its Subsidiaries
of any cash prepayment received in reduction of the principal balance of the
Palestine Limited Partnership Note, the Borrower shall make a mandatory
repayment of principal of the Term Loans and Revolving Credit Loans (as set
forth in subsection (I) below) in an amount equal one hundred percent (100%) of
such payment; provided, however, that the provisions of this clause (h) shall
not be effective until consummation of the Principal Merger Transaction.
(i) Each prepayment of the Loans made pursuant to subsections (F), (G)
and (H) above shall be applied, first, to reduce the aggregate outstanding
principal amount of the Term Loans, ratably among the Lenders holding Term Loans
in proportion to the principal amount held by each, with such reduction to be
applied to each scheduled principal payment on the Term Loans due under
subsection (C) above, on a pro rata basis across maturities, and upon payment in
full of the Term Loans, to reduce the aggregate outstanding principal amount of
the Revolving Credit Loans, ratably among the Lenders holding Revolving Credit
Loans in proportion to the principal amount held by each. Each payment or
prepayment of a LIBOR Loan made pursuant to the provisions of this SECTION 2.5
on a day other than the last day of the Interest Period applicable thereto shall
be made together with all amounts required under SECTION 2.13 to be paid as a
consequence thereof.
2.6. Interest.
(a) The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full, (i) at the Adjusted Base Rate, as in effect from
time to time, during such periods as such Loan is a Base Rate Loan, or (ii) at
the Adjusted LIBOR Rate, as in effect from time to time, during such periods as
such Loan is a LIBOR Loan.
(b) Any principal amounts of the Loans not paid when due and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other fees and amounts hereunder not paid when due (whether at maturity,
pursuant to acceleration or otherwise), shall bear interest at a rate per annum
equal to the rate otherwise applicable to such Loan plus two percentage points
(2.0%), and such default interest shall be payable on demand. Further, but
without duplication of the foregoing, during the existence of any Event of
Default in response to which the Lenders do not elect to declare the outstanding
principal amounts of the Loans immediately due and payable, if required by the
Required Lenders, the Borrower will pay interest on the dates provided pursuant
to subsection (C), below, in respect of the unpaid principal amount of each
Loan, from the date the Event of Default first exists until it is cured or
waived, at a rate per annum equal to the rate otherwise applicable to such Loan
plus two percentage points (2.0%) and such interest shall be payable on demand.
To the greatest extent permitted by law, interest shall continue to accrue after
the filing by or against the Borrower of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any
Base Rate Loan or portion thereof paid or prepaid pursuant to the
provisions of SECTION 2.5, except as provided hereinbelow), in arrears
on the first Business Day of each successive January, April, July and
October, beginning with the first such day to occur after the Closing
Date; provided, that in the event the Loans are repaid or prepaid in
full and the Total Commitment has been terminated, then accrued
interest in respect of all Base Rate Loans shall be payable together
with such repayment or prepayment on the date thereof;
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(ii) in respect of each LIBOR Loan (including any
LIBOR Loan or portion thereof paid or prepaid pursuant to the
provisions of SECTION 2.5, except as provided hereinbelow), in arrears,
on the last Business Day of the Interest Period applicable thereto
(subject to the provisions of clause (IV) in SECTION 2.8); provided,
that in the event all LIBOR Loans made pursuant to a single Borrowing
are repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether
pursuant to acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Loan Document
shall be deemed to establish or require the payment of interest to any Lender in
an amount in excess of the maximum amount permitted by applicable law. If the
amount of interest or other charges payable for the account of any Lender on any
payment date would exceed the maximum amounts permitted by applicable law to be
charged by such Lender, the amount of interest payable for its account on such
payment date shall be automatically reduced to such maximum permissible amounts.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amounts permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent payment date shall be automatically increased
to such maximum permissible amount, provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the previous sentence. The
parties hereto understand and believe that if Tennessee or Oregon law were to
apply, this lending transaction complies with the usury laws of the State of
Tennessee or Oregon. If at any time, any amount of interest or other charges
actually paid by the Borrower on or with respect to any Loan is determined to be
in excess of the maximum amount permitted by applicable law, such excess amount
shall be credited as a prepayment of the outstanding principal balance of the
applicable Loan as of the date paid or, if such Loan has been paid in full,
refunded to the Borrower.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation; provided, however, that the failure of the Agent to
provide the Borrower or the Lenders with any such notice shall neither affect
any obligations of the Borrower or the Lenders hereunder nor result in any
liability on the part of the Agent to the Borrower or any Lender. Each such
determination (including each determination of the Reserve Requirement in
connection with a Borrowing of LIBOR Loans) shall, absent manifest error, be
final, conclusive and binding on all parties hereto.
2.7. Fees. The Borrower agrees to pay:
(a) To First Union, for its own account, on the date of this Agreement,
the fees described in the Fee Letter, in the amounts set forth therein as due
and payable on the date of this Agreement and to the extent not theretofore paid
to First Union;
(b) To the Agent, for the account of each Lender with a Revolving
Credit Commitment, a commitment fee per annum for the period from the date of
this Agreement to the Revolving Credit Facility Termination Date at the rate per
annum as determined under the following matrix with reference to the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR, applied to the
average daily Unutilized Revolving Credit Commitment of such Lender, payable in
arrears (i) on the first Business Day of each successive January, April, July
and October, beginning with the first such day to occur after the Closing Date,
and (ii) on the Revolving Credit Facility Termination Date:
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Ratio of Consolidated Adjusted
Debt to Annualized Consolidated EBITDAR Fee Percentage
--------------------------------------- --------------
Greater than or equal to
2.75 to 1.0 0.500%
Less than 2.75 to 1.0 0.375%
From the Closing Date until the fifth (5) Business Day after receipt by
the Agent of the financial statement for the fiscal quarter ended June 30, 1997
pursuant to SECTION 5.1(A) below, the fee percentage shall be 0.5%. The fee
percentage shall be reset from time to time as the calculation of Applicable
Margin changes as set forth herein.
(c) To the Agent, for the account of each L/C Participant, a letter of
credit fee in respect of each Letter of Credit for the period from the date of
its issuance to the date of its termination, at a rate per annum equal to the
Applicable Margin for LIBOR Loans in effect from time to time during such
period, on the daily average Stated Amount thereof, payable in arrears (i) on
the first Business Day of each successive January, April, July and October,
beginning with the first such day to occur after the Closing Date, and (ii) on
the later of the Revolving Credit Facility Termination Date or the date of
termination of the last outstanding Letter of Credit;
(d) To the Issuing Bank, for its own account, such commissions,
issuance fees, transfer fees and other fees and charges incurred in connection
with the issuance and administration of each Letter of Credit as are customarily
charged from time to time by the Issuing Bank for the performance of such
services in connection with similar letters of credit, or as may be otherwise
agreed to by the Borrower; and
(e) To the Agent, for its own account, the annual administrative fees
provided in the Fee Letter, on the terms, in the amounts and at the times set
forth therein.
2.8. Interest Periods. Concurrently with the giving of any Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, or three month period (subject to SECTION 2.11);
provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing
shall at all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan
shall commence on the date of the Borrowing of such Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) the Borrower may not select any Interest Period
that begins prior to the Closing Date or that expires after (y) the
Revolving Credit Facility Maturity Date, with respect to Revolving
Credit Loans that are to be maintained as LIBOR Loans, or (z) Term Loan
Facility Maturity Date, with respect to Term Loans that are to be
maintained as LIBOR Loans;
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(iv) if any Interest Period otherwise would expire on
a day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day unless such next succeeding Business
Day falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) no Interest Period with respect to Term Loans
that are to be maintained as LIBOR Loans may be selected that would end
after a scheduled date for repayment of principal of the Term Loans
occurring on or after the first day of such Interest Period unless,
immediately after giving effect to such selection, the aggregate
principal amount of Term Loans that are Base Rate Loans or that have
Interest Periods expiring on or before such principal repayment date
equals or exceeds the principal amount required to be paid on such
principal repayment date;
(vi) if any Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month during
which such Interest Period would otherwise expire, such Interest Period
shall expire on the last Business Day of such calendar month; and
(vii) if, upon the expiration of any Interest Period
applicable to a Borrowing of LIBOR Loans, the Borrower shall have
failed to elect a new Interest Period to be applicable to such LIBOR
Loans, then the Borrower shall be deemed to have elected to convert
such LIBOR Loans into Base Rate Loans as of the expiration of the then
current Interest Period applicable thereto.
2.9. Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day to elect (i)
to convert all or a portion of the outstanding principal amount of any Base Rate
Loans under either Credit Facility into LIBOR Loans under the same Credit
Facility, or to convert any LIBOR Loans under either Credit Facility the
Interest Periods for which end on the same day into Base Rate Loans under the
same Credit Facility, or (ii) to continue all or a portion of the outstanding
principal amount of any LIBOR Loans under either Credit Facility the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (i) any such conversion of LIBOR Loans into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; (ii) any such
conversion of Base Rate Loans into, or continuation of, LIBOR Loans shall
involve an aggregate principal amount of not less than $3,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof; (iii) no partial
conversion of LIBOR Loans made pursuant to a single Borrowing shall reduce the
outstanding principal amount of such LIBOR Loans to less than $3,000,000 or to
any greater amount not an integral multiple of $1,000,000 in excess thereof,
(iv) no such conversion or continuation shall be permitted with regard to any
Base Rate Loans that are Swingline Loans, and (v) no conversion of Base Rate
Loans into LIBOR Loans or continuation of LIBOR Loans into a new Interest Period
shall be permitted during the continuance of a Default or Event of Default. If a
LIBOR Loan is converted into a Base Rate Loan on any day other than the last day
of the Interest Period applicable thereto, the Borrower will pay, upon such
conversion, all amounts required under SECTION 2.13 to be paid as a consequence
thereof.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 12:00 noon, Charlotte time, three (3) Business
Days prior to the effective date of any conversion of Base Rate Loans into, or
continuation of, LIBOR Loans and one (1) Business Day prior to the effective
date of any conversion of LIBOR Loans into Base Rate Loans. Each such notice
(each, a "Notice of Conversion/Continuation") shall be irrevocable, shall be
given in the form of EXHIBIT B-2 and shall specify (x) the date of such
conversion or continuation (which shall be a Business Day), (y) in the case of a
conversion into, or a continuation of, LIBOR Loans, the Interest Period to be
applicable thereto, and (z) the aggregate amount and Type of the Loans being
converted or continued and the Credit Facility under which such Loans were
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made. Upon the receipt of a Notice of Conversion/Continuation, the Agent will
promptly notify each Lender having a Commitment under the relevant Credit
Facility of the proposed conversion or continuation. In the event that the
Borrower shall fail to deliver a Notice of Conversion/ Continuation as provided
herein with respect to any outstanding LIBOR Loans, such LIBOR Loans shall
automatically be converted to Base Rate Loans upon the expiration of the then
current Interest Period applicable thereto (unless repaid pursuant to the terms
hereof).
2.10. Method of Payments; Computations.
(a) All payments by the Borrower hereunder shall be made without
setoff, counterclaim or other defense, in Dollars and in immediately available
funds to the Agent, for the account of the Lenders or the Swingline Lender, as
the case may be (except as otherwise expressly provided herein as to payments
required to be made directly to the Issuing Bank and the Lenders) at its office
referred to in SECTION 10.4, prior to 12:00 noon, Charlotte time, on the date
payment is due. Any payment made as required hereinabove, but after 12:00 noon,
Charlotte time, shall be deemed to have been made on the next succeeding
Business Day. If any payment falls due on a day that is not a Business Day, then
such due date shall be extended to the next succeeding Business Day (except that
in the case of LIBOR Loans to which the provisions of clause (IV) in SECTION 2.8
are applicable, such due date shall be the next preceding Business Day), and
such extension of time shall then be included in the computation of payment of
interest, fees or other applicable amounts at the applicable rate in effect
immediately prior to such extension.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender. The Agent will distribute to the Issuing Bank like
amounts relating to payments made to the Agent for the account of the Issuing
Bank in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment of principal, interest or fees
under SECTION 2.7 is due to any Lender hereunder that such payment will not be
made in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date, and the Agent may, in reliance on such
assumption, but shall not be obligated to, cause to be distributed to such
Lender on such due date an amount equal to the amount then due to such Lender.
If and to the extent the Borrower shall not have so made such payment in full to
the Agent, and without limiting the obligation of the Borrower to make such
payment in accordance with the terms hereof, such Lender shall repay to the
Agent forthwith on demand such amount so distributed to such Lender, together
with interest thereon for each day from the date such amount is so distributed
to such Lender until the date repaid to the Agent, at the Federal Funds Rate.
(d) With respect to each payment hereunder, except as specifically
provided otherwise herein or in any of the other Loan Documents, the Borrower
may designate by written notice to the Agent prior to or
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concurrently with such payment the Types of Loans that are to be paid, repaid or
prepaid, provided that (i) unless made together with all amounts required under
SECTION 2.13 to be paid as a consequence thereof, a prepayment of a LIBOR Loan
may be made only on the last day of the Interest Period applicable thereto, and
(ii) each payment on account of any Credit Obligations to or for the account of
any one or more Lenders shall be apportioned ratably among such Lenders in
proportion to the amounts of such Credit Obligations owed to them. In the
absence of any such designation by the Borrower, or if an Event of Default has
occurred and is continuing, the Agent shall make such designation as the
Required Lenders may direct, subject to the foregoing and to the other
provisions of this Agreement.
(e) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed; provided, however, that interest calculated
with respect to the Base Rate shall be computed on the basis of a 365/366-day
year and the actual days elapsed.
2.11. Increased Costs, Change in Circumstances, Etc.
(a) If, at any time after the Closing Date and from time to time, the
adoption or modification of any applicable law, rule or regulation, or any
interpretation or administration thereof by any Governmental Authority or
central bank (whether or not having the force of law) charged with the
interpretation, administration or compliance of the Lenders with any of such
requirements, shall, subject to the provisions of SECTION 2.12 which shall be
controlling as to the matters covered thereby:
(i) subject any Lender to, or increase the net amount
of, any tax, impost, duty, charge or withholding with respect to any
amount received or to be received hereunder in connection with LIBOR
Loans (other than taxes imposed on net income or profits of, or any
branch or franchise tax applicable to, such Lender or a Lending Office
of such Lender);
(ii) change the basis of taxation of payments to any
Lender in connection with LIBOR Loans (other than changes in taxes on
the net income or profits of, or any branch or franchise tax applicable
to, such Lender or a Lending Office of such Lender);
(iii) impose, increase or render applicable any reserve
(other than the Reserve Requirement), capital adequacy, special deposit
or similar requirement against assets of, deposits with or for the
account of, or loans, credit or commitments extended by, any Lender or
a Lending Office of such Lender; or
(iv) impose on any Lender or in the London interbank
Eurodollar market any other condition or requirement (other than taxes
imposed on net income or profits of, or any branch or franchise tax
applicable to, such Lender or a Lending Office of such Lender, and
other than the Reserve Requirement to the extent otherwise taken into
account in the determination of LIBOR Rates) affecting this Agreement
or LIBOR Loans;
and the result of any of the foregoing is to increase the costs to any Lender of
agreeing to make, making, funding or maintaining any LIBOR Loans or to reduce
the yield or rate of return of such Lender on any LIBOR Loans to a level below
that which such Lender could have achieved but for the adoption or modification
of any such requirements, the Borrower will, within fifteen (15) days after
delivery to the Borrower by such Lender of written demand therefor (with a copy
thereof to the Agent), pay to such Lender such additional amounts relating or
directly corresponding to the Loans as shall compensate such Lender for such
increase in costs or reduction in return.
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(b) If, at any time after the Closing Date and from time to time, the
adoption or modification of any applicable federal, state or local law, rule or
regulation regarding any Lender's required level of capital (including any
allocation of capital requirements or conditions, but excluding federal, state
or local income tax liability), or the implementation of any such requirements
previously adopted but not implemented prior to the Closing Date, or any
interpretation or administration thereof by any Governmental Authority (whether
or not having the force of law) charged with the interpretation, administration
or compliance of such Lender with any of such requirements, has or would have
the effect of reducing the rate of return on such Lender's capital as a
consequence of its Commitments, Loans or participations in Letters of Credit
hereunder to a level below that which such Lender could have achieved but for
such adoption, modification, implementation or interpretation (taking into
account such Lender's policies with respect to capital adequacy), the Borrower
will, within fifteen (15) days after delivery to the Borrower by such Lender of
written demand therefor (with a copy thereof to the Agent), pay to such Lender
such additional amounts as will compensate such Lender for such reduction in
return.
(c) If, on or prior to the first day of any Interest Period, by reason
of changes arising after the date of this Agreement affecting the London
interbank Eurodollar market, (i) the Agent shall have determined that Dollar
deposits in the amount of any Lender's required LIBOR Loan pursuant to such
Borrowing are not generally available in the London interbank Eurodollar market
or that the rate at which such Dollar deposits are being offered will not
adequately and fairly reflect the cost to such Lender of making or maintaining
its LIBOR Loan during such Interest Period or (ii) the Agent shall have
determined that adequate and reasonable means do not exist for ascertaining the
applicable LIBOR Rate for such Interest Period, the Agent will forthwith so
notify the Borrower and the Lenders, whereupon the obligation of (y) in the case
of clause (I) above, each such affected Lender, and (z) in the case of clause
(II) above, all Lenders, in each case to make, to convert Base Rate Loans into,
or to continue, LIBOR Loans shall be suspended (including pursuant to the
Borrowing to which such Interest Period applies), and any Notice of Borrowing or
Notice of Conversion/Continuation given at any time thereafter with respect to
LIBOR Loans shall be deemed to be a request for Base Rate Loans (but in the case
of clause (I) above, only to the extent of such affected Lender's Pro Rata Share
thereof) until the Agent or the affected Lender, as the case may be, shall have
determined that the circumstances giving rise to such suspension no longer exist
(and the affected Lender, if making such determination, shall have so notified
the Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the Closing Date and from time to time, the adoption or modification
of any applicable law, rule or regulation, or any interpretation or
administration thereof by any Governmental Authority or central bank (whether or
not having the force of law) charged with the interpretation, administration or
compliance of any Lender with any of such requirements, has or would have the
effect of making it unlawful for such Lender to honor its obligation to make
LIBOR Loans or to continue to make or maintain LIBOR Loans, such Lender will
forthwith so notify the Agent and the Borrower, whereupon (i) each of such
Lender's outstanding LIBOR Loans shall automatically, on the expiration date of
the Interest Period applicable thereto or, to the extent any such LIBOR Loan may
not lawfully be maintained as a LIBOR Loan until such expiration date (subject
to payment as may be required by SECTION 2.13), upon such notice, be converted
into a Base Rate Loan and (ii) the obligation of such Lender to make, to convert
Base Rate Loans into, or to continue, LIBOR Loans shall be suspended, and any
Notice of Borrowing or Notice of Conversion/Continuation given at any time
thereafter with respect to LIBOR Loans shall, as to such Lender, be deemed to be
a request for Base Rate Loans, until such Lender shall have determined that the
circumstances giving rise to such suspension no longer exist and shall have so
notified the Agent, and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. Each Lender agrees
that, upon the
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occurrence of any event giving rise to the operation of this Section with
respect to such Lender, it will, if requested by the Borrower and to the extent
permitted by law, endeavor in good faith to designate another Lending Office for
its LIBOR Loans, but only if such designation would make it lawful for such
Lender to continue to make or maintain LIBOR Loans hereunder; provided that such
designation is made on such terms that such Lender, in its good faith
determination, suffers no increased cost or economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of this Section.
(f) Each demand for payment under this Section shall be preceded by a
notice to the Borrower of such anticipated demand, which notice shall specify in
reasonable detail the basis for such demand, but the failure to provide such
advance notice shall not relieve the Borrower of any of its obligations
hereunder. Nothing in this Section shall be construed or so operate as to
require the Borrower to pay any interest, fees, costs or charges in excess of
that permitted by applicable law. Notwithstanding the foregoing, all demands for
payment under this SECTION 2.11 must be made on the Borrower within one hundred
twenty (120) days after the relevant Lender obtains actual knowledge that such
Lender is entitled to such payment.
2.12. Taxes.
(a) So long as the applicable Lender shall have complied with the
provisions of SECTION 2.12(C) hereof, any and all payments by the Borrower
hereunder or under any Note shall be made, in accordance with the terms hereof
and thereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (other than taxes imposed on net income or
profits of, or any branch or franchise taxes applicable to, the Agent, the
Issuing Bank or any Lender) (y) by the jurisdiction under the laws of which the
Agent, the Issuing Bank or such Lender, as the case may be, is organized or any
political subdivision thereof and (z) in the case of each Lender, by the
jurisdiction in which any Lending Office of such Lender is located or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to the Agent, the
Issuing Bank or any Lender, so long as the applicable Lender shall have complied
with the provisions of SECTION 2.12(C) hereof, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section),
the Agent, the Issuing Bank or such Lender, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower will make such deductions, and (iii) the Borrower will pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. If and to the extent that any Lender
subsequently shall be refunded or otherwise recover all or any part of such
deduction, it shall refund to the Borrower the amount so recovered.
(b) So long as the applicable Lender shall have complied with the
provisions of SECTION 2.12(C), the Borrower will indemnify the Agent, the
Issuing Bank and each Lender for the full amount of Taxes (including, without
limitation, any Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Agent, the Issuing Bank or such Lender, as the case may be,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date the Agent, the Issuing Bank or any Lender, as the case may be, makes
written demand therefor and delivers to the Borrower the original receipt of
Taxes paid by it or an invoice from the relevant taxing authority regarding such
Taxes. Within thirty (30) days after the date of any payment of Taxes pursuant
to this Section, the Borrower will furnish to the Agent, the Issuing Bank or the
relevant Lender, as the case may be, the original or a certified copy of a
receipt or other relevant documentation evidencing payment thereof; provided
that demand therefor must be made on the Borrower within one hundred twenty
(120) days after the Issuing Bank's or relevant Lender's actual knowledge that
such Lender is entitled to such payment. If and to the extent that any Lender
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subsequently shall be refunded or otherwise recover all or any part of such
payment of taxes, it shall refund to the Borrower the amount so recovered.
(c) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code, and such Lender is eligible to
claim exemption from United States withholding tax under Section 1441 or 1442 of
the Internal Revenue Code, such Lender will deliver to the Agent and the
Borrower:
(i) if such Lender is eligible to claim an exemption
from, or a reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the payment of
any interest in the first calendar year, and before the payment of any
interest in each third succeeding calendar year, during which interest
may be paid to such Lender under this Agreement;
(ii) if such Lender is eligible to claim that interest
paid under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Lender, and in each succeeding taxable year of
such Lender, during which interest may be paid to such Lender under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under
the Internal Revenue Code or other laws of the United States as a
condition to exemption from, or reduction of, United States withholding
tax.
Each Lender as of the Closing Date, and each assignee under any
Assignment and Acceptance (as of the date thereof), that is a "foreign
corporation, partnership or trust" as described herein must be eligible to claim
a complete exemption and must provide applicable forms to the Borrower as
required by this SECTION 2.12. Each such Lender will promptly notify the Agent
and the Borrower of any changes in circumstances that would modify or render
invalid any claimed exemption or reduction.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required under subsection
(C) above are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax. For purposes of this
Section, a distribution hereunder by the Agent to or for the account of any
Lender shall be deemed a payment by the Borrower.
(e) If the IRS or any other Governmental Authority, domestic or
foreign, asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (whether because the
appropriate form was not delivered or was not properly executed, because such
Lender failed to notify the Agent of a change in circumstances that rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this subsection (E), together with all costs,
expenses and reasonable attorneys' fees incurred or paid in connection
therewith.
(f) If at any time the Borrower requests any Lender to deliver any
forms other than documentation pursuant to subsection (C) above, then the
Borrower shall, upon demand of such Lender, reimburse
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such Lender for any reasonable costs or expenses incurred by such Lender in the
preparation or delivery of such forms or other documentation.
(g) Each Lender agrees that, if the Borrower is required to pay
additional amounts to or for the account of any Lender pursuant to subsection
(A) or (B) above, then such Lender will, to the extent permitted by law,
endeavor in good faith to designate another Lending Office for its LIBOR Loans,
but only if such designation would make it lawful for such Lender to continue to
make or maintain LIBOR Loans hereunder; provided that such designation is made
on such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section.
2.13. Compensation. The Borrower will compensate each Lender upon
demand for all losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund or
maintain LIBOR Loans, but excluding loss of anticipated profit with respect to
any Loans) that such Lender may sustain (i) if for any reason (other than a
default by Agent or such Lender) a Borrowing of, or conversion of or into, LIBOR
Loans does not occur on a date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of conversion of
LIBOR Loans pursuant to SECTION 2.11(D) or acceleration of the maturity of such
Loans pursuant to SECTION 8.1), (iii) if any prepayment of any of its LIBOR
Loans is not made on any date specified in a notice of prepayment given by the
Borrower, or (iv) as a consequence of any other failure by the Borrower to make
any payments with respect to LIBOR Loans when due hereunder; provided, however,
such Lender must make such demand for payment on the Borrower within one hundred
twenty (120) days after such Lender obtains actual knowledge that such Lender is
entitled to such payment. Calculation of all amounts payable to a Lender under
this Section shall be made as though such Lender had actually funded its
relevant LIBOR Loan through the purchase of a Eurodollar deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of such LIBOR Loan,
having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore Lending Office of such
Lender to a Lending Office of such Lender in the United States; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section. Determinations by any Lender for purposes of
this Section of any such losses, expenses or liabilities shall, absent manifest
error, be conclusive, provided that such determinations are made in good faith.
2.14. Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower (i) to finance the redemption of certain preferred stock and redeemable
preferred stock pursuant to the terms of, and simultaneously with the closing of
the transactions contemplated by, the Investment Agreement, (ii) to refinance
certain existing Debt, including the payment in full of the obligations of
Principal and its Subsidiaries pursuant to the Loan Agreement dated as of July
26, 1996, between Principal, its Subsidiaries, AmSouth Bank of Alabama and First
Union and lenders and agents, as such parties are identified therein, (iii) to
pay reasonable fees and expenses in connection herewith and the Investment
Agreement and the Securities Purchase Agreement, (iv) to finance Permitted
Acquisitions pursuant to this Agreement; (v) to provide working capital for the
Borrower and its Subsidiaries; and (vi) for general corporate purposes.
2.15. Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes a payment
or payments to or for the account of the Agent, the Lenders or the Issuing Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee,
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receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Credit Obligation intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Agent to a Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent shall redistribute such amounts to the Lenders on the
same basis as such amounts were originally distributed.
2.16. Pro Rata Treatment.
(a) Except for Swingline Loans, all funding of Borrowings,
continuations and conversions of Loans shall be made by the Lenders pro rata on
the basis of their relative Commitments (in the case of the funding of the Term
Loans and the initial funding of Revolving Credit Loans) or Loans (in the case
of continuations and conversions of Loans), as applicable from time to time.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise,
applicable to the payment of any of the Credit Obligations that exceeds its
ratable share (according to the proportion of (i) the amount of such Credit
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of such Credit Obligations due and payable to all Lenders at such time)
of payments on account of such Credit Obligations then or therewith obtained by
all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Credit Obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such other Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to the provisions of this subsection may, to the
fullest extent permitted by law, exercise any and all rights of payment
(including, without limitation, setoff, banker's lien or counterclaim) with
respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
2.17. Letters of Credit.
(a) Subject to and upon the terms and conditions herein set forth, so
long as no Default or Event of Default has occurred and is continuing, the
Issuing Bank will, at any time and from time to time on and after the Closing
Date and prior to the Revolving Credit Facility Termination Date, and upon
request by the Borrower in accordance with the provisions of SECTION 2.17(B),
issue for the account of the Borrower one or more irrevocable standby letters of
credit denominated in Dollars and in a form customarily used or otherwise
approved
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by the Issuing Bank (together with all amendments, modifications and supplements
thereto, substitutions therefor and renewals and restatements thereof,
collectively, the "Letters of Credit"). Notwithstanding the foregoing:
(i) No Letter of Credit shall be issued the Stated
Amount upon issuance of which (i) when added to all other Letter of
Credit Outstandings at such time, would exceed $5,000,000 or (ii) when
added to all other Letter of Credit Outstandings at such time
(exclusive of Reimbursement Obligations that are repaid with the
proceeds of, and simultaneously with the incurrence of, Revolving
Credit Loans) and the aggregate principal amount of all Revolving
Credit Loans and Swingline Loans then outstanding, would exceed the
lesser of the Total Revolving Credit Commitment at such time or the
Revolving Credit Borrowing Availability;
(ii) No Letter of Credit shall be issued that by its
terms expires more than one (1) year after its date of issuance or the
Revolving Credit Facility Maturity Date, whichever is earliest;
provided, however, that a Letter of Credit may, if requested by the
Borrower and approved by the Issuing Bank, provide by its terms, and on
terms acceptable to the Issuing Bank, for renewal for successive
periods of one year or less, unless and until the Issuing Bank shall
have delivered a notice of nonrenewal to the beneficiary of such Letter
of Credit; and
(iii) The Issuing Bank shall be under no obligation to
issue any Letter of Credit if, at the time of such proposed issuance,
(A) any order, judgment or decree of any Governmental Authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon the Issuing
Bank with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which the Issuing Bank is not otherwise
compensated) not in effect on the Closing Date, or any unreimbursed
loss, cost or expense that was not applicable, in effect or known to
the Issuing Bank as of the Closing Date and that the Issuing Bank in
good xxxxx xxxxx material to it, or (B) the Issuing Bank shall have
actual knowledge, or shall have received notice from any Lender, prior
to the issuance of such Letter of Credit that one or more of the
conditions specified in SECTION 3.3 are not then satisfied or that the
issuance of such Letter of Credit would violate the provisions of
subsection (I) above unless the Required Lenders otherwise authorize
the Issuing Bank to issue such Letter of Credit.
(b) Whenever the Borrower desires the issuance of a Letter of Credit,
the Borrower will notify the Issuing Bank (with copies to the Agent) in writing,
by 12:00 noon, Charlotte, North Carolina local time, at least three (3) Business
Days (or such shorter period as is acceptable to the Issuing Bank in any given
case) prior to the requested date of issuance thereof. Each such request (each,
a "Letter of Credit Request") may not be revoked at any time after the Issuing
Bank has completed processing and issued the Letter of Credit, shall be given in
the form of EXHIBIT B-4 and shall be appropriately completed to specify (i) the
proposed date of issuance (which shall be a Business Day), (ii) the proposed
Stated Amount and expiry date of the Letter of Credit, and (iii) the name and
address of the proposed beneficiary or beneficiaries of the Letter of Credit.
The Borrower will also complete any application procedures and documents
reasonably required by the Issuing Bank in connection with the issuance of any
Letter of Credit, it being understood that in the event of any conflict between
such documents and the Loan Documents, the Loan Documents shall control. The
Agent will, promptly upon its receipt thereof, notify each Lender of the Letter
of Credit Request. Upon its issuance of any Letter of Credit, the Issuing Bank
will promptly notify each Lender of such issuance and will notify each Lender
with a Revolving Credit Commitment of the amount of its participation therein
under SECTION 2.17(C).
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(c) Immediately upon the issuance of any Letter of Credit, the Issuing
Bank shall be deemed to have sold and transferred to each Lender with a
Revolving Credit Commitment, and each such Lender (each, in such capacity, an
"L/C Participant") shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation, pro rata to the extent of its Revolving
Credit Percentage at such time, in such Letter of Credit, each drawing made
thereunder, and the obligations of the Borrower under this Agreement with
respect thereto and any security therefor (including the Collateral) or guaranty
pertaining thereto; provided, however, that the fees and other charges relating
to Letters of Credit described in SECTIONS 2.7(D) and (E) shall be payable
directly to the Issuing Bank as provided therein, and the L/C Participants shall
have no right to receive any portion thereof. Upon any change in the Revolving
Credit Commitments of any of the Lenders pursuant to SECTION 10.5, with respect
to all outstanding Letters of Credit and Reimbursement Obligations there shall
be an automatic adjustment to the participations pursuant to this Section to
reflect the new Revolving Credit Percentages of the assigning Lender and the
Eligible Assignee.
(d) The Borrower hereby agrees to reimburse the Issuing Bank by making
payment to the Agent, for the account of the Issuing Bank, in immediately
available funds, for any payment made by the Issuing Bank under any Letter of
Credit (each such amount so paid until reimbursed, together with interest
thereon payable as provided hereinbelow, a "Reimbursement Obligation")
immediately after, and in any event on the date of, such payment, together with
interest on the amount so paid by the Issuing Bank, to the extent not reimbursed
prior to 2:00 p.m., Charlotte, North Carolina local time, on the date of such
payment or disbursement, (i) for the period from the date of the payment to the
date of receipt by the Borrower from the Issuing Bank of notice of such payment,
at the Adjusted Base Rate as in effect from time to time during such period, and
(ii) for the period from the date of receipt by the Borrower from the Issuing
Bank of notice of such payment to the date the Reimbursement Obligation created
thereby is satisfied, at the Adjusted Base Rate as in effect from time to time
during such period plus two percentage points (2.0%), such interest also to be
payable on demand. The Borrower hereby authorizes and directs the Agent to, and
the Agent shall, pay the Issuing Bank all Reimbursement Obligations payable
hereunder by applying any funds then held in the Cash Collateral Account
established pursuant to SECTION 2.17(I), and if such funds shall be insufficient
to satisfy such Reimbursement Obligation in full, by drawing such amounts under
the Revolving Credit Facility (to the extent of availability thereunder) as of
the due dates of such Reimbursement Obligations, but the failure of the Agent to
so pay the Issuing Bank by drawing under the Revolving Credit Facility will not
affect the Borrower's obligations to pay the Reimbursement Obligations.
Notwithstanding any such draw against the Revolving Credit Facility, the Agent
shall provide the notices to the Borrower required by this SECTION 2.17(D). The
Issuing Bank will provide the Agent and the Borrower with prompt notice of any
payment or disbursement made under any Letter of Credit, although the failure to
give, or any delay in giving, any such notice shall not release, diminish or
otherwise affect the Borrower's obligations under this Section or any other
provision of this Agreement.
(e) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have satisfied in a timely manner in
full its Reimbursement Obligation to the Issuing Bank pursuant to SECTION
2.17(D), and to the extent that any amounts then held in the Cash Collateral
Account established pursuant to SECTION 2.17(I) shall be insufficient to satisfy
such Reimbursement Obligation in full, the Issuing Bank will promptly notify the
Agent, and the Agent will promptly notify each L/C Participant, of such failure.
If the Agent gives such notice prior to 11:00 a.m., Charlotte, North Carolina
local time, on any Business Day to any L/C Participant, such L/C Participant
will make available to the Agent, for the account of the Issuing Bank, its Pro
Rata Share (calculated with respect to its Revolving Credit Percentage) of the
amount of such payment on such Business Day in immediately available funds. If
the Agent gives such notice after 11:00 a.m., Charlotte, North Carolina local
time, on any Business Day to any such L/C Participant, such L/C Participant
shall make its Pro Rata Share of such amount available to the Agent on the next
succeeding Business Day. If and to the extent such L/C Participant shall not
have so made its Pro Rata Share of the amount of such payment
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available to the Agent, such L/C Participant agrees to pay to the Agent, for the
account of the Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Agent, at the Federal Funds Rate. The failure of any L/C Participant to
make available to the Agent its Pro Rata Share of any payment under any Letter
of Credit shall not relieve any other L/C Participant of its obligation
hereunder to make available to the Agent its Pro Rata Share of any payment under
any Letter of Credit on the date required, as specified above, but no L/C
Participant shall be responsible for the failure of any other L/C Participant to
make available to the Agent such other L/C Participant's Pro Rata Share of any
such payment. Each such payment by an L/C Participant under this SECTION 2.17(E)
of its Pro Rata Share of an amount paid by the Issuing Bank shall constitute a
Revolving Credit Loan by such Lender (the Borrower being deemed to have given a
timely Notice of Borrowing therefor) and shall be treated as such for all
purposes of this Agreement; provided that for purposes of determining the
available unused portion of the Total Revolving Credit Commitment immediately
prior to giving effect to the application of the proceeds of such Revolving
Credit Loans, the Reimbursement Obligation being satisfied thereby shall be
deemed not to be outstanding at such time.
(f) Whenever the Issuing Bank receives a payment in respect of a
Reimbursement Obligation as to which the Agent has received, for the account of
the Issuing Bank, any payments from the L/C Participants pursuant to SECTION
2.17(E), the Issuing Bank will promptly pay to the Agent, and the Agent will
promptly pay to each L/C Participant that has paid its Pro Rata Share thereof,
in immediately available funds, an amount equal to such L/C Participant's
ratable share (based on the proportionate amount funded by such L/C Participant
to the aggregate amount funded by all L/C Participants) of such Reimbursement
Obligation.
(g) The Reimbursement Obligations of the Borrower, and the obligations
of the L/C Participants to make payments to the Agent, for the account of the
Issuing Bank, with respect to Letters of Credit, shall be irrevocable, shall
remain in effect until the Issuing Bank shall have no further obligations to
make any payments or disbursements under any circumstances with respect to any
Letter of Credit, and, except to the extent resulting from any gross negligence
or willful misconduct on the part of the Issuing Bank as finally determined by a
court of competent jurisdiction and not subject to any appeal (or pursuant to
arbitration as set forth in SECTION 10.3(B)), shall not be subject to
counterclaim, setoff or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) Any lack of validity or enforceability of this
Agreement, any of the other Loan Documents or any documents or
instruments relating to any Letter of Credit;
(ii) Any change in the time, manner or place of
payment of, or in any other term of, all or any of the Credit
Obligations in respect of any Letter of Credit, whether or not the
Borrower has notice or knowledge thereof;
(iii) The existence of any claim, setoff, defense or
other right that the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting),
the Agent, the Issuing Bank, any Lender or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated hereby or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named
in any such Letter of Credit);
(iv) Any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect, any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, telecopier or otherwise, or any errors in translation or in
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interpretation of technical terms, other than due to the Issuing
Bank's gross negligence or willful misconduct;
(v) Any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of the Letter of
Credit (the Issuing Bank's sole obligation, in determining whether to
pay under any Letter of Credit, being to examine documents required to
be delivered under such Letter of Credit in good faith and without
gross negligence to ascertain that such documents appear on their face
to comply with the terms of such Letter of Credit), any non-
application or misapplication by the beneficiary or any transferee of
the proceeds of such drawing or any other act or omission of such
beneficiary or transferee in connection with such Letter of Credit;
(vi) The exchange, release, surrender or impairment
of any Collateral or other security for the Credit Obligations;
(vii) The occurrence of any Default or Event of
Default; or
(viii) Subject to the Issuing Bank's obligation set
forth in the parenthetical in clause (V) above, any other circumstance
or event whatsoever, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or
a discharge of, the Borrower or a guarantor.
None of the foregoing shall impair, prevent or otherwise affect any of the
rights and powers granted to the Issuing Bank hereunder. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall be binding upon the Borrower and each L/C Participant and
shall not create or result in any liability of the Issuing Bank to the Borrower
or any L/C Participant. It is expressly understood and agreed that, for purposes
of determining whether a wrongful payment under a Letter of Credit resulted from
the Issuing Bank's gross negligence or willful misconduct, (i) the Issuing
Bank's acceptance of documents that appear on their face to comply with the
terms of such Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, (ii) the
Issuing Bank's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including the
amount of any draft presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect (so long as such document appears on its face
to comply with the terms of such Letter of Credit), and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (iii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be deemed not to constitute gross
negligence or willful misconduct of the Issuing Bank.
(h) If at any time after the Closing Date the Issuing Bank or any L/C
Participant determines that the introduction of or any change in any applicable
law, rule, regulation, order, guideline or request or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Issuing Bank or
any L/C Participant with any request or directive by any such authority (whether
or not having the force of law) shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
Letters of Credit issued by the Issuing Bank or participated in by any L/C
Participant or (ii) impose on the Issuing Bank or any L/C Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to the
Issuing Bank or L/C Participant of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Issuing Bank or such
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L/C Participant hereunder or reduce the rate of return on its capital with
respect to Letters of Credit, then the Borrower will, within fifteen (15) days
after delivery to the Borrower by the Issuing Bank or such L/C Participant of
written demand therefor (with a copy thereof to the Agent), pay to the Issuing
Bank or such L/C Participant such additional amounts as shall compensate the
Issuing Bank or such L/C Participant for such increase in costs or reduction in
return; provided that such demand must be made on the Borrower within one
hundred twenty (120) days after the Issuing Bank or relevant L/C Participant
obtains actual knowledge that such Issuing Bank or L/C Participant is entitled
to such payment. A certificate submitted to the Borrower by the Issuing Bank or
such L/C Participant, as the case may be (a copy of which certificate shall be
sent by the Issuing Bank or such L/C Participant to the Agent), setting forth
the basis for the determination of such additional amount or amounts necessary
to compensate the Issuing Bank or such L/C Participant as aforesaid, shall be
conclusive and binding on the Borrower absent manifest error provided it is made
in good faith.
(i) At any time and from time to time (i) during the continuance of an
Event of Default, the Agent, at the direction, or with the consent, of the
Required Lenders, may require the Borrower to deliver to the Agent such
additional amount of cash as is equal to the difference between the aggregate
Stated Amount of all Letters of Credit at any time outstanding (whether or not
any beneficiary under any Letter of Credit shall have drawn or be entitled at
such time to draw thereunder) and the amount then on deposit in the Cash
Collateral Account (as hereinafter defined) and (ii) in the event of a repayment
under SECTION 2.5(E), the Agent will retain such amount as may then be required
to be retained under the proviso in SECTION 2.5(E), such amount in each case
under clauses (I) and (II) above to be held by the Agent in a cash collateral
account (the "Cash Collateral Account") as security for, and for application to,
the Borrower's Reimbursement Obligations. The Borrower hereby grants to the
Agent, for the benefit of the Issuing Lender and the Lenders, a lien upon and
security interest in the Cash Collateral Account and all amounts held therein
from time to time as security for Letter of Credit Outstandings, and for
application to the Borrower's Reimbursement Obligations as and when the same
shall arise. The Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest on the
investment of such amounts in Cash Investments, which investments shall be made
at the direction of the Borrower (unless a Default or Event of Default shall
have occurred and be continuing, in which case the determination as to
investments shall be made at the option and in the discretion of the Agent),
amounts in the Cash Collateral Account shall not bear interest. Interest and
profits, if any, on such investments shall accumulate in such account. In the
event of a drawing, and subsequent payment by the Issuing Bank, under any Letter
of Credit at any time during which any amounts are held in the Cash Collateral
Account, the Agent will deliver to the Issuing Bank an amount equal to the
Reimbursement Obligation created as a result of such payment (or, if the amounts
so held are less than such Reimbursement Obligation, all of such amounts) to
reimburse the Issuing Bank therefor. Any amounts remaining in the Cash
Collateral Account after the expiration of all Letters of Credit and
reimbursement in full of the Issuing Bank for all of its obligations thereunder
shall be held by the Agent, for the benefit of the Borrower, with such amounts
to be applied against the Credit Obligations in such order and manner (x) as the
Borrower may direct in the absence of a Default or an Event of Default and (y)
otherwise, as the Agent may direct. If the Borrower is required to provide cash
collateral pursuant to SECTION 2.5(E), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower on demand, provided that after
giving effect to such return (i) the sum of (x) the aggregate principal amount
of all Revolving Credit Loans, Letter of Credit Outstandings and Swingline Loans
outstanding at such time would not exceed the lesser of the Total Revolving
Credit Commitments at such time or the Revolving Credit Borrowing Availability
and (ii) no Default or Event of Default shall have occurred and be continuing at
such time. If the Borrower is required to provide cash collateral as a result of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower promptly after all Events of Default have been
waived. Notwithstanding anything to the contrary contained herein, Agent may,
without notice to the Borrower, sell or liquidate any of the foregoing
investments at any time if the proceeds thereof are required for any release of
funds permitted or required hereunder, and Agent shall not be liable or
responsible for any loss, cost or penalty resulting from any such sale or
liquidation. With respect to any funds received by Agent for deposit into the
Cash
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Collateral Account after 10:00 a.m., Charlotte, North Carolina, time, the Agent
shall not be required to invest such funds or to effect such investment
instruction until the following Business Day.
(j) Notwithstanding any termination of the Commitments or repayment of
the Loans, or both, the obligations of the Borrower under this SECTION 2.17
shall remain in full force and effect until the Issuing Bank and the L/C
Participants shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Closing. The closing of the transactions contemplated by
this Credit Agreement (the "Closing") shall take place at the offices of
Xxxxxxxx & Xxxxx, at 10:00 a.m. on December 17, 1996, or at such other place or
time as the parties hereto shall mutually agree.
3.2. Conditions of Loans and Advances. The obligations of the
Lenders to enter into this financing and to make the initial Loans under this
Agreement on the Closing Date are subject to the satisfaction or express written
waiver of the following conditions:
3.2.1. Executed Loan Documents.
(a) Loan Documents. The Notes and all other Loan Documents to be
executed on or prior to the Closing Date shall have been duly authorized,
executed and delivered to the appropriate Lenders and the Swingline Lender by
the Borrower, in form and substance satisfactory to the Lenders, shall be in
full force and effect and no Default shall exist thereunder, each Lender and the
Swingline Lender shall have received its original Notes and a copy of each other
Note, and the Agent shall have received a copy of each Note.
(b) Security and Pledge Agreement. The Security and Pledge Agreement
shall have been duly authorized, executed and delivered to the Agent and each
Lender by the Borrower and the Guarantors, together with all certificates for
the Stock being pledged thereunder and duly executed undated stock powers for
each such certificate, and together with all promissory notes, (duly endorsed in
blank), initial transaction statements and other documents requested by the
Agent and the Lenders to perfect the security interests granted therein. The
Security and Pledge Agreement shall be in full force and effect and no Default
shall exist thereunder, and the Agent and each Lender shall have received a
fully executed original thereof.
(c) Guaranty Documents. Each Subsidiary of the Borrower (other than
The Xxxxxxx Group, Inc. and InProNet, Inc.) existing as of the Closing Date
shall have duly authorized, executed and delivered to the Agent and each Lender
a Guaranty Agreement and the other Guaranty Documents in form and substance
satisfactory to the Lenders, each such document shall be in full force and
effect and no Default shall exist thereunder, and the Agent and each Lender
shall have received a fully executed original thereof.
(d) Financing Statements. Financing Statements and all other filings or
recordations necessary to perfect the security interest of the Agent, on behalf
of the Lenders, in the Collateral shall have been filed, and the Agent shall
have received confirmation in a form acceptable to the Lenders that such
security interest constitutes a valid and perfected first priority security
interest therein to the extent such security interest can be perfected by filing
a financing statement, subject only to Permitted Liens.
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(e) Mortgages; Title Insurance. The Mortgages shall have been duly
authorized, executed and delivered by the Borrower and the Guarantors (as
applicable), shall have been recorded, registered and filed in a manner
acceptable to the Agent, shall be in full force and effect and no default shall
exist thereunder, and the Agent shall have received fully executed copies
thereof, and each Lender shall have received a photocopy thereof. The Agent, for
the benefit of the Lenders, shall have received policies of title insurance or
title insurance binders in form and substance satisfactory to the Agent, from
title insurance companies duly licensed to do business in the states where the
Realty is located, selected by the Borrower and acceptable to the Agent, in
amounts satisfactory to the Agent but not to exceed the fair market value of the
Realty, on standard ALTA (1992) Loan Policy forms, with respect to each tract of
Realty being encumbered by the liens of the Mortgages, all premiums thereon
shall have been paid, and the policy shall insure that the Mortgages constitute
valid, enforceable first priority liens on the Realty, free and clear from all
title defects and encumbrances whatsoever except for and subject to Permitted
Liens, and with such exceptions as are acceptable to the Agent, and shall
include revolving credit endorsements, variable rate endorsements and such other
endorsements as the Agent may request, to the extent available in the applicable
jurisdictions. The title insurance policies (or binders, as the case may be)
with respect to the Realty may not contain general survey exceptions except with
the Agent's prior written consent.
(f) Surveys. The Agent shall have received a metes-and-bounds survey of
each tract or parcel of the Realty being encumbered by the lien of the
Mortgages, in form and substance satisfactory to the Agent.
(g) Environmental Assessments. The Agent shall have received an
environmental assessment with respect to each tract or parcel of the Realty, in
form and substance satisfactory to the Agent.
(h) Landlord Consents. A Landlord Consent with respect to each of the
hospital Leased Properties shall have been duly authorized, executed and
delivered to the Agent by the tenant and the landlord with respect thereto,
shall be in full force and effect and no Default shall exist thereunder, shall
be recorded, registered and filed in the appropriate real estate records in a
manner acceptable to the Agent within five (5) days following the Closing Date,
and the Agent shall have received a fully executed copy thereof.
(i) Certain Subordinated Debt. The obligations of the Borrower and its
Subsidiaries under the Professional Services Agreement and the Intercompany
Management Agreements existing as of the Closing Date shall be subordinated to
the Credit Obligations and the Guaranty Obligations on terms acceptable to the
Lenders in their sole discretion.
3.2.2. Closing Certificates; Etc.
(a) Certificate of the Borrower. The Agent and each Lender shall have
received a certificate dated as of the Closing Date from the Chief Executive
Officer or Chief Financial Officer of the Borrower, in form and substance
satisfactory to the Lenders, to the effect that, to their knowledge, (i) all
representations and warranties of the Borrower contained in this Agreement and
the other Loan Documents are true, correct and complete in all materials
respects as of the Closing Date, (ii) neither the Borrower nor any of its
Subsidiaries is in violation of any of the covenants contained in this Agreement
and the other Loan Documents, (iii) after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred and
is continuing, and (iv) the Borrower has satisfied each of the conditions set
forth in this Section to be satisfied by the Borrower.
(b) Secretaries' Certificates. The Agent and each Lender shall have
received a certificate dated as of the Closing Date from the Secretary or an
Assistant Secretary of the Borrower and each Guarantor, in form and substance
satisfactory to the Lenders, certifying: (i) that attached thereto is a true and
complete copy of the bylaws of such corporation as in effect on the date of such
certification; (ii) that attached thereto is a true and
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complete copy of resolutions adopted by the Board of Directors and stockholders
(if necessary) of such corporation, authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents, as applicable; and
(iii) as to the incumbency and genuineness of the signature of each officer of
such corporation executing this Agreement or any of the other Loan Documents and
authorized to request any Borrowing, as applicable.
(c) Articles of Incorporation. The Agent and each Lender shall have
received copies of the articles or certificate of incorporation of the Borrower
and each Guarantor and all amendments thereto, each certi fied as of a recent
date by the Secretary of State (or other equivalent officer) of its state of
incorporation, together with a certification by the Secretary or an Assistant
Secretary of the Borrower and each Guarantor that such articles of incorporation
have not been amended since such date.
(d) Certificates of Existence or Good Standing. The Agent and each
Lender shall have received (i) long-form certificates as of a recent date of the
good standing or existence of the Borrower and each Guarantor under the laws of
its state of incorporation and each state where the Borrower and each Guarantor
is qualified to transact business, and (ii) where reasonably available,
certificates as of a recent date from the department of revenue or other
appropriate Governmental Authority of each such state indicating that the
Borrower or such Guarantor, as appropriate, has filed all required tax returns
and owes no delinquent taxes.
(e) Opinion of Counsel to the Borrower and the Guarantors. The Agent
and each Lender shall have received the favorable opinions of Tonkon, Xxxx,
Xxxxx, Marmaduke & Booth, Oregon counsel to the Borrower, Xxxxxxxx & Xxxxx,
Xxxxxx Xxxxxxx, Xxxxxx & Xxxxx, Tennessee counsel to the Borrower and the
Guarantors, Carrington, Coleman, Xxxxxx & Xxxxxxxxxx, Texas counsel to the
Borrower and the Guarantors, each such opinion to be addressed to the Agent, for
the benefit of the Lenders, the Issuing Bank and each Lender, and in form and
substance satisfactory to the Agent and each Lender.
(f) Investment Agreement and Securities Purchase Agreement Opinions.
The Agent and each Lender shall have received a letter from each counsel that is
required to deliver an opinion to the Borrower in connection with the Investment
Agreement and Securities Purchase Agreement, stating that the Agent and the
Lenders are entitled to rely on each such opinion as if it were addressed to
them.
(g) UCC Search. The Agent and each Lender shall have received the
results of a search of all filings made against the Borrower and each Guarantor
under the Uniform Commercial Code as in effect in any state in which any assets
of any Borrower or any Guarantor are located, indicating that the Collateral is
free and clear of any liens or encumbrances except for Permitted Liens or for
which UCC-3 termination statements are being delivered.
(h) Insurance. The Agent shall have received certificates, and
certified copies of policies, of insurance, in form and substance satisfactory
to the Agent, upon the Collateral and the business of the Borrower and each
Guarantor, with the additional insured, mortgagee and loss payable clauses and
endorsements required by SECTION 5.4.
3.2.3. Consents; No Adverse Change.
(a) Consents and Approvals. All necessary approvals, authorizations and
consents, if any be required, of any Person (including without limitation the
Landlord Consent and the consent of Mother Xxxxxxx Hospital Regional Health Care
Center) and all Governmental Authorities having jurisdiction with respect to the
Collateral and the transactions contemplated by this Agreement, the Investment
Agreement and Securities Purchase Agreement shall have been obtained.
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(b) No Injunction, Etc. No action, proceeding, investigation, claim,
regulation or legislation shall have been instituted, threatened or proposed
before any court or other Governmental Authority to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or that is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or that, in the Required Lenders' discretion, would make
inadvisable the consummation of the transactions contemplated by this Agreement.
(c) No Material Adverse Change. Since the date of the most recent
audited Financial Statements of the Borrower and each Guarantor, there shall not
have occurred any Material Adverse Change or any event, condition or state of
facts that could reasonably be expected to have a Material Adverse Effect, other
than as specifically contemplated by this Agreement, the Investment Agreement
and the Principal Merger Transaction.
(d) Event of Default. No Default or Event of Default shall have
occurred and be continuing.
3.2.4. Financial Matters.
(a) Financial Statements. The Lenders shall have received the
Financial Statements from the Borrower, in form and substance satisfactory to
the Lenders.
(b) Projections. The Lenders shall have received the Projections from
the Borrower, together with a certificate of the chief financial officer of the
Borrower as to the assumptions used in preparing the Projections, all in form
and substance satisfactory to the Lenders.
(c) Financial Condition Certificate. The Agent and each Lender shall
have received a Financial Condition Certificate together with the attachments
required thereby, all in substantially the form of EXHIBIT E.
(d) Taxes. All taxes, fees and other charges then due in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents shall have been paid by the Borrower.
(e) Compliance Certificates. The Lenders shall have received a
Compliance Certificate, calculated on a pro forma basis as of the Closing Date
and such pro forma calculations shall reflect a minimum Annualized Consolidated
EBITDAR of $22,839,000 as of the Closing Date, calculated in a manner and in
substance satisfactory to the Agent, in its sole discretion.
3.2.5. Certain Transactions.
(a) Immediately prior to the date hereof, certain officers and
shareholders of the Borrower shall have formed Carryco, Inc., an Oregon
corporation, and shall have contributed to the capital of Carryco, Inc. shares
of the Borrower valued at approximately $4,000,000. Carryco, Inc. shall have
then merged with and into the Borrower. Under the terms of such merger, the
shareholders of Carryco, Inc. shall have received common stock of the Borrower
in exchange for their shares in Carryco, Inc., the remaining shareholders of the
Borrower shall have received or shall continue to hold certain preferred and
redeemable preferred stock, and the treasury shares (formerly held by Carryco,
Inc.) shall have been cancelled. The Agent and the Lenders shall have received
copies of the articles of merger, together with satisfactory evidence of the
filing thereof with the Oregon Secretary of State, and all other documents
evidencing this transaction, together with such certifications and written
assurances as the Agent and the Lenders shall request, and all such documents,
certifications and assurances shall be in form and substance satisfactory to the
Agent and the Lenders in their sole discretion.
(b) Immediately prior to the date hereof, the Borrower shall have
sold the assets related to its senior living businesses for cash in the
aggregate approximate amount of $18,400,000. The Agent and the
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Lenders shall have received copies of relevant articles of merger (as certified
as filed with Secretaries of State), asset purchase agreements, bills of sales,
and all other documents evidencing this transaction, together with such
certifications and written assurances as the Agent and the Lenders shall
reasonably request, and all such documents, certifications and assurances shall
be in form and substance reasonably satisfactory to the Agent and the Lenders.
(c) Each of the Investment Agreement and the Securities Purchase
Agreement shall be in full force and effect and in form and substance reasonably
satisfactory to the Agent and the Lenders, the transactions contemplated
thereby, including the equity investments by GTCR, Leeway & Co. and the other
investors, shall be consummated simultaneously with the Closing hereunder, and
no default or event which, with the passage of time or giving of notice or both,
would constitute a default shall have occurred thereunder. The Agent and the
Lenders shall have received copies of the Investment Agreement and the
Securities Purchase Agreement and all other documents evidencing this
transaction, together with such certifications and written assurances as the
Agent and the Lenders shall reasonably request, and all such documents,
certifications and assurances shall be in form and substance reasonably
satisfactory to the Agent and the Lenders.
(d) Simultaneously with the closing of the transactions under this
Agreement, the Borrower shall have used the proceeds of the investment pursuant
to the Investment Agreement and the Securities Purchase Agreement and certain
proceeds of the Loans made hereunder to redeem all of the outstanding shares of
redeemable preferred stock and preferred stock for approximately $74,000,000 in
cash. The Agent and the Lenders shall have received copies of the documents
evidencing this transaction, together with such certifications and written
assurances as the Agent and the Lenders shall reasonably request, and all such
documents, certifications and assurances shall be in form and substance
reasonably satisfactory to the Agent and the Lenders.
(f) The total equity investment (including the rollover equity) in the
Borrower and its Subsidiaries since inception shall be no less than $45,600,000
and the Borrower shall have delivered to the Agent and the Lenders written
certification thereof.
3.2.6. Principal Loan Termination. Principal and its Subsidiaries
shall have paid in full its obligations under the Credit Agreement dated as of
July 26, 1996, between Principal and its Subsidiaries, the lenders thereunder
and the agents named therein, all letters of credit issued thereunder shall be
terminated, and the lenders' obligations to advance money and to issue letters
of credit thereunder shall have terminated.
3.2.7. Miscellaneous.
(a) Disbursement Instructions; Account Designation Letter. The Agent
shall have received an Account Designation Letter, together with written
instructions from an Authorized Officer of the Borrower, including wire transfer
information, directing the payment of the proceeds of the initial Loans to be
made hereunder. If any Debt is being refinanced or otherwise paid off with the
proceeds of the Loans, the funds required for such payoff shall be earmarked by
the Agent for the benefit of the refinanced lender and shall be paid directly
from the Agent to the refinanced lender pursuant to a payoff letter under which
the refinanced lender agrees to releases any and all liens on the assets of the
Borrower and its Subsidiaries upon payment in full.
(b) Proceedings and Documents. The Agent and the Lenders shall have
received copies of all other documents, certificates, opinions, instruments and
other evidence as each may reasonably request, in form and substance reasonably
satisfactory to the Agent and the Lenders, with respect to the transactions
contemplated by this Agreement and the taking of all actions in connection
therewith.
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3.3 Conditions to All Loans and Advances. The obligation of the
Lenders to make any Loan hereunder (including any Loans made on the Closing
Date, but excluding Revolving Loans made for the purpose of repaying Refunded
Swingline Loans or to fund Reimbursement Obligations) and the obligation of the
Issuing Bank to issue any Letters of Credit are subject to the continued
validity of all Loan Documents and the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
(a) Each of the representations and warranties made by the Borrower
contained in ARTICLE IV shall be true and correct on and as of such Borrowing
Date with the same effect as if made on and as of the Borrowing Date, except to
the extent the facts upon which such representation and warranty are based may
be changed as a result of transactions or occurrences permitted or contemplated
hereby or such representation or warranty relates solely to a prior date;
(b) No Default or Event of Default shall have occurred on the Borrowing
Date or after giving effect to the Loans to be made or Letters of Credit to be
issued on such Borrowing Date; and
(c) Since the date of the most recent audited financial statements of
the Borrower and each Guarantor, to the knowledge of the Borrower, there shall
not have occurred any Material Adverse Change or a Material Adverse Effect,
other than as specifically contemplated by this Agreement, the Investment
Agreement and the Principal Merger Transaction.
3.4 Waiver of Conditions Precedent. If any Lender makes any Loan
hereunder, or if the Issuing Bank issues any Letter of Credit, prior to the
fulfillment of any of the conditions precedent set forth in this ARTICLE III,
the making of such Loan or the issuance of such Letter of Credit shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and unless the Required Lenders indicate otherwise in
writing, the Borrower shall thereafter use its best efforts to fulfill each such
condition promptly.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit Agreement, to
make the Loans and to continue to make the Loans, and to induce the Issuing Bank
to issue, and the Lenders to participate in, the Letters of Credit, the Borrower
makes the following warranties and representations to the Agent, the Issuing
Bank and each Lender on the date hereof and on the date of each Borrowing
(except to the extent any such representation or warranty relates solely to a
prior date and except to the extent that the facts upon which such
representation or warranty is based have changed as a result of a transaction or
occurrence permitted or contemplated by this Agreement), after giving effect to
the transactions contemplated hereby and by the Investment Agreement and the
Securities Purchase Agreement except as specifically provided otherwise:
4.1. Corporate Organization and Power; Capital Structure. (a) The
Borrower and each of its Subsidiaries (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) is qualified to do business and is in good standing in every
other jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified and where the failure to be so
qualified would have a Material Adverse Effect, which jurisdictions as of the
Closing Date are set forth on SCHEDULE 4.1; (c) except as set forth on SCHEDULE
4.2 and except for Subsidiaries acquired or created after the Closing Date in
compliance with SECTIONS 5.12 and 6.7, has no Subsidiaries or Affiliates (other
than its officers, directors and shareholders) and, except for investments made
in compliance with SECTION 6.7, is not a partner or joint venturer in any
partnerships or joint ventures; (d) has the corporate power to own and give a
lien
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on and security interest in its Collateral and to engage in the transactions
contemplated hereby; and (e) has the full corporate power, authority and legal
right to execute and deliver this Agreement and the other Loan Documents to
which it is a party and to perform and observe the terms and provisions thereof.
Neither the Borrower nor any of its Subsidiaries has, during the preceding five
(5) years, been known as or used any other corporate, fictitious or trade names
in the United States other than as set forth on SCHEDULE 4.1.
(b) The authorized capital stock of the Borrower consists of
twenty-five thousand (25,000) shares of the no par value Series A Senior
Preferred Stock, of which twenty thousand (20,000) shares are issued and
outstanding, fifty thousand (50,000) shares of no par value Series B Junior
Preferred Stock, of which twenty-eight thousand five hundred forty (28,540)
shares are issued and outstanding, ninety-six thousand (96,000) shares of no par
value Series A Preferred Stock, no par value, of which zero (0) shares are
issued and outstanding, seven hundred fifty thousand (750,000) shares of no par
value Junior Redeemable Preferred Stock of which zero (0) shares are issued and
outstanding and twenty million (20,000,000) shares of no par value Common Stock
of which three million two hundred seventy-six thousand and five (3,276,005)
shares are issued and outstanding. All of the outstanding capital stock of the
Borrower is duly and validly issued, fully paid and non-assessable and was
offered, issued and sold in compliance with all applicable federal and state
securities laws. None of the outstanding capital stock of the Borrower has been
issued in violation of any preemptive or other rights of its shareholders. The
Borrower does not have outstanding any securities or other rights which are
either by their terms or by contract convertible or exchangeable into capital
stock of or other equity interest in the Borrower, as the case may be nor any
preemptive or similar rights to subscribe for or to purchase, or any options or
warrants or agreements for the purchase or issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to, its
capital stock or other equity interest or securities convertible into its
capital stock or other equity interest, except, as set forth on SCHEDULE 4.1(B).
4.2. Subsidiaries. SCHEDULE 4.2 contains a complete and accurate list
of the Subsidiaries of the Borrower as of the Closing Date and as of the date of
consummation of the Principal Merger Transaction, showing, as to each
Subsidiary, the number of shares of Stock or other Interests and the owner of
each class of Stock or other Interests authorized and outstanding. Except as set
forth on SCHEDULE 4.2, all of such issued and outstanding shares of Stock or
other Interests of all of such of Borrower's Subsidiaries that are owned by the
Borrower or its Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Borrower or its Subsidiaries,
free and clear of any liens, charges, encumbrances, security interests, claims
or restrictions of any nature whatsoever, except for liens in favor of the
Agent, for the benefit of the Lenders, granted under the Loan Documents, and
there are no other equity securities of any such Subsidiaries issued and
outstanding or reserved for any purpose.
4.3. Enforceability of Loan Documents; Compliance with Other
Instruments. Except as set forth on SCHEDULE 4.3, each of the Loan Documents to
which the Borrower or any Guarantor is a party, as the case may be, has been
duly authorized by all necessary corporate action on the part of the Borrower or
such Guarantor, has been validly executed and delivered by the Borrower or such
Guarantor and is the legal, valid and binding obligation of the Borrower or such
Guarantor, enforceable against the Borrower or such Guarantor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity. Neither the Borrower nor
any of its Subsidiaries is in default with respect to any indenture, loan
agreement, mortgage, lease, deed or similar agreement to which it is a party or
by which it, or any of its property, is bound which default could reasonably be
expected to have a Material Adverse Effect. Neither the execution, delivery or
performance of the Loan Documents by the Borrower and the Guarantors, nor
compliance by the Borrower and the Guarantors therewith: (a) conflicts or will
conflict with or results or will result in any breach of, or constitutes or will
constitute with the passage of time or the giving of notice or both, a default
under, (i) any Requirement of Law or (ii) any material agreement or instrument
to which the Borrower or any Guarantor is a
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party or by which it, or any of its property, is bound or (b) results or will
result in the creation or imposition of any lien, charge or encumbrance upon the
properties of the Borrower or any of its Subsidiaries pursuant to any such
agreement or instrument, except for Permitted Liens.
4.4. Use of Proceeds. The Borrower's use of the proceeds of any Loans
made by the Lenders to the Borrower pursuant to this Agreement are and will be
legal and proper corporate uses, duly authorized by the Board of Directors of
the Borrower, and such uses are and will be consistent with all applicable laws
and statutes, as in effect from time to time.
4.5. Governmental Authorization.
(a) No authorization, consent or approval of, or declaration or filing
with, any Governmental Authority is required for the valid execution and
delivery by the Borrower and its Subsidiaries of the Loan Documents to which
they are a party or the consummation by the Borrower and its Subsidiaries of the
loan transactions contemplated hereby and thereby, including repayment of the
Credit Obligations and pledging the Collateral, except for the filing and
recording of the Financing Statements, the Mortgages, the Landlord Consents and
collateral assignments of registered trademarks, patents and copyrights which
constitute Collateral, and except for filings and notices unrelated to
perfection of security interests and liens in Collateral and required to be made
or given by the Borrower and its Subsidiaries after the Closing Date in the
ordinary conduct of their business operations. The Borrower and its Subsidiaries
have, and are in good standing with respect to, all material governmental
approvals, permits, certificates, inspections, consents and franchises necessary
to continue to conduct business as heretofore conducted and to own or lease and
operate its properties as now owned or leased by it where the failure to have
and maintain the same could reasonably be expected to have a Material Adverse
Effect.
(b) The Borrower and each of its Subsidiaries has, to the extent
applicable, (i) obtained (or been duly assigned) all required certificates of
need or determinations of need, as required by the relevant state Governmental
Authority, for the ownership and operation of their businesses as currently
operated; (ii) obtained and maintains in good standing all required material
licenses; (iii) obtained and maintains accreditation from all generally
recognized accrediting agencies for the Borrower and its Subsidiaries; (iv) if
required, obtained and maintains Medicaid Certification and Medicare
Certification; (v) if required, entered into and maintains in good standing its
Medicare Provider Agreement and its Medicaid Provider Agreement.
(c) Each professional employee, officer and director of the Borrower
and its Subsidiaries providing professional services to patients of the Borrower
or any such Subsidiary is duly licensed (where license is required) by each
state or state agency or commission, or any other governmental agency having
jurisdiction over the provisions of such services by such employee, officer or
director, in which the Borrower or any of its Subsidiaries is located, required
to enable such employee, officer or director to provide the professional
services necessary to enable the Borrower or such Subsidiary to operate as
currently operated and as presently contemplated to be operated except to the
extent the failure to have such a license would not have a Material Adverse
Effect. All such required material licenses are in full force and effect on the
date hereof and have not been revoked or suspended or otherwise limited. Each
physician retained or otherwise engaged as an independent contractor by the
Borrower or any of its Subsidiaries possesses a valid narcotics number issued by
the United States Drug Enforcement Administration and a valid state narcotics
registration.
4.6. Financial Statements.
(a) The Borrower has heretofore furnished to each Lender copies of the
Financial Statements. The Financial Statements have been prepared in accordance
with Generally Accepted Accounting Principles
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(subject, with respect to the unaudited Financial Statements, to the absence of
notes required by Generally Accepted Accounting Principles and to normal
year-end audit adjustments) and present fairly in all material respects the
financial position of the Persons covered thereby on a consolidated basis as of
the dates thereof and the consolidated results of operations of the Persons
covered thereby for the periods then ended. Except as fully reflected in the
most recent Financial Statements and the notes thereto, as of the Closing Date,
and taking into account the Loans to be made on the Closing Date and the other
transactions contemplated by the Loan Documents, the Investment Agreement, the
Securities Purchase Agreement and the Principal Merger Transaction, there will
be no material liabilities or obligations with respect to the Borrower or any of
its Subsidiaries of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change. Neither the Borrower nor
any of its Subsidiaries has directly or indirectly declared, ordered, paid, made
or set apart any amounts or property for any dividend, share acquisition or
other distribution, or agreed to do so, except as permitted by SECTION 6.8.
(b) The Borrower has prepared, and has heretofore furnished to each
Lender copies of, annual projected balance sheets and statements of income and
cash flows of the Borrower and its Subsidiaries (assuming the consummation of
the Principal Merger Transaction on the first day occurring after the Closing
Date) for the five-year period commencing on the date set forth therein (the
"Projections"). In the opinion of the Borrower's management, the assumptions
used in preparation of the Projections were reasonable when made and are
reasonable as of the Closing Date. The Projections have been prepared in good
faith by the executive and financial personnel of the Borrower in light of the
historical financial performance of the Borrower and its Subsidiaries prior to
Closing and of Principal and its Subsidiaries and the financial and operating
condition of the Borrower and its Subsidiaries prior to Closing and of Principal
and its Subsidiaries at the time prepared, give effect to the transactions
contemplated by the Loan Documents and, in the opinion of the Borrower's
management, represent, as of the Closing Date, a reasonable estimate of the
future performance and financial condition of the Borrower and its Subsidiaries
(assuming the consummation of the Principal Merger Transaction on the first day
occurring after the Closing Date, subject to the uncertainties and
approximations inherent in any projections and without representation or
warranty that such projected performance and financial condition will actually
be achieved, it being acknowledged by the Lenders and the Agent that the actual
results may differ from the projected results and the differences may be
material.
4.7. Solvency. (i) On the Closing Date, prior to the transactions
contemplated by this Agreement, the Investment Agreement, the Securities
Purchase Agreement and the Principal Merger Transaction, the Borrower and each
of its Subsidiaries (taking into account rights of contribution) is, and the
Borrower and its Subsidiaries, on a consolidated basis are, Solvent, and (ii)
after giving effect to the transactions contemplated hereby, the Investment
Agreement, the Securities Purchase Agreement and the Principal Merger
Transaction, the Borrower and each of its Subsidiaries (taking into account
rights of contribution) will be Solvent, and the Borrower and its Subsidiaries
on a consolidated basis will be Solvent.
4.8. Places of Business. SCHEDULE 4.8 lists, as of the Closing Date,
(i) the chief executive office and places of business (including county or town
designation), as provided in the Uniform Commercial Code, of the Borrower and
each of its Subsidiaries, (ii) the locations at which the Borrower and each of
its Subsidiaries maintains, or presently intends to maintain, billing and
related records relating to Accounts Receivable, and (iii) all locations where
personal property valued at $100,000 or more in the aggregate of the Borrower
and each of its Subsidiaries is presently maintained.
4.9. Leased Properties. SCHEDULE 4.9 lists, as of the Closing Date,
(i) all material real property leased by the Borrower or any of its
Subsidiaries, and (ii) all personal property leased by the Borrower or any of
its Subsidiaries requiring lease payments in excess of $100,000 per year,
including in each case the name of the lessors and a description of the
locations of such property. The Borrower and each of its Subsidiaries enjoys
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peaceful and undisturbed possession under all of its real property leases, and
all such leases are valid and in full force and effect. The Borrower has
delivered complete and accurate copies of all such leases to the Agent and the
Lenders.
4.10. Realty. SCHEDULE 4.10 lists all real property owned as of the
Closing Date and as of the date of the consummation of the Principal Merger
Transaction by the Borrower or any of its Subsidiaries.
4.11. Assets for Conduct of Business. The Borrower and each of its
Subsidiaries possesses adequate assets, licenses, patents, copyrights,
trademarks and trade names necessary to continue to conduct its business
substantially as heretofore conducted without any material conflict with the
rights of other Persons.
4.12. Insurance. SCHEDULE 4.12 accurately summarizes all insurance
policies or programs of the Borrower and its Subsidiaries in effect as of the
Closing Date and as of the date of the consummation of the Principal Merger
Transaction, and indicates the insurer's name, policy number, expiration date,
amount of coverage, type of coverage, exclusions and deductibles, and also
indicates any self-insurance program that is in effect.
4.13. Ownership of Properties. Except as set forth on SCHEDULE 4.13,
(a) each of the Borrower and its Subsidiaries has good and marketable title to
all real property owned by it, holds interests as lessee under valid leases in
full force and effect with respect to all leased real and material personal
property used in connection with its business, and has good title to all of its
other properties and assets, including, without limitation, the assets reflected
in the most recent Financial Statements (except as sold or otherwise disposed of
since the date thereof in the ordinary course of business), in each case free
and clear of all liens, claims or encumbrances other than Permitted Liens; and
(b) other than the Financing Statements in favor of the Agent and protective
filings with respect to operating leases that may be filed after the Closing
Date or with respect to Permitted Liens, no financing statement that names the
Borrower or any of its Subsidiaries as debtor has been filed and is still in
effect, and neither the Borrower nor any of its Subsidiaries has signed any
other financing statement or any security agreement authorizing any secured
party thereunder to file any such financing statement.
4.14. First Priority. The provisions of the Loan Documents (whether
executed and delivered prior to or on the Closing Date or thereafter), are and
will be effective to create in favor of the Agent, for the benefit of the
Lenders, upon the initial extension of credit hereunder and the proper filing of
all Financing Statements and other recordations contemplated thereunder in the
jurisdictions and locations contemplated thereby (or, in the case of the Pledge
Agreement, the possession by the Agent of certificates evidencing the securities
pledged thereby without notice of an adverse claim or, in the case of motor
vehicles, the endorsement of certificates of title), a valid and enforceable
first priority perfected security interest in and lien upon all right, title and
interest of the Borrower and its Subsidiaries in the Collateral described
therein, subject only to Permitted Liens, and except as and to the extent the
Agent's liens cannot be perfected by filing under the Uniform Commercial Code.
Upon (i) delivery and continued possession by the Agent, without notice of
adverse claim, of certificates evidencing the securities pledged pursuant to the
Security and Pledge Agreement, (ii) endorsement and delivery to the Agent of
certificates of title for motor vehicles, and (iii) the filing of collateral
assignments of patents and trademarks with the U.S. Patent and Trademark Office,
the Agent shall have a valid and enforceable first priority security interest in
and lien upon all right, title and interest of the Borrower and its Subsidiaries
in such Collateral, subject only to Permitted Liens.
4.15. Litigation; Government Regulation. Except as set forth in
SCHEDULE 4.15, (a) there are no judgments, injunctions or similar orders or
decrees and no actions, suits, investigations or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries or its business except to the extent that the same could
not reasonably be expected to have a Material Adverse
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Effect, or that question the validity of this Agreement or any of the Loan
Documents, at law or in equity before any court, arbitrator or Governmental
Authority, and (b) neither the Borrower nor any of its Subsidiaries is in
violation of or in default under any Requirement of Law where such violation
could have a Material Adverse Effect.
4.16. Taxes. Except as set forth in SCHEDULE 4.16, neither the
Borrower nor any of its Subsidiaries is delinquent in the payment of any taxes
that have been levied or assessed by any Governmental Authority against it or
its assets where such delinquency could reasonably be expected to have a
Material Adverse Effect. Except as set forth in SCHEDULE 4.16, as of the Closing
Date, each of the Borrower and its Subsidiaries (a) has timely filed all
material tax returns that are required by law to be filed prior to the date
hereof, and has paid all taxes shown on said returns and all other assessments
or fees levied upon it or upon its properties to the extent that such taxes,
assessments or fees have become due, and if not due, such taxes have been
adequately provided for and sufficient reserves therefor established on its
books of account, and (b) is current with respect to payment of all federal and
state withholding taxes, social security taxes and other payroll taxes, in each
case where the failure to do so could reasonably be expected to have a Material
Adverse Effect.
4.17. ERISA; Employee Benefits.
(a) SCHEDULE 4.17 lists, as of the Closing Date, all Employee Plans and
Pension Plans ("Plans") maintained or sponsored by the Borrower and its
Subsidiaries or to which the Borrower or any of its Subsidiaries is obligated to
contribute and separately identifies all Qualified Plans (as defined below) and
all Multiemployer Plans. The Borrower has delivered true and correct copies of
all such Plans to the Agent.
(b) Each such Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code and other federal or
state law, including all requirements under the Internal Revenue Code or ERISA
for filing reports (which are true and correct in all material respects as of
the date filed), and benefits have been paid in accordance with the provisions
of each such Plan.
(c) The form of each Plan intended to be qualified under Section 401 of
the Internal Revenue Code ("Qualified Plan") to the knowledge of the Borrower
qualifies under Section 401 of the Internal Revenue Code, and the trusts created
thereunder are, to the knowledge of the Borrower, exempt from tax under the
provisions of Section 501 of the Internal Revenue Code, and to the knowledge of
the Borrower nothing has occurred that would cause the loss of such
qualification or tax-exempt status.
(d) There is no material outstanding liability under Title IV of ERISA
with respect to any Plan maintained or sponsored by the Borrower and its
Subsidiaries (as to which the Borrower or any of its Subsidiaries is or may be
liable), nor with respect to any Plan to which any of the Borrower or its
Subsidiaries (wherein the Borrower or any of its Subsidiaries is or may be
liable) contributes or is obligated to contribute.
(e) None of the Qualified Plans subject to Title IV of ERISA has any
material unfunded benefit liability as defined in Section 4001(a)(18) of ERISA
(as to which the Borrower or any of its Subsidiaries is or may be liable).
(f) No Plan maintained or sponsored by the Borrower or any of its
Subsidiaries provides medical or other welfare benefits or extends coverage
relating to such benefits beyond the date of a participant's termination of
employment with the Borrower or such Subsidiary, except to the extent required
by Section 4980B of the Internal Revenue Code and at the sole expense of the
participant or the beneficiary of the participant to the fullest extent
permissible under such Section of the Internal Revenue Code. The Borrower and
its Subsidiaries
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have complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Internal Revenue Code.
(g) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is obligated to
contribute.
(h) As of the Closing Date, there are no pending or, to the knowledge
of the Borrower, threatened claims, actions or lawsuits, other than routine
claims for benefits in the usual and ordinary course, asserted or instituted
against (i) any Plan maintained or sponsored by the Borrower and its
Subsidiaries or their assets, or (ii) any fiduciary with respect to any Plan for
which the Borrower or any of its Subsidiaries may be directly or indirectly
liable, through indemnification obligations or otherwise.
(i) Neither the Borrower nor any of its Subsidiaries has incurred or,
to the knowledge of the Borrower, reasonably expects to incur (i) any liability
(and no event has occurred that, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan or (ii) any liability under Title IV of ERISA
(other than premiums due and not delinquent under Section 4007 of ERISA) with
respect to a Plan.
(j) Neither the Borrower nor any of its Subsidiaries has engaged,
directly or indirectly, in a nonexempt prohibited transaction (as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA) in connection
with any Plan that has a Material Adverse Effect.
4.18. Compliance with Laws. The Borrower and each of its Subsidiaries
has duly complied with, and the Collateral and their business operations and
leaseholds are in compliance with, all Requirements of Law, including, without
limitation, all federal and state securities laws, OSHA, and Titles XVIII and
XIX of the Social Security Act (42 U.S.C. xx.xx. 1395 et seq. and xx.xx. 1396 et
seq., respectively, as amended from time to time), the Bloodborne Pathogens
Standard, the Medicare Regulations, the Medicaid Regulations and the MediCal
Regulations, except to the extent that noncompliance will not have a Material
Adverse Effect.
4.19. Environmental Matters. Except as would not result in a Material
Adverse Effect:
(a) Except as reflected in SCHEDULE 4.19 (i) no Hazardous Material is
or has been generated, used, released, treated, disposed of or stored, or
otherwise located, in, on or under the Realty (or any portion thereof), and no
part of the Realty or other property owned, leased or operated by the Borrower
or its Subsidiaries (now or in the past), including without limitation the soil
and groundwater located thereon and thereunder, has been contaminated by any
Hazardous Material; (ii) no improvements on the Realty contain any asbestos or
substances containing asbestos; (iii) none of the Realty has been the subject of
a remedial action; and (iv) to the best of the Borrower's knowledge, the
foregoing statements are true and correct with respect to all of the real
property adjoining any of the Realty.
(b) To the best of the Borrower's knowledge, no portion of the Realty
has been used as or for a mine, a landfill, a dump or other disposal facility, a
gasoline service station, or a petroleum products storage facility, and none of
the Realty or other property owned, leased or operated by the Borrower or its
Subsidiaries (now or in the past) has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems.
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(c) Except as set forth in SCHEDULE 4.19, there are no underground
storage tanks situated on the Realty and, to the best of the knowledge of the
Borrower, no underground storage tanks have ever been situated on the Realty.
(d) Except as set forth in SCHEDULE 4.19, all activities and operations
of the Borrower and its Subsidiaries meet the requirements of all applicable
Environmental Laws, Borrower and its Subsidiaries have not violated any
Environmental Law in the past, and the Realty has never been the site of a
violation of any Environmental Law.
(e) Except as set forth on SCHEDULE 4.19, neither the Borrower nor its
Subsidiary has sent a Hazardous Material to a site which, pursuant to any
Environmental Law, (1) has been placed on the "National Priorities List" or
"CERCLIS List" (or any similar federal, state or local list) of sites subject to
possible environmental problems, or (2) is subject to or the source of a claim,
an administrative order or other request to take "response," "removal,"
"corrective" or "remedial" action, as defined in any Environmental Law, or to
pay for or contribute to the costs of cleaning up the site.
(f) Neither the Borrower nor any of its Subsidiaries is involved in any
suit or proceeding and or has received any notice from any Governmental
Authority or other third party, with respect to a release or threat of release
of any Hazardous Material, or violation or alleged violation of any
Environmental Law, and neither the Borrower nor any of its Subsidiaries has
received notice of any claim from any person or entity relating to property
damage or to personal injuries from exposure to any Hazardous Material.
(g) The Borrower and its Subsidiaries have timely filed all reports
required to be filed, has acquired all necessary certificates, approvals and
permits, and have generated and maintained in all material respects all required
data, documentation and records required under all Environmental Laws.
4.20. Margin Securities.
(a) Neither the Borrower nor any of its Subsidiaries owns any "margin
stock" within the meaning of Regulation U. None of the proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin stock, maintaining, reducing or retiring any Debt that was originally
incurred to purchase or carry margin stock or for any other purpose that would
violate Regulation G, Regulation U, Regulation T or Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System, as the same
may be in effect from time to time, or for any purpose that would violate the
Exchange Act.
(b) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds of the Loans) will violate or result
in a violation of Section 7 of the Exchange Act. Neither the Borrower nor any of
its Subsidiaries owns or intends to carry or purchase directly or indirectly any
"margin security" within the meaning of the Exchange Act.
4.21. Full Disclosure. None of the Loan Documents or any other written
statements furnished to the Agent or any Lender by or on behalf of the Borrower
or any of its Subsidiaries in connection with the Loan Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein or herein, in light of the
circumstances under which they were made, not misleading.
4.22. Contracts; Labor Disputes. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charge,
corporate restriction, judgment, injunction, decree, rule, regulation or order
of any court or other Governmental Authority, that has or could reasonably be
expected to
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have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries
is a party to, and there is not pending or, to the Borrower's knowledge,
threatened, any labor dispute, strikes, lock-out, grievance, work stoppage or
walkouts relating to any labor contract to which the Borrower or any of its
Subsidiaries is a party that has or could reasonably be expected to have a
Material Adverse Effect.
4.23. Reimbursement from Third Party Payors. The accounts receivable
of the Borrower and its Subsidiaries have been and will continue to be adjusted
to reflect reimbursement policies of third party payors such as Medicare,
Medicaid, MediCal, Blue Cross/Blue Shield, private insurance companies, health
maintenance organizations, preferred provider organizations, alternative
delivery systems, managed care systems and other third party payors. In
particular, the accounts receivable relating to such third party payors do not
and shall not exceed amounts the Borrower and its Subsidiaries are entitled to
receive under any capitation arrangement, fee schedule, discount formula,
cost-based reimbursement or other adjustment or limitation to the usual charges
of such Person.
4.24. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor
any of its stockholders, officers or directors have engaged on behalf of
Borrower or any Subsidiary in any of the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any applications for any benefit or payment under the Medicare or
Medicaid program; (ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment under the Medicare or Medicaid program; (iii)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment under the
Medicare or Medicaid program on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently; (iv) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay such remuneration (a) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid, or (b) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or ordering of any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid. With respect to this Section, knowledge by a senior officer of the
Borrower or a Subsidiary of any of the events described in this Section shall
not be imputed to the Borrower or such Subsidiary unless such knowledge was
obtained or learned by a senior officer in his or her official capacity as a
senior officer of the Borrower or such Subsidiary. No activity of the Borrower
or any Subsidiary shall be considered to be a breach of this Section, except in
the case of a knowing and willful violation thereof, until the Borrower or such
Subsidiary has received notification, written or oral, by a Governmental
Authority of competent jurisdiction as to any such violation.
4.25. Certain Agreements. As of the Closing Date, each of the
Investment Agreement and the Securities Purchase Agreement is in full force and
effect, the transactions contemplated thereby have been consummated, the
Borrower has delivered full and complete copies thereof, together with all
material related documents, to the Agent and the Lenders, and no default or
event which, with the passage of time or giving of notice or both, would
constitute a default has occurred thereunder. All representations and warranties
made by the Borrower set forth in or made in connection with the Investment
Agreement and the Securities Purchase Agreement are, as of the Closing Date,
true and complete in all material respects. Immediately after the Closing
hereunder, the Principal Merger Agreement shall be executed and delivered by all
parties thereto and shall be in full force and effect, the transactions
contemplated thereby shall be consummated, the Borrower shall deliver a full and
complete copy thereof, together with all material related documents, to the
Agent and the Lenders, and no default or event which, with the passage of time
or giving of notice or both, would constitute a default shall have occurred
thereunder. All representations and warranties made by the Borrower and
Principal set forth in
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or made in connection with the Principal Merger Agreement are, as of the date
thereof, true and complete in all material respects.
4.26. Event of Default. No Default or Event of Default has occurred
and is continuing.
4.27. Ownership of Stock of Borrower. As of the Closing Date, after
giving effect to the consummation of the transactions contemplated by the
Investment Agreement and the Securities Purchase Agreement and the consummation
of the Principal Merger Transaction, the Stock of the Borrower will be owned as
set forth on SCHEDULE 4.27.
4.28. Single Business Enterprise. The Borrower and the Guarantors
operate, and intend to operate, as a single business enterprise. Although
separate entities, the Borrower and the Guarantors operate under a common
business plan. Each of the Borrower and the Guarantors will accordingly benefit
from the financing arrangement established by this Agreement. The Borrower
acknowledges that the Agent and the Lenders are relying on the agreement by each
Guarantor to execute and deliver the Guaranty Documents in committing to the
Facilities.
4.29. Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto (other than
Schedules relating solely to representations and warranties made solely as of
the Closing Date) become outdated or incorrect in any material respect or in the
event additional disclosure is required in connection with any Acquisition, the
Borrower shall promptly provide the Agent in writing with such revisions or
updates to such Schedule as may be necessary or appropriate to update or correct
the same; provided, however, that no Schedule shall be deemed to have been
amended, modified or superseded by any such correction or update that would
disclose the occurrence of an event or condition which constitutes a Default or
Event of Default, nor shall any breach of warranty or representation resulting
from the inaccuracy or incompleteness of any such Schedule be deemed to have
been cured thereby, unless such inaccuracy or incompleteness is the result of
transactions or events expressly permitted hereunder (including Permitted
Acquisitions) or unless the Required Lenders, in their sole and absolute
discretion, shall have accepted in writing such revisions or updates to such
Schedule.
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of all Credit Obligations and the termination of
the Lenders' obligation to make Loans and the Issuing Bank's obligation, on
behalf of the Lenders, to issue Letters of Credit, the Borrower covenants and
agrees that:
5.1. Financial and Business Information about the Borrower. The
Borrower shall deliver to the Agent and the Lenders:
(a) Within forty-five (45) days after the close of the first two (2)
calendar months of each fiscal quarter, to and including the month ending May
31, 1997, an unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such month, and unaudited consolidated and
consolidating statements of income and consolidated retained earnings and cash
flows for the Borrower and its Subsidiaries for the month then ended and for
that portion of the fiscal year then ended, in each case setting forth
comparable budgeted figures for the fiscal quarter then ended, together with a
breakdown of such income statements per hospital, all prepared in accordance
with Generally Accepted Accounting Principles (subject to the absence of
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notes required by Generally Accepted Accounting Principles and subject to normal
and reasonable year-end audit adjustments) applied on a basis consistent with
that of the preceding month or containing disclosure of the effect on the
financial position or results of operation of any change in the application of
accounting principles and practices during the month;
(b) Within forty-five (45) days after the close of each of the first
three fiscal quarters of each fiscal year of the Borrower, beginning with the
current fiscal quarter, an unaudited consolidated and (if requested)
consolidating balance sheet of the Borrower and its Subsidiaries as of the close
of such fiscal quarter, and unaudited consolidated and consolidating statements
of income, and consolidated retained earnings and cash flows for the Borrower
and its Subsidiaries for the fiscal quarter then ended and for that portion of
the fiscal year then ended, in each case beginning with the fiscal quarter
ending March 31, 1998 setting forth comparative figures for the corresponding
fiscal quarter in the preceding fiscal year, and in each case setting forth
comparable budgeted figures for the fiscal quarter then ended, together with a
breakdown of such income statements per hospital, all prepared in accordance
with Generally Accepted Accounting Principles (subject to the absence of notes
required by Generally Accepted Accounting Principles and subject to normal and
reasonable year-end audit adjustments) applied on a basis consistent with that
of the preceding quarter or containing disclosure of the effect on the financial
position or results of operation of any change in the application of accounting
principles and practices during the quarter, and certified by the Chief
Executive Officer, Chief Financial Officer or Vice President-Controller of the
Borrower to be true and accurate in all material respects (subject to normal and
reasonable year-end audit adjustments);
(c) As soon as practicable and in any event within one hundred twenty
(120) days after the close of the 1996 fiscal year of the Borrower, and one
hundred (100) days after the close of any fiscal year of the Borrower
thereafter, beginning with the close of the current fiscal year, an audited
consolidated balance sheet and unaudited consolidating balance sheet of the
Borrower and its Subsidiaries as of the close of such fiscal year, audited
consolidated and unaudited consolidating statements of income and audited
consolidated retained earnings and cash flows for the Borrower and its
Subsidiaries for the fiscal year then ended, in each case beginning with the
fiscal year ending December 31, 1998 setting forth unaudited comparative figures
for the preceding fiscal year and in each case, setting forth comparable
budgeted figures for the fiscal year then ended, including the notes to each,
audited (except as previously noted) by a nationally recognized, "Big Six"
independent certified public accountant or other independent certified public
accountant reasonably acceptable to the Required Lenders, and together with a
breakdown of such income statements per hospital, all such audited statements
prepared in accordance with Generally Accepted Accounting Principles applied on
a basis consistent with those of the preceding year or containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the year,
certified by the Chief Executive Officer, Chief Financial Officer or Vice
President - Controller of the Borrower to be true and accurate in all material
respects, and, with respect to audited statements, accompanied by a report
thereon by such certified public accountants, containing an opinion that is not
qualified in any materially negative respect, including as to going concern or
scope of audit;
(d) Concurrently with the delivery of the financial statements
described in subsection (C) above, a letter from the independent certified
public accountants that, based on the independent certified public accountant's
examination of the financial statements of the Borrower and its Subsidiaries,
the accountants did not obtain knowledge of the occurrence or existence of any
Default or Event of Default, or a statement specifying the nature and period of
existence of any such condition or event disclosed by their examination;
provided, however, that such accountants shall not be liable to anyone by reason
of their failure to obtain knowledge of any Event of Default or Default that
would not be disclosed in the course of an audit conducted in accordance with
generally accepted auditing standards;
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(e) Concurrently with the delivery of the financial statements
described in subsections (B) and (C) above, a Compliance Certificate with
respect to the period covered by the financial statements then being delivered,
together with an Interest Rate Calculation Worksheet and a Covenant Compliance
Worksheet reflecting the computation of the financial covenants set forth in
ARTICLE VI as of the last day of the period covered by such financial
statements;
(f) As soon as practicable and in any event within sixty (60) days
after the close of the 1996 fiscal year of the Borrower, and thirty (30) days
after the close of each fiscal year of the Borrower thereafter, beginning with
the current fiscal year, an annual operating budget and capital budget prepared
on a quarterly basis for the Borrower and its Subsidiaries on a consolidated
basis, in form and detail reasonably acceptable to the Agent, including, without
limitation, a breakdown per hospital;
(g) Promptly upon their becoming available, copies of (i) all financial
statements, material reports and proxy statements that the Borrower or any of
its Subsidiaries shall send or make available generally to its stockholders,
(ii) all registration statements and prospectuses that the Borrower or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers or any national
securities exchange, (iii) all material reports and other statements (other than
routine reports prepared in the ordinary course of business that would not
result in any adverse action) that the Borrower or any of its Subsidiaries may
render to or file with any other Governmental Authority, including, without
limitation, the Environmental Protection Agency, OSHA and state environmental
and health authorities and agencies, and (iv) all press releases and other
statements that the Borrower or any of its Subsidiaries shall make available
generally to the public concerning developments in the business of the Borrower
or any of its Subsidiaries, other than press releases or statements issued in
the ordinary course of business;
(h) Promptly after review by the Borrower's Board of Directors, but in
any event within thirty (30) days after the Borrower's receipt thereof, copies
of any management letters from certified public accountants;
(i) Upon request by the Agent, concurrently with each delivery of the
financial statements described in subsections (B) and (C), an aging of the
Accounts of the Borrower and its Subsidiaries as of the end of such fiscal
quarter;
(j) Concurrently with each delivery of the financial statements
described in subsection (A) and (B), a statistical summary of management
contracts between the Borrower or any of its Subsidiaries and hospitals and
other healthcare facilities;
(k) Promptly upon the reasonable request therefor, copies of any annual
report required to be filed under ERISA in connection with any Employee Plan and
such other additional information about any Employee Plan as may be reasonably
requested;
(l) A Revolving Credit Borrowing Availability Certificate (i) from the
Closing Date through the date of delivery of the Borrower's June 30, 1997
financial statements, in connection with and on the date of each Borrowing, and
(ii) thereafter, within forty-five (45) days following the end of each fiscal
quarter;
(m) Promptly after receipt, copies of any environmental assessments or
audits on properties owned, operated or leased by the Borrower or its
Subsidiaries; and
(n) Upon the Agent's or any Lender's request, such other information
about the Collateral or the financial condition and operations of the Borrower
and its Subsidiaries as the Agent or any Lender may from time to time reasonably
request.
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5.2. Notice of Certain Events. The Borrower shall promptly, but in no
event later than five (5) Business Days after a senior officer of the Borrower
obtains knowledge thereof, give written notice to the Agent and the Lenders of:
(a) Any litigation or proceeding brought against the Borrower or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect;
(b) Any written notice of a violation of a Requirement of Law received
by the Borrower or any of its Subsidiaries from any Governmental Authority that,
if such violation were established and not promptly corrected, could reasonably
be expected to have a Material Adverse Effect;
(c) Any attachment, judgment, lien, levy or order in excess of $500,000
that may be placed on or assessed against the Borrower or any of its
Subsidiaries or any of the Collateral, except for Permitted Liens;
(d) Any Default or Event of Default; provided that the notice period
provided above shall not be deemed to be a cure period or extension for any
Default or Event of Default;
(e) Receipt by any Borrower or any of it Subsidiaries of (i) any notice
of loss of Joint Commission on Accreditation of Healthcare Organizations
accreditation, loss of participation under any material reimbursement program or
loss of applicable health care licenses at any facility owned or lease or
managed by the Borrower or any of its Subsidiaries; and (ii) any other material
deficiency notice, compliance order or adverse report issued by any Governmental
Authority or accreditation commission having jurisdiction over licensing,
accreditation or operation of any such facility or by any Governmental Authority
or private insurance company pursuant to a provider agreement, which, if not
promptly complied with or cured, could result in the suspension or forfeiture of
any license, certification, or accreditation necessary for any such facility to
carry on its business as then conducted or the suspension or termination of any
insurance or reimbursement program available to the facility;
(f) Receipt or delivery by the Borrower or any of its Subsidiaries of
any material notice (including without limitation any first refusal, put or call
notice) pursuant to the Investor Agreement, the Palestine Limited Partnership
Agreement, or any other shareholder, partnership, operating or similar
agreement;
(g) Any default or event of default under any lease relating to the
Leased Properties under which the Borrower or any Subsidiary is lessee which
could reasonably be expected to have a Material Adverse Effect; or
(h) Any default or event of default under any agreement or instrument
to which the Borrower or any of its Subsidiaries is a party or by which the
Borrower or any of its Subsidiaries, or any of their property, is bound, the
termination of which could reasonably be expected to have a Material Adverse
Effect.
5.3. Corporate Existence and Maintenance of Properties. The Borrower
shall, and shall cause each of its Subsidiaries to:
(a) Maintain and preserve in full force and effect its corporate
existence, except as otherwise permitted by SECTION 6.1, and all material
rights, privileges and franchises; provided, however, that the Borrower may
permit the liquidation or dissolution of any of its Subsidiaries (and any such
Subsidiary may suffer such liquidation or dissolution) if, at the time of such
liquidation or dissolution, such Subsidiary has no assets, engages in no
business and otherwise has no activities other than activities related to the
maintenance of its corporate existence and good standing;
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(b) Conduct its business in an orderly and efficient manner, keep its
properties in good working order and condition (normal wear and tear excepted)
and from time to time make all needed repairs to, renewals of or replacements of
its properties (except to the extent that any of such properties are obsolete or
are being replaced) so that the efficiency of its business operations shall be
maintained and preserved; and
(c) File or cause to be filed in a timely manner all reports,
applications, estimates and licenses required by any Governmental Authority
that, if not timely filed, could reasonably be expected to have a Material
Adverse Effect.
5.4. Maintenance of Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to,
maintain and pay for insurance upon all of its assets and properties, including
the Collateral, wherever located, and all real property owned or leased by it,
in such amounts and against such risks as is customarily maintained by similar
businesses in similar locations, and will, at the Closing, deliver certificates
of such insurance to the Agent with satisfactory loss payable endorsements
naming the Agent as an additional loss payee, additional insured and/or
mortgagee thereunder, as its interests may appear, as appropriate. Within thirty
(30) days after the Closing, the Borrower shall deliver to the Agent certified
copies of the original policies of all insurance on the Collateral.
(b) Each such policy of insurance shall contain a clause requiring the
insurer to give not less than thirty (30) days (or ten (10) days for nonpayment)
prior written notice to the Agent before any cancellation of the policies for
any reason whatsoever. The Borrower hereby directs, and will cause each of its
Subsidiaries to direct, all insurers under policies of property and casualty
insurance on the Collateral to pay all proceeds payable thereunder directly to
the Agent when such proceeds, on an aggregate basis for any claim or series of
related claims, exceed $1,000,000. The Agent, on behalf of the Lenders, shall
hold all such proceeds for the account of the Borrower and its Subsidiaries. So
long as no Default or Event of Default has occurred and its continuing, the
Agent shall immediately deliver to the Borrower any insurance proceeds received
by the Agent in the amount of $1,000,000 or less, in the aggregate, for any
claim or series of related claims. So long as no Default or Event of Default has
occurred and is continuing, the Agent shall, at the Borrower's request, disburse
proceeds in excess of $1,000,000 for the purpose of replacing or repairing
destroyed or damaged assets, as and when required to be paid and upon
presentation of evidence satisfactory to the Agent of such repair estimates and
other documents as the Agent may reasonably request, or, if the Borrower has not
requested any such disbursement for one hundred twenty (120) consecutive days,
shall apply such proceeds in whole or in part as a prepayment of the Loans in
accordance with SECTIONS 2.5(A-B). If an Event of Default has occurred and is
continuing, the Borrower hereby irrevocably makes, constitutes and appoints the
Agent (and all officers, employees or agents designated by the Agent) as its
true and lawful agent (and attorney-in-fact) for the purpose of making, settling
and adjusting claims under such policies of insurance, endorsing its name or the
name of any Subsidiary on any check, draft, instrument or other item or payment
for the proceeds of such policies of insurance and for making all determinations
and decisions with respect to such policies of insurance.
(c) If the Borrower or any of its Subsidiaries fails to obtain and
maintain any of the policies of insurance required to be maintained hereunder or
to pay any premium in whole or in part, then the Agent may, at the Borrower's
expense, without waiving or releasing any obligation or Default by the Borrower
hereunder, procure the same, but shall not be required to do so. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand by the
Borrower to the Lenders and shall be additional Credit Obligations hereunder,
secured by the Collateral.
(d) Upon the reasonable request of the Agent from time to time, the
Borrower shall deliver to the Agent evidence that the insurance required to be
maintained pursuant to this Agreement is in effect.
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5.5. Maintenance of Books and Records; Inspection.
(a) The Borrower shall, and shall cause each of its Subsidiaries to,
maintain adequate books, accounts and records, and prepare all financial
statements required under this Agreement in accordance with Generally Accepted
Accounting Principles and in material compliance with all Requirements of Law.
(b) The Borrower shall, and shall cause each of its Subsidiaries to,
permit employees or agents of the Agent (or any Lender, at the Lenders'
expense), during normal business hours upon reasonable notice to inspect its
properties and to examine or audit its books, records, reports, accounts and
other papers and make copies and memoranda of them, and to discuss its affairs,
finances and accounts with its officers and employees and, with advance written
approval of the Chief Financial Officer or Vice President - Controller of the
Borrower (which approval shall not be unreasonably withheld), the independent
public accountants of the Borrower and its Subsidiaries (and by this provision
the Borrower and each of its Subsidiaries authorizes said accountants to discuss
the finances and affairs of the Borrower or such Subsidiary), all at such
reasonable times and as often as may be reasonably requested without undue
interference in the business and operations of the Borrower and its
Subsidiaries.
5.6. Compliance with ERISA. The Borrower shall, and shall cause each
of its Subsidiaries to: (i) make timely payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
Employee Plan and (ii) not take any action or fail to take action, the result of
which action or inaction could be a material liability of the Borrower or any of
its Subsidiaries to the Pension Benefit Guaranty Corporation or to a
Multiemployer Plan. Borrower shall not, nor shall it permit any of its
Subsidiaries to, participate in any Prohibited Transaction that could subject
the Borrower or any of its Subsidiaries to any material civil penalty under
ERISA or material tax under the Internal Revenue Code. The Employee Plans of the
Borrower and each of its Subsidiaries shall be operated in such a manner that
neither the Borrower nor any Subsidiary will incur any material tax liability
under Section 4980B of the Internal Revenue Code or any material liability to
any qualified beneficiary as defined in Section 4980B.
5.7. Payment of Taxes. The Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a material lien or
charge upon any of its properties; provided, however, that the Borrower or any
of its Subsidiaries may in good faith by appropriate proceedings and with due
diligence contest any such tax, assessment, charge, levy or claim if the
Borrower or such Subsidiary establishes reserves therefor in accordance with
Generally Accepted Accounting Principles.
5.8. Compliance with Laws. The Borrower shall, and shall cause each of
its Subsidiaries to, (i) have all material licenses, permits, certifications
approvals and authorizations required by Governmental Authorities necessary to
the ownership, occupation or use of its properties or the conduct of its
business, and maintain the same at all times in full force and effect, except to
the extent that a failure to have or maintain the same would not have a Material
Adverse Effect, and (ii) comply with all Requirements of Law in respect of the
conduct of its business, the ownership of its property and the Collateral,
including, without limitation, Titles XVIII and XIX of the Social Security Act,
Medicare Regulations, Medicaid Regulations, MediCal Regulations, ERISA, OSHA and
the Bloodborne Pathogens Standard, other than those the failure to comply with
which would not have a Material Adverse Effect.
5.9. Name Change. The Borrower may change the name of the Borrower to
"Principal Hospital Company" and may change the name of its Subsidiary,
Principal Hospital Company, a Delaware corporation, in each case at any time
within one hundred twenty (120) days after the Closing Date. Except as
provided in the
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preceding sentence, the Borrower shall notify the Agent and the Lenders at least
fifteen (15) days prior to the effective date of any change of the name of the
Borrower or any of its Subsidiaries, and prior to such effective date the
Borrower or such Subsidiary shall execute any amended or new Financing
Statements and other Loan Documents necessary to maintain and continue the
perfected security interest of the Agent in all of the Collateral and shall take
such other actions and execute such documents as the Agent shall reasonably
request.
5.10. Disbursement of Proceeds by the Borrower.
(a) At the request of the Agent, the Borrower shall obtain an
intercompany promissory note with respect to advances of any portion of the
Loans to any Subsidiary of the Borrower and any other amounts owing from any
Subsidiary of the Borrower to the Borrower from time to time, and shall promptly
thereafter grant to the Agent a first priority perfected security interest in
such promissory note as security for the Credit Obligations.
(b) If any Subsidiary becomes a debtor under the Bankruptcy Code, the
Agent, on behalf of the Lenders, is authorized, but not required, to file proofs
of claim with respect to such intercompany Debt on behalf of the Borrower and
vote the rights of the Borrower in any plan of reorganization with regard to any
Debt owed by such Subsidiary to the Borrower. The Agent, on behalf of the
Lenders, is further empowered to demand, xxx for, collect and receive every
payment and distribution on such Debt owing to the Borrower in such Subsidiary's
bankruptcy proceeding.
5.11. Creation or Acquisition of New Subsidiaries. The Borrower and
its Subsidiaries may from time to time create or acquire new Subsidiaries
subject to the terms of this Agreement, provided that (i) each new Subsidiary
having assets with a gross value (determined in accordance with Generally
Accepted Accounting Principles) in excess of $100,000 (or upon obtaining assets,
including but not limited to the proceeds of Investments, loans, or other
distributions from the Borrower or another Subsidiary, in excess of $100,000 in
the case of an existing Subsidiary which previously had assets with a gross
value less than $100,000) will execute and deliver to the Agent (with sufficient
copies for each Lender) an amendment or accession to the Guaranty Agreement
(pursuant to which such new Subsidiary shall become a party thereto), an
amendment or accession to the Security and Pledge Agreement, Financing
Statements, certificates of title, stock certificates and other documents
reasonably required by the Agent, all in form and substance satisfactory to the
Agent, pursuant to which such new Subsidiary shall secure its obligations under
the Guaranty Agreement by first priority, perfected security interests in all of
its assets, subject only to Permitted Liens, (ii) the Borrower and/or the other
Guarantors will execute and deliver to the Agent (with sufficient copies for
each Lender) an amendment or supplement to the Pledge Agreement, in form and
substance satisfactory to the Agent, pursuant to which all of the capital stock
or other ownership interests of such new Subsidiary that is directly or
indirectly owned by the Borrower shall be pledged to the Agent under the
Security and Pledge Agreement, together with the certificates representing such
capital stock or other ownership interests and stock powers duly executed in
blank, and (iii) the Borrower will cause each such new Subsidiary to execute and
deliver, and will cause to be delivered, all documentation of the type described
in SECTIONS 3.2.2(B) through (D) and SECTION 3.2.2(H), and upon request of the
Agent, SECTIONS 3.2.2(E) and 3.2.2(G) as such new Subsidiary would have had to
deliver were it a Subsidiary on the Closing Date.
5.12. Certain Permitted Acquisitions; Asset Purchases.
(a) Subject to the remaining provisions of this SECTION 5.12 applicable
thereto and subject to the definition of "Permitted Acquisitions" herein, the
Borrower and its Subsidiaries may from time to time after the Closing Date
effect Permitted Acquisitions, so long as with respect to each Permitted
Acquisition, no Default or Event of Default is in existence at the time of the
consummation of such Permitted Acquisition or would exist after giving effect
thereto.
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(b) At the time of each Permitted Acquisition involving the creation or
acquisition of a Subsidiary or the acquisition of Stock or other Interest of any
Person, the Borrower and the Guarantors shall have complied with SECTION 5.11.
(c) Not less than ten (10) Business Days prior to the consummation of
any Permitted Acquisition of $1,000,000 or greater or requiring approval of the
Required Lenders, the Borrower shall deliver to the Agent and each Lender the
following items, each in form and substance reasonably satisfactory to the
Agent:
(i) a description of the material terms of such
Permitted Acquisition (including, without limitation a description of
the acquisition, a description of the acquiror, the Acquisition Amount
and method and structure of payment), of each facility, Person,
business or asset that is the subject of such Acquisition, (each, a
"Target"), together with the most current draft of the acquisition or
other purchase or lease agreement;
(ii) historical financial statements of each Target
(if applicable) for the two (2) most recent fiscal years available and
for any interim periods since the most recent fiscal year-end for which
such interim statements are available; and
(iii) projected revenue and EBITDAR contribution levels
for the Target for a three-year period following the consummation of
such Permitted Acquisition or such asset purchase or lease, together
with any appropriate statement of assumptions and pro forma adjustments
and including a detailed report of expense adjustments requested by the
Borrower.
(d) The Borrower will deliver to the Agent and each Lender (i) copies
of any material modifications or supplements to the draft agreements submitted
pursuant to CLAUSE (C)(I) above prior to the closing of the Acquisition and (ii)
a copy of the fully executed acquisition or other purchase or lease agreement
(including schedules and exhibits thereto) within sixty (60) days after the
closing thereof, except as set forth in subsection (E) below.
(e) Within thirty (30) days after the end of each fiscal quarter, the
Borrower will deliver to the Agent and each Lender the documents required by
subsections (C) and (D) above for each Permitted Acquisition of less than
$1,000,000 that does not require the consent of the Required Lenders.
(f) No Acquisition may be effected unless:
(i) calculations are made by the Borrower of compliance
with the covenants contained in SECTIONS 6.9 through 6.15, inclusive,
for the most recent calculation period ended immediately prior to the
date of such Acquisition, on a pro forma basis as if the Acquisition
has occurred on the first day of such period, and shall show that all
such covenants will be complied with, giving effect to the pro forma
consolidation of the business acquired, and if such Acquisition is
$750,000 or greater or requires approval of the Required Lenders, such
calculations shall be reasonably satisfactory to the Agent;
(ii) the Borrower in good faith believes that the
financial covenants contained in such SECTIONS 6.9 through 6.15,
inclusive, will continue to be met on a quarterly basis for the one
year period following the date of the consummation of the Acquisition
on a quarterly basis;
(iii) prior to the consummation of the Acquisition of
$1,000,000 or greater or that requires consent of the Required Lenders,
the Borrower shall furnish the Agent and the Lenders with an
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officer's certificate executed by a senior officer of the Borrower,
certifying to the best of his knowledge as to compliance with the
requirements of preceding clauses (I) and (II) and SECTION 5.12(C), and
containing the pro forma calculations required by the preceding clause
(I); and
(iv) except for Acquisitions for which the Acquisition
Amounts are within the dollar limits set forth in the definition of
"Permitted Acquisitions" herein, the Required Lenders shall have
consented thereto in writing.
(g) The consummation of each Permitted Acquisition, shall be deemed to
be a representation and warranty by the Borrower that all conditions to be
satisfied by the Borrower hereon have been satisfied, that the same is permitted
in accordance with the terms of this Agreement and that the information
submitted by the Borrower pursuant to subsections (C) through (F) above, as
appropriate, is true and correct in all material respects as of the date such
certificate is given, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, for purposes of SECTIONS 3.3 and 7.1.
5.13. Swap Agreement. Within ninety (90) days after the Closing, the
Borrower shall enter into, or obtain, and maintain in full force and effect,
interest rate swap agreements, interest rate cap agreements or other instruments
or agreements on such terms as may be reasonably acceptable to the Agent,
pursuant to which the Borrower shall obtain protection against increases in the
interest rates applicable hereunder as to all outstanding Term Loans for not
less than three (3) years, it being understood that any such agreement may be
for a term of less than three (3) years so long as an agreement or agreements
satisfying the terms of this SECTION 5.13 shall be in effect continuously
throughout the 3-year period and so long as the term of any single agreement
shall not be less than one (1) year. The Borrower shall promptly deliver
evidence satisfactory to the Agent of compliance with this Section.
5.14. Acquisition of Realty. Promptly, and in any event within ten
(10) days after any permitted acquisition or lease of any Realty by the Borrower
or any Subsidiary, the Borrower will deliver an update to SCHEDULE 4.9 (for
Leased Properties) or 4.10 (for owned Realty). Promptly thereafter, and in any
event within sixty (60) days after the request of the Agent, the Borrower shall,
and shall cause each of its Subsidiaries to, as applicable, deliver to the Agent
each of the items described in SECTION 3.2 that would have been required had
such Realty been owned or leased on the Closing Date, and such other documents
relating to such Realty (including without limitation appraisals and opinions of
counsel) as the Required Lenders shall reasonably request.
5.15. Further Assurances. The Borrower shall, and shall cause each of
its Subsidiaries to, make, execute, endorse, acknowledge and deliver to the
Agent and the Lenders any amendments, restatements, modifications or supplements
hereto and any other agreements, instruments or documents, and take any and all
such other actions, as may from time to time be reasonably requested by the
Agent or the Lenders to effect, confirm or further assure or protect and
preserve the interests, rights and remedies of the Lenders and the Agent under
this Agreement and the other Loan Documents.
5.16. Cash Deposits. Commencing ninety (90) days after the Closing
Date, all cash in excess of ten percent (10%) of the aggregate amount of all
cash of the Borrower and its Subsidiaries (excluding deposits in transit) shall
be consolidated no less frequently than once a week in an account or accounts
maintained with one or more Lenders.
5.17. Purchase of Ojai Valley Community Hospital. Unless the Required
Lenders do not approve the Acquisition, the Borrower shall purchase Ojai Valley
Community Hospital, pursuant to its purchase option therefor, on terms and
conditions reasonably acceptable to the Agent, on or before June 30, 1997,
provided, however, that the Borrower's obligation to so purchase shall be tolled
if (i) an Event of Default under SECTIONS
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6.9, 6.10, 6.11, 6.12, 6.13, 6.14 OR 6.29 exists and is continuing or (ii) after
giving effect to the purchase, the Borrower will not have cash and borrowing
capacity reasonably sufficient to enable the Borrower to transact business in
the ordinary course. In connection therewith, the Borrower shall provide a first
priority Mortgage in favor of the Lenders, together with title insurance and
other customary real estate documentation, in form and substance reasonably
satisfactory to the Agent.
ARTICLE VI
NEGATIVE COVENANTS
Until payment in full of the Credit Obligations and termination of the
Lenders' obligation to make Loans and the Issuing Bank's obligation, on behalf
of the Lenders, to issue Letters of Credit, the Borrower covenants and agrees
that it will not, and will not permit any of its Subsidiaries to, individually
or in the aggregate:
6.1. Merger, Consolidation. Except as permitted by SECTION 5.3,
liquidate, wind up or dissolve, or enter into any consolidation, merger or
other combination, or agree to do any of the foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with
another Person so long as (x) the Borrower is the surviving
corporation, (y) if such merger or consolidation is in connection with
a Permitted Acquisition, the applicable conditions of SECTIONS 5.11 and
5.12 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist;
(ii) any Subsidiary may merge or consolidate with
another Person so long as (w) the Person surviving such merger or
consolidation is the Borrower or a Guarantor, (y) if such merger or
consolidation is in connection with a Permitted Acquisition, the
applicable conditions of SECTIONS 5.11 and 5.12 shall be satisfied, and
(z) immediately after giving effect thereto, no Default or Event of
Default would exist; and
(iii) the Borrower may consummate the Principal
Merger Transaction.
6.2. Debt. Create, incur, assume or suffer to exist any Debt other
than:
(i) Debt incurred pursuant to this Agreement and the
other Loan Documents;
(ii) Debt existing on the date hereof as set forth in
SCHEDULE 6.2 attached hereto; provided that the Debt is not increased
above the amount then outstanding;
(iii) accrued expenses, current trade payables and
other current liabilities arising in the ordinary course of business
and not incurred through the borrowing of money;
(iv) unsecured intercompany Debt (x) of any Subsidiary
to the Borrower, (y) of any Subsidiary to a Guarantor, and (z) of the
Borrower to any Guarantor, provided that any such Debt under this
clause (IV) is incurred in the ordinary course of business and, if
requested by the Agent, is evidenced by one or more promissory notes
pledged to the Agent pursuant to the Pledge Agreement, is payable on
demand and, is fully subordinated in right of payment to the Credit
Obligations and the Guaranty Obligations, as applicable; and provided
further, that intercompany Debt for money borrowed by the Palestine
Limited Partnership shall not exceed those obligations evidenced by the
Palestine Limited
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Partnership Note and that all other intercompany Debt owed by Palestine
Limited Partnership shall not exceed amounts currently payable pursuant
to the Hospital Management Agreement dated in or about June, 1996,
between Palestine-Principal, Inc., a Tennessee corporation, and the
Palestine Limited Partnership, as such agreement may be amended,
supplemented or renewed from time to time in compliance with SECTION
6.25 hereof.
(v) Contingent Obligations permitted by SECTION 6.3;
(vi) Debt of the Borrower under any Swap Agreement
relating to the Debt incurred under this Agreement; provided that the
notional amount of all such agreements at any time shall not exceed the
aggregate amount of the Commitments at such time;
(vii) Debt assumed or incurred in connection with a
Permitted Acquisition to the extent such Debt is approved by and, if
required by the Required Lenders, subordinated on terms acceptable to
the Required Lenders;
(viii) Debt with respect to financed insurance
premiums not past due;
(ix) unsecured Subordinated Debt; and
(x) other Debt (including, without limitation, Debt
secured by purchase money liens described in clause (E) of the
definition of Permitted Liens and Capital Lease Obligations) in an
aggregate principal amount at any time outstanding not to exceed
$3,000,000 for the Borrower and its Subsidiaries.
6.3. Contingent Obligations. Create, incur, assume or suffer to
exist any Contingent Obligation other than:
(i) endorsements of instruments or items of payment
for deposit or collection in the ordinary course of business;
(ii) Contingent Obligations incurred pursuant to the
Loan Documents;
(iii) Contingent Obligations consisting of the
indemnification by the Borrower or any of its Subsidiaries of (x) the
officers, directors, employees and agents of the Borrower or such
Subsidiary, to the extent permissible under the corporation law of the
jurisdiction in which the Borrower or such Subsidiary is organized, (y)
commercial banks, investment bankers and other independent consultants
or professional advisors pursuant to agreements relating to the
underwriting of the Borrower's or such Subsidiary's securities or the
rendering of banking or professional services to the Borrower or such
Subsidiary and (z) landlords, licensors, licensees and other parties
pursuant to agreements entered into in the ordinary course of business
by the Borrower or such Subsidiary;
(iv) customary indemnification obligations of the
Borrower and its Subsidiaries incurred in connection with Permitted
Acquisitions made in compliance with SECTION 5.13;
(v) unsecured amounts payable under earnouts,
approved by and subordinated on terms acceptable to the Required
Lenders, and other contingent obligations, in each case incurred by any
Borrower or any Subsidiary in connection with a Permitted Acquisition,
whether or not earned or matured;
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(vi) performance, appeal and bid bonds and pledges and
deposits pursuant to workers' compensation and similar requirements, in
each case to the extent permitted under the definition of "Permitted
Liens" contained herein;
(vii) obligations under Letters of Credit issued
under SECTION 2.17;
(viii) Contingent Obligations described on SCHEDULE 6.3
attached hereto, without giving effect to any increases thereof without
the written consent of the Required Lenders;
(ix) guarantees by the Borrower or any of its
Subsidiaries of obligations of the Borrower or its Subsidiaries under
leases permitted hereunder;
(x) guarantees by the Borrower or any of its
Subsidiaries of any other Debt permitted under SECTION 6.2 and
guaranties permitted by SECTION 6.7;
(xi) guarantees by the Borrower or any of its
Subsidiaries of physician compensation to the extent such guarantees
under Generally Accepted Accounting Principles would not be reflected
as a specific dollar amount on the liability side of such Person's
balance sheet;
(xii) other Contingent Obligations not to exceed
$1,000,000 at any time.
6.4. Liens and Encumbrances. Create, assume or suffer to exist any deed
of trust, mortgage or encumbrance, lien (including a lien of attachment,
judgment or execution) or security interest (including the interest of a
conditional seller of goods) securing a charge or obligation, in or on any of
its property, real or personal, whether now owned or hereafter acquired, except
for Permitted Liens.
6.5. Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or property, including, without limitation, the
Collateral, except for (i) sales of inventory in the ordinary course of
business; (ii) the sale of worn out or obsolete equipment for fair market value
or the exchange of used or obsolete equipment for replacement equipment; (iii)
the sale of permitted temporary or overnight investments; (iv) dispositions not
otherwise permitted by this SECTION 6.5, not exceeding $1,000,000 in the
aggregate, for the Borrower and its Subsidiaries, for any fiscal year; (v) any
sale, lease, transfer or conveyance from one Subsidiary to another Subsidiary or
to the Borrower, or from the Borrower to any Subsidiary, in accordance with
SECTION 6.6, provided that, immediately after giving effect thereto, no Default
or Event of Default would exist and (vi) asset sales made in connection with the
transactions contemplated by the Investment Agreement.
6.6. Transactions with Related Persons. Except for Subordinated Debt
and except as set forth on SCHEDULE 6.6 or as expressly permitted by SECTIONS
5.12, 6.1, 6.2, 6.3(II, III, VII, VIII and IX), 6.5, 6.7, 6.8, 6.16 and 6.19 or
otherwise contemplated by this Agreement, directly or indirectly make any loan
or advance to, or purchase, assume or guarantee any Debt to or from, any of its
officers, directors, stockholders or Affiliates, or subcontract any operations
to any Affiliate, or enter into any other transaction with any Affiliate, except
(a) in the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and (b) upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate and except
for the Professional Services Agreement.
6.7. Restricted Investments. Except as otherwise permitted in SECTIONS
6.2, 6.3, 6.5 and 6.8, directly or indirectly, purchase, own, invest in or
otherwise acquire any capital stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any
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loans, advances or extensions of credit to, or any investment in cash or by
delivery of property in, any other Person, or become a partner or joint venturer
in any partnership or joint venture, or consummate an Acquisition, or make a
commitment or otherwise agree to do any of the foregoing, other than:
(a) Cash Investments;
(b) loans and advances to employees for reasonable travel,
moving and business expenses incurred in the ordinary
course of business;
(c) Accounts owing to the Borrower or any of its
Subsidiaries created in the ordinary course of business
and payable in accordance with customary terms
prevailing in the industry;
(d) prepaid expenses incurred in the ordinary course of
business;
(e) loans, advances, or extensions of credit to, guaranties of
and investments existing as of the Closing Date in
corporations, partnerships and other Persons as of the
Closing Date as set forth on SCHEDULE 6.7;
(f) investments in Subsidiaries and Permitted Acquisitions
made in accordance with terms of this Agreement,
including SECTIONS 5.11 and 5.12;
(g) investments by the Borrower under any Swap Agreement
relating to the Debt incurred under this Agreement;
provided that the notional amount of all such Swap
Agreements at any time shall not exceed the aggregate
amount of the Commitments at such time;
(h) physician loans, guaranties and similar obligations
incurred in connection with the recruitment of physicians
in the ordinary course of business and customary for
hospitals similar to those operated by the Borrower and
its Subsidiaries;
(i) loans or advances from a Subsidiary to the Borrower or to
another Subsidiary that is a Guarantor or from the
Borrower to a Subsidiary that is a Guarantor so long as
the requirements of SECTION 6.2(IV) are satisfied;
(j) loans, advances and extensions of credit acquired in
connection with a disposition of assets permitted by
SECTION 6.5 hereof;
(k) notes and other investments received in connection with
bankruptcy in settlement of claims; and
(l) any other investments which are not described in clauses
(A) through (K) above, not to exceed during the term of
the Loans, $1,000,000 in the aggregate at any one time
outstanding.
6.8. Restricted Payments; Certain Distributions.
(a) Declare or pay any dividends or distributions upon any of its Stock
or Interest (other than dividends paid in Stock of the Borrower and dividends or
distributions paid or payable by a Subsidiary to the Borrower or another
Subsidiary), except as set forth on SCHEDULE 6.8; or
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(b) purchase, redeem, retire or otherwise acquire, directly or
indirectly, any shares of its Stock or other Interests, any shares of Stock or
other Interests of any Affiliate or any option, warrant or other right to
acquire shares of its Stock or Stock or other Interests of any Affiliate (other
than purchases, redemptions, retirements and other acquisitions by a Subsidiary
of shares, Interests, options, warrants or other rights issued thereby held by
the Borrower or another Subsidiary), except as follows:
(i) the Palestine Limited Partnership may purchase
the partnership interests (or a portion thereof) of Mother Xxxxxxx
Hospital Regional Health Care Center under the Palestine Limited
Partnership Agreement so long as no Default or Event of Default then
exists or would result immediately after giving effect thereto;
(ii) the Borrower may consummate the redemption
transaction contemplated by the Investment Agreement;
(iii) the Borrower may purchase and redeem its Stock
held by an employee or by the Brim, Inc. carryover stockholders upon
the death, disability or termination of employment of such stockholder
that is an employee, so long as the purchase price thereof is paid
solely by delivery of a promissory note which constitutes Subordinated
Debt hereunder; provided; however, the Borrower may purchase and redeem
such Stock with up to $500,000 in cash in the aggregate; and
(iv) redeem Series A Senior Preferred Stock from
Leeway & Co. or its successors and assigns with the proceeds of a
qualified initial public offering of the Borrower's common stock by an
underwriter of national reputation to the extent not required to be
applied in accordance with SECTION 2.5(F) hereof; provided there is no
Default or Event of Default hereunder and the Borrower is in pro forma
covenant compliance with the covenants contained herein upon
consummation of such redemption.
(c) make any distribution of cash, property or assets other than Stock
among the holders of shares of its Stock (other than distributions made by
Subsidiaries to the Borrower or another Subsidiary); or
(d) enter into or amend any agreement relating to any of the foregoing
(excluding agreements relating only to Subsidiaries with the Borrower or another
Subsidiary) including without limitation any agreement restricting or imposing
requirements regarding the payment of dividends and distributions.
6.9. Consolidated Adjusted Debt to Annualized Consolidated EBITDAR.
Permit the ratio of Consolidated Adjusted Debt to Annualized Consolidated
EBITDAR as of the end of any fiscal quarter beginning with the fiscal quarter
ending March 31, 1997 to and including the fiscal quarter ending June 30, 1997,
to be greater than or equal to 4.25 to 1.0; and as of the end of any fiscal
quarter thereafter, to be greater than or equal to 4.0 to 1.0.
6.10. Consolidated Adjusted Senior Debt to Annualized Consolidated
EBITDAR. Permit the ratio of Consolidated Adjusted Senior Debt to Annualized
Consolidated EBITDAR to be greater than or equal to 4.25 to 1.0 for any fiscal
quarter beginning with the fiscal quarter ending March 31, 1997 to and including
the fiscal quarter ending June 30, 1997; 4.00 to 1.0 thereafter to and including
the fiscal quarter ending September 30, 1997; 3.75 to 1.0 thereafter to and
including the fiscal quarter ending March 31, 1998; 3.50 to 1.0 thereafter to
and including the fiscal quarter ending September 30, 1998; and 3.00 to 1.0 for
any fiscal quarter thereafter.
6.11. Minimum Consolidated EBITDAR. Permit Consolidated EBITDAR to be
less than $2,500,000.00 for the fiscal month ending January 31, 1997;
$3,900,000.00 for the two fiscal months ending
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February 28, 1997; $5,500,000 for the fiscal quarter ending March 31, 1997;
$7,200,000.00 for the four fiscal months ending April 30, 1997; and
$8,800,000.00 for the five fiscal months ending May 31, 1997.
6.12. Minimum Net Worth. Permit Consolidated Net Worth to be less than
negative $15,000,000 as of the end of any fiscal quarter beginning with the
fiscal quarter end on December 31, 1996; plus ninety percent (90%) of
Consolidated Net Income (but excluding any net loss) for all periods from and
after January 1, 1997; plus one hundred percent (100%) of the aggregate amount
of all increases in the stated capital and additional paid in capital accounts
of the Borrower resulting from the issuance of equity securities or other
capital investments after the Closing Date.
6.13. Annualized Consolidated EBITDAR to Annualized Interest Expense
and Annualized Lease Expense. Permit the ratio of Annualized Consolidated
EBITDAR to the sum of Annualized Interest Expense and Annualized Lease Expense
to be less than or equal to 2.0 to 1.0 for any fiscal quarter beginning with the
fiscal quarter ending March 31, 1997 to and including the fiscal quarter ending
September 30, 1997; 2.5 to 1.0 thereafter to and including the fiscal quarter
ending September 30, 1998; and 3.0 to 1.0 for any fiscal quarter thereafter.
6.14. Fixed Charge Coverage. Permit the ratio of Annualized
Consolidated EBITDAR to Fixed Charges to be less than or equal to 1.1 to 1.0 for
any fiscal quarter beginning with the fiscal quarter ending March 31, 1997 to
and including the fiscal quarter ending December 31, 1997; and 1.0 to 1.0 for
any fiscal quarter thereafter.
6.15. Capital Expenditures. Permit Capital Expenditures (i) for the
fiscal year ending December 31,1997 to exceed $7,300,000 and (ii) for any fiscal
year, beginning with the fiscal year beginning January 1, 1998 to exceed five
percent (5%) of Consolidated Net Revenues for the four (4) fiscal quarters
ending on the last day of the previous fiscal year, adjusted for inflation based
on the consumer price index as determined by the Agent, plus proceeds of
insurance with respect to any loss of Collateral (to the extent used to replace
or replace such Collateral), plus proceeds of the disposition of assets
permitted by SECTION 6.5.
6.16. Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any of its Subsidiaries of any
asset that has been sold or transferred by the Borrower or such Subsidiary to
such Person, except that (a) the Borrower or any of its Subsidiaries between
themselves may enter any sale and leaseback so long as the provisions of SECTION
6.6 are satisfied and (b) the Borrower or any of its Subsidiaries may enter into
a sale and leaseback transaction regarding the purchase and subsequent sale and
leaseback of new equipment and machinery so long as the Borrower complies with
the covenants set forth in SECTIONS 6.2(X), 6.6, 6.9, 6.10, 6.11, 6.12, 6.13,
6.14 and 6.15 and there is otherwise no Default or Event of Default.
6.17. New Business. Engage in any business other than businesses
primarily within the Line of Business or make any material change in any of its
business objectives, purposes and operations that would be reasonably likely to
result in a material adverse effect.
6.18. Subsidiaries or Partnerships. Except as otherwise permitted by
the terms of this Agreement (including but not limited to SECTIONS 5.11, 5.12
and 6.7 hereof), (a) become a partner or joint venturer in any partnership or
joint venture, or (b) create or acquire any new Subsidiary.
6.19. Management Contracts. Enter into any agreements whereby the
management or control of its business as a whole or the business of any
Facility as a whole shall be delegated to or placed in any persons other than
its governing body and officers, the Borrower or one of the Borrower's
Subsidiaries, other than the
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Professional Services Agreement and the Intercompany Management Agreements. All
Intercompany Management Agreements existing as of the Closing Date are described
on SCHEDULE 6.19.
6.20. Limitation on Certain Restrictions. Directly or indirectly create
or otherwise cause or suffer to exist or become effective any restriction or
encumbrance on (a) the ability of the Borrower and its Subsidiaries to perform
and comply with their obligations under the Loan Documents or (b) the ability of
any Subsidiary of the Borrower to make any dividend payments or other
distributions in respect of its capital stock, to repay Debt owed to the
Borrower or any other Subsidiary, to make loans or advances to the Borrower or
any other Subsidiary, or to transfer any of its assets or properties to the
Borrower or any other Subsidiary, in each case other than such restrictions or
encumbrances existing under or by reason of (i) the Loan Documents, (ii)
applicable Requirements of Law and (iii) customary non-assignment and no-sale
provisions in any lease governing a leasehold interest or any installment
purchase agreement governing purchase money Debt.
6.21. No Other Negative Pledges. Directly or indirectly permit, enter
into or suffer to exist any agreement or restriction that prohibits or
conditions the creation, incurrence or assumption of any lien, security interest
or other encumbrance upon or with respect to any part of its property or assets,
whether now owned or hereafter acquired, or agree to do any of the foregoing,
other than as set forth in this Credit Agreement and the other Loan Documents.
6.22. Hazardous Wastes. Violate any Environmental Law or permit any
Hazardous Material to be brought onto any of the Realty or any other property
owned, leased or operated by the Borrower or its Subsidiaries, if the results
thereof would have a Material Adverse Effect. If any material Hazardous Material
is brought or found thereon or therein, except as may be permitted above (and
then only in strict compliance with all applicable Environmental Laws),
Borrower, at its expense, shall immediately remove it, with proper disposal, and
perform all required environmental response, removal, corrective and remedial
actions in a diligent manner and in accordance with all Environmental Laws, the
Borrower's obligations hereunder to survive any foreclosure of any Mortgage or
other deed of trust or mortgage. The Borrower shall promptly, after any officer
of either of the Borrower learns or obtains knowledge of the occurrence thereof,
give written notice to the Agent of receipt of any written notice of any
material violation or noncompliance, order or request for information from any
Governmental Agency with respect to any Environmental Law, and shall promptly
remedy any breach of any Environmental Law by the Borrower or its Subsidiaries.
Agent shall have the right, at the expense of the Borrower, to enter upon the
Realty or other property owned, leased or operated by the Borrower or its
Subsidiaries, or any part thereof (through its employees and/or agents), to
verify compliance by the Borrower and its Subsidiaries with the terms of this
Agreement and to conduct such environmental assessments and audits as Agent
shall deem advisable to facilitate such verification; provided, however,
BORROWER AND ITS SUBSIDIARIES HEREBY ACKNOWLEDGE THAT ALL HAZARDOUS MATERIAL
HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE
RESPONSIBILITY OF THE BORROWER AND ITS SUBSIDIARIES, AND THE BORROWER AND ITS
SUBSIDIARIES HAVE FULL DECISION-MAKING POWER WITH RESPECT THERETO. BORROWER AND
ITS SUBSIDIARIES FURTHER ACKNOWLEDGE THAT NEITHER THE AGENT NOR ANY LENDER IS AN
ENVIRONMENTAL CONSULTANT, ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE
WHATSOEVER. NO ACT (OR DECISION NOT TO ACT) OF THE AGENT OR ANY LENDER RELATED
TO THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL GIVE RISE TO ANY OBLIGATION OR
LIABILITY ON THE PART OF THE AGENT OR ANY LENDER WITH RESPECT TO ENVIRONMENTAL
MATTERS. IN NO EVENT SHALL ANY INFORMATION OBTAINED FROM THE AGENT OR ANY LENDER
OR THEIR RESPECTIVE AGENTS PURSUANT TO THIS AGREEMENT OR ANY LOAN DOCUMENT
CONCERNING THE ENVIRONMENTAL CONDITION OF THE REALTY OR OTHER PROPERTY BE
CONSIDERED BY THE BORROWER OR ANY SUBSIDIARY (OR ANY OTHER RECIPIENT OF SAID
INFORMATION) AS CONSTITUTING LEGAL OR ENVIRONMENTAL
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CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND NEITHER THE
BORROWER NOR ANY OF ITS SUBSIDIARIES (NOR ANY OTHER RECIPIENT OF SAID
INFORMATION) SHALL RELY ON SAID INFORMATION. THE RESPONSIBILITY FOR COMPLIANCE
WITH ENVIRONMENTAL LAWS RESTS SOLELY WITH THE BORROWER AND ITS SUBSIDIARIES.
6.23. Fiscal Year. Change its fiscal year from a calendar year
ending December 31.
6.24. Amendments; Prepayments of Debt, Etc. (a) Amend in any respect
the certificate or articles of incorporation, bylaws, partnership agreement,
operating agreement or similar governing document of the Borrower or any of its
Subsidiaries (other than to permit a name change or other immaterial amendment
not inconsistent with this Agreement), any Intercompany Management Agreement,
any shareholder agreement (to the extent such amendment would impose any
obligation on the Borrower or any of its Subsidiaries inconsistent with this
Agreement), the Investment Agreement or the Securities Purchase Agreement; or
(b) except with respect to the Debt created under the Loan Documents, customary
trade discounts, purchase money Debt, Capital Leases, financed insurance
premiums and Swap Agreements, permitted intercompany Debt, make any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before due for the purpose of paying when
due), or exchange, any Debt.
6.25. Location of Assets; Places of Business. Without thirty (30) days'
prior written notice to the Agent and the execution and delivery of Financing
Statements reasonably satisfactory to the Agent, (i) maintain any Inventory or
Equipment at any location other than the locations set forth on SCHEDULE 4.8 or
(ii) change its principal place of business to a location other than that set
forth on SCHEDULE 4.8.
6.26. Account Documents. Without thirty (30) days' prior written
notice to the Agent and the execution and delivery of Financing Statements
reasonably satisfactory to the Agent, remove the billing and related records
relating to Accounts from the locations set forth on SCHEDULE 4.8.
6.27. No Inconsistent Transactions or Agreements. Enter into any
transaction or agreement, or enter into any amendment or other modification to
any currently existing agreement, that by its terms prohibits or materially
restricts the ability of the Borrower to pay the principal of or interest on
the Loans.
6.28. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any
of their officers or directors, shall engage on behalf of Borrower or any
Subsidiary in any of the following: (i) knowingly and willfully making or
causing to be made a false statement or representation of a material fact in any
applications for any benefit or payment under Medicare or Medicaid programs;
(ii) knowingly and willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any benefit
or payment under Medicare or Medicaid programs; (iii) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under Medicare or Medicaid programs on
its own behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (a)
in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare or Medicaid, or (b) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing,
leasing or order of any good, facility, service, or item for which payment may
be made in whole or in part by Medicare or Medicaid. With respect to this
Section, knowledge by a senior officer of the Borrower or a Subsidiary of any of
the event described in this Section shall not be imputed to the Borrower or such
Subsidiary unless such knowledge was obtained or learned by such senior officer
in his or her official capacity as a officer of the Borrower or such Subsidiary.
Neither the Borrower nor
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any Subsidiary shall be considered to have breached this Section, except in the
case of a knowing and willful violation thereof, until the Borrower or such
Subsidiary has received notification, written or oral, by a Governmental
Authority of competent jurisdiction as to any such violation.
6.29. Parkview Regional Hospital/EBITDAR to Facility Rent Expense.
Permit the ratio of EBITDAR of Parkview Regional Hospital to Facility Rent
Expense of Parkview Regional Hospital to be less than 1.75 to 1.0 at any time.
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower (i) fails to pay any principal amount of the Credit
Obligations when due, or (ii) fails to pay any interest and fees on the Credit
Obligations within two (2) Business Days after the due date thereof;
(b) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained in SECTION 5.3(A), 5.12, 5.13 or ARTICLE VI;
(c) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained in SECTION 5.1, 5.2(C), 5.2(E), 5.2(F) or 2.13, and the same is not
cured to the Required Lenders' satisfaction within fifteen (15) days after the
earlier of (i) written notice to the Borrower by the Agent of the existence of
such Default, or (ii) the date on which the Borrower or such Subsidiary acquires
knowledge thereof;
(d) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained herein except those specified in subsections (A), (B) and (C) above,
and the same is not cured to the Required Lenders' satisfaction within thirty
(30) days after the earlier of (i) written notice to the Borrower by the Agent
of the existence of such Default, or (ii) the date on which the Borrower or such
Subsidiary acquires knowledge thereof;
(e) If any representation or warranty made in writing by or on behalf
of the Borrower or any of its Subsidiaries in this Agreement, in the other Loan
Documents or in any other agreement now existing or hereafter executed between
the Borrower or any of its Subsidiaries and the Agent or any Lender shall prove
to have been false or misleading in any material respect when made;
(f) The occurrence of any default or event of default on the part of
the Borrower or any of its Subsidiaries (including specifically, but without
limitation, defaults due to nonpayment) under the terms of any agreement,
document or instrument (including without limitation any Swap Agreement or any
other similar agreement with any other Person) pursuant to which the Borrower or
such Subsidiary has incurred any Debt (other than the Credit Obligations) in
excess of $700,000, which default or event of default would permit acceleration
of such Debt and which is not cured within any applicable grace or cure period;
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(g) (i) The termination of any hospital lease agreement; or (ii) the
termination of any other agreement, contract or instrument to which the Borrower
or any of its Subsidiaries is a party or by which it or any of its properties
are bound where such termination is reasonably likely to result in a Material
Adverse Effect;
(h) The occurrence of an event of default under any of the Loan
Documents or in any other agreement now existing or hereafter executed
evidencing or securing any of the Credit Obligations, taking into account any
applicable grace or cure provisions thereof;
(i) The occurrence of any uninsured damage to or loss, theft or
destruction of the Collateral or other assets of the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse Effect
on their financial condition;
(j) The filing by the Borrower or any of its Subsidiaries (with assets
having a value of $250,000 or more) of any voluntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing;
(k) The filing against the Borrower or any of its Subsidiaries (with
assets having a value of $250,000 or more) of any involuntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing, which petition is not dismissed discharged, stayed or bonded within
sixty (60) days after the date of filing;
(l) A custodian, trustee, receiver or assignee for the benefit of
creditors is appointed or takes possession of the Collateral or any other assets
of the Borrower or any of its Subsidiaries (with assets having a value of
$250,000 or more) which appointment continues undischarged, undismissed,
unstayed or unbonded for 60 days or more;
(m) The Borrower or any of its Subsidiaries (with assets having a value
of $250,000 or more) ceases, or the Borrower and its Subsidiaries, on a
consolidated basis, cease, to be Solvent (taking into account any rights of
contribution);
(n) A notice of lien, levy or assessment is filed of record against any
portion of the assets of the Borrower or any of its Subsidiaries by the United
States, or any department, agency or instrumentality thereof, or by any other
Governmental Authority or any other Person, including, without limitation, the
Pension Benefit Guaranty Corporation, or if any taxes or debts owing at any time
or times hereafter to any one of them becomes a lien or encumbrance (other than
a Permitted Lien) upon the Collateral or any other asset of the Borrower or any
of its Subsidiaries, and the same is not dismissed, released, bonded or
discharged within five (5) days after the same becomes a lien or encumbrance or,
in the case of ad valorem taxes, prior to the last day when payment may be made
without penalty and, if bonded, such bond (or a replacement bond) shall not
continue in effect at all times until such judgment is dismissed or discharged,
and any such event could reasonably be expected to have a Material Adverse
Effect;
(o) The entry of judgments or the issuance of warrants of attachment,
execution or similar process against the Borrower or any of its Subsidiaries or
any of their assets of $500,000 or more in the aggregate in excess of the
proceeds of insurance available therefor, which shall not be paid, dismissed,
discharged, stayed pending appeal or bonded within fifteen (15) days after entry
and, if bonded, such bond (or a replacement bond) shall not continue in effect
at all times until such judgment is dismissed or discharged;
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(p) The occurrence of any of the following events: (i) the happening of
a Reportable Event that could give rise to liability (that is not waived by the
Pension Benefit Guaranty Corporation or by the Required Lenders, or if such
liability can be avoided by any corrective action of the Borrower, such
corrective action is not completed within ninety (90) days after the occurrence
of such Reportable Event) with respect to any Pension Plan; (ii) the termination
of any Pension Plan in a "distress termination" under the provisions of Section
4041 of ERISA; (iii) the appointment of a trustee by an appropriate United
States District Court to administer any Pension Plan; (iv) the institution of
any proceedings by the Pension Benefit Guaranty Corporation to terminate any
Pension Plan or to appoint a trustee to administer any such plan; and (v) the
failure of the Borrower to notify the Lenders promptly upon receipt by the
Borrower of any notice of the institution of any proceeding or any other actions
that may result in the termination of any such plan;
(q) (i) The guaranty given by any Guarantor of the Borrower under the
Guaranty Agreement shall, for any reason other than the satisfaction in full of
all Credit Obligations and termination of this Agreement or the release of such
Subsidiary from its Guaranty Obligations under the Guaranty Agreement in
accordance with the terms thereof, cease to be in full force and effect at any
time or is declared to be null and void or (ii) any such Subsidiary denies that
it has any further liability under the Guaranty Agreement or gives notice to
such effect, and such denial or notice is not revoked within one Business Day
after the earlier of (A) receipt by the Borrower of notice from the Agent or any
Lender of such denial or notice or (B) the Borrower becomes aware of such denial
or notice being made or given, as the case may be;
(r) The occurrence of a Change of Control;
(s) Xxxxxx X. Xxxx and Xxxxxxx X. Xxxx shall cease to be the Chief
Executive Officer and Chief Financial Officer, respectively, of the Borrower or
involved in the day-to-day operations of the Borrower and its Subsidiaries, and
within 120 days following the cessation of their respective involvement, the
relevant executive is not succeeded by a chief executive officer or chief
financial officer, as applicable, reasonably acceptable to the Required Lenders;
or
(t) The Borrower or any Subsidiary, to the extent, if any, presently
participating or required by law to participate, in Medicaid or Medicare
programs shall fail to be eligible for any reason to participate in Medicaid,
Medicare or MediCal programs or to accept assignments or rights to reimbursement
under Medicaid Regulations, Medicare Regulations or MediCal Regulations, such
failure shall have a Material Adverse Effect, and such failure shall also
continue beyond the completion of any appeal process diligently pursued by the
Borrower or such Subsidiary in good faith.
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies; Termination of Commitments, Acceleration, Etc. Upon
and at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments of each Lender, the Swingline Commitment of
the Swingline Lender, and the Issuing Bank's obligation to issue Letters of
Credit, to be terminated, whereupon the same shall terminate (provided that,
upon the occurrence of an Event of Default with respect to the Borrower pursuant
to SECTIONS 7.1(J), (K) or (L), all of the Commitments and the Swingline
Commitment, together with the Issuing Bank's obligation to issue Letters of
Credit, shall automatically be terminated);
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(b) Declare all or any part of the outstanding principal amount of the
Loans, all unpaid interest accrued thereon, and all other amounts payable under
this Agreement, the Notes and the other Loan Documents to be immediately due and
payable, whereupon such outstanding principal amounts, accrued interest and
other such amounts shall become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower (provided that, upon the occurrence of an Event of Default with respect
to the Borrower pursuant to SECTIONS 7.1(J), (K) or (L), all such outstanding
principal amounts, accrued interest and other such amounts shall automatically
become immediately due and payable);
(c) Direct the Borrower to deliver (and the Borrower hereby agrees,
upon receipt of notice of such direction from the Agent, to deliver) to the
Agent from time to time such additional amount of cash as is equal to the
difference between the aggregate Stated Amount of all Letters of Credit then
outstanding (whether or not any beneficiary under any Letter of Credit shall
have drawn or be entitled at such time to draw thereunder) and the amount then
on deposit in the Cash Collateral Account, such amount to be held by the Agent
in the Cash Collateral Account as security for the Borrower's Reimbursement
Obligations as described in SECTION 2.17(I); and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Loan Documents and applicable law.
8.2. Right of Setoff. Upon the occurrence and during the continuance
of, and prior to any express written waiver by the Required Lenders of, an Event
of Default, the Agent and each Lender may, and are hereby authorized by the
Borrower, at any time and from time to time, to the fullest extent permitted by
applicable law, without advance notice to the Borrower (any such notice being
expressly waived by the Borrower) and irrespective of demand for payment, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held in other than a fiduciary account and any
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any or all of the Credit Obligations now or
hereafter existing, whether or not such Credit Obligations have matured. The
Agent agrees to notify the Borrower after any such setoff or application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
8.3. Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration
of the Agent's and the Lenders' rights and remedies set forth in this Agreement
is not intended to be exhaustive, and the exercise by the Agent or any Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder, under the Loan Documents or under any
other agreement between the Borrower or any of its Subsidiaries and the Agent or
the Lenders or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower or any of its
Subsidiaries and the Agent or the Lenders or their agents or employees shall be
effective to change, modify or discharge any provision of this Agreement or any
of the other Loan Documents or to constitute a waiver of any Event of Default.
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ARTICLE IX
THE AGENT
9.1. Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Agent hereunder and under the other Loan
Documents and to take such actions as agent on its behalf hereunder and under
the other Loan Documents, and to exercise such powers and to perform such
duties, as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers and duties as are reasonably incidental
thereto.
9.2. Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Loan Documents. The Agent shall not have, by reason of this Agreement or
any other Loan Document, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any other Loan Document, express or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
or liabilities in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents or
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact that it selects with reasonable care. The
Agent shall be entitled to consult with legal counsel, independent public
accountants and other experts selected by it with respect to all matters
pertaining to this Agreement and the other Loan Documents and its duties
hereunder and thereunder and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts. The Lenders hereby acknowledge that the Agent shall not
be under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders).
9.3. Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action taken or omitted to be taken by it or such Person
under or in connection with the Loan Documents, except for its or such Person's
own gross negligence or willful misconduct, (ii) responsible in any manner to
any Lender for any recitals, statements, information, representations or
warranties herein or in any other Loan Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for the financial condition of the Borrower, its Subsidiaries or any other
Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Loan Document or the existence or possible existence of
any Default or Event of Default, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries.
9.4. Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any notice, statement, consent or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Loan Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Loan Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first
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have been indemnified to its satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking, continuing
to take or omitting to take any such action. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent's acting or refraining from acting hereunder or under any other
Loan Document in accordance with the instructions of the Required Lenders (or,
where a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders (including all subsequent
Lenders).
9.5. Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action hereunder and under the
other Loan Documents and to make such investigation as it deems necessary to
inform itself as to the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Loan Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.6. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent shall have received written notice from the Borrower or a Lender
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent will give notice thereof to the Lenders as
soon as reasonably practicable; provided, however, that if any such notice has
also been furnished to the Lenders, the Agent shall have no obligation to notify
the Lenders with respect thereto. The Agent shall (subject to SECTIONS 9.4 and
10.8) take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action (except for
those actions specified in SECTION 8.1(A), (B), (C) or (D), with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders. Each Lender shall promptly give the Agent such a notice upon its
actual knowledge of a Default or an Event of Default; provided, however, that
the failure of any Lender to deliver such notice shall not, in the absence of
gross negligence or willful misconduct, affect its rights hereunder or under the
other Loan Documents. Each Lender agrees that the rights and remedies granted
under this Agreement and the other Loan Documents shall be exercised solely by
the Agent, at the direction or with the consent of the Required Lenders, and
that no Lender shall have any right individually to exercise any such right or
remedy except to the extent, if any, expressly provided herein or therein.
9.7. Indemnification. To the extent the Agent is not reimbursed by or
on behalf of the Borrower, and without limiting the obligation of the Borrower
to do so, the Lenders agree (i) to indemnify the Agent and its officers,
directors, employees, agents, attorneys-in-fact and Affiliates, ratably in
proportion to their
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percentages as used in determining the Required Lenders as of the date of
determination, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, reasonable expenses
(including, without limitation, reasonable attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the repayment in full of the Loans and the termination of
the Commitments) be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of this Agreement or any other Loan Document or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing, and (ii) to reimburse the Agent upon
demand, ratably in proportion to their percentages as used in determining the
Required Lenders as of the date of determination, for any reasonable expenses
incurred by the Agent for the benefit of the Lenders (including, without
limitation, reasonable attorneys' fees and expenses and compensation of agents
and employees paid for services rendered on behalf of the Lenders); provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements to the extent resulting from the gross
negligence or willful misconduct of the party to be indemnified.
9.8. The Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it, the Letters of Credit issued by it and the
Notes issued to it, the Agent in its individual capacity and not as Agent shall
have the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not performing the agency duties
specified herein; and the terms "Lenders," "Required Lenders," "holders of
Notes" and any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower,
any of its Subsidiaries or any of their Affiliates as if it were not performing
the agency duties specified herein, and may accept fees and other consideration
from any of them for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
9.9. Successor Agent. Subject to the appointment and acceptance of a
successor as provided below, the Agent may resign at any time by giving ten (10)
Business Days' prior written notice to the Borrower and the Lenders. Upon any
such notice of resignation and with the prior consent of the Borrower, which
consent shall not be unreasonably withheld, the Required Lenders will appoint
from among the Lenders a successor to the Agent. If no successor to the Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within such ten-Business Day period, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent with the prior consent
of the Borrower, which consent shall not be unreasonably withheld, which shall
be a commercial bank or trust company organized under the laws of the United
States of America or any state thereof and having a combined capital and surplus
of at least $1,000,000,000. Upon the acceptance of any appointment as Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring Agent's
resignation as Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent.
9.10. Collateral Matters.
(a) The Agent is hereby authorized on behalf of the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Security Documents.
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(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all of
the Credit Obligations, (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition expressly permitted
hereunder or under any other Loan Document or to which the Required Lenders have
consented or (iii) otherwise pursuant to and in accordance with the provisions
of any applicable Loan Document. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release Collateral
pursuant to this subsection (B).
9.11. Issuing Bank and Swingline Lender. The provisions of this
ARTICLE IX (other than SECTION 9.9) shall apply to the Issuing Bank and the
Swingline Lender mutatis mutandis to the same extent as such provisions apply
to the Agent
@@ ARTICLE X
MISCELLANEOUS
10.1. Survival.
(a) The representations and warranties made by or on behalf of the
Borrower or any of its Subsidiaries in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document. Notwithstanding any other provision herein or anything
provided or implied by law to the contrary, no termination or cancellation
(regardless of cause or procedure) of the Commitments, this Agreement or any of
the other Loan Documents shall in any way affect or impair the rights and
obligations of the parties hereto with respect to any of the provisions of (i)
SECTION 10.3, (ii) SECTION 2.15 or (iii) this Agreement and the other Loan
Documents relating to indemnification or payment of costs and expenses,
including, without limitation, all of the provisions of SECTIONS 2.11(A),
2.11(B), 2.12, 2.13, 2.17(H), 9.7, 10.6 and 10.7, and, in each case, such
provisions shall survive any such termination or cancellation and the making and
repayment of the Loans.
(b) The Borrower, the Agent and the Lenders agree that: (i) ARTICLES IV
and V and the other applicable provisions of this Credit Agreement are intended
as the Agent's (on behalf of the Lenders) written request for information (and
the Borrower's response) concerning the environmental condition of the real
property; and (ii) each provision in this Credit Agreement (together with any
indemnity applicable to a breach of any such provision) with respect to the
environmental condition of the Realty is intended to be an "environmental
provision" and as such it is expressly understood that the Borrower's duty to
indemnify the Agent and the Lenders as specified hereunder shall survive the
termination or cancellation of the Commitments or this Agreement and the making
and repayment of the Loans.
10.2. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
DEEMED TO HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN NORTH CAROLINA AND SHALL
BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
OF THE STATE OF NORTH CAROLINA; PROVIDED THAT EACH LETTER OF CREDIT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OR
RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE
DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM
CUSTOMS") AND, AS TO
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MATTERS NOT GOVERNED THEREBY, THE INTERNAL LAWS OF THE STATE OF THE DOMICILE OF
THE ISSUING BANK. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED,
THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN
MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE
WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
PROCEEDING TO WHICH THE AGENT, THE ISSUING BANK, ANY LENDER OR THE BORROWER IS A
PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT, THE ISSUING BANK, ANY LENDER OR THE BORROWER. THE BORROWER
IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY
JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION
THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL
SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO BORROWER
(ATTENTION: GENERAL COUNSEL) AT ITS ADDRESS SET FORTH HEREINBELOW, AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR FIFTEEN (15) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER
POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
10.3. Arbitration; Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any of the Loan
Documents ("Disputes") between or among parties hereto or thereto shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction contemplated
by this Agreement or any of the Loan Documents. Arbitration shall be conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. The expedited procedures set forth in Rule 51 et seq.
of the Arbitration Rules shall be applicable to claims of less than $1,000,000.
All applicable statutes of limitation shall apply to any Dispute. A judgment
upon the award may be entered in any court having jurisdiction. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted, or if such person is not available, the single
arbitrator may be a licensed attorney. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to any
interest rate protection agreements.
(b) Notwithstanding the preceding binding arbitration proceedings, the
Borrower and the Agent, on behalf of the Lenders, agree to preserve, without
diminution, certain remedies, more particularly described below, that any party
hereto may employ or exercise freely, independently or in connection with an
arbitration
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proceeding or after an arbitration action is brought. The Agent, on behalf of
the Lenders, and the Borrower shall have the right to proceed in any court of
proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale granted under
any Loan Documents or under applicable law or by judicial foreclosure and sale,
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, setoff,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of any arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
The Borrower and the Agent, on behalf of the Lenders, agree that they
shall not have a remedy of punitive or exemplary damages against the other in
any Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially.
10.4. Notice. All notices and other communications provided for
hereunder shall be in writing (including facsimile transmission) and mailed,
telecopied or delivered to the party to be notified at the following addresses
(provided, however, that Syndication Agency Services of First Union National
Bank of North Carolina will not receive copies of regular financial reports and
the attorneys listed below will receive neither regular financial reports nor
the business information submitted to the Agent and the Lenders):
If to Borrower: Brim, Inc. (changing name to Principal
Hospital Company)
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx X-00
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Agent
or the Issuing Bank: First Union National Bank of
North Carolina
One First Xxxxx Xxxxxx, XX-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: First Union National Bank of
North Carolina
000 Xxxxxx Xxxxxx North
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2nd Floor
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: First Union National Bank of
North Carolina
One First Union Center, 5th Floor
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to any Lender: At the address set forth on its
signature page hereto.
or to such other address as any party may designate for itself by like notice to
all other parties hereto. All such notices and communications shall be deemed to
have been given (i) if mailed as provided above by any method other than
overnight delivery service, on the third Business Day after deposit in the
mails, postage prepaid, (ii) if transmitted by overnight delivery service or
telecopied, when delivered for overnight delivery or transmitted by telecopier,
respectively, with appropriate confirmation of delivery, or (iii) if delivered
by hand, upon delivery; provided that notices and communications to the Agent
shall not be effective until received by the Agent.
All wire transfers to the Agent shall be sent to First Union National
Bank of North Carolina, ABA Routing #000000000, to the credit of First Union
National Bank of North Carolina, Charlotte, North Carolina, Attention:
Syndication Agency Services, G/L #465906, RC #5007, RE: Principal Hospital
Company, unless otherwise instructed by the Agent.
10.5. Assignments, Participations.
(a) With the prior consent of the Agent and the Borrower, which consent
shall not be unreasonably withheld (except in the case of a Default or Event of
Default in which case no consent of the Borrower shall be required), each Lender
may assign to one or more other Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the outstanding Loans made by it and the Note or
Notes held by it); provided, however, that (i) each such assignment shall be of
an equal, pro rata percentage of such Lender's rights and obligations (including
its Commitments) under each Credit Facility, (ii) except in the case of an
assignment to an Affiliate of such Lender or a Person that, immediately prior to
such assignment, was a Lender, (1) the amount of the Commitments of such
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to each such
assignment) shall in no event be less than the lesser of (y) the aggregate
Commitments of such Lender immediately prior to such assignment or (z)
$5,000,000, and (2) the amount of the
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Swingline Commitment being assigned pursuant to any such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than Swingline Commitment, (iii) each such assignment
shall be to an Eligible Assignee, (iv) the parties to each such assignment will
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment, and will pay a processing fee of $3,000 to the Agent for its
own account, and (v) the assignee shall prepare and deliver to the Agent (for
delivery to the Borrower) any forms and other documents required by SECTION
2.12(C). Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein
(a) the assignee thereunder shall be deemed a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of such Lender
hereunder with respect thereto, and (b) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree with each
other, and with the other parties hereto, as follows: (i) other than as may be
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished hereto or pursuant
thereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their obligations under this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee has received a copy of
this Agreement, together with copies of the Financial Statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; (iv) such assignee will,
independently and without reliance upon the Agent, the assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder, as are specifically delegated to
or required of the Agent by the terms hereof or thereof and such other powers as
are reasonably incidental thereto; and (vii) such assignee will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent will maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower, the Issuing Bank or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent will, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT D, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give notice thereof to the
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Borrower. Within five (5) Business Days after its receipt of such notice, the
Borrower, at its own expense, will execute and deliver to the Agent in exchange
for the surrendered Note or Notes a new Note or Notes to the order of such
assignee in an amount equal to the Commitment or Commitments assumed by it
pursuant to such Assignment and Acceptance and, to the extent the assigning
Lender has retained its Commitments hereunder, a new Note or Notes to the order
of the assigning Lender in an amount equal to the Commitment or Commitments
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the forms of EXHIBITS A-1 and
A-2, as appropriate.
(e) Each Lender may sell to one or more other Persons participations in
any portion comprising less than all of its rights and obligations under this
Agreement (including, without limitation, a portion of its Commitments, the
outstanding Loans made by it and the Note or Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower, the Issuing Bank, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (iv)
any such participation shall be in an amount of not less than $5,000,000, (v) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement (including, without limitation, all of its
Commitments, the outstanding Loans made by it and the Note or Notes held by it),
(vi) each such participation shall be of an equal, pro rata percentage of such
Lender's rights and obligations (including its Commitments) under each Credit
Facility, (vii) no Lender shall permit any participant to have any voting rights
or any right to control the vote of such Lender with respect to any amendment,
modification, waiver, consent or other action hereunder or under any other Loan
Document except as to actions of the type described in SECTION 10.8(A), and
(viii) the parties to each such participation shall pay a processing fee of
$3,000 to the Agent for its own account. In the case of a participation, the
participant shall not have any rights under this Agreement or any of the other
Loan Documents, the participant's rights against the granting Lender in respect
of such participation to be those set forth in the participation agreement, and
all amounts payable by the Borrower hereunder shall be determined as if such
Lender had not sold such participation; provided, however, that each such
participant shall have the rights of a Lender for purposes of SECTIONS 2.11(A),
2.11(B), 2.12, 2.13 and 8.2, and shall be entitled to the benefits thereof, to
the extent that the Lender selling such participation would be entitled to such
benefits if the participation had not been sold.
(f) With the prior consent of the Required Lenders and the Borrower,
which consent shall not be unreasonably withheld, the Issuing Bank may assign
all, but not less than all, of its rights and obligations as Issuing Bank under
this Agreement, including, without limitation, its commitment to issue Letters
of Credit, to any Eligible Assignee, and upon acceptance of such assignment, the
successor Issuing Bank shall succeed to such rights and obligations and the
assigning Issuing Bank shall be discharged therefrom.
(g) The Agent, the Issuing Bank and each Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Section, disclose to the assignee or participant, or proposed assignee
or participant, any information relating to the Borrower and its Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
assignee or participant or proposed assignee or participant agrees in writing to
the Agent, the Issuing Bank or such Lender, as the case may be, to keep such
information confidential to the same extent required of the Lenders under
SECTION 10.17.
(h) Nothing in this Agreement or the other Loan Documents shall
prohibit any Lender or participant from pledging or assigning its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the outstanding Loans made by it and the Note or
Notes held by it, including Collateral therefor) to any Federal Reserve Bank in
accordance with applicable law.
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10.6. Fees and Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, the Borrower shall be obligated:
(a) to pay or reimburse the Agent upon demand and after notice in
accordance with SECTION 10.4 for all reasonable expenses (including, without
limitation, reasonable attorneys' fees, but excluding salaries of the Agent's
regularly employed personnel and overhead) incurred or paid by the Agent in
connection with: (i) the preparation, execution, delivery, interpretation,
modification, amendment or termination of this Agreement or the other Loan
Documents or any consent or waiver requested by the Borrower hereunder or
thereunder; (ii) upon the occurrence and during the continuance of any Event of
Default, charges for appraisers, examiners, environmental consultants, auditors
or similar Persons whom the Agent may engage with respect to rendering opinions
concerning the financial condition of the Borrower and its Subsidiaries; and
(iii) upon the occurrence and during the continuance of any Event of Default,
any commercially reasonable attempt to inspect, verify, protect, preserve,
collect, sell, liquidate or otherwise dispose of the Collateral or any other
assets of the Borrower or any Guarantor;
(b) to pay or reimburse the Agent and each Lender upon demand and after
notice in accordance with SECTION 10.4 for all reasonable expenses (including,
without limitation, reasonable attorneys' fees, but excluding salaries of the
Agent's or such Lender's regularly employed personnel and overhead) incurred or
paid by the Agent or such Lender in connection with: (i) any litigation,
contest, dispute, suit or proceeding or action (whether instituted by the Agent,
the Lenders, or any of them, the Borrower or any other Person) in any way
relating to this Agreement or the other Loan Documents (other than a dispute
solely between or among the Lenders or the Lenders and the Agent); (ii) any
attempt by the Agent or such Lender to enforce any of its rights against the
Borrower or any other Person that may be obligated to the Agent or such Lender
by virtue of this Agreement or the other Loan Documents; and (iii) any
refinancing or restructuring of the credit arrangement provided under this
Agreement in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding;
(c) to pay and hold the Agent and each Lender harmless from and against
any and all liability and loss with respect to or resulting from the nonpayment
or delayed payment of any and all intangibles, documentary stamp and other
similar taxes, fees and excises, if any, including any interest and penalties,
that may be, or be determined to be, payable in connection with the transactions
contemplated by this Agreement and the other Loan Documents or in any
modification hereof or thereof; and
(d) to pay and hold the Agent and each Lender harmless from and against
any and all finder's or brokerage fees and commissions that may be payable in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, other than any fees or commissions of finders or brokers engaged
by the Agent or any Lender.
10.7. Indemnification. From and at all times after the date of this
Agreement, and in addition to the costs and expenses payable under SECTION 10.6
and all of the Agent's and the Lenders' other rights and remedies against the
Borrower, the Borrower agrees to indemnify and hold harmless the Agent, the
Issuing Bank and each Lender and each of their directors, officers, employees,
agents and their Affiliates (each, an "Indemnified Person") against any and all
claims, losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever, including, without limitation, reasonable attorneys' fees,
reasonable costs and expenses (collectively, "Indemnified Costs") incurred by or
asserted against any such Indemnified Person from and after the date hereof,
whether direct or indirect, as a result of or arising from or in any way
relating to any suit, action or proceeding (including any inquiry or
investigation) by any Person, whether threatened or initiated, asserting a claim
for any legal or equitable remedy under any statute or regulation, including,
without limitation, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or enforcement of this
Agreement or the other Loan Documents or any of the transactions contemplated
herein or therein, and including, without limitation, Environmental Claims,
whether or not such Indemnified Person is a party to any such action, proceeding
or suit or the target of
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any such inquiry or investigation; provided, however, that no Indemnified Person
shall have the right to be indemnified hereunder for any Indemnified Costs
resulting from the gross negligence or willful misconduct of such Indemnified
Person (as finally determined by a court of competent jurisdiction or pursuant
to arbitration as set forth in SECTION 10.3) or resulting from any dispute
solely between or among the Lenders or the Lenders and the Agent. Without
limiting the generality of the foregoing, the Indemnified Costs with respect to
Environmental Claims shall include, without limitation, amounts paid in
settlement of claims, all consultant and expert fees and expenses of any
Indemnified Person incurred in connection with any investigation of site
conditions, any abatement, cleanup, remediation, removal or restoration work, or
liability for any damages or injuries of any Person or to land, air, water or
other natural resources. All of the foregoing losses, damages, costs and
expenses of any Indemnified Person shall be payable by the Borrower within
thirty (30) days after demand, and shall be additional Credit Obligations
hereunder. In the event that the foregoing indemnity is unavailable or
insufficient to hold each Indemnified Person harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Persons in respect of
their losses, claims, damages or liabilities in such proportions as
appropriately reflect the relative benefits received by and fault of the
Borrower and such Indemnified Persons in connection with the matters as to which
such losses, claims, damages or liabilities relate and other equitable
considerations.
Any Indemnified Party may submit a claim for indemnification hereunder
by delivering written notice of such claim to the Borrower and, unless the
claimant is the Agent, to the Agent, and such notice shall describe in
reasonable detail the basis for the claim, the amount or estimated amount of the
claim, and such other information as the Borrower or the Agent shall reasonable
request.
10.8. Amendments, Waivers, Etc. Except as may be otherwise
specifically set forth in this Agreement or the other Loan Documents, neither
this Agreement nor any other Loan Document nor any provision hereof or thereof
may be amended, modified, waived, discharged or terminated, and no consent to
any departure by the Borrower from any provision hereof or thereof may be given,
except in a writing signed by the Required Lenders; provided, however, that:
(a) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of each Lender holding Credit Obligations
directly affected thereby, (i) reduce the principal amount of, or rate of
interest on, any Loan, or reduce any fees or other Credit Obligations (other
than fees payable to the Agent for its own account) or any obligations of any
Person now or hereafter primarily or contingently liable with respect to the
Credit Obligations or (ii) postpone any date fixed for any payment of principal,
interest (other than additional interest payable under SECTION 2.6(B) during the
continuance of an Event of Default), fees (other than fees payable to the Agent
for its own account) or any other Credit Obligations;
(b) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of all Lenders, (i) increase the Commitments
of any Lender (it being understood that a waiver of any Default or Event of
Default or of any mandatory reduction in either Total Commitment shall not
constitute such an increase), (ii) change the definition of "Required Lenders"
or otherwise change the number or percentage of Lenders that shall be required
for the Lenders or any of them to take or approve, or direct the Agent to take,
any action hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to extend, the term of the Revolving Credit Facility
or Term Loan Facility, (iv) affect the obligation of the Lenders having
Revolving Credit Commitments to become L/C Participants, (v) amend any provision
of this SECTION 10.8, (vi) release all or substantially all of the Collateral or
(vii) consent to the assignment or transfer by the Borrower, or by any other
Person now or hereafter primarily or contingently liable with respect to the
Credit Obligations, of any of its rights and obligations under this Agreement or
any of the other Loan Documents;
(c) no provision relating to the rights or obligations of the Swingline
Lender or the Issuing Bank under this Agreement or any of the other Loan
Documents may be amended, modified or waived without the consent of such Person;
and
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(d) no provision relating to the rights or obligations of the Agent
under this Agreement or any of the other Loan Documents may be amended, modified
or waived without the consent of the Agent.
10.9. Rights and Remedies Cumulative, Non-Waiver, Etc. The enumeration
of the Agent's and the Lenders' rights and remedies set forth in this Agreement
and the other Loan Documents is not intended to be exhaustive, and the exercise
by the Agent or any Lender of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder, under the
other Loan Documents or under any other agreement between the Borrower and the
Lenders, or any of them (or the Agent on their behalf), or that may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take action on the part of the Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any of the Borrower and the Agent or the Lenders or their agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default. No notice to
or demand upon the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the right of the Agent or any Lender to exercise any right or remedy
or take any other or further action in any circumstances without notice or
demand.
10.10. Binding Effect, Assignment. All of the terms of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
successors and assigns of the Borrower, the Agent, the Issuing Bank and each
Lender; provided, however, that (i) the Borrower may not sell, assign or
transfer this Agreement or any portion hereof or thereof, including, without
limitation, any of its rights, title, interests, remedies, powers and duties
hereunder or thereunder and (ii) any assignees and participants of the Lenders
and any successor Issuing Bank shall have such rights and obligations with
respect to this Agreement and the other Loan Documents as are provided for in
and pursuant to SECTION 10.5.
10.11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.12. Entire Agreement. THIS AGREEMENT AND THE LOAN DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF, INCLUDING WITHOUT LIMITATION THE COMMITMENT LETTER. THIS
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS AND THE INSTRUMENTS AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
10.13. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders.
10.14. Counterparts; Effectiveness. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which, when so executed and
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delivered, shall be an original, but all of which shall together constitute one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
10.15. Conflict of Terms. The Exhibits and Schedules hereto and the
other Loan Documents are incorporated in this Agreement by this reference
thereto. Except as otherwise provided in this Agreement and except as otherwise
provided in the other Loan Documents, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision of the other
Loan Documents, the provision contained in this Agreement shall control.
10.16. Injunctive Relief. The Borrower recognizes that in the event it
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Agent and the Lenders. The Borrower therefore agrees that the Agent and the
Lenders, if the Agent so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages in any case
where a remedy at law, in the reasonable good faith opinion of the Required
Lenders, may prove to be inadequate relief.
10.17. Confidentiality. Each Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all nonpublic confidential information provided in connection with this
Agreement or any other Loan Document and agrees and undertakes that it shall not
use any such information for any purpose or in any manner other than pursuant to
the terms contemplated by this Agreement. Any Lender may disclose such
information (i) at the request of any bank regulatory authority or in connection
with an examination of such Lender by any such authority, (ii) pursuant to
subpoena or other court process, (iii) when required to do so in accordance with
the provisions of any applicable law, (iv) at the express direction of any
agency of any State of the United States of America or of any other jurisdiction
in which such Lender conducts its business or (v) to such Lender's independent
auditors and other professional advisors that have a reasonable need or basis
for access thereto. The Lenders agree to use reasonable efforts to notify the
Borrower within a reasonable period of time prior to any such disclosure.
10.18. Post-Closing Matters. The Borrower will, and will cause each of
its Subsidiaries to, use its best efforts to assist the Agent in the syndication
of the Facilities and the resultant addition of Lenders after the Closing Date.
[Signature page to follow]
-98-
105
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
BRIM, INC.
By: /s/ Xxxxxx X. Xxxx
------------------------------
Title: Chief Executive Officer
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, AS AGENT AND AS ISSUING BANK
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: Senior Vice President
(signatures continued)
000
XXXXX XXXXX XXXXXXXX XXXX XX XXXXX
XXXXXXXX
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Title: Senior Vice President
Term Loan
Commitment: $5,250,000
Revolving Credit: $9,750,000
Address:
First Union National Bank
of North Carolina
One First Xxxxx Xxxxxx, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Healthcare Finance Group
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
First Union Bank
of North Carolina
000 Xxxxxx Xxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Wiring Instructions:
First Union National Bank
of North Carolina
Charlotte, North Carolina
ABA# 000000000
For further credit to:
Syndication Agency Services
GL# 465906
RC# 5007
Reference: Brim, Inc./Principal Hospital Company
(signatures continued)
000
XXXXXXX XXXX XX XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Title: Senior Vice President
Term Loan
Commitment: $4,725,000
Revolving Credit: $8,775,000
Lending Office, Hand Delivery Address
and Mailing Address:
AmSouth Bank of Alabama
0000 0xx Xxxxxx Xxxxx
XxXxxxx Sonat Tower 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: W. Page Xxxxxx
Wiring Instructions:
AmSouth Bank of Alabama
ABA # 000000000
For further credit to:
Acct. # 0011 0245 0400 100
(Corp. Clrng. Acct.)
Healthcare Banking
Reference: Principal Hospital
Company
(signatures continued)
108
XXXXXX COMMERCIAL PAPER INC.
By: /s/ Xxxxxx X. Xxx
---------------------
Title: Authorized Signatory
Term Loan
Commitment: $4,375,000
Revolving Credit: $8,125,000
Lending Office:
Xxxxxx Commercial Paper Inc.
c/o Bankers Trust Company
Corporate Trust & Agency Group
0 Xxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx Kunerb
and
Xxxxxx Commercial Paper Inc.
000 Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxxx
With copies of modifications to Credit
Agreement and financial information only to:
Xxxxxxx Xxxxxxx
Xxxxxx Commercial Paper Inc.
3 World Xxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx Commercial Paper Inc.
Wiring Instructions:
Bankers Trust ABA # 000-000-000
For further credit to:
Favor NY Ltd. Loan Services Omnibus Acct.
Acct. # 00-0000 000
Attention: Xxxxx Xxxxxxx
(signatures continued)
109
CREDIT LYONNAIS NEW YORK BRANCH
By:
-----------------------------------
Pascal Poupelle, Senior Vice President
Term Loan
Commitment: $4,025,000
Revolving Credit: $7,475,000
Lending Office, Hand Delivery Address
and Mailing Address:
Credit Lyonnais
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Wiring Instructions:
Lyonnais
New York, New York
ABA # 0000-0000-0
Acct. # 01-88179214000001
Attention: Loan Servicing
Reference: Principal Hospital Company
(signatures continued)
000
XXXXXX XXXXXXX XXXXXXX AGENCY
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Title: Vice President
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Title: Vice President
Term Loan
Commitment: $3,500,000
Revolving Credit: $6,500,000
Lending Office, Hand Delivery Address
and Mailing Address:
Banque Paribas Houston Agency
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx
Wiring Instructions:
Bankers Trust Company New York
ABA # 000000000
For Account 00000000 - Banque Paribas New York
For further credit to:
Acct. # 2144-001545 - Banque Paribas Houston Agency
Reference: Principal Hospital Company
Loan Operations Activity Contact:
Banque Paribas New York
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Primary Contact: Xxxx Xxxxx-Xxxxxx
Secondary Contact: Xxxxxx Xxxxxx/Xxx Xxxxxxx
(signatures continued)
000
Xxxxxx Xxxxxxx Xxxxxxx Agency
Letter of Credit Activity Contact:
Primary Contact:
Xxxxxx Xxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 166514 or 166343
Secondary Contact:
Xxxxxxxx Xxxx
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 166514 or 166343
Wiring Instructions for Letter of Credit Activity:
Bankers Trust Company, New York
ABA # 000000000
For Acct. # 04-204254 - Banque Paribas Houston Agency
(signatures continued)
000
XXX XXXX XX XXXXXX
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Title: Assistant Vice President
Term Loan
Commitment: $3,500,000
Revolving Credit: $6,500,000
Lending Office, Hand Delivery Address
and Mailing Address:
Key Bank of Oregon
0000 XX 0xx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx
Wiring Instructions:
Key Bank of Oregon
ABA # 000000000
Beneficiary: NW Region Specialty Services
Acct. # 370215701092
Attn: Specialty Team
Telephone: 0 (000) 000-0000
(signatures continued)
000
XXXXXXXX XXXX XXXX XX XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Title: Vice President
Term Loan
Commitment: $3,500,000
Revolving Credit: $6,500,000
Lending Office, Hand Delivery Address
and Mailing Address:
National City Bank of Kentucky
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
Wiring Instructions:
National City Bank of Kentucky
ABA # 000000000
For further credit to:
G/L # 151804
Attention: Xxxx Boston
Reference: Principal Hospital Company
(signatures continued)
000
XXXXX XXXX XX XXXXXXXXXX, N.A.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
Title: Vice President
Term Loan
Commitment: $3,500,000
Revolving Credit: $6,500,000
Lending Office, Hand Delivery Address
and Mailing Address:
Union Bank of California
000 X. Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Wiring Instructions:
Union Bank of California
ABA # 000000000
For further credit to:
Acct. # 0012060232
Reference: Principal Hospital Company
(signatures continued)
115
FIRST AMERICAN NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Title: Vice President
Term Loan
Commitment: $2,625,000
Revolving Credit: $4,875,000
Lending Office, Hand Delivery Address
and Mailing Address:
First American National Bank
First Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxx Xxxxxxxx
Wiring Instructions:
First American National Bank
Nashville, Tennessee ABA #
000-0000-00 For further credit
to:
Wire Transfer Clearing
Acct # 0901256
Reference: Principal Hospital
