EXHIBIT 10.1
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
VistaCare, Inc.
Vista Hospice Care, Inc.
VistaCare USA, Inc.
FHI Health Systems, Inc.
FHI GP, Inc.
FHI LP, Inc.
Family Hospice, Ltd. and
FHI Management, Ltd.
as BORROWERS
with
HEALTHCARE BUSINESS CREDIT CORPORATION
as LENDER
dated as of December 23, 2004
EXHIBIT LIST
Exhibit 1.1 -- Form of Pledge Agreement
Exhibit 2.1(c)(i) -- Form of Amended and Restated Revolving Credit Note
Exhibit 2.1(c)(ii) -- Form of Acquisition Term Loan Note
Exhibit 2.2(b) -- Form of Borrowing Base Report
Exhibit 2.2(c) -- Loan Request
Exhibit 4.1 -- Form of Opinion of Counsel
Exhibit 4.2A -- Notice Letter Re: Commercial Obligors
Exhibit 4.2B -- Notice Letter Re: Government Obligors
Exhibit 6.8 -- Officer's Certificates
Schedule 1 -- Ineligible Obligors and Concentration Limits
Schedule 2 -- Borrowers' States of Qualifications
-- Chief Executive Office
-- Places of Business/Other Names
-- Provider Identification Numbers
-- Pending Litigation
-- Permitted Liens
-- Fiscal Year End
-- Federal Tax I.D. Numbers
-- Existing Guaranties, Investments and Borrowings
-- Other Associations
-- Environmental Matters
-- Capital Stock and Equity Interests
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan and Security Agreement (as the
same may from time to time be amended, restated, modified or otherwise
supplemented, this "AGREEMENT") is dated this 23 day of December, 2004 by and
among VistaCare, Inc., a Delaware corporation, Vista Hospice Care, Inc., a
Delaware corporation, VistaCare USA, Inc., a Delaware corporation, FHI Health
Systems, Inc., a Delaware corporation, FHI GP, Inc., a Texas corporation, FHI
LP, Inc., a Nevada corporation, Family Hospice, Ltd., a Texas limited
partnership, FHI Management, Ltd., a Texas limited partnership (together with
each of their successors and permitted assigns, collectively referred to as the
"BORROWERS" and each individually referred to as a "BORROWER"), and Healthcare
Business Credit Corporation, a Delaware corporation, as lender (together with
its successors and assigns, the "LENDER").
BACKGROUND
WHEREAS, BORROWERS and LENDER entered into an Amended and Restated Loan
and Security Agreement dated as of June 3, 2002, as amended by that certain
First Amendment to Amended and Restated Loan and Security Agreement dated as of
June , 2003 (said Loan and Security Agreement, as amended and in effect on the
date hereof, the "Existing Credit Agreement");
WHEREAS, pursuant to the Existing Credit Agreement, LENDER has made
certain revolving loans (collectively, the "Prior Loans") to BORROWERS which
Prior Loans are evidenced by that certain revolving credit note of BORROWERS
dated as of April 16, 2001 in the original principal amount of $30,000,000 (the
"Prior Note");
WHEREAS, BORROWERS and LENDER desire that, on the terms and conditions
herein, (i) the Existing Credit Agreement be amended and restated into this
Agreement, (ii) the Prior Loans continue under this Agreement, (iii) the
Acquisition Term Loan (as defined hereinafter) provide for Permitted
Acquisitions in accordance with the terms of this Agreement, and (iv) the Loans
under the Existing Credit Agreement continue in full force and effect and,
together with the other Loan Documents, secure the Obligations of BORROWERS (as
such terms are defined hereinafter).
NOW, THEREFORE, in consideration of the premises, the following mutual
agreements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
that the Existing Credit Agreement be amended and restated to read in its
entirety, as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1. Terms Defined: As used in this Agreement, the following terms have
the following respective meanings:
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"ACCOUNT" or "ACCOUNTS" means a right to payment of a monetary
obligation, whether or not earned by performance for services rendered or to be
rendered or for a secondary obligation incurred or to be incurred, including but
not limited to (a) the third party reimbursable portion of accounts receivable
owing to a BORROWER arising out of the delivery by such BORROWER of medical,
surgical, diagnostic or other professional, medical or dental services and/or
the supply of goods related to any of such services (whether such services are
supplied by a BORROWER or a third party), including all rights to reimbursement
under any agreements with an Obligor, (b) all accounts, general intangibles,
rights, remedies, guarantees, and security interests in respect of the
foregoing, all rights of enforcement and collection, all books and records
evidencing or related to the foregoing, and all rights under this Agreement in
respect of the foregoing, (c) all information and data compiled or derived by
such BORROWER in respect of such accounts receivable, subject to the
confidentiality rights under applicable law and under rights and rules of JCAHO
and (d) all proceeds of any of the foregoing. The term includes health-care
insurance receivables.
"ACCOUNTS DETAIL FILE" has the meaning set forth in Section
2.2(b) hereof.
"ACQUISITION TERM LOAN" has the meaning set forth in Section
2.1(a) hereof.
"ACQUISITION TERM LOAN AMOUNT" means an amount equal to Twenty
Million and No/100 Dollars ($20,000,000.00).
"ACQUISITION TERM LOAN COMMITMENT FEE" has the meaning set
forth in Section 2.8 hereof.
"ACQUISITION TERM LOAN MATURITY DATE" has the meaning set
forth in Section 2.1(e) hereof.
"ACQUISITION TERM LOAN NOTE" has the meaning set forth in
Section 2.1(c) hereof.
"ACQUISITION TERM LOAN TERMINATION FEE" has the meaning set
forth in Section 2.8 hereof.
"ADVANCE(S)" means any monies advanced or credit extended,
including without limitation the Revolving Loans to or for the benefit of
BORROWERS, or any of them by LENDER, under the Total Facility.
"ADVANCE RATE" means eighty five percent (85%) or such other
percentage(s) resulting from an adjustment pursuant to Section 2.1(f) below, and
such other rate as may be increased from time to time by Lender in Lender's sole
discretion upon and after the occurrence of an Event of Default.
"AFFILIATE" means with respect to any Person (the "Specified
Person"), (a) any Person which directly or indirectly controls, or is controlled
by, or is under common control with, the Specified Person, and (b) any director
or officer (or, in the case of a Person which is not a corporation, any
individual having analogous powers) of the Specified Person or of a Person who
is an Affiliate of the Specified Person within the meaning of the preceding
clause (a). For purposes of
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the preceding sentence, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, or direct or indirect ownership
(beneficially or of record) of, or direct or indirect power to vote, 5% or more
of the outstanding shares of any class of capital stock of such Person (or in
the case of a Person that is not a corporation, 5% or more of any class of
equity interest).
"APPLICABLE REVOLVING LOAN MARGIN" means for any day, with
respect to any Revolving Loan under the Total Facility, at the following rate as
determined according to the applicable level ("LEVEL") as indicated by the
following grid:
XXXXX 0 XXXXX 0
------- -------
Advance Rate < 85% > 85% but < 90%
Applicable Revolving LIBOR Rate, plus LIBOR Rate, plus
Loan Margin 3.00% 3. 50%
provided that during the period from the Closing Date through and including the
date on which the BORROWERS receive written notice from LENDER that LENDER has
agreed to increase the Advance Rate up to an amount not to exceed 90%, the
Applicable Revolving Loan Margin shall be equal to Level 1.
"APPLICABLE TERM LOAN MARGIN" means for any day, with respect
to the Acquisition Term Loan, at the following rate as determined according to
the applicable level ("LEVEL") as indicated by the following grid, with such
Level to be determined on the basis of the Leverage Ratio of the BORROWERS as of
the last day of each fiscal quarter of the BORROWERS as reflected on the
financial statements for such fiscal quarter delivered by the BORROWERS pursuant
to Section 6.7:
Leverage Ratio Applicable Term Loan Margin
-------------- ---------------------------
Level 1 > 3.50:1.00 LIBOR Rate, plus 5.00%
< 3.50:1.00 but >
Xxxxx 0 3.25:1.00 LIBOR Rate, plus 4.75%
< 3.25:1.00 but >
Xxxxx 0 3.00:1.00 LIBOR Rate, plus 4.50%
Xxxxx 0 < 3.00:1.00 but
>.2.7500:1.00 LIBOR Rate, plus 4.00%
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< 2.75:1.00 but >
Xxxxx 0 2.50:1.00 LIBOR Rate, plus 3.75%
< 2.50:1.00 but >
Xxxxx 0 2.25:1.00 LIBOR Rate, plus 3.50%
< 2.25:1.00 but >
Xxxxx 0 2.00:1.00 LIBOR Rate, plus 3.25%
Xxxxx 0 < 2.00:1.00 LIBOR Rate, plus 3.00%
provided that during the period from the Closing Date through and including the
date on which the BORROWERS deliver the financial statements under Section 6.7
for the fiscal quarter ending September 30, 2004, the Applicable Term Loan
Margin shall equal the LIBOR Rate, plus five percent (5.00%), and thereafter and
until the Acquisition Term Loan Maturity Date, the Applicable Term Loan Margin
shall be equal to the Level as set forth above and shall be effective on the
date on which the BORROWERS deliver the financial statements under Section 6.7
for the applicable fiscal quarter and provided at such time no Event of Default
or Unmatured Event of Default has occurred, however, if there shall have
occurred an Event of Default which has not been cured or waived, the Applicable
Term Loan Margin shall immediately be adjusted to the Default Rate until the
Event of Default shall have been cured or waived, as the case may be. Each
change in the Applicable Term Loan Margin shall be effective on the first
Business Day following delivery of the most recent financial statements pursuant
to Section 6.7 subject to the proviso set forth in the preceding sentence.
"AUTHORIZED OFFICER" means any officer or partner of a
BORROWER authorized by specific resolution of such BORROWER to request Revolving
Loans as set forth in the incumbency certificate referred to in Section 4.1(d)
of this Agreement.
"BILLING DATE" means the date on which the xxxx for services
rendered or goods provided was sent to the respective Obligor.
"BORROWING BASE" means, at any date, an amount equal to the
lesser of (a) the sum of (i) the Revolving Loan Commitment, plus (ii) if the
LENDER has made any Revolving Loan under the Tranche A Facility, the Tranche A
Loan Commitment, plus (iii) if the LENDER has made any Revolving Loan under the
Tranche B Facility, the Tranche B Loan Commitment or (b) the product of (i) the
applicable Advance Rate then in effect, times (ii) the Estimated Net Value of
all Eligible Accounts as of such date.
"BORROWING BASE DEFICIENCY" means, as of any date, the amount,
if any, by which (a) the aggregate amount of all Advances outstanding as of such
date exceeds (b) the Borrowing Base as of such date.
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"BORROWING BASE EXCESS" means, as of any date, the amount, if
any, by which (a) the Borrowing Base as of such date exceeds (b) the aggregate
amount of all Advances outstanding as of such date.
"BORROWING BASE REPORT" has the meaning set forth in Section
2.2(b) hereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
any day on which banking institutions in Philadelphia, Pennsylvania or New York
City, New York are permitted or required by law, executive order or governmental
decree to remain closed or a day on which LENDER is closed for business.
"CAPITALIZED LEASE" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a part of TRICARE, a medical benefits program supervised by
the U.S. Department of Defense.
"CLOSING" has the meaning set forth in Section 4.6 hereof.
"CLOSING DATE" has the meaning set forth in Section 4.6
hereof.
"CMS" means the Centers for Medicare and Medicaid Services, a
division of the U.S. Department of Health and Human Services.
"COLLATERAL" has the meaning set forth in Section 3.1 hereof.
"COLLECTIONS" means with respect to any Account, all cash
collections on such Account.
"COLLECTION ACCOUNT" has the meaning set forth in Section
2.7(a) hereof.
"COMMERCIAL LOCKBOX" means a lockbox in the name of LENDER (or
a nominee of LENDER) and maintained at the Lockbox Bank, or such other bank as
is acceptable to LENDER, to which Collections on all Accounts, other than
Government Accounts, are sent.
"COMMITMENT FEE" has the meaning set forth in Section 2.8
hereof.
"CONCENTRATION LIMITS" means the various financial tests,
expressed as percentages of the then current ENV of all Eligible Accounts,
described on SCHEDULE 1 as in effect from time to time.
"CONTRACT" means an agreement by which an Obligor is obligated
to pay for services rendered to patients of BORROWER.
"DEBT SERVICE COVERAGE RATIO" means the ratio of (a) the sum
of (i) Net Income, plus (ii) Interest Expense, plus (iii) income taxes, plus
(iv) depreciation and amortization expenses,
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plus (v) expenses resulting from non-cash items in connection with non-cash
stock compensation expense minus non-financed capital expenditures to (b) the
sum of (i) Interest Expense, plus (ii) the current portion of long-term debt,
plus (iii) the current portion of lease payments under capitalized leases plus
(iv) Distributions, all as determined for BORROWERS on a consolidated basis in
accordance with GAAP; provided that for purposes of determining the Debt Service
Coverage Ratio, Distributions which consist of repurchasing capital stock of the
BORROWERS shall be excluded from such calculation as long as such Distributions
do not exceed $50,000,000 and no Event of Default shall have occurred.
"DEFAULT RATE" means 200 basis points above the interest rate
otherwise applicable on the Revolving Loans or Acquisition Term Loan.
"DEFAULTED ACCOUNT" means an Account as to which (a) the
initial ENV has not been received in full as Collections within one hundred and
eighty (180) days of the Billing Date, or (b) LENDER reasonably deems
uncollectible because of the bankruptcy or insolvency of the Obligor or any
other reason.
"DEPOSITORY AGREEMENT(S)" means those certain Depository
Agreements entered into in connection with this Agreement among BORROWERS,
LENDER and the Lockbox Bank, relating to the Commercial Lockbox and the
Government Lockbox, as applicable.
"DESIGNATED FUNDING DATE" has the meaning set forth in Section
2.2(a) hereof.
"DISTRIBUTION" means (i) dividends or other distributions on
capital stock or other equity interests of a BORROWER; (ii) the redemption,
repurchase or acquisition of such stock or equity interests or of warrants,
rights or other options to purchase such stock or equity interest; and (iii)
loans made to any Shareholders.
"DOWNLOAD DATE" has the meaning set forth in Section 2.2(b)
hereof.
"ELIGIBLE ACCOUNT" means an Account of a BORROWER:
(a) which is a liability of an Obligor which is (i) a
commercial insurance company reasonably acceptable to LENDER, organized under
the laws of any jurisdiction in the United States, having its principal office
in the United States, other than those listed on SCHEDULE 1 as ineligible, (ii)
a Blue Cross/Blue Shield Plan other than those listed on SCHEDULE 1 as
ineligible, (iii) CHAMPUS, Medicare or Medicaid, or (iv) a HMO, PPO or an
institutional Obligor reasonably acceptable to LENDER, or any other type of
Obligor, not included in the categories of Obligors listed in the foregoing
clauses (i) - (iii), organized under the laws of any jurisdiction in the United
States, having its principal office in the United States, and is listed on
SCHEDULE 1 as an eligible Obligor,
(b) the Obligor of which is not an Affiliate of BORROWER,
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(c) the Obligor of which has received a letter substantially
in the form of EXHIBIT 4.2A (in the case of all Accounts other than Government
Accounts) or a letter substantially in the form of EXHIBIT 4.2B (in the case of
all Government Accounts),
(d) in an amount, as relating to a specific xxxx of an
individual patient, not less than Five and No/100 Dollars ($5.00) nor more than
Fifty Thousand and No/100 Dollars ($50,000.00), denominated and payable in
United States dollars,
(e) as to which the representations and warranties of Section
5.21 hereof are true,
(f) which (i) does not arise from the delivery of cosmetic
surgery services and (ii) is not a workers' compensation claim (unless expressly
approved by LENDER) and (iii) does not arise from any services delivered for
injury sustained in a motor vehicle accident (unless the Obligor on such Account
is a type of Obligor permitted pursuant to clause (a) of this definition) and
(iv) does not have an Obligor who is the individual patient or person who
received the goods or services rendered,
(g) which is not outstanding more than (i) one hundred and
eighty (180) days past the Billing Date in the case of Accounts that have been
billed, and (ii) forty five (45) days past the last day of the month in which
the corresponding services and/or goods were provided in the case of Accounts
that have not been billed, provided that in no event may the Account be
outstanding more than two hundred and twenty five (225) days past the last day
of the month in which the corresponding services and/or goods were provided, and
provided further that such services rendered but not yet billed are Eligible
Accounts to the extent (A) such services are reflected in BORROWERS' accounting
records in a manner consistent with the recording of the billed accounts
receivable and (B) that such amount does not exceed one hundred percent (100%)
of eligible billed accounts receivable,
(h) to the extent such Account does not include late charges
or finance charges,
(i) which complies with such other criteria and requirements
as may be specified from time to time by LENDER in its reasonable discretion,
and
(j) which is an Estimated Additional Unbilled Account.
"ESTIMATED ADDITIONAL UNBILLED ACCOUNTS" has the meaning set
forth in Section 2.2(b) hereof.
"ESTIMATED NET VALUE" or "ENV" means on any date of
calculation with respect to any Account an amount equal to the anticipated cash
collections as calculated by LENDER using the Value Track System(TM) (which
system periodically adjusts such amount to reflect LENDER's evaluation of the
performance of similar Accounts and to reflect payments received with respect
thereto), except that if LENDER determines that all Obligor payments with
respect to an Account
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have been made or if an Account has become a Defaulted Account, the ENV of such
Account shall be zero.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1
hereof.
"EXPENSES" has the meaning set forth in Section 9.5 hereof.
"FUNDING DATE" has the meaning set forth in Section 2.2(a)
hereof.
"GAAP" means generally accepted accounting principles,
consistently applied.
"GOVERNMENT ACCOUNTS" means Accounts on which any federal or
state governmental unit or any intermediary for a federal or state governmental
unit is the Obligor.
"GOVERNMENT LOCKBOX" means a lockbox and deposit account in
the name of BORROWER(s) maintained at the Lockbox Bank, or such other bank as is
acceptable to LENDER, to which Collections on all Government Accounts are sent.
"HAZARDOUS SUBSTANCES" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, by any environmental statute, rule or
regulation of any governmental entity presently in effect and applicable to such
real property.
"INITIAL CREDIT FACILITY" has the meaning set forth in Section
2.1(a) hereof.
"INITIAL CREDIT TERM" has the meaning set forth in Section
2.1(d) hereof.
"INITIAL TRANCHE TERM" has the meaning set forth in Section
2.1(d) hereof.
"INTEREST EXPENSE" means, for any period of BORROWERS, the
consolidated interest expense of BORROWERS and their Subsidiaries for such
period payable in connection with the Debt for Borrowed Money of BORROWERS and
such Subsidiaries (including all computed interest on Capitalized Leases).
"JCAHO" means the Joint Commission for Accreditation of
Healthcare Organizations, a nationally recognized organization providing
accreditations to hospitals and other healthcare facilities, or any successor
entity charged with performing its functions.
"LEVERAGE RATIO" means, at any date of determination thereof,
the ratio of (i) the sum of (A) the Obligations, plus (B) Subordinated Debt, to
(ii) the sum of (A) Net Income, plus (B) Interest Expense, plus (C) income tax
expense, plus (D) depreciation and amortization expenses, plus (E) expenses
resulting from non-cash items in connection with non-cash stock compensation
expense, plus (F) non-financed capital expenditures, all as determined for
BORROWERS on a consolidated basis in accordance with GAAP.
"LIBOR RATE" means an annual rate equal to the sum of the
annual rate in effect in the London Interbank market applicable to one (1) month
deposits of U.S. dollars as reported
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in the Wall Street Journal on the second Business Day preceding the date of
determination. If the Wall Street Journal is not published on such Business Day
or does not report such rate, such rate shall be as reported by such other
publication or source as LENDER may select.
"LOAN DOCUMENTS" means this Agreement, the Revolving Credit
Note, the Acquisition Term Loan Note, each Pledge Agreement, the Depository
Agreements and all agreements relating to the Government Lockbox and the
Commercial Lockbox, all financing statements and any other agreements,
instruments, documents and certificates executed and/or delivered in connection
with this Agreement, as each may be amended, restated, modified or otherwise
supplemented from time to time.
"LOAN REQUEST" has the meaning set forth in Section 2.2(c)
hereof.
"LOCKBOX BANK" means PNC Bank, National Association, or such
other bank that is acceptable to LENDER.
"MONITORING FEE" has the meaning set forth in Section 2.8
hereof.
"NET INCOME" means, with respect to any period, the aggregate
of the net income (loss) of Borrowers for such period, determined in accordance
with GAAP on a consolidated basis. There shall be excluded in computing Net
Income (i) any after tax gains (but not losses) attributable to dispositions of
assets (other than sales of inventory in the ordinary course of business) and
(ii) any after tax extraordinary gains (but not losses).
"NET WORTH" means the aggregate amount, determined on a
consolidated basis in accordance with GAAP, of all of the assets of the
BORROWERS less all liabilities of the BORROWERS.
"OBLIGATIONS" means all now existing or hereafter arising
loans, advances, liabilities, debts, obligations, covenants, and duties of
payment or performance of every kind, matured or unmatured, direct or
contingent, owing, arising, due or to become due, or payable to LENDER, by or
from BORROWERS, or any of them, in each case to the extent arising out of this
Agreement or any other Loan Document or otherwise, including, without
limitation, all obligations to repay principal of and interest on all the
Revolving Loans, and to pay interest, fees, including but not limited to renewal
fees, Unused Line Fees, Non-use Fees, any Revolving Loan Termination Fee, any
Acquisition Term Loan Termination Fee, the Monitoring Fee, other collateral
monitoring fees, examination fees, closing fees, facility fees, costs, charges,
expenses, professional fees, and any other sums chargeable to BORROWERS, or any
of them, under the Loan Documents or any other agreement with LENDER, whether or
not evidenced by any note or other instrument.
"OBLIGOR" means the party primarily obligated to pay an
Account.
"PERSON" means any individual, corporation, partnership,
limited liability partnership, limited liability company, association, trust,
unincorporated organization, joint venture, court or government or political
subdivision or agency thereof, or other entity.
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"PERMITTED ACQUISITION" means any acquisition by any BORROWER
(i) if, after giving effect to such acquisition, the projected pro forma Debt
Service Coverage Ratio for the immediately succeeding twelve (12) month period
is not less than 1.25:1.00, (ii) which is otherwise approved by Lender in
accordance with the terms of this Agreement and (iii) so long as no Event of
Default or Unmatured Event of Default has occurred hereunder.
"PERMITTED LIENS" has the meaning set forth in Section 5.6
hereof.
"PLEDGE AGREEMENTS" means the collective reference to those
certain, and "PLEDGE AGREEMENT" means each of that certain, (i) Pledge Agreement
dated as of December 23, 2004 made by VistaCare, Inc. in favor of LENDER, (ii)
Pledge Agreement dated as of December 23, 2004 made by Vista Hospice Care, Inc.
in favor of LENDER, (iii) Pledge Agreement dated as of December 23, 2004 made by
FHI Health Systems, Inc. in favor of LENDER, (iv) Pledge Agreement dated as of
December 23, 2004 made by FHI GP, Inc. in favor of LENDER, (v) Pledge Agreement
dated as of December 23, 2004 made by FHI LP, Inc. in favor of LENDER, as each
may from time to time be amended, restated, modified or otherwise supplemented,
substantially in the form set forth in EXHIBIT 1.1 attached hereto and made a
part hereof.
"PROPERTY" means an interest of BORROWER in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
"REVOLVING CREDIT NOTE" has the meaning set forth in Section
2.1(c) hereof.
"REVOLVING LOAN(S)" has the meaning set forth in Section
2.1(b) hereof.
"REVOLVING LOAN COMMITMENT" means an amount equal to Twenty
Million and No/100 Dollars ($20,000,000.00).
"REVOLVING LOAN MATURITY DATE" has the meaning set forth in
Section 2.1(d) hereof.
"REVOLVING LOAN TERMINATION FEE" has the meaning set forth in
Section 2.3(d) hereof.
"SECURITIES" has the meaning set forth in Section 6.14 hereof.
"SHAREHOLDER" means, as applicable, a shareholder, member or
partner of BORROWER.
"SUBORDINATED DEBT" means debt or other obligations of a
BORROWER that is subordinated to the Obligations of BORROWERS to LENDER on terms
and conditions that are satisfactory to LENDER in its sole discretion.
"SUBSIDIARY" shall mean, individually, and "SUBSIDIARIES"
shall mean the collective reference to, any corporation, limited liability
company, partnership, joint venture, trust, or other legal entity of which any
BORROWER owns directly or indirectly 50% or more of the
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outstanding voting stock or interest, or of which any BORROWER has effective
control, by contract or otherwise.
"TOTAL FACILITY" has the meaning set forth in Section 2.1(a)
hereof.
"TOTAL FACILITY COMMITMENT" has the meaning set forth in
Section 2.1(a) hereof.
"TRANCHE A FACILITY" has the meaning set forth in Section
2.1(a) hereof.
"TRANCHE A LOAN COMMITMENT" means an amount equal to Five
Million and No/100 Dollars ($5,000,000.00).
"TRANCHE B FACILITY" has the meaning set forth in Section
2.1(a) hereof.
"TRANCHE B LOAN COMMITMENT" means an amount equal to Five
Million and No/100 Dollars ($5,000,000.00).
"TRICARE" means the medical program for active duty members,
qualified family members, CHAMPUS eligible retirees and their family members and
survivors, of all uniformed services.
"UNIFORM COMMERCIAL CODE" or "UCC" means the Uniform
Commercial Code as in effect from time to time in the State of New Jersey.
"UNMATURED EVENT OF DEFAULT" means an event which with the
passage of time, giving of notice or both, would become an Event of Default.
"UNUSED LINE FEE" has the meaning set forth in Section 2.3(c)
hereof.
"VALUE TRACK SYSTEM(TM)" means the proprietary business system
used by LENDER to value and record the status of Accounts.
1.2. Matters of Construction: The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which LENDER is a party,
including, without limitation, references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
1.3. Accounting Principles: Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in
11
accordance with GAAP, to the extent applicable, except as otherwise expressly
provided in this Agreement.
1.4. Restructuring: On the Closing Date, and at the time on such date
that the restructuring contemplated by this Agreement occurs, (a) the Prior
Loans shall continue as Revolving Loans under this Agreement and be evidenced by
the Revolving Note, (b) the proceeds of the Acquisition Term Loan shall be used
for Permitted Acquisitions pursuant to the terms of the Agreement and (c) the
security interests and liens granted by BORROWERS under the Loan Documents and
the documents delivered in connection therewith shall continue in full force and
effect under this Agreement. None of the Prior Loans shall be deemed to have
been repaid as a result of the restructuring described in this Section 1.4. None
of the liens of BORROWERS granted to LENDER pursuant to the Loan Documents shall
be terminated as a result of the restructuring described in this Section 1.4.
1.5. Restatement: This Agreement shall not constitute a novation of the
Existing Agreement or all or any portion of the Obligations evidenced thereby.
SECTION 2. THE LOANS
2.1. Total Facility - Description:
(a) Subject to the last sentence of this Section 2.1(a) and
the other terms and conditions of this Agreement, LENDER hereby establishes for
the joint and several benefit of BORROWERS a total facility (the "TOTAL
FACILITY") of up to Thirty Million and No/100 Dollars ($30,000,000) (the "TOTAL
FACILITY COMMITMENT") consisting of (i) a line of credit facility (the "INITIAL
CREDIT FACILITY") which shall not at any time exceed the maximum aggregate
principal amount of the Revolving Loan Commitment, (ii) a line of credit
facility (the "TRANCHE A FACILITY") in a maximum aggregate principal amount at
any time not to exceed the Tranche A Loan Commitment and (iii) a line of credit
facility (the "TRANCHE B FACILITY") in a maximum aggregate principal amount at
any time not to exceed the Tranche B Loan Commitment. In addition to the Total
Facility, LENDER shall also provide to BORROWERS two acquisition term loans
(each, an "ACQUISITION TERM LOAN", and collectively, the "ACQUISITION TERM
LOANS") in the principal amount not to exceed the Acquisition Term Loan Amount
which shall be made available to BORROWERS in accordance with the terms hereof
and in two separate tranches, each tranche not to exceed Ten Million and No/100
Dollars ($10,000,000), the proceeds of which will be used for Permitted
Acquisitions. Notwithstanding anything to the contrary contained in this Section
2.1(a) or any other provision of this Agreement, BORROWERS and LENDER hereby
agree that prior to any BORROWER obtaining any Advance under the Total Facility
or any tranche under the Acquisition Term Loan, BORROWERS shall (i) enter into
Depository Agreements which will replace those currently in effect at such time
and which will further comply with the other terms and provisions of this
Agreement and (ii) deliver a legal opinion in form and substance satisfactory to
LENDER which opines as to the pledge of Medicaid Accounts by BORROWER in each
State where any BORROWER has Medicaid Accounts.
(b) The Total Facility shall include Advances which may be
extended by LENDER to or for the benefit of BORROWERS from time to time
hereunder in the form of revolving
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credit loans ("REVOLVING LOANS"). The aggregate outstanding amount of all
Advances under the Total Facility, at any time, shall not exceed the Borrowing
Base. In no event shall the initial principal amount of any Revolving Loan be
less than One Hundred Thousand and No/100 Dollars ($100,000.00). Subject to such
limitation, the outstanding balance of all Advances may fluctuate from time to
time, either to be reduced by repayments made by BORROWERS or to be increased by
future Advances which may be made by LENDER. If the aggregate outstanding amount
of all Advances exceeds the Borrowing Base, BORROWERS shall immediately repay
such excess in full. LENDER has the right at any time, and from time to time, in
its reasonable discretion (but without any obligation) to set aside reasonable
reserves against the Borrowing Base in such amounts as LENDER may reasonably
deem appropriate. The Obligations of BORROWERS under the Total Facility, the
Acquisition Term Loan and this Agreement are joint and several and shall at all
times be absolute and unconditional.
(c) At Closing, BORROWERS shall duly execute and deliver to
LENDER (i) an amended and restated promissory note made payable to the order of
LENDER in the principal amount of the Total Facility Commitment (as the same may
be amended, modified or replaced from time to time, the "REVOLVING CREDIT NOTE"
and (ii) a promissory note made payable to the order of LENDER in the principal
amount of the Acquisition Term Loan Amount (as the same may be amended, modified
or replaced from time to time, the "ACQUISITION TERM LOAN NOTE"). The Revolving
Credit Note and the Acquisition Term Loan Note shall evidence BORROWERS' joint
and several, absolute and unconditional obligation to repay LENDER for all
Revolving Loans made by LENDER under the Total Facility and the Acquisition Term
Loan, respectively, with interest as herein and therein provided. Each and every
Advance under the Total Facility shall be evidenced by the Revolving Credit
Note, which is hereby incorporated herein by reference and made a part hereof.
The Revolving Credit Note and the Acquisition Term Loan Note shall be
substantially in the form of EXHIBIT 2.1(C)(I) and EXHIBIT 2.1(C)(II),
respectively, attached hereto and made a part hereof.
(d) The term ("INITIAL CREDIT TERM") of the Total Facility
shall expire on December 23, 2009. All Revolving Loans under the Total Facility
shall be repaid on or before the earlier of (i) the last day of the Initial
Credit Term, (ii) upon termination of the Total Facility, and (iii) termination
of this Agreement (the earliest of such dates, the "REVOLVING LOAN MATURITY
DATE"). After the Maturity Date no further Revolving Loans shall be available
from LENDER.
(e) The Acquisition Term Loan shall be repaid on or before the
earlier of (i) December 23, 2009 and (ii) termination of this Agreement (the
earlier of such dates, the "ACQUISITION TERM LOAN MATURITY DATE").
(f) From time to time, upon not less than three (3) Business
Days notice to BORROWERS and provided that an Event of Default or Unmatured
Event of Default has not occurred hereunder, LENDER may adjust the Advance Rate
in order to reflect, in LENDER's reasonable judgment, the experience with
BORROWERS (including by way of illustration, to adjust for any known or
potential offsets by Medicare or Medicaid) or the aggregate amount or percentage
of the Collections with respect to the Accounts.
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2.2. Funding Procedures:
(a) Subject to the terms and conditions of this Agreement and
so long as no Event of Default or Unmatured Event of Default has occurred
hereunder, LENDER will make Revolving Loans to BORROWERS once a week, on a
specified Business Day of each week (such day to be mutually agreeable to
Borrowers and LENDER ("DESIGNATED FUNDING DATE") whether or not Borrowers have
requested a Revolving Loan to be made on such date), and on such other day of
the week as BORROWERS may request (such day along with the Designated Funding
Date is referred to herein as the "FUNDING DATE").
(b) Not later than 11:00 a.m. (Eastern Time) two (2) Business
Days prior to each Designated Funding Date ("DOWNLOAD DATE"), BORROWERS will
deliver to LENDER the computer file data associated with the Accounts, which
shall include, without limitation, the information (including changes in the
Obligor reimbursement rates and changes in federal or state laws or regulations
affecting payment for medical services), required by LENDER to enable LENDER to
process and value the outstanding Accounts of BORROWERS on LENDER's Value Track
System(TM), as well as xxxx and collect such Accounts following an Event of
Default ("ACCOUNTS DETAIL FILE"). Upon completion of the processing of the data
with respect to such Accounts, LENDER will prepare and deliver to BORROWERS by
no later than 5:00 p.m. (Eastern Time) on the first Business Day following the
Download Date (or if such Accounts Detail File is not delivered until after
11:00 a.m. (Eastern Time) on the Download Date, the second Business Day
following the Download Date) a report regarding the Borrowing Base then in
effect, which shall be substantially in the form of EXHIBIT 2.2(B) (a "BORROWING
BASE REPORT"). Notwithstanding the foregoing, until such time as BORROWERS
request a Revolving Loan to be made, BORROWERS hereby agree to submit to the
LENDER such Accounts Detail File monthly to be received by LENDER no later than
the tenth day of each month.
(c) On the Designated Funding Date, BORROWERS will sign and
return the Borrowing Base Report to LENDER. If BORROWERS are requesting that a
Revolving Loan be made on such Designated Funding Date, BORROWERS shall also
deliver to LENDER, concurrently with the Borrowing Base Report, a written
request for such Revolving Loan substantially in the form of EXHIBIT 2.2(C) (a
"LOAN REQUEST"). The Borrowing Base Report and Loan Request may be delivered via
telecopy and BORROWERS acknowledge that LENDER may rely on BORROWERS' signatures
by facsimile, which shall be legally binding upon BORROWERS.
(d) Subject to the terms and conditions of this Agreement, if
the Borrowing Base Report and Loan Request are delivered to LENDER before 11:00
a.m. (Eastern Time) on the Funding Date, LENDER will advance on the Designated
Funding Date (or the next Business Day if the Borrowing Base Report and Loan
Request are delivered after 11:00 a.m. (Eastern Time)) to BORROWER a Revolving
Loan in an amount equal to the lesser of (i) the amount of the Revolving Loan
requested by BORROWERS in the Loan Request or (ii) the Borrowing Base Excess as
of such date; provided that such Revolving Loan is not less than One Hundred
Thousand and No/100 Dollars ($100,000.00). Any Advances made by Lender hereunder
shall be treated for all purposes as, and shall accrue interest at the same rate
applicable to, Revolving Loans.
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(e) LENDER's determination of the Estimated Net Value of the
Eligible Accounts and other amounts to be determined or calculated under this
Agreement shall, in the absence of manifest error, be binding and conclusive.
2.3. Interest and Fees:
(a) Each Advance shall bear interest on the outstanding
principal amount thereof from the date made until such Advance is paid in full.
The BORROWERS agree to pay interest on the unpaid principal amount of each
Revolving Loan from time to time outstanding hereunder at the following rates
per year:
(i) before maturity of any Revolving Loan, whether by
acceleration or otherwise, at a rate equal to the
Applicable Revolving Loan Margin. The interest rate
on all amounts outstanding under the Total Facility
shall be adjusted weekly based on the LIBOR Rate as
of each Designated Funding Date; or
(ii) after the Maturity Date, until paid, at a rate
equal the Default Rate.
(b) The Acquisition Term Loan shall bear interest on the
outstanding principal amount thereof from the Closing Date until such
Acquisition Term Loan is paid in full. The BORROWERS agree to pay interest on
the unpaid principal amount of the Acquisition Term Loan until the Acquisition
Term Loan Maturity Date at the Applicable Term Loan Margin. The BORROWERS
further agree to pay interest on the unpaid principal amount of the Acquisition
Term Loan after the Acquisition Term Loan Maturity Date, until paid, at a rate
equal to the Default Rate.
(c) BORROWERS shall unconditionally pay to LENDER a fee
("UNUSED LINE FEE") equal to one-quarter of one percent (0.25%) per annum of the
unused portion of the Total Facility. The unused portion of the Total Facility
shall be the difference between (a) an amount equal to the sum of (i) the
Revolving Loan Commitment plus (ii) the Tranche A Loan Commitment, if BORROWERS
obtain any Advance under such facility, plus (iii) the Tranche B Loan
Commitment, if BORROWERS obtain any Advance under such facility, minus (b) the
average daily outstanding balance of the Revolving Loans during each month (or
portion thereof), which fees shall be calculated and payable monthly, in
arrears, and prior to the time the LENDER makes any Advance to any BORROWER,
such fees shall be due and payable on the fifteenth date of each calendar month,
or if such day is not a Business Day the next succeeding Business Day,
commencing October 15, 2004 and continuing each calendar month thereafter, until
such time as LENDER makes any Advance to any BORROWER such fees shall be due and
payable on the first Designated Funding Date of each calendar month.
(d) If any Event of Default shall occur and be continuing, the
rate of interest applicable to each Revolving Loan then outstanding shall be the
Default Rate. The Default Rate shall apply from the date of the Event of Default
until the date such Event of Default is waived or cured, and interest accruing
at the Default Rate shall be payable upon demand.
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(e) Should the Total Facility terminate for any reason prior
to the last day of the Initial Credit Term, in addition to repayment of all
Obligations under this Agreement and termination of LENDER's commitment
hereunder, BORROWERS shall unconditionally be obligated to pay at the time of
such termination, a fee ("REVOLVING LOAN TERMINATION FEE") in an amount equal to
the product of (i) the product of (A) an amount equal to the sum of the
Revolving Loan Commitment plus the Tranche A Loan Commitment, if BORROWERS'
obtained any Advance under the Tranche A Facility, plus the Tranche B Loan
Commitment, if BORROWERS' obtained any Advance under the Tranche B Facility,
multiplied by (i) two percent (2.00%) if the effective date of such termination
is on or prior to the second annual anniversary of the Closing Date and (ii) one
percent (1.00%) if the effective date of such termination is after the second
annual anniversary of the Closing Date and prior to the third annual anniversary
of the Closing Date (for purposes of such calculation, such number of years is
rounded up to the next whole number for any partial year remaining). BORROWERS
acknowledge that the Revolving Loan Termination Fee is an estimate of Lender's
damages in the event of early termination and is not a penalty. In the event of
termination of the Total Facility, all of the Obligations under the Total
Facility shall be immediately due and payable upon the termination date stated
in any notice of termination. Notwithstanding the foregoing, should LENDER
terminate the Total Facility for any reason other than acceleration or as a
result of an Event of Default, LENDER and BORROWERS hereby acknowledge that no
Revolving Loan Termination Fee shall be due and payable by BORROWERS.
(f) Should the Acquisition Term Loan terminate for any reason
prior to the Acquisition Term Loan Maturity Date, in addition to repayment of
all Obligations related to the Acquisition Term Loan, BORROWERS shall
unconditionally be obligated to pay at the time of such termination, a fee
("ACQUISITION TERM LOAN TERMINATION FEE") in an amount equal to (i) two percent
(2.00%) of the outstanding principal amount of the Acquisition Term Loan Amount
if the effective date of such termination is on or prior to the second annual
anniversary of the Closing Date and (ii) one percent (1.00%) of the outstanding
principal amount of the Acquisition Term Loan Amount if the effective date of
such termination is after the second annual anniversary of the Closing Date and
prior to the third annual anniversary of the Closing Date. In the event
Borrowers do not activate either tranche of the Acquisition Term Loan prior to
the Acquisition Term Loan Maturity Date, in addition to repayment of all
Obligations related to the Acquisition Term Loan, BORROWERS shall
unconditionally be obligated to pay at the time of such termination, an
Acquisition Term Loan Termination Fee equal to one percent (1.00%) of the
Acquisition Term Loan Amount. BORROWERS acknowledge that the Acquisition Term
Loan Termination Fee is an estimate of LENDER's damages in the event of early
termination and is not a penalty. In the event of termination of the Acquisition
Term Loan, all of the Obligations under the Acquisition Term Loan shall be
immediately due and payable upon the termination date stated in any notice of
termination. Notwithstanding the foregoing, should LENDER terminate the
Acquisition Term Loan for any reason other than acceleration or as a result of
an Event of Default, LENDER and BORROWERS hereby acknowledge that no Acquisition
Term Loan Termination Fee shall be due and payable by BORROWERS.
(g) All undertakings, agreements, covenants, warranties and
representations of BORROWERS contained in the Loan Documents shall survive any
termination as set forth in Section 2.3(e) or Section 2.3(f) above, and LENDER
shall retain its liens in the Collateral and all
16
of its rights and remedies under the Loan Documents notwithstanding such
termination until BORROWERS have paid the Obligations to LENDER, in full, in
immediately available funds, together with the applicable Revolving Loan
Termination Fee or Acquisition Term Loan Termination Fee, if any.
Notwithstanding the payment in full of the Obligations, LENDER shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage LENDER may incur as a result of dishonored checks
or other items of payment received by LENDER from BORROWERS or any Obligor and
applied to the Obligations, LENDER shall (i) have received a written agreement
duly executed by BORROWERS and by any Person whose loans or other advances to
BORROWERS are used in whole or in part to satisfy the Obligations, indemnifying
LENDER from any such loss or damage; or (ii) have retained such monetary
reserves and security interests on the Collateral for such period of time as
LENDER, in its reasonable discretion, may deem necessary to protect LENDER from
any such loss or damage.
2.4. Additional Interest Provisions:
(a) Calculation of Interest: Interest shall be computed for
the actual number of days elapsed on the basis of a year consisting of 360 days,
including the date a Revolving Loan or Acquisition Term Loan, as applicable, is
made and excluding the date such Revolving Loan or Acquisition Term Loan, as
applicable, or any portion thereof is paid or prepaid.
(b) Continuation of Interest Charges: All contractual rates of
interest chargeable on any outstanding Acquisition Term Loan or Revolving Loan,
as applicable, shall continue to accrue and be paid even after default,
maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind
or the happening of any event or occurrence similar or dissimilar.
(c) Applicable Interest Limitations: In no contingency or
event whatsoever shall the aggregate of all amounts deemed interest hereunder
and charged or collected pursuant to the terms of this Agreement exceed the
highest rate permissible under applicable law. In the event that any court of
competent jurisdiction determines LENDER has charged or received interest
hereunder in excess of the highest applicable rate, LENDER may, in its sole
discretion, apply and set off such excess interest received by LENDER against
other Obligations due or to become due and such rate shall automatically be
reduced to the maximum rate permitted by such law.
2.5. Payments:
(a) All accrued interest on the Revolving Loans bearing
interest at the LIBOR Rate shall be due and payable weekly on the Designated
Funding Date, at the Maturity Date and upon payment in full beginning with the
first of such dates to occur after the date of the first Revolving Loan
hereunder, and to each Revolving Loan to which the LIBOR Rate applies, on the
last Business Day of each month of each year until maturity, at the Maturity
Date or Acquisition Term Loan Maturity Date, as applicable, and upon payment in
full. After the Maturity Date or Acquisition Term Loan Maturity Date, as
applicable, interest shall be payable on demand. Any Unused Line Fees shall be
due and payable monthly on the first Funding Date of each month with respect to
Unused Line Fees which accrued during the prior month.
17
(b) If at any time the aggregate principal amount of all
Advances outstanding exceeds the Borrowing Base then in effect, BORROWERS shall
immediately make such principal prepayments of the Revolving Loans (subject to
the terms of Section 2.3(e)) as is necessary to eliminate such excess.
(c) Except as set forth below, the entire outstanding
principal balance of all of the Advances, together with all unpaid accrued
interest thereon and any unpaid Unused Line Fees, shall be due and payable on
the Maturity Date. The outstanding principal balance of the Acquisition Term
Loan, together with all unpaid accrued interest thereon, shall be due and
payable on the Acquisition Term Loan Maturity Date. BORROWERS shall repay the
Acquisition Term Loan to LENDER (i) on the first Business Day of each month
commencing with the month after which Borrowers activate any tranche under the
Acquisition Term Loan and continuing for three consecutive months and in
payments of interest only and (ii) commencing with the next Business Day through
and including the Acquisition Term Loan Maturity Date, in consecutive monthly
payments of principal and interest based on a five-year amortization schedule;
provided that at such time as an Event of Default or Unmatured Event of Default
has occurred, the BORROWERS shall be required to pay both principal and interest
payments to LENDER based on a revised five-year amortization schedule as
calculated by LENDER at such time.
(d) Subject to the terms of Sections 2.3(c) and 2.3(e) above,
BORROWERS may prepay the principal of the Revolving Loans on any Designated
Funding Date by giving LENDER written notice of the proposed prepayment two (2)
Business Days prior to such Designated Funding Date.
(e) All payments and prepayments shall be applied first to any
unpaid interest and fees and thereafter to the principal of the Revolving Loans
and to other amounts due LENDER, in the order provided in Section 2.7(f) hereof.
Except as otherwise provided herein, all payments of principal, interest, fees,
or other amounts payable by BORROWERS hereunder shall be remitted to LENDER in
immediately available funds not later than 11:00 a.m. (Eastern Time) on the day
due. Whenever any payment is stated as due on a day which is not a Business Day,
the maturity of such payment shall be extended to the next succeeding Business
Day and interest shall continue to accrue during such extension.
2.6. Use of Proceeds: The extensions of credit under and proceeds of
the Total Facility shall be used to repay existing indebtedness of BORROWERS and
for working capital and general corporate purposes, including acquisitions. The
proceeds of the Acquisition Term Loan shall be used for Permitted Acquisitions
in accordance with the terms of this Agreement.
2.7. Lockboxes and Collections:
(a) BORROWERS will enter into lockbox agreements in respect of
the Government Lockbox and Commercial Lockbox in such form and with the Lockbox
Bank or such other bank as is acceptable to LENDER. BORROWERS shall instruct the
Lockbox Bank maintaining the Government Lockbox and the Commercial Lockbox to
initiate, or accept an initiation from LENDER which effectuates, a daily
transfer of all available funds to an account of LENDER to be designated by
Lender (the "COLLECTION ACCOUNT").
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(b) BORROWERS will cause all Collections with respect to all
of the Accounts, other than Government Accounts, to be sent directly to the
Commercial Lockbox, and will cause all Collections with respect to all of the
Government Accounts to be sent directly to the Government Lockbox (which may be
effectuated by electronic transfer directly to the Government Lockbox). In the
event that a BORROWER receives any Collections that should have been sent to the
Commercial Lockbox or the Government Lockbox, such BORROWER will, promptly upon
receipt and in any event within one (1) Business Day of receipt, forward such
Collections directly to the Commercial Lockbox or Government Lockbox, as
applicable, in the form received, and if requested by LENDER, promptly notify
LENDER of such event. Until so forwarded, such Collections not generated from
Government Accounts shall be held in trust for the benefit of LENDER.
(c) No BORROWER shall withdraw any amounts from the accounts
into which the Collections remitted to the Commercial Lockbox are deposited nor
shall any BORROWER change the procedures under the agreements governing the
Commercial Lockbox and related accounts.
(d) BORROWERS will cooperate with LENDER in the identification
and reconciliation on a daily basis of all amounts received in the Commercial
Lockbox and the Government Lockbox. If more than ten percent (10%) of the
Collections since the most recent Designated Funding Date is not identified or
reconciled to the satisfaction of LENDER within ten (10) Business Days of
receipt, LENDER shall not be obligated to make further Revolving Loans until
such amount is identified or is reconciled to the reasonable satisfaction of
LENDER, as the case may be. In addition, if any such amount cannot be identified
or reconciled to the satisfaction of LENDER, LENDER may utilize its own staff
or, if it deems necessary, engage an outside auditor, in either case at
BORROWERS' expense (which in the case of LENDER's own staff shall be in
accordance with LENDER's then prevailing customary charges (plus expenses)), to
make such examination and report as may be necessary to identify and reconcile
such amount.
(e) No BORROWER will send to or deposit in the Commercial
Lockbox or the Government Lockbox any funds other than payments made with
respect to Accounts.
(f) Prior to the occurrence of an Event of Default, on the
second Business Day following the day on which Collections are deposited in the
Collection Account, LENDER shall cause such Collections to be applied to reduce
the aggregate outstanding amount of the Advances, provided that, on each Funding
Date, LENDER shall cause all Collections on deposit in the Collection Account on
the day immediately preceding such Designated Funding Date to be disbursed in
the following order of priority:
(i) to LENDER for any costs and expenses of LENDER
required to be paid or reimbursed by BORROWERS under this Agreement or under any
of the other Loan Documents;
(ii) to LENDER in an amount equal to the unpaid
accrued interest on the aggregate outstanding Advances as of such Designated
Funding Date;
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(iii) to LENDER in an amount equal to any unpaid
accrued Unused Line Fees which are then due and payable as of such Designated
Funding Date;
(iv) to LENDER in the amount of any Borrowing Base
Deficiency, if any;
(v) subject to Section 2.3(c) and 2.3(e), to LENDER,
the amount of any prepayment of principal of which BORROWERS have given notice
to LENDER in accordance with Section 2.5(d) hereof; and
(vi) to LENDER for the aggregate outstanding amount
of the Advances and all other fees due and payable hereunder.
In addition, promptly upon request of BORROWERS, so long as no Event of Default
shall have occurred, LENDER shall disburse to BORROWERS the amount, if any, by
which the collected balance in the Collection Account exceeds the aggregate
outstanding principal amount of the Advances and all interest and other amounts
that will be payable on the next Designated Funding Date. Following the
occurrence of an Event of Default, LENDER may apply all Collections to
BORROWERS' Obligations in such order as LENDER may in its sole discretion
determine.
2.8. Fees:
(a) As of the Closing, LENDER shall have fully earned, and
BORROWERS shall have paid to LENDER, a non-refundable commitment fee
("COMMITMENT Fee") equal to Two Hundred Thousand and No/100 Dollars
($200,000.00) all of which has been paid to LENDER.
(b) Subject to the terms and conditions of this Agreement and
so long as no Event of Default or Unmatured Event of Default has occurred
hereunder, if LENDER makes any Advance under either the Tranche A Facility or
the Tranche B Facility, BORROWERS shall pay to LENDER a non-refundable
commitment fee under each of the Tranche A Facility and the Tranche B Facility,
each of which will be deemed to be fully earned by LENDER as of such date and
each of which shall be in an amount equal to Fifty Thousand and No/100 Dollars
($50,000.00).
(c) Prior to the time the LENDER makes any Advance to any
BORROWER BORROWERS shall pay to LENDER on the fifteenth date of each calendar
month, or if such day is not a Business Day the next succeeding Business Day, a
nonrefundable monitoring fee ("MONITORING FEE"), which when paid shall be deemed
fully earned by LENDER, equal to Fifteen Hundred and No/100 Dollars ($1,500.00),
commencing July 15, 2003 and continuing each calendar month thereafter; provided
that after such time as LENDER makes any Advance to any BORROWER such fees shall
be due and payable on the first Designated Funding Date of each calendar month.
(d) As of the Closing Date, LENDER shall have fully earned,
and BORROWERS shall have paid to LENDER, a non-refundable portion of the total
acquisition term loan commitment fee in an amount equal to Fifty Thousand and
No/100 Dollars ($50,000.00) ("INITIAL FEE"). At such time as Borrowers activate
either tranche under the Acquisition Term
20
Loan, Borrowers shall pay and Lender shall have fully earned the remaining
portion of the total acquisition term loan commitment fee in an amount equal to
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) (together with the
Initial Fee, the "ACQUISITION TERM LOAN COMMITMENT FEE").
SECTION 3. COLLATERAL
3.1. Description: To secure the payment, promptly when due, and the
punctual performance, of all of the Obligations, each BORROWER assigns to LENDER
to the extent assignable under federal, state or local law, including without
limitation administrative pronouncements, and grants to LENDER a security
interest in, all of such BORROWER'S right, title and interest in and to the
following property of such BORROWER whether now owned or hereafter acquired
(collectively, the "COLLATERAL"):
(i) Accounts, Contract Rights, etc. - All now owned and
hereafter acquired, created, or arising accounts (including, without
limitation, the Accounts), accounts receivable, notes receivable,
contract rights, chattel paper, documents (including documents of
title), instruments and letters of credit;
(ii) Inventory - All now owned or hereafter acquired, created
or arising inventory of every nature and kind, wherever located;
(iii) General Intangibles - All now owned and hereafter
acquired, created or arising general intangibles of every kind and
description, including, but not limited to, all existing and future
customer lists, telephone lists and directories, choses in action,
loans, claims, books, records, patents and patent applications,
copyrights, trademarks, tradenames, tradestyles, trademark
applications, blueprints, drawings, designs and plans, trade secrets,
contracts, contract rights, distributorship agreements, licenses,
license agreements, formulae, tax and any other types of refunds,
rights (if any) to or in employee or other pension, retirement or
similar plans and any assets thereof (to the extent permitted by
applicable law and subject always to the rights of the beneficiaries
thereof), or any portion thereof, including, without limitation,
refunds for overpayments, distributions upon termination, reversion of
any surplus assets or otherwise, returned and unearned insurance
premiums, rights and claims under insurance policies including, without
limitation, credit insurance and key man life insurance policies,
computer information, software, records and data, and rights, remedies
and guarantees evidencing, securing or otherwise relating to any
BORROWER'S accounts including, without limitation, all rights of
enforcement and collection;
(iv) Equipment - All now owned and hereafter acquired
equipment, including, without limitation, machinery, vehicles,
furniture, leasehold improvements and fixtures, wherever located, and
all replacements, parts, accessories, accessions, substitutions and
additions thereto;
(v) Deposit Accounts and Related Property - All now existing
and hereafter acquired or arising deposit accounts, Commercial
Lockboxes, Governmental
21
Lockboxes, Collection Accounts, investment accounts, commercial paper,
investment securities, investment property, and certificates of
deposit, of every nature, wherever located, and all funds received
thereby, deposited therein or associated therewith, any checks or
instruments from time to time representing or evidencing the same and
all documents and records associated therewith;
(vi) Property in LENDER's Possession - All Property, now or
hereafter in LENDER's possession; and
(vii) Proceeds - The collections and proceeds (including,
without limitation, insurance proceeds), whether cash or non-cash, of
all of the foregoing.
3.2. Lien Documents: At Closing and thereafter as LENDER reasonably
deems necessary, each BORROWER shall duly authorize, execute and deliver to
LENDER or shall have duly authorized, executed and delivered (all in form and
substance reasonably satisfactory to LENDER):
(a) Financing Statements - Financing statements pursuant to
the UCC, which LENDER may file in any jurisdiction where any Collateral is or
may be located and in any other jurisdiction that LENDER deems appropriate; and
(b) Other Agreements - Any other agreements, documents,
instruments and writings, including, without limitation, security agreements and
assignment agreements, lawfully and reasonably required by LENDER to evidence,
perfect or protect LENDER's liens and security interest in the Collateral.
3.3. Other Actions: In addition to the foregoing, each BORROWER shall
do anything further that may be lawfully and reasonably required by Lender to
perfect its security interests and to effectuate the intentions and objectives
of this Agreement, including, but not limited to, the execution and delivery of
continuation statements, amendments to financing statements, security
agreements, contracts and any other documents required hereunder. At Lender's
request, each BORROWER shall also immediately deliver (with execution by such
BORROWER of all necessary documents or forms to reflect LENDER's security
interest therein) to LENDER all items for which LENDER determines it should have
physical possession in order to perfect and protect LENDER's security interest
therein, duly endorsed or assigned to LENDER without restriction.
3.4. Searches: LENDER shall, as LENDER may reasonably request from time
to time and at BORROWERS' expense, obtain the following searches (the results of
which are to be consistent with the warranties made by BORROWERS in this
Agreement):
(a) UCC Searches: With respect to each BORROWER, UCC searches
with the Secretary of State and local filing office of each state where such
BORROWER is organized and where such BORROWER maintains its chief executive
office, a place of business, or assets;
22
(b) Judgments, Etc.: Judgment, federal and state tax lien and
corporate tax lien searches against each BORROWER in all applicable filing
offices of each state searched under subparagraph (a) above.
BORROWERS shall, prior to or at Closing and at BORROWERS' expense, obtain and
deliver to LENDER good standing or equivalent certificates showing each Borrower
to be in good standing in its state of incorporation or organization and
authorized to transact business and in good standing as a foreign corporation in
each other state or foreign country in which it is doing and presently intends
to do business for which such BORROWER'S failure to be so qualified might have
material adverse effect on such BORROWER'S business, financial condition,
Property or LENDER's rights hereunder.
3.5. Filing Security Agreement: A carbon, photographic or other
reproduction or other copy of this Agreement is sufficient as and may be filed
in lieu of a financing statement.
3.6. Power of Attorney: Each of the officers of LENDER is hereby
irrevocably made, constituted and appointed the true and lawful attorney-in-fact
for each BORROWER (without requiring any of them to act as such) with full power
of substitution to do the following (such power to be deemed coupled with an
interest): (1) after an Event of Default or Unmatured Event of Default occurs
hereunder, endorse the name of such BORROWER upon any and all checks, drafts,
money orders and other instruments for the payment of monies that are payable to
such BORROWER and constitute Collections on the Collateral; (2) execute in the
name of such BORROWER any financing statements, schedules, assignments,
instruments, documents and statements that such BORROWER is obligated to give
LENDER hereunder or that LENDER deems is necessary to perfect LENDER's security
interest or lien in the Collateral; (3) after an Event of Default or Unmatured
Event of Default occurs hereunder, to verify validity, amount or any other
matter relating to the Collateral by mail, telephone, telecopy or otherwise; and
(4) after an Event of Default or Unmatured Event of Default occurs hereunder, do
such other and further acts and deeds in the name of such BORROWER that LENDER
may reasonably deem necessary or desirable to enforce its right with respect to
any Collateral.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement and the making of each Revolving Loan are
subject to the following conditions precedent (all documents to be in form and
substance satisfactory to LENDER and LENDER's counsel):
4.1. Resolutions, Opinions, and Other Documents: Prior to the Closing,
BORROWERS shall have delivered to LENDER the following:
(a) a duly and fully executed Agreement, Revolving Credit
Note, Acquisition Term Loan Note and each Pledge Agreement;
(b) each instrument, document and agreement required to be
executed under any provision of this Agreement or any of the other Loan
Documents;
23
(c) certified copies of (i) resolutions of each BORROWER'S
board of directors or partners, as applicable, authorizing the execution of this
Agreement, the Revolving Credit Note, the Acquisition Term Loan Note and each
document required to be delivered by this Agreement and (ii) each BORROWER'S
Articles of Incorporation and By-laws or Certificate of Limited Partnership and
Partnership Agreement, as applicable, or certifications that such documents have
not been amended since being delivered under the Existing Credit Agreement;
(d) incumbency certificates identifying all Authorized
Officers of each BORROWER, with specimen signatures;
(e) a written opinion of BORROWERS' independent counsel
addressed to Lender in the form attached hereto as EXHIBIT 4.1, which shall
include without limitation, an opinion that Lender has a perfected security
interest in the Collateral;
(f) payment by BORROWERS of the Commitment Fee, the
Acquisition Term Loan Commitment Fee and all Expenses associated with the Total
Facility and the Acquisition Term Loan incurred to the Closing Date;
(g) a Collateral Access Agreement with respect to real
property leased by BORROWERS located at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxx, 00000;
(h) LENDER shall have received copies of each of the
accreditations, licenses, certifications required by Section 5.3 below and all
Contracts requested by LENDER;
(i) a balance sheet as of June 30, 2004 and related statement
of income and statement of cash flows for the month and fiscal year then ended,
prepared in accordance with GAAP; and
(j) all other instruments, certificates, documents,
information and reports required or requested to be executed and/or delivered by
BORROWERS under any provision of this Agreement or any of the Loan Documents.
4.2. Additional Preconditions to Loans: LENDER's obligation to make the
initial Revolving Loan and each subsequent Revolving Loan shall be subject to
the satisfaction of each of the following conditions:
(a) After giving effect to such Revolving Loan:
(i) the aggregate principal amount of all Advances
outstanding shall not exceed the Borrowing Base then in effect; and
(ii) the ENV of all Eligible Accounts shall not
exceed any of the Concentration Limits.
(b) All representations and warranties of BORROWERS shall be
deemed reaffirmed as of the making of such Revolving Loan and shall be true both
before and after giving effect to such Revolving Loan and no Event of Default or
Unmatured Event of Default
24
shall have occurred and be continuing, BORROWERS shall be in compliance with
this Agreement and the other Loan Documents, and BORROWERS shall have certified
such matters to LENDER.
(c) Each BORROWER shall have signed and delivered to LENDER
notices, in the form of EXHIBIT 4.2A, directing the Obligors (other than
Obligors with respect to Government Accounts) to make payment to the Commercial
Lockbox; and, in the form of EXHIBIT 4.2B, directing the Obligors with respect
to Government Accounts to make payment to the Government Lockbox.
(d) BORROWERS shall have taken all actions necessary to permit
LENDER to record all of the Eligible Accounts in LENDER's Value Track
System(TM).
(e) The lockbox arrangements required by Section 2.7 hereof
shall be in effect, and the amounts received in the lockboxes shall have been
identified or reconciled to LENDER's satisfaction, as required by Section 2.7(d)
hereof.
(f) BORROWERS shall have taken such other actions, including
the delivery of documents and opinions, as LENDER may reasonably request.
4.3. Absence of Certain Events: As of the Closing Date and prior to
each Revolving Loan, no Event of Default or Unmatured Event of Default hereunder
shall have occurred and be continuing.
4.4. Compliance with this Agreement: BORROWERS shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by BORROWERS before or at the
Closing Date and as of the date of each Advance and the Acquisition Term Loan.
4.5. Closing Certificate: LENDER shall have received a certificate
dated the Closing Date and signed by the chief financial officer of each
BORROWER certifying that all of the conditions specified in this Section have
been fulfilled and that there has not occurred any material adverse change in
the operations and conditions (financial or otherwise) of such BORROWER since
June 30, 2004.
4.6. Closing: Subject to the conditions of this Section 4, the Initial
Credit Facility and the Acquisition Term Loan shall be made available on the
date (the "CLOSING DATE") this Agreement is duly executed and all of the
conditions contained in Section 4.1 hereof are completed (the "CLOSING").
4.7. Non-Waiver of Rights: By completing the Closing hereunder, or by
making Advances hereunder, LENDER does not thereby waive a breach of any
warranty, representation or covenant made by BORROWERS hereunder or under any
agreement, document, or instrument delivered to LENDER or otherwise referred to
herein, and any claims and rights of LENDER resulting from any breach or
misrepresentation by BORROWERS are specifically reserved by LENDER.
25
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce LENDER to complete the Closing and make the Revolving Loans
under the Total Facility and to make the Acquisition Term Loan to each BORROWER,
each BORROWER represents and warrants to LENDER that:
5.1. Organization and Validity:
(a) Such BORROWER is duly organized as either a corporation or a
partnership and validly existing under the laws of its state of incorporation or
formation, is duly qualified, is validly existing and in good standing and has
lawful power and authority to engage in the business it conducts in each state
and other jurisdiction where the nature and extent of its business requires
qualification, except where the failure to so qualify would not have a material
adverse effect on such BORROWER'S business, financial condition, Property or
prospects. A list of all states and other jurisdictions where such BORROWER is
qualified to do business is attached hereto as SCHEDULE 2 and made a part
hereof.
(b) The execution, delivery and performance of this Agreement, the
other Loan Documents and all related agreements and each document required by
any Section hereof will not violate any law, government rule or regulation,
which violation could have a material adverse effect on the business, financial
condition, Property or prospects of the BORROWERS, taken as a whole, or the
charter, minutes, partnership agreement or bylaw provisions of BORROWER, violate
or result in a default (immediately or with the passage of time) under any
contract, agreement or instrument to which such BORROWER is a party, or by which
such BORROWER is bound, which violation or default could have a material adverse
effect on the business, financial condition, Property or prospects of the
BORROWERS, taken as a whole. Such BORROWER is not in violation of nor has
knowingly caused any Person to violate any term of any agreement or instrument
to which it or such Person is a party or by which it may be bound or of its
charter, minutes, partnership agreement or bylaws, which violation could have a
material adverse effect on the business, financial condition, Property or
prospects of the BORROWERS, taken as a whole.
(c) Such BORROWER has all requisite power and authority to enter
into and perform this Agreement and the other Loan Documents and to incur the
Obligations herein provided for, and has taken all proper and necessary
corporate action or other necessary action to authorize the execution, delivery
and performance of this Agreement and the other Loan Documents.
(d) This Agreement, the Revolving Credit Note, the Acquisition Term
Loan Note and the other Loan Documents, when delivered, will be valid and
binding upon all such BORROWER party thereto and enforceable in accordance with
their respective terms.
5.2. Places of Business: Each BORROWER'S jurisdiction of organization,
chief executive office and the only other places of business of each such
BORROWER are located at the corresponding addresses set forth on SCHEDULE 2.
Except as disclosed on SCHEDULE 2: (i) no BORROWER has changed
26
any such location in the last five (5) years (ii) no BORROWER has changed its
name in the last five (5) years and (iii) during such period, no BORROWER used,
nor does any BORROWER now use, any fictitious or trade name.
5.3. Operation of Facilities: Each BORROWER owns or leases and operates
facilities to provide health care services and (a) maintains Medicare and
Medicaid provider status and is the holder of the provider identification
numbers identified on SCHEDULE 2 hereto, all of which are current and valid and
such BORROWER has not allowed, permitted, authorized or caused any other Person
to use any such provider identification number, and (b) has obtained all
material licenses, accreditations and approvals of governmental authorities and
all other Persons necessary for such BORROWER to own its assets, to carry on its
business, to execute, deliver and perform the Loan Documents, and to receive
payments from the Obligors and, if organized as a not-for-profit entity, has and
maintains its status, if any, as an organization exempt from federal taxation
under Section 501(c)(3) of the Internal Revenue Code. No BORROWER has been
notified by any such governmental authority or other Person during the
immediately preceding twenty four (24) month period that such Person has
rescinded or not renewed, or intends to rescind or not renew, any such license
or approval.
5.4. Pending Litigation: There are no judgments or judicial or
administrative orders, proceedings or investigations (civil or criminal)
pending, or to the knowledge of such BORROWER, threatened, against any BORROWER
in any court or before any governmental authority or arbitration board or
tribunal, other than as set forth on SCHEDULE 2 hereto, none of which, if
adversely determined, would have a material adverse effect on such BORROWER. No
BORROWER is in default with respect to any order of any court, governmental
authority, regulatory agency or arbitration board or tribunal. No directors or
executive officer of any BORROWER has been indicted or convicted in connection
with or is engaging in any criminal conduct, or is currently subject to any
lawsuit or proceeding or under investigation in connection with any
anti-racketeering or other conduct or activity.
5.5. Medicaid and Medicare Cost Reporting: The Medicaid and/or Medicare
cost reports, as applicable, of each facility and of the home office of each
BORROWER for all cost reporting periods have been submitted when and as required
to (i) as to Medicaid, the state agency, or other CMS-designated agent or agent
of such state agency, charged with such responsibility or (ii) as to Medicare,
the Medicare intermediary or other CMS-designated agent charged with such
responsibility.
5.6. Title to Collateral: Such BORROWER has good and marketable title to
all the Collateral it respectively purports to own, free from liens, claims and
encumbrances, except those of LENDER and those listed on SCHEDULE 2 hereto
("PERMITTED LIENS").
5.7. Governmental Consent: Neither the nature of any BORROWER or of any
BORROWER'S business or Property, nor any relationship between any BORROWER and
any other Person, nor any circumstance affecting any BORROWER in connection with
the issuance or delivery of any Loan Document, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority on the part of any such BORROWER in connection with the
execution and delivery of this Agreement or the issuance or delivery of the
Revolving Credit Note, the Acquisition Term Loan Note or other Loan
27
Documents; except for instances in which the lack of such consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of any such BORROWER would not have a
material adverse effect on the business, financial condition, Property or
prospects of the BORROWERS, taken as a whole.
5.8. Taxes: All tax returns required to be filed by BORROWERS, or any of
them, in any jurisdiction have in fact been filed, and all taxes, assessments,
fees and other governmental charges upon BORROWERS, or any of them, or upon any
of their respective Property, income or franchises, which are shown to be due
and payable on such returns have been paid, except for those taxes being
contested in good faith with due diligence by appropriate proceedings. No
BORROWER is aware of any proposed additional tax assessment or tax to be
assessed against or applicable to any BORROWER that could reasonably be expected
to have a material adverse effect on such BORROWER'S business, financial
condition, Property or prospects.
5.9. Financial Statements: BORROWERS' internally-prepared balance sheets
as of June 30, 2004 and the related income statements and statements of cash
flows for the period then ended (complete copies of which have been delivered to
LENDER) have been prepared in accordance with GAAP and present fairly,
accurately and completely the financial position of BORROWERS as of such dates
and the results of their operations for such period. The fiscal year for each
BORROWER currently ends on the date set forth on SCHEDULE 2 hereto. Each
BORROWER'S federal tax identification number is as set forth on SCHEDULE 2
hereto.
5.10. Full Disclosure: Neither the financial statements referred to in
Section 5.9, nor this Agreement, the other Loan Documents or related agreements
and documents or any written statement furnished by any BORROWER to LENDER in
connection with the negotiation of the Total Facility and the Acquisition Term
Loan and contained in any financial statements or documents relating to any
BORROWER contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
5.11. Guarantees, Contracts, etc.:
(a) No BORROWER owns nor holds equity or long term debt investments
in, has any outstanding advances to, or serves as guarantor, surety or
accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person except as described in SCHEDULE 2 hereto.
(b) No BORROWER is a party to any contract or agreement, or subject
to any charter or other corporate restriction, which unduly materially and
adversely affects its business, financial condition, Property or prospects.
(c) Except as otherwise specifically provided in this Agreement, no
BORROWER has agreed or consented to cause or permit any of the Collateral to be
subject in the future (upon the happening of a contingency or otherwise) to a
lien or encumbrance not permitted by this Agreement.
5.12. Compliance with Laws:
28
(a) No BORROWER is in violation of, has received written notice that
it is in violation of, or has knowingly caused any Person to violate, any
applicable statute, regulation or ordinance of the United States of America, or
of any state, city, town, municipality, county or of any other jurisdiction, or
of any agency, or department thereof (including without limitation,
environmental laws and regulations) which may materially and adversely affect
its business, financial condition, Property or prospects.
(b) Each BORROWER is current with all reports and documents required
to be filed with any state or federal securities commission (if any) or similar
agency and is in compliance in all material respects with all applicable rules
and regulations of such commissions.
5.13. Other Associations: No BORROWER is engaged in nor has an interest in
any joint venture or partnership with any other Person or has any subsidiaries
or Affiliates, except as described on SCHEDULE 2 hereto.
5.14. Environmental Matters: Except as disclosed on SCHEDULE 2 hereto, no
BORROWER has knowledge:
(a) of the presence of any Hazardous Substances on any of the real
property where any BORROWER conducts operations or has its personal property, or
(b) of any on-site spills, releases, discharges, disposal or storage
of Hazardous Substances that have occurred or are presently occurring on any of
such real property or where any Collateral is located, or
(c) of any spills, releases, discharges or disposal of Hazardous
Substances that have occurred, are presently occurring on any other real
property as a result of the conduct, action or activities of any BORROWER.
5.15. Capital Stock and Equity Interests: The authorized and outstanding
shares of capital stock and other equity interests of each BORROWER is as set
forth on SCHEDULE 2 hereto. All of the capital stock and equity interests of
such BORROWER have been duly and validly authorized and issued and are fully
paid and non-assessable and have been sold and delivered to the holders thereof
in compliance with, or under valid exemption from, all Federal and state laws
and the rules and regulations of all regulatory bodies thereof governing the
sale and delivery of securities. Except for the rights and obligations set forth
in SCHEDULE 2, there are no subscriptions, warrants, options, calls,
commitments, rights or agreements by which any BORROWER or any of the
Shareholders of any BORROWER is bound relating to the issuance, transfer, voting
or redemption of shares of its capital stock, partnership units or any
pre-emptive rights held by any Person with respect to the shares of capital
stock or partnership units of any such BORROWER. Except as set forth in SCHEDULE
2, no Borrower has issued any securities convertible into or exchangeable for
shares of its capital stock or partnership units or any options, warrants or
other rights to acquire such shares or partnership units or securities
convertible into or exchangeable for such shares or partnership units.
29
5.16. Lockboxes; Lockbox Agreements: The Government Lockbox and the
Commercial Lockbox are the only lockbox accounts maintained by BORROWERS, and
each Obligor of an Eligible Account has been directed by the notice attached as
EXHIBIT 4.2A to this Agreement, and is required to, remit all payments with
respect to such Account for deposit in the Commercial Lockbox (other than the
Obligors of Government Accounts which have been directed by the notice attached
as EXHIBIT 4.2B to this Agreement to remit all payments with respect to such
Accounts for deposit in the Government Lockbox). Each agreement relating to each
Government Lockbox and each Commercial Lockbox is in full force and effect as of
the date hereof and has not been amended, restated or modified.
5.17. Borrowing Base Reports: Each Borrowing Base Report signed by
BORROWERS, on behalf of Borrowers, contains and will contain an accurate summary
of all Eligible Accounts of BORROWERS contained in the Borrowing Base as of its
date.
5.18. Security Interest: Each BORROWER has granted to LENDER a valid,
perfected first priority and only security interest in the Accounts and the
other Collateral subject to no other liens, claims or encumbrances, other than
Permitted Liens.
5.19. Accounts:
(a) No BORROWER has done nor shall do anything to interfere with the
collection of the Accounts and no BORROWER shall amend or waive the terms or
conditions of any Account or any related Contract in any material adverse manner
without LENDER's prior written consent.
(b) Each BORROWER has made and will continue to make all payments to
Obligors necessary to prevent any Obligor from offsetting any earlier
overpayment to such BORROWER against any amounts such Obligor owes on an
Account.
5.20. Pension Plans: Each pension or profit sharing plan, if any, to which
any BORROWER is a party has been and will be funded in accordance with the
obligations of such BORROWER set forth in such plan.
5.21. Representations and Warranties for each Loan: As of each date that
BORROWERS shall request any Revolving Loan, each BORROWER shall be deemed to
make, with respect to each Eligible Account included in the Borrowing Base, each
of the following representations and warranties:
(a) Such Account satisfies each of the conditions of an Eligible
Account.
(b) All information relating to such Account that have been
delivered to LENDER are true and correct in all material respects. With respect
to each such Account that has been billed, the corresponding BORROWER has
delivered to the Obligor all requested supporting claim documents and all
information set forth in the xxxx and supporting claim documents is true,
complete and correct in all material respects.
30
(c) There is no lien or adverse claim (other than Permitted Liens)
in favor of any third party, nor any filing against any BORROWER, as debtor,
covering or purporting to cover any interest in such Account.
(d) Such Account is (i) owed by the Obligor identified by BORROWERS
as being obligated to do so for an amount not less than such Account's Estimated
Net Value and, to BORROWERS' knowledge, is recognized as such by the Obligor,
(ii) to BORROWER'S knowledge, the legally enforceable obligation of such Obligor
and (iii) an account receivable or general intangible within the meaning of the
UCC, or is a right to payment under a policy of insurance or proceeds thereof,
and is not evidenced by any instrument or chattel paper. To BORROWERS'
knowledge, there is no payor other than the Obligor identified by BORROWERS as
the payor primarily liable on such Account.
(e) No such Account (i) requires the approval of any Person for such
Account to be assigned to LENDER hereunder (except as the same may have been
obtained or such requirement for approval may not be enforceable), (ii) is
subject to any legal action, proceeding or investigation (pending or
threatened), dispute, set-off, counterclaim, defense, abatement, suspension,
deferment, deductible, reduction or termination by the Obligor or (iii) is past,
or within one hundred and eighty (180) days of, the statutory limit for
collection applicable to the Obligor.
(f) Such BORROWER does not have any guaranty of, letter of credit
support for, or collateral security for, such Account, other than any such
guaranty, letter of credit or collateral security as has been assigned to
LENDER; provided, however, that BORROWERS may have letters of credit support
for, or guaranty of, or collateral security for, such Accounts which in the
aggregate do not exceed Two Million and No/100 Dollars ($2,000,000) as long as
no Event of Default shall have occurred.
(g) The services constituting the basis of such Account (i) were
provided as a result of a written or documented verbal certification from an
attending physician or a medical director of VistaCare, Inc., (ii) at the time
such services were rendered, all such services were covered by the insurance
policy or Contract obligating the applicable Obligor to make payment with
respect to such Account (and the corresponding BORROWER has verified such
determination) and (iii) the patient received such services in the ordinary
course of such BORROWER'S business.
(h) The fees and charges charged for the services constituting the
basis for such Account were when rendered and are currently consistent with (i)
the usual, customary and reasonable fees charged by BORROWERS or (ii) pursuant
to negotiated fee contracts, or imposed fee schedules, with or by the applicable
Obligors.
(i) The Obligor with respect to such Account is located in the
United States, and is (i) a party which in the ordinary course of its business
or activities agrees to pay for healthcare services received by individuals,
including commercial insurance companies and non-profit insurance companies
issuing health, or other types of insurance, employers or unions, self-insured
healthcare organizations, preferred provider organizations, and health insured,
prepaid maintenance organizations, (ii) a state, an agency or instrumentality of
a state or a political
31
subdivision of a state or (iii) the United States or an agency or
instrumentality of the United States.
(j) The insurance policy or Contract obligating an Obligor to make
payment (i) does not prohibit the transfer of such payment obligation from the
patient to the corresponding BORROWER and (ii) is and was in full force and
effect and applicable to the patient at the time the services constituting the
basis for such Account were performed.
(k) The representations and warranties made by BORROWERS in the Loan
Documents and all financial or other information delivered to LENDER with
respect to BORROWERS and such Account do not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statement
made not misleading.
(l) If requested by LENDER, a copy of each related Contract to which
each BORROWER is a party has been delivered to LENDER unless any such BORROWER
shall have, prior to the related Funding Date, certified in an Officer's
Certificate that such delivery is prohibited by the terms of the Contract or by
law, and the circumstances of such prohibition.
(m) If such Account has not been billed, the services giving rise to
such Account have been properly recorded in the corresponding BORROWER'S
accounting system.
(n) Such Account was (or if unbilled, will be) in any event billed
no later than forty-five (45) days after the last day of the month in which the
services or goods giving rise to such Account were rendered or provided, as
applicable, and each xxxx contains an express direction requiring the Obligor to
remit payments to either the Government Lockbox or Commercial Lockbox, as
applicable.
(o) Such Account has an Estimated Net Value which, when added to the
Estimated Net Value of all other Accounts owing by the same Obligor and which
constitute Eligible Accounts included in the Borrowing Base, does not exceed any
applicable Concentration Limits.
(p) Neither such Account nor the related Contract contravenes any
laws, rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury, consumer protection,
truth-in-lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy), and no party to such
related Contract is in violation of any such law, rule or regulation in
connection with such Contract.
(q) As of the applicable Funding Date, to BORROWERS' knowledge, no
Obligor on such Account is bankrupt, insolvent, or is unable to make payment of
its obligations when due, and no other fact exists which would cause any
BORROWER reasonably to expect that the amount billed to the related Obligor for
such Account will not be paid in full when due.
5.22. Interrelatedness of BORROWERS: The business operations of each
BORROWER are interrelated and complement one another, and such companies and
partnerships have a common business purpose, with intercompany bookkeeping and
accounting adjustments used to separate
32
their respective Properties, liabilities and transactions. To permit their
uninterrupted and continuous operation, such companies and partnerships now
require and will from time to time hereafter require funds for general business
purposes. The proceeds of the Acquisition Term Loan and of Advances under the
Total Facility will directly or indirectly benefit each BORROWER hereunder,
jointly and severally, regardless of which BORROWER requests or receives part or
all of the proceeds of such Acquisition Term Loan or Advance, as applicable.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Each BORROWER covenants that until all of BORROWERS' Obligations to LENDER
are paid and satisfied in full and the Total Facility and the Acquisition Term
Loan have been terminated:
6.1. Payment of Taxes and Claims: Each BORROWER shall pay, before they
become delinquent, all taxes, assessments and governmental charges or levies
imposed upon it or upon such BORROWER'S Property, except for those being
contested in good faith with due diligence by appropriate proceedings and for
which appropriate reserves have been maintained under GAAP.
6.2. Maintenance of Insurance, Financial Records and Legal Existence:
(a) Property Insurance - Each BORROWER shall maintain or cause to be
maintained insurance on its Property against fire, flood, casualty and such
other hazards in such amounts, with such deductibles and with such insurers as
are customarily used by companies operating in the same industry as such
BORROWER. The policies of all such casualty insurance shall contain standard
lender loss payable and additional insured clauses issued in favor of LENDER
pursuant to which all losses thereunder shall be paid to LENDER as LENDER's
interests may appear. Such policies shall expressly provide that the requisite
insurance cannot be altered or canceled without thirty (30) days prior written
notice to LENDER and shall insure LENDER notwithstanding the act or neglect of
the insured. At or prior to Closing, BORROWER shall furnish LENDER with
insurance certificates certified as true and correct and being in full force and
effect as of the Closing Date or such other evidence of insurance as LENDER may
require, provided that such BORROWER shall furnish to LENDER such insurance
certificates naming LENDER as loss payee and as additional insured no later than
sixty (60) days subsequent to the Closing Date. In the event BORROWER fails to
procure or cause to be procured any such insurance or to timely pay or cause to
be paid the premium(s) on any such insurance, LENDER may do so for BORROWER, but
BORROWER shall continue to be liable for the same. BORROWER hereby appoints
LENDER as its attorney-in-fact, exercisable at LENDER's option, to endorse any
check which may be payable to BORROWER in order to collect the proceeds of such
insurance.
(b) Public Liability and Business Interruption Insurance - BORROWERS
shall maintain, and shall deliver to LENDER upon LENDER's request evidence of
public liability and business interruption insurance in such amounts as is
customary for companies in the same or similar businesses located in the same or
similar area.
(c) Financial Records - BORROWERS shall keep current and accurate
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to
33
reserves, all in accordance with GAAP. No BORROWER shall change its respective
fiscal year end date without the prior written notice to LENDER.
(d) Existence and Rights - Each BORROWER shall do (or cause to be
done) all things necessary to preserve and keep in full force and effect its
legal existence, good standing, rights and franchises.
(e) Compliance with Laws - Each BORROWER shall be in compliance with
any and all laws, ordinances, governmental rules and regulations, and court or
administrative orders or decrees to which it is subject, whether federal, state
or local (including without limitation environmental or environmental-related
laws, statutes, ordinances, rules, regulations and notices) and shall obtain and
maintain any and all licenses, permits, franchises, certificates of needs or
other governmental authorizations necessary to the ownership of its Property or
to the conduct of its businesses, which violation or failure to obtain may
materially adversely affect the business, Property, financial conditions or
prospects of such BORROWER.
6.3. Business Conducted: The BORROWERS shall continue in the primary
business presently engaged in by them, it being agreed that the BORROWERS may
engage in businesses reasonably related to their primary business.
6.4. Litigation: BORROWERS shall give prompt notice to LENDER of any
litigation claiming in excess of $250,000 from BORROWERS, or any of them, or
which may otherwise have a material adverse effect on the business, financial
condition, Property or prospects of BORROWERS, or any of them.
6.5. Taxes: BORROWERS shall pay all taxes (other than taxes based upon or
measured by LENDER's income or revenues), if any, solely in connection with the
Revolving Loans and/or the recording of any financing statements or other Loan
Documents. The obligations of BORROWERS under this section shall survive the
payment of BORROWERS' Obligations under this Agreement and the termination of
this Agreement.
6.6. Financial Covenants: BORROWERS shall perform and comply with each of
the following financial covenants as reflected and computed from their financial
statements:
(a) BORROWERS shall maintain at all times, a Debt Service Coverage
Ratio of at least 1.25 to 1.0 measured quarterly on a rolling four-quarter basis
beginning with the quarter ending March 31, 2002.
(b) BORROWERS shall maintain at all times a Leverage Ratio of less
than (i) 4.00 to 1.0 for each fiscal quarter during the fiscal year ended
September 30, 2005, (ii) 3.75 to 1.0 for each fiscal quarter during the fiscal
year ended September 30, 2006, (iii) 3.50 to 1.0 for each fiscal quarter during
the fiscal year ended September 30, 2007 and (iii) 3.00 to 1.0 for each fiscal
quarter thereafter.
34
(c) BORROWERS shall maintain as of Closing and at all times
thereafter a Net Worth measured quarterly at the end of each fiscal quarter of
at least Eighteen Million and No/100 Dollars ($18,000,000.00).
6.7. Financial and Business Information: BORROWERS shall deliver to LENDER
the following (all to be in form and substance satisfactory to LENDER):
(a) Financial Statements and Collateral Reports:
(i) as soon as available but in any event, within one hundred
and fifty (150) days after the end of each fiscal year of BORROWERS, deliver
financial statements of BORROWERS for such year which present fairly BORROWERS'
financial condition including the balance sheet of BORROWERS as at the end of
such fiscal year, an income statement and a statement of cash flows for such
fiscal year, all on a consolidated and consolidating basis, setting forth in the
consolidated statements in comparative form, the corresponding figures as at the
end of and for the previous fiscal year, all in reasonable detail, including all
supporting schedules, and audited by independent public accountants of
recognized standing, selected by BORROWERS and reasonably satisfactory to
LENDER, and prepared in accordance with GAAP;
(ii) as soon as available but in any event within forty-five
(45) days after the end of each fiscal quarter, deliver to LENDER BORROWERS'
internally prepared quarterly consolidated and consolidating financial
statements along with year to date information, including balance sheet, income
statement and statements of cash flows with respect to the periods measured;
(iii) promptly upon request, deliver such other information
concerning BORROWERS as LENDER may from time to time request, including Medicare
and Medicaid cost reports and audits, annual reports, security law filings and
reports to any security holders;
(iv) not more than (60) days after the commencement of each
fiscal year deliver to LENDER final annual consolidated and consolidating
projections for BORROWERS, including balance sheets, income statements and
statements of cash flows, all prepared on a monthly basis;
(v) at least thirty (30) days prior to the beginning of each
fiscal year commencing with fiscal year beginning October 1, 2005 deliver to
LENDER preliminary fiscal year annual consolidated and consolidating projections
for BORROWERS, including balance sheets, income statements and statements of
cash flows, all prepared on a monthly basis; and
(vi) and such other data, reports, statements and information
(financial or otherwise), as LENDER may reasonably request.
(b) Notice of Event of Default - promptly upon becoming aware of the
existence of any condition or event which constitutes an Event of Default or
Unmatured Event of Default under this Agreement, a written notice specifying the
nature and period of existence thereof and what action BORROWERS are taking (and
propose to take) with respect thereto;
35
(c) Notice of Claimed Default - promptly upon receipt by any
BORROWER of a notice of default, oral or written, given to such BORROWER by any
creditor for borrowed money in excess of $50,000.
6.8. Officers' Certificates: Along with the set of financial statements
delivered to LENDER at the end of each fiscal quarter and fiscal year pursuant
to Section 6.7(a) hereof, deliver to LENDER a certificate (in the form of
EXHIBIT 6.8 attached hereto and made a part hereof) from the chief financial
officer of each BORROWER setting forth:
(a) Covenant Compliance - the information (including reasonably
detailed calculations) required in order to establish whether BORROWERS are in
compliance with the requirements of Sections 6.6 as of the end of the period
covered by the financial statements then being furnished (and any exhibits
appended thereto) under Section 6.7; and
(b) Event of Default - that the signer in his capacity as an officer
of such BORROWER has reviewed the relevant terms of this Agreement, and has made
(or caused to be made under his supervision) a review of the transactions and
conditions of such BORROWER from the beginning of the accounting period covered
by the financial statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action such
BORROWER has taken or proposes to take with respect thereto.
6.9. Inspection: Prior to the time Lender makes an Advance to any
Borrower, provided that no Event of Default or Unmatured Event of Default
exists, no more frequently than once per fiscal year, BORROWERS will permit any
of LENDER's officers or other representatives to visit and inspect any
BORROWER'S location(s) or where any Collateral is kept during regular business
hours to examine and audit all of such BORROWER'S books of account, records,
reports and other papers, to make copies and extracts therefrom and to discuss
its affairs, finances and accounts with its officers, employees and independent
certified public accountants and attorneys. BORROWERS shall pay to LENDER all
reasonable fees based on standard rates for such inspections, currently at the
rate of $850 per day, per person (plus out-of-pocket expenses); provided that
after such time as Lender makes an Advance to any Borrower such inspections
shall be no more frequently than semi-annual as long as no Event of Default or
Unmatured Event of Default exists.
6.10. Tax Returns and Reports: At LENDER's request from time to time,
BORROWERS shall promptly furnish LENDER with copies of the annual federal and
state income tax returns of BORROWERS.
6.11. Material Adverse Developments: Each BORROWER agrees that immediately
upon it or any of its officers becoming aware of any development or other
information which would reasonably be expected to materially and adversely
affect the businesses, financial condition, Property, prospects of a BORROWER or
a BORROWER'S ability to perform under this Agreement, it shall give to LENDER
telephonic or facsimile notice specifying the nature of such development or
36
information and such anticipated effect. In addition, such verbal communication
shall be confirmed by written notice thereof to LENDER on the next Business Day
after such verbal notice is given.
6.12. Places of Business; Jurisdiction of Organization; Name: Each
BORROWER shall give thirty (30) days prior written notice to LENDER of any
changes in the location of any of its chief executive office or any other places
of business, any changes in its jurisdiction of organization, change of name or
the establishment of any new, or the discontinuance of any existing place of
business.
6.13. Notice of Action: Each BORROWER will promptly notify LENDER in the
event of any legal action, dispute, setoff, counterclaim, defense or reduction
that is or may be asserted by an Obligor with respect to any Account that may
have a material adverse effect on the collectibility of such Account or all
Accounts collectively.
6.14. Verification of Information: At the reasonable request of LENDER,
BORROWERS will promptly provide and verify the accuracy of information
concerning BORROWERS and their Affiliates of the type provided by or on behalf
of BORROWERS and their Affiliates to LENDER in connection with LENDER's decision
to enter into this Agreement. BORROWERS agree to provide complete and accurate
copies of such documents and other materials and such other information
concerning BORROWERS and their Affiliates as LENDER may reasonably request in
connection with any securitization of, and sale of securities backed by, the
Eligible Accounts (the "SECURITIES"). Such information may be relied upon by
LENDER and any party arranging the offering of such Securities by LENDER or its
assignee. Such information provided by or on behalf of BORROWERS and their
Affiliates will be true and complete in all material respects and will not omit
to state a material fact necessary to make the statements contained in such
information, in light of the circumstances under which they were made, not
misleading. The BORROWERS shall not be required to review, and assume no
liability or responsibility for, the offering documents or other disclosure
materials prepared in connection with the issuance of the Securities.
6.15. Value Track System(TM): BORROWERS shall permit LENDER to interface
its Value Track System(TM) to BORROWERS' data files and will reasonably assist
LENDER in completing and maintaining such interface such that the interface can
interpret, track and reconcile the Accounts Detail File provided by BORROWERS.
SECTION 7. BORROWERS' NEGATIVE COVENANTS
Each BORROWER covenants that until all of BORROWERS' Obligations to LENDER
are paid and satisfied in full and the Total Facility and the Acquisition Term
Loan have been terminated, that:
7.1. Merger, Consolidation, Dissolution or Liquidation:
(a) No BORROWER shall sell, lease, license, transfer or otherwise
dispose of its Property other than (i) to another BORROWER, (ii) with respect to
Property sold in the ordinary course or ordinary operation of such BORROWER'S
business, (iii) in a transaction permitted under
37
subsection (b) below, and (iv) sales of assets for fair market value in an
aggregate amount not to exceed $1,000,000 per year, in each case without
LENDER's prior written consent.
(b) No BORROWER shall merge or consolidate with, or acquire, any
other Person or commence a dissolution or liquidation, other than through a
merger with another BORROWER, provided, that any BORROWER may effect any
Permitted Acquisition.
7.2. Liens and Encumbrances: No BORROWER shall: (i) execute a negative
pledge agreement with any Person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the Collateral, whether now owned or
hereafter acquired, to be subject to any lien, claim or encumbrance other than:
(i) Permitted Liens,
(ii) purchase money liens and liens of a capital lease upon
any Property acquired by or held by a BORROWER in the ordinary course of
business not to exceed Two Hundred Seventy Five Thousand and No/100 Dollars
($275,000.00) per transaction or series of related transactions, provided that
in no event shall the aggregate amount secured by such purchase money liens and
liens of capital leases exceed One Million and No/100 Dollars ($1,000,000.00) in
any fiscal year,
(iii) liens on property of a Person existing at the time such
Person is merged into or consolidated with a BORROWER or becomes a subsidiary of
a BORROWER, provided that such liens do not extend to any assets other than
those of the Person so merged into or consolidated with such BORROWER or Person,
provided that such liens do not include any accounts receivable of a BORROWER,
(iv) the replacement, renewal or extension of liens permitted
by clauses (ii) or (iii) above, without any increase of the indebtedness secured
thereby.
7.3. Negative Pledge: No BORROWER shall pledge, grant or permit any lien
(other than Permitted Liens) to exist on the common stock or membership units of
its Subsidiaries and Affiliates.
7.4. Transactions With Affiliates or Subsidiaries:
(a) No BORROWER shall enter into any transaction with any subsidiary
or other Affiliate (other than another BORROWER) including, without limitation,
the purchase, sale, lease or exchange of Property, or the loaning,
capitalization or giving of funds to any such Affiliate or any subsidiary,
unless (i) such subsidiary or Affiliate is engaged in a business substantially
related to the business permitted to be conducted by such BORROWER hereunder and
(ii) the transaction is in the ordinary course of and pursuant to the reasonable
requirements of such BORROWER'S business and upon terms substantially the same
and no less favorable to such BORROWER as it would obtain in a comparable
arm's-length transactions with any Person not an Affiliate or a subsidiary and
(iii) such transaction is not prohibited hereunder.
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(b) Subject in any event to the limitations of Section 7.4(a) above,
except with the prior written consent of LENDER, no BORROWER shall create or
acquire any subsidiary unless such subsidiary engages in a business permitted to
be conducted by BORROWERS hereunder, and if required by LENDER, such subsidiary
becomes a BORROWER hereunder.
7.5. Guarantees: Except as set forth on SCHEDULE 2 hereto and excepting
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection, no BORROWER shall become or be liable, directly or
indirectly, primary or secondary, matured or contingent, in any manner, whether
as guarantor, surety, accommodation maker, or otherwise, for the existing or
future indebtedness of any kind of any other Person.
7.6. Loans to Other Persons: No BORROWER shall make or be permitted to
have outstanding any loans, advances or extensions of credit to any Person
(other than advances to employees or loans, advances or extensions of credit to
another BORROWER in an aggregate amount outstanding not to exceed $500,000 at
any point in time).
7.7. Change in Ownership: Each BORROWER, other than VistaCare, Inc., shall
remain wholly-owned, directly or indirectly, by VistaCare, Inc. No Change of
Control (as defined below) shall occur with respect to VistaCare, Inc. For the
purposes of this Section 7.7, a Change of Control shall have occurred if any
Person or two or more Persons acting in concert (in each case, other than
present holders of the voting stock of VistaCare, Inc.) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934), directly or
indirectly, of the voting stock of VistaCare, Inc. (or other securities
convertible into such voting stock) representing fifty one percent (51%) or more
of the combined voting power of all voting stock (including securities
convertible into such voting stock) of VistaCare, Inc. without the consent of
LENDER, which consent may not be unreasonably withheld or delayed.
7.8. Distributions: BORROWERS shall not, following an Event of Default or
Unmatured Event of Default, declare or pay or make any forms of Distributions to
its Shareholders, their successors or assigns, nor may any BORROWER declare or
pay or make any forms of Distributions if in each case, after giving effect to
such Distributions, an Event of Default or Unmatured Event of Default will
result.
7.9. Change in Business: The BORROWERS shall not change their primary
business from that engaged in by the BORROWERS on the Closing Date, it being
agreed that the BORROWERS may engage in businesses reasonably related to their
primary business.
7.10. Adverse Transactions: No BORROWER shall enter into any transaction
which is reasonably likely to materially and adversely affect the Collateral or
such BORROWER'S ability to repay the Obligations in full as and when due.
SECTION 8. DEFAULT
8.1. Events of Default: Each of the following events shall constitute an
event of default ("EVENT OF DEFAULT") and LENDER shall thereupon have the option
to declare the
39
Obligations immediately due and payable, all without demand, notice, presentment
or protest or further action of any kind (it also being understood that the
occurrence of any of the events or conditions set forth in subparagraphs (j),
(k), (l) or (r) shall automatically cause an acceleration of the Obligations):
(a) Payments - if BORROWERS fail to make any payment of principal or
interest on the date when such payment is due and payable and such failure
continues for a period of one (1) Business Day; provided however, that the one
(1) Business Day grace period shall not be applicable if such payments are due
and payable due to maturity, acceleration or demand, whether following an Event
of Default or otherwise; or
(b) Other Charges - if BORROWERS fail to pay any other charges,
fees, Expenses or other monetary obligations owing to LENDER, arising out of or
incurred in connection with this Agreement on the date when such payment is due
and payable, whether upon maturity, acceleration, demand or otherwise and such
failure continues for a period of five (5) Business Days after the earlier of a
BORROWER becoming aware of such failure or a BORROWER receiving written notice
from LENDER of such failure; provided however, that the five (5) Business Day
grace period shall not be applicable if such payments are due and payable due to
maturity, acceleration or demand, whether following an Event of Default, or
otherwise; or
(c) Particular Covenant Defaults - if any BORROWER fails to perform,
comply with or observe any covenant or undertaking contained in this Agreement
not otherwise described in this Section 8.1, and such failure continues for a
period of fifteen (15) days after the earlier of a BORROWER becoming aware of
such failure or a BORROWER receiving written notice from LENDER of such failure;
or
(d) Financial Information - if any statement, report, financial
statement, or certificate made or delivered by a BORROWER or any of their
officers, employees or agents, to LENDER is not true and correct, in all
material respects, when made; or
(e) Uninsured Loss - if there shall occur any uninsured damage to or
loss, theft, or destruction in excess of $100,000 with respect to any portion of
any BORROWER'S Property; or
(f) Warranties or Representations - if any warranty, representation
or other statement by or on behalf of BORROWERS, or any of them, contained in or
pursuant to this Agreement, any of the Loan Documents, or in any document,
agreement or instrument furnished in compliance with, relating to, or in
reference to this Agreement, is false, erroneous, or misleading in any material
respect when made; or
(g) Agreements with Others - if BORROWERS, or any of them, shall
default beyond any grace period under any agreement with any creditor for
borrowed money having an outstanding principal amount of $100,000 or more and
(i) such default consists of the failure to pay any principal, premium or
interest with respect to such indebtedness or (ii) such default consists of the
failure to perform any covenant or agreement with respect to such indebtedness,
if the effect of such default is to cause or permit BORROWERS', or any of their
obligations which are
40
the subject thereof to become due prior to its maturity date or prior to its
regularly scheduled date of payment;
(h) Other Agreements with LENDER - if BORROWERS, or any of them,
breach or violate the terms of, or if a default or an event of default, occurs
under, any other existing or future agreement (related or unrelated) between or
among BORROWERS, or any of them and LENDER, including without limitation, the
Loan Documents and any lease agreements or finance agreements with any affiliate
of LENDER; or
(i) Judgments - if any final judgment for the payment of money in
excess of $100,000 which is not covered by insurance or an appeal bond, or for
which BORROWERS have not established a cash or cash equivalent reserve in the
amount of such judgment, shall be rendered and shall remain unsatisfied and
unstayed for a period of at least ten (10) days;
(j) Assignment for Benefit of Creditors, etc. - if BORROWERS, or any
of them, make or propose an assignment for the benefit of creditors generally,
offers a composition or extension to creditors, or makes or sends notice of an
intended bulk sale of any business or assets now or hereafter owned or conducted
by any BORROWER which might materially and adversely affect such BORROWER; or
(k) Bankruptcy, Dissolution, etc. - upon the commencement of any
action for the dissolution or liquidation of BORROWERS, or any of them, or the
commencement of any proceeding to avoid any transaction entered into by
BORROWERS, or any of them, or the commencement of any case or proceeding for
reorganization or liquidation of BORROWERS, or any of their debts under the
Bankruptcy Code or any other state or federal law, now or hereafter enacted for
the relief of debtors, whether instituted by or against any BORROWER; provided,
however, that BORROWERS shall have sixty (60) days to obtain the dismissal or
discharge of involuntary proceedings filed against a BORROWER, it being
understood that during such sixty (60) day period, LENDER shall be not obligated
to make Advances hereunder and LENDER may seek adequate protection in any
bankruptcy proceeding; or
(l) Receiver - upon the appointment of a receiver, liquidator,
custodian, trustee or similar official or fiduciary for BORROWERS, or any of
them, or for any of any BORROWER'S Property; or
(m) Execution Process, Seizure, etc. - the issuance of any execution
or distraint process affecting any material portion of the Property of any
BORROWER, or any material portion of the Property of any BORROWER is seized by
any governmental entity, federal, state or local; or
(n) Pension Benefits, etc. - if BORROWERS fail to comply with ERISA,
so that grounds exist to permit the appointment of a trustee under ERISA to
administer BORROWERS' employee plans or to allow the Pension Benefit Guaranty
Corporation to institute proceedings to appoint a trustee to administer such
plan(s), or to permit the entry of a lien to secure any deficiency or claim; or
41
(o) Investigations - any indication or evidence received by LENDER
that reasonably leads it to believe BORROWERS, or any of them, have directly or
indirectly been engaged in any type of activity which would be reasonably likely
to adversely affect any Collateral or result in the forfeiture of any Collateral
to any governmental entity, federal, state or local; or
(p) Material Adverse Events -
(i) LENDER reasonably determines that an event which adversely
affects the collectibility of a material portion of the Accounts has occurred;
or
(ii) a material adverse change occurs in the business or
condition of BORROWERS, or any of them, which impairs BORROWERS' ability to
repay the Obligations in full as and when due; or
(q) Lockbox Instructions - any instruction or agreement regarding
the Commercial Lockbox or the Government Lockbox or the bank accounts related
thereto is amended or terminated by any BORROWER without the written consent of
LENDER, or if any BORROWER fails, within one Business Day of receipt, to forward
Collections it receives with respect to any Accounts to the Commercial Lockbox
or the Government Lockbox, as the case may be.
8.2. Cure: Nothing contained in this Agreement or the Loan Documents shall
be deemed to compel LENDER to accept a cure of any Event of Default hereunder,
except as outlined in Section 8.1(c) hereof.
8.3. Rights and Remedies on Default:
(a) In addition to all other rights, options and remedies granted or
available to LENDER under this Agreement or the Loan Documents, or otherwise
available at law or in equity, upon or at any time after the occurrence and
during the continuance of an Event of Default or Unmatured Event of Default,
LENDER may, in its discretion, withhold or cease making Advances under the Total
Facility.
(b) In addition to all other rights, options and remedies granted or
available to LENDER under this Agreement or the Loan Documents (each of which is
also then exercisable by LENDER), LENDER may, in its discretion, upon or at any
time after the occurrence and during the continuance of an Event of Default,
terminate the Total Facility and accelerate the Acquisition Term Loan.
(c) In addition to all other rights, options and remedies granted or
available to LENDER under this Agreement or the Loan Documents (each of which is
also then exercisable by LENDER), LENDER may, upon or at any time after the
occurrence and during the continuance of an Event of Default, exercise all
rights under the UCC and any other applicable law or in equity, and under all
Loan Documents permitted to be exercised after the occurrence of an Event of
42
Default, including the following rights and remedies (which list is given by way
of example and is not intended to be an exhaustive list of all such rights and
remedies):
(i) Subject to all applicable laws and regulations governing
payment of Medicare and Medicaid receivables, the right to "take possession" of
the Collateral, and notify all Obligors of LENDER's security interest in the
Collateral and require payment under the Accounts to be made directly to LENDER
and LENDER may, in its own name or in the name of the applicable BORROWER,
exercise all rights of a secured party with respect to the Collateral and
collect, xxx for and receive payment on all Accounts, and settle, compromise and
adjust the same on any terms as may be satisfactory to LENDER, in its sole and
absolute discretion for any reason or without reason and LENDER may do all of
the foregoing with or without judicial process (including without limitation
notifying the United States postal authorities to redirect mail addressed to
BORROWERS, or any of them, to an address designated by LENDER); or
(ii) Require BORROWERS at BORROWERS' expense, to assemble all
or any part of the Collateral and make it available to LENDER at any place
designated by LENDER, which may include providing LENDER or any entity
designated by LENDER with access (either remote or direct) to BORROWERS'
information system for purposes of monitoring, posting payments and rebilling
Accounts to the extent deemed desirable by LENDER in its sole discretion; or
(iii) The right to reduce or modify the Revolving Loan
Commitment, the Borrowing Base or any portion thereof or the Advance Rates or to
modify the terms and conditions upon which LENDER may be willing to consider
making Advances under the Total Facility or to take additional reserves in the
Borrowing Base for any reason.
(d) BORROWERS hereby agree that a notice received by them at least
ten (10) days before the time of any intended public sale or of the time after
which any private sale or other disposition of the Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any Collateral which threatens to speedily decline
in value or which is sold on a recognized market may be sold immediately by
LENDER without prior notice to BORROWERS. Each BORROWER covenants and agrees not
to interfere with or impose any obstacle to LENDER's exercise of its rights and
remedies with respect to the Collateral.
8.4. Nature of Remedies: All rights and remedies granted LENDER hereunder
and under the Loan Documents, or otherwise available at law or in equity, shall
be deemed concurrent and cumulative, and not alternative remedies, and LENDER
may proceed with any number of remedies at the same time until all Obligations
are satisfied in full. The exercise of any one right or remedy shall not be
deemed a waiver or release of any other right or remedy, and LENDER, upon or at
any time after the occurrence and during the continuance of an Event of Default,
may proceed against BORROWERS, or any of them, at any time, under any agreement,
with any available remedy and in any order.
8.5. Set-Off: If any bank account or other Property held by or with
LENDER, or any Affiliate of LENDER, or any participant is attached or otherwise
liened or levied upon by any third party, LENDER (and such participant) shall
have and be deemed to have, without notice to
43
BORROWERS, the immediate right of set-off and may apply the funds or other
amounts or property thus set off against any of BORROWERS' Obligations
hereunder.
SECTION 9. MISCELLANEOUS
9.1. GOVERNING LAW: THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL
RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW JERSEY. THE PROVISIONS
OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER AGREEMENTS AND
DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING
PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT.
9.2. Integrated Agreement: The Revolving Credit Note, the Acquisition Term
Loan Note, the other Loan Documents, all related agreements and this Agreement
shall be construed as integrated and complementary of each other and as
augmenting and not restricting LENDER's rights and remedies. If, after applying
the foregoing, an inconsistency still exists, the provisions of this Agreement
shall constitute an amendment thereto and shall control.
9.3. Waiver and Indemnity:
(a) No omission or delay by LENDER in exercising any right or power
under this Agreement or any related agreements and documents will impair such
right or power or be construed to be a waiver of any default, or Event of
Default or an acquiescence therein, and any single or partial exercise of any
such right or power will not preclude other or further exercise thereof or the
exercise of any other right, and as to any BORROWER no waiver will be valid
unless in writing and signed by LENDER and then only to the extent specified.
(b) Each BORROWER releases and shall indemnify, defend and hold
harmless LENDER, and its respective officers, employees and agents, of and from
any claims, demands, liabilities, obligations, judgments, injuries, losses,
damages and costs and expenses (including, without limitation, reasonable legal
fees) resulting from (i) acts or conduct of a BORROWER under, pursuant or
related to this Agreement and the other Loan Documents, (ii) any BORROWER'S
breach, or alleged breach, or violation of any representation, warranty,
covenant or undertaking contained in this Agreement or the other Loan Documents,
and (iii) any BORROWER'S failure, or alleged failure, to comply with any or all
laws, statutes, ordinances, governmental rules, regulations or standards,
whether federal, state or local, or court or administrative orders or decrees
(including without limitation environmental laws, etc.), and all costs,
expenses, fines, penalties or other damages resulting therefrom, unless, in each
case resulting from acts or conduct of LENDER constituting willful misconduct or
gross negligence.
(c) LENDER shall not be liable for, and BORROWERS hereby agree that
LENDER's liability in the event of a breach by LENDER of this Agreement shall be
limited to BORROWERS' direct damages suffered and shall not extend to, any
consequential or incidental damages. In the
44
event BORROWERS bring suit against LENDER in connection with the transactions
contemplated hereunder, and LENDER is found not to be liable, BORROWERS shall
indemnify and hold LENDER harmless from all costs and expenses, including
attorneys' fees, incurred by LENDER in connection with such suit.
9.4. Time: Whenever BORROWERS, or any of them, shall be required to make
any payment, or perform any act, on a day which is not a Business Day, such
payment may be made, or such act may be performed, on the next succeeding
Business Day. Time is of the essence in BORROWERS' performance under all
provisions of this Agreement and all related agreements and documents.
9.5. Expenses of LENDER:
(a) At Closing and from time to time thereafter, BORROWERS will pay
all reasonable expenses of LENDER on demand (including, without limitation,
search costs, audit fees, appraisal fees, and the fees and expenses of legal
counsel for LENDER) relating to this Agreement, and all related agreements and
documents, including, without limitation, expenses incurred in the analysis,
negotiation, preparation, closing, administration and enforcement of this
Agreement and the other Loan Documents, the enforcement, protection and defense
of the rights of LENDER in and to the Revolving Loans and Collateral or
otherwise hereunder, and any reasonable expenses relating to extensions,
amendments, waivers or consents pursuant to the provisions hereof, or any
related agreements and documents or relating to agreements with other creditors,
or termination of this Agreement (collectively, the "EXPENSES"). Any Expenses
not paid upon demand by LENDER shall bear interest at the per annum rate equal
to the interest rate applicable to the Advances.
(b) In addition, at any time following the date of this Agreement,
BORROWERS effect any changes which results in a change in the format or sequence
of BORROWERS' data, BORROWERS shall pay to LENDER its reasonable charge for
implementing such changes as are necessary to accommodate the changes in the
format or sequence of the data such that the Value Track System(TM) is capable
of importing such data, including an hourly fee of $125.
9.6. Confidentiality: Except as provided in Section 9.18 hereof or to the
extent required by law or applicable regulations, BORROWERS and LENDER agree to
maintain the confidentiality of this Agreement and other Loan Documents and not
to disclose the contents hereof or provide a copy hereof to any third party,
except as required by law and (i) accountants, lawyers and financial advisers of
the parties who are informed of and agree to be bound by this Section 9.6, and
(ii) that copies hereof may be provided to any assignee or participant (or
potential assignee or participant) of LENDER's interests herein, any investors
or prospective investors who acquire or may acquire Securities backed by
Accounts and any parties which facilitate the issuance of such Securities,
including rating agencies, guarantors and insurers. LENDER agrees to maintain
the confidentiality of patient information obtained as a result of its interests
in, or duties with respect to, the Accounts in accordance with HIPAA and
applicable state privacy laws and shall not use, disclose or release patient
information except as specifically authorized herein or in any addendum hereto
or as required by HIPAA or applicable state law.
45
9.7. Notices:
(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, or via first class,
Certified or Registered mail, postage prepaid, to the address of such party set
forth on the signature pages hereof, unless such address is changed by written
notice hereunder.
(b) Any notice sent by LENDER or BORROWERS, or any of them, by any
of the above methods shall be deemed to be given when so received.
(c) LENDER shall be fully entitled to rely upon any facsimile
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
9.8. Headings: The headings of any paragraph or Section of this Agreement
are for convenience only and shall not be used to interpret any provision of
this Agreement.
9.9. Survival: All warranties, representations, and covenants made by any
or all BORROWERS herein, in any Loan Document, or in any agreement referred to
herein or on any certificate, document or other instrument delivered by it or on
its behalf under this Agreement, shall be considered to have been relied upon by
LENDER, and shall survive the delivery to LENDER of any Loan Document,
regardless of any investigation made by LENDER or on its behalf. All statements
in any such certificate or other instrument prepared and/or delivered for the
benefit of LENDER shall constitute warranties and representations by BORROWERS
hereunder. Except as otherwise expressly provided herein, all covenants made by
any or all BORROWERS hereunder, in any Loan Document or under any other
agreement or instrument shall be deemed continuing until all Obligations are
satisfied in full.
9.10. Successors and Assigns:
(a) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties. No BORROWER may transfer,
assign or delegate any of its duties or obligations hereunder.
(b) The LENDER may at any time assign all of its Advances and
commitments hereunder to any other Person with the consent of BORROWERS, which
consent shall not be unreasonably withheld or delayed.
9.11. Duplicate Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed document.
9.12. Modification: No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by BORROWERS
and LENDER.
46
9.13. Signatories: Each individual signatory hereto represents and
warrants that such signatory is duly authorized to execute this Agreement on
behalf of such signatory's principal and that such signatory executes the
Agreement in such capacity and not as a party.
9.14. Third Parties: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of any BORROWER. Nothing contained in
this Agreement shall be construed as a delegation to LENDER of any BORROWER'S
duty of performance, including, without limitation, such BORROWER'S duties under
any account or contract with any other Person.
9.15. Waivers:
(a) BORROWERS each hereby irrevocably, unconditionally and fully
subordinate in favor of LENDER, any and all rights they or any of them, may have
at any time (whether arising directly or indirectly, by operation of law or
contract) to assert or receive payment on any claim against each other or any of
them, on account of payments made under this Agreement, including without
limitation, any and all rights of subrogation, reimbursement, exoneration,
contribution or indemnity. Each BORROWER waives any event or circumstances which
might constitute a legal or equitable defense of, or discharge of, such
BORROWER. Furthermore, each BORROWER agrees that if any payment on the
Obligations is recovered from or repaid by LENDER in whole or in part in any
bankruptcy, insolvency or similar proceeding instituted by or against any
BORROWER, the remaining BORROWERS and/shall be obligated to the same extent as
if the recovered or repaid payment had never been originally made on such
Obligation.
(b) Each BORROWER hereby consents and agrees that LENDER, at any
time or from time to time in its discretion may: (i) settle, compromise or grant
releases for liabilities of other BORROWERS, and/or any other Person or Persons
liable for any Obligations, (ii) exchange, release, surrender, sell, subordinate
or compromise any Collateral to the extent allowed under federal, state or local
law, including without limitation administrative pronouncements, of any party
now or hereafter securing any of the Obligations, and (iii) following an Event
of Default, apply any and all payments received at any time against the
Obligations in any order as LENDER may determine; all of the foregoing in such
manner and upon such terms as LENDER may see fit, without notice to or further
consent from such BORROWER who hereby agrees and shall remain bound upon this
Agreement notwithstanding any such action on LENDER's part.
(c) The liability of each BORROWER hereunder is absolute and
unconditional and shall not be reduced, impaired or affected in any way by
reason of (i) any failure to obtain, retain or preserve, or the lack of prior
enforcement of, any rights against any Person or Persons (including other
BORROWERS) or in any Property, (ii) the invalidity or unenforceability of any
Obligations or rights in any Collateral, (iii) any delay in making demand upon
other BORROWERS or any delay in enforcing, or any failure to enforce, any rights
against other BORROWERS or in any Collateral even if such rights are thereby
lost, (iv) any failure, neglect or omission to obtain, perfect or retain any
lien upon, protect, exercise rights against, or realize on, any Property of any
BORROWER, or any other party securing the Obligations, (v) the existence or
non-existence of any defenses which may be available to the other BORROWERS with
respect to the Obligations or (vi)
47
the commencement of any bankruptcy, reorganization, liquidation, dissolution or
receivership proceeding or case filed by or against any of BORROWERS.
9.16. CONSENT TO JURISDICTION: EACH BORROWER AND LENDER HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE
OF NEW JERSEY IN ANY AND ALL ACTIONS AND PROCEEDINGS WHETHER ARISING HEREUNDER
OR UNDER ANY OTHER AGREEMENT OR UNDERTAKING. BORROWERS WAIVE ANY OBJECTION TO
IMPROPER VENUE AND FORUM NON-CONVENIENS TO PROCEEDINGS IN ANY SUCH COURT AND ALL
RIGHTS TO TRANSFER FOR ANY REASON. EACH BORROWER IRREVOCABLY AGREES TO SERVICE
OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ADDRESS OF THE
APPROPRIATE PARTY SET FORTH HEREIN.
9.17. WAIVER OF JURY TRIAL: EACH BORROWER AND LENDER HEREBY WAIVE ANY AND
ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
COMMENCED BY OR AGAINST LENDER WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO OR UNDER THE LOAN DOCUMENTS, WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE.
9.18. Publication: BORROWERS grant LENDER the right to publish and/or
advertise information to the effect that this transaction has closed, which
information may include, without limit, (i) the names of BORROWERS and LENDER,
(ii) the size of the transaction and (iii) those items of information commonly
included within a "tombstone advertisement" of the type customarily published in
financial or business periodicals.
9.19. Discharge of Taxes, BORROWER'S Obligations, Etc.: LENDER, in its
sole discretion, shall have the right at any time, and from time to time, with
prior notice to BORROWERS, if BORROWERS fail to do so five (5) Business Days
after requested in writing to do so by LENDER, to: (a) pay for the performance
of any of BORROWERS' obligations hereunder, and (b) discharge taxes or liens, at
any time levied or placed on any of BORROWERS' Property in violation of this
Agreement unless BORROWERS are in good faith with due diligence by appropriate
proceedings contesting such taxes or liens. Expenses and advances shall be
deemed Advances hereunder and shall be deemed Advances hereunder and shall bear
interest at the same rate applied to the Revolving Loans until reimbursed to
LENDER. Such payments and advances made by LENDER shall not be construed as a
waiver by LENDER of an Event of Default under this Agreement.
9.20. Injunctive Relief: The parties acknowledge and agree that, in the
event of a breach or threatened breach of any party's obligations hereunder, may
have no adequate remedy in money damages and, accordingly, shall be entitled to
an injunction (including without limitation, a temporary restraining order,
preliminary injunction, writ of attachment, or order compelling an audit)
against such breach or threatened breach, including without limitation,
maintaining the cash management and collection procedure described herein.
However, no specification in this Agreement of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any other legal or
equitable remedies in the event of a breach or threatened breach of any
provision of this Agreement.
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SECTION 10. SPECIAL INTER-BORROWER PROVISIONS
10.1. Certain BORROWER Acknowledgments and Agreements:
(a) Each BORROWER acknowledges that it will enjoy significant
benefits from the business conducted by the other BORROWERS because of, inter
alia, their combined ability to bargain with other Persons including without
limitation their ability to receive the Total Facility and the Acquisition Term
Loan on favorable terms granted by this Agreement and other Loan Documents which
would not have been available to an individual BORROWER acting alone. Each
BORROWER has determined that it is in its best interest to procure the Total
Facility and the Acquisition Term Loan which each BORROWER may utilize directly
and which receive the credit support of the other BORROWERS as contemplated by
this Agreement and the other Loan Documents.
(b) LENDER has advised BORROWERS that it is unwilling to enter into
this Agreement and the other Loan Documents and make available the Total
Facility and the Acquisition Term Loan extended hereby to any BORROWER unless
each BORROWER agrees, among other things, to be jointly and severally liable for
the due and proper payment of the Obligations of each other BORROWER under this
Agreement and other Loan Documents. Each BORROWER has determined that it is in
its best interest and in pursuit of its purposes that it so induce LENDER to
extend credit pursuant to this Agreement and the other documents executed in
connection herewith (i) because of the desirability to each BORROWER of the
Total Facility and the Acquisition Term Loan, the interest rates and the modes
of borrowing available hereunder, (ii) because each BORROWER may engage in
transactions jointly with other BORROWERS and (iii) because each BORROWER may
require, from time to time, access to funds under this Agreement for the
purposes herein set forth.
(c) Each BORROWER has determined that it has and, after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, the inter-BORROWER arrangement set
forth in this Section 10.1), will have assets having a fair saleable value in
excess of the amount required to pay its probable liability on its existing
debts as they fall due for payment and that the sum of its debts is not and will
not then be greater than all of its Property at a fair valuation, that such
BORROWER has, and will have, access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to
be derived by such BORROWER from the access to funds under this Agreement
(including, without limitation, the INTER-BORROWER arrangement set forth in this
Section 10.1) is reasonably equivalent to the obligations undertaken pursuant
hereto.
(d) VistaCare, Inc. (on behalf of each BORROWER) shall maintain
records specifying (a) all Obligations incurred by each BORROWER, (b) the date
of such incurrence, (c) the date and amount of any payments made in respect of
such Obligations and (d) all inter-BORROWER obligations pursuant to this Section
10. VistaCare, Inc. shall make copies of such records available to LENDER, upon
request.
49
10.2. Maximum Amount Of Joint and Several Liability: To the extent that
applicable law otherwise would render the full amount of the joint and several
obligations of any BORROWER hereunder and under the other Loan Documents invalid
or unenforceable, such BORROWER'S obligations hereunder and under the other Loan
Documents shall be limited to the maximum amount which does not result in such
invalidity or unenforceability, provided, however, that each BORROWER'S
obligations hereunder and under the other Loan Documents shall be presumptively
valid and enforceable to their fullest extent in accordance with the terms
hereof or thereof, as if this Section 10.2 were not a part of this Agreement.
10.3. Authorization of VistaCare, Inc. by BORROWERS:
(a) Each of BORROWERS hereby irrevocably authorizes VistaCare, Inc.
to give notices, make requests, make payments, receive payments and notices,
give receipts and execute agreements, make agreements or take any other action
whatever on behalf of such BORROWER under and with respect to any Loan Document
and each BORROWER shall be bound thereby. This authorization is coupled with an
interest and shall be irrevocable, and LENDER may rely on any notice, request,
information supplied by VistaCare, Inc., every document executed by VistaCare,
Inc., every agreement made by VistaCare, Inc. or other action taken by
VistaCare, Inc. in respect of BORROWERS or any thereof as if the same were
supplied, made or taken by any or all BORROWERS. Without limiting the generality
of the foregoing, the failure of one or more BORROWERS to join in the execution
of any writing in connection herewith shall not, unless the context clearly
requires, relieve any such BORROWER from obligations in respect of such writing.
(b) BORROWERS acknowledge that the credit provided hereunder is on
terms more favorable than any BORROWER acting alone would receive and that each
BORROWER benefits directly and indirectly from all Advances hereunder. Each of
the other BORROWERS, shall be jointly and severally liable for all Obligations,
regardless of, inter alia, which BORROWER requested (or received the proceeds
of) a particular Advance.
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ADDRESS FOR NOTICES TO BORROWERS: BORROWERS:
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 0000 VISTACARE, INC.
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, Chief Financial Officer By:____________________________
Name:__________________________
Title:_________________________
VISTA HOSPICE CARE, INC.
By:____________________________
Name:__________________________
Title:_________________________
VISTACARE USA, INC.
By:____________________________
Name:__________________________
Title:_________________________
FHI HEALTH SYSTEMS, INC.
By:____________________________
Name:__________________________
Title:_________________________
FHI GP, INC.
By:____________________________
Name:__________________________
Title:_________________________
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FOR VISTACARE, INC.
FHI LP, INC.
By:____________________________
Name:__________________________
Title:_________________________
FAMILY HOSPICE, LTD.
By:____________________________
Name:__________________________
Title:_________________________
FHI MANAGEMENT, LTD.
By:____________________________
Name:__________________________
Title:_________________________
Address for notices: LENDER:
Healthcare Business Credit Corporation
000 Xxxxxxxxxx Xxxx, Xxxxx 000 HEALTHCARE BUSINESS CREDIT
Xxxxx Xxxxxx, XX 00000 CORPORATION
Attn: Xxxxxxx X. Xxxxxxxxxx, President By:____________________________
Fax: 000-000-0000 Name:__________________________
Title:_________________________
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FOR VISTACARE, INC.
SCHEDULE 1
Ineligible Obligors and Concentration Limits
SCHEDULE 2
Each BORROWER'S States of Qualifications (Section 5.1)
Chief Executive Office of each BORROWER (Section 5.2)
Places of Business/Other Names of each BORROWER (Section 5.2)
Provider Identification Numbers of each BORROWER (Section 5.3)
Pending Litigation for each BORROWER (Section 5.4)
Permitted Liens of each BORROWER (Section 5.6)
Fiscal Year End of each BORROWER (Section 5.9)
Federal Tax I.D. Numbers of each BORROWER (Section 5.9)
Existing Guaranties, Investments and Borrowings of each BORROWER (Section 5.11)
Other Associations of each BORROWER (Section 5.13)
Environmental Matters of each BORROWER (Section 5.14)
Capital Stock and Equity Interests of each BORROWER (Section 5.15)
