<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>d97941exv10w1.txt
<DESCRIPTION>SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
HORIZON HEALTH CORPORATION
as Parent,
HORIZON MENTAL HEALTH MANAGEMENT, INC.
as Borrower,
JPMORGAN CHASE BANK
(as successor in interest by merger to The Chase Manhattan Bank
who was the successor in interest by merger to the Chase Bank of Texas,
National Association, formerly known as
Texas Commerce Bank National Association),
as Agent,
and
the banks named herein
23 May 2002
with J.P. Morgan Securities Inc.
as sole lead arranger
<PAGE>
<Table>
<Caption>
Page
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ARTICLE I. DEFINITIONS .............................................................. 6
Section 1.1. Definitions ....................................................... 6
Section 1.2. Other Definitional Provisions ..................................... 17
Section 1.3. Accounting Terms and Determinations ............................... 17
Section 1.4. Time of Day ....................................................... 17
ARTICLE II. REVOLVING CREDIT FACILITY AND LETTERS OF CREDIT ......................... 17
Section 2.1. Revolving Commitments ............................................. 17
Section 2.2. Revolving Notes ................................................... 17
Section 2.3. Repayment of Loans ................................................ 18
Section 2.4. Revolving Commitment Fee .......................................... 18
Section 2.5. Use of Proceeds ................................................... 18
Section 2.6. Reduction, Termination, and Increase of Revolving Commitments ..... 18
Section 2.7. Letters of Credit ................................................. 19
ARTICLE III. MASTER ASSIGNMENT ...................................................... 23
Section 3.1. Assignment ........................................................ 23
Section 3.2. Chase Representations and Disclosures ............................. 23
Section 3.3. Added Bank Representations and Agreements ......................... 23
Section 3.4. Effectiveness of the Assignments .................................. 23
Section 3.5. Exchange of Revolving Notes; New Revolving Commitments ............ 24
Section 3.6. Address for Notices ............................................... 24
ARTICLE IV. INTEREST AND FEES ....................................................... 24
Section 4.1. Interest Rate ..................................................... 24
Section 4.2. Determinations of Margins ......................................... 24
Section 4.3. Payment Dates ..................................................... 25
Section 4.4. Default Interest .................................................. 25
Section 4.5. Conversions and Continuations of Accounts ......................... 25
Section 4.6. Computations ...................................................... 26
ARTICLE V. ADMINISTRATIVE MATTERS ................................................... 26
Section 5.1. Borrowing Procedure ............................................... 26
Section 5.2. Minimum Amounts ................................................... 26
Section 5.3. Certain Notices ................................................... 26
Section 5.4. Prepayments ....................................................... 27
Section 5.5. Method of Payment ................................................. 29
Section 5.6. Pro Rata Treatment ................................................ 29
Section 5.7. Sharing of Payments ............................................... 29
Section 5.8. Non-Receipt of Funds by Agent ..................................... 30
Section 5.9. Withholding Taxes ................................................. 30
Section 5.10. Withholding Tax Exemption ......................................... 30
</Table>
TABLE OF CONTENTS - Page i
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<Table>
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ARTICLE VI. YIELD PROTECTION AND ILLEGALITY ......................................... 31
Section 6.1. Additional Costs .................................................. 31
Section 6.2. Limitation on Eurodollar Accounts ................................. 32
Section 6.3. Illegality ........................................................ 33
Section 6.4. Treatment of Affected Loans ....................................... 33
Section 6.5. Compensation ...................................................... 33
Section 6.6. Capital Adequacy .................................................. 34
ARTICLE VII. CONDITIONS PRECEDENT ................................................... 34
Section 7.1. Initial Loan ...................................................... 34
Section 7.2. All Loans ......................................................... 35
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES ........................................ 35
Section 8.1. Corporate Existence ............................................... 36
Section 8.2. Financial Statements .............................................. 36
Section 8.3. Corporate Action; No Breach ....................................... 36
Section 8.4. Operation of Business ............................................. 36
Section 8.5. Litigation and Judgments .......................................... 36
Section 8.6. Rights in Properties; Liens ....................................... 36
Section 8.7. Enforceability .................................................... 37
Section 8.8. Approvals ......................................................... 37
Section 8.9. Debt .............................................................. 37
Section 8.10. Taxes ............................................................. 37
Section 8.11. Margin Securities ................................................. 37
Section 8.12. ERISA ............................................................. 37
Section 8.13. Disclosure ........................................................ 37
Section 8.14. Subsidiaries ...................................................... 38
Section 8.15. Agreements ........................................................ 38
Section 8.16. Compliance with Laws .............................................. 38
Section 8.17. Investment Company Act ............................................ 38
Section 8.18. Public Utility Holding Company Act ................................ 38
Section 8.19. Environmental Matters ............................................. 38
Section 8.20. Solvency .......................................................... 39
Section 8.21. Benefit Received .................................................. 39
ARTICLE IX. POSITIVE COVENANTS ...................................................... 40
Section 9.1. Reporting Requirements ............................................ 40
Section 9.2. Maintenance of Existence; Conduct of Business ..................... 41
Section 9.3. Maintenance of Properties ......................................... 41
Section 9.4. Taxes and Claims .................................................. 41
Section 9.5. Insurance ......................................................... 42
Section 9.6. Inspection Rights ................................................. 42
Section 9.7. Keeping Books and Records ......................................... 42
Section 9.8. Compliance with Laws .............................................. 42
Section 9.9. Compliance with Agreements ........................................ 42
Section 9.10. Further Assurances and Collateral Matters ......................... 42
Section 9.11. ERISA ............................................................. 44
</Table>
TABLE OF CONTENTS - Page ii
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<Table>
<S> <C>
ARTICLE X. NEGATIVE COVENANTS ....................................................... 44
Section 10.1. Debt ............................................................. 44
Section 10.2. Limitation on Liens and Restrictions on Subsidiaries ............. 45
Section 10.3. Mergers, etc ..................................................... 46
Section 10.4. Restrictions on Dividends and other Distributions ................ 46
Section 10.5. Investments ...................................................... 47
Section 10.6. Limitation on Issuance of Capital Stock .......................... 49
Section 10.7. Transactions With Affiliates ..................................... 50
Section 10.8. Disposition of Assets ............................................ 50
Section 10.9. Lines of Business ................................................ 50
Section 10.10. Sale and Leaseback ............................................... 50
Section 10.11. Prepayment of Debt ............................................... 50
ARTICLE XI. FINANCIAL COVENANTS ..................................................... 50
Section 11.1. Consolidated Net Worth ........................................... 50
Section 11.2. Indebtedness to Capitalization ................................... 51
Section 11.3. Fixed Charge Coverage ............................................ 51
Section 11.4. Indebtedness to Adjusted EBITDA .................................. 54
Section 11.5. Current Ratio .................................................... 54
Section 11.6. Managed Care Contracts ........................................... 54
ARTICLE XII. DEFAULT ................................................................ 55
Section 12.1. Events of Default ................................................ 55
Section 12.2. Remedies ......................................................... 57
Section 12.3. Performance by Agent ............................................. 57
Section 12.4. Setoff ........................................................... 57
Section 12.5. Continuance of Default ........................................... 58
ARTICLE XIII. AGENT ................................................................. 58
Section 13.1. Appointment, Powers and Immunities ............................... 58
Section 13.2. Rights of Agent as a Bank ........................................ 58
Section 13.3. Defaults ......................................................... 59
Section 13.4. Indemnification .................................................. 59
Section 13.5. Independent Credit Decisions ..................................... 59
Section 13.6. Several Revolving Commitments .................................... 60
Section 13.7. Successor Agent .................................................. 60
Section 13.8. Agent Fee ........................................................ 60
Section 13.9. Intercreditor Provisions ......................................... 60
ARTICLE XIV. MISCELLANEOUS .......................................................... 61
Section 14.1. Expenses ......................................................... 61
Section 14.2. Indemnification .................................................. 61
Section 14.3. Limitation of Liability .......................................... 62
Section 14.4. No Duty .......................................................... 62
Section 14.5. No Fiduciary Relationship ........................................ 62
Section 14.6. Equitable Relief ................................................. 62
Section 14.7. No Waiver; Cumulative Remedies ................................... 62
Section 14.8. Successors and Assigns ........................................... 62
Section 14.9. Survival ......................................................... 65
</Table>
TABLE OF CONTENTS - Page iii
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<Table>
<S> <C>
Section 14.10. Entire Agreement; Amendment and Restatement; Ratification ....... 66
Section 14.11. Amendments ...................................................... 67
Section 14.12. Maximum Interest Rate ........................................... 68
Section 14.13. Notices ......................................................... 68
Section 14.14. Governing Law; Venue of Service of Process ...................... 68
Section 14.15. Counterparts .................................................... 69
Section 14.16. Severability .................................................... 69
Section 14.17. Headings ........................................................ 69
Section 14.18. Non-Application of Chapter 346 of The Finance Code of Texas ..... 69
Section 14.19. Construction .................................................... 69
Section 14.20. Independence of Covenants ....................................... 69
Section 14.21. Waiver of Jury Trial ............................................ 69
</Table>
TABLE OF CONTENTS - Page iv
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INDEX TO EXHIBITS
<Table>
<Caption>
Exhibit Description of Exhibit
------- ----------------------
<S> <C>
A Revolving Note
B Assignment and Acceptance
C Compliance Certificate
D Increased Commitment Supplement
E Loan Change Notice
F Letter of Credit Notice
</Table>
INDEX TO SCHEDULES
<Table>
<Caption>
Schedule Description of Schedule
-------- -----------------------
<S> <C>
1.1(a) Revolving Commitments
1.1(b) Assignment Details
8.14 List of Subsidiaries
8.14A Organizational Chart
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
</Table>
INDEX TO EXHIBITS AND SCHEDULES - Solo Page
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"),
dated as of May 23, 2002, is among HORIZON HEALTH CORPORATION, a corporation
duly organized and validly existing under the laws of the State of Delaware
("Parent"), HORIZON MENTAL HEALTH MANAGEMENT, INC., a corporation duly organized
and validly existing under the laws of the State of Texas ("Borrower"), each of
the banks or other lending institutions which is or which may from time to time
become a party hereto or any successor or assignee thereof (individually, a
"Bank" and, collectively, the "Banks"), and JPMORGAN CHASE BANK (as successor
in interest by merger to The Chase Manhattan Bank, who was the successor in
interest by merger to the Chase Bank of Texas, National Association, formerly
known as Texas Commerce Bank National Association), as sole arranger and
individually as a Bank and as agent for itself and the other Banks (in its
capacity as agent, together with its successors in such capacity, the "Agent").
RECITALS:
A. Parent, Texas Commerce Bank National Association ("Texas Commerce"),
individually as a bank and as the agent, Bank of America National Trust and
Savings Association (now known as Bank of America, N.A. and herein, "Bank of
America"), Comerica Bank-Texas ("Comerica"), Cooperatieve Centrale Raiffeisen -
Boerenleenbank B.A., "Rabobank Nederland," New York Bank ("Rabobank"), and
Banque Paribas, Houston Agency ("Banque Paribas") entered into a Credit
Agreement dated as of December 9, 1997 (as the same has been amended or
otherwise modified, the "Original Credit Agreement"). Pursuant to the Original
Credit Agreement:
1. Parent entered into: (a) a Security Agreement, dated as of
December 9, 1997 with the Agent (as the same has been and may hereafter
be amended or otherwise modified, the "Parent Security Agreement"), and
(b) a Pledge and Security Agreement, dated as of December 9, 1997 with
the Agent (as the same has been and may hereafter be amended or
otherwise modified, the "Parent Pledge Agreement");
2. Each of Horizon Mental Health Management, Inc., a Texas
corporation ("Borrower"), Mental Health Outcomes, Inc., a Delaware
corporation ("Outcomes"), HHG Colorado, Inc., a Colorado corporation
("Colorado"), HHMC Partners, Inc., a Delaware corporation ("Partners"),
Geriatric Medical Care, Inc., a Tennessee corporation ("Geriatric"),
Specialty Rehab Management, Inc., a Delaware corporation ("Specialty"),
Acorn Behavioral Healthcare Management Corporation, a Pennsylvania
corporation ("Acorn"), and Florida Professional Psychological Services,
Inc. ("FPPS") entered into (a) an Unconditional Guaranty Agreement,
dated as of December 9, 1997 in favor of the Agent and the banks party
to the Original Credit Agreement (as the same has been and may
hereafter be amended or otherwise modified, the "Guaranty"), and (b) a
Security Agreement dated as of December 9, 1997 with the Agent (as the
same has been and may hereafter be amended or otherwise modified, the
"Subsidiary Security Agreement");
3. Borrower entered into a Pledge and Security Agreement dated
as of December 9, 1997 with the Agent (as amended by that certain
Pledge Amendment dated May 19, 1998 and as the same has otherwise been
and may hereafter be amended or otherwise modified, the "Borrower
Pledge Agreement.")
B. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, FPPS, Bank of America, Comerica, Rabobank, Banque Paribas, and Chase
Bank of Texas, National Association (formerly known as Texas Commerce Bank
National Association and herein, "Chase Texas"),
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
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individually as a bank and as agent for itself and the other banks, and North
Central Development Company, a Texas corporation ("NCD") entered into a Consent
Letter, dated as of April 30, 1998, consenting to the acquisition by Parent of
FPM Behavioral Health, Inc. ("FPMBH").
C. In connection with the acquisition of FPMBH:
1. Parent entered into a Pledge Amendment, dated as of June 1,
1998, amending Schedule 1 to the Parent Pledge Agreement to add
Parent's ownership interest in FPMBH thereon.
2. FPMBH entered into (a) a Subsidiary Joinder Agreement,
dated as of June 1, 1998, joining into the Subsidiary Security
Agreement and the Guaranty as a guarantor and debtor thereunder, and
(b) a Pledge and Security Agreement, dated as of June 1, 1998, pledging
to the Agent its interests in its subsidiaries (as the same has been
and may hereafter be amended or otherwise modified, the "FPMBH Pledge
Agreement").
3. Each of FPMBH's subsidiaries, Arizona Psychiatric
Affiliates, Inc. ("APA"), Florida Psychiatric Associates, Inc. ("FPA"),
FPM/Hawaii, Inc. ("Hawaii"), Florida Psychiatric Management, Inc.
("FPMI") (now known as Horizon Behavioral Services of Florida, Inc.),
FPM of Louisiana, Inc. ("Louisiana"), FPM Management, Inc. ("FPMMI"),
FPM of Ohio, Inc. ("Ohio"), FPM of Utah, Inc. ("Utah"), FPM/Southeast,
Inc. ("Southeast"), FPM of West Virginia, Inc. ("West Virginia"),
FPMBP of Arizona, Inc. ("Arizona"), FPMBH Clinical Services, Inc.
("Clinical"), and FPMBH of Texas, Inc. ("Texas"), entered into a
separate Subsidiary Joinder Agreement, dated as of June 1, 1998,
joining into the Subsidiary Security Agreement and the Guaranty as a
guarantor and debtor thereunder.
4. Each of FPMI and Clinical entered into separate Pledge and
Security Agreements, dated as of June 1, 1998, pledging the stock of
their respective subsidiaries.
D. FPMBH changed its name to Horizon Behavioral Services, Inc.
(hereinafter referred to as "HBS") and in connection with the name change,
Parent entered into a Pledge Amendment dated as of August 1, 1998 amending
Schedule 1 to the Parent Pledge Agreement to add Parent's ownership of HBS
thereon.
E. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, FPPS, NCD, Bank of America, Comerica, Rabobank, Banque Paribas, and
Chase Texas, individually as a bank and as agent for itself and the other banks,
entered into an Amendment Letter, dated as of June 30, 1998, amending the
Original Credit Agreement.
F. The following corporate restructurings have occurred:
1. FPPS merged with and into HBS effective as of June 4, 1998
("FPPS Merger").
2. Hawaii, FPMMI, Louisiana, Ohio, Utah, West Virginia, and
Southeast were merged with and into HBS effective as of September 1,
1998 (the "FPM Mergers").
3. Parent contributed all the capital stock of Acorn to HBS,
Clinical was merged with and into FPA effective as of September 10,
1998 and APA was merged with and into FPA effective as of September 24,
1998 (collectively, the "Florida Psychiatric Mergers"). As a result of
the merger of FPMMI into HBS, the pledge and security agreement
executed by FPMI is no longer effective because FPMI no longer has any
subsidiaries. As a result of the Florida Psychiatric Mergers, Clinical
has been merged out of existence and the survivor of such mergers
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
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FPA does not have any subsidiaries. Therefore, the pledge and security
agreement executed by Clinical is no longer effective.
G. HBS entered into a Pledge Amendment, dated as of September 10, 1998,
amending Schedule 1 to the FPMBH Pledge Agreement to add HBS's 100% ownership
interest in Acorn and FPA acquired in connection with the contribution described
in clause F.3. above and the Florida Psychiatric Mergers.
H. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, HBS, FPA, FPMI, Arizona, Texas, NCD, Bank of America, Comerica,
Rabobank, Banque Paribas, and Chase Texas, individually as a bank and as agent
for the banks, entered into a Second Amendment to Credit Agreement and Third
Amendment to Letter Loan Agreement, dated as of September 30, 1998 (the "Second
Amendment") pursuant to which: (i) certain provisions of the Original Credit
Agreement were amended, (ii) the banks consented to HBS's acquisition of all of
the shares of Choice Health, Inc. ("Choice"), (iii) the banks consented to
Parent's contribution to HBS of one hundred percent (100%) of the issued and
outstanding shares of capital stock of Acorn, (iv) the banks consented to the
Florida Psychiatric Mergers and FPMBH Merger, and (v) the banks consented to the
release and return of the stock powers and the shares of stock of FPPS, Hawaii,
FPMMI, Louisiana, Ohio, Utah, West Virginia, Southeast, Clinical, and APA. In
connection with the Second Amendment:
1. HBS (formerly FPMBH) entered into a Pledge Amendment, dated
as of October 5, 1998, amending Schedule 1 to the FPMBH Pledge
Agreement to add HBS's 100% ownership interest in Choice thereto.
2 Choice entered into a Subsidiary Joinder Agreement joining
into the Subsidiary Security Agreement and the Guaranty as a guarantor
and debtor thereunder.
I. Parent, Borrower, Outcomes, Colorado, Geriatric, Specialty, Acorn,
Partners, HBS, FPA, FPMI, Arizona, Texas, Choice, NCD, Bank of America,
Comerica, Rabobank, Banque Paribas, and Chase Texas, individually as a bank and
as agent for the banks, entered into a Third Amendment to Credit Agreement and
Fourth Amendment to Letter Loan Agreement, dated as of November 6, 1998,
amending certain provisions of the Original Credit Agreement.
J. HBS (formerly FPMBH) acquired 100% of the capital stock of Resources
in Employee Assistance and Corporate Health, Inc. ("Reach") and in connection
with such acquisition:
1. HBS (formerly FPMBH) entered into a Pledge Amendment, dated
as of March 31, 1999, amending Schedule 1 to the FPMBH Pledge Agreement
to add 100% of the capital stock of Reach thereto.
2. Reach entered into a Subsidiary Joinder Agreement, dated as
of March 31, 1999, joining into the Subsidiary Security Agreement and
the Guaranty as a party thereto.
K. Parent, Borrower, Outcomes, Geriatric, Specialty, Acorn, Partners,
HBS, FPA, FPMI, Texas, Choice, Reach, NCD, Bank of America, Comerica and Chase
Texas, individually as a bank and as agent for itself and the banks entered into
a Fourth Amendment to Credit Agreement and Fifth Amendment to Letter Loan
Agreement, dated as of October 12, 1999, amending certain provisions of the
Original Credit Agreement.
L. Parent sent a letter to Chase Texas as agent dated June 27, 2000
canceling all Revolving Commitments under the Original Credit Agreement.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
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M. Acorn was merged with and into HBS on June 2, 2000; Choice was
dissolved on January 19, 2000; Colorado was dissolved on January 19, 1999;
Arizona was merged with and into HBS on December 17, 1998; and Reach was
dissolved on August 10, 2000.
N. Borrower has created a new subsidiary, HMHM of Tennessee, Inc., a
Tennessee corporation (herein "HMHM"), HBS has created two new subsidiaries,
Horizon Behavioral Services- Colorado, Inc., a Colorado corporation ("HBS CO")
and Horizon Behavioral Services of California, Inc., a California corporation
("HBS CA"), and Texas created a new subsidiary, FPM Behavioral Health Services,
Inc., a Texas non-profit corporation ("FPM"). In connection with the creation of
the forgoing subsidiaries:
1. each of HMHM and HBS CO entered into a Subsidiary Joinder
Agreement, dated as of November 15, 2000, joining into the Subsidiary
Security Agreement and the Guaranty as a guarantor and debtor
thereunder;
2. Texas entered into Pledge and Security Agreement, dated as
of November 15, 2000, pledging the membership interest of FPM (the
"Texas Pledge Agreement");
3. Borrower entered into a Pledge Amendment, dated as of
November 15, 2000, amending Schedule 1 to the Pledge Agreement to add
100% of the capital stock of HMHM thereto; and
4. HBS entered into a Pledge Amendment, dated as of November
15, 2000, amending Schedule 1 to the FPMBH Pledge Agreement to add 100%
of the capital stock of HBS CO and HBS CA thereto.
O. As a result of the transactions described above, the Obligated
Parties under the Original Credit Agreement were Borrower, Outcomes, Geriatric,
Specialty, Partners, HBS (formerly FPMBH), FPA, FPMI, Texas, HBS CO and HMHM.
P. On November 15, 2000, Bank of America, Comerica, Rabobank and Banque
Paribas assigned to The Chase Manhattan Bank (as successor in interest by merger
to Chase Texas) all of their respective interest in the Original Credit
Agreement, including without limitation, all of their respective term loans
outstanding thereunder. After giving effect to those assignments, Parent,
Borrower and The Chase Manhattan Bank individually and as agent entered into
that certain Amended and Restated Credit Agreement dated as of November 15, 2000
(as amended by that certain First Amendment to Amended and Restated Credit
Agreement dated as of March 27, 2002 and as the same has been further modified,
herein the "Existing Credit Agreement") which amended and restated the Original
Credit Agreement in its entirety. The term loans outstanding under the Original
Credit Agreement were continued under the terms of the Existing Credit Agreement
as "Loans".
Q. HBS entered into a Stock Purchase Agreement, dated as of August 1,
2001, with PSI-EAP, Inc., a Delaware corporation and Occupational Health
Consultants of America, Inc. ("OHCA") whereby HBS purchased all of the issued
and outstanding capital stock of OHCA (the "OHCA Stock Acquisition"). On August
1, 2001, Employee Assistance Services, Inc. ("EAS"), Resource EAP, Inc.
("REAP"), Employee Assistance Program, Inc. ("EAP"), John Edwards & Associates,
Inc. ("John Edwards"), and Zanone and Associates, Inc. ("Zanone") were
wholly-owned subsidiaries of OHCA. EAP, John Edwards, and Zanone were dissolved
on August 28, 2001, August 28, 2001, and August 29, 2001, respectively and as a
part of the dissolution there was a general assignment of all of the assets of
EAP, John Edwards, and Zanone to OHCA. In connection with the OHCA Stock
Acquisition:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
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1. each of EAS, REAP, and OHCA entered into a Subsidiary
Joinder Agreement, dated as of December 20, 2001, joining into the
Subsidiary Security Agreement and the Guaranty as a debtor and
guarantor, respectively, thereunder;
2. HBS entered into a Pledge Amendment, dated as of December
20, 2001, amending Schedule 1 to the FPMBH Pledge Agreement to add 100%
of the capital stock of OHCA thereto; and
3. OHCA entered into a Pledge and Security Agreement, dated as
of December 20, 2001, pledging 100% of the capital stock of EAS and
REAP (the "OHCA Pledge Agreement").
R. HBS has created three new subsidiaries, Horizon Behavioral Services
of New York, Inc., a New York corporation ("HBS NY"), Horizon Behavioral
Services IPA, Inc., a New York corporation ("HBS IPA"), and Horizon Behavioral
Services of New Jersey, Inc., a New Jersey corporation ("HBS NJ"). In connection
with the creation of the foregoing subsidiaries:
1. each of HBS NY, HBS IPA, and HBS NJ entered into a
Subsidiary Joinder Agreement, dated as of February 28, 2002, joining
into the Subsidiary Security Agreement and the Guaranty as a debtor and
guarantor, respectively, thereunder; and
2. HBS entered into a Pledge Amendment dated as of February
28, 2002, amending Schedule 1 to the FPMBH Pledge Agreement to add 100%
of the capital stock of HBS NY, HBS IPA, and HBS NJ thereto.
S. On December 18, 2001, FPMI changed its name to Horizon Behavioral
Services of Florida, Inc. (hereinafter referred to as "HBS FL") and in
connection with the name change HBS has entered into a Pledge Amendment dated as
of February 28, 2002, amending Schedule 1 to the FPMBH Pledge Agreement to add
HBS's ownership of HBS FL thereon.
T. REAP was merged with and into OHCA on February 14, 2002.
U. HBS CO was dissolved on March 1, 2002 and its assets were
transferred to Horizon Behavioral Services, Inc.
V. Each of Parent, Borrower, the remaining Obligated Parties under the
Original Credit Agreement, EAS, OHCA, HBS NY, HBS IPA, HBS NJ, HBS FL and Agent
wish to amend and restate the Existing Credit Agreement in its entirety, as
hereinafter set forth, to among other things, (i) change the commitments of the
Banks to be a five (5) year facility (a) with the first three (3) years being a
$30,000,000 senior secured revolving credit facility with an accordion feature
whereby the Banks' commitments may be increased up to $50,000,000 during the
first two years but which turns into a reducing facility in the third year and
(b) that converts to an amortizing term facility at the beginning of the fourth
year, and (ii) add Bank of America, National Association as a "Bank" under the
Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
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ARTICLE I.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Added Bank" has the meaning specified in Section 3.1.
"Additional Costs" has the meaning specified in Section 6.1.
"Adjusted EBITDA" has the meaning specified in Section 11.4.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by Agent to be equal to the Eurodollar Rate
for such Eurodollar Account for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 4.2.
"Affiliate " means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall Agent or any Bank
be deemed an Affiliate of Parent or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Applicable Lending Office" means for each Bank and each Type of
Account, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Account below its name on the signature pages hereof or such
other office of such Bank (or of an Affiliate of such Bank) as such Bank may
from time to time specify to Borrower and Agent as the office by which its Loans
subject to Accounts of such Type are to be made and maintained.
"Applicable Rate" has the meaning set forth in Section 4.1.
"Approved Fund" has the meaning set forth in Section 14.8.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by Agent pursuant to Section 14.8,
in substantially the form of Exhibit B.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Bank Affiliate" has the meaning specified in Section 14.8.
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"Base Margin" has the meaning specified in Section 4.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum then most recently publicly announced from time to time by
Chase as its prime rate in effect at its Principal Office; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
effective. "Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as released on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so released for any day which is a Business Day, the arithmetic
average (rounded upwards to the next 1/100th of 1%), as determined by Agent, of
the quotations for the day of such transactions received by Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of Agent to obtain sufficient quotations
in accordance with the terms thereof, the Base Rate shall be determined without
regard to clause (a) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively. The Base Rate may not be any Bank's
best or favored rate and the Banks may make other loans to other Persons at
rates lower than the Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning specified in the introductory paragraph of
this Agreement.
"Borrower Pledge Agreement" has the meaning specified in the Recitals
to this Agreement.
"Business Day" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of Texas or the
State of New York or is a day on which banking institutions located in the State
of Texas or the State of New York are closed, and (b), with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Loans subject to Eurodollar Accounts, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the European interbank market.
"Calculation Period" has the meaning specified in Section 4.2.
"Capital Expenditures" means, for any period, all expenditures of
Parent and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP including all such expenditures associated with Capital
Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
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"Chase" means JPMorgan Chase Bank in its individual capacity and not as
Agent, and its successors, as successor in interest by merger to The Chase
Manhattan Bank, who was the successor in interest by merger to Chase Bank of
Texas, National Association, who was formerly known as Texas Commerce Bank
National Association.
"Closing Date" means May 23, 2002.
"Code " means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been granted
pursuant to the Parent Security Agreement, the Parent Pledge Agreement, the
Subsidiary Security Agreement, and the Subsidiary Pledge Agreements, whether
such Liens are now existing or hereafter arise.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of a fraction, the numerator of which is the amount of the Revolving
Commitment of such Bank and the denominator of which is the aggregate amount of
the Revolving Commitments of all of the Banks.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit C properly completed and executed by the chief financial officer of
Parent.
"Consolidated Net Income" has the meaning specified in Section 11.3.
"Continue ", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 4.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 4.5 or Article VI of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days or that
are past due by more than ninety (90) days but are being contested in good faith
by appropriate proceedings diligently pursued; (d) all Capital Lease Obligations
of such Person; (e) all Debt or other obligations of others Guaranteed by such
Person; (f) all obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been assumed by such
Person or are non-recourse to the credit of such Person; (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments; (h) all liabilities of such Person in respect of all unfunded
vested benefits under any Plan; (i) all obligations of such Person in respect of
mandatory redemption or mandatory dividend rights on capital stock (or other
equity); (j) all obligations of such Person, contingent or otherwise, for the
payment of money under any non-compete, consulting, performance based or similar
agreement entered into with the seller of a Target or any other similar
arrangements providing for the deferred payment of the purchase price for an
acquisition permitted hereby or an acquisition consummated prior to the date
hereof, in each case to the extent reflected as a liability on the balance sheet
of a Person in accordance with GAAP; (k) all obligations of such Person under
any interest rate or currency swap, cap, collar or similar hedge agreement; (l)
all obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which lease is required or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
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is permitted to be classified and accounted for as an operating lease under GAAP
but which is intended by the parties thereto for tax, bankruptcy, regulatory,
commercial law, real estate law and all other purposes as a financing
arrangement (sometimes known as a synthetic lease); and (m) any other amounts
which are required to be reflected as a liability on the balance sheet of a
Person in accordance with GAAP, excluding trade accounts payable excluded from
Debt pursuant to clause (c) of this definition, accruals, deferred credits and
loss contingencies.
"Default " means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, or any
other amount payable by Borrower under any Loan Document which is not paid when
due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of two percent (2%) plus the Applicable Rate for Base Rate
Accounts as in effect from time to time (provided, that if such amount in
default is principal of a Loan subject to a Eurodollar Account and the due date
is a day other than the last day of an Interest Period therefor, the "Default
Rate" for such principal shall be, for the period from and including the due
date and to but excluding the last day of the Interest Period therefor, two
percent (2%) plus the interest rate for such Loan for such Interest Period as
provided in Section 4.1 hereof, and, thereafter, the rate provided for above in
this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EAS" has the meaning specified in the Recitals to this Agreement.
"EBITDA" has the meaning specified in Section 11.3.
"Effective Date" has the meaning specified in Section 3.4.
"Eligible Assignee" has the meaning set forth in Section 14.8.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses, (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order, or agreement with any Governmental Authority
or other Person, arising from environmental, health, or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Parent or is under common control (within the
meaning of Section 414(c) of the Code) with Parent.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
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"Eurodollar Account" means a portion of a Loan that bears interest at a
rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Account for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) offered to Chase or one of its Affiliates at approximately
11:00 A.M. London time (or as soon thereafter as practicable) two Business Days
prior to the first day of such Interest Period by leading banks in the European
interbank market for Dollar deposits in immediately available funds having a
term comparable to such Interest Period and, if necessary to obtain such offers,
in an amount comparable to the principal amount of the Eurodollar Account
applicable to Agent to which such Interest Period relates. If Agent is not
participating in a Eurodollar Account during any Interest Period therefor
(pursuant to Section 6.4 hereof or for any other reason), the Eurodollar Rate
for such Account for such Interest Period shall, if necessary to obtain the
Eurodollar Rate offers, be determined by reference to the amount of the Account
which Agent would have made had it been participating in such Account.
"Eurodollar Rate Margin" has the meaning specified in Section 4.2.
"Event of Default" has the meaning specified in Section 12.1.
"Existing Credit Agreement" has the meaning specified in the Recitals
to this Agreement.
"Federal Funds Effective Rate" has the meaning specified in the
definition of Base Rate.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period three (3) calendar months in duration with the first such
period in any Fiscal Year beginning on the first day of September and the last
such period in any Fiscal Year ending on the last day of August.
"Fiscal Year" means twelve (12) month period beginning on the first day
of September and ending on the last day of August of the following year.
"Florida Psychiatric Mergers" has the meaning specified in the Recitals
to this Agreement.
"FPM" has the meaning specified in the Recitals to this Agreement.
"FPM Mergers" has the meaning specified in the Recitals to this
Agreement.
"FPMBH" has the meaning specified in the Recitals to this Agreement.
"FPMI" has the meaning specified in the Recitals to this Agreement.
"FPMBH Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"FPPS" has the meaning specified in the Recitals to this Agreement.
"FPPS Merger" has the meaning specified in the Recitals to this
Agreement.
"Fund" has the meaning specified in Section 14.8.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
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Accountants and/or in statements of the Financial Accounting Standards Board
and/or their respective successors and which are applicable in the circumstances
as of the date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles applied in a current period are comparable
in all material respects to those accounting principles applied in a preceding
period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning. The amount of any Guarantee shall be equal to
the amount of the obligations so guaranteed or otherwise supported or, if not a
fixed and determined amount, the maximum amount so guaranteed.
"Guaranty" has the meaning specified in the Recitals to this Agreement.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"HBS CA" has the meaning specified in the Recitals to this Agreement.
"HBS CO" has the meaning specified in the Recitals to this Agreement.
"HBS FL" has the meaning specified in the Recitals to this Agreement.
"HBS IPA" has the meaning specified in the Recitals to this Agreement.
"HBS NJ" has the meaning specified in the Recitals to this Agreement.
"HBS NY" has the meaning specified in the Recitals to this Agreement.
"HMHM" has the meaning specified in the Recitals to this Agreement.
"Increased Commitment Supplement" means a supplement to this Agreement
substantially in the form attached hereto as Exhibit D, executed and delivered
by Borrower, Agent and one or more of the Banks and/or any New Banks, which sets
forth the increase in the Revolving Commitment of each Bank party thereto, and
to the extent that there are New Banks, the agreement of each such New Bank to
become a Bank party to and bound by this Agreement and the other Loan Documents.
"Indebtedness" has the meaning specified in Section 11.2.
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"Indebtedness to Adjusted EBITDA Ratio" means the ratio of Indebtedness
to Adjusted EBITDA as determined and calculated in accordance with Section 11.4.
"Insignificant Subsidiary" means HBS CA and FPM.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as Borrower
may select as provided in Section 4.5 or 5.3, except that each such Interest
Period which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (a) each Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or if such succeeding Business Day falls in
the next succeeding calendar month, on the next preceding Business Day); (b) any
Interest Period in existence under a Loan which would otherwise extend beyond
the Termination Date applicable to such Loan shall end on the Termination Date
applicable to such Loan; (c) no more than six (6) Interest Periods shall be in
effect at the same time; (d) no Interest Period for any Eurodollar Account shall
have a duration of less than one (1) month and, if the Interest Period would
otherwise be a shorter period, the related Eurodollar Account shall not be
available hereunder; and (e) after the Revolving Termination Date, no Interest
Period may extend beyond a principal repayment date unless after giving effect
thereto, the aggregate principal amount of the loans subject to Eurodollar
Accounts having Interest Periods that end after such principal payment date
shall be equal to or less than the aggregate principal amount of such loan to be
outstanding hereunder after such principal payment date.
"Issuing Bank" means JPMorgan Chase Bank, in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.7(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term "Issuing Bank" shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time, plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Bank at any time shall be
its Commitment Percentage of the total LC Exposure at such time.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement and any letter of credit issued under the Existing Credit Agreement
and outstanding on the Closing Date.
"Letter of Credit Notice" has the meaning set forth in Section 2.7(b).
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
"Loan Change Notice" has the meaning set forth in Section 5.3.
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"Loan Documents" means this Agreement, the Original Credit Agreement,
the Existing Credit Agreement, the Letters of Credit, the Revolving Notes, the
Parent Security Agreement, the Parent Pledge Agreement, the Guaranty, the
Subsidiary Security Agreement, the Subsidiary Pledge Agreements, and all other
promissory notes, security agreements, deeds of trust, assignments, guaranties,
letters of credit, applications and agreements for Letters of Credit, and other
instruments, agreements, and other documentation executed and delivered pursuant
to or in connection with this Agreement, as such instruments, agreements, and
other documentation may be amended or otherwise modified.
"Loans" means, as to any Bank, the advances made by such Bank pursuant
to Section 2.1 and the loans outstanding under the Existing Credit Agreement as
of the Closing Date, which are not being repaid but are being continued as
"Loans" hereunder.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of Parent and the Subsidiaries taken as a whole or (b) a material
adverse effect on the validity, perfection, priority, or ability of Agent to
enforce Agent's Lien on the Collateral or of the ability of Agent or any Bank to
enforce a material provision of the Loan Documents. In determining whether any
individual event could reasonably be expected to result in a Material Adverse
Effect, notwithstanding that such event does not itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events could reasonably be
expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of non- usurious interest under applicable law that such Bank may
charge Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to Borrower at the time of such change in the
Maximum Rate. For purposes of determining the Maximum Rate under Texas law, the
applicable rate ceiling shall be the weekly ceiling described in, and computed
in accordance with Chapter 303 of the Texas Finance Code.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by Parent or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Proceeds" has the meaning specified in Section 5.4(b).
"New Banks" has the meaning specified in Section 2.6(b).
"Obligated Party" means Parent, the Subsidiaries who are parties to the
Guaranty, the Subsidiary Security Agreement or a Subsidiary Pledge Agreement or
any other Person (exclusive of Borrower) who is or becomes party to any
agreement that guarantees or secures payment and performance of the Obligations
or any part thereof. Not all Subsidiaries are Obligated Parties. AHG
Partnership, HBS CA, and FPM are the only Subsidiaries of Parent that are not
Obligated Parties. As of the Closing Date, the Subsidiaries who are Obligated
Parties are listed on the Obligated Party Consent attached hereto.
"Obligation" means all obligations, indebtedness, and liabilities of
Borrower to Agent, the Issuing Bank, and the Banks, or any of them, arising
pursuant to any of the Loan Documents, pursuant to any interest rate swap,
interest rate caps, interest rate collars, or other similar agreements entered
into by
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
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Agent, the Issuing Bank, or any Bank with Parent or any Subsidiary enabling
Parent or a Subsidiary to fix or limit its interest expense, whether now
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligation of Borrower to repay the
Loans, the LC Disbursements, interest on the Loans and LC Disbursements, and all
fees, costs, and expenses (including attorneys' fees and expenses) provided for
in the Loan Documents or such agreements enabling Parent or any Subsidiary to
fix or limit its interest expense.
"OHCA" has the meaning specified in the Recitals to this Agreement.
"OHCA Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"Original Credit Agreement" has the meaning specified in the Recitals
to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Parent" has the meaning specified in the introductory paragraph of
this Agreement.
"Parent Joinder Agreement" means the Parent Joinder Agreement executed
on November 15, 2000, and substantially in the format of Exhibit "D" to the
Existing Credit Agreement.
"Parent Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"Parent Security Agreement" has the meaning specified in the Recitals
to this Agreement.
"Permitted Acquisition" means an acquisition of a Person or its assets
in a transaction complying with the conditions set out in Section 10.5(a).
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan established or maintained by
Parent or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Principal Office" means the principal office of Agent, located at 1
Chase Manhattan Plaza, 8th Floor, New York, New York 10081.
"Prohibited Transaction" means any transaction set forth in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not exist
a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of May, August, November,
and February of each year, the first of which shall be August 31, 2002.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank or the Issuing
Bank, any change after the date of the Existing Credit Agreement in United
States federal, state, or foreign laws or regulations (including Regulation D)
or the adoption or making after such date of any interpretations, directives, or
requests applying to a class of banks including such Bank or the Issuing Bank of
or under any United
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
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States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Required Banks" means Banks having (a) sixty-six and two-thirds
percent (66 2/3%) or more of the Revolving Commitments or (b) if all Revolving
Commitments have terminated, sixty-six and two- thirds percent (66 2/3%) or more
of the sum of the total Revolving Exposures.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding One Billion Dollars
against "Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined or any
category of extensions of credit or other assets which include Eurodollar
Accounts.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds and to acquire participations in Letters of
Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Bank's Revolving Exposure hereunder, as such commitment may be
reduced, terminated, or increased pursuant to Sections 2.6, 5.4(b) , or 12.2.
The initial amount of each Bank's Revolving Commitment is set forth opposite the
name of such Bank on Schedule 1.1(a) hereto under the heading "Revolving
Commitment" or in the most recent Assignment and Acceptance or Increased
Commitment Supplement executed by such Bank pursuant to which such Bank shall
have assumed its Revolving Commitment, as applicable. The aggregate amount of
the Revolving Commitments of all Banks as of the Closing Date equal Thirty
Million Dollars ($30,000,000).
"Revolving Exposure" shall mean, with respect to any Bank at any time,
the sum of the outstanding principal amount of such Bank's Loans and its LC
Exposure (or, if determined with respect to a Bank who is the Issuing Bank, its
direct interests in outstanding Letters of Credit minus all other Banks'
participation interests therein whether or not notice of any such participation
shall have been given).
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means May 31, 2005 or such earlier date on
which the Revolving Commitments terminate as provided in this Agreement.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 15
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"Security Documents" means each of the Parent Pledge Agreement, the
Parent Security Agreement, the Subsidiary Pledge Agreements, the Subsidiary
Security Agreement, and all amendments and modifications thereto.
"Second Amendment" has the meaning specified in the Recitals to this
Agreement.
"Set Facility Amount" has the meaning specified in Section 2.6(c).
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by Parent
or one or more of the Subsidiaries or by Parent and one or more of the
Subsidiaries.
"Subsidiary Joinder Agreement" means an agreement which has been or
will be executed by a Subsidiary as required hereby adding it as a party to the
Guaranty and the Subsidiary Security Agreement, in substantially the form of
Exhibit "H" to the Original Credit Agreement, as the same may be amended or
otherwise modified.
"Subsidiary Pledge Agreements" means each of the pledge and security
agreements between a Subsidiary and the Agent for the benefit of itself and the
Banks, in substantially the form of Exhibit "F" to the Original Credit
Agreement, as the same may be amended or otherwise modified, and includes as of
the Closing Date each of the following:
(a) the Borrower Pledge Agreement;
(b) the FPMBH Pledge Agreement;
(c) the Texas Pledge Agreement; and
(d) the OHCA Pledge Agreement.
"Subsidiary Security Agreement" has the meaning specified in the
Recitals.
"Target" means the Person who is to be acquired or whose assets are to
be acquired in an acquisition governed by Section 10.5.
"Term Loan Amount" has the meaning specified in Section 2.3.
"Termination Date" means May 31, 2007.
"Texas Pledge Agreement" has the meaning specified in the Recitals to
this Agreement.
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Texas.
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Section 1.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder", and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unle ss otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 8.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 8.2 hereof. To enable the ready and consistent
determination of compliance by Parent with its obligations under this Agreement,
Parent will not change the manner in which either the last day of its Fiscal
Year or the last days of the first three Fiscal Quarters of its Fiscal Year is
calculated. In the event any changes in accounting principles required by GAAP
or recommended by Parent's certified public accountants and implemented by
Parent occur and such changes result in a change in the method of the
calculation of financial covenants, standards, or terms under this Agreement,
then Parent, Borrower, Agent, and the Banks agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
changes with the desired result that the criteria for evaluating such covenants,
standards, or terms shall be the same after such changes as if such changes had
not been made. Until such time as such an amendment shall have been executed and
delivered by Parent, Agent, Borrower, and the Banks, all financial covenants,
standards, and terms in this Agreement shall continue to be calculated or
construed as if such changes had not occurred.
Section 1.4. Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to Dallas, Texas time.
ARTICLE II.
Revolving Credit Facility and Letters of Credit
Section 2.1. Revolving Commitments. Subject to the terms and conditions
of this Agreement, each Bank severally agrees to make one or more advances to
Borrower from time to time from and including the Closing Date to but excluding
the Revolving Termination Date; provided that such Bank's Revolving Exposure
shall not exceed the amount of such Bank's Revolving Commitment as then in
effect. Subject to the foregoing limitations, and the other terms and provisions
of this Agreement, Borrower may borrow, prepay, and reborrow hereunder the
amount of the Revolving Commitments and may establish Base Rate Accounts and
Eurodollar Accounts thereunder and, until the Termination Date, Borrower may
Continue Eurodollar Accounts established under the Loans or Convert Accounts
established under the Loans of one Type into Accounts of the other Type.
Accounts of each Type under the Loan made by each Bank shall be established and
maintained at such Bank's Applicable Lending Office for Loans of such Type.
Section 2.2. Revolving Notes. The Loans made by each Bank shall be
evidenced by a single promissory note of Borrower in substantially the form of
Exhibit A hereto, payable to the order of such Bank in a principal amount equal
to its Revolving Commitment and otherwise duly completed.
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Section 2.3. Repayment of Loans. Borrower shall pay to Agent for the
account of the Banks the Loans which are outstanding on June 1, 2005 (the amount
of such Loans herein on such date the "Term Loan Amount") in eight (8) principal
installments as follows: (a) seven (7) installments each in the principal amount
equal to ten percent (10%) of the Term Loan Amount, each due and payable on each
Quarterly Payment Date, beginning on August 31, 2005 through February 28, 2007;
and thereafter (b) one final installment in the aggregate amount equal to the
Loans outstanding as of the Termination Date, due and payable on the Termination
Date.
Section 2.4. Revolving Commitment Fee. Borrower agrees to pay to Agent
for the account of each Bank a commitment fee on the daily average unused amount
of such Bank's Revolving Commitment for the period from and including the
Closing Date to but excluding the Revolving Termination Date, at a rate per
annum equal to one-half of one percent (0.50%). Accrued commitment fees under
this Section 2.4 shall be payable in arrears on each Quarterly Payment Date and
on the Revolving Termination Date. For the purpose of calculating the commitment
fee hereunder, the Revolving Commitments shall be deemed utilized by all
outstanding Loans and Letters of Credit.
Section 2.5. Use of Proceeds. The proceeds of the Loans shall be used
by Borrower for ongoing working capital needs and other general corporate
purposes, including, without limitation, to finance the purchase price of
Permitted Acquisitions and making loans to its Parent and Subsidiaries in
accordance with Sections 10.4 and 10.5.
Section 2.6. Reduction, Termination, and Increase of Revolving
Commitments.
(a) Voluntary Reductions or Terminations of Revolving
Commitments. At any time and from time to time from and including the Closing
Date to but excluding the Revolving Termination Date, Borrower shall have the
right to terminate or reduce in part the unused portion of the Revolving
Commitments, provided that: (i) Borrower shall give notice of each such
termination or reduction as provided in Section 5.3; and (ii) each partial
reduction shall be in an aggregate amount at least equal to Three Million
Dollars ($3,000,000). The Revolving Commitments may not be reinstated after they
have been terminated or reduced. Any reduction or termination of the Revolving
Commitments shall be accompanied by any payment required under Section
5.4(b)(i).
(b) Increase of Revolving Commitments. From and including the
Closing Date to but excluding May 31, 2004, Borrower may increase the aggregate
amount of the Revolving Commitments by an aggregate amount: (i) equal to any
integral multiple of $5,000,000 and not less than $5,000,000 and (ii) not to
exceed the sum of $20,000,000 less the aggregate amount of all reductions to the
Revolving Commitments under Section 5.4(b)(ii); provided, that (i) no Default
shall have occurred and be continuing on the effective date of the increase;
(ii) the Revolving Commitments shall not have been reduced under this Section
2.6, nor shall Borrower have given notice of any such reduction under Section
2.6(a), (iii) the Revolving Commitments shall not previously have been increased
pursuant to this Section 2.6(b) on more than four (4) occasions, and (iv) no
Bank shall have any obligation to increase its Revolving Commitment unless it is
a party to an Increased Commitment Supplement. The increase in the Revolving
Commitments under this Section 2.6(b) may be accomplished by one or more of the
Banks increasing their respective Revolving Commitments or by one or more
Persons being added as "Banks" hereunder (each a "New Bank") or by a combination
of the foregoing; provided, that the Revolving Commitment of each New Bank shall
be at least $5,000,000 and the maximum number of New Banks shall be four (4).
Provided that no Default exists at such time or after giving effect to the
increase, an increase in the Revolving Commitments made in accordance with this
Section 2.6(b) shall become effective on the date Agent receives a properly
completed Increased Commitment Supplement executed by Borrower and the Banks
willing to increase their respective Revolving Commitments and the New Banks (if
any). Agent shall promptly execute any Increased Commitment Supplement so
delivered in
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accordance with this Section 2.6(b) and deliver a copy thereof to the other
Banks. Upon the effective date of the Increased Commitment Supplement, if all
existing Banks shall not have provided their pro rata portion of the requested
increase and Loans are outstanding, Borrower shall request a borrowing hereunder
which shall be made only by the Banks who have increased their Revolving
Commitment and, if applicable, the New Banks, and the proceeds of such borrowing
shall be utilized by Borrower to repay the Banks who did not agree to increase
their Revolving Commitments, such borrowing and repayments to be in amounts
sufficient so that after giving effect thereto, the Loans shall be held by the
Banks pro rata according to their respective Revolving Commitments.
(c) Mandatory Reductions of Revolving Commitments. The
aggregate amount of the Revolving Commitments will be reduced as follows: (i) on
August 31, 2004, the aggregate amount of the Revolving Commitments shall be
decreased to an amount equal to ninety-five percent (95%) of the aggregate
amount of the Revolving Commitments in effect on May 31, 2004 (such aggregate
amount in effect on May 31, 2004 herein the "Set Facility Amount"); (ii) on
November 30, 2004, the aggregate amount of the Revolving Commitments shall be
decreased to an amount equal to ninety percent (90%) of the Set Facility Amount;
(iii) on February 28, 2005, the aggregate amount of the Revolving Commitments
shall be decreased to an amount equal to eighty-five percent (85%) of the Set
Facility Amount; and (iv) on May 31, 2005, the aggregate amount of the Revolving
Commitments shall be decreased to an amount equal to eighty percent (80%) of the
Set Facility Amount
Section 2.7. Letters of Credit.
(a) General. Subject to the terms and conditions set forth
herein, Borrower may request the issuance of Letters of Credit for its own
account or for any of the Obligated Parties' benefit, in the form of a Letter of
Credit Notice, at any time and from time to time from the Closing Date to but
excluding the Revolving Termination Date. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by
Borrower to, or entered into by Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), Borrower shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and
Agent (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) irrevocable written notice, in the form attached hereto as
Exhibit F (a "Letter of Credit Notice"), requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with clause (c) of this Section), the amount of such Letter
of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, Borrower also shall submit a letter
of credit application on the Issuing Bank's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the LC Exposure shall not exceed $3,000,000 and (ii) the sum of the total
Revolving Exposures shall not exceed the aggregate amount of the Revolving
Commitments.
(c) Expiration Date. Each Letter of Credit shall expire (i) on
the date approved by the Issuing Bank which approval shall be evidenced by the
issuance of such Letter of Credit or (ii) at or
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prior to the close of business on the earlier of (A) the date one year after the
date of issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (B) the date
that is five Business Days prior to the Revolving Termination Date.
(d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Banks, the Issuing
Bank hereby grants to each Bank, and each Bank hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Bank's Commitment
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Bank hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Bank, such Bank's Commitment Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by Borrower on the date due as provided in
clause (e) of this Section, or of any reimbursement payment required to be
refunded to Borrower for any reason. Each Bank acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, Borrower shall reimburse such LC
Disbursement by paying to Agent an amount equal to such LC Disbursement not
later than 1:00 P.M. on the date that such LC Disbursement is made, if Borrower
shall have received notice of such LC Disbursement prior to 10:00 A.M. on such
date, or, if such notice has not been received by Borrower prior to such time on
such date, then not later than 1:00 P.M. on the Business Day immediately
following the day that Borrower receives such notice; provided that Borrower may
prior to the Revolving Termination Date, subject to the conditions to borrowing
set forth herein, request in accordance with Section 5.3 that such payment be
financed with a Loan subject to Base Rate Accounts in an equivalent amount and,
to the extent so financed, Borrower's obligation to make such payment shall be
discharged and replaced by the resulting Loan subject to Base Rate Accounts. If
Borrower fails to make such payment when due, Agent shall notify each Bank of
the applicable LC Disbursement, the payment then due from Borrower in respect
thereof and such Bank's Commitment Percentage thereof. Promptly following
receipt of such notice, each Bank shall pay to Agent its Commitment Percentage
of the payment then due from Borrower, in the same manner as provided in Section
5.1 with respect to Loans made by such Bank (and Section 5.1 shall apply,
mutatis mutandis, to the payment obligations of the Banks), and Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Banks.
Promptly following receipt by Agent of any payment from Borrower pursuant to
this paragraph, Agent shall distribute such payment to the Issuing Bank or, to
the extent that the Banks have made payments pursuant to this paragraph to
reimburse the Issuing Bank, then to such Banks and the Issuing Bank as their
interests may appear. Any payment made by a Bank pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
Loans subject to a Base Rate Account as contemplated above) shall not constitute
a Loan and shall not relieve Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. Borrower's obligation to reimburse
LC Disbursements as provided in clause (e) of this Section shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent, or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 20
<PAGE>
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Article, constitute a
legal or equitable discharge of, or provide a right of setoff against,
Borrower's obligations hereunder. Neither Agent, the Banks nor the Issuing Bank,
nor any Person related thereto, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to Borrower to the extent of
any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Borrower to the extent permitted by applicable law)
suffered by Borrower that are caused by the Issuing Bank's failure to exercise
care when determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof. The parties hereto expressly
agree that, in the absence of gross negligence or willful misconduct on the part
of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify Agent and Borrower by telephone (confirmed by telecopy) of such demand
for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve Borrower of its obligation to reimburse the
Issuing Bank and the Banks with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full
on the date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that Borrower reimburses such LC Disbursement, at the
rate per annum equal to the Base Rate plus the Base Margin; provided that, if
Borrower fails to reimburse such LC Disbursement when due pursuant to clause (e)
of this Section, then Section 4.4 shall apply. Interest accrued pursuant to this
Section shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Bank pursuant to clause (e) of
this Section to reimburse the Issuing Bank shall be for the account of such Bank
to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among Borrower, Agent, the replaced
Issuing Bank and the successor Issuing Bank. Agent shall notify the Banks of any
such replacement of the Issuing Bank. At the time any such replacement shall
become effective, Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to clause (k) of this Section. From and after
the effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of the Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term "Issuing Bank" shall be deemed to refer to such successor or
to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have
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all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that Borrower receives notice from
Agent or the Required Banks demanding the deposit of cash collateral pursuant to
this paragraph or if Borrower is otherwise required to provide cash collateral
for LC Exposures under Section 5.4 or otherwise, Borrower shall deposit in an
account with Agent, in the name of Agent and for the benefit of the Banks, to be
held by Agent as collateral for the payment and performance of the obligations
of Borrower under this Agreement, an amount in cash equal to the LC Exposure as
of such date plus any accrued and unpaid letter of credit fees relating thereto;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to Borrower described in clause (e) or (f) of
Section 12.1 or on the Revolving Termination Date if any Letter of Credit has an
expiration date beyond the Revolving Termination Date. Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion of
Agent and at Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of Borrower for the LC Exposure at such time or, if
the maturity of the Loans has been accelerated (but subject to the consent of
the Banks with LC Exposure representing greater than 66 2/3% of the total LC
Exposure), be applied to satisfy other obligations of Borrower under this
Agreement. If Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to Borrower within three
Business Days after all Events of Default have been cured or waived.
(k) Fees. Borrower agrees to pay (i) to the Agent for the
account of each Bank a participation fee with respect to its participations in
Letters of Credit, which shall accrue on the average daily amount of such Bank's
LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements), during the period from and including the Closing Date to but
excluding the later of the date on which such Bank's Revolving Commitment
terminates and the date on which such Bank ceases to have any LC Exposure, at a
rate per annum equal to the Eurodollar Rate Margin in effect from time to time
pursuant to Section 4.2, and (ii) to the Issuing Bank a fronting fee, which
shall accrue on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements), during the
period from and including the Closing Date to but excluding the later of the
date of termination of the Issuing Bank's commitments to issue Letters of Credit
and the date on which there ceases to be any LC Exposure, at the rate or rates
per annum separately agreed upon between the Borrower and the Issuing Bank, as
well as the Issuing Bank's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Accrued participation fees and fronting fees shall be due
and payable on the third Business Day following each Quarterly Payment Date;
provided that all such fees shall be payable on the Revolving Termination Date
and any such fees accruing after the Revolving Termination Date shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). None of the Banks are entitled to any portion of the
fronting fee.
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ARTICLE III.
Master Assignment
Section 3.1. Assignment. Chase hereby sells and assigns to Bank of
America, National Association ("Added Bank") without recourse, representation,
or warranty except as specifically set forth herein, and Added Bank hereby
purchases and assumes from Chase, Added Bank's Pro-Rata Interest in and to all
of Chase's rights and obligations under the Existing Credit Agreement and the
other Loan Documents as of the Effective Date (including, without limitation,
such Pro-Rata Interest in the Revolving Commitments of Chase under the Existing
Credit Agreement on the Effective Date and such Pro-Rata Interest in the
Revolving Exposure under the Existing Credit Agreement as of the Effective Date,
together with such Pro-Rata Interest in all unpaid interest and fees accrued
from the Effective Date) (the "Assignments"). The term "Pro-Rata Interest"
means, with respect to Added Bank, the percentage interest specified on Schedule
1.1(b) hereto opposite Added Bank's name in the column entitled "Pro-Rata
Interest".
Section 3.2. Chase Representations and Disclosures. Chase (a)
represents to Added Bank that as of the Effective Date, Chase's Revolving
Commitment under the Existing Credit Agreement is equal to $15,000,000, the
outstanding principal balance of Chase's Loans is $0.00, Chase's LC Exposure is
$1,000,000 (all as unreduced by any assignments which have not yet become
effective), (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Existing Credit Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Existing Credit Agreement or any other Loan
Document, other than that it is legally authorized to enter into this Agreement,
it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim, and (c)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of Borrower or any Obligated Party or the performance
or observance by Borrower or any Obligated Party of any of their obligations
under the Existing Credit Agreement or any other Loan Document.
Section 3.3. Added Bank Representations and Agreements. Added Bank (a)
represents and warrants to Chase that it is legally authorized to enter into
this Agreement, (b) confirms that it has received a copy of the Existing Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 9.1 thereof, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement, (c) agrees that it will, independently
and without reliance upon Agent, Chase, or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Agreement
and the other Loan Documents, (d) confirms that, upon the approval of Agent and
Borrower, it is an Eligible Assignee, (e) appoints and authorizes Agent to take
such action on its behalf and to exercise such powers under the Loan Documents
as are delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (f) agrees that it will perform in accordance
with their terms all obligations which by the terms of the Agreement and the
other Loan Documents are required to be performed by it as a Bank, and (g) , if
it is organized under the laws of a jurisdiction outside of the United States of
America, agrees to provide Agent the forms prescribed by the Internal Revenue
Service of the United States of America certifying as to its exemption from
United States of America withholding taxes with respect to all payments to be
made to it under the Agreement or such other Loan Documents as are necessary to
indicate that all such payments are subject to such tax at a rate reduced by an
applicable tax treaty.
Section 3.4. Effectiveness of the Assignments. Chase's Assignment to
Added Bank set forth in Section 3.1 shall be effective on the Closing Date
immediately prior to the effectiveness of this
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Agreement; provided, that Chase shall have received the purchase price for the
Assignment from Added Bank in the amount specified opposite Added Bank's name on
Schedule 1.1(b) hereto in the column entitled "Purchase Price" (the "Effective
Date"). By execution below, Borrower and Agent accept this Agreement and the
Assignments for purposes of Section 14.8 of the Existing Credit Agreement and
approve Added Bank as an Eligible Assignee. From and after the Effective Date,
(a) Added Bank shall be a party to this Agreement and shall have the rights and
obligations of a Bank hereunder and under the other Loan Documents, (b) Chase
shall, to the extent of the Assignments provided in this Article IV, relinquish
its rights and be released from its obligations under the Existing Credit
Agreement and the other Loan Documents, and (c) Agent shall make all payments in
respect of the interest assigned hereby (including payments of principal,
interest, fees, and other amounts) to Added Bank. Chase and Added Bank shall
make all appropriate adjustments in payments under the Existing Credit Agreement
and the Revolving Notes for periods prior to the Closing Date directly between
themselves.
Section 3.5. Exchange of Revolving Notes; New Revolving Commitments.
Borrower agrees to exchange Chase's existing Revolving Notes for new Revolving
Notes payable to the order of (a) Added Bank in amounts equal to the Revolving
Commitments of Added Bank on Schedule 1.1(a) hereto and (b) Chase in amounts
equal to the Revolving Commitments of Chase on Schedule 1.1(a) hereto. The
Revolving Commitments of each Bank after giving effect to the Assignments and
prior to giving effect to the terms of this Agreement are set forth on Schedule
1.1(b) hereto.
Section 3.6. Address for Notices. For purposes of Section 14.13 of this
Agreement, the "Address for Notices" for Added Bank is as set forth below its
name on the signature pages hereof.
ARTICLE IV.
Interest and Fees
Section 4.1. Interest Rate. Subject to Section 14.12, Borrower shall
pay to Agent for the account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank for the period commencing on the date of
such Loan to but excluding the date such Loan is due, at a fluctuating rate per
annum equal to the Applicable Rate. The term "Applicable Rate" means (i) during
the period that such Loans or portions thereof are subject to a Base Rate
Account, the Base Rate plus the Base Margin and (ii) during the period that such
Loans or portions thereof are subject to a Eurodollar Account, the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin.
Section 4.2. Determinations of Margins. The margins identified in
Section 4.1 shall be defined and determined as follows:
(a) "Base Margin" shall mean (i) during the period commencing
on the Closing Date and ending on but not including the first Adjustment Date
(as defined below), one-half of one percent (0.50%) per annum and (ii) during
each period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a "Calculation Period"), the percent per annum set forth
in the table below in this Section 4.2 under the heading "Base Margin" opposite
the Indebtedness to Adjusted EBITDA Ratio which corresponds to the Indebtedness
to Adjusted EBITDA Ratio set forth in, and as calculated in accordance with, the
applicable Compliance Certificate.
(b) "Eurodollar Rate Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date, two percent (2.00%) per annum and (ii) during each Calculation
Period, the percent per annum set forth in the table below under the heading
Eurodollar Rate Margin opposite the Indebtedness to Adjusted EBITDA Ratio which
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 24
<PAGE>
corresponds to the Indebtedness to Adjusted EBITDA Ratio set forth in, and as
calculated in accordance with, the applicable Compliance Certificate.
<Table>
<Caption>
Indebtedness to Adjusted EBITDA Ratio Eurodollar Rate Margin Base Margin
------------------------------------- ---------------------- -----------
<S> <C> <C>
Greater than or equal to 2.00 to 1.00 2.75% 1.25%
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00 2.50% 1.00%
Greater than or equal to 1.00 but less than 1.50 to 1.00 2.25% 0.75%
Less than 1.00 to 1.00 2.00% 0.50%
</Table>
Upon delivery of the Compliance Certificate pursuant to subsection 9.1(c) in
connection with the financial statements of Parent and the Subsidiaries required
to be delivered pursuant to Section 9.1(b) at the end of each Fiscal Quarter
commencing with such Compliance Certificate delivered with respect to the Fiscal
Quarter ending on August 31, 2002, the Base Margin and the Eurodollar Rate
Margin (for Interest Periods commencing after the applicable Adjustment Date)
shall automatically be adjusted in accordance with the Indebtedness to Adjusted
EBITDA Ratio set forth therein and the table set forth above, such automatic
adjustment to take effect as of the first Business Day after the receipt by
Agent of the related Compliance Certificate pursuant to Section 9.1(c) (each
such Business Day when such margins change pursuant to this sentence or the next
following sentence, herein an "Adjustment Date"). If Parent fails to deliver
such Compliance Certificate which so sets forth the Indebtedness to Adjusted
EBITDA Ratio within the period of time required by subsection 9.1(c): (i) the
Base Margin shall automatically be adjusted to one and one-quarter percent
(1.25%) per annum and (ii) the Eurodollar Rate Margin (for Interest Periods
commencing after the applicable Adjustment Date) shall automatically be adjusted
to two and three-quarters percent (2.75%) per annum, such automatic adjustments
to take effect as of the first Business Day after the last day on which Parent
was required to deliver the applicable Compliance Certificate in accordance with
Section 9.1(c) and to remain in effect until subsequently adjusted in accordance
herewith upon the delivery of a Compliance Certificate.
Section 4.3. Payment Dates. Accrued interest on the Loans shall be due
and payable as follows: (i) in the case of Loans subject to Base Rate Accounts,
on each Quarterly Payment Date and on the Termination Date; and (ii) in the case
of Loans subject to Eurodollar Accounts and with respect to each such Account,
on the last day of such Interest Period, the Termination Date and, if such
Interest Period is six (6) months long, on the date ninety (90) days from the
start of such Interest Period.
Section 4.4. Default Interest. Notwithstanding the foregoing, Borrower
will pay to Agent for the account of each Bank interest at the applicable
Default Rate on any principal of any Loan made by such Bank, and (to the fullest
extent permitted by law) any other amount payable by Borrower under any Loan
Document to or for the account of Agent or such Bank, that is not paid in full
when due (whether at stated maturity, by acceleration, or otherwise), for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Interest payable at the Default Rate shall be payable from
time to time on demand and if not sooner demanded, on each Quarterly Payment
Date.
Section 4.5. Conversions and Continuations of Accounts. Subject to
Section 5.2, Borrower shall have the right from time to time to Convert all or
part of any Base Rate Account in existence under a Loan into a Eurodollar
Account under the same Loan or to Continue Eurodollar Accounts in existence
under a Loan as Eurodollar Accounts under the same Loan, provided that: (a)
Borrower shall give Agent notice of each such Conversion or Continuation as
provided in Section 5.3; (b) a Eurodollar Account may only be Converted on the
last day of the Interest Period therefor; and (c) except for Conversions into
Base
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 25
<PAGE>
Rate Accounts, no Conversions or Continuations shall be made while a Default has
occurred and is continuing.
Section 4.6. Computations. Interest and fees payable by Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Eurodollar Accounts on the basis of a year of 360 days and the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which payable unless such calculation would
result in a usurious rate, in which case interest shall be calculated on the
basis of a year of 365 or 366 days, as the case may be; (ii) with respect to
Base Rate Accounts (A) if based on the Prime Rate, on the basis of a year of 365
or 366 days, as the case may be and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable or (B) if based on the Federal Funds Effective Rate on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable unless in
the case of clauses (i) or (ii) (B) such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
ARTICLE V.
Administrative Matters
Section 5.1. Borrowing Procedure. Borrower shall give Agent, and Agent
will give the Banks, notice of each borrowing under the Revolving Commitments in
accordance with Section 5.3. Not later than 1:00 P.M. on the date specified for
each such borrowing each Bank will make available to Agent the amount of the
Loan to be made by it on such date, at the Principal Office, in immediately
available funds, for the account of Borrower. The amount so received by Agent
shall, subject to the terms and conditions of this Agreement, be made available
to Borrower by (a) depositing the same, in immediately available funds, in an
account of Borrower (designated by Borrower) maintained with Agent at the
Principal Office or (b) wire transferring such funds to a Person or Persons
designated by Borrower in writing; provided that Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.7(e) shall be
remitted by Agent to the Issuing Bank.
Section 5.2. Minimum Amounts. Except for prepayments pursuant to
Article VI and financings of reimbursements of LC Disbursements as contemplated
by Section 2.7(e), each borrowing under a Loan and each prepayment of principal
of a Loan shall be in an amount at least equal to Five Hundred Thousand Dollars
($500,000) or any larger amounts in increments of One Hundred Thousand Dollars
($100,000). Except for Conversions pursuant to Article VI, each Eurodollar
Account applicable to a Loan shall be in a minimum principal amount of One
Million Dollars ($1,000,000) or any larger amounts in increments of One Hundred
Thousand Dollars ($100,000).
Section 5.3. Certain Notices. Each termination or reduction of
Revolving Commitments, borrowing and prepayment of Loans, and Conversion and
Continuation of Accounts shall be made upon Borrower's irrevocable written
notice delivered to Agent in the form attached hereto as Exhibit E (a "Loan
Change Notice") and shall be effective only if received by Agent not later than
10:00 A.M. (a) on the Business Day of the borrowing, prepayment or repayment of
Loans subject to Base Rate Accounts or of the Conversion into Base Rate Accounts
and (b) with respect to any other repayments, terminations, reductions,
borrowings, Conversions, Continuations, or prepayments, on the Business Day
which is the number of Business Days prior to the day of the relevant action
specified below:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 26
<PAGE>
<Table>
<Caption>
Number of Business
Action Days Prior to Action
------ --------------------
<S> <C>
Termination or reduction of Revolving Commitments
Borrowing of Loans subject to Eurodollar 5
Accounts, Conversions into or Continuations as
Eurodollar Accounts or prepayment of Loans
subject to Eurodollar Accounts 3
</Table>
Any Loan Change Notice which is received by Agent after 10:00 A.M. on a Business
Day shall deemed to be received and shall be effective on the next Business Day.
Each such Loan Change when providing notice of a termination or reduction shall
specify the amount of the Commitments to be terminated or reduced. Each such
Loan Change Notice when providing notice borrowing, Conversion, Continuation, or
prepayment shall specify: (a) the Loans to be borrowed prepaid or the Accounts
to be Converted or Continued; (b) the amount (subject to Section 5.2 hereof) be
borrowed, Converted, Continued, or prepaid; (c) in the case of a Conversion, the
Type of Account result from such Conversion; (d) in the case of a borrowing the
Type of Account or Accounts to applicable to such borrowing and the amounts
thereof; (e) in the event a Eurodollar Account is the duration of the Interest
Period therefor; and (f) the date of borrowing, Conversion, Continuation,
prepayment (which shall be a Business Day). Agent shall notify the Banks of the
contents of each Change Notice on the date of its receipt of the same or, if
received on or after 10:00 A.M. on a Day, on the next Business Day. In the event
Borrower fails to select the Type of Account applicable Loan, or the duration of
any Interest Period for any Eurodollar Account, within the time period otherwise
as provided in this Section 5.3, such Account (if outstanding as a Eurodollar
Account) will automatically Converted into a Base Rate Account on the last day
of the preceding Interest Period such Account or (if outstanding as a Base Rate
Account) will remain as, or (if not then outstanding) be made as, a Base Rate
Account. Borrower may not borrow any Loans subject to a Eurodollar Convert any
Base Rate Accounts into Eurodollar Accounts, or Continue any Eurodollar Account
Eurodollar Account if the Applicable Rate for such Eurodollar Accounts would
exceed the Rate or if a Default exists.
Section 5.4. Prepayments.
(a) Optional Prepayments. Subject to Section 5.2 and the
provisions of Section 5.4, Borrower may, at any time and from time to time
without premium or penalty upon notice to Agent as specified in Section 5.3,
prepay or repay any Loan in full or in part. Loans subject Eurodollar Account
may be prepaid or repaid only on the last day of the Interest Period applicable
unless (i) Borrower pays to Agent for the account of the applicable Banks any
amounts due Section 6.5 as a result of such prepayment or repayment or (ii)
after giving effect to such prepayment repayment the aggregate principal amount
of the Eurodollar Accounts applicable to the Loan prepaid or repaid having
Interest Periods that end after such payment date shall be equal to or less the
principal amount of such Loan after such prepayment or repayment.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 27
<PAGE>
(b) Mandatory Prepayments.
(i) Reduction of Revolving Commitment. On each date
that the Revolving Commitments are reduced pursuant to Section 2.6 or clause (b)
of this Section 5.4 prior to the Revolving Termination Date, Borrower shall
prepay the Loans in the amount, if any, by which the sum of the total Revolving
Exposure exceeds the total Revolving Commitments (as reduced) together with any
amounts due under Section 6.5 as a result of such prepayment or , if no Loans
are outstanding, deposit cash collateral in an account with Agent pursuant to
Section 2.7(j) in an amount equal to such excess.
(ii) Asset Dispositions. If the Net Proceeds relating
to any Asset Disposition exceed Two Hundred Fifty Thousand Dollars ($250,000)
(it being understood that if the Net Proceeds exceed Two Hundred Fifty Thousand
Dollars ($250,000), the entire Net Proceeds and not just the portion in excess
of the foregoing amount shall be subject to this subsection) for any single
transaction or series of related transactions or if such Net Proceeds when
aggregated with all other Net Proceeds from any Asset Disposition received
during the same Fiscal Year exceed Seven Hundred Fifty Thousand Dollars
($750,000), (it being understood that if the Net Proceeds exceed Seven Hundred
Fifty Thousand Dollars ($750,000), the entire Net Proceeds not just the portion
in excess of the foregoing amount shall be subject to this Subsection), then:
(A) if the Revolving Commitments are still in effect, then the aggregate amount
of the Revolving Commitments shall be automatically and permanently reduced by
such Net Proceeds, such reduction to be effective on the date five (5) days
after the receipt by Parent or any Subsidiary of such Net Proceeds; and (B)
Borrower shall within five (5) days of receipt of such Net Proceeds prepay the
Loans in an amount equal to such Net Proceeds or, if no Loans are outstanding
and if any Event of Default shall have occurred and be continuing, deposit cash
collateral in an account with Agent pursuant to Section 2.7(j) in an amount
equal to such Net Proceeds. A prepayment received pursuant to this Section
5.4(b)(ii) after the Revolving Termination Date shall be applied to the
installments due under Section 2.3 in the inverse order of maturity and shall be
accompanied with any amounts due under Section 6.5 as a result of such
prepayment. Notwithstanding the foregoing, (A) the aggregate amount of the
Revolving Commitments shall not be reduced and Parent or a Subsidiary may retain
proceeds otherwise required to be delivered in accordance with the foregoing
from an Asset Disposition if (1) no Default exists and (2) in the event the
Person disposing of the asset in question reasonably expects to reinvest or has
already reinvested, pursuant to a plan of which the Asset Disposition was a
contemplated part, all of the Net Proceeds of such Asset Disposition in
productive assets then used or useable in its business or, in the case of
proceeds received due to loss, damage, destruction, or condemnation, to be used
for rebuilding, repairing or replacing assets, in each case committed to such
use within ninety (90) days after receipt of such proceeds and (B) an Asset
Disposition not permitted by Section 10.8 is not permitted under this Section
5.4(b)(ii). For purposes of this subsection 5.4(b) the following terms shall
have the following meanings:
"Asset Disposition" means the disposition whether by sale,
lease, sale/leaseback, transfer, loss, damage, destruction,
condemnation or otherwise of any assets of the Parent or any Subsidiary
other than the sale of inventory in the ordinary course of business.
"Net Proceeds" means cash proceeds (including casualty
insurance proceeds paid with respect to damage to property) received by
Parent or any Subsidiaries from any Asset Disposition (including
payments under notes or other debt securities received in connection
with any Asset Disposition and insurance proceeds and awards of
condemnation), net of (a) the reasonable and customary costs of such
sale, lease, transfer, or other disposition (including reasonable and
customary professional fees and expenses and taxes attributable to such
sale, lease, or transfer which are actually expected to be paid) and
(b) amounts applied to repayment of Debt (other than the Obligations)
secured by a Lien on the asset disposed.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 28
<PAGE>
(iii) In the event and on each occasion, other than
as described in Section 5.4(b)(i) , that the sum of the total Revolving
Exposures exceeds the total Revolving Commitments, Borrower shall prepay the
Loans (or, if no Loans are outstanding, deposit cash collateral in an account
with Agent pursuant to Section 2.7(j)) in an amount equal to such excess.
Section 5.5. Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by
Borrower or any Obligated Party under the Loan Documents shall be made to Agent
at the Principal Office for the account of each Bank's Applicable Lending Office
in Dollars and in immediately available funds, without setoff, deduction, or
counterclaim, not later than 1:00 P.M. on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day). Borrower and each
Obligated Party shall, at the time of making each such payment, specify to Agent
the sums payable under the Loan Documents to which such payment is to be applied
(and in the event that Borrower fails to so specify, or if an Event of Default
has occurred and is continuing, Agent may apply such payment and any proceeds of
any Collateral to the Obligations in such order and manner as the Required Banks
may elect in their sole discretion, subject to Section 5.6 hereof). Each payment
received by Agent under any Loan Document for the account of a Bank shall be
paid to such Bank by 3:00 P.M. on the date the payment is deemed made to Agent
in immediately available funds, for the account of such Bank's Applicable
Lending Office. Whenever any payment under any Loan Document shall be stated to
be due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section 5.6. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Loan shall be made by the Banks, each payment of
commitment fees under Section 2.4 shall be made for the account of the Banks,
and each termination or reduction of the Revolving Commitments shall be applied
to the Revolving Commitments of the Banks, pro rata according to their
respective Commitment Percentages; (b) the making, Conversion, and Continuation
of Accounts of a particular Type (other than Conversions provided for by Section
6.4) shall be made pro rata among the Banks holding Accounts of such Type
according to their respective Commitment Percentages; (c) each payment and
prepayment of principal of or interest on Loans by Borrower shall be made to
Agent for the account of Agent or the Banks holding such Loans pro rata in
accordance with the respective unpaid principal amounts of such Loans or
participation interests held by Agent or such Banks; provided that as long as no
default in the payment of interest exists, payments of interest made when the
Banks are holding different types of accounts applicable to the same Loan as a
result of the application of Section 6.4 shall be made to the Banks in
accordance with the amount of interest actually owed to each; and (d) proceeds
of Collateral shall be shared by Agent and the Banks pro rata in accordance with
the respective unpaid principal amounts of and interest on the Obligations then
due Agent and the Banks. If at any time payment, in whole or in part, of any
amount distributed by Agent hereunder is rescinded or must otherwise be restored
or returned by Agent as a preference, fraudulent conveyance, or otherwise under
any bankruptcy, insolvency, or similar law, then each Person receiving any
portion of such amount agrees, upon demand, to return the portion of such amount
it has received to Agent.
Section 5.7. Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through Agent) through the exercise of any right of set-off,
banker's lien, counterclaim, or similar right, or otherwise, it shall promptly
purchase from the other Banks participations in the Obligations held by the
other Banks in such amounts, and make such other adjustments from time to time
as shall be equitable to the end that all the Banks shall share the benefit of
such payment pro rata in accordance with the unpaid principal of and interest on
the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 29
<PAGE>
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any Bank so purchasing a participation in the
Obligations held by the other Banks may exercise all rights of set-off, banker's
lien, counterclaim, or similar rights with respect to such participation as
fully as if such Bank were a direct holder of Obligations in the amount of such
participation. Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.
Section 5.8. Non-Receipt of Funds by Agent. Unless Agent shall have
been notified by a Bank or Borrower (the "Payor") prior to the date on which
such Bank is to make payment to Agent hereunder or Borrower is to make a payment
to Agent for the account of one or more of the Banks, as the case may be (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to Agent, Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to Agent, (a) the recipient of
such payment shall, on demand, pay to Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by Agent until the date Agent recovers such
amount at a rate per annum equal to the Federal Funds Effective Rate for such
period and (b) Agent shall be entitled to offset against any and all sums to be
paid to such recipient, the amount calculated in accordance with the foregoing
clause (a).
Section 5.9. Withholding Taxes. All payments by Borrower of amounts
payable under any Loan Document shall be payable without deduction for or on
account of any present or future taxes, duties, or other charges levied or
imposed by the United States of America or by the government of any jurisdiction
outside the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or measured by
the net income or profit of a Bank pursuant to the laws of the jurisdiction in
which it is organized or in which the principal office or Applicable Lending
Office of such Bank is located or any subdivision thereof or therein). If any
such taxes, duties, or other charges are so levied or imposed, Borrower will
make additional payments in such amounts so that every net payment of amounts
payable by it under any Loan Document, after withholding or deduction for or on
account of any such present or future taxes, duties, or other charges, will not
be less than the amount provided for herein or therein, provided that Borrower
may withhold to the extent required by law and shall have no obligation to pay
such additional amounts to any Bank to the extent that such taxes, duties, or
other charges are levied or imposed by reason of the failure or inability of
such Bank to comply with the provisions of Section 5.10. Borrower shall furnish
promptly to Agent for distribution to each affected Bank, as the case may be,
official receipts evidencing any such withholding or reduction.
Section 5.10. Withholding Tax Exemption. Each Bank that is not
organized under the laws of the United States of America or a state thereof
agrees that it will deliver to Borrower and Agent two duly completed copies of
the appropriate United States Internal Revenue Service Form certifying that such
Bank is entitled to receive payments from Borrower under any Loan Document
without deduction or withholding of any United States of America federal income
taxes. Each Bank which so delivers such a form further undertakes to deliver to
Borrower and Agent two (2) additional copies of such form on or before the date
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Borrower or Agent, in each case certifying that such Bank is
entitled to receive payments from Borrower under any Loan Document without
deduction or withholding of any United States of America federal income taxes,
unless an event (including without limitation any
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 30
<PAGE>
change in treaty, law, or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises Borrower and
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States of America federal income tax.
ARTICLE VI.
Yield Protection and Illegality
Section 6.1. Additional Costs.
(a) Borrower shall pay directly to each Bank or the Issuing
Bank, as the case may be, from time to time such amounts as such Bank or the
Issuing Bank may determine to be necessary to compensate it for any reasonable
costs incurred by such Bank or the Issuing Bank, as the case may be, which such
Bank or the Issuing Bank determines are attributable to its making or
maintaining of any Loans or Letters of Credit, as the case may be, subject to
Eurodollar Accounts hereunder or its obligation to make any of such Loans or
Letters of Credit hereunder, or any reduction in any amount receivable by such
Bank or the Issuing Bank hereunder in respect of any such Loans, such Letters of
Credit or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank or the Issuing Bank under this Agreement or its Revolving
Notes in respect of any of such Loans or Letters of Credit (other than franchise
taxes and taxes imposed on the overall net income of such Bank or the Issuing
Bank or its Applicable Lending Office for any of such Loans or Letters of Credit
by the United States of America or the jurisdiction in which such Bank or the
Issuing Bank has its Principal Office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, such Bank or the Issuing Bank, as the case may
be, (including any of such Loans or any deposits referred to in the definition
of "Eurodollar Rate" in Section 1.1 hereof); or
(iii) imposes any other condition affecting this
Agreement or the Revolving Notes or the Letters of Credit or any of such
extensions of credit or liabilities or commitments.
Each Bank and the Issuing Bank, as applicable, will notify Borrower (with a copy
to Agent) of any event occurring after the date of this Agreement which will
entitle such Bank or the Issuing Bank, as the case may be, to compensation
pursuant to this subsection 6.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and will
designate a different Applicable Lending Office for the Loans or Letters of
Credit, as the case may be, affected by such event if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole opinion of such Bank or the Issuing Bank, as the case may be, violate
any law, rule, or regulation or be in any way disadvantageous to such Bank or
the Issuing Bank. Each Bank and the Issuing Bank, as applicable, will furnish
Borrower with a certificate setting forth the basis and the amount of each
request of such Bank or the Issuing Bank for compensation under this subsection
6.1(a). If any Bank or the Issuing Bank requests compensation from Borrower
under this subsection 6.1(a), Borrower may, by notice to such Bank or the
Issuing Bank, as the case may be, (with a copy to Agent) suspend the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 31
<PAGE>
obligation of such Bank to make Loans subject to Eurodollar Accounts or Continue
Eurodollar Accounts as Eurodollar Accounts or Convert Base Rate Accounts into
Eurodollar Accounts or suspend the obligation of the Issuing Bank to issue
Letters of Credit, as applicable, until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section 6.4
hereof shall be applicable with respect to such Eurodollar Accounts).
(b) Without limiting the effect of the foregoing provisions of
this Section 6.1, in the event that, by reason of any Regulatory Change, any
Bank or the Issuing Bank either (i) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of such Bank or the Issuing Bank, as the case may be, which
includes deposits by reference to which the interest rate on the Loans subject
to Eurodollar Accounts is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank which includes Loans
subject to Eurodollar Accounts or with respect to the Issuing Bank which
includes Letters of Credit or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if such
Bank or the Issuing Bank, as the case may be, so elects by notice to Borrower
(with a copy to Agent), the obligation of such Bank to make Loans subject to
Eurodollar Accounts or Continue Eurodollar Accounts as Eurodollar Accounts or
Convert Base Rate Accounts into Eurodollar Accounts hereunder or the obligation
of the Issuing Bank to issue Letters of Credit, as the case may be, shall be
suspended until the Regulatory Change giving rise to such request ceases to be
in effect (in which case the provisions of Section 6.4 hereof shall be
applicable).
(c) Determinations and allocations by any Bank or the Issuing
Bank for purposes of this Section 6.1 of the effect of any Regulatory Change on
its costs of maintaining its obligation to make Loans, to issue Letters of
Credit, of making or maintaining Loans, of making or maintaining Letters of
Credit, or on amounts receivable by it in respect of the Loans or the Letters of
Credit, as the case may be, and of the additional amounts required to compensate
such Bank or the Issuing Bank in respect of any Additional Costs, shall, absent
manifest error, be conclusive, provided that such determinations and allocations
are made on a reasonable basis.
Section 6.2. Limitation on Eurodollar Accounts. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Accounts under a
Loan for any Interest Period therefor:
(a) Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof are not being provided in
the relative amounts or for the relative maturities for purposes of determining
the rate of interest for the Loans subject to such Eurodollar Accounts as
provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Agent that the relevant rates of interest referred to in
the definition of "Adjusted Eurodollar Rate" in Section 1.1 hereof on the basis
of which the rate of interest for such Loans for such Interest Period is to be
determined do not accurately reflect the cost to the Banks of making or
maintaining such Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Eurodollar Account and the relevant amounts or periods, and so long as such
condition remains in effect, the Banks shall be under no obligation to make
additional Loans subject to a Eurodollar Account or to Convert Base Rate
Accounts into Eurodollar Accounts and Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Eurodollar Accounts, either
prepay the Loans subject to such Eurodollar Accounts or Convert such Eurodollar
Accounts into Base Rate Accounts in accordance with the terms of this Agreement.
Determinations made under this Section 6.2 shall be made on a reasonable basis.
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Section 6.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Eurodollar
Account hereunder or (b) maintain Loans subject to a Eurodollar Account
hereunder, then such Bank shall promptly notify Borrower (with a copy to Agent)
thereof and such Bank's obligation to make or maintain Loans subject to a
Eurodollar Account and to Convert Base Rate Accounts into Eurodollar Accounts
hereunder shall be suspended until such time as such Bank may again make and
maintain Loans subject to a Eurodollar Account (in which case the provisions of
Section 6.4 hereof shall be applicable).
Section 6.4. Treatment of Affected Loans. If the Accounts applicable to
a Loan of any Bank (hereinafter called "Affected Accounts") are to be Converted
pursuant to Section 6.1 or 6.3 hereof, the Bank's Affected Accounts shall be
automatically Converted into Base Rate Accounts on the last day(s) of the then
current Interest Period(s) (or, in the case of a Conversion required by
subsection 6.1(b) or Section 6.3 hereof, on such earlier date as such Bank may
specify to Borrower with a copy to Agent) and, unless and until such Bank gives
notice as provided below that the circumstances specified in Section 6.1 or 6.3
hereof which gave rise to such Conversion no longer exist: (a) to the extent
that such Bank's Affected Accounts have been so Converted, all payments and
prepayments of principal which would otherwise be applied to such Bank's
Affected Accounts shall be applied instead to its Base Rate Accounts; and (b)
all Accounts which would otherwise be established or Continued by such Bank as
Eurodollar Accounts shall be made as or Converted into Base Rate Accounts and
all Accounts of such Bank which would otherwise be Converted into Eurodollar
Accounts shall be Converted instead into (or shall remain as) Base Rate
Accounts. If such Bank gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof which gave rise to the
Conversion of such Bank's Affected Accounts pursuant to this Section 6.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Accounts are outstanding, such
Bank's Base Rate Accounts shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Eurodollar
Accounts to the extent necessary so that, after giving effect thereto, all
Accounts held by the Banks holding Eurodollar Accounts and by such Bank are held
pro rata (as to principal amounts, Types, and Interest Periods) in accordance
with their respective Commitment Percentages.
Section 6.5. Compensation. Borrower shall pay to Agent for the account
of each Bank, upon the request of such Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Loan subject to a
Eurodollar Account or Conversion of a Eurodollar Account for any reason
(including, without limitation, the acceleration of the outstanding Loans
pursuant to subsection 12.2(a)) on a date other than the last day of an Interest
Period for the applicable Eurodollar Account; or
(b) Any failure by Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article VIII to
be satisfied) to borrow or prepay a Loan subject to a Eurodollar Account, or
Convert a Base Rate Account to a Eurodollar Account on the date for such
borrowing, Conversion, or prepayment specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a
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failure to borrow, the Interest Period for such Eurodollar Account which would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Eurodollar Account provided for herein over (ii) the
interest component of the amount such Bank would have bid in the European
interbank market for Dollar deposits of leading banks and amounts comparable to
such principal amount and with maturities comparable to such period.
Section 6.6. Capital Adequacy. If any Bank shall have determined that
any Regulatory Change has or would have the effect of reducing the rate of
return on such Bank's (or its parent's) capital as a consequence of its
obligations hereunder or the transactions contemplated hereby to a level below
that which such Bank (or its parent) could have achieved but for such adoption,
implementation, change, or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within ten (10) Business Days after demand
by such Bank (with a copy to Agent), Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its parent) for
such reduction. A certificate of such Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive, provided that the determination thereof is made
on a reasonable basis. In determining such amount or amounts, such Bank may use
any reasonable averaging and attribution methods.
ARTICLE VII.
Conditions Precedent
Section 7.1. Initial Loan. The effectiveness of this Agreement as an
amendment and restatement of the Existing Credit Agreement and the obligation of
each Bank to make its initial Loan hereunder is subject to the condition
precedent that Agent shall have received on or before the day of any such Loan
and on or before the Closing Date, all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to
Agent:
(a) Resolutions. Resolutions of the Board of Directors of
Parent and each Subsidiary certified by its Secretary or an Assistant Secretary
which authorize its execution, delivery, and performance of the Loan Documents
to which it is or is to be a party.
(b) Incumbency Certificate. A certificate of incumbency
certified by the Treasurer, Secretary or an Assistant Secretary of Parent and
each Subsidiary certifying the name of each of its officers (i) who are
authorized to sign the Loan Documents to which it is or is to be a party
(including the certificates contemplated herein) together with specimen
signatures of each such officers and (ii) who will, until replaced by other
officers duly authorized for that purpose, act as its representative for the
purposes of signing documentation and giving notices and other communications in
connection with the Loan Documents.
(c) Articles of Incorporation. The articles of incorporation
of Parent and each Subsidiary certified by the Secretary of State of the state
of its incorporation (or the other appropriate governmental officials of its
jurisdiction of organization) and dated a current date or, if applicable, a
certification that such articles of incorporation have not changed since the
certified copies delivered under the Existing Credit Agreement or Original
Credit Agreement.
(d) Bylaws. The bylaws of Parent and each Subsidiary certified
by its Secretary or an Assistant Secretary or, if applicable, a certification
that such bylaws have not changed since the certified copies delivered under the
Existing Credit Agreement or Original Credit Agreement.
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(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of Parent and each Subsidiary
as to its existence and good standing, all dated a current date.
(f) Revolving Notes. The Revolving Notes executed by Borrower.
(g) Existing Credit Agreement Interest and Fees. Evidence that
all unpaid interest and commitment and letter of credit fees accrued under the
Existing Credit Agreement through the Closing Date and any amounts payable under
Section 6.5 of the Existing Credit Agreement shall have been paid in full.
(h) Fees. The fees due on the Closing Date as described in the
fee letter dated December 12, 2001 between Chase, J.P. Morgan Securities, Inc.,
Parent and Borrower.
(i) Opinion of Counsel. Favorable opinions of legal counsel to
Borrower and the Subsidiaries, as to such matters as Agent may reasonably
request.
Section 7.2. All Loans. The obligation of each Bank to make any Loan
(including the initial Loan), and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the following additional conditions
precedent:
(a) No Default. No Default shall have occurred and be
continuing, or would result from such Loan or issuance, amendment, renewal, or
extension of such Letter of Credit, as applicable;
(b) Representations and Warranties. All of the representations
and warranties contained in Article VIII hereof and in the other Loan Documents
shall be true and correct on and as of the date of such Loan or the date of
issuance, amendment, renewal, or extension of such Letter of Credit, as
applicable, with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date; and
(c) Additional Documentation. Agent shall have received such
additional approvals, opinions, or documents as Agent may reasonably request.
Each notice of borrowing and each request for the issuance, amendment, renewal,
or extension of a Letter of Credit by Borrower hereunder, shall constitute a
representation and warranty by Borrower that the conditions precedent set forth
in subsections 7.2(a) and (b) have been satisfied (both as of the date of such
notice and, unless Borrower otherwise notifies Agent prior to the date of such
borrowing or the date of such issuance, amendment, renewal, or extension of such
Letter of Credit, as applicable, as of the date of such borrowing or such
issuance, amendment, renewal, or extension of such Letter of Credit, as
applicable).
ARTICLE VIII.
Representations and Warranties
To induce Agent and the Banks to enter into this Agreement, Parent and
Borrower each represent and warrant to Agent and the Banks that:
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Section 8.1. Corporate Existence. Parent and each Subsidiary (a) is a
corporation or other entity (as reflected on Schedule 8.14) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority to own
its assets and carry on its business as now being or as proposed to be
conducted, and (c) is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where the failure
to so qualify could not reasonably be expected to have a Material Adverse
Effect. Parent and each Subsidiary has the corporate power and authority to
execute, deliver, and perform their respective obligations under the Loan
Documents to which it is or may become a party.
Section 8.2. Financial Statements. Parent has delivered to Agent and
the Banks audited consolidated financial statements of Parent and the
Subsidiaries as at and for the Fiscal Year ended August 31, 2001 and unaudited
financial statements of Parent and the Subsidiaries as at and for the Fiscal
Quarter ended February 28, 2002. Such financial statements have been prepared in
accordance with GAAP and present fairly (subject with respect to the Fiscal
Quarter financial statements to year end audit adjustments) the financial
condition of Parent and the Subsidiaries as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein. Neither Parent nor any of the Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or otherwise),
operations, prospects, or properties of Parent and the Subsidiaries taken as a
whole since August 31, 2001.
Section 8.3. Corporate Action; No Breach. The execution, delivery, and
performance by Parent and each Subsidiary of the Loan Documents to which each is
or may become a party and compliance with the terms and provisions hereof and
thereof have been duly authorized by all requisite action on the part of Parent
and each Subsidiary and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the articles of
incorporation, bylaws or other governing documents of Parent or any of the
Subsidiaries, (ii) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or (iii) any
material agreement or instrument to which Parent or any Subsidiary is a party or
by which any of them or any of their property is bound or subject, or (b)
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien (except as provided herein) upon any of the
revenues or assets of Parent or any Subsidiary.
Section 8.4. Operation of Business. Parent and each of the Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, necessary to conduct their respective businesses
substantially as now conducted except those that the failure to so possess could
not reasonably be expected to have a Material Adverse Effect, and Parent and
each of its Subsidiaries are not in violation of any valid rights of others with
respect to any of the foregoing except violations that could not reasonably be
expected to have a Material Adverse Effect.
Section 8.5. Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of either Borrower or the Parent,
threatened against or affecting Parent or any Subsidiary, that would, if
adversely determined, have a Material Adverse Effect. There are no outstanding
judgments against Parent or any Subsidiary.
Section 8.6. Rights in Properties; Liens. Parent and each Subsidiary
have good title to or valid leasehold interests in their respective properties
and assets, real and personal, including the properties, assets, and leasehold
interests reflected in the financial statements described in Section 8.2, and
none of the properties, assets, or leasehold interests of Parent or any
Subsidiary is subject to any Lien,
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except as of the Closing Date, as reflected on Schedule 10.2 and, at all times
after the Closing Date, as permitted by Section 10.2.
Section 8.7. Enforceability. The Loan Documents to which Parent or any
Subsidiary is a party, when delivered, shall constitute the legal, valid, and
binding obligations of Parent or the Subsidiary, as applicable, enforceable
against Parent or the applicable Subsidiary in accordance with their respective
terms, except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and general
principles of equity.
Section 8.8. Approvals. All authorizations, approvals, and consents of,
and all filings or registrations with, any Governmental Authority or third party
necessary for the execution, delivery, or performance by Parent or any
Subsidiary of the Loan Documents to which each is or may become a party or for
the validity or enforceability thereof have been obtained or made, provided,
however, that if HBS CA obtains a Knox-Keene License from the State of
California pursuant to the Knox-Keene Health Care Service Plan Act of 1975 to
operate prepaid health service plans in the State of California then HBS's
pledge of HBS CA's stock will be restricted from sale or foreclosure by the
Agent or any Lender pursuant to such Knox-Keene Health Care Service Plan Act of
1975.
Section 8.9. Debt. Parent and the Subsidiaries have no Debt, except, as
of the Closing Date, the Debt described on Schedule 10.1 and, at all times after
the Closing Date, as permitted by Section 10.1.
Section 8.10. Taxes. Parent and each Subsidiary have filed all material
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable other than those being
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves have been established. Neither Borrower nor Parent knows of
any pending investigation of Parent or any Subsidiary by any taxing authority or
of any pending but unassessed tax liability of Parent or any Subsidiary.
Section 8.11. Margin Securities. Neither Parent nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T, U, or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 8.12. ERISA. Parent and each Subsidiary are in compliance in
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings.
Neither Parent nor any ERISA Affiliate has completely or partially withdrawn
from a Multiemployer Plan. Parent and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans. The
present value of all vested benefits under each Plan do not exceed the fair
market value of all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with ERISA, by an
amount that will exceed Two Hundred Fifty Thousand Dollars ($250,000). Neither
Parent nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA.
Section 8.13. Disclosure. All factual information furnished by or on
behalf of Parent in writing to Agent or any Bank (including, without limitation,
all information contained in the Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
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contemplated herein or therein is, and all other such factual information
hereafter furnished by or on behalf of Parent to Agent or any Bank, will be true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information not misleading in any material respect at such time in
light of the circumstances under which such information was provided.
Section 8.14. Subsidiaries. As of the Closing Date, Parent has no
Subsidiaries other than those listed on Schedule 8.14 hereto. Schedule 8.14 sets
forth the type of each Subsidiary listed thereon, the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of
Parent's or a Subsidiary's ownership of the outstanding voting stock (or other
ownership interests) of each such Subsidiary and, the authorized, issued, and
outstanding capital stock (or other equity interests) of each such Subsidiary.
All of the outstanding capital stock (or other equity interests) of each
Subsidiary listed on Schedule 8.14 has been validly issued, is fully paid, and
is nonassessable. There are no outstanding subscriptions, options, warrants,
calls, or rights (including preemptive rights) to acquire, and no outstanding
securities or instruments convertible into, capital stock of any Subsidiary
except as disclosed on Schedule 8.14. All of the outstanding capital stock (or
other equity interests) of the Borrower, each of the Obligated Parties (other
than the Parent) and each of the Insignificant Subsidiaries has been pledged to
the Agent. Borrower and all of the Obligated Parties are parties to either the
Subsidiary Security Agreement or the Parent Security Agreement and the Guaranty.
Section 8.15. Agreements. Neither Parent nor any Subsidiary is a party
to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate restriction that could
reasonably be expected to have a Material Adverse Effect. Neither Parent nor any
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party other than defaults which will
not have a Material Adverse Effect.
Section 8.16. Compliance with Laws. Neither Parent nor any Subsidiary
is in violation in any material respect of any law, rule, regulation, order, or
decree of any Governmental Authority or arbitrator.
Section 8.17. Investment Company Act. Neither Parent nor any Subsidiary
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
Section 8.18. Public Utility Holding Company Act. Neither Parent nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 8.19. Environmental Matters.
(a) Parent, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all Environmental
Laws. Neither Borrower nor Parent is aware of, nor has Borrower or Parent
received written notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or prevent the
compliance or continued compliance of Parent and the Subsidiaries with all
Environmental Laws;
(b) Parent and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and Parent and its Subsidiaries
are in compliance with all of the terms and conditions of such permits;
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(c) No Hazardous Materials have been used, generated, stored,
transported, disposed of on, or Released from any of the properties or assets of
Parent or any Subsidiary, and to the knowledge of Borrower and Parent, no
Hazardous Materials are present at such properties, except in compliance with
Environmental Laws. The use which Parent and the Subsidiaries make and intend to
make of their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or Release of any
Hazardous Material on, in, or from any of their properties or assets except in
compliance with Environmental Laws;
(d) Neither Parent nor any of the Subsidiaries nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Authority or other
Person or subject to any judicial or administrative proceeding with respect to
(i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii)
any Environmental Liabilities arising from a Release or threatened Release;
(e) Neither Parent nor any of the Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C.ss.6901 et seq., regulations thereunder or any
comparable provision of state law. Parent and the Subsidiaries are in compliance
with all applicable financial responsibility requirements of all Environmental
Laws;
(f) Neither Parent nor any of the Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law reporting
a Release; and
(g) No Lien arising under any Environmental Law has attached
to any property or revenues of Parent or the Subsidiaries.
Section 8.20. Solvency. Parent and each Subsidiary, both individually
and on a consolidated basis: (a) owns and will own assets the fair saleable
value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay probable liabilities of then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to it; (b) has capital that is not unreasonably small
in relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 8.21. Benefit Received. Parent and the Subsidiaries will
receive reasonably equivalent value in exchange for the obligations incurred
under the Loan Documents to which each is a party.
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ARTICLE IX.
Positive Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the following
positive covenants:
Section 9.1. Reporting Requirements. Parent will furnish to Agent and
each Bank:
(a) Annual Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each Fiscal Year, beginning
with the Fiscal Year ending on August 31, 2002, a copy of the annual audit
report of Parent and the Subsidiaries for such Fiscal Year containing, on a
consolidated basis, balance sheets and statements of income, retained earnings,
and cash flow (and, upon request, on a consolidating basis, balance sheets and
statements of income), in each case as at the end of such Fiscal Year and for
the Fiscal Year then ended, in each case setting forth in comparative form the
figures for the preceding Fiscal Year, all in reasonable detail and audited and
certified on an unqualified basis by independent certified public accountants of
recognized standing acceptable to Agent, to the effect that such report has been
prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available, and
in any event within forty-five (45) days after the end of each Fiscal Quarter, a
copy of an unaudited condensed financial report of Parent and the Subsidiaries
as of the end of such period and for the Fiscal Quarter then ended containing,
on a consolidated basis, a balance sheet and statements of income, retained
earnings, and cash flow (and, upon request, on a consolidating basis, balance
sheets and statements of income), in each case setting forth in comparative form
the figures for the corresponding Fiscal Quarter of the preceding Fiscal Year,
all in reasonable detail certified by the chief financial officer of Parent to
have been prepared in accordance with GAAP and to fairly present (subject to
year-end audit adjustments) the financial condition and results of operations of
Parent and the Subsidiaries, on a consolidated basis, at the date and for the
periods indicated therein;
(c) Compliance Certificate. Within forty-five (45) days after
the end of each Fiscal Quarter, or with respect to the last Fiscal Quarter of
each Fiscal Year, within ninety (90) days of the end of such Fiscal Quarter, a
Compliance Certificate;
(d) Annual Projections. As soon as available and in any event
within forty-five (45) days after the beginning of each Fiscal Year, Parent will
deliver its consolidated (and, upon request, consolidating) forecasted profit
and loss statement for the current Fiscal Year set forth on a Fiscal Quarter by
Fiscal Quarter basis consistent with Parent's historical financial statements,
together with appropriate supporting details, a statement of underlying
assumption and a pro forma projection of Parent's compliance with the financial
covenants in this Agreement for the same period;
(e) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to Parent or any Subsidiary
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of
Parent or any Subsidiary;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator affecting Parent or any Subsidiary which, if determined
adversely to Parent or such Subsidiary, could reasonably be expected to have a
Material Adverse Effect;
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(g) Notice of Default. As soon as possible and in any event
within five (5) Business Days after an officer of Parent has knowledge of the
occurrence of each Default, a written notice setting forth the details of such
Default and the action that Parent has taken and proposes to take with respect
thereto;
(h) ERISA Reports. If requested by Agent, promptly after the
filing or receipt thereof, copies of all reports, including annual reports, and
notices which Parent or any Subsidiary files with or receives from the PBGC or
the U.S. Department of Labor under ERISA; and as soon as possible and in any
event within five (5) Business Days after Parent or any Subsidiary knows or has
reason to know that any Reportable Event or Prohibited Transaction has occurred
with respect to any Plan or that the PBGC or Parent or any Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to terminate
any Plan, a certificate of the chief financial officer of Parent setting forth
the details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action that Parent proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to Agent and the Banks pursuant to any other
clause of this Section;
(j) Notice of Material Adverse Effect. As soon as possible and
in any event within five (5) Business Days after an officer of Parent has
knowledge of the occurrence thereof, written notice of any matter that could
reasonably be expected to have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by Parent or
any Subsidiary to its stockholders generally and one copy of each regular,
periodic, or special report, registration statement, or prospectus filed by
Parent or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency;
(l) Notice of Knox-Keene Licensing. As soon as possible and in
any event within five (5) Business Days after HBS CA receives notice from the
State of California that it has been granted a Knox-Keene License pursuant to
the Knox-Keene Health Care Service Plan Act of 1975, written notice of such
licensing and a copy of any documentation associated therewith; and
(m) General Information. Promptly, such other information
concerning Parent or any Subsidiary as Agent or any Bank may from time to time
reasonably request.
Section 9.2. Maintenance of Existence; Conduct of Business. Parent
will, and will cause each Subsidiary to, preserve and maintain (a) its existence
(except as permitted by Section 10.3) and (b) all of its privileges, licenses,
permits, franchises, qualifications, and rights that are necessary or desirable
in the ordinary conduct of its business. Parent will, and will cause each
Subsidiary to, conduct its business in an orderly and efficient manner in
accordance with good business practices.
Section 9.3. Maintenance of Properties. Parent will, and will cause
each Subsidiary to, maintain, keep, and preserve in good working order and
condition (exclusive of ordinary wear, tear and casualty) all of its material
properties necessary in the conduct of its business.
Section 9.4. Taxes and Claims. Parent will, and will cause each
Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and
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governmental charges imposed on it or its income or profits or any of its
property, and (b) all valid and lawful claims for labor, material, and supplies,
which, if unpaid, might become a Lien upon any of its property; provided,
however, that neither Parent nor any Subsidiary shall be required to pay or
discharge any tax, levy, assessment, or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued, and for
which adequate reserves have been established.
Section 9.5. Insurance. Parent will, and will cause each Subsidiary to,
maintain insurance with financially sound and reputable insurance companies in
such amounts and covering such risks as are usually carried by corporations
engaged in similar businesses and owning similar properties in the same general
areas in which Parent and the Subsidiaries operate, provided that in any event
Parent will maintain and cause each Subsidiary to maintain workmen's
compensation insurance (or alternate comparable coverage as required by law),
property insurance, comprehensive general liability insurance and professional
liability insurance reasonably satisfactory to Agent. Each general liability
insurance policy shall name Agent as additional insured, each insurance policy
covering Collateral shall name Agent as loss payee and shall provide that such
policy will not be canceled or materially changed without fifteen (15) days
prior written notice to Agent.
Section 9.6. Inspection Rights. Upon two (2) Business Day's prior
notice and from time to time during normal business hours, Parent will, and will
cause each Subsidiary to, permit representatives of Agent to examine, copy, and
make extracts from its books and records, to visit and inspect its properties,
and to discuss its business, operations, and financial condition with its
officers, employees, and independent certified public accountants. When a
Default exists, the prior notice described in the first sentence of this Section
9.6 shall not be required. The representatives of any Bank may accompany Agent
during any examination, visit, inspection or discussions under this Section 9.6.
Section 9.7. Keeping Books and Records. Parent will, and will cause
each Subsidiary to, maintain proper books of record and account in which full,
true, and correct entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities.
Section 9.8. Compliance with Laws. Parent will, and will cause each
Subsidiary to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws and ERISA), rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 9.9. Compliance with Agreements. Parent will, and will cause
each Subsidiary to, comply in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.
Section 9.10. Further Assurances and Collateral Matters.
(a) Further Assurance and Exceptions to Perfection. Parent
will, and will cause each Subsidiary, other than an Insignificant Subsidiary,
to, execute and deliver such further documentation and take such further action
as may be requested by Agent to carry out the provisions and purposes of the
Loan Documents and to create, preserve, and perfect the Liens of Agent for the
benefit of itself and the Banks in the Collateral; provided that, prior to the
occurrence of a Default, neither Parent nor any Subsidiary, nor an Insignificant
Subsidiary at any time, shall be required to:
(i) execute or have filed any UCC Financing Statement
fixture filings necessary to perfect Agent's Lien on property at a location
identified pursuant to the Parent Security Agreement or the Subsidiary Security
Agreement as a "Contract Location" (herein a "Contract Location");
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(ii) execute or deliver any waivers, subordinations
or acknowledgments from any third parties who have possession or control of any
Collateral;
(iii) except as required by Section 7.1(g) of the
Original Credit Agreement, obtain any landlord or mortgagee waivers or
subordinations;
(iv) deliver any certificates of title evidencing
equipment of Parent or a Subsidiary, other than an Insignificant Subsidiary,
with Agent's Lien noted thereon; or
(v) grant Agent control over any deposit, security or
commodity account.
If a Default occurs, then Parent shall, and shall cause each Subsidiary, other
than an Insignificant Subsidiary, to, take such action as Agent may request to
perfect and protect the Liens of Agent in all the Collateral, including any or
all of the actions described in clauses (i) through (v) of this Section 9.10(a).
Notwithstanding the foregoing, if prior to the occurrence of a Default, the book
value of the equipment (excluding vehicles) and fixtures located at a Contract
Location exceeds One Hundred Thousand Dollars ($100,000.00), then Parent shall,
or shall cause the applicable Subsidiary, other than an Insignificant
Subsidiary, to, take all actions as Agent may request to perfect and protect the
Liens of Agent in the equipment and fixtures held at such Contract Location.
Parent shall promptly notify Agent if the book value of the equipment (excluding
vehicles) and fixtures located at a Contract Location exceeds One Hundred
Thousand Dollars ($100,000.00).
(b) Subsidiary Pledge. Upon the creation or acquisition of any
Subsidiary, other than the creation of the Insignificant Subsidiaries, the
Parent shall cause such Subsidiary to execute and deliver a Subsidiary Joinder
Agreement and such other documentation as the Agent may request to cause such
Subsidiary to evidence, perfect, or otherwise implement the guaranty and
security for repayment of the Obligations contemplated by a Guaranty, the
Subsidiary Security Agreement and, if applicable, a Subsidiary Pledge Agreement.
(c) Parent Pledge of Subsidiary Stock. If any Subsidiary is
created or acquired after the Closing Date, Parent shall cause the owner of the
capital stock of such Subsidiary to execute and deliver to Agent an amendment to
the Pledge Agreements or a Pledge and Security Agreement, as applicable,
describing as collateral thereunder the stock of or other ownership interests in
the new Subsidiary and Parent shall cause the owner of the capital stock of such
Subsidiary to deliver the certificates representing such stock or other
interests to Agent together with undated stock or other powers duly executed in
blank.
(d) Insignificant Subsidiaries. If as of any date, the
aggregate amount of the Insignificant Subsidiaries' EBITDA as calculated for the
most recently completed four (4) Fiscal Quarter period as of the date of
determination exceeds Five Hundred Thousand Dollars ($500,000), then, within
thirty (30) days after the date of determination, the Parent and Borrower shall
either (i) cause each Insignificant Subsidiary to execute and deliver such
documentation as the Agent may request to cause such Insignificant Subsidiary to
evidence, perfect, or otherwise implement the guaranty of and provision of
security for the Obligations contemplated by the Guaranty and the Subsidiary
Security Agreement or (ii) provide Agent written notice that the Insignificant
Subsidiaries shall be excluded from the calculation of all consolidated
financial covenants hereunder. If Parent and the Borrower elect to exclude the
Insignificant Subsidiaries from the calculation of all consolidated financial
covenants, then without any further amendment or other modification to the Loan
Documents, the Insignificant Subsidiaries shall thereafter be so excluded. In
calculating compliance with the financial covenants thereafter, the Parent will
show the calculations utilized to exclude the Insignificant Subsidiaries from
such financial covenants.
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Section 9.11. ERISA. Parent will, and will cause each Subsidiary to,
comply with all minimum funding requirements and all other requirements of
ERISA, if applicable, so as not to give rise to any liability which will have a
Material Adverse Effect.
ARTICLE X.
Negative Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the following
negative covenants:
Section 10.1. Debt. Parent will not, and will not permit any Subsidiary
to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to Agent and Banks pursuant to the Loan Documents and
existing Debt described on Schedule 10.1;
(b) Intercompany Debt owed by the Parent or a Subsidiary to
Borrower or loans or advances between Subsidiaries; provided that (i) the
obligations of each obligor of such Debt must be subordinated in right of
payment to any liability such obligor may have for the Obligations from and
after such time as any portion of the Obligations shall become due and payable
(whether at stated maturity, by acceleration or otherwise), the Borrower hereby
agreeing to such subordination, (ii) such Debt must be incurred in the ordinary
course of business and on terms customary for intercompany borrowings among
Borrower and the Parent or a Subsidiary or must be made on such other terms and
provisions as Agent may reasonably require, (iii) Borrower shall have granted
Agent a Lien on its right, title and interest in and to such Debt and all Liens
securing the payment thereof, and (iv) the sum of (A)the aggregate amount of all
Debt owed by Insignificant Subsidiaries to Borrower and the other Subsidiaries
plus (B) the aggregate amount of all capital contributions to, investments in
and purchases of stock, bonds or other equity securities of Insignificant
Subsidiaries by Parent and the other Subsidiaries shall not exceed the amounts
provided for in Section 10.5;
(c) Debt of Parent or any Subsidiary (other than the
Insignificant Subsidiaries) not to exceed Five Hundred Thousand Dollars
($500,000) in the aggregate for Parent and all Subsidiaries at any time
outstanding secured by purchase money Liens permitted by Section 10.2;
(d) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on Parent's
or a Subsidiary's behalf in accordance with the policies issued to Parent and
the Subsidiaries;
(e) Guarantees by Parent of (i) trade accounts payable owed by
a Subsidiary, and arising in the ordinary course of business, (ii) Debt of a
Subsidiary or (iii) operating leases of a Subsidiary entered into in the
ordinary course of business; provided that, (A) the Debt guaranteed is otherwise
permitted hereunder; and (B) no Default exists or would result from such
Guarantee;
(f) Guarantees incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds,
and other similar obligations not exceeding at any time outstanding One Million
Dollars ($1,000,000) in aggregate liability;
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(g) Debt arising in connection with interest rate swap, cap,
collar or similar agreements entered into in the ordinary course of business to
fix or limit Parent's or any Subsidiary's (other than an Insignificant
Subsidiary) interest expense;
(h) Debt of any Person (or any of such Person's subsidiaries)
existing at the time such Person becomes a Subsidiary (or is merged into or
consolidated with Parent or any of the Subsidiaries), but only to the extent
that such Debt was not incurred in connection with, as a result of or in
contemplation of such Person becoming a Subsidiary (or being merged into or
consolidated with Parent or any Subsidiary); provided, however, that (i) in no
event shall the aggregate amount of such Debt outstanding at any time exceed One
Million Dollars ($1,000,000) and (ii) immediately after such acquired Person
becomes a Subsidiary (or is merged into or consolidated with Parent or any
Subsidiary), no Default exists; and
(i) Debts of Parent or any Subsidiary (other than an
Insignificant Subsidiary), other than the Debts specifically described in
clauses (a) through (h) of this Section 10.1, which in the aggregate for Parent
and all Subsidiaries do not exceed Two Hundred Fifty Thousand Dollars ($250,000)
at any time outstanding.
Section 10.2. Limitation on Liens and Restrictions on Subsidiaries.
Parent will not, and will not permit any Subsidiary to, incur, create, assume,
or permit to exist any Lien upon any of its property, assets, or revenues,
whether now owned or hereafter acquired, except the following, none of which
shall encumber the Collateral other than those Liens described in clauses (a),
(b), (d), (e), (g) and (h):
(a) Existing Liens disclosed on Schedule 10.2 hereto,
(b) Liens in favor of Agent for the benefit of itself and the
Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of Parent or the
Subsidiaries to use such assets in their respective businesses, and none of
which is violated in any material respect by existing or proposed structures or
land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental charges that
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords, or other similar statutory Liens securing obligations that are not
yet due and are incurred in the ordinary course of business or which are being
contested in good faith and for which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, and contracts (other than for payment of Debt);
(g) Liens for purchase money obligations and Capital Lease
Obligations; provided that: (i) the Debt secured by any such Lien is permitted
under Section 10.1; and (ii) any such Lien encumbers only the asset so
purchased;
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(h) Liens related to any attachment or judgment not
constituting an Event of Default;
(i) Liens arising from filing UCC financing statements
regarding leases permitted by this Agreement; and
(j) Liens on fixed assets of a Person existing at the time
such Person becomes a Subsidiary (or such Person is merged into or consolidated
with Parent or any Subsidiary) in accordance with the provisions of Section 10.3
hereof; provided, however, that such Liens (i) only secure the Debt permitted by
subsection 10.1(h) , (ii) were in existence prior to such acquired Person
becoming a Subsidiary (or prior to the contemplation of such merger or
consolidation), (iii) do not cover any property other than the property of such
acquired Person which is subject to such Liens prior to such acquired Person
becoming a Subsidiary (or prior to the contemplation of such merger or
consolidation), and (iv) do not cover any accounts receivables, inventory or
general intangibles.
Neither Parent nor any Subsidiary shall enter into or assume any agreement
(other than the Loan Documents and other than the documentation relating to the
guaranties described on Schedule 10.1) prohibiting the creation or assumption of
any Lien upon its properties or assets, whether now owned or hereafter acquired;
provided that, in connection with the creation of purchase money Liens, Parent
or any Subsidiary may agree that it will not permit any other Liens to encumber
the asset subject to such purchase money Lien. Except as provided herein, as
provided in the documentation relating to the guaranties described on Schedule
10.1 and except for any restrictions imposed or required to be imposed by
applicable law and regulation, Parent will not and will not permit any
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock (or other equity
interests) owned by Parent or any Subsidiary; (2) subject to subordination
provisions, pay any Debt owed to Parent or any other Subsidiary; (3) make loans
or advances to Parent or any other Subsidiary; or (4) transfer any of its
property or assets to Parent or any other Subsidiary.
Section 10.3. Mergers, etc. Parent will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
wind-up, dissolve, or liquidate itself; provided that, (a) Parent and the
Subsidiaries (other than an Insignificant Subsidiary) may acquire assets or
shares or other evidence of beneficial ownership of a Person in accordance with
the restrictions set forth in Section 10.5; (b) if no Default exists or would
result, any Subsidiary may merge into or consolidate with Parent, any other
Subsidiary (other than an Insignificant Subsidiary) or a Target if the surviving
Person is or becomes a wholly owned Subsidiary directly owned by Parent, assumes
the obligations of the applicable Subsidiary under the Loan Documents and is
solvent as contemplated under Section 8.20 after giving effect to such merger or
consolidation, and (c) Parent or any wholly owned Subsidiary (other than an
Insignificant Subsidiary) directly owned by Parent (the "Acquiring Company") may
acquire all or substantially all of the assets of any Subsidiary (a
"Transferring Subsidiary") if the Acquiring Company assumes all the Transferring
Subsidiary's liabilities (including without limitation, all liabilities of the
Transferring Subsidiary under the Loan Documents to which it is a party) and,
following such assignment and assumption, such Transferring Subsidiary may wind
up, dissolve, and liquidate.
Section 10.4. Restrictions on Dividends and other Distributions. Parent
will not and will not permit any Subsidiary to directly or indirectly declare,
order, pay, make or set apart any sum for (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
(or other equity interest) of Parent or any Subsidiary now or hereafter
outstanding; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or
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indirect, of any shares of any class of stock (or other equity interest) of
Parent or any Subsidiary now or hereafter outstanding; or (c) any payment made
to retire, or to obtain the surrender of, any outstanding warrants, options, or
other rights to acquire shares of any class of stock (or other equity interest)
of Parent or any Subsidiary now or hereafter outstanding; except that: (i)
Subsidiaries (other than Parent) may make, declare and pay dividends and make
other distributions with respect to their capital stock (or other equity
interest) to Parent or the other Subsidiaries; (ii) this Section 10.4 shall not
prohibit the transactions permitted by clauses (a), (j), or (l) of Section 10.5;
and (iii) Parent may redeem or repurchase shares of its stock issued to
employees and directors under Parent's benefit programs; provided that (A) no
Default exists or would result therefrom and (B) the aggregate amount paid by
Parent in connection with such redemptions and repurchases during any Fiscal
Year does not exceed One Million Dollars ($1,000,000). For purposes of this
Section 10.4, stock conveyed, transferred or surrendered in connection with the
exercise of stock options should not be considered redeemed or repurchased to
the extent no cash consideration is paid to employees or directors in connection
with such exercise.
Section 10.5. Investments. Parent will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any advance, loan, other
extension of credit, or capital contribution to or investment in any Person, or
purchase or own any stock, bonds, notes, debentures, or other securities of any
Person, or be or become a joint venturer with or partner of any Person, except:
(a) Parent or any wholly owned Subsidiary directly owned by
Parent (other than an Insignificant Subsidiary) may acquire shares, other equity
securities or other evidence of beneficial ownership of a Person or all or
substantially all of a Person's assets or the assets of a division or branch of
such Person, if, with respect to each such acquisition:
(i) Default. No Default exists or would result
therefrom;
(ii) Bank Approval. Parent shall have obtained the
prior written consent of the Required Banks if: (A) the Purchase Price for the
acquisition is greater than Ten Million Dollars ($10,000,000); (B) after giving
effect to such acquisition, the aggregate Purchase Price of all Permitted
Acquisitions (including the acquisition by Parent of all of the membership
interests of ProCare One Nurses, LLC) that have occurred during the four (4)
consecutive Fiscal Quarters then most recently ending is greater than Twenty
Five Million Dollars ($25,000,000); (C) the ratio of Indebtedness outstanding as
of the date of determination (which shall not be more than thirty (30) days
prior to the acquisition date) to Adjusted EBITDA (as defined in Section 11.4)
for the most recent four (4) Fiscal Quarter period then ended as of such date
would exceed 2.05 to 1.00, calculated on a pro forma basis as if the acquisition
had occurred as of the first day of such four (4) Fiscal Quarters and including
in the ratio calculation any Debt incurred or assumed in connection therewith as
if the Target were a "Prior Target" for purposes of Calculating Adjusted EBITDA;
or (D) the acquisition is not the acquisition by Parent of all of the membership
interests of ProCare One Nurses, LLC. As used above, the phrase "Purchase Price"
means, as of any date of determination and with respect to a proposed
acquisition, the purchase price to be paid for the Target or its assets,
including all cash consideration paid (whether classified as purchase price,
non-compete, consulting or post-closing performance based payments or otherwise)
or to be paid (based on the estimated amount thereof), the value of all other
assets to be transferred by the purchaser in connection with such acquisition to
the seller (but specifically excluding any stock of Parent issued to the seller
which shall not be part of the Purchase Price for purposes of this clause (ii))
all valued in accordance with the applicable purchase agreement and the
outstanding principal amount of all Debt of the Target or the seller assumed or
acquired in connection with such acquisition.
(iii) Delivery and Notice Requirements. Parent shall
provide to Agent, fifteen (15) days prior to the consummation of the
acquisition, the following: (A) notice of the acquisition, (B) the most recent
financial statements of the Target that Parent has available, (C) such other
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documentation and information relating to the Target and the acquisition as
Agent may reasonably request, including, without limitation, for the acquisition
by Parent of all of the membership interests of ProCare One Nurses, LLC a
certification by Parent three (3) days prior to the consummation of the
acquisition that there has been no material adverse change in the financial
condition of ProCare One Nurses, LLC from the financial condition reflected in
the financial statements delivered to Agent in accordance with Section
10.5(a)(iii)(B), and (D) evidence certified by the chief executive or chief
financial officer of Parent that Parent shall be in compliance with the
covenants contained in Article XI on a pro forma basis for the four (4) Fiscal
Quarter period then most recently ending (assuming (1) the consummation of the
acquisition in question; (2) that the incurrence or assumption of any Debt in
connection therewith occurred on the first day of such period; (3) to the extent
such Debt bears interest at a floating rate, the rate in effect for the entire
period of calculation was the rate in effect at the time of calculation; and (4)
any sale of Subsidiaries or lines of business which occurred during such period
occurred on the first day of such period). Within sixty (60) days of such
acquisition the obligations under subsections 9.10(b) and (c) shall be
fulfilled.
(iv) Diligence. Parent has completed due diligence on
the Target or the assets to be acquired;
(v) U.S. Acquisitions. The Target is organized under
the laws of a state in the United States of America and is involved in the same
general type of business activities as the Subsidiaries;
(vi) Structure. If the proposed acquisition is an
acquisition of the stock of a Target, the acquisition will be structured so that
the Target will become a wholly owned Subsidiary directly owned by Parent or
indirectly owned by Parent through a wholly owned Subsidiary, other than an
Insignificant Subsidiary, directly owned by Parent. If the proposed acquisition
is an acquisition of assets, the acquisition will be structured so that Parent
or a wholly owned Subsidiary, other than an Insignificant Subsidiary, directly
owned by Parent shall acquire the assets either directly or through a merger;
and
(b) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one (1) year or less from
the date of acquisition;
(c) fully insured certificates of deposit with maturities of
one (1) year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of $250,000,000;
(d) commercial paper or bonds of a domestic issuer if at the
time of purchase such paper or bonds are rated in one of the two highest rating
categories of Standard and Poor's Corporation or Moody's Investors Service,
Inc.;
(e) current trade and customer accounts receivable for
services rendered in the ordinary course of business;
(f) shares of any mutual fund registered under the Investment
Company Act of 1940, as amended, which invests solely in investments of the type
described in clauses (b) through (d) of this Section 10.5;
(g) loans to physicians; provided that (i) at the time of such
loan no Default shall exist or result therefrom; (ii) the aggregate amount of
such loans made by Parent and the Subsidiaries and outstanding at any one time
shall not exceed Five Hundred Thousand Dollars ($500,000), calculated net of any
bad debt reserves;
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(h) advances to employees for business expenses incurred in
the ordinary course of business including, without limitation, loans in
connection with employee relocations and changes in Parent's and the
Subsidiaries' payroll payment dates;
(i) existing investments described on Schedule 10.5 hereto;
(j) loans, advances and other extensions of credit to
Subsidiaries made in accordance with the restrictions set forth in subsection
10.1(b); provided that, at the time any such loan, advance or other extension of
credit is made, no Default exists or would result therefrom;
(k) Guarantees permitted by Section 10.1;
(l) if no Default exists, Parent and the Subsidiaries (other
than an Insignificant Subsidiary) may make additional capital contributions to
and/or investments in or purchase any stocks, bonds, or other equity securities
authorized to be issued under Section 10.6 of a wholly owned Subsidiary or a
newly created Person organized by Parent or a Subsidiary (other than an
Insignificant Subsidiary) that, immediately after such investment or purchase,
will be a wholly owned Subsidiary if the obligations under Section 9.10 shall be
fulfilled and the aggregate amount of such contributions, investments and
purchases made under the permissions of this clause (l) plus the aggregate
amount of all loans and advances to Insignificant Subsidiaries made under the
permissions of Section 10.1(b) does not exceed Five Hundred Thousand Dollars
($500,000) in the aggregate during the period from the closing date under the
Existing Credit Agreement through the Termination Date; provided, however,
Parent and the Subsidiaries may, make additional capital contributions, loans,
and advances to and/or investments in or purchase any stocks, bonds, or other
equity securities authorized to be issued under Section 10.6 of HBS CA if the
aggregate amount thereof made during the period from the closing date under the
Existing Credit Agreement through the Termination Date does not exceed the
lesser of (i) One Million Five Hundred Thousand Dollars ($1,500,000) or (ii) the
minimum amount necessary for HBS CA to maintain compliance with the minimum net
worth requirement of Fifty Thousand Dollars ($50,000) for entities licensed
under the Knox-Keene Health Care Service Plan Act of 1975;
(m) Specialty may make or permit to remain outstanding any
advance, loan, other extension of credit, or capital contribution to or
investment in Valley Rehabilitation Hospital, LLP, a Texas limited liability
partnership ("Valley Rehabilitation"), and may purchase or own any stock, bonds,
notes, debentures, or other securities issued by Valley Rehabilitation, if (i)
no Default exists as of the date the investment is made, (ii) , during the
period from the Closing Date through the Termination Date, the sum of (A) the
aggregate principal amount of all such advances, loans, and extensions of credit
made to Valley Rehabilitation plus (B) the aggregate initial purchase price paid
for all stocks, bonds, notes, debentures, or other securities issued by Valley
Rehabilitation, does not exceed One Million Five Hundred Thousand Dollars
($1,500,000), and (iii) , during the period from the Closing Date through the
Termination Date, Specialty, Parent or any Subsidiary has an exclusive contract
to manage Valley Rehabilitation's business; and
(n) money market funds that (i) comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's, and (iii)
have portfolio assets of at least $5,000,000,000.
Section 10.6. Limitation on Issuance of Capital Stock. Except as
permitted by Section 10.4 and except for issuances, sales, assignments or other
disposition to Parent, or to a Subsidiary which is the parent of the issuer,
Parent will not permit any Subsidiary to, at any time issue, sell, assign, or
otherwise dispose of (a) any of its capital stock (or other equity interests),
(b) any securities exchangeable for or
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convertible into or carrying any rights to acquire any of its capital stock (or
other equity interests), or (c) any option, warrant, or other right to acquire
any of its capital stock (or other equity interests).
Section 10.7. Transactions With Affiliates. Parent will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of Parent or such Subsidiary, except in the ordinary
course of and pursuant to the reasonable requirements of Parent's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
Parent or such Subsidiary than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate of Parent or such Subsidiary.
Section 10.8. Disposition of Assets. Parent will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer, or otherwise dispose of
any of its assets, except (a) dispositions of inventory in the ordinary course
of business; (b) dispositions of unnecessary, obsolete or worn out equipment;
(c) the sale, discount or transfer of delinquent notes or accounts receivable in
the ordinary course of business for purposes of collection in accordance with
past practices; and (d) if no Default exists or would result therefrom, other
dispositions of assets if: (i) the aggregate book value of the assets disposed
of does not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate
during any twelve (12) month period; (ii) the assets disposed of are not
accounts or general intangibles; and (iii) the obligations under subsection
5.4(b) are fulfilled.
Section 10.9. Lines of Business. Parent will not, and will not permit
any Subsidiary to, engage in any line or lines of business activity other than
the businesses in which they are engaged on the Closing Date and any businesses
which are similar or related to those engaged in by Parent and the Subsidiaries
on the Closing Date.
Section 10.10. Sale and Leaseback. Parent will not, and will not permit
any Subsidiary to, enter into any arrangement with any Person pursuant to which
it leases from such Person real or personal property that has been or is to be
sold or transferred, directly or indirectly, by it to such Person
Section 10.11. Prepayment of Debt. Parent will not, and will not permit
any Subsidiary to, prepay or optionally redeem any Debt in an aggregate amount
in excess of One Hundred Thousand Dollars ($100,000) during the period from the
Closing Date through the Termination Date other than the Obligations; provided,
however, that, as long as no Default exists or would result therefrom, Parent or
any Subsidiary may prepay or optionally redeem Debt acquired or assumed by
Parent or such Subsidiary in connection with Permitted Acquisitions with
proceeds of the Loans in an aggregate amount up to Three Hundred Thousand
Dollars ($300,000) during the period from the Closing Date through the
Termination Date.
ARTICLE XI.
Financial Covenants
Parent and Borrower each covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Revolving
Commitment hereunder, Parent and Borrower will perform and observe the following
financial covenants:
Section 11.1. Consolidated Net Worth. Parent will at all times maintain
Consolidated Net Worth in an amount not less than the sum of (a) $52,873,793,
minus (b) the lesser of (i) $500,000 or (ii) the aggregate amount of the
non-cash losses attributable to the impairment of its goodwill and which were
incurred and reported by Parent on its financial statements during its Fiscal
Year ending August 31, 2002
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which have resulted from Parent's compliance with statement number 142 of the
Financial Accounting Standards Board, plus (c) fifty percent (50%) of Parent's
cumulative net income determined on a consolidated basis in accordance with GAAP
for each Fiscal Quarter to have completely elapsed since February 28, 2002, plus
(d) one hundred percent (100%) of the net cash proceeds of any sale of equity
securities or other contributions to the capital of Parent received by Parent
since February 28, 2002, calculated without duplication. If Parent's
consolidated net income for a Fiscal Quarter is zero or less, no adjustment to
the requisite level of Consolidated Net Worth shall be made. "Consolidated Net
Worth" means, at any particular time, calculated without duplication, in
conformity with GAAP, the sum of (a) the total amount of capital stock, plus (b)
the total amount of preferred stock, plus (c) the total amount of paid-in
capital, plus (d) the total amount of retained earnings.
Section 11.2. Indebtedness to Capitalization. Parent will not at any
time permit the ratio of Indebtedness to Capitalization to exceed .50 to 1.00.
As used in this Section 11.2, the following terms have the following meanings:
"Capitalization" means, at any particular time, the
sum of Consolidated Net Worth (as defined in Section 11.1)
plus Indebtedness.
"Indebtedness" means, at the time of determination,
the sum of the following determined for Parent and the
Subsidiaries on a consolidated basis (without duplication):
(a) all obligations for borrowed money; (b) all obligations of
such Person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all Capital Lease Obligations; (d)
all obligations to reimburse the issuer of any letter of
credit for amounts drawn or drawable; and (e) the outstanding
principal amount of the loans extended to North Central
Development Company which are secured by a Lien on the
facility located at 1500 Waters Ridge Drive, Lewisville, Texas
leased by Parent.
Section 11.3. Fixed Charge Coverage . As of the end of each Fiscal
Quarter, Parent shall not permit the ratio of Cash Flow for the four (4) Fiscal
Quarters then ending to Fixed Charges as of such Fiscal Quarter end to be less
than 1.20 to 1.00. For purposes of this Section 11.3 the following terms shall
have the following meanings:
"Cash Flow" means, for any period, the total of the
following for Parent and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (A)
EBITDA; minus (B) any provision for (or plus any benefit from)
cash income or franchise taxes included in determining
Consolidated Net Income; minus (C) cash dividends and other
distributions made on account of the Parent's capital stock;
plus (D) the aggregate amount of the non-cash losses which
have not already been excluded in determining Consolidated Net
Income and which are attributable to the impairment of
Parent's goodwill incurred and reported by Parent on its
financial statements which have resulted from Parent's
compliance with statement number 142 of the Financial
Accounting Standards Board.
"Consolidated Net Income" means, for any period and
any Person (a "Subject Person"), such Subject Person's
consolidated net income (or loss) determined in conformity
with GAAP, but excluding:
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(a) any extraordinary gains or losses or
nonrecurring revenue or expense;
(b) any gains or losses realized upon the sale
or other disposition of any capital stock or debt security of
any Person;
(c) any gains or losses in respect of the
write-up of any asset at greater than original cost or
write-down at less than original cost;
(d) any gains or losses realized upon the sale
or other disposition of property, plant, equipment, or
intangible assets of the Subject Person or any of its
subsidiaries which is not sold or otherwise disposed of in the
ordinary course of business;
(e) any gains or losses from the disposal of a
discontinued business;
(f) any net gains or losses arising from the
extinguishment of any debt of the Subject Person or its
subsidiaries;
(g) any restoration to income of any
contingency reserve relating to any long term assets or long
term liability, except to the extent that provision for such
reserve was made out of income accrued during such period;
(h) the cumulative effect of any change in an
accounting principle on income of prior periods;
(i) any deferred credit representing the
excess of equity in any acquired company or assets at the date
of acquisition over the cost of the investment in such company
or asset;
(j) the income from any sale of assets in
which the book value of such assets prior to their sale had
been the book value inherited by the Subject Person from a
transfer of such assets;
(k) the income (or loss) of any Person (other
than a subsidiary) in which the Subject Person or a subsidiary
has an ownership interest; provided, however, that (i)
Consolidated Net Income shall include amounts in respect of
the income of such Person when actually received in cash by
the Subject Person or such subsidiary in the form of dividends
or similar distributions and (ii) Consolidated Net Income
shall be reduced by the aggregate amount of all investments,
regardless of the form thereof, made by the Subject Person or
any of its subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(l) the income of any subsidiaries to the
extent the payment of such income in the form of a
distribution or repayment of any Debt to the Subject Person or
a Subsidiary is not permitted, whether on account of any
restriction in by-laws, articles of incorporation or
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similar governing document, any agreement or any law, statute,
judgment, decree, or governmental order, rule, or regulation
applicable to such Subsidiary;
(m) any reduction in or addition to income tax
expense resulting from an increase or decrease in a deferred
income tax asset due to the anticipation of future income tax
benefits;
(n) any reduction in or addition to income tax
expense due to the change in a statutory tax rate resulting in
an increase or decrease in a deferred income tax asset or in a
deferred income tax liability;
(o) any gains or losses attributable to
returned surplus assets of any pension-benefit plan or any
pension credit attributable to the excess of (i) the return on
pension-plan assets over (ii) the pension obligation's service
cost and interest cost;
(p) the income or loss of any Person acquired
by the Subject Person or a subsidiary for any period prior to
the date of such acquisition; and
(q) the income from any sale of assets in
which the accounting basis of such assets had been the book
value of any Person acquired by the Subject Person or a
subsidiary prior to the date such Person became a subsidiary
or was merged into or consolidated with the Subject Person or
a subsidiary.
"EBITDA" means, for any period and any Person, the
total of the following each calculated without duplication on
a consolidated basis for such period: (a) Consolidated Net
Income; plus (b) any provision for (or less any benefit from)
income or franchise taxes included in determining Consolidated
Net Income; plus (c) interest expense (including the interest
portion of Capital Lease Obligations) deducted in determining
Consolidated Net Income; plus (d) amortization and
depreciation expense deducted in determining Consolidated Net
Income.
"Fixed Charges" means, as of any date of
determination, the total of the following for Parent and the
Subsidiaries calculated on a consolidated basis without
duplication but excluding any of the forgoing of any Prior
Target for any period prior to the date of such acquisition:
(a) cash interest expense (including the interest portion of
Capital Lease Obligations) for the four (4) Fiscal Quarter
period then ending; plus (b) as of each date of determination:
(i) prior to the Revolving Termination Date, one-fifth (1/5)
of the Parent's and the Subsidiaries' outstanding balance of
the Loans and (ii) on and after the Revolving Termination
Date, the current maturities of long term debt reflected on
the Parent's consolidated balance sheet, excluding at all
times two-thirds (2/3) of the amount of the final principal
installment due on the Termination Date pursuant to Section
2.3 (b); plus (c) Capital Expenditures made during the four
(4) Fiscal Quarter period then ending;
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plus (d) payments made during the four (4) Fiscal Quarter
period then ending pursuant to any Capital Lease Obligations
(excluding the interest portion thereof to the extent included
under clause (a) above).
"Prior Target" means all Targets acquired or whose
assets have been acquired in a transaction permitted by
subsection 10.5(a) or subsection 10.5(a) of the Original
Credit Agreement or the Existing Credit Agreement.
Section 11.4. Indebtedness to Adjusted EBITDA. As of the last day of
each Fiscal Quarter, Parent shall not permit the ratio of Indebtedness
outstanding as of such day to the Adjusted EBITDA for the four (4) Fiscal
Quarter period then ended to exceed 2.25 to 1.00. As used in this Section 11.4,
"Adjusted EBITDA" means, for any period (the "Subject Period"), the total of the
following calculated without duplication for such period: (a) Parent's EBITDA
(as defined in Section 11.3); plus (b) the aggregate amount of the non-cash
losses which have not already been excluded in determining Consolidated Net
Income and which are attributable to the impairment of Parent's goodwill
incurred and reported by Parent on its financial statements which have resulted
from Parent's compliance with statement number 142 of the Financial Accounting
Standards Board, plus (c) on a pro forma basis, the pro forma EBITDA of each
Prior Target or, as applicable, the EBITDA of a Prior Target attributable to the
assets acquired from such Prior Target, for any portion of such Subject Period
occurring prior to the date of the acquisition of such Prior Target or the
related assets but only to the extent such EBITDA for such Prior Target can be
established in a manner satisfactory to Agent based on financial statements of
the Prior Target prepared in accordance with GAAP without adjustment for
expenses or other charges that will be eliminated after the acquisition.
Section 11.5. Current Ratio. Parent will not at any time permit the
ratio of Current Assets to Current Liabilities to be less than 1.00 to 1.00. As
used in this Section 11.5, the following terms have the following meanings:
"Current Assets" means, as of any date, all amounts
which are required to be carried as current assets on a
consolidated balance sheet of Parent at such date in
accordance with GAAP.
"Current Liabilities" means, as of any date, all
amounts which are required to be carried as current
liabilities on a consolidated balance sheet of Parent at such
date in accordance with GAAP, excluding, at all times, the
outstanding principal balance of the Loans.
Section 11.6. Managed Care Contracts. Without the prior written consent
of the Required Banks, which shall not be unreasonably withheld, Parent will not
at any time permit the gross revenue of Parent and its Subsidiaries, determined
in conformity with GAAP as of any month and calculated for the immediately
preceding twelve (12) month period, generated during such twelve (12) month
period from (a) contracts providing exclusively for managed care plus (b) the
managed care portions of contracts providing for Employee Assistance Programs
and managed care to exceed in the aggregate thirty-five percent (35%) of total
gross revenue of Parent and its Subsidiaries generated during such twelve (12)
month period, determined in conformity with GAAP.
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ARTICLE XII.
Default
Section 12.1. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Borrower shall fail to pay when due any principal,
interest, fees, or other Obligations payable under any Loan Document or any part
thereof.
(b) Any representation, warranty, or certification made or
deemed made by Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with any Loan Document
shall be false, misleading, or erroneous in any material respect when made or
deemed to have been made.
(c) Borrower or any Obligated Party shall fail to perform,
observe or comply with (i) any covenant, agreement, or term contained in clause
(g) of Section 9.1, Sections 9.5 or 9.6, Article X, or Article XI of this
Agreement or (ii) any covenant, agreement, or term contained in any Loan
Document relating to the creation, perfection or protection of the Liens
required to be granted to secure the obligation of any Obligated Party under the
Loan Documents.
(d) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in any Loan
Document (other than covenants to pay the Obligations and the covenants
described in subsection 12.1(c)) and such failure shall continue for a period of
twenty (20) days after the earlier of (i) the date Agent or any Bank provides
Borrower with notice thereof or (ii) the date Borrower or Parent should have,
with the exercise of reasonable diligence, notified Agent thereof in accordance
with subsection 9.1(g).
(e) Borrower, any Obligated Party or any other Subsidiary
shall (i) apply for or consent to the appointment of, or the taking of
possession by a receiver, custodian, trustee, examiner, liquidator, or the like
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code"), (iv) institute any proceeding or file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, (vi) admit in writing its inability
to, or be generally unable to pay its debts as such debts become due, or (vii)
take any corporate action for the purpose of effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of Borrower, any Obligated Party or any other
Subsidiary, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement, or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator, or the like of Borrower, any such
Obligated Party or any such other Subsidiary or of all or any substantial part
of its property, or (iii) similar relief in respect of Borrower, any such
Obligated Party or any such other Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of thirty (30) or more days,
or an order for relief against Borrower, any Obligated Party or any other
Subsidiary shall be entered in an involuntary case under the Bankruptcy Code.
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(g) Borrower, any Obligated Party or any other Subsidiary
shall fail to discharge within a period of thirty (30) days after the
commencement thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000) against any of its assets or properties.
(h) A final judgment or judgments for the payment of money in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate shall be
rendered by a court or courts against Borrower, any Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof, and Borrower or the
relevant Subsidiary or Obligated Party shall not, within said period of thirty
(30) days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) Borrower, any Obligated Party or any other Subsidiary
shall fail to pay when due any principal of or interest on any Debt if the
aggregate principal amount of the affected Debt equals or exceeds One Hundred
Thousand Dollars ($100,000) (other than the Obligations), or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been required
to be prepaid prior to the stated maturity thereof or any event shall have
occurred with respect to any Debt in the aggregate principal amount equal to or
in excess of One Hundred Thousand Dollars ($100,000) that permits (or, with the
giving of notice or lapse of time or both, would permit) any holder or holders
of such Debt or any Person acting on behalf of such holder or holders to
accelerate the maturity thereof or require any such prepayment.
(j) This Agreement shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by Borrower, any Obligated Party or any other
Subsidiary or Borrower or any Obligated Party shall deny that it has any further
liability or obligation under any of the Loan Documents, or any lien or security
interest created by the Loan Documents shall for any reason (other than the
negligence of Agent or the release thereof in accordance with the Loan
Documents) cease to be a valid, first priority perfected security interest in
and lien upon any of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with
respect to Parent or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii)
the filing under Section 4041 of ERISA of a notice of intent to terminate any
Plan or the termination of any Plan; (iv) any event or circumstance that might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings; or
(v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Banks subject Parent to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably be
expected to exceed One Hundred Thousand Dollars ($100,000).
(l) Ninety (90) days shall have elapsed after the Management
Change Date and James W. McAtee shall not have been replaced as President and
Chief Executive Officer of the Parent with a qualified individual. As used in
this clause (l), the term "Management Change Date" means the date when James W.
McAtee (i) ceases to hold the titles and responsibilities of President and Chief
Executive Officer of the Parent or (ii) otherwise fails to be active in the
management of the day to day operations of the Parent.
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(m) Any Person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Exchange Act) shall become the direct or indirect beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of more than 20% of the
total voting power of all classes of capital stock then outstanding of Parent
entitled (without regard to the occurrence of any contingency) to vote in
elections of directors of Parent except as a result of stock repurchases by
Parent otherwise authorized hereunder.
Section 12.2. Remedies. If any Event of Default shall occur and be
continuing, Agent may (and if directed by Required Banks, shall) do any one or
more of the following:
(a) Acceleration. By notice to Borrower, declare all
outstanding principal of and accrued and unpaid interest on the Revolving Notes
and all other amounts payable by Borrower under the Loan Documents immediately
due and payable, and the same shall thereupon become immediately due and
payable, without further notice, demand, presentment, notice of dishonor, notice
of acceleration, notice of intent to accelerate, protest, or other formalities
of any kind, all of which are hereby expressly waived by Borrower and Parent.
(b) Termination of Revolving Commitments. Terminate the
Revolving Commitments without notice to Borrower or Parent.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to Agent for the benefit of itself and the Banks to secure payment and
performance of the Obligations in accordance with the terms of the Loan
Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
subsection 12.1(e) or (f), the Revolving Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest on the Revolving Notes and all other amounts payable by Borrower under
the Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by Borrower and Parent.
Section 12.3. Performance by Agent. If Borrower or any Obligated Party
shall fail to perform any covenant or agreement in accordance with the terms of
the Loan Documents, Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of Borrower or the
applicable Obligated Party. In such event, Borrower shall, at the request of
Agent, promptly pay any amount expended by Agent or the Banks in connection with
such performance or attempted performance to Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and including
the date of such expenditure to but excluding the date such expenditure is paid
in full. Notwithstanding the foregoing, it is expressly agreed that neither
Agent nor any Bank shall have any liability or responsibility for the
performance of any obligation of Borrower or any Obligated Party under any Loan
Document.
Section 12.4. Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to Parent or Borrower (any such notice being hereby expressly
waived by Borrower and Parent), to set off and apply any and all deposits
(general, time, demand, provisional, or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of Borrower or Parent against any and all of the
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Obligations, irrespective of whether or not Agent or such Bank shall have made
any demand under such Loan Documents and although such Obligations may be
unmatured. Each Bank agrees promptly to notify Borrower (with a copy to Agent)
after any such setoff and application; provided, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
and remedies of each Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Bank may
have.
Section 12.5. Continuance of Default. For purposes of all Loan
Documents, a Default shall be deemed to have continued and exist until Agent
shall have actually received evidence satisfactory to Agent that such Default
shall have been remedied.
ARTICLE XIII.
Agent
Section 13.1. Appointment, Powers and Immunities. Each Bank and the
Issuing Bank hereby appoints (and continues the appointment created by the
Original Credit Agreement) and authorizes Chase to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to Agent by the terms of the Loan Documents, together with such other
powers as are reasonably incidental thereto. Neither Agent nor any of its
Affiliates, officers, directors, employees, attorneys, or agents shall be liable
for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with any Loan Document or any of the other Loan
Documents except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the preceding sentence, Agent (i) may treat
the payee of any Revolving Note as the holder thereof until it receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to Agent; (ii) shall have no duties or responsibilities except
those expressly set forth in the Loan Documents, and shall not by reason of any
Loan Document be a trustee or fiduciary for any Bank; (iii) shall not be
required to initiate any litigation or collection proceedings under any Loan
Document except to the extent requested by Required Banks; (iv) shall not be
responsible to the Banks for any recitals, statements, representations, or
warranties contained in any Loan Document, or any certificate or other
documentation referred to or provided for in, or received by any of them under,
any Loan Document, or for the value, validity, effectiveness, enforceability, or
sufficiency of any Loan Document or any other documentation referred to or
provided for therein or for any failure by any Person to perform any of its
obligations thereunder; (v) may consult with legal counsel (including counsel
for Parent), independent public accountants, and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; and (vi) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate, or other instrument or
writing believed by it to be genuine and signed or sent by the proper party or
parties. As to any matters not expressly provided for by any Loan Document,
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by Required Banks, and
such instructions of Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks; provided, however, that
Agent shall not be required to take any action which exposes it to personal
liability or which is contrary to any Loan Document or applicable law.
Section 13.2. Rights of Agent as a Bank. With respect to its Revolving
Commitment, the Loans made by it, the Letters of Credit issued by it as the
Issuing Bank, and the Revolving Note issued to it, Chase (and any successor
acting as Agent) in its capacity as a Bank hereunder shall have the same rights
and powers hereunder as any other Bank and may exercise the same as though it
were not acting as Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Agent in its
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individual capacity. Agent and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to (as disclosed pursuant
to Section 13.9 or otherwise), act as trustee under indentures of, provide
merchant banking services to, and generally engage in any kind of banking,
trust, or other business with Borrower, any Obligated Party or any other
Subsidiary, and any other Person who may do business with or own securities of
Borrower, any Obligated Party or any other Subsidiary, all as if it were not
acting as Agent and without any duty to account therefor to the Banks.
Section 13.3. Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless Agent has received
notice from a Bank, Parent or Borrower specifying such Default and stating that
such notice is a "Notice of Default." In the event that Agent receives such a
notice of the occurrence of a Default, Agent shall give prompt notice thereof to
the Banks (and shall give each Bank prompt notice of each such non-payment).
Agent shall (subject to Section 13.1) take such action with respect to such
Default as shall be directed by Required Banks, provided that unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable and in the best interest of the Banks.
Section 13.4. Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY
AGENT FROM AND HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER
SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF BORROWER AND
PARENT UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY AGENT UNDER OR IN RESPECT OF ANY OF THE
LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE
FOREGOING TO THE EXTENT CAUSED BY AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE BANKS THAT AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS
AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES
TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON
THE BASIS OF THE COMMITMENT PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES) INCURRED BY AGENT IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT,
OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE)
OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
BORROWER OR PARENT.
Section 13.5. Independent Credit Decisions. Each Bank agrees that it
has independently and without reliance on Agent or any other Bank, and based on
such documentation and information as it has deemed appropriate, made its own
credit analysis of Borrower and decision to enter into any Loan
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Document and that it will, independently and without reliance upon Agent or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under any Loan Document. Except as otherwise
specifically set forth herein, Agent shall not be required to keep itself
informed as to the performance or observance by Borrower or any Obligated Party
of any Loan Document or to inspect the properties or books of Borrower or any
Obligated Party. Except for notices, reports, and other documents and
information expressly required to be furnished to the Banks by Agent hereunder
or under the other Loan Documents, Agent shall not have any duty or
responsibility to provide any Bank with any credit or other financial
information concerning the affairs, financial condition, or business of Borrower
or any Obligated Party (or any of their Affiliates) which may come into the
possession of Agent or any of its Affiliates.
Section 13.6. Several Revolving Commitments. The Revolving Commitments
and other obligations of the Banks under any Loan Document are several. The
default by any Bank in making a Loan in accordance with its Revolving Commitment
shall not relieve the other Banks of their obligations under any Loan Document.
In the event of any default by any Bank in making any Loan, each non- defaulting
bank shall be obligated to make its Loan but shall not be obligated to advance
the amount which the defaulting Bank was required to advance hereunder. No Bank
shall be responsible for any act or omission of any other Bank
Section 13.7. Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to the Banks, the Issuing Bank, and Borrower, and Agent
may be removed at any time by Required Banks if it has breached its obligations
under the Loan Documents. Upon any such resignation or removal, Required Banks
will have the right to appoint a successor Agent with Borrower's consent, which
shall not be unreasonably withheld. If no successor Agent shall have been so
appointed by Required Banks and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation or
the Required Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks and the Issuing Bank, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or any State thereof and having combined capital and surplus of at least
One Hundred Million Dollars ($100,000,000). Upon the acceptance of its
appointment as successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges, immunities, contractual
obligations, and duties of the resigning or removed Agent, and the resigning or
removed Agent shall be discharged from its duties and obligations under the Loan
Documents. After any Agent's resignation or removal as Agent, the provisions of
this Article XIII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was Agent.
Section 13.8. Agent Fee. Parent and Borrower, jointly and severally,
agree to pay to Chase the administrative fee described in the fee letter dated
December 12, 2001 among Parent, Borrower, J.P. Morgan Securities Inc., and
Chase.
Section 13.9. Intercreditor Provisions. The Banks acknowledge that the
Obligated Parties are indebted to Chase pursuant to the Guarantees described on
Schedule 10.1 and have granted Liens to Chase to secure obligations arising in
connection therewith as reflected on Schedule 10.2 (such Liens granted pursuant
to the documents described in item 2 on Schedule 10.2 herein the "Lease Liens"
and the property in which the Lease Liens has been granted which is specifically
described on Annex A to Schedule 10.2, herein the "Lease Collateral"). In order
to induce the Banks to enter into this Agreement, Chase subordinates the Lease
Liens and makes them junior, second and inferior to the security interest of
Agent held for the benefit of the Banks under the Loan Documents in the Lease
Collateral. The foregoing subordination shall not impair the rights Chase has as
a Bank hereunder.
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ARTICLE XIV.
Miscellaneous
Section 14.1. Expenses. Parent and Borrower hereby, jointly and
severally, agree to pay on demand: (a) all reasonable costs and expenses of
Agent and the Added Bank arising in connection with the preparation,
negotiation, execution, and delivery of the Loan Documents executed and
delivered on the Closing Date, including, without limitation, the reasonable
fees and expenses of legal counsel for Agent and the Added Bank; (b) all
reasonable costs and expenses of Agent arising in connection with (i) the
preparation, negotiation, execution, and delivery of any of the Loan Documents
executed and delivered after the Closing Date and any and all amendments or
other modifications to the Loan Documents, and (ii) the syndication of the
Loans, including in all instances, without limitation, the reasonable fees and
expenses of legal counsel for Agent; (c) all reasonable costs and expenses of
Agent and the Banks in connection with any Default and the enforcement of any
Loan Document, including, without limitation, the reasonable fees and expenses
of legal counsel for Agent and each of the Banks (including the allocated costs
of in house counsel); (d) all transfer, stamp, documentary, or other similar
taxes, assessments, or charges levied by any Governmental Authority in respect
of any Loan Document; (e) all costs, expenses, assessments, and other charges
incurred in connection with any filing, registration, recording, or perfection
of any security interest or Lien contemplated by any Loan Document; (f) all
other costs and expenses incurred by Agent in connection with any Loan Document,
including, without limitation, all reasonable costs, expenses, and other charges
incurred in connection with obtaining any audit or appraisal in respect of the
Collateral; and (g) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder.
Section 14.2. Indemnification. PARENT AND BORROWER, JOINTLY AND
SEVERALLY, INDEMNIFY AGENT, THE ISSUING BANK, AND EACH BANK AND EACH AFFILIATE
(INCLUDING WITHOUT LIMITATION, J.P. MORGAN SECURITIES, INC.) THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND EXPENSES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C)
ANY BREACH BY BORROWER OR ANY OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES
OR ASSETS OF PARENT OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; PROVIDED THAT
THE PERSON ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION SHALL NOT BE
INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, OR EXPENSES ARISING OUT OF
OR RESULTING FROM ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS
OBLIGATIONS UNDER THE LOAN DOCUMENTS. WITHOUT LIMITING ANY PROVISION OF
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ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD
HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND
EXPENSES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF SUCH PERSON.
Section 14.3. Limitation of Liability. None of Agent, any Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and Parent, Borrower and, by the execution of the
Loan Documents to which it is a party each other Obligated Party, hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, consequential, or punitive damages suffered or incurred by
Parent, Borrower or any other Obligated Party in connection with, arising out
of, or in any way related to any of the Loan Documents, or any of the
transactions contemplated by any of the Loan Documents.
Section 14.4. No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by Agent or any Bank shall
have the right to act exclusively in the interest of Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to Parent, Borrower or any of
Parent's shareholders or any other Person.
Section 14.5. No Fiduciary Relationship. The relationship between
Borrower and the Obligated Parties on the one hand and Agent and each Bank on
the other is solely that of debtor and creditor, and neither Agent nor any Bank
has any fiduciary or other special relationship with Borrower or any Obligated
Parties, and no term or condition of any of the Loan Documents shall be
construed so as to deem the relationship between Borrower and the Obligated
Parties on the one hand and Agent and each Bank on the other to be other than
that of debtor and creditor.
Section 14.6. Equitable Relief. Parent and Borrower recognize that in
the event Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy at
law may prove to be inadequate relief to Agent and the Banks. Parent and
Borrower therefore agree that Agent and the Banks, if Agent or the Required
Banks so request, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 14.7. No Waiver; Cumulative Remedies. No failure on the part of
Agent, the Issuing Bank, or any Bank to exercise and no delay in exercising, and
no course of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in the Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 14.8. Successors and Assigns.
(a) Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that (i) neither the Borrower nor
the Parent may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Bank (and any attempted
assignment or transfer by Borrower or Parent without such consent shall be null
and void) and (ii) no Bank may assign or otherwise transfer its
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rights or obligations hereunder except in accordance with this Section. Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in clause (d) of this
Section) and, to the extent expressly contemplated hereby, the Bank Affiliate of
each of Agent, the Issuing Bank, and the Banks) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) Assignments. Parent, Borrower, and each of the Banks agree
that any Bank (the "Assigning Bank") may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolving Commitment and the Revolving
Exposure at the time owing to it); provided that (i) except in the case of an
assignment of the entire remaining amount of the Assigning Bank's Revolving
Commitment and the Revolving Exposure at the time owing to it or in the case of
an assignment to a Bank or a Bank Affiliate or an Approved Fund with respect to
a Bank, the aggregate amount of the Revolving Commitment (which for this purpose
includes the Revolving Exposure) or principal outstanding balance of the Loan of
the Assigning Bank subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
Agent) shall not be less than $5,000,000, unless each of Agent and, so long as
no Default exists, Borrower otherwise consent (each such consent not to be
unreasonably withheld or delayed), (ii) each partial assignment shall be made as
an assignment of a proportionate part of all the Assigning Bank's rights and
obligations under this Agreement with respect to the Loan or the Revolving
Commitment assigned, (iii) the parties to each assignment shall execute and
deliver to Agent an Assignment and Acceptance, together with a processing and
recordation fee of Three Thousand Five Hundred Dollars ($3,500), and the
Eligible Assignee, if it shall not be a Bank, shall deliver to Agent an
administrative questionnaire in a form satisfactory to Agent, and (iv) in the
case of an assignment to a CLO, the Assigning Bank shall retain the sole right
to approve any amendment, modification, or waiver of any provision of this
Agreement, provided that the Assignment and Acceptance between the Assigning
Bank and such CLO may provide that the Assigning Bank will not, without the
consent of such CLO, agree to any amendment, modification or waiver with respect
to the following: (A) any increase of such Bank's Revolving Commitment, (B) any
reduction of the principal amount of, or interest to be paid on, the Revolving
Note, or any fees or other amounts payable hereunder to such Bank, (C) any
postponement of any date fixed for the payment of principal of, or interest on,
the Revolving Note payable to such Bank, or any fees or other amounts payable to
such Bank hereunder, or (D) the release of Borrower, any Obligated Party or any
Collateral. Subject to acceptance and recording thereof by Agent pursuant to
clause (c) of this Section, from and after the effective date specified in each
Assignment and Acceptance, the Eligible Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Bank under this Agreement, and
the Assigning Bank thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
Assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Section 14.2). Any assignment or transfer by a Bank of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Bank of a participation in such
rights and obligations in accordance with clause (d) of this Section.
(c) Information. Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Banks and the Revolving
Commitments of, and principal amount of the Loans and LC Disbursements owing to
each Bank pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive and Borrower, Parent, Agent, the
Issuing Bank, and the Banks may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Bank hereunder for all purposes of
this Agreement,
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notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower, Parent, the Issuing Bank, or any Bank at any reasonable
time and from time to time upon reasonable prior notice. Upon its receipt of the
Eligible Assignee's completed administrative questionnaire in a form
satisfactory to Agent (unless the Eligible Assignee shall already be a Bank
hereunder), the processing and recordation fee referred to in clause (b) of this
Section, any written consent to such assignment required by clause (b) of this
Section, and an Assignment and Acceptance executed by an Assigning Bank and
Eligible Assignee representing that it is an Eligible Assignee, together with
any Revolving Notes subject to such assignment, Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt written notice thereof
to Borrower. No assignment shall be effective for purpose of this Agreement
unless it has been recorded in the Register as provided in this clause (c).
Within five (5) Business Days after its receipt of such notice Borrower, at its
expense, shall execute and deliver to Agent in exchange for the surrendered
Revolving Notes new Revolving Notes to the order of such Eligible Assignee in an
amount equal to the Revolving Commitments or Revolving Exposure assumed by it
pursuant to such Assignment and Acceptance and, if the Assigning Bank has
retained Revolving Commitments or Revolving Exposure, Revolving Notes to the
order of the Assigning Bank in an amount equal to the Revolving Commitments or
Revolving Exposure retained by it hereunder (each such promissory note shall
constitute a "Revolving Note" for purposes of the Loan Documents). Such new
Revolving Notes shall be in an aggregate principal amount of the surrendered
Revolving Notes, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of Exhibit A
hereto.
(d) Participations. Any Bank may, without the consent of, or
notice to, Borrower, Parent, the Issuing Bank, or Agent, sell participations to
one or more banks or other entities (a "Participant") in all or a portion of
such Bank's rights and/or obligations under this Agreement (including all or a
portion of its Revolving Commitment and/or the Revolving Exposure owing to it);
provided that (i) such Bank's obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Borrower, Parent, the
Issuing Bank, Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement or instrument pursuant to which a Bank sells
such a participation shall provide that such Bank shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Bank will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to the following: (A) any
increase of such Bank's Revolving Commitment, (B) any reduction of the principal
amount of, or interest to be paid on, the Revolving Note, or any fees or other
amounts payable hereunder to such Bank, (C) any postponement of any date fixed
for the payment of principal of, or interest on, the Revolving Note payable to
such Bank, or any fees or other amounts payable to such Bank hereunder, or (D)
the release of Borrower, any Obligated Party or any Collateral. Subject to
clause (e) of this Section, Borrower agrees that each Participant shall be
entitled to the benefits of Sections 5.9, 6.1 and 6.5 to the same extent as if
it were a Bank and had acquired its interest by assignment pursuant to paragraph
(b) of this Section. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 12.4 as though it were a Bank, provided
such Participant agrees to be subject to Section 5.7 as though it were a Bank. A
Participant shall not be entitled to receive any greater payment under Sections
5.9 and 6.1 than the applicable Bank would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with Borrower's prior written consent.
A Participant that is not organized under the laws of the United States of
America or a state thereof shall not be entitled to the benefits of Section 5.9
unless Borrower is notified of the participation sold to such Participant and
such Participant agrees, for the benefit of Borrower, to comply with Section
5.10 as though it were a Bank
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(e) Pledge to Federal Reserve. Any Bank may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Bank, including without limitation any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment of a security interest shall release a Bank
from any of its obligations hereunder or substitute any such pledgee or assignee
for such Bank as a party hereto.
(f) Defined Terms. As used in this Section 14.8, the following
terms have the following meanings:
"Approved Fund" means (a) a CLO and (b) with respect to any
Bank that is a fund which invests in bank loans and similar extensions
of credit, any other fund that invests in bank loans and similar
extensions of credit and is managed by the same investment advisor as
such Bank or by an Affiliate of such investment advisor.
"Bank Affiliate" means, (a) with respect to any Bank, (i) an
Affiliate of such Bank or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing,
holding or otherwise investing in bank loans and similar extensions of
credit in the ordinary course of its business and is administered or
managed by a Bank or an Affiliate of such Bank and (b) with respect to
any Bank that is a fund which invests in bank loans and similar
extensions of credit and is managed by the same investment advisor as
such Bank or by an Affiliate of such investment advisor.
"CLO" means any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding, or
otherwise investing in bank loans and similar extensions of credit in
the ordinary course of its business and is administered or managed by a
Bank or Bank Affiliate.
"Eligible Assignee" means (a) a Bank; (b) a Bank Affiliate;
(c) an Approved Fund; and (d) any other Person (other than a natural
Person) approved by Agent, in the case of any assignment of a Loan,
and, unless (x) such Person is taking delivery of an assignment in
connection with physical settlement of a credit derivatives transaction
or (y) a Default exists, Borrower (each such approval not to be
unreasonably withheld or delayed). If the consent of Borrower to an
assignment or to an Eligible Assignee is required hereunder (including
a consent to an assignment which does not meet the minimum assignment
thresholds specified in paragraph (b)(i) of this Section), Borrower
shall be deemed to have given its consent five Business Days after the
date notice thereof has been delivered by the Assigning Bank (through
Agent) unless such consent is expressly refused by Borrower prior to
such fifth Business Day.
"Fund" means any Person (other than a natural Person) that is
(or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the
ordinary course of its business.
Section 14.9. Survival. All representations and warranties made in any
Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by Agent or any Bank or any closing
shall affect the representations and warranties or the right of Agent or any
Bank to rely upon them. Without prejudice to the survival of any other
obligation of Borrower or Parent hereunder, the obligations of Borrower and
Parent under Article VI and Sections 14.1 and 14.2 shall survive repayment of
the Revolving Notes, the expiration or termination of the Letters of Credit, and
termination of the Revolving Commitments.
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<PAGE>
Section 14.10. Entire Agreement; Amendment and Restatement;
Ratification. THIS AGREEMENT, THE REVOLVING NOTES, AND THE OTHER LOAN DOCUMENTS
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
(PROVIDED THAT THE INDEMNITY, EXPENSE REIMBURSEMENT AND FEE PROVISIONS OF THE
COMMITMENT LETTER AND FEE LETTER DATED DECEMBER 12, 2001, FROM CHASE TO PARENT
AND BORROWER ARE NOT REPLACED BY THE LOAN DOCUMENTS) AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO. This Agreement amends and restates the Existing Credit
Agreement in its entirety. The execution of this Agreement, the Revolving Note,
and the other Loan Documents executed in connection herewith does not extinguish
the indebtedness outstanding in connection with the Existing Credit Agreement
nor does it constitute a novation. At all times during the period prior to the
date hereof, all of the provisions of the Existing Credit Agreement are hereby
ratified and confirmed and shall remain in full force and effect. Any reference
in any Loan Document to the Existing Credit Agreement or the Original Credit
Agreement is hereby amended to be a reference to this Agreement. The Parent,
Borrower, Agent and the Banks ratify and confirm each of the Loan Documents
entered into prior to the Closing Date (but excluding the Existing Credit
Agreement) and agree that such Loan Documents continue to be legal, valid,
binding and enforceable in accordance with their respective terms, except as
modified hereby as described below. PARENT, BORROWER AND EACH OTHER OBLIGATED
PARTY (BY ITS EXECUTION OF THIS AGREEMENT BELOW), REPRESENTS AND WARRANTS THAT
AS OF THE DATE HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR
COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS. TO INDUCE AGENT AND
THE BANKS TO ENTER INTO THIS AGREEMENT, PARENT, BORROWER AND EACH OTHER
OBLIGATED PARTY WAIVES ANY AND ALL CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS,
WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND HEREBY RELEASES
AGENT AND THE BANKS AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND
ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL OBLIGATIONS,
INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER,
WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH PARENT, BORROWER OR ANY
OTHER OBLIGATED PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY
RELEASED PARTY ARISING PRIOR TO THE CLOSING DATE AND FROM OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. Without limiting
the generality of the foregoing and notwithstanding anything in any Loan
Document to the contrary, Parent, Borrower, the other Obligated Parties, Agent
and the Banks agree and acknowledge that:
(i) the term "Obligations" as used in the Guaranty,
the Parent Security Agreement and the Parent Pledge Agreement means the
"Obligations" as defined herein;
(ii) the term "Obligations" as used in the Parent
Security Agreement and the Parent Pledge Agreement also includes the
obligations, indebtedness and liability of the Parent under this Agreement and
the Guaranty, whether now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 66
<PAGE>
(iii) the term "Secured Obligations" as used in the
Subsidiary Security Agreement and the Subsidiary Pledge Agreement, when used
with respect to Borrower only, includes without limitation, the "Obligations,"
as defined herein;
(iv) the term "Borrower" as used in the Guaranty, the
Parent Security Agreement, the Parent Pledge Agreement, the Subsidiary Pledge
Agreements or the Subsidiary Security Agreement means Horizon Mental Health
Management, Inc. as the "Borrower" hereunder and successor by assumption to the
obligations of Parent;
(v) any reference in the Security Documents or the
Guaranty to any Revolving Note, Term Note or Note, shall mean, the Revolving
Notes executed pursuant hereto;
(vi) any reference in the Security Documents or the
Guaranty to "Secured Party", "Pledgee", or "Agent" is hereby amended to be a
reference to JPMorgan Chase Bank (as successor in interest by merger to The
Chase Manhattan Bank, who was the successor in interest by merger to Chase Bank
of Texas, National Association, who was formerly known as Texas Commerce Bank
National Association), as agent for itself and the other banks and lending
institutions named in this Agreement; and
(vii) the terms "FPMI" and Florida Psychiatric
Management, Inc. as used in any of the Loan Documents means HBS FL and Horizon
Behavioral Services of Florida, Inc., respectively.
Section 14.11. Amendments. No amendment or waiver of any provision of
any Loan Document to which Borrower or Parent is a party, nor any consent to any
departure by Borrower or Parent therefrom, shall in any event be effective: (a)
unless pursuant to an Increased Commitment Supplement executed in accordance
with the terms and conditions thereof and Section 2.6(b) which only needs to be
signed by Borrower, Parent, Agent and the Bank's increasing or providing new
Revolving Commitments thereunder and (b), in the case of this Agreement, and any
circumstance other than as described in clause (a) preceding; unless the same
shall be agreed or consented to by Required Banks, Parent and Borrower and in
the case of any other Loan Document, unless the same shall be agreed or
consented to by Agent acting with the consent of the Required Banks and the
other parties thereto. Each such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, no amendment, waiver, or consent shall: (a)
without the consent of each Bank affected thereby: (i) increase the Revolving
Commitment of a Bank, (ii) reduce the principal of, or interest on, the
Revolving Notes or the LC Disbursements, or any fees or other amounts payable
hereunder to such Bank; (iii) postpone any date fixed for any payment of
principal of, or interest on, the Revolving Note payable to such Bank, the LC
Disbursements, or any fees or other amounts payable to such Bank hereunder; (b)
change the percentage of the Revolving Commitments or of the aggregate unpaid
principal amount of the Revolving Notes or the number of Banks which shall be
required for the Banks or any of them to take any action under any Loan Document
without the consent of all Banks; (c) change any provision contained in this
Section 14.11 without the consent of all Banks; or (d) release any Collateral or
release Borrower or any Obligated Party from liability without the consent of
all Banks. Notwithstanding anything to the contrary contained in this Section,
no amendment, waiver, or consent shall be made (a) with respect to Article XIII
hereof without the prior written consent of the Agent and (b) which affects the
rights or duties of the Issuing Bank without the prior written consent of the
Issuing Bank.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 67
<PAGE>
Section 14.12. Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall at
any time exceed the Maximum Rate. If at any time the interest rate (the
"Contract Rate") for any Obligation shall exceed the Maximum Rate, thereby
causing the interest accruing on such Obligation to be limited to the Maximum
Rate, then any subsequent reduction in the Contract Rate for such Obligation
shall not reduce the rate of interest on such Obligation below the Maximum Rate
until the aggregate amount of interest accrued on such Obligation equals the
aggregate amount of interest which would have accrued on such Obligation if the
Contract Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount permitted
by applicable law. If any excess of interest in such respect is hereby provided
for, or shall be adjudicated to be so provided, in any Loan Document or
otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither Borrower nor the sureties,
guarantors, successors, or assigns of Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any Bank
ever receives, collects, or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by applicable law shall be
applied as a payment and reduction of the principal of the Obligations, and, if
the principal of the Obligations has been paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, Borrower and each Bank shall, to the
extent permitted by applicable law, (a) characterize any non-principal payment
as an expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations so that interest for the entire term
does not exceed the Maximum Rate.
Section 14.13. Notices. All notices and other communications provided
for in any Loan Document to which Borrower or any Obligated Party is a party
shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof and, if to
an Obligated Party, at the address for notices for Parent, or, as to any party,
at such other address as shall be designated by such party in a notice to each
other party given in accordance with this Section. Except as otherwise provided
in any Loan Document, all such communications shall be deemed to have been duly
given when transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed notice, three
(3) Business Days after being duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to Agent pursuant to Section
5.3 shall not be effective until received by Agent. Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by Agent; provided
that the foregoing shall not apply to notices pursuant to Article II and
Sections 5.1 through 5.3 unless otherwise agreed by Agent and the applicable
Bank. Agent or Borrower may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. All notices and other
communications given to any party hereto by electronic communications in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 14.14. Governing Law; Venue of Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. ANY
ACTION OR PROCEEDING AGAINST PARENT OR BORROWER UNDER OR IN CONNECTION WITH ANY
LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 68
<PAGE>
COURT LOCATED IN DALLAS, TEXAS OR ANY FEDERAL COURT IN THE NORTHERN DISTRICT OF
TEXAS. PARENT AND BORROWER EACH HEREBY IRREVOCABLY (a) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b) WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT
IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. PARENT AND BORROWER
EACH AGREE THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14.13 OF THIS AGREEMENT.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF
AGENT, THE ISSUING BANK, OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT, THE ISSUING BANK, OR ANY
BANK TO BRING ANY ACTION OR PROCEEDING AGAINST PARENT, BORROWER OR WITH RESPECT
TO ANY OF THEIR RESPECTIVE PROPERTY IN COURTS IN OTHER JURISDICTION. ANY ACTION
OR PROCEEDING BY PARENT OR BORROWER AGAINST AGENT OR ANY BANK SHALL BE BROUGHT
ONLY IN A COURT LOCATED IN DALLAS, TEXAS.
Section 14.15. Counterparts. This Agreement may be executed in one or
more counterparts and on telecopy counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 14.16. Severability. Any provision of any Loan Document held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of any Loan Document and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 14.17. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 14.18. Non-Application of Chapter 346 of The Finance Code of
Texas. The provisions of Chapter 346 of The Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 14.19. Construction. Parent, Borrower, each other Obligated
Party (by its execution of the Loan Documents to which its is a party), Agent,
and each Bank acknowledges that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review the
Loan Documents with its legal counsel and that the Loan Documents shall be
construed as if jointly drafted by the parties thereto.
Section 14.20. Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 14.21. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 69
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PARENT:
HORIZON HEALTH CORPORATION
By: /s/ RONALD C. DRABIK
----------------------------------
Name: RONALD C. DRABIK
----------------------------
Title: CFO
---------------------------
Address for Notices:
1500 Waters Ridge Drive
Lewisville, Texas 75057
Fax No.: (972) 420-8282
Telephone No.: (972) 420-8200
Attention: Chief Financial Officer
BORROWER:
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By: /s/ RONALD C. DRABIK
----------------------------------
Name: RONALD C. DRABIK
----------------------------
Title: CFO
---------------------------
Address for Notices:
1500 Waters Ridge Drive
Lewisville, Texas 75057
Fax No.: (972) 420-8282
Telephone No.: (972) 420-8200
Attention: Chief Financial Officer
SECOND AMENDMENT AND RESTATED CREDIT AGREEMENT - Page 70
<PAGE>
AGENT AND BANKS:
JPMORGAN CHASE BANK (as successor in
interest by merger to The Chase Manhattan
Bank, who was successor-in-interest by
merger to the Chase Bank of Texas,
National Association who was formerly
known as TEXAS COMMERCE BANK NATIONAL
ASSOCIATION),
individually as a Bank and as Agent.
By: /s/ D. SCOTT HARVEY
--------------------------------------
D. Scott Harvey, Senior Vice President
Address for Notices:
MAIL ADDRESS:
P.O. Box 660197
Dallas, Texas 75266-0197
HAND DELIVERY ADDRESS:
12875 Josey Lane
Farmers Branch, Texas 75234
Fax No.: (972) 888-7837
Telephone No.: (972) 888-7802
Attention: D. Scott Harvey
Steve Lewis
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
12875 Josey Lane
Farmers Branch, Texas 75234
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 71
<PAGE>
BANK OF AMERICA, NATIONAL ASSOCIATION
By: /s/ DANIEL H. PENKAR
---------------------------------------
Daniel H. Penkar, Senior Vice President
Address for Notices:
MAIL ADDRESS:
Bank of America, National Association
901 Main Street, 67th Floor
Dallas, Texas 75202
Fax No.: (214) 209-3140
Telephone No.: (214) 209-1178
Attention: Daniel H. Penkar
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Nancy Santos
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 72
<PAGE>
OBLIGATED PARTY CONSENT
Each Obligated Party (i) consents and agrees to this Second Amended and
Restated Credit Agreement including, without limitation, Section 14.10 of this
Second Amended and Restated Credit Agreement; (ii) agrees that the Guaranty,
Subsidiary Security Agreement, and the Subsidiary Pledge Agreement to which it
is a party shall remain in full force and effect and shall continue to be the
legal, valid, and binding obligation of such Obligated Party enforceable against
it in accordance with its terms; (iii) agrees that the "Obligations" as defined
herein are "Obligations" as defined in the Guaranty; and (iv) agrees that any
reference to the "Borrower" in the Guaranty, Subsidiary Security Agreement or
Subsidiary Pledge Agreement shall mean Horizon Mental Health Management, Inc. as
the "Borrower" hereunder successor by assumption to the obligations of the
Parent.
OBLIGATED PARTIES:
MENTAL HEALTH OUTCOMES, INC.
GERIATRIC MEDICAL CARE, INC.
SPECIALTY REHAB MANAGEMENT, INC.
HHMC PARTNERS, INC.
HORIZON BEHAVIORAL SERVICES, INC.
FLORIDA PSYCHIATRIC ASSOCIATES, INC.
HORIZON BEHAVIORAL SERVICES OF FLORIDA, INC.
FPMBH OF TEXAS, INC.
HMHM OF TENNESSEE, INC.
OCCUPATIONAL HEALTH CONSULTANTS OF AMERICA, INC.
EMPLOYEE ASSISTANCE SERVICES, INC.
HORIZON BEHAVIORAL SERVICES IPA, INC.
HORIZON BEHAVIORAL SERVICES NEW JERSEY, INC.
HORIZON BEHAVIORAL SERVICES OF NEW YORK, INC.
By: /s/ RONALD C. DRABIK
-------------------------------------------------
Name: Ronald C. Drabik
-------------------------------------------
Authorized Officer for each Obligated Party
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 73
<PAGE>
INDEX TO EXHIBITS
<Table>
<Caption>
Exhibit Description of Exhibit
------- ----------------------
<S> <C>
A Revolving Note
B Assignment and Acceptance
C Compliance Certificate
D Increased Commitment Supplement
E Loan Change Notice
F Letter of Credit Notice
</Table>
INDEX TO SCHEDULES
<Table>
Schedule Description of Schedule
-------- -----------------------
<S> <C>
1.1(a) Revolving Commitments
1.1(b) Assignment Details
8.14 List of Subsidiaries
8.14A Organizational Chart
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
</Table>
INDEX TO EXHIBITS AND SCHEDULES - Solo Page
<PAGE>
EXHIBIT A
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Revolving Note
EXHIBIT A - Cover Page
<PAGE>
SECOND AMENDED AND RESTATED REVOLVING NOTE
$_____________ Dallas, Texas ______,____
Dallas, Texas
FOR VALUE RECEIVED, the undersigned, HORIZON MENTAL HEALTH MANAGEMENT,
INC., a Texas corporation ("Borrower") hereby promises to pay to the order of
____________________________ ("Bank"), at the Principal Office of the Agent, in
lawful money of the United States of America and in immediately available funds,
the principal amount of ___________________________________ DOLLARS
($___________) or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by Bank to Borrower under the Credit
Agreement referred to below, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Loans, at such office, in like money and funds, for the period
commencing on the date of such Loans until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.
Borrower hereby authorizes Bank to record in its records the amount of
each Loan and Type of Accounts established under each Loan and all
Continuations, Conversions and payments of principal in respect thereof, which
records shall, in the absence of manifest error, constitute prima facie evidence
of the accuracy thereof; provided, however, that the failure to make such
notation with respect to any such Loan or payment shall not limit or otherwise
affect the obligations of Borrower under the Credit Agreement or this Revolving
Note.
This Revolving Note is one of the Revolving Notes referred to in the
Second Amended and Restated Credit Agreement dated as of May 23, 2002, among
Borrower, Horizon Health Corporation, Bank, the other banks and lending
institutions named therein and JPMorgan Chase Bank, as agent for Bank and such
other banks and lending institutions ("Agent") (such Credit Agreement, as the
same may be amended or otherwise modified from time to time, being referred to
herein as the "Credit Agreement"), and evidences the Loans made by Bank
thereunder. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity of this Revolving Note upon the happening of
certain stated events and for prepayments of the Loans prior to the maturity of
this Revolving Note upon the terms and conditions specified in the Credit
Agreement. Capitalized terms used in this Revolving Note have the respective
meanings assigned to them in the Credit Agreement.
This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States
of America.
Except for any notices expressly required by the Loan Documents,
Borrower and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this Revolving Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Revolving Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release any such party or to release
or substitute part or all of the collateral securing this Revolving Note, or to
grant any other indulgences or forbearances whatsoever, without notice to any
other party and without in any way affecting the personal liability of any party
hereunder.
SECOND AMENDED AND RESTATED REVOLVING NOTE - Page 1
<PAGE>
This Revolving Note is executed in amendment and restatement of (and
not in extinguishment or satisfaction of the indebtedness evidenced by) that
certain Amended and Restated Revolving Note dated as of November 15, 2000,
executed by Borrower pursuant to the Existing Credit Agreement and payable to
the order of The Chase Manhattan Bank (the "2000 Note") to the extent the
indebtedness evidenced thereby has been assigned to the Bank. The 2000 Note was
executed in amendment and restatement of all of those certain Term Notes dated
as of December 9, 1997 executed by Parent pursuant to the Original Credit
Agreement and payable to the order of the banks named therein, including The
Chase Manhattan Bank, as such notes have been assigned to The Chase Manhattan
Bank and assumed by Borrower (collectively, the "1997 Notes" and the 1997 Notes
and the 2000 Note, herein the "Prior Notes"). This Revolving Note evidences
indebtedness previously evidenced by the Prior Notes. With respect to matters
relating to the period prior to the date hereof, all provisions of the Prior
Notes are hereby ratified and confirmed and shall remain in full force and
effect.
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By:
---------------------------------
Name:
--------------------------
Title:
-------------------------
SECOND AMENDED AND RESTATED REVOLVING NOTE - Page 2
<PAGE>
EXHIBIT B
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Assignment and Acceptance
EXHIBIT B - Cover Page
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Dated _____________, ______
Reference is made to the Second Amended and Restated Credit Agreement
dated May 23, 2002, among HORIZON HEALTH CORPORATION, a Delaware corporation
("Parent" ), HORIZON MENTAL HEALTH MANAGEMENT, INC., a Texas Corporation (the
"Borrower"), the banks and the lending institutions named therein (the "Banks ")
and JPMORGAN CHASE BANK, as agent for the Banks ("Agent") (such Credit
Agreement, as it may be amended or otherwise modified from time to time, being
hereinafter referred to as the "Credit Agreement" and capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement). This Assignment and Acceptance is being executed
pursuant to Section 14.8 of the Credit Agreement.
_________________________________ (the "Assignor ") and
______________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse, representation or warranty except as specifically
set forth herein, and the Assignee hereby purchases and
assumes from the Assignor as of the Effective Date (as defined
below), a ___________% interest in and to all the Assignor's
rights and obligations under the Revolving Commitments of the
Assignor on the Effective Date and such percentage interest in
the Loans owing to the Assignor outstanding on the Effective
Date, and the LC Exposure of the Assignor on the Effective
Date together with such percentage interest in all unpaid
interest and fees accrued from the Effective Date relating
thereto). After giving effect to this the foregoing
assignment, Assignee's Revolving Commitments shall equal
$_________________.
2. The Assignor (i) represents that as of the date hereof, its
Revolving Commitment is $_____________, the outstanding
principal balance of its Loans is $_____________, the LC
Exposure of the Assignor is $____________ (all as unreduced by
any assignments which have not yet become effective); (ii)
makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other Loan Document,
other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest
is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or any
Obligated Party or the performance or observance by Borrower
or any Obligated Party of any of their obligations under the
Credit Agreement or any Loan Document; and (iv) attaches the
Revolving Notes held by Assignor and requests that Agent
exchange such Revolving Notes for new Revolving Notes payable
to the order of (A) Assignee in amounts equal to the Revolving
Commitments assumed by the Assignee pursuant hereto or the
outstanding principal amount of the Loans assigned to Assignee
pursuant hereto, as applicable, and (B) the Assignor in
amounts equal to the Revolving Commitments or Loans (as
applicable) retained by the Assignor under the Credit
Agreement, as specified above.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements
delivered
ASSIGNMENT AND ACCEPTANCE - Page 1
<PAGE>
pursuant to Section 9.1 thereof, and such other documents and
information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and
without reliance upon Agent, the Assignor, or any other Bank
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement and the other Loan Documents; (iv) confirms that it
is eligible to be an Assignee; (v) appoints and authorizes
Agent to take such action on its behalf and to exercise such
powers under the Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably
incidental thereto; (vi) agrees that it will perform in
accordance with their terms all obligations which by the terms
of the Credit Agreement and the other Loan Documents are
required to be performed by it as a Bank; [and (vii) attaches
the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's exemption from
United States withholding taxes with respect to all payments
to be made to the Assignee under the Credit Agreement or such
other documents as are necessary to indicate that all such
payments are subject to such tax at a rate reduced by an
applicable tax treaty].(1)
4. The effective date for this Assignment and Acceptance shall be
_______________, ____ (the "Effective Date").(2) Following the
execution of this Assignment and Acceptance, it will be
delivered to Agent and Borrower for acceptance and recording
by Agent.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this
Assignment and Acceptance, shall have the rights and
obligations of a Bank thereunder and under the other Loan
Documents and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement
and the other Loan Documents.
6. Upon such acceptance and recording, from and after the
Effective Date, Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal,
interest, fees, and other amounts) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Revolving
Note(s) for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Texas
and applicable laws of the United States of America.
8. This Assignment and Acceptance may be executed in any number
of counterparts and on telecopy counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement
----------
(1) If the Assignee is organized under the laws of a jurisdiction
outside the United States.
(2) Such date shall be at least five (5) Business Days after the
execution of this Assignment and Acceptance and delivery thereof to Agent.
ASSIGNMENT AND ACCEPTANCE - Page 2
<PAGE>
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
Address for Notices:
Telecopy No.:
--------------------------
Telephone No.
--------------------------
Lending Office for Base Rate Accounts
Lending Office for Eurodollar Accounts
ACCEPTED BY:
JPMORGAN CHASE BANK,
as Agent
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
HORIZON MENTAL HEALTH MANAGEMENT, INC.,
as Borrower
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
ASSIGNMENT AND ACCEPTANCE - Page 3
<PAGE>
EXHIBIT C
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Compliance Certificate
EXHIBIT C - Cover Page
<PAGE>
COMPLIANCE CERTIFICATE
for the
Fiscal Quarter ending __________ __ , _____
To: JPMorgan Chase Bank
P.O. Box 660197
Dallas, Texas 75266-0197
Fax No.: (972) 888-7837
Telephone No.: (972) 888-7802
Attention: D. Scott Harvey
Steve Lewis
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 9.1(c) of that certain Second Amended and Restated Credit
Agreement (as amended, the "Agreement") dated as of May 23, 2002, among the
Horizon Health Corporation ("Parent"), Horizon Mental Health Management, Inc.
("Borrower"), the banks and lending institutions named therein (the "Banks ")
and JPMorgan Chase Bank, as agent for the Banks ("Agent"). All capitalized
terms, unless otherwise defined herein, shall have the same meanings as in the
Agreement. All the calculations set forth below shall be made pursuant to the
terms of the Agreement.
The undersigned, as an authorized financial officer of Parent, and
not individually, does hereby certify to the Agents and the Banks that:
<Table>
<S> <C> <C> <C> <C> <C>
1. DEFAULT.
No Default has occurred and is continuing or if a Default has
occurred and is continuing, I have described on the attached
Exhibit A the nature thereof and the steps taken or proposed to
remedy such Default.
2. SECTION 9.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Parent and Yes No N/A
the Subsidiaries on or before ninety (90) days
after the end of each Fiscal Year.
(b) Quarterly unaudited financial statements of Parent Yes No N/A
and the Subsidiaries within forty-five (45) days
after the end of each Fiscal Quarter
(c) Financial Projections of Parent and Subsidiaries Yes No N/A
within forty-five (45) days after the beginning of
each Fiscal Year.
3. SECTION 9.10(d) - INSIGNIFICANT SUBSIDIARIES
EBITDA for the Insignificant Subsidiaries for the
most recently completed four Fiscal Quarter period
not to exceed: $500,000
Actual EBITDA for the Insignificant Subsidiaries
for the most recently completed four Fiscal Quarter
period: $_______ Yes No
</Table>
Compliance Certificate - Page 1
<PAGE>
<Table>
<S> <C> <C> <C> <C>
4. SECTION 10.1 - DEBT
(a) Purchase money not to exceed: $ 500,000
Actual Outstanding: $_________ Yes No
(b) Guarantees of surety, appeal bonds, etc. not to exceed: $1,000,000
Actual Outstanding: $_________ Yes No
(c) Aggregate Debt of newly acquired merged Subsidiaries not to exceed: $1,000,000
Actual Outstanding: $_________ Yes No
(d) Other Debt not to exceed: $ 250,000
Actual Outstanding: $_________ Yes No
5. SECTION 10.4 - RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS
The total aggregate amount of redemption or repurchases
exercised by employees and directors in connection with
the exercise by such Person of stock options granted to
such Person under Parent's benefit programs in any Fiscal
Year shall not exceed: $1,000,000
Actual Expended: $_________ Yes No
6. SECTION 10.5 - INVESTMENTS
(a) Aggregate amount of loans to physicians employed
by a Subsidiary not to exceed (calculated net of
bad debt reserve): $ 500,000
Actual Outstanding: $_________ Yes No
(b) Aggregate amount of investment in or contributions
to wholly owned Subsidiaries not to exceed: $ 500,000
Actual Outstanding: $_________ Yes No
(c) Gross aggregate amount of loans, advances, and
investments in or contributions to Valley
Rehabilitation Hospital, LLP not to exceed: $1,500,000
Actual Aggregate Amount: $_________ Yes No
7. SECTION 10.8 - ASSET DISPOSITIONS
(a) Aggregate book value of assets disposed during any
12-month period not to exceed: $ 500,000
(b) Total book value of asset dispositions for
12-month period most recently ending: $________ Yes No
8. SECTION 10.11 - PREPAYMENT OF DEBT
(a) Aggregate amount of Debt, other than the
Obligations, prepaid or optionally redeemed during
period from the Closing Date to the Termination
Date not to exceed: $ 300,000
</Table>
Compliance Certificate - Page 2
<PAGE>
<Table>
<S> <C> <C> <C> <C> <C>
(b) Total amount of Debt, other than the Obligations,
prepaid or optionally redeemed: $___________ Yes No
9. SECTION 11.1 - CONSOLIDATED NET WORTH
(a) Base Consolidated Net Worth $___________
(b) The lesser of (i) $500,000 or (ii) aggregate amount $___________
of non-cash losses attributable to impairment of
goodwill and incurred and reported on Parent's
8/31/02 financial statement for such fiscal year
which have resulted from Parent's compliance with
statement number 142 of FASB
(c) Cumulative positive Net Income since 2/28/02 $___________
Fiscal Quarter end
(d) 50% of 9(c) $___________
(e) Aggregate amount of net cash proceeds or other $___________
Capital Contribution to Parent since 2/28/02
(f) Required Consolidated Net Worth: $___________
9(a) minus 9(b) plus 9(d) plus 9(e)
(g) Actual Consolidated Net Worth $___________ Yes No
10. SECTION 11.2 - INDEBTEDNESS TO CAPITALIZATION
(a) Debt for borrowed money $___________
(b) Debt evidenced by bonds, notes, etc. $___________
(c) Capital Lease Obligations $___________
(d) Reimbursement obligations for letters of credit $___________
(e) North Central Development Company debt $___________
(f) Sum of 10(a) through 10(e) $___________
(g) Actual Consolidated Net Worth $___________
(from Section 11.1)
(h) 10(f) plus 10(g) $___________
(j) 10(f) : 10(h) = ______:1.00
(k) Maximum Indebtedness to Capitalization 0.50:1.00 Yes No
11. SECTION 11.3 - FIXED CHARGE COVERAGE
(a) Parent and the Subsidiaries' Consolidated Net
Income for last four Fiscal Quarters (from $___________
(b) Plus provisions for tax $___________
(c) less benefit from tax $___________
(d) Plus interest expense $___________
(e) Plus amortization and depreciation $___________
(f) Parent and the Subsidiaries' EBITDA: $___________
(11(a) plus 11(b) minus 11(c) plus 11(d) plus
11(e))
(g) provisions for taxes $___________
</Table>
Compliance Certificate - Page 3
<PAGE>
<Table>
<S> <C> <C> <C> <C>
(h) plus benefit from taxes $___________
(i) minus cash dividends and other distributions made $___________
on account of the Parent's capital stock
(j) aggregate amount of non-cash losses which have $___________
not already been excluded in determining
Consolidated Net Income and which are
attributable to impairment of Parent's goodwill
incurred and reported by Parent on its financial
statements which have resulted from Parent's
compliance with statement number 142 of FASB
(k) Cash Flow $___________
(11(f) plus 11(h) minus 11(g) minus 11(i)
plus 11(j))
(l) Fixed Charges
(i) Cash interest expense for last four Fiscal
Quarters $___________
(ii) as of each date of determination (A) prior
to the Revolving Termination Date, one-fifth
of the outstanding balance of Loans and (B)
on and after the Revolving Termination Date,
current maturities of long term debt reflected
on Parent's consolidated balance sheet,
excluding 2/3 of the final principal
installment due on the Termination Date $___________
(iii) Aggregate amount of Capital Expenditures for
last four Fiscal Quarters $___________
(iv) Payments made pursuant to Capital Lease
Obligations for last four Fiscal Quarters $___________
(v) Sum of 11(l)(i) through (iv) $___________
(m) Actual Fixed Charge Coverage (11(k) : 11(l)(v))= ______:1.00
(n) Minimum Fixed Charge Coverage 1.20:1.00 Yes No
12. SECTION 11.4 - INDEBTEDNESS TO ADJUSTED EBITDA
(a) Indebtedness (from 10(f)) $___________
(b) Actual EBITDA (from 11(f)) $___________
(c) Goodwill Impairment (from 11(i)) $___________
(d) Prior Period/Prior Target EBITDA without $___________
adjustment for expenses or charges which will
be eliminated after acquisition
(e) Adjusted EBITDA (12(b) plus 12(c) plus 12(d)) $___________
(f) 12(a) : 12(e) ______:1.00
(g) Maximum Indebtedness to Adjusted EBITDA
allowed by Credit Agreement 2.25:1.00 Yes No
13. SECTION 11.5 - CURRENT RATIO
(a) Consolidated current assets from balance sheet of
Parent $___________
(b) Consolidated current liabilities from balance sheet
of Parent $___________
</Table>
Compliance Certificate - Page 4
<PAGE>
<Table>
<S> <C> <C> <C> <C>
(c) Outstanding Principal balance of the Loans to the
extent included in 13(b) $___________
(d) Total Current Liabilities (13(b) minus 13(c)) $___________
(e) Actual Ratio of Current Assets to Current Liabilities
(13(a):13(d)) _____:1.00
(f) Minimum Ratio of Current Assets to Current Liabilities 1.00:1.00 Yes No
14. SECTION 11.6 - Managed Care Contracts
(a) Gross revenue during the immediately preceding 12 $___________
month period from contracts providing exclusively
for managed care
(b) Gross revenue during the immediately preceding 12 $___________
month period from the managed care portions of
contracts providing for EAS and managed care
(c) Total Managed Care Gross Revenue (14(a) plus $___________
(14(b))
(d) Total Gross Revenue during such 12 month period $___________
(e) 35% of 14(d) $___________
(f) Maximum Permitted Gross Revenue from Managed 14(c) > 14(e) Yes No
Care Contracts
</Table>
15. ATTACHED SCHEDULES
Attached hereto as schedules are the calculations supporting the
computation set forth above in this Certificate. All information contained
herein and on the attached schedules is true and correct.
16. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in
accordance with GAAP (excluding footnotes) and fairly present (subject to
year end audit adjustments) the financial conditions and the results of the
operations of the Persons reflected thereon, at the date and for the
periods indicated therein.
17. CONFLICT
In the event of any conflict between the definitions or covenants contained
in the Credit Agreement and as they may be interpreted or abbreviated in
the Compliance Certificate, the Credit Agreement shall control.
IN WITNESS WHEREOF, the undersigned has executed this Certificate effective
this _______ day of ____________, _______.
HORIZON HEALTH CORPORATION
By:
----------------------------
Name:
----------------------
Title:
---------------------
Compliance Certificate - Page 5
<PAGE>
Schedule 1
to
Compliance Certificate
Parent Consolidated Net Income
for period ______________ to _________________
<Table>
<Caption>
<S> <C> <C> <C>
1. GAAP for Parent (the "Subject Person") excluding the following
consolidated net income $
-----------
(a) extraordinary gains or losses or nonrecurring revenue or expenses
-----------
(b) gains on sale of securities
-----------
(c) losses on sale of securities
-----------
(d) any gains or losses in respect of the write-up of any asset at
greater than original cost or write-down at less than original
cost;
-----------
(e) any gains or losses realized upon the sale or other disposition
of property, plant, equipment or intangible assets which is not
sold or otherwise disposed of in the ordinary course of business;
-----------
(f) any gains or losses from the disposal of a discontinued business;
-----------
(g) any net gains or losses arising from the extinguishment of any
debt;
-----------
(h) any restoration to income of any contingency reserve for long
term asset or long term liabilities, except to the extent that
provision for such reserve was made out of income accrued during
such period;
-----------
(i) the cumulative effect of any change in an accounting principle on
income of prior periods;
-----------
(j) any deferred credit representing the excess of equity in any
acquired company or assets at the date of acquisition over the
cost of the investment in such company or asset;
-----------
(k) the income from any sale of assets in which the book value of
such assets prior to their sale had been the book value
inherited;
-----------
(l) the income (or loss) of any Person (other than a subsidiary) in
which the Subject Person or a subsidiary has an ownership
interest; provided, however, that (i) Consolidated Net Income
shall include amounts in respect of the income of such Person
when actually received in cash by the Subject Person or such
subsidiary in the form of dividends or similar distributions and
(ii) Consolidated Net Income shall be reduced by the aggregate
amount of all investments, regardless of the form thereof, made
by the Subject Person or any of its subsidiaries in such Person
for the purpose of funding any deficit or loss of such Person;
-----------
</Table>
Schedule 1 to Compliance Certificate - Page 1 of 2
<PAGE>
<Table>
<S> <C><C> <C>
(m) the income of any subsidiaries to the extent the payment of such
income in the form of a distribution or repayment of any Debt to
the Subject Person or a Subsidiary is not permitted, whether on
account of any restriction in by-laws, articles of incorporation
or similar governing document, any agreement or any law, statute,
judgment, decree or governmental order, rule or regulation
applicable to such Subsidiary;
-----------
(n) any reduction in or addition to income tax expense resulting from
an increase or decrease in a deferred income tax asset due to the
anticipation of future income tax benefits;
-----------
(o) any reduction in or addition to income tax expense due to the
change in a statutory tax rate resulting in an increase or
decrease in a deferred income tax asset or in a deferred income
tax liability;
-----------
(p) any gains or losses attributable to returned surplus assets of
any pension-benefit plan or any pension credit attributable to
the excess of (i) the return on pension-plan assets over (ii) the
pension obligation's service cost and interest cost;
-----------
(q) the income or loss of any Person acquired by the Subject Person
or a subsidiary for any period prior to the date of such
acquisition; and
-----------
(r) the income from any sale of assets in which the accounting basis
of such assets had been the book value of any Person acquired by
the Subject Person or a subsidiary prior to the date such Person
became a subsidiary or was merged into or consolidated with the
Subject Person or a subsidiary.
-----------
TOTAL: $
===========
</Table>
Schedule 1 to Compliance Certificate - Page 2 of 2
<PAGE>
EXHIBIT D
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Increased Commitment Supplement
Exhibit D, Cover Page
<PAGE>
INCREASED COMMITMENT SUPPLEMENT
This INCREASED COMMITMENT SUPPLEMENT (this "Supplement") is dated as of
____________, 200_ and entered into by and among HORIZON HEALTH CORPORATION, a
corporation duly organized and validly existing under the laws of the State of
Delaware ("Parent"), HORIZON MENTAL HEALTH MANAGEMENT, INC., a corporation duly
organized and validly existing under the laws of the State of Texas
("Borrower"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Bank" and, collectively, the "Banks") and JP MORGAN
CHASE BANK (as successor in interest by merger to The Chase Manhattan Bank, who
was the successor in interest by merger to the Chase Bank of Texas, National
Association, who was formerly known as Texas Commerce Bank National
Association), individually as a Bank and as agent for itself and the other Banks
(in its capacity as agent, together with its successors in such capacity, the
"Agent") and is made with reference to that certain Second Amended and Restated
Credit Agreement dated as of May 23, 2002, (as amended, the "Credit Agreement"),
by and among the Parent, the Borrower, the Banks and the Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, pursuant to Section 2.6(b) of the Credit Agreement, the
Borrower and the Banks are entering into this Increased Commitment Supplement to
provide for the increase of the aggregate Revolving Commitments;
WHEREAS, each Bank [party hereto and already a party to the Credit
Agreement] wishes to increase its Revolving Commitments [, and each Bank, to the
extent not already a Bank party to the Credit Agreement (herein a "New Bank"),
wishes to become a Bank party to the Credit Agreement];(3)
WHEREAS, the Banks are willing to agree to supplement the Credit
Agreement in the manner provided herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. Increase in Commitments. Subject to the terms and conditions
hereof, each Bank severally agrees that its Revolving Commitment shall be
increased to [or in the case of a New Bank, shall be] the amount set forth
opposite its name on the signature pages hereof.
Section 2. [New Banks. Each New Bank (i) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered under Section 9.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Supplement; (ii) agrees that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it has met the requirements to be an
assignee under Section 14.8(c) of the Credit Agreement; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees
---------
(3) Bracketed alternatives should be included if there are New Banks.
INCREASED COMMITMENT SUPPLEMENT - Page 1
<PAGE>
that it is a "Bank" under the Credit Agreement and will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Bank; and (vi) attaches
executed counterparts of any U.S. Internal Revenue Service or other forms
required under Section 5.10.]
Section 3. New Notes. Borrower agrees to execute and deliver to each
Bank a new Revolving Note in the amount of such Bank's Revolving Commitment
after giving effect to this Supplement, each such Revolving Note payable to a
Bank already party to the Credit Agreement to be delivered in modification of,
but not in extinguishment of the indebtedness evidenced by, the Revolving Note
previously payable to such Bank (each herein a "Prior Note"). Each of the
parties hereto hereby acknowledges and agrees that each such new Revolving Note
is a Revolving Note for all purposes under the Credit Agreement and the other
Loan Documents and that the loans evidenced by such Revolving Notes shall
constitute Loans for all purposes under the Credit Agreement and the other Loan
Documents. Each Bank agrees to return to Borrower the Prior Note payable to such
Bank (if any) upon its receipt of a new Revolving Note under the terms of this
Section 3.
Section 4. Conditions to Effectiveness. Section 1 and 2 of this
Supplement shall become effective only upon the satisfaction of the condition
precedent that the Agent shall have received on or before the effective date
hereof (the "Effective Date") all of the following, each dated (unless otherwise
indicated) the date hereof, in form and substance satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of
Borrower certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by Borrower of this Supplement and the
Revolving Notes executed pursuant hereto or a certification that the resolutions
have not changed since the certified copies were delivered at closing;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of Borrower certifying the
name of each officer of Borrower who is authorized to sign this Supplement and
the Revolving Notes executed pursuant hereto (including the certificates
contemplated herein) together with specimen signatures of each such officer;
(c) Certificate of Incorporation. The certificate of
incorporation of Borrower certified by the Secretary of State of the state of
incorporation of Borrower and dated a current date or a certification that the
certificate of incorporation has not changed since the certified copies were
delivered at closing;
(d) Bylaws. The bylaws of Borrower certified by the Secretary
or an Assistant Secretary of Borrower or a certification that the bylaws have
not changed since the certified copies were delivered at closing;
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of Borrower as to the
existence and good standing of Borrower, each dated a current date;
(f) Revolving Notes. The Revolving Notes required to be
executed by Borrower pursuant hereto; and
(g) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including reasonable attorney's fees) referred to in Section 14.1 of
the Credit Agreement, to the extent incurred, shall have been paid in full by
the Borrower.
INCREASED COMMITMENT SUPPLEMENT - Page 2
<PAGE>
Section 5. Representations and Warranties. In order to induce the Banks
to enter into this Supplement and to supplement the Credit Agreement in the
manner provided herein, Borrower and Parent each represent and warrant to Agent
and each Bank that (a) this Supplement and the Revolving Notes executed pursuant
hereto are Loan Documents as defined in the Credit Agreement; (b) the
representations and warranties of Borrower and Parent contained in Article VIII
of the Credit Agreement are true and correct; provided, however, that the
reference in Section 8.2 of the Credit Agreement, to financial statements will
be deemed for purposes of this Supplement to refer to the most recent year end
and interim financial statements delivered to Agent pursuant to Section 9.1 of
the Credit Agreement; (c) no event has occurred and is continuing or will result
from the consummation of the transactions contemplated by this Supplement that
would constitute a Default; and (d) AS OF THE DATE OF ITS EXECUTION OF THIS
SUPPLEMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS
TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH, IT
WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER
KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS SUPPLEMENT.
PARENT, BORROWER AND EACH OTHER OBLIGATED PARTY (BY ITS EXECUTION OF THIS
AGREEMENT BELOW), REPRESENTS AND WARRANTS THAT AS OF THE DATE HEREOF THERE ARE
NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS
UNDER THE LOAN DOCUMENTS. TO INDUCE AGENT AND THE BANKS TO ENTER INTO THIS
AGREEMENT, PARENT, BORROWER AND EACH OTHER OBLIGATED PARTY WAIVES ANY AND ALL
CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING
PRIOR TO THE DATE HEREOF AND HEREBY RELEASES AGENT AND THE BANKS AND THEIR
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS (COLLECTIVELY THE
"RELEASED PARTIES") FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITY,
CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH PARENT, BORROWER OR ANY OTHER OBLIGATED
PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY
ARISING PRIOR TO THE CLOSING DATE AND FROM OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 6. Effect of Supplement. The terms and provisions set forth in
this Supplement shall modify and supersede all inconsistent terms and provisions
set forth in the Credit Agreement and except as expressly modified and
superseded by this Supplement, the terms and provisions of the Credit Agreement
and the other Loan Documents are ratified and confirmed and shall continue in
full force and effect. Borrower, Parent, the Agent, and the Banks party hereto
agree that the Credit Agreement as supplemented hereby and the other Loan
Documents shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms. Each of the Loan Documents, including
the Credit Agreement and any and all other agreements, documents, or instruments
now or hereafter executed and delivered pursuant to the terms hereof or pursuant
to the terms of the Credit Agreement as supplemented hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement as amended hereby.
Section 7. Fees and Expenses. Borrower acknowledges that all costs,
fees and expenses as described in Section 14.1 of the Credit Agreement incurred
by the Agent and its counsel with respect to this Supplement and the documents
and transactions contemplated hereby shall be for the account of Borrower.
Section 8. Applicable Law. This Agreement and the Revolving Notes
executed pursuant hereto shall be governed by, and construed in accordance with,
the laws of the State of Texas.
INCREASED COMMITMENT SUPPLEMENT - Page 3
<PAGE>
Section 9. Counterparts, Effectiveness. This Supplement may be executed
in any number of counterparts, by different parties hereto in separate
counterparts and on telecopy counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document. This Supplement
(other than the provisions of Sections 1 and 2 hereof, the effectiveness of
which is governed by Section 4 hereof) shall become effective upon the execution
of a counterpart hereof by Borrower, Parent, the Banks and receipt by Borrower
and the Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
Section 10. ENTIRE AGREEMENT. THIS SUPPLEMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH
THIS SUPPLEMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS SUPPLEMENT, AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 11. Survival. All representations and warranties made in this
Supplement or any other Loan Document including any Loan Document furnished in
connection with this Supplement shall survive the execution and delivery of this
supplement and the other Loan Documents, and no investigation by Agent or any
Bank or any closing shall affect the representations and warranties or the right
of Agent or any Bank to rely upon them.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HORIZON HEALTH CORPORATION
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By:
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
JP MORGAN CHASE BANK (as successor in
interest by merger to The Chase Manhattan
Bank, who was successor in interest by
merger to the Chase Bank of Texas, National
Association who was formerly know as Texas
Commerce Bank National Association),
individually as a Bank and as Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
INCREASED COMMITMENT SUPPLEMENT - Page 4
<PAGE>
New Total Revolving Commitment: [BANK],
$
--------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
New Total Revolving Commitment: [NEW BANK],
$
--------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
INCREASED COMMITMENT SUPPLEMENT - Page 5
<PAGE>
EXHIBIT E
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Loan Change Notice
EXHIBIT E - Cover Page
<PAGE>
LOAN CHANGE NOTICE
JPMorgan Chase Bank, as Agent
12875 Josey Lane
Farmers Branch, TX 75234
Attention: Steve Lewis
Telecopy: (972) 888-7837
and
JPMorgan Chase Bank
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Shoshana Tyson
Telecopy: (212) 552-2261
Ladies and Gentlemen:
This Loan Change Notice (the "Notice") is being delivered pursuant to
Section 5.3 of that certain Second Amended and Restated Credit Agreement (as
amended, the "Agreement") dated as of May 23, 2002, among the Horizon Health
Corporation ("Parent"), Horizon Mental Health Management, Inc. ("Borrower"), the
banks and lending institutions named therein (the "Banks "), and JPMorgan Chase
Bank, as agent for the Banks ("Agent"). All capitalized terms, unless otherwise
defined herein, shall have the same meanings as in the Agreement. All the
calculations set forth below shall be made pursuant to the terms of the
Agreement.
The undersigned, as an authorized officer of Borrower, and not
individually, does hereby give to the Agent and the Banks notice that it
requests [check and complete whichever is applicable]:
[___] The Revolving Commitments be terminated;
[___] A reduction of the Revolving Commitments in the aggregate amount
of $___________(4) be made;
---------
(4) Not less than $3,000,000.
Loan Change Notice - Page 1
<PAGE>
[______] The Banks make an advance under the Revolving Commitments on
_______ (which is a Business Day) in an aggregate amount equal to _______ and
upon the terms set forth below:
<Table>
<Caption>
Account Amount(5)
------- ---------
<S> <C> <C>
Base Rate $
---------
<Caption>
Interest Period(6)
------------------
<S> <C> <C>
Eurodollar $ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
</Table>
[______] A [Continuation] [Conversion] [prepayment] under the Agreement
on _______ (which is a Business Day) and upon the terms set forth below:
<Table>
<Caption>
Account Amount(7)
------- ---------
<S> <C> <C>
Base Rate $
---------
<Caption>
Interest Period(8)
------------------
<S> <C> <C>
Eurodollar $ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
$ Months
--------- ---------
</Table>
Borrower certifies that on the date hereof (a) all of the
representations and warranties contained in Article VIII of the Agreement and in
the other Loan Documents are true and correct on and as of the date of such
reduction, termination, borrowing, Conversion, Continuation, or prepayment, as
applicable, with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date and (b) no
default shall have occurred and be continuing, or result from such reduction,
termination, borrowing, Conversion, Continuation, or prepayment, as applicable.
---------
(5) Not less than $500,000 (and in integral multiples of $100,000) if a
Base Rate Account, or not less than $1,000,000 (and in integral multiples of
$100,000) if a Eurodollar Account, and not greater than the Revolving
Commitments then available.
(6) Which shall be subject to the definition of "Interest Period" and
end not later than the Termination Date.
(7) Not less than $500,000 (and in integral multiples of $100,000) if a
Base Rate Account or prepayment, or not less than $1,000,000 (and in integral
multiples of $100,000) if a Eurodollar Account, and not greater than the
Revolving Commitments then available .
(8) Which shall be subject to the definition of "Interest Period" and
end not later than the Termination Date. Loans subject to a Eurodollar Account
may be prepaid or repaid only on the last day of the Interest Period applicable
thereto unless the requirements of Section 5.4 of the Agreement are satisfied.
Loan Change Notice - Page 2
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice effective
this __________ day of ___________, _____.
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
Loan Change Notice - Page 3
<PAGE>
EXHIBIT F
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Letter of Credit Notice
EXHIBIT F - Cover Page
<PAGE>
LETTER OF CREDIT NOTICE
JPMorgan Chase Bank, as Agent
12875 Josey Lane
Farmers Branch, TX 75234
Attention: Steve Lewis
Telecopy: (972) 888-7837
and
JPMorgan Chase Bank
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Shoshana Tyson
Telecopy: (212) 552-2261
Ladies and Gentlemen:
This Letter of Credit Notice (the "Notice") is being delivered pursuant
to Section 2.7(b) of that certain Second Amended and Restated Credit Agreement
(as amended, the "Agreement") dated as of May 23, 2002, among the Horizon Health
Corporation ("Parent"), Horizon Mental Health Management, Inc. ("Borrower"), the
banks and lending institutions named therein (the "Banks "), and JPMorgan Chase
Bank, as agent for the Banks ("Agent"). All capitalized terms, unless otherwise
defined herein, shall have the same meanings as in the Agreement. All the
calculations set forth below shall be made pursuant to the terms of the
Agreement.
The undersigned, as an authorized officer of Borrower, and not
individually, does hereby give to the Agent and the Banks notice that it
requests [check and complete whichever is applicable]:
[___] That Letter of Credit number ___________ in the face amount of
$_____________ issued in favor of _________________ to expire on ____________ be
[amended] [renewed] [extended] on ______________ (which shall be a Business Day)
upon the terms set forth below:
<Table>
<Caption>
Beneficiary (name and Expiration
address) LC # Face Amount Date(9)
--------------------- ---- ----------- -----------
<S> <C> <C> <C>
</Table>
[___] The Issuing Bank Issue a Letter of Credit on _____________ (which
is a Business Day) upon the terms set forth below:
<Table>
<Caption>
Beneficiary (name and LC # Face Amount Expiration
address) Date10
--------------------- ---- ----------- -----------
<S> <C> <C> <C>
</Table>
-------------
(9) Which shall expire on the date approved by the Issuing Bank or at or prior
to the close of business on the earlier of (a) the date one year after the
renewal or extension of such Letter of Credit and (b) the date that is five
Business Days prior to the Revolving Termination Date
(10) Which shall expire on the date approved by the Issuing Bank or at or prior
to the close of business on the earlier of (a) the date one year after the
issuance of such Letter of Credit and (b) the date that is five Business Days
prior to the Revolving Termination Date
Letter of Credit Notice - Page 1
<PAGE>
Borrower certifies that on the date hereof (a) all of the
representations and warranties contained in Article VIII of the Agreement and in
the other Loan Documents are true and correct on and as of the date of such
issuance, amendment, renewal, or extension, as applicable, with the same force
and effect as if such representations and warranties had been made on and as of
such date except to the extent that such representations and warranties relate
specifically to another date and (b) no default shall have occurred and be
continuing, or result from such issuance, amendment, renewal, or extension, as
applicable.
IN WITNESS WHEREOF, the undersigned has executed this Notice effective
this __________ day of ___________, _____.
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
Letter of Credit Notice - Page 2
<PAGE>
SCHEDULE 1.1(a)
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Revolving Commitments
<Table>
<Caption>
BANK AMOUNT
---- ------
<S> <C>
1. Chase $15,000,000
2. Bank of America, National Association $15,000,000
-----------
Total $30,000,000
===========
</Table>
Schedule 1.1(a) - Revolving Commitments - Solo Page
<PAGE>
SCHEDULE 1.1(b)
TO
HORIZON HEALTH CORPORATION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Assignment Details
<Table>
<Caption>
Revolving
Commitments
under Existing
Bank Credit Agreement Pro-Rata Interest Purchase Price
---------------- ----------------- --------------
<S> <C> <C> <C>
Bank of America, National Association $7,500,000 50% $0.0
</Table>
Outstanding Letters of Credit
<Table>
<Caption>
Issuer Beneficiary LC # Face Amount Expiration
------ ----------- ---- ----------- ----------
<S> <C> <C> <C> <C>
JPMorgan Chase Bank Humana, Inc. D-223776 $1,000,000 3/31/03
</Table>
Schedule 1.1(b) - Assignment Details - Solo Page
<PAGE>
SCHEDULE 8.14
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
List of Subsidiaries
I. FIRST TIER SUBSIDIARIES
<Table>
<Caption>
% Equity Equity Issued
Subsidiary Parent Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ --------- ---- ------------ ---- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Mental Health Common stock
Outcomes, Inc. Parent 100% Corporation Delaware $.01 par value 10,000 1,000
2. Specialty Rehab Common stock
Management, Inc. Parent 100% Corporation Delaware $.01 par value 10,000 9,494
3. Geriatric Medical Common stock
Care, Inc. Parent 100%* Corporation Tennessee $.01 par value 15,000 11,504
4. Horizon Mental
Health Management, Common stock
Inc. ("Borrower") Parent 100% Corporation Texas $.01 par value 1,000 1,000
5. Horizon Behavioral
Services, Inc. Common stock
("HBS") Parent 100% Corporation Delaware $.01 par value 1,000 1,000
SECOND TIER SUBSIDIARIES
6. HHMC Partners, Inc. Common stock
("HHMC") Borrower 100% Corporation Delaware $.10 par value 10,000 1,000
</Table>
---------
* Warrant to Purchase 10% of ownership held by Ramsey Healthcare
Schedule 8.14 - List of Subsidiaries
<PAGE>
<Table>
<Caption>
% Equity Equity Issued
Subsidiary Parent Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ --------- ---- ------------ ---- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
7. HMHM of Common stock
Tennessee, Inc. Borrower 100% Corporation Tennessee $.01 par value 10,000 1,000
8. Florida Psychiatric HBS 100% Corporation Florida Common stock 400,000:
Management, Inc. $.10 par value 200,00
Class A
Voting
200,00
Class B
Non-voting 64,956 Class A
9. FPMBH of Texas, Common stock
Inc. ("Texas") HBS 100% Corporation Delaware $.01 par value 1,000 1,000
10. Florida Psychiatric Common stock
Associates, Inc. HBS 100% Corporation Florida $1.00 par value 7,500 300
11. Horizon Behavioral
Services of
California, Inc. HBS 100% Corporation California N/A 10,000 1,000
12. Occupational Health
Consultants of
America, Inc.
("OHCA") HBS 100% Corporation Tennessee Common stock 1,000 1,000
13. Horizon Behavioral Common stock
Services IPA, Inc. HBS 100% Corporation New York $.01 par value 200 100
14. Horizon Behavioral
Services of New Common stock
Jersey, Inc. HBS 100% Corporation New Jersey $.01 par value 10,000 1,000
15. Horizon Behavioral
Services of New Common stock
York, Inc. HBS 100% Corporation New York $.01 par value 200 100
</Table>
Schedule 8.14 - List of Subsidiaries
<PAGE>
<Table>
<Caption>
% Equity Equity Issued
Subsidiary Parent Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ --------- ---- ------------ ---- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
II. THIRD TIER SUBSIDIARIES
16. FPM Behavioral Non-Profit Membership
Health Services, Inc. Texas 100% Corporation Delaware Interest None None
General General partner
17. AHG Partnership HHMC 60% Partnership Texas interest N/A N/A
18. Employee Assistance Common
Services, Inc. OHCA 100% Corporation Kentucky No par value 2,000 100
Common
19. Resources EAP, Inc. OHCA 100% Corporation Florida $10 par value 20,000 10
</Table>
The organizational structure of Parent and the Subsidiaries can be graphically
depicted as reflected on Schedule 8.14A.
Schedule 8.14 - List of Subsidiaries
<PAGE>
Schedule 1.1(b) - Assignment Details - Solo Page
<PAGE>
SCHEDULE 8.14A
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Organizational Chart
As of March 1, 2001
[CHART]
Schedule 8.14A - Organizational Chart - Solo Page
<PAGE>
SCHEDULE 10.1
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Debt
Unconditional Guaranty Agreement executed by the Guarantors dated December 9,
1997 guaranteeing the obligations of North Central Development Company to Chase
arising under that certain Term Note B dated December 20, 1995 executed by North
Central Development Company and payable to the order of Chase in the original
principal amount of $863,000 and certain other indebtedness relating thereto.
Schedule 10.1 - Debt - Solo Page
<PAGE>
SCHEDULE 10.2
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Existing Liens
<Table>
<Caption>
Company Secured Party Collateral UCC-1 No. UCC-1 Date
------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Accounts, contract rights,
general intangibles of each
Parent and all Subsidiaries granted company as move fully
pursuant to Security Agreements described on Annex A hereto
dated December 9, 1997 with Chase Chase (the "Lease Collateral")
</Table>
Schedule 10.2 - Existing Liens - Solo
Page
<PAGE>
ANNEX A
to
Schedule 10.2
to
Horizon Health Corporation
Amended and Restated Credit Agreement
Lease Collateral
(a) All present and future accounts, contract rights, general
intangibles, chattel paper, documents, instruments, money, and deposit accounts,
wherever located, now owned or hereafter acquired by debtor, and any and all
present and future tax refunds of any kind whatsoever to which debtor is now or
shall hereafter become entitled.
(b) The bala nce of every deposit account of debtor and any other claim
of debtor against Chase, now or hereafter existing, whether liquidated or
unliquidated.
(c) All present and future increases, profits, combinations,
reclassifications of, and substitutes and replacements for, all or part of the
collateral described in clauses (a) and (b) above.
(d) All present and future accounts, contract rights, general
intangibles, chattel paper, documents, instruments, cash and non-cash proceeds,
and other rights arising from or by virtue of, or from the voluntary or
involuntary sale, lease, or other disposition of, or collections with respect
to, or insurance proceeds payable with respect to, or proceeds payable by virtue
of warranty or other claims against manufacturers of, or claims against any
other Person with respect to, all or any part of the collateral described in
this clause or in clauses (a), (b) and (c) above.
(e) All present and future security for the payment to debtor of any of
the collateral heretofore described in clauses (a) through (d) and goods which
gave or will give rise to any of such collateral or are evidenced, identified,
or represented therein or thereby.
Annex A to Schedule 10.2 - Solo Page
<PAGE>
SCHEDULE 10.5
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Existing Investments
None
Schedule 10.5 - Existing Investments - Solo Page
</TEXT>
</DOCUMENT>