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Exhibit 10.16
LOAN AGREEMENT
Dated: December 13, 1996
Between
CORESTATES BANK, N.A., as Agent
For the Several Lenders
and
PHYSICIAN SUPPORT SYSTEMS, INC.
and its Subsidiaries
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TABLE OF CONTENTS
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Section Page
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SECTION 1. DEFINITIONS
1.1 General Provisions........................ 1
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1.2 Defined Terms............................. 2
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SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 Revolving Credit.......................... 14
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2.2 Revolving Credit Note..................... 14
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2.3 Term Loans................................ 15
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2.4 Term Loan Notes........................... 16
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2.5 Interest Rate Elections................... 16
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2.6 Line of Credit............................ 18
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2.7 Line of Credit Note....................... 19
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2.8 Fees...................................... 20
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2.9 Loan Account.............................. 21
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2.10 Computation of Interest................... 21
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2.11 Maximum Legal Rate........................ 21
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2.12 Payments.................................. 21
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2.13 Application of Payments................... 22
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2.14 Late Charges.............................. 22
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2.15 Mandatory Payments........................ 22
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2.16 Voluntary Prepayments..................... 22
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2.17 Limitations on Revolving Credit Advances.. 23
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2.18 Borrower's Obligations.................... 23
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SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 Organization and Qualification............ 24
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3.2 Power and Authority....................... 24
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3.3 Enforceability............................ 24
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3.4 Conflict with Other Instruments........... 24
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3.5 Litigation................................ 25
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3.6 Title to Assets........................... 25
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3.7 Licenses; Intellectual Property........... 25
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3.8 Default................................... 25
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3.9 Taxes..................................... 25
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3.10 Financial Condition....................... 26
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3.11 ERISA..................................... 26
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3.12 Regulation U.............................. 27
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3.13 No Notices; No Violations................. 27
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3.14 Labor..................................... 28
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3.15 Environmental Matters..................... 28
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SECTION 4. CONDITIONS OF BORROWING
4.1 Initial Advance........................... 28
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4.2 Subsequent Advances....................... 30
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SECTION 5. AFFIRMATIVE COVENANTS
5.1 Financial Statements; Reports............. 30
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5.2 Liabilities............................... 31
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5.3 ERISA..................................... 31
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5.4 Notices................................... 32
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5.5 Use of Proceeds........................... 32
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5.6 Corporate Existence; Properties........... 32
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5.7 Insurance................................. 33
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5.8 Books and Records......................... 33
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5.9 Location of Business...................... 33
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5.10 Funded Debt to Cash Flow.................. 33
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5.11 Fixed Charge Coverage Ratio............... 34
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5.12 Current Ratio............................. 34
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5.13 Deposit Accounts.......................... 34
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(i)
SECTION 6. NEGATIVE COVENANTS
6.1 Debt.................................... 34
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6.2 Liens................................... 34
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6.3 Investments............................. 35
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6.4 Mergers, Consolidations................. 36
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6.5 Disposition of Assets................... 36
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6.6 Continuance of Business................. 36
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6.7 Use of Proceeds......................... 37
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SECTION 7. EVENTS OF DEFAULT, REMEDIES
7.1 Events of Default....................... 37
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7.2 Acceleration............................ 39
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7.3 Right of Setoff......................... 40
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7.4 Remedies Cumulative..................... 40
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SECTION 8. MISCELLANEOUS
8.1 No Waiver; Cumulative Remedies.......... 40
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8.2 Notices................................. 41
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8.3 Reimbursement of Agent.................. 41
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8.4 Payment of Expenses and Taxes........... 42
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8.5 Survival of Representations and
Warranties.............................. 42
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8.6 Participations and Assignments.......... 42
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8.7 Successors.............................. 42
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8.8 Construction............................ 43
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8.9 Severability............................ 43
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8.10 Indemnity............................... 43
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8.11 Waiver of Trial by Jury; Jurisdiction... 43
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8.12 Actions Against Lenders; Release........ 44
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8.13 Counterparts............................ 44
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8.14 Entire Agreement........................ 45
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8.15 Margin Stock............................ 45
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SECTION 9. RIDERS AND JOINDERS
9.1 Riders.................................. 45
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9.2 Joinders................................ 45
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SECTION 10. THE AGENT
10.1 Appointment and Authorization........... 45
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10.2 Agent's Rights as Lender................ 46
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10.3 Actions; Lenders' Instructions.......... 46
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10.4 Preference Repayments................... 47
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10.5 Consultation with Experts............... 47
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10.6 Liability of Agent...................... 47
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10.7 Credit Decision......................... 48
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10.8 Successor Agent......................... 48
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10.9 Setoff or Counterclaim.................. 48
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10.10 Amendments............................. 49
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10.11 Payments Received...................... 49
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10.12 Advances............................... 49
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10.13 Indemnification........................ 49
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10.14 Liquidation............................ 50
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10.15 Forwarding Information................. 51
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10.16 Termination............................ 51
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10.17 Notices................................ 52
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10.18 No Joint Venture....................... 52
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10.19 Definitions............................ 52
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10.20 Corporate Records...................... 52
Table of Schedules . . . . . . . . . . . . . . . . . . . . . . .
Table of Exhibits. . . . . . . . . . . . . . . . . . . . . . . .
(ii)
LOAN AGREEMENT
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LOAN AGREEMENT made and entered into December 13, 1996, between
PHYSICIAN SUPPORT SYSTEMS, INC., and its subsidiaries which executed the
signature pages hereto or which join in this Agreement, and CORESTATES BANK,
N.A., as a Lender and as Agent for the Lenders listed on Rider A attached
hereto.
SECTION 1. DEFINITIONS.
1.1 General Provisions. Unless expressly provided otherwise in
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this Agreement or in the Loan Documents, or unless the context requires
otherwise:
(a) all accounting terms used in this Agreement and in the Loan
Documents shall have the meanings given to them in accordance with
Generally Accepted Accounting Principles;
(b) all terms used herein and in the Loan Documents that are
defined in the Pennsylvania Uniform Commercial Code, as amended from time
to time, shall have the meanings set forth therein;
(c) unless otherwise specified, all capitalized terms defined in
this Agreement shall have the defined meanings when used in the Loan
Documents and in any other documents made or delivered pursuant to this
Agreement;
(d) the singular shall mean the plural, the plural shall mean the
singular, and the use of any gender shall include all genders;
(e) all references to any particular party defined herein shall
be deemed to refer to each and every Person defined herein as such party
individually, and to all of them, collectively, jointly and severally, as
though each were named wherever the applicable defined term is used;
(f) all references to "Sections," "Subsections," "Paragraphs" and
"Subparagraphs" shall refer to provisions of this Agreement;
(g) all references to time herein shall mean Eastern Standard
Time or Eastern Daylight Time, as then in effect; and
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(h) all references to sections, subsections, paragraphs or other
provisions of statutes or regulations shall be deemed to include successor,
amended, renumbered and replacement provisions.
1.2 Defined Terms As used herein, the following terms shall have the
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meanings indicated, unless the context otherwise requires:
"Accumulated Funding Deficiency" shall mean any accumulated
funding deficiency as defined in ERISA (S)302(a).
"Adjusted LIBOR Rate" shall mean, for and with respect to any
applicable LIBOR Period, a rate per annum equal to the sum of (i) LIBOR,
plus (ii) eighty-five (85) basis points (0.85%).
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"Advance" and "Advances" shall mean, individually and
collectively as appropriate, any and all Revolving Credit Advances and Line
of Credit Advances.
"Affiliate" shall mean, as to any Person:
(a) if such Person is an individual, any (i) relative no
more remote than first cousin of such Person or of a general partner
of such Person, (ii) partnership in which such Person is a general
partner, (iii) general partner of such Person, or (iv) corporation of
which such Person is a director, officer, or person in control;
(b) if such Person is a corporation, any (i) director of
such Person, (ii) officer of such Person, (iii) person in control of
such Person, (iv) partnership in which such Person is a general
partner, (v) general partner of or joint venturer with such Person, or
(vi) relative no more remote than first cousin of a general partner,
director, officer, or person in control of such Person; or
(c) if such Person is a partnership, any (i) general partner
in such Person, (ii) relative no more remote than first cousin of a
general partner in such Person, (iii) partnership in which such Person
is a general partner, (iv) general partner of such Person, or (v)
person in control of such Person.
As used in this definition, "control" shall mean possession, directly or
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indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any
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event, any Person which owns or holds directly or indirectly twenty-five
percent (25%) or more of the voting securities or twenty-five percent (25%)
or more of the partnership or other equity interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
control such corporation or other Person.
"Agent" shall mean CoreStates Bank, N.A., as agent for the
Lenders, and any successor agent hereunder.
"Agreement" shall mean this loan agreement and any future
amendments, restatements, modifications or supplements hereof or hereto.
"Bankruptcy Code" shall mean the United States Bankruptcy Code,
Title 11 of the United States Code, as amended, or any successor law
thereto, and any rules promulgated in connection therewith.
"Borrowers" shall mean, collectively, Physician Support Systems,
Inc., a Delaware corporation, and all Subsidiaries which have executed the
signature pages of this Agreement or which have joined in this Agreement.
"Borrowing Notice" shall mean a written request by any Borrower
to the Agent for a Revolving Credit Advance pursuant hereto containing any
and all information required hereby and made pursuant to such forms as the
Agent may require from time to time.
"Business Day" shall mean a day other than a Saturday, Sunday or
legal holiday under the laws of the Commonwealth of Pennsylvania.
"Capital Expenditures" shall mean, collectively, any purchase,
acquisition, or lease, the cost or payment with respect to which is
required to be capitalized pursuant to and in accordance with Generally
Accepted Accounting Principles.
"Capital Lease Obligations" shall mean, collectively, the
obligations of any 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 obligations are required to be classified
and accounted for as capital leases on a balance sheet of
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such Person pursuant to and in accordance with Generally Accepted
Accounting Principles, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with Generally Accepted
Accounting Principles.
"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or any successor law thereto, and any regulations promulgated thereunder.
"Commitment" shall mean, individually, each Lender's commitment
to make Line of Credit Advances and Revolving Credit Advances hereunder as
set forth on Rider A attached hereto, as such Commitments may be reduced,
increased, or terminated pursuant to Section 2 hereof.
"Contamination" shall mean the presence of any Hazardous
Substance which may require Remedial Actions under applicable law.
"Controlled Group Member" shall mean:
(a) any corporation included with PSS in a controlled group
of corporations within the meaning of Code (S)414(b);
(b) any trade or business (whether or not incorporated)
which is under common control with PSS within the meaning of Code
(S)414(c); and
(c) any member of an affiliated service group of which PSS
is a member within the meaning of Code (S)414(m).
"Conversion Date" shall mean January 1, 1999.
"Conversion Notice" shall mean a notice in the form of Exhibit
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"A" attached hereto given by any Borrower to the Agent in accordance with
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Section 2.3 hereof.
"Current Assets" shall mean the aggregate amount carried as
current assets on the books of PSS and its Subsidiaries on a consolidated
basis after eliminating all intercompany items.
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"Current Liabilities" shall mean the aggregate amount carried as
liabilities on the books of PSS and its Subsidiaries on a consolidated
basis for accounts payable, accrued salaries, accrued expenses, current
taxes, current rent or lease payments, and current installments of long-
term debt which are due on demand or within one year after the date as of
which Current Liabilities are to be determined, and any other debt due on
demand or within one year after the date as of which Current Liabilities
are to be determined after eliminating all intercompany items.
"Default" shall mean any event specified in Subsection 7.1,
whether or not any requirement for notice or lapse of time has been
satisfied.
"Employee Pension Plan" shall mean any pension plan which (i) is
maintained by PSS or any Controlled Group Member, and (ii) is qualified
under Code (S)401.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any regulations issued thereunder by the United
States Department of Labor or the PBGC.
"Event of Default" shall mean any event specified in Subsection
7.1, provided that any requirement for notice or lapse of time has been
satisfied.
"Fixed Charges" shall mean, with respect to PSS and its
Subsidiaries on a consolidated basis, for any applicable period and without
duplication, the sum of (i) the total amount of interest due and payable in
respect of all outstanding indebtedness, (ii) amounts due and payable in
respect of Capital Lease Obligations to the extent that such amounts are in
the nature of interest, (iii) all scheduled payments of principal on all
outstanding indebtedness, (iv) amounts paid in respect of Capital Lease
Obligations to the extent that such amounts are in the nature of principal,
(v) dividends paid, and (vi) funds disbursed for the repurchase of capital
stock, as measured over the preceding four fiscal quarters of Borrower.
"Funded Debt" shall mean, with respect to PSS and its
Subsidiaries on a consolidated basis, at any applicable date and without
duplication, the excess of (a) sum of (i) the principal amount of all
indebtedness for borrowed money and indebtedness incurred in connection
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with the acquisition of assets or capital stock, (ii) all Capital Lease
Obligations, and (iii) all guaranteed obligations, letter of credit
obligations and deferred purchase price obligations, over (b) the principal
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amount of all Subordinated Indebtedness.
"Generally Accepted Accounting Principles" shall mean, at any
particular time, generally accepted accounting principles as in effect at
such time, provided, however, that, if employment of more than one
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principle shall be permissible at such time in respect of a particular
accounting matter, "Generally Accepted Accounting Principles" shall refer
to the principles which are then employed by PSS with the agreement of its
independent certified public accountants.
"Hazardous Substances" shall mean any chemical, solid, liquid,
gas, or other substance having the characteristics identified in, listed
under, or designated pursuant to:
(a) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. (S)9601(14), as a
"hazardous substance;"
(b) the Clean Water Act, 33 U.S.C. (S)1321(b)(2)(A), as a
"hazardous substance;"
(c) the Clean Water Act, 33 U.S.C. (S)(S)1317(a) and
1362(13), as a "toxic pollutant;"
(d) Table 1 of Committee Print Numbered 95-30 of the
Committee on Public Works and Transportation of the United States
House of Representatives, as a "toxic pollutant;"
(e) the Clean Air Act, 42 U.S.C. (S)7412(a)(1), as a
"hazardous air pollutant;"
(f) the Toxic Substances Control Act, 15 U.S.C. (S)2606(f),
as an "imminently hazardous chemical substance or mixture;"
(g) the Resource, Conservation and Recovery Act, 42 U.S.C.
(S)(S)6903(5) and 6921, as a "hazardous waste;" or
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(h) any other laws, regulations or governmental
publications, as presenting an imminent and substantial danger to the
public health or welfare or to the environment, or as otherwise
requiring special handling, collection, storage, treatment, disposal,
or transportation.
The term "Hazardous Substances" shall also include: (w) petroleum, crude
oil, gasoline, natural gas, liquified natural gas, synthetic fuel, and all
other petroleum, oil, or gasoline based products; (x) radioactive
substances, mixtures, wastes, compounds, materials, elements, products or
matters; (y) asbestos, asbestos-containing materials, polychlorinated
biphenyls, and (z) any other substance, mixture, waste, compound, material,
element, product or matter that presents an imminent and substantial danger
to the public health or welfare or to the environment upon its Release.
"Intermediate Market Rate" shall be equal to the Overnight Market
Rate plus thirty (30) basis points.
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"Lenders" shall mean, collectively, the financial institutions
listed on Rider A attached hereto, as such Rider may be amended from time
to time.
"Line of Credit" shall mean the revolving line of credit facility
in the maximum amount of $5,000,000 described in Subsection 2.6.
"Line of Credit Advance" or "Line of Credit Advances" shall mean,
individually and collectively as appropriate, any or all advances made
under the Line of Credit.
"Line of Credit Commitment" shall mean, as at any applicable
time, the Borrower's maximum credit availability under the Line of Credit,
as established under Subsection 2.6 whether or not then fully extended.
"Line of Credit Note" shall mean the promissory note described in
Subsection 2.7 and any future amendments, restatements, modifications or
supplements thereof or thereto.
"Line of Credit Termination Date" shall mean June 30, 1998,
unless extended in writing by the Agent.
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"Loan Account" shall mean, collectively, the account or accounts
of the Borrower on the books of Agent in which are recorded the Loans and
the payments of principal and interest made by the Borrower to Agent
thereon.
"Loan Documents" shall mean, collectively, this Agreement, the
Notes and all other agreements executed and delivered to the Lenders or the
Agent by the Borrowers in connection therewith and any modifications,
amendments, restatements, substitutions and replacements of or for any of
the foregoing.
"Loans" shall mean, collectively, all Advances and the Term
Loans.
"London Interbank Offered Rate" shall mean, for and with respect
to any LIBOR Loan and any LIBOR Period applicable thereto, the rate
(rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to the
composite London Interbank Offered Rate for dollar ($) deposits
approximately equal in principal amount to the amount of such LIBOR Loan
and for a maturity comparable to such LIBOR Period appearing on the
Telerate Screen Page 3750 at approximately 11:00 A.M., London time, on the
date that is two (2) LIBOR Business Days prior to the commencement of such
LIBOR Period; provided, however, that if such rate shall for any reason not
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be available on the Telerate Screen Page 3750 at such time, the London
Interbank Offered Rate shall be the arithmetic average of the rates at
which dollar ($) deposits approximately equal in principal amount to the
amount of such LIBOR Loan and for a maturity comparable to such LIBOR
Period are offered to the principal London office of any bank designated by
Agent in immediately available funds in the London interbank market at
approximately 11:00 A.M., London time, two (2) LIBOR Business Days prior to
the commencement of such Interest Period. As used herein, the term
"Telerate Screen Page 3750" shall mean the display designated as the page
for LIBOR on the Dow Jones Telerate Service (or such other page as may
replace the LIBOR page on that service for the purpose of displaying London
interbank offered rates of major banks).
"LIBOR" shall mean, for each LIBOR Loan and LIBOR Period
applicable thereto, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) determined by the Agent according to the
following formula:
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X
R = -----
1-Y
where R = LIBOR
X = London Interbank Offered Rate for such LIBOR Loan for
the applicable LIBOR Period
Y = the average of the daily rates (expressed as a decimal
fraction) of maximum reserve requirements which are, at
any time, applicable during such LIBOR Period
(including, without limitation, basic, special,
supplemental, marginal and emergency reserves) under
any regulations of the Board of Governors of the
Federal Reserve System or other banking authority,
domestic or foreign, as now and from time to time
hereafter in effect, prescribed for eurocurrency
funding (currently referred to as Eurocurrency
Liabilities in Regulation D of such Board) to which the
Agent (including any branch, Affiliate, or other
fronting office making or holding a LIBOR Loan) is
subject, as now and from time to time hereafter in
effect.
"LIBOR Business Day" shall mean any Business Day on which
commercial banks are open for international business (including dealing in
Dollar ($) deposits) in London, England and Philadelphia, Pennsylvania.
"LIBOR Loan" shall mean any Loan or portion thereof which bears
interest at the Adjusted LIBOR Rate pursuant hereto.
"LIBOR Period" shall mean, with respect to any Loan or portion
thereof bearing interest at the Adjusted LIBOR Rate pursuant hereto, the
period commencing on the date on which the Loan or portion thereof begins
to bear interest at the Adjusted LIBOR Rate in accordance herewith and
ending thirty (30), sixty (60), ninety (90), or one hundred eighty (180)
days thereafter, as appropriate, as selected by any Borrower pursuant to
Section 2.5, subject to the following:
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(i) if the last day of the LIBOR Period selected by such
Borrower pursuant to Section 2.5 does not fall on a Business Day:
(A) the LIBOR Period shall be automatically extended
until the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such LIBOR Period
shall end on the next preceding Business Day;
(B) interest shall, to the extent applicable, continue
to accrue at the Adjusted LIBOR Rate; and
(C) the next LIBOR Period elected, or deemed to have
been elected, by such Borrower with respect to the LIBOR Loan to
which the LIBOR Period relates, if any, shall commence on the day
following the Business Day described in clause (i)(A) above; and
(ii) any LIBOR Period that begins on the last Business Day
of the calendar month (or on a date for which there is no numerically
corresponding day in the calendar month in which such LIBOR Period
ends) shall end on the last Business Day of a calendar month and the
next LIBOR Period with respect to the LIBOR Loan to which the LIBOR
Period relates, if any, shall commence on such Business Day.
"Market Rate Loan" and "Market Rate Loans" shall mean,
individually and collectively, as appropriate, any and all loans made by
the Lenders to the Borrowers bearing interest at the Overnight Market Rate
or the Intermediate Market Rate.
"Minimum LIBOR Loan Amount" shall mean One Million Dollars
($1,000,000).
"Multiemployer Plan" shall mean a multiemployer pension plan as
defined in ERISA (S)3(37) to which PSS or any Controlled Group Member is or
has been required to contribute subsequent to September 25, 1980.
"Net Cash Flow" shall mean, for any applicable period, the
consolidated net income of PSS for its most recently completed four fiscal
quarters plus (a) the sum of (i) interest expense taken into
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account in connection with the determination of that income, (ii) income
tax expense taken into account in connection with the determination of that
income, (iii) depreciation and amortization expense taken into account in
connection with the determination of that income, (iv) merger costs taken
into account in connection with the determination of that income, and (v)
restructuring changes taken into account in connection with the
determination of that income, minus (b) Capital Expenditures for such four
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fiscal quarters.
"Notes" shall mean, collectively, the Line of Credit Note, the
Revolving Credit Note, and the Term Notes.
"Obligations" shall mean all liabilities, duties and obligations
of the Borrowers to the Lenders with respect to any covenants,
representations or warranties herein or in the Loan Documents, with respect
to the principal of and interest on the Loans, and all other present and
future fixed and/or contingent obligations of the Borrowers to the Lenders
under the Loan Documents, including, without limitation, obligations with
respect to interest accruing (or which would accrue but for (S)502 of the
Bankruptcy Code) after the date of any filing by any Borrower of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceedings with respect to any Borrower.
"Overnight Market Rate" shall mean a floating per annum rate of
interest equal to the sum of (a) the interest rate quoted by Garvin as the
opening Federal Funds Rate appearing on the Telerate Screen, plus (b)
eighty-seven basis points (0.87%).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PSS" shall mean Physician Support Systems, Inc., a Delaware
corporation.
"Person" shall mean an individual, a corporation, a partnership,
a joint venture, a trust or unincorporated organization, a joint stock
company or other similar organization, a government or any political
subdivision thereof, or any other legal entity.
"Premises" shall mean the real properties, improvements thereon
and fixtures attached thereto owned or leased by any Borrower.
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"Prime Rate" shall mean the floating annual rate of interest that
is designated from time to time by Agent as the "Prime Rate" and is used by
Agent as a reference base with respect to different interest rates charged
to borrowers generally. Such rate of interest shall change simultaneously
and automatically upon Agent's designation of any change in such reference
rate, and Agent's determination and designation from time to time of the
reference rate shall not in any way preclude Agent from making loans to
other borrowers at rates which are higher or lower than or different from
the referenced rate.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, or dumping.
"Remedial Actions" shall mean:
(a) clean-up or removal of Hazardous Substances;
(b) such actions as may be necessary to monitor, assess, or
evaluate the Release or threatened Release of Hazardous Substances;
(c) proper disposal or removal of Hazardous Substances;
(d) the taking of such other actions as may be necessary to
prevent, minimize, or mitigate the damages caused by a Release or
threatened Release of Hazardous Substances to the public health or
welfare or to the environment; and
(e) the providing of emergency assistance after a Release.
Remedial Actions include, but are not limited to, such actions at the
location of a Release as: storage; confinement; perimeter protection using
dikes, trenches, or ditches; clay cover; neutralization; clean-up of
Hazardous Substances or contaminated materials; recycling or reuse;
diversion; destruction; segregation of reactive wastes; dredging or
excavations; repair or replacement of leaking containers; collection of
leachate and runoff; onsite treatment or incineration; providing
alternative water supplies; and any monitoring reasonably required to
assure that such actions protect the public health and welfare and the
environment.
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"Reorganization" shall mean reorganization as defined in ERISA
(S)4241(a).
"Reportable Event" shall mean with respect to any Employee
Pension Plan, an event described in ERISA (S)4043(b).
"Required Lenders" shall mean Lenders that own, in the aggregate,
at least 66 2/3% of the Commitments.
"Revolving Credit Advance" or "Revolving Credit Advances" shall
mean, individually and collectively as appropriate, any or all advances
made under the Revolving Credit Facility.
"Revolving Credit Commitment" shall mean, as at any applicable
time, the Borrowers' maximum credit availability under the Revolving Credit
Facility, as established under Subsection 2.1 whether or not then fully
extended.
"Revolving Credit Facility" shall mean the revolving credit
facility in the maximum amount of $30,000,000 described in Subsection 2.1.
"Revolving Credit Note" shall mean the promissory note of the
Borrowers described in Subsection 2.2 and any future amendments,
restatements, modifications, or supplements thereof or thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Significant Subsidiary" shall mean (a) Spring Anesthesia Group,
Inc., Synergistic Systems, Inc., and EE&C Financial Services, Inc., and (b)
any other Subsidiary that at the Closing Date or at any date thereafter has
annual revenues in excess of $10,000,000 in any calendar year.
"Subordinated Indebtedness" shall mean (i) the indebtedness owed
by PSS to the L. David Covell Living Trust and Spring Investment Limited
Liability Company in a principal amount not to exceed $5,500,000 in the
aggregate (the "Spring Debt"), (ii) any indebtedness of PSS or any
Subsidiary that is subordinated on substantially the same basis as the
Spring Debt, and (iii) any other indebtedness of PSS or any Subsidiary, if
any, for money borrowed, whether now existing or
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hereafter incurred, which is approved by the Agent as Subordinated
Indebtedness before it is incurred by PSS or such Subsidiary.
"Subsidiary" shall mean any corporation more than fifty percent
(50%) of the outstanding shares of capital stock of which (except for
directors' qualifying shares, if required by law) are at the time owned by
PSS and/or one or more Subsidiaries.
"Term Loan" and "Term Loans" shall mean, individually and
collectively, as appropriate, any and all loans made by Lenders to the
Borrowers under Section 2.3.
"Term Note" and "Term Notes" shall mean, individually and
collectively, as appropriate, any and all promissory notes of the Borrowers
described in Section 2.4.
"Termination Date" shall mean January 1, 2004.
"Withdrawal Liability" shall mean any withdrawal liability as
defined in ERISA (S)4201.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1 Revolving Credit
----------------
(a) Subject to, and in accordance with, the terms and conditions
of this Agreement, each Lender severally (but not jointly) agrees to extend
credit to the Borrowers by making loans to them, from time to time during
the period commencing on the Closing Date and ending on the Business Day
preceding the Conversion Date, in an aggregate amount that shall not
exceed, at any one time outstanding, Thirty Million Dollars ($30,000,000).
No Lender shall be required to extend loans in excess of such Lender's
Commitment.
(b) During the period referred to in Paragraph 2.1(a), the
Borrowers may use the Revolving Credit Commitment by borrowing, repaying
and reborrowing. Subject to the provisions of Section 2.5(b), the
Borrowers shall notify the Agent in writing of each proposed borrowing
under the Revolving Credit Facility not later than 10:00 A.M. on the day of
such proposed borrowing. Each such borrowing and repayment shall be either
(i) in integral multiples of Five Hundred Thousand Dollars ($500,000) or
(ii) equal to the remaining credit availability under the
14
Revolving Credit Commitment. The Borrowers authorize and direct the Lenders
to disburse the proceeds of each such borrowing by direct deposit to demand
deposit account number 0015355336 of PSS with the Agent.
(c) The Borrowers may by written notice to the Agent permanently
reduce or terminate the Revolving Credit Commitment, provided that the
Borrowers concurrently therewith pay to the Agent for the account of the
Lenders the amount by which the aggregate outstanding Revolving Credit
Advances exceeds the Revolving Credit Commitment as so reduced or
terminated, together with any amounts due under Subsection 2.16.
2.2 Revolving Credit Note.2 Revolving Credit Note". On the date
----------------------- ---------------------
hereof, the Borrowers shall execute and deliver to the Agent a promissory note,
which shall evidence the Borrowers' obligations to repay the principal of,
interest on, and other amounts due in connection with the Revolving Credit
Facility and which shall:
(a) be dated the Closing Date and be payable to the Agent's order
in the principal amount of Thirty Million Dollars ($30,000,000);
(b) bear interest on the unpaid principal amount of any
outstanding Revolving Credit Advances from the dates of such advances at an
annual rate selected by the Borrowers pursuant to Section 2.5;
(c) be payable, with respect to LIBOR Loans, as to interest at
the expiration of the LIBOR Period applicable thereto; provided, however,
-------- -------
for LIBOR Loans having a LIBOR Period in excess of three (3) months,
interest shall be payable at the expiration of each three (3) month period
during the LIBOR Period and at the expiration of the LIBOR Period;
(d) be payable as to interest with respect to Market Rate Loans
monthly, commencing January 1, 1997, and continuing on the first day of
each month thereafter until payment in full of the unpaid principal amount
thereof and all accrued but unpaid interest thereon; and
(e) be payable in full as to the entire unpaid principal balance,
all accrued interest and other sums due thereunder on the sooner of (i) the
Conversion Date; (ii) upon written demand after the occurrence of an Event
of Default; or (iii) immediately and
15
automatically upon any Event of Default described in Paragraphs (e) or (f)
of Subsection 7.1.
2.3 Term Loans
----------
(a) At any time on or before the Conversion Date, any Borrower,
at its option, may elect to convert all or any portion of any outstanding
Revolving Credit Advance into a term loan (a "Term Loan"), by giving
written notice thereof to the Agent in form of Exhibit "A" attached hereto
-----------
(a "Conversion Notice"). A Conversion Notice shall state (i) the amount of
the Revolving Credit Advance converted to a Term Loan, (ii) the interest
rate with respect to such Term Loan selected by such Borrower pursuant to
Section 2.5(i), and (iii) the maturity date of such Term Loan (which shall
not be later than five (5) years from the date of conversion or the
Termination Date, whichever comes first) (the "Maturity Date"). No portion
-------------
of any Revolving Credit Advance that is a LIBOR Loan may be converted into
a Term Loan prior to the expiration of the applicable LIBOR Period.
(b) The Revolving Credit Commitment will be reduced by the
outstanding principal balance of each Term Loan. As the outstanding
principal balance of any Term Loan is repaid, the Revolving Credit
Commitment shall increase by the amount of principal repaid on such Term
Loan.
2.4 Term Loan Notes On the date that any Revolving Advance or
---------------
portion thereof is converted to a Term Loan (a "Change Date"), the Borrowers
shall execute and deliver to the Agent a promissory note of the Borrowers in the
form of Exhibit "B" attached hereto, which shall evidence the Borrowers'
-----------
obligations to repay the principal of, interest on, and all other amounts due in
connection with such Term Loan, and which shall:
(a) be dated the Change Date and be payable to the Agent's order
in the principal amount of such Term Loan;
(b) bear interest on the unpaid principal amount of such Term
Loan from the Change Date at an annual rate selected by any Borrower
pursuant to Section 2.5;
(c) be payable as to interest the first day of each calendar
month until payment in full of the unpaid principal amount of, and all
accrued but unpaid interest thereon; and
16
(d) be payable as to principal in equal, consecutive monthly
installments commencing on the first day of the next succeeding calendar
month and continuing on the first day of each calendar month thereafter and
in one final payment on the Maturity Date equal to the unpaid principal
balance thereof. Each monthly payment will be equal to the original
principal balance of such Term Note divided by the number of months from
the Change Date to the Maturity Date.
2.5 Interest Rate Elections.
-----------------------
(a) Any Borrower, subject to any prior continuing interest rate
elections made pursuant to Section 2.5(b), at any time and from time to
time, may notify the Agent that it is electing to have interest accrue at
the Overnight Market Rate on a specific portion (up to and including 100%)
of the aggregate unpaid amount of any Revolving Credit Advance. All
Revolving Credit Advances for which an interest rate option is not
specifically designated by a Borrower, pursuant to the terms hereof, or not
requested in conformity with the terms hereof, shall be bear interest at
the Overnight Market Rate.
(b) Subject to the notice provisions set forth in this Section
2.5(b), at any time and from time to time, any Borrower may notify (which
notice shall be irrevocable) the Agent that it is electing to have interest
accrue for a LIBOR Period specified in writing by such Borrower at the
Adjusted LIBOR Rate on a specific portion (up to and including 100%) of the
aggregate unpaid amount of any Revolving Credit Advance (including any
Revolving Credit Advance to be made by the Lenders to the Borrowers on the
date of election) equal to the amount specified by the Borrower. A
Borrower shall notify the Agent not later than 10:00 A.M. two (2) LIBOR
Business Days before the date on which the Borrowers desire any Revolving
Credit Advance to bear interest at the Adjusted LIBOR Rate.
Notwithstanding anything contained herein to the contrary, any LIBOR Loan
shall be in minimum denominations equal to the Minimum LIBOR Loan Amount
and in multiples thereof if in excess thereof.
(c) Following an interest rate election made by any Borrower with
respect to any Revolving Credit Advance pursuant to Sections 2.5(a) or
2.5(b), but subject to all other conditions of this Agreement, such
Borrower may, in accordance with the provisions of Sections 2.5(a) and
2.5(b), from time to time, elect to convert or continue the type of
interest rate borne by such Revolving Credit Advance. In the event that a
Borrower fails to provide the Agent with
17
any notice of conversion or continuance, as described above, such Revolving
Credit Advance shall immediately and automatically become a Market Rate
Loan and shall commence bearing interest at the Overnight Market Rate.
Notwithstanding anything contained herein to the contrary, no Borrower
shall convert any LIBOR Loan to a Market Rate Loan until the expiration of
the LIBOR Period then in effect with respect thereto.
(d) Each LIBOR Period shall end prior to the Termination Date and
the Borrower's election of LIBOR Periods hereunder shall not violate the
provisions of this Section 2.5(d).
(e) In the event that the Agent shall determine (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the interbank eurodollar market or
otherwise, adequate and reasonable means do not exist for ascertaining
LIBOR, the Borrowers' right to elect to have interest accrue on any
Revolving Credit Advance at the Adjusted LIBOR Rate shall be suspended
until such time that the Agent determines that adequate and reasonable
means exist for ascertaining LIBOR.
(f) Notwithstanding anything contained herein to the contrary, if
any applicable law, treaty, regulation or directive, or any change in or in
the application or interpretation of such law, treaty, regulation or
directive, or any other event shall make it unlawful for any Lender to make
or maintain LIBOR Loans:
(i) The obligation of the Lenders to make or maintain LIBOR
Loans shall be cancelled automatically and immediately; and
(ii) Such LIBOR Loans shall convert automatically and
immediately to Market Rate Loans and bear interest at the Overnight
Market Rate.
(g) The Borrowers shall not prepay, in whole or in part, any
LIBOR Loans prior to the expiration of the appropriate LIBOR Period
applicable thereto. The Borrowers shall indemnify the Lenders and hold the
Lenders harmless from and against any and all direct and indirect costs and
losses (including losses resulting from redeployment of prepaid or
reborrowed funds at rates lower than the cost of such funds to the
Lenders), but not lost profits, that the Lenders may sustain or incur as a
result of (i) any prepayment of a LIBOR Loan, (ii) the conversion of a
LIBOR Loan to a Market Rate Loan prior to the expiration of the LIBOR
Period applicable thereto, (iii) a Revolving Credit Advance
18
being converted from a LIBOR Loan to a Market Rate Loan by reason of the
circumstances described in Section 2.5(e) or (f), or (iv) a LIBOR Loan not
being made after notice thereof is provided to the Agent pursuant hereto.
Such agreement to indemnify shall include, without limitation, any interest
payable by the Lenders to lenders of funds obtained by the Lenders in order
to make or maintain LIBOR Loans pursuant hereto.
(h) Following the occurrence of an Event of Default, the
Borrowers may not elect to have any Revolving Credit Advance made or
maintained as, or converted into, a LIBOR Loan after the expiration of any
LIBOR Period then in effect for that Revolving Credit Advance.
(i) With respect to any Term Loan, any Borrower may elect in a
Conversion Notice to have the Term Loan bear interest at the Intermediate
Market Rate or a fixed rate of interest quoted by the Agent at the request
of such Borrower for up to a five (5) year term.
2.6 Line of Credit.
--------------
(a) Subject to, and in accordance with, the terms and conditions
of this Agreement, each Lender severally (but not jointly) agrees to extend
credit to the Borrowers by making loans to them, from time to time during
the period commencing on the Closing Date and ending on the Business Day
preceding the Line of Credit Termination Date, in an aggregate amount that
shall not exceed, at any one time outstanding, Five Million Dollars
($5,000,000). No Lender shall be required to extend loans in excess of
such Lender's Commitment.
(b) During the period referred to in Paragraph 2.6(a), the
Borrowers may use the Line of Credit by borrowing, repaying and
reborrowing. The Borrowers shall notify the Agent orally or in writing of
each proposed borrowing under the Line of Credit not later than 2:00 p.m.,
on the day of such proposed borrowing. Each such borrowing and repayment
shall be either (i) in integral multiples of Ten Thousand Dollars ($10,000)
or (ii) equal to the remaining credit availability under the Line of Credit
Commitment. The Borrowers authorize and direct the Lender to disburse the
proceeds of each such borrowing by direct deposit to demand deposit account
number 0015355336 of PSS with the Agent.
(c) The Line of Credit Termination Date may be extended or
renewed by the Required Lenders, in their sole discretion, on a day-to-day
basis or otherwise, based on a letter to such effect from the
19
Agent to the Borrowers or by a written agreement between the parties
hereto.
(d) The Borrowers may by written notice to the Agent permanently
reduce or terminate the Line of Credit Commitment, provided that the
Borrowers concurrently therewith pay to the Agent for the account of the
Lenders the amount by which the aggregate outstanding Line of Credit
Advances exceeds the Line of Credit Commitment as so reduced or terminated,
together with any amounts due under Subsection 2.16.
2.7 Line of Credit Note. On the date hereof, the Borrowers shall
-------------------
execute and deliver to the Agent a promissory note, which shall evidence the
Borrowers' obligations to repay the principal of, interest on, and other amounts
due in connection with the Line of Credit, and which shall:
(a) be dated the Closing Date and be payable to the Agent's order
in the principal amount of Five Million Dollars ($5,000,000);
(b) bear interest on the unpaid principal amount of any funds
advanced and outstanding under the Line of Credit from the dates of such
advances at an annual rate equal to the lesser of (i) the Agent's Prime
Rate or (ii) the Overnight Market Rate plus sixty-five basis points
(0.65%);
(c) be payable as to interest monthly, commencing on January 1,
1997, and continuing on the same day of each month thereafter until payment
in full of the unpaid principal amount thereof, and all accrued but unpaid
interest thereon; and
(d) be payable in full as to the entire unpaid principal balance,
all accrued interest and other sums due thereunder on the sooner of (i) the
Line of Credit Termination Date; (ii) upon written demand after the
occurrence of an Event of Default, or (iii) immediately and automatically
upon any Event of Default described in Paragraphs (e) or (f) of Subsection
7.1.
2.8 Fees. In connection with the Revolving Credit Facility, the
----
Borrowers shall pay to the Lenders the following fees, all of which shall be
non-refundable:
20
(a) An unused commitment fee payable within fifteen days after
the end of each calendar quarter, commencing April 15, 1997, in an amount
equal to the product of (i) the Revolving Credit Commitment minus the daily
-----
average during such calendar quarter of the outstanding principal balance
of all outstanding Revolving Credit Advances, and (ii) .0625%;
(b) A commitment fee of $37,500 payable on the Closing Date with
respect to the Revolving Credit Facility;
(c) An unused commitment fee payable within fifteen days after
the end of each calendar quarter, commencing April 15, 1997, in an amount
equal to the product of (i) the Line of Credit Commitment minus the daily
-----
average principal balance during such calendar quarter of the outstanding
principal balance of all outstanding Line of Credit Advances, and (ii)
.0625%; and
(d) A commitment fee of $6,250 payable on the Closing Date with
respect to the Line of Credit.
The fees payable under paragraphs (a) and (c) of this Subsection 2.8 shall be
adjusted on a pro rata basis if the Line of Credit Commitment or the Revolving
Credit Commitment is reduced or terminated during any calendar quarter.
2.9 Loan Account. The Agent shall record in one or more Loan
------------
Accounts, the Loans, all advances to and all payments made by the Borrowers on
account of the Loans, and all other appropriate debits and credits. Each month
the Agent shall render to PSS a statement setting forth the debit balance of the
Loan Account as of the close of the preceding month, together with a statement
of the amount of interest and other charges due the Lenders as of that time.
Each statement shall be considered correct and accepted by the Borrowers and
conclusively binding upon the Borrowers unless the Borrowers notify the Agent to
the contrary in writing within ten (10) days from the receipt of the statement.
2.10 Computation of Interest. Interest shall be calculated on the
-----------------------
basis of a 365/366-day year for actual days elapsed. Any change in the interest
rate on the Notes resulting from a change in the Prime Rate, the Overnight
Market Rate, or the Intermediate Market Rate shall become effective as of the
opening of business on the day on which such change in the Prime Rate, the
Overnight Market Rate, or the Intermediate Market Rate shall occur.
2.11 Maximum Legal Rate. The Borrowers shall not be obligated to
------------------
21
pay and Lenders shall not collect interest on any Obligation at a rate in excess
of the maximum permitted by law or the maximum that will not subject Lenders to
any civil or criminal penalties. If, because of the acceleration of maturity,
the payment of interest in advance or any other reason, the Borrowers are
required, under the provisions of any Loan Document or otherwise, to pay
interest at a rate in excess of such maximum rate, the rate of interest under
such provisions shall immediately and automatically be reduced to such maximum
rate, and any payment made in excess of such maximum rate, together with
interest thereon at the rate provided herein from the date of such payment,
shall be immediately and automatically applied to the reduction of the unpaid
principal balance of the Obligation as of the date on which such excess payment
was made. If the amount to be so applied to reduction of the unpaid principal
balance exceeds the unpaid principal balance, the amount of such excess shall be
refunded by Lenders to the Borrowers.
2.12 Payments. All payments (including prepayments) by
--------
the Borrowers hereunder shall be made at 51 South Duke Street, Lancaster,
Pennsylvania 17602 or such other place or places as the Agent may direct, prior
to 2:00 P.M. on the date of payment, in lawful money of the United States of
America, and in immediately available funds, and, when due or upon instruction
from PSS, may be made by debit to PSS's account number 0015355336 with the
Agent.
2.13 Application of Payments. All payments shall be applied first to
-----------------------
the payment in full of any costs incurred in the collection of any Obligation,
including (without limitation) reasonable attorneys' fees, then to the payment
in full of any late charges, then to the payment in full of accrued and unpaid
interest and then to the reduction of the unpaid principal balance on the Line
of Credit and then to the unpaid principal balance on the Revolving Credit
Facility.
2.14 Late Charges. If the Borrowers shall fail to pay any
------------
installment of interest or principal due under the Loans or any other sum due to
the Lenders under any of the Loan Documents within fifteen (15) days after the
date it is due, the Borrowers shall pay to the order of the Lenders,
immediately, without notice or demand, a late charge equal to two percent (2.0%)
of the amount overdue to defray part of the additional expense incurred by the
Lenders in connection with the delinquency and collection of the overdue amount.
The provision for such late charge shall not be construed to permit the
Borrowers to make any payment after its due date, obligate the Lenders to accept
any overdue installment, or affect the Lenders' rights and remedies upon the
occurrence of a Default or an Event of Default.
22
2.15 Mandatory Payments. If the unpaid principal balance of the
------------------
Line of Credit Note exceeds the Line of Credit Commitment at any time, the
Borrowers shall immediately pay to the Agent for application to the Line of
Credit Note an amount equal to such excess.
2.16 Voluntary Prepayments.
---------------------
(a) Subject to Subsection 2.5 and paragraphs (b) and (c) below,
the Borrowers at any time and from time to time may voluntarily prepay any
Loan (whether a Term Loan or an Advance), in whole or in part, upon
notification to the Agent of such prepayment not later than 2:00 P.M. on
the date of prepayment, in integral multiples of One Hundred Thousand
Dollars ($100,000). Any partial prepayments of principal shall be applied
against scheduled payments of principal in the inverse order of maturity
and shall not postpone or reduce any regularly scheduled payment of
principal or interest thereon.
(b) If the Borrowers prepay, in whole or in part, any LIBOR Loan
prior to the expiration of the appropriate LIBOR Period applicable thereto,
then the Borrowers shall indemnify the Lenders and hold the Lenders
harmless from and against any and all direct and indirect costs and losses
(including losses from redeployment of prepaid or unborrowed funds at rates
lower than the cost of such funds to Lenders), but not lost profits, that
any Lender may sustain or incur as a result of such prepayment of a LIBOR
Loan. Such agreement to indemnify shall include, without limitation, any
interest payable by the Lenders to lenders of funds obtained by the Lenders
in order to make or maintain LIBOR Loans pursuant hereto.
(c) The Borrowers may prepay any Term Loan in whole, but not in
part, at any time, but any prepayment of principal of any Term Loan bearing
interest at a fixed rate of interest shall be accompanied by a payment of
all accrued and unpaid interest on the principal so prepaid plus a
prepayment premium equal to the amount, if any, by which (i) each
installment of principal being prepaid is discounted to a present value at
a rate per annum equal to the yield to maturity of the "Applicable Treasury
Bond Obligation(s)" exceeds (ii) the principal amount being prepaid. The
"Applicable Treasury Bond Obligation(s)" shall mean the debt obligation(s)
of the United States Treasury having a maturity date nearest in time to the
maturity date(s) of the principal being prepaid and the maturity date and
yield to maturity of such Applicable Treasury Bond Obligation(s) as shall
be determined by the
23
Agent in its sole discretion on the basis of quotations published in the
Wall Street Journal (or a comparable source chosen by the Agent) on the
-------------------
date of prepayment.
2.17 Limitations on Revolving Credit Advances. Except for the
----------------------------------------
repayment on the Closing Date of certain obligations owed to the Bank of New
York, Revolving Credit Advances may only be used to finance acquisitions by the
Borrowers or their wholly-owned Subsidiaries of companies engaged in businesses
with lines of business similar to the lines of business in which Borrowers are
currently engaged. If, in connection with any such acquisition, (a) a Borrower
requests a Revolving Credit Advance, and (b) the sum of (i) the aggregate amount
of all Revolving Credit Advances outstanding at such time and (ii) such
requested Revolving Credit Advances exceeds $10,000,000, then such acquisition
must be approved by the Agent, which approval shall not be unreasonably withheld
or delayed.
2.18 Borrower's Obligations. Except for PSS, the maximum liability
----------------------
of each Borrower hereunder shall be limited to the greater of (i) that amount of
the Advances that were advanced or contributed to that Borrower or used to pay
obligations of that Borrower, and (ii) such amount as will not cause such
Borrower's obligations hereunder to be unenforceable.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
To induce Agent and the Lenders to enter into this Agreement and to
make the Loans, each Borrower represents and warrants to Agent and the Lenders
that:
3.1 Organization and Qualification. Each Borrower is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified as a foreign corporation
and in good standing under the laws of each jurisdiction in which the conduct of
its business or the ownership of its assets requires such qualification and in
which the failure to so qualify would have a material adverse effect on the
business or financial condition of PSS or such Subsidiary.
3.2 Power and Authority. Each Borrower has the corporate power to
-------------------
execute, deliver and perform under, the Loan Documents and to borrow under this
Agreement and has taken all necessary corporate action to authorize the
borrowings hereunder on the terms and conditions of this Agreement and the
execution and delivery of, and performance under, the Loan Documents. No consent
of any other party (including stockholders of the Borrowers) and no
24
consent, license, approval or authorization of, or registration or declaration
with, any governmental authority, bureau or agency is required in connection
with the execution, delivery, performance, validity or enforceablility of the
Loan Documents.
3.3 Enforceability. The Loan Documents, when executed and delivered
--------------
to Agent pursuant to the provisions of this Agreement, will constitute valid
obligations of each Borrower legally binding upon it and enforceable in
accordance with their respective terms, except as enforceability of the
foregoing may be limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights and
general equitable principles.
3.4 Conflict with Other Instruments. The execution and delivery of,
-------------------------------
and performance under, the Loan Documents will not violate or contravene any
provision of any existing law or regulation or decree of any court, governmental
authority, bureau or agency having jurisdiction in the premises or of the
Articles of Incorporation or of the By-Laws of any Borrower or of any material
mortgage, indenture, security agreement, contract, undertaking or other
agreement to which any Borrower is a party or which purports to be binding upon
it or any of its properties or assets, and will not result in the creation or
imposition of any lien, charge, encumbrance on, or security interest in, any of
its properties or assets pursuant to the provisions of any such mortgage,
indenture, security agreement, contract, undertaking or other agreement.
3.5 Litigation. No actions, suits or proceedings before any court
----------
or governmental department or agency (whether or not purportedly on behalf of
PSS or any Significant Subsidiary) are pending or, to the knowledge of the
Borrowers, threatened (a) with respect to any of the transactions contemplated
by this Agreement or (b) against or affecting PSS or any Significant Subsidiary
or any of its properties that could reasonably be expected to have a material
adverse effect upon the financial condition, business or operations of PSS or
any Significant Subsidiary or the Borrowers' ability to perform any of their
obligations under the Loan Documents.
3.6 Title to Assets. Except as disclosed in writing to the Agent or
---------------
in PSS's most recent audited financial statements, no assets of any Borrower or
any Subsidiary are subject to any mortgages, pledges, charges, liens, security
interests or other encumbrances that would be required to be disclosed in
audited financial statements of PSS in accordance with Generally Accepted
Accounting Principles.
25
3.7 Licenses; Intellectual Property. PSS and each Significant
-------------------------------
Subsidiary owns or has a valid right to use the licenses, trade secrets,
trademarks, trademark rights, trade names or trade name rights or franchises,
copyrights, inventions, and intellectual property rights being used to conduct
its business as now operated; and the conduct of the business of each Borrower
as now operated does not conflict with valid licenses, trade secrets,
trademarks, trademark rights, trade names or trade name rights or franchises,
copyrights, inventions, and intellectual property rights of others. No claim is
pending or, to the Borrowers' knowledge, threatened to the effect that any such
intellectual property owned or licensed by the Borrowers or which the Borrower
otherwise has the right to use, is invalid or unenforceable by the Borrower, as
the case may be. Except as disclosed to the Agent, the Borrower has no
obligation to compensate any Person for the use of any such rights, and no
Person has been granted any license or other rights to use in any manner any of
the rights of the Borrower or any Subsidiary, whether requiring the payment of
royalties or not.
3.8 Default. No Default or Event of Default hereunder has occurred
-------
and is continuing.
3.9 Taxes. PSS and each Significant Subsidiary has filed or caused
-----
to be filed all tax returns (including, without limitation, those relating to
federal and state income taxes) required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it (other than those being contested in good faith by appropriate proceedings
for which adequate reserves have been provided on its books). No tax liens have
been filed against any assets of the Borrower or any Subsidiary, and no claims
are being asserted with respect to such taxes which could have a material
adverse effect upon the financial condition, business or operations of the
Borrower or any Subsidiary.
3.10 Financial Condition. All consolidated and consolidating balance
-------------------
sheets, profit and loss statements, and other financial statements of PSS, dated
as of September 30, 1996, all of which have heretofore been delivered to the
Lenders, and all financial statements and data of PSS which will hereafter be
furnished to the Lenders, do or will (when furnished) present fairly in all
material respects the consolidated financial position of PSS and the results of
its operations as of the dates and for the periods for which the same are
furnished. All such financial statements have been prepared in accordance with
Generally Accepted Accounting Principles applied on a consistent basis. Neither
PSS nor any Significant Subsidiary possesses any "loss contingency" (as that
term is defined in Financial Accounting Standards Board, Statement of Financial
Accounting
26
Standards Board, Statement of Financial Accounting Standards No. 5 - "FASB 5")
which is not accrued, reflected, or reserved against in its balance sheet or
disclosed in the footnotes to such balance sheet. There has been no material
adverse change in the business, properties, operations or condition (financial
or otherwise) of PSS or any Significant Subsidiary since the date of the
financial statements which were most recently furnished by the Borrowers to the
Lenders.
3.11 ERISA.
-----
(a) Except as specifically disclosed to the Lenders in writing
prior to the date of this Agreement:
(i) there is no Accumulated Funding Deficiency with respect
to any Employee Pension Plan;
(ii) no Reportable Event has occurred with respect to any
Employee Pension Plan;
(iii) no violations of the Code have occurred that could
potentially cause the loss of the tax qualified status of any Employee
Pension Plan other than violations that are cureable without material
expense to the Borrower;
(iv) neither PSS nor any Controlled Group Member has
incurred Withdrawal Liability with respect to any Multiemployer Plan;
and
(v) no Multiemployer Plan is in Reorganization.
(b) No liability (whether or not such liability is being
litigated) has been asserted against PSS or any Controlled Group Member in
connection with any Employee Pension Plan or any Multiemployer Plan by the
PBGC, by the trustee of a trust established pursuant to ERISA (s) 4049, by
a trustee appointed pursuant to ERISA (s)4042(b) or (c), or by a sponsor or
an agent of a sponsor of a Multiemployer Plan, and no lien has been
attached and no person has threatened to attach a lien on any of PSS's or
its Controlled Group Members' property as a result of failure to comply
with ERISA or as a result of the termination of any Employee Pension Plan.
(c) Each Employee Pension Plan, as most recently amended,
27
including amendments to any trust agreement, group annuity or insurance
contract, or other governing instrument, is the subject of a favorable
determination letter by the Internal Revenue Service with respect to its
qualifications under (s)Code 401(a) and such Employee Pension Plan's
related trusts are exempt from taxation under (s)Code 501(a). PSS has
furnished Lenders with a copy of the most recent actuarial report for each
Employee Pension Plan which is a defined benefit pension plan and each such
report is accurate in all material respects. Neither PSS nor any Controlled
Group Member has an unfulfilled obligation to contribute to any
Multiemployer Plan other than for periodic contributions on account of
current services of current employees that are not past due.
3.12 Regulation U. Neither PSS nor any Significant Subsidiary is
------------
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and (except for a tender offer for the
stock of a company whose stock is publicly traded) no part of the proceeds of
the Loans will be used to purchase or carry any margin stock or to reduce or
retire any indebtedness incurred for such purpose or to extend credit to others
for such purpose.
3.13 No Notices; No Violations. Neither PSS nor any Significant
-------------------------
Subsidiary has received any notice from any federal, state or local authority or
any insurance or inspection body to the effect that any of its properties,
facilities, equipment or business procedures or practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, judicial or
administrative determination, or any other requirements of any such authority or
body, and PSS and all Significant Subsidiaries, and all such properties,
facilities, equipment, procedures and practices, are, to the Borrowers'
knowledge, in compliance in all material respects with all such laws,
ordinances, determinations, regulations and requirements.
3.14 Labor. Neither PSS nor any Significant Subsidiary is involved
-----
in any strike, lock-out, boycott or any other material labor trouble, nor is it
involved in labor negotiations.
28
3.15 Environmental Matters.
---------------------
(a) To the best of Borrowers' knowledge, the Premises have never
been and are not being used to make, store, handle, treat, dispose of,
generate, or transport Hazardous Substances in violation of any applicable
law. To the best of Borrowers' knowledge, there has never been a Release
of Hazardous Substances on or from the Premises or any other property owned
or used by the Borrower in violation of any applicable law or that caused
or might cause Contamination, and no Contamination exists on any such
property.
(b) Neither PSS nor any of the Significant Subsidiaries has ever
received any notification, citation, or complaint of any kind from any
governmental authority alleging any violation of any law or regulation by
PSS or such Subsidiary relating or pertaining to the making, storing,
handling, treating, disposing, generating, transporting, or Release of any
Hazardous Substances, and neither PSS nor any Significant Subsidiary nor,
to the best of Borrowers' knowledge, any property owned or used by PSS or
any Significant Subsidiary is under any investigation with respect to any
such matters.
(c) To the best of the Borrowers' knowledge, there are no
underground storage tanks on the Premises or any other property owned or
used by PSS or any Significant Subsidiary.
SECTION 4. CONDITIONS OF BORROWING.
4.1 Initial Advance. As a condition precedent to the Lenders'
---------------
obligation to make the initial Advance, the following conditions shall all be
satisfied at the Closing Date:
(a) Loan Documents. Each Borrower shall have delivered or
--------------
caused to be delivered to the Agent duly executed copies of each of the
Loan Documents.
29
(b) Borrower's Authorizations.
-------------------------
(x) PSS shall have delivered to Agent
(i) a copy, certified by the Secretary of PSS, of the
resolutions of the Board of Directors of PSS authorizing and approving
the execution and delivery of and performance under this Agreement and
the other Loan Documents, the borrowings provided for hereunder;
(ii) PSS's articles of incorporation certified by the
corporate Secretary of PSS;
(iii) a good standing or subsistence certificate with
respect to PSS certified by the Secretary of State of the state of
PSS's incorporation as of a date within ten (10) days of the Closing
Date; and
(iv) a copy of PSS's By-Laws, as currently in effect,
certified by PSS's Secretary or Assistant Secretary; and
(y) The President and Secretary of PSS shall have duly executed
and delivered to the Agent certificates of incumbency, in form and
substance satisfactory to the Agent.
(z) A copy of the resolutions of the respective Boards of
Directors of each Borrower (except PSS) authorizing and approving the
execution and delivery of and performance under this Agreement and the
other Loan Documents, and the borrowings provided for hereunder.
(c) Legal Opinions. Counsel for PSS shall have delivered to the
--------------
Agent an opinion acceptable to Agent, dated the Closing Date and addressed
to the Agent.
(d) Representations. The representations and warranties
---------------
contained in Section 3 hereof shall be true and correct as of the Closing
Date and no Default or Event of Default shall be in existence or shall
occur as a result of any Advance made on the Closing Date.
(e) Legal Matters. All legal matters incident to the
-------------
transactions contemplated by this Agreement shall be satisfactory to
30
Stevens & Lee, counsel for the Agent.
4.2 Subsequent Advances. As a condition precedent to the Lenders'
-------------------
obligation to make any Advance after the Closing Date, the following conditions
shall all be satisfied on the date of such Advance:
(a) Representations. The representations and warranties
---------------
contained in Subsections 3.1, 3.2, 3.3, 3.4, 3.6, 3.8, and 3.10 (except for
the last sentence of Subsection 3.10 to the extent such matter has
theretofore been disclosed to the Agent) shall be true and correct on the
date such Advance is made.
(b) No Default. No Default or Event of Default shall exist on
----------
the date of such Advance or shall occur as the result of making such
Advance.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrowers covenant and agree that from and after the effective
date of this Agreement and so long as any of the indebtedness hereunder remains
outstanding and unpaid, in whole or in part, or the credit commitments hereunder
remain available, the Borrowers will observe the following covenants, unless the
Agent shall otherwise consent in writing:
5.1 Financial Statements; Reports. The Borrowers will furnish to
-----------------------------
Lender:
(a) Annual Reports: as soon as PSS files its annual report on
--------------
Form 10-K with the SEC or ninety (90) days after its fiscal year end,
whichever is later, the annual audit report of PSS containing a
consolidated balance sheet of PSS and Subsidiaries, as at the end of such
fiscal year, and related consolidated statements of income, stockholders'
equity, and cash flows of PSS and its Subsidiaries, for such fiscal year,
setting forth in each case in comparative form the corresponding figures
for the preceding fiscal year, all in reasonable detail, prepared in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis and certified without exception or qualification by
independent public accountants selected by PSS and satisfactory to the
Agent, together with a consolidating balance sheet as at such year end and
consolidating income statement for such fiscal year of PSS and its
Subsidiaries;
31
(b) Quarterly Statements. As soon as PSS files its quarterly
--------------------
reports on Form 10-Q with the SEC or forty-five (45) days after the end of
each fiscal quarter, whichever is later, a consolidated balance sheet of
PSS and its Subsidiaries, as of the end of such quarterly period, the
related consolidated statements of income for such quarterly period and for
the period from the end of the preceding fiscal year to the end of such
quarterly period, and the related consolidated statements of cash flows for
the period from the end of the preceding year to the end of such quarterly
period, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis (subject to normal
year-end adjustments) and certified as to accuracy by the chief financial
officer of PSS, together with a consolidating balance sheet as at such
quarter end and consolidating statements of income for such quarterly
period and for the period from the preceding year end to the end of such
quarterly period of PSS and its Subsidiaries;
(c) Reports to Investors: promptly after the sending or making
--------------------
available or filing the same, copies of all reports and financial
statements required to be or actually delivered or sent by PSS to its
shareholders generally;
(d) Securities Filings: promptly upon sending, making available,
------------------
or filing the same, such reports and financial statements as PSS shall send
or make available to the shareholders of PSS or file with the SEC and any
press releases made by PSS; and
(e) Other Information: from time to time, such additional
-----------------
financial and other information as Agent may reasonably request.
5.2 Liabilities. PSS and any Significant Subsidiaries will pay and
-----------
discharge, at or before their maturity, all their respective material
obligations and liabilities (including, without limitation, tax liabilities and
all employee wages as provided in the Fair Labor Standards Act, 29 U.S.C. 206-
207 and any successor statute), except those which may be contested in good
faith, and maintain adequate reserves for any of the same in accordance with
Generally Accepted Accounting Principles.
32
5.3 ERISA.
-----
(a) PSS will furnish to Lenders (i) within thirty (30) days
after it has reason to know that it or any Controlled Group Member has
incurred Withdrawal Liability, or that any Multiemployer Plan is in
Reorganization or that any Reportable Event has occurred with respect to
any Employee Pension Plan or that the PBGC has instituted or will institute
proceedings under Title IV of ERISA to terminate any Employee Pension Plan
or to appoint a trustee to administer any Employee Pension Plan, a
statement setting forth the details as to such Withdrawal Liability,
Reorganization, Reportable Event, termination or appointment proceedings
and the action which it (or the Multiemployer Plan sponsor or Employee
Pension Plan sponsor other than PSS) proposes to take with respect thereto,
together with a copy of any notice of Withdrawal Liability or
Reorganization given to PSS or any Controlled Group Member and a copy of
the notice of such Reportable Event given to PBGC if a copy of such notice
is available to PSS or any of its Controlled Group Members; and (ii)
promptly after receipt thereof, a copy of any notice PSS or any of its
Controlled Group Members or the sponsor of any Employee Pension Plan
received from PBGC or the Internal Revenue Service which sets forth or
proposes any action or determination with respect to such Employee Pension
Plan.
(b) PSS will notify Lenders of (i) any excise taxes which have
been assessed or which PSS or any of its Controlled Group Members have
reason to believe may be assessed against PSS or any of its Controlled
Group Members by the Internal Revenue Service with respect to any Employee
Pension Plan or Multiemployer Plan or (ii) any revocation of qualification
under Code (S)(S)401 which has occurred or which PSS or any of its
Controlled Group Members have reason to believe may occur with respect to
any Employee Pension Plan or Multiemployer Plan.
5.4 Notices. The Borrowers will promptly give notice in writing to
-------
the Lenders of the occurrence of any of the following:
(a) any Event of Default or Default under this Agreement; or
(b) any material adverse change in the properties, operations,
business or condition (financial or otherwise) of PSS or any Significant
Subsidiary since the date of the most recent financial
33
statements furnished by the Borrowers to the Lenders or the likely
occurrence thereof.
5.5 Use of Proceeds. Except for the repayment on the Closing Date of
---------------
obligations owed to Bank of New York, the Borrowers shall use the proceeds of
the Revolving Credit Facility solely for the purpose of financing acquisitions
in accordance with Subsection 2.17. The Borrowers shall use the proceeds of the
Line of Credit solely for working capital purposes.
5.6 Corporate Existence; Properties. PSS and each Significant
-------------------------------
Subsidiary will maintain, and cause each other Subsidiary to maintain:
(a) its corporate existence and its qualification to do
business and good standing in each jurisdiction in which qualification is
necessary for the proper conduct of its businesses; and
(b) all material licenses, permits and other authorizations
necessary for the ownership and operation of its properties and businesses.
5.7 Insurance. PSS and each Significant Subsidiary shall carry at
---------
all times, in coverage, form and amount consistent with prudent business
practices, hazard insurance (with fire, extended and vandalism and malicious
mischief coverage and coverage against such other hazards as are customarily
insured against by companies in the same or similar business), commercial
general liability insurance, worker's compensation insurance, and comprehensive
automobile liability insurance, and pay all premiums on the policies for such
insurance when and as they become due and do all other things necessary to
maintain such policies in full force and effect. The Borrowers shall from time
to time, upon request by the Agent, promptly furnish or cause to be furnished to
the Agent evidence, in form and substance satisfactory to the Agent, of the
maintenance of all insurance required to be maintained by this Section.
5.8 Books and Records. PSS will maintain, and will cause each
-----------------
Subsidiary to maintain, accurate and complete records and books of account with
respect to all its operations in accordance with Generally Accepted Accounting
Principles, and will permit, and will cause each Subsidiary to permit, officers
or representatives of the Agent and the Lenders to examine and make excerpts
from such books and records and to visit and inspect its properties, both real
and personal, at all reasonable times and upon reasonable prior notice.
34
5.9 Location of Business. The Borrowers will notify Agent in advance
--------------------
of any change in the location of the principal executive offices of PSS.
5.10 Funded Debt to Cash Flow. PSS will maintain on a consolidated
------------------------
basis at each fiscal quarter end beginning December 31, 1996, a ratio of Funded
Debt to Net Cash Flow of not greater than the following ratios based on the
aggregate outstanding Revolving Credit Advances and Term Loans:
Outstanding Revolving Credit Maximum Ratio
Advances and Term Loans -------------
-----------------------
$10,000,000 or less 2.00 to 1.0
$10,000,001 to $20,000,000 2.50 to 1.0
$20,000,001 to $30,000,000 2.75 to 1.0
5.11 Fixed Charge Coverage Ratio. PSS will maintain on a consolidated
---------------------------
basis at each fiscal quarter end beginning December 31, 1996, a ratio of Net
Cash Flow to Fixed Charges of not less than 3.0 to 1.0.
5.12 Current Ratio. PSS will maintain on a consolidated basis at each
-------------
fiscal quarter end beginning December 31, 1996, a ratio of Current Assets to
Current Liabilities of not less than 1.20 to 1.0.
5.13 Deposit Accounts. PSS shall maintain its primary collection and
----------------
disbursement deposit accounts with the Agent.
SECTION 6. NEGATIVE COVENANTS.
The Borrowers covenant and agree that from and after the effective
date of this Agreement and so long as any of the indebtedness hereunder remains
outstanding and unpaid, in whole or in part, or the credit commitments hereunder
remain available, the Borrowers will observe the following covenants unless the
Agent shall otherwise consent in writing:
6.1 Debt. Except for the indebtedness incurred under this Agreement,
----
the Borrowers will not, nor will they permit any Subsidiary to, create, incur,
assume or suffer or permit to exist any indebtedness for borrowed money or any
indebtedness constituting the deferred portion of the purchase price of any
business permitted to be acquired by PSS or any Subsidiary, except:
35
(a) any such indebtedness not in excess of $2,000,000 in the
aggregate principal amount at any one time outstanding; and
(b) Subordinated Indebtedness.
6.2 Liens. PSS will not, nor will it permit any Subsidiary to,
-----
create, assume, or suffer to exist, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind upon any of its assets, whether now owned or
hereafter acquired, securing (a) indebtedness for borrowed money, (b)
indebtedness incurred in connection with the acquisition of businesses permitted
to be acquired by PSS or any Subsidiary, (c) guaranteed obligations, (d) letter
of credit obligations, or (e) deferred purchase price obligations, except,
purchase money liens on and security interests in assets acquired by any
Borrower or any Subsidiary, provided that such liens and security interests
attach only to the property so acquired and do not encumber any other property
of the Borrowers or any Subsidiary.
6.3 Investments. The Borrowers will not make or suffer to exist any
-----------
investment, except investments in the following:
(a) companies engaged in businesses similar to the lines of
business in which the Borrowers are currently engaged;
(b) marketable direct obligations of the United States of
America or any agency thereof, marketable obligations directly and fully
guaranteed by the United States of America and certificates of deposit
issued by any Lender or by any other bank with a shareholders' equity of at
least $50,000,000 organized under the laws of the United States of America
or any state thereof, provided that such obligations and certificates of
deposit have a maturity of one year or less from the date of purchase;
(c) any of the following:
(i) repurchase agreements on obligations specified in
clause (b) above maturing within 90 days, provided that the long-term
unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency in one of its
two highest rating categories and the short-term debt obligations of
the party agreeing to repurchase are rated at least Prime-1 by Moody's
Investor Service, Inc. and at least A1+ by Standard & Poor's
Corporation;
36
(ii) federal funds, certificates of deposit, time
deposits, money market accounts and bankers' acceptances (which shall
each have an original maturity of not more than 90 days and, in the
case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United
States or any state, provided that the long-term unsecured debt
obligations of such depository institution or trust company at the
date of acquisition thereof have been rated by each Rating Agency in
one of its two highest long-term ratings; and the short-term
obligations of such depository institution or trust company are rated
at least Prime-1 by Moody's Investor Service, Inc. and at least A1+ by
Standard & Poor's Corporation; and
(iii) commercial paper (having an original maturity of not
more than 365 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its highest short-
term rating; provided that such commercial paper shall have a
remaining maturity of not more than 90 days; and
(d) assets used in the ordinary course of Borrowers'
businesses.
6.4 Mergers, Consolidations. PSS will not, nor will it permit any
-----------------------
Subsidiary to, enter into any transaction of merger or consolidation, except
that:
(a) any Subsidiary may be merged into or consolidated with the
Borrower if the Borrower shall be the surviving corporation;
(b) any Subsidiary may be merged into or consolidated with any
other Subsidiary or any other Person; and
(c) Borrower may be merged with another Person if the Borrower
will be the surviving corporation;
provided that immediately after giving effect thereto, the Borrower shall be in
compliance with all the terms of this Agreement and no Default or Event of
Default hereunder shall have occurred and be continuing.
37
6.5 Disposition of Assets. No Borrower will liquidate or dissolve
---------------------
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
pledge, or otherwise transfer or dispose of all or any substantial part of its
properties, assets or business except that the Borrowers and any Subsidiaries
may sell used equipment no longer used or useful in connection with their
respective businesses.
6.6 Continuance of Business. No Borrower will, nor will it permit
-----------------------
any Subsidiary to, engage in any line of business other than those in which the
Borrowers or any such Subsidiary is currently engaged on the date of this
Agreement and lines of business similar thereto.
6.7 Use of Proceeds. Except in connection with a tender offer for
---------------
the stock of corporation whose shares are publicly traded, no Borrower will, nor
will it permit any Subsidiary to, directly or indirectly, apply any part of the
proceeds of the Loans to the purchasing or carrying of any "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder.
SECTION 7. EVENTS OF DEFAULT, REMEDIES.
7.1 Events of Default. The following shall constitute Events of
Default:
(a) Non-Payment. (i) Failure by the Borrowers to pay the
-----------
principal of or accrued interest on the Notes within three Business Days
after such payment is due, or (ii) the failure of the Borrowers to pay any
other amount payable to any Lender under this Agreement within fifteen (15)
days after such amount becomes due.
(b) Falsity of Representations and Warranties. Any
-----------------------------------------
representation or warranty made by the Borrowers in this Agreement or in
any other Loan Document or in any certificate, financial or other statement
furnished at any time under or in connection with this Agreement or any
other Loan Document shall prove to be false or misleading in any material
respect when made.
(c) Failure to Perform Certain Covenants. Failure by the
------------------------------------
Borrowers to observe or perform any other covenants, conditions or
provisions contained in this Agreement or in any other Loan Document,
provided that, except with respect to a violation of the covenants
38
contained in Subsections 5.10 through 5.12, 6.4, and 6.5, such failure
shall continue for a period of thirty (30) days.
(d) Default Under Other Obligations. The Borrower or any
-------------------------------
Subsidiary:
(i) defaults in any payment of principal of or interest
on any obligations with respect to indebtedness for borrowed money
(other than under the Notes or any such obligation payable to any
Lender) or any obligation for the deferred purchase price of property
beyond any period of grace provided with respect thereto; or
(ii) defaults in the performance of any other agreement,
term or condition contained in any such obligation or in any agreement
relating thereto;
if the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) declares, such obligation to become due prior to its
stated maturity and if the aggregate amount of all of such obligations so
accelerated exceed $1,000,000.
(e) Voluntary Bankruptcy, Etc. The commencement by PSS or any
-------------------------
Significant Subsidiary of a voluntary case under the Bankruptcy Code, as
now constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency, reorganization, rehabilitation or other
similar law, or the consent by it to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of PSS or any Significant
Subsidiary or for any substantial part of its property, or the making by it
of any general assignment for the benefit of creditors, or the failure of
PSS or any Significant Subsidiary generally to pay its debts as such debts
become due, or the taking of corporate action by PSS or any Significant
Subsidiary in furtherance of any of the foregoing.
(f) Involuntary Bankruptcy, Etc. The entry of a decree or
---------------------------
order for relief by a court having jurisdiction in the premises in respect of
any Borrower or any Subsidiary in an involuntary case under the Bankruptcy Code,
as now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
any Borrower or any Subsidiary or for any substantial part of its property, or
ordering the winding-up or
39
liquidation of its affairs and the continuance of any such decree or order
unstayed and in effect for a period of sixty (60) days.
(g) ERISA.
-----
(i) (A)(1) Any Employee Pension Plan is terminated within
the meaning of Title IV of ERISA, or (2) a trustee is appointed by the
appropriate United States District Court to administer any Employee
Pension Plan, or (3) the PBGC institutes proceedings to terminate any
Employee Pension Plan, or (4) any Reportable Event occurs which the
Lender determines in good faith indicates a substantial likelihood
that an event described in (1), (2), or (3) above will occur, or (5)
PSS or any of its Controlled Group Members incur any Withdrawal
Liability with respect to any Multiemployer Plan or (6) any
Multiemployer Plan enter Reorganization, and (B) with respect to
events described in (1)-(4) above, only, the benefit commitments
(within the meaning of ERISA (S)(S)4001(a)(16)), exceed the market
value of the assets in the fund under the Employee Pension Plan by,
five percent (5%) or more of the consolidated net worth of PSS;
(ii) there occurs any Accumulated Funding Deficiency with
respect to any Employee Pension Plan and PSS or any of its Controlled
Group Members fails to correct such Accumulated Funding Deficiency
prior to the end of the taxable period within the meaning of Code
(S)(S)4971(c)(3); or
(iii) any Employee Pension Plan loses its tax-qualified
status and as a result thereof, PSS or any Controlled Group Member
incurs liability in the aggregate exceeding five percent (5%) of the
consolidated net worth of PSS.
(h) Default Under Other Documents. An "Event of Default" or
-----------------------------
similar event shall have occurred and be continuing under any Loan
Document.
(i) Judgments. One or more judgments not covered by insurance
---------
maintained by PSS or any Significant Subsidiary (or if covered by
insurance, with respect to which the insurer has denied coverage or
reserved its rights) are entered against PSS or any Significant Subsidiary
in the aggregate amount of One Million Dollars ($1,000,000) or more, and
PSS or any Significant Subsidiary shall not obtain the
40
satisfaction, release, stay or dismissal thereof within thirty (30) days
thereof.
7.2 Acceleration
------------
(a) Upon the occurrence of an Event of Default specified in
Paragraphs 7.1(a) through 7.1(d), and 7.1(g) through 7.1(i), the Agent may,
with the approval of the Required Lenders, by written notice to the
Borrowers, terminate immediately and irrevocably the Revolving Credit
Facility, the Revolving Credit Commitment, the Line of Credit, the Line of
Credit Commitment, and any other obligation of the Lenders to make any
advances to or for the account of the Borrowers, and declare the Notes, and
all other instruments evidencing the Obligations to be due and payable,
whereupon the principal amount of the Notes and all outstanding
Obligations, together with accrued interest thereon and all other amounts
payable thereunder, shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the documents
evidencing the same to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in
Paragraphs 7.1(e) or 7.1(f), the Revolving Credit Facility, the Revolving
Credit Commitment, the Line of Credit and the Line of Credit Commitment,
and any other obligation of the Lenders to make any advances to or for the
account of the Borrowers, shall automatically and immediately terminate and
the unpaid principal balances of, all accrued, unpaid interest on, and all
other sums payable with regard to, the Notes and all instruments evidencing
the Obligations shall automatically and immediately become due and payable,
in all cases without any action on the part of the Agent or any Lender.
7.3 Right of Setoff. Upon the occurrence of an Event of Default,
---------------
the Lenders shall have the right, in addition to all other rights and remedies
available to them, to set off against the unpaid balance of the Obligations, any
debt owing to any Borrower by any Lender and any funds in any deposit account
maintained by any Borrower with any Lender except deposit accounts used solely
as payroll accounts or for the payment of health benefit expenses.
7.4 Remedies Cumulative. The Agent and the Lenders may exercise
--------------------
any of their rights and remedies set forth in this Loan Agreement and the other
Loan Documents. The remedies of the Agent and the Lenders shall be
41
cumulative and concurrent, and may be pursued singly, successively, or together,
at their sole discretion, and may be exercised as often as the occasion
therefore shall occur; and the failure to exercise any such right or remedy
shall in no event be construed as a waiver or release thereof.
SECTION 8. MISCELLANEOUS.
8.1 No Waiver; Cumulative Remedies. No failure or delay on the
-------------------------------
part of the Agent or any Lender in exercising any right, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude or require any other or further exercise
thereof or the exercise of any other right, power or privilege. Neither the
Agent nor any Lender shall be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by the Agent, and then only to the extent specifically set
forth in writing. A waiver with respect to one event shall not be construed as
continuing or as a bar to or a waiver of any right or remedy with respect to a
subsequent event. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
8.2 Notices. All notices, requests and demands to or upon the
--------
respective parties hereto shall be deemed to have been given or made when (a)
deposited in the United States mail, postage prepaid, certified mail, return
receipt requested, (b) when sent by telecopy transmission, or (c) when sent by
courier system providing for receipt of delivery, addressed as follows or to
such other address as may be hereafter designated in writing by the respective
parties hereto:
42
The Borrowers: (a) If mailed:
Physician Support Systems, Inc.
P.O. Box 127
Landisville, PA 17538
Attention: David S. Geller,
Senior Vice President and Chief Financial
Officer
(b) If sent by courier:
Physician Support Systems, Inc.
Route 230 and Eby Chicques Road
Mount Joy, PA 17552
Attention: David S. Geller,
Senior Vice President and Chief Financial
Officer
(c) If sent by telecopy:
Telecopy No.: (717) 653-8261
Agent: CoreStates Bank, N.A.
51 South Duke Street
Lancaster, PA 17602
Attention: Gary R. Johnson
Telecopy No.: (717) 295-8554
8.3 Reimbursement of Agent. The Borrowers hereby agree to reimburse
-----------------------
the Agent for its reasonable out-of-pocket expenses, including reasonable
counsel fees, incurred by the Agent in connection with the development,
preparation, execution and enforcement of this Agreement and all the Loan
Documents, including all counsel fees in connection with any bankruptcy or
insolvency proceeding involving any Borrower, this Agreement or any of the other
Loan Documents. Such expenses and counsel fees shall be paid simultaneously with
the execution of this Agreement and all such expenses hereafter incurred shall
be paid within fifteen (15) days after notice thereof is given to Borrowers by
the Agent.
8.4 Payment of Expenses and Taxes. In addition to payment of the
------------------------------
expenses and counsel fees provided for in Subsection 8.3, the Borrowers agree to
pay, and to save the Agent and the Lenders harmless from any delay in paying,
stamp and other similar taxes, if any, including, without limitation, all
levies, impositions, duties, charges or withholdings, together with any
penalties, fines or interest thereon or other additions thereto, which may be
payable or determined to be payable in connection with the execution and
delivery of this Agreement and the Loan Documents or any modification of any
thereof or any waiver or consent under or in respect of any thereof.
8.5 Survival of Representations and Warranties. All
-------------------------------------------
43
representations, warranties, covenants and agreements made in this Agreement and
all other Loan Documents shall survive the execution and delivery of the Loan
Documents and the making of the Loans hereunder. The provisions of Subsections
8.3, 8.4, 8.10, 8.11 and 8.12 hereof shall survive payment of the Obligations.
8.6 Participations and Assignments.
-------------------------------
(a) Subject to the provisions of Section 10.16(b) hereof, with
the prior written consent of PSS (which consent shall not be unreasonably
withheld or delayed), each Lender shall have the right to assign all or any
of its interest in any or all of the Loans and the Loan Documents or to
participate with other lenders in the Loans, the Loan Documents and any and
all collateral on such terms and at such times as the Lender may determine
from time to time. The Borrowers hereby grant to each such assignee and
participant the right to set off deposit accounts maintained by any
Borrower or any of the Subsidiaries with such assignee or participant or
any other obligations such assignee or participant may owe to such Borrower
or any of its Subsidiaries, to the extent of all Obligations. The Lenders
may disclose all financial, business and other information about the
Borrower or any of its Subsidiaries which the Lenders may possess at any
time to all prospective and actual assignees and participants, provided
that such prospective or actual assignees and participants agree to
preserve the confidentiality of any nonpublic information.
(b) No Borrower may assign or transfer its rights hereunder
without the prior written consent of the Required Lenders.
8.7 Successors. This Agreement shall be binding upon and inure to
-----------
the benefit of the Borrowers, the Agent, and the Lenders and their respective
successors and permitted assigns.
8.8 Construction. This Agreement, all Loan Documents, and the rights
-------------
and obligations of the parties hereunder and thereunder, shall be governed by
and construed and interpreted in accordance with, the domestic internal laws of
the Commonwealth of Pennsylvania without regard to its rules or principles
pertaining to conflict of laws. The Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.9 Severability. Any provision contained in this Agreement which is
-------------
prohibited or unenforceable in any jurisdiction shall, as to such
44
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.10 Indemnity. The Borrowers hereby agree, whether or not any of the
----------
transactions contemplated in the Loan Documents shall be consummated, to pay,
assume liability for, and indemnify, protect, defend, save and keep harmless the
Agent and the Lenders from and against, any and all liabilities, obligations,
losses, damages, settlements, claims, actions, suits, penalties, costs and
expenses (including, but not limited to, reasonable legal and investigative fees
and expenses but excluding any and all lost profits) of whatsoever kind and
nature, including, but not limited to claims based upon negligence, strict or
absolute liability, liability in tort, latent and other defects (whether or not
discoverable), and any claim for patent, trademark or copyright infringement
which may from time to time be imposed on, incurred by or asserted against the
Agent or any Lender (whether or not any such claim is also indemnified or
insured against by any other person) in any way relating to or resulting from
this Agreement or any other Loan Document, or any of the transactions
contemplated herein or therein. The provisions of this subsection shall survive
the payoff, release, foreclosure or other disposition, as applicable, of this
Agreement, the Obligations or any collateral.
8.11 Waiver of Trial by Jury; Jurisdiction.
--------------------------------------
(a) Each party to this Agreement agrees that any suit, action, or
proceeding, whether claim or counterclaim, brought or instituted by either
party hereto or any successor or assign of any party on or with respect to
this Agreement or any other Loan Document or which in any way relates,
directly or indirectly, to the Loans or any event, transaction, or
occurrence arising out of or in any way connection with the Loans, or the
dealings of the parties with respect thereto, shall be tried only by a
court and not by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. THE BORROWERS
ACKNOWLEDGE AND AGREE THAT THIS SUBSECTION 8.11 IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT BETWEEN THE PARTIES AND THAT THE LENDERS WOULD NOT
EXTEND THE CREDIT FACILITIES PROVIDED HEREIN TO THE BORROWERS IF THIS
WAIVER OF JURY TRIAL SECTION WERE NOT A PART OF THIS AGREEMENT.
(b) For the purpose of any suit, action or proceeding arising out
of or relating to this Agreement, the Notes, or the Loans,
45
the Borrowers hereby irrevocably consent and submit to the jurisdiction and
venue of any of the Courts of the Commonwealth of Pennsylvania including,
without limitation, the Court of Common Pleas of Lancaster County and the
Federal District Court for the Eastern District of Pennsylvania. The
Borrowers irrevocably waive any objection which they may now or hereinafter
have to the laying of the venue of any suit, action or proceeding brought
in such court and any claim that such suit, action or proceeding brought in
such a court has been brought in an inconvenient forum. The provisions of
this Paragraph 8.11(b) shall not limit or otherwise affect the right of the
Agent or any Lender to institute and conduct action in any other
appropriate manner, jurisdiction or court.
8.12 Actions Against Lenders; Release.
---------------------------------
(a) Any action brought by the Borrowers or any Subsidiary against
the Agent or any Lender which is based, directly or indirectly, on this
Agreement or any other Loan Document or any matter in or related to this
Agreement or any other Loan Document, including but not limited to the
making of the Loans or the administration or collection thereof, shall be
brought only in the courts located in the Commonwealth of Pennsylvania.
(b) Upon full payment and satisfaction of the Loans and the
interest thereon, as provided in Section 2 hereof, the parties shall
thereupon automatically each be fully, finally, and forever released and
discharged from any further claim, liability or obligation in connection
with the Loans except as expressly set forth herein, except to the extent
an payment received by the Agent or any Lender is determined to be a
preference or similar voidable transfer.
8.13 Counterparts. This Agreement may be executed in any number of
-------------
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
8.14 Entire Agreement. This Agreement and the Loan Documents
-----------------
represent the entire agreement between the Agent, the Lenders and the Borrowers
with respect to the financing transactions to which they relate, and cannot be
changed or amended except by an agreement in writing signed by the Borrowers and
the Agent.
8.15 Margin Stock. The Lenders are not relying on any margin
-------------
46
stock (within the meaning of Regulation U) as collateral in connection with the
extension or maintenance of any credit under this Agreement.
SECTION 9. RIDERS AND JOINDERS. RIDERS AND JOINDERS.
9.1 Riders. Each of the Riders attached to this Agreement and
-------
executed or initialed by Agent and by PSS are incorporated by reference into
this Agreement and are made a part hereof. The terms and conditions contained
in any Rider to this Agreement may be modified, amended, supplemented or
restated by a subsequently dated Rider executed or initialed by the Agent and
PSS, and any such subsequently dated Rider shall be incorporated by reference
into this Agreement and made a part hereof whether or not such Rider is
physically attached hereto. Each amendment, modification, and supplement to or
restatement of a Rider shall be effective as of the date of such Rider unless
otherwise expressly provided therein.
9.2 Joinders. If the parties hereto desire to have a new entity
---------
become a party to this Agreement as either a Borrower or a Lender, such party
shall execute and deliver to the Agent a joinder in the form of Rider B attached
hereto. Upon acceptance of such joinder by the Agent and PSS, such party shall
become a Borrower or Lender hereunder as the case may be. Each Subsidiary shall
join in this Agreement and become a Borrower hereunder within ten (10) days
after such Subsidiary becomes a Subsidiary.
SECTION 10. THE AGENT.
10.1 Appointment and Authorization. Each Lender appoints and
------------------------------
authorizes the Agent to take such action as agent on the Lender's behalf and to
exercise such powers under this Agreement and the Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto. The Agent shall have no duties or
responsibilities except those expressly provided herein. The Borrowers shall be
entitled to rely on any representation made by Agent that any action taken by
Agent has been approved (if necessary) by the Required Lenders, and the
Borrowers shall have no duty to inquire as to whether such action by Agent was
approved by the Required Lenders.
10.2 Agent's Rights as Lender. Agent shall have the same rights and
-------------------------
powers under this Agreement as any other Lender and may exercise or refrain from
exercising the same as though it were not the Agent, and Agent and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with any Borrower or any Affiliate as if it were not the Agent
hereunder.
47
10.3 Actions; Lenders' Instructions.
-------------------------------
(a) The Agent, upon receipt of written instructions from the
Required Lenders, shall take any action specified in such instructions
which is within the Agent's rights, powers or discretion under the Loan
Documents and applicable law. Any Lender that fails to respond to the
Agent in writing within ten (10) days after written notice from Agent
requesting approval of any action that Agent proposes to take with respect
to the Loans shall be deemed to have approved such action by Agent.
(b) Each Lender which notifies the Agent to take specific
actions shall concurrently deliver copies of such notification to the other
Lenders. The Agent shall deliver copies to the Lenders of each written
notice which it delivers to any Borrower. Failure by any Lender to deliver
copies of any notices pursuant to this Section 10.3(b) shall not invalidate
any action with regard to the Borrowers.
(c) Any action taken or failure to act pursuant to such
instructions from the Required Lenders or the Agent's rights, powers or
discretion shall be binding on the Lenders.
(d) No Lender shall have any right of action against the Agent
as a result of the Agent's action or failure to take action under the Loan
Documents in accordance with the instructions of the Required Lenders.
(e) Notwithstanding anything else contained herein to the
contrary, without the prior written consent of the Required Lenders (which
consent no Lender shall unreasonably withhold, condition or delay), the
Agent, on behalf of the Lenders, shall not:
(i) agree to any change in the rate or rates of interest,
maturity or amortization schedules applicable to the Loans except as
the Borrowers are permitted to make under the terms hereof;
(ii) release any Borrower from its obligations under the
Loan Documents;
(iii) extend the Termination Date, the Line of Credit
Termination Date, or the Conversion Date; or
48
(iv) quote a fixed rate of interest to any Borrower under
Section 2.5(i) with respect to any Term Loan.
(f) Notwithstanding anything else contained herein to the
contrary, a Lender's Commitment may not be increased or decreased without
the written consent of such Lender.
(g) Anything herein or otherwise to the contrary
notwithstanding,the Agent shall not grant any waiver or consent required
under the Loan Documents or requested by the Borrowers without the approval
of the Required Lenders.
10.4 Preference Repayments. If claim is ever made upon the Agent or
---------------------
any Lender for repayment or recovery of any amount or amounts received by the
Agent or any Lender in payment or on account of the Loans and the Agent or any
Lender repays all or part of such amount by reason of (a) any judgment, decree
or order of any court or administrative body having jurisdiction over the Agent
or any Lender or any of its property, or (b) any settlement or compromise of any
such claim effected by the Agent or any Lender with any such claimant (including
the Borrowers), then and in such event Lenders agree that any such judgment,
decree, order, settlement or compromise shall be binding upon Lenders,
notwithstanding any revocation hereof or the cancellation of the Loan Documents
or other instrument evidencing the Loans, and Lenders agree to immediately pay
to the Agent or the Lender repaying such amount an amount equal to the product
of (i) such Lender's Commitment and (ii) the amount of such funds repaid by the
Agent or such Lender.
10.5 Consultation with Experts. The Agent may consult with legal
-------------------------
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
10.6 Liability of Agent. Neither the Agent nor any of its directors,
------------------
officers, agents, or employees shall be liable for any action taken or not taken
by it in connection herewith (i) with the consent or at the request of the
Required Lenders or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement, any Loan Document, or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrowers; or (iii) the validity, effectiveness
49
or genuineness of this Agreement, the Loan Documents, or any other instrument or
writing furnished in connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a telecopy or similar writing)
reasonably believed by it to be genuine or to be signed by the proper party or
parties.
10.7 Credit Decision. By executing this Agreement, each Lender
---------------
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under the Loan Documents.
10.8 Successor Agent. With the written consent of PSS to any
---------------
successor Agent (which consent shall not be unreasonably withheld or delayed),
the Agent may resign at any time by giving written notice thereof to the
Lenders. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent, which successor Agent must be approved by PSS (which
approval shall not be unreasonably withheld or delayed). If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty (30) Business Days after the retiring Agent gives
notice of resignation, the retiring Agent may, on behalf of the Lenders, appoint
a successor agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least Fifty Million Dollars ($50,000,000).
Upon the acceptance in writing for the benefit of the Lenders of its appointment
as Agent hereunder by a successor agent, the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
10.9 Setoff or Counterclaim. The Agent and the Lenders each hereby
----------------------
agree that if any of them shall, by exercising any right of setoff or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest due with respect to the Loans which is greater
than the proportion received by the others in respect of the aggregate amount of
principal and interest due to the others with respect to the Loans, the Lender
that has received such proportionately greater payment shall make
50
such payments to the other Lenders as may be required so that all such payments
of principal and interest with respect to the interest of each in the Loans
shall be shared by the Lenders pro rata (in proportion to each Lender's
Commitment). The foregoing shall not impair the right of any of Lenders to
exercise any right of setoff or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of any Borrower other
than its indebtedness under the Loans; provided, however, that amounts subject
to such exercise shall be applied first to the payment of indebtedness of such
Borrower which is participated in or shared by all the Lenders prior to the
application of any such amounts to any indebtedness of the Borrower which is
owed to only some of the Lenders.
10.10 Amendments. Any provision of this Section 10 may be amended by
----------
a writing signed by all of the Lenders and Agent. Except for the provisions of
Sections 10.1, 10.8, 10.11, and 10.16, the Borrowers shall not be a beneficiary
of any provision contained in this Section 10, and the Borrowers shall have no
rights under any provisions of this Section 10.
10.11 Payments Received. Agent shall hold all payments received by it
-----------------
from the Borrowers with respect to the Loans in trust for the account of the
Lenders. Agent shall deliver to each Lender its percentage share of any payment
received by Agent on account of the Loans by wire transfer of funds to the
account designated by such Lender on the Business Day following the date on
which payment is received by the Agent. Payments shall not be deemed "received"
by Agent until Agent has collected funds with respect to such payment.
10.12 Advances. Each Lender shall on the date that any Advance is to
--------
be made to the Borrowers remit to the Agent such Lender's proportionate share of
the amount advanced to the Borrowers under or in connection with the Loans by
wire transfer in immediately available funds. The commitment of each Lender to
the Agent hereunder is absolute and binding, and is not subject to reduction or
termination. The Agent and each Lender shall make appropriate adjustments of
their respective records concerning the proportionate share of each with respect
to amounts advanced under the Loans and amounts received from the Borrowers for
credit against principal, interest and other charges due under the Loan
Documents as of the date of each transfer between the Agent and such Lender.
10.13 Indemnification. Each Lender hereby agrees to indemnify the
---------------
Agent according to its proportionate share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
(including, without limitation, the Out-of-Pocket Costs),
51
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to, or arising
out of the Loans or any action taken or omitted by the Agent under the Loan
Agreement or other Loan Documents; provided, however, that the Lenders shall not
be liable for any portion of any such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from (a) the Agent's gross negligence or willful misconduct, or (b) any breach
of the provisions of this Agreement by Agent. The Agent agrees to act in a
commercially reasonable fashion in defending or attempting to settle any such
suit, action or claim brought against it, and any payment of any amounts for
which it shall seek indemnification hereunder; and the Agent shall give the
Lenders notice of all such suits, actions and claims of which it is aware, and
shall endeavor to give the Lenders prior notice of any such payment. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for the Lender's proportionate share of any Out-of-Pocket Costs to
the extent that the Agent is not reimbursed for such Out-of-Pocket Costs by the
Borrowers.
10.14 Liquidation.
-----------
(a) If the Agent shall determine that an Event of Default has
occurred, the Agent may, after notice to, and approval of the Required
Lenders, elect to exercise its rights and remedies under this Agreement and
the other Loan Documents. Thereafter, all Collections and all other monies
received or held by the Agent in connection with the Loans shall be applied
to the following categories, in the following order (and in accordance with
the proportionate shares thereof in categories (ii) and (iii)): (i) all
Out-of-Pocket Costs and all costs and expenses incurred by the Agent and
the Lenders in connection with the enforcement of their rights under this
Agreement or any of the other Loan Documents; (ii) all accrued and unpaid
interest under the Loans; and (iii) the entire unpaid principal balance of
the Loans. The failure of the Agent or the Lenders to apply Collections as
aforesaid shall not be deemed or construed to confer any right upon the
Borrowers or to any guarantor, surety or endorser of the Loans.
(b) The Agent agrees to use its best efforts to give the Lenders
notice of all material actions to be taken with respect to all Collections
after the occurrence of an Event of Default under this Agreement; provided,
--------
however, that no failure to give the Lenders any such notice shall result
-------
in any liability of the Agent in the absence of gross negligence or willful
misconduct on the part of the Agent.
52
10.15 Forwarding Information. Agent shall promptly forward to each
----------------------
Lender a copy of any financial information received by the Agent with respect to
the Borrowers that has not been contemporaneously provided to the Lenders by the
Borrowers. The Agent shall furnish to the Lenders on a weekly basis a statement
of all advances made and payments received by the Agent with respect to the
Loans.
10.16 Termination.
-----------
(a) The obligations of the Lenders to the Agent hereunder are
absolute, and the Lenders' proportionate share of the Loans may be reduced
or terminated only with the express prior written approval of the Agent and
PSS and effected either by (i) the substitution of another financial
institution which is authorized to make similar extensions of credit in the
ordinary course of business (provided that the Agent and PSS shall not
unreasonably withhold such approval); or (ii) the voluntary purchase by the
Agent of the Lenders' proportionate share (or the amount of the reduction
thereof proposed by the Lenders). The Agent shall have no obligation to
purchase the Lenders' proportionate share or any part thereof, or to find
any substitute financial institution.
(b) Neither the Agent nor any of the Lenders shall sell, pledge,
assign, grant participations in, subparticipate or otherwise transfer
(except to wholly-owned banking subsidiaries of any holding company which
owns either the Agent or any of the Lenders, by operation of law in the
case of a merger or acquisition involving the Agent or any of the Lenders,
or where so ordered pursuant to applicable banking regulations) its
respective rights under or in connection with this Agreement, the Loan
Documents and the Loans without procuring the prior written consent of the
Required Lenders. Nothing contained herein shall confer upon either the
Agent or the Lenders any interest in, or subject either to any liability
for, the assets or liabilities of the other, except as expressly provided
for herein.
53
(c) In the event of (i) the insolvency of any of the Lenders or
the appointment of any public authority to be in charge of any of the
Lenders or their respective assets, or (ii) the failure on the part of any
of the Lenders to observe or perform any of the terms, covenants or
conditions required to be observed or performed by them under this
Agreement and the subsequent failure to cure such failure within thirty
(30) days after notice from the nondefaulting party to effect such cure,
the nondefaulting party shall have the right, but not the obligation, to
purchase the defaulting party's proportionate share of the Loans for a
purchase price equal to the defaulting party's proportionate share of the
outstanding principal balance of the Loans at the purchase date plus
accrued but unpaid interest at the applicable rates specified in the Loan
Documents through the date of such purchase. Such transfer shall be
accomplished by a written assignment in form acceptable to the parties.
(d) In the event of (i) the insolvency of the Agent or the
appointment of any public authority to be in charge of the Agent or its
assets or (ii) the failure of the Agent to observe or perform any of the
terms, covenants, or conditions required to be observed or performed by
Agent under this Agreement and the subsequent failure to cure such failure
within ten (10) days after notice from any of the Lenders of such failure,
then the Lenders (excluding any Lender acting as Agent) may by agreement
replace the Agent and appoint a successor Agent in accordance with the
procedures described in Paragraph 10.8 hereof.
10.17 Notices. All notices given under this Section 10 shall be
-------
deemed given (i) when sent by United States mail, postage paid, (ii) when sent
by commercial express courier that provides evidence of delivery, charges paid,
or (iii) when sent by telecopy to the Lenders and the Agent at the addresses set
forth in Rider A attached hereto.
10.18 No Joint Venture. The provisions of this Section 10 shall not
----------------
be deemed a joint venture or partnership among the Agent and the Lenders or an
extension of credit by the Agent or the Lenders to the other.
10.19 Definitions. When used in this Section 10 the following terms
-----------
shall have the following meanings:
"Out-of-Pocket Costs" means all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) paid or incurred by or on behalf of the Agent or the
54
Lenders in connection with the preparation, execution and administration or
the enforcement of any rights under this Agreement or any of the other Loan
Documents.
"Collections" means all monies or other assets received by the
Agent or any of the Lenders, by setoff or otherwise, for credit against
principal, interest or other amounts due with respect to the Loans.
10.20 Corporate Records. Each of the Lenders and the Agent agree to
-----------------
have the minutes of the appropriate committee of such institution reflect the
existence of this Agreement and to maintain a copy of this Agreement in the
institution's files relating to the Loans.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
PHYSICIAN SUPPORT SYSTEMS, INC.
By_______________________________________
David S. Geller, Senior Vice President
SPRING ANESTHESIA GROUP, INC.
By_______________________________________
David S. Geller, Senior Vice President
INDEPENDENT ANESTHESIA IPA OF CALIFORNIA, INC.
By_______________________________________
David S. Geller, Senior Vice President
INDEPENDENT ANESTHESIA IPA OF ARIZONA, INC.
By_______________________________________
David S. Geller, Senior Vice President
NORTH COAST HEALTH CARE MANAGEMENT, INC.
By________________________________________
David S. Geller, Senior Vice President
NORTH COAST ACCOUNT SYSTEMS, INC.
By________________________________________
MEDICAL MANAGEMENT SUPPORT, INC.
By_______________________________________
David S. Geller, Senior Vice President
DATA PROCESSING SYSTEMS, INC.
55
By_______________________________________
David S. Geller, Senior Vice President
PSS PBS NORTHWEST, INC.
By________________________________________
David S. Geller, Senior Vice President
PSS ALM, INC.
By________________________________________
David S. Geller, Senior Vice President
SYNERGISTIC SYSTEMS, INC.
By________________________________________
David S. Geller, Senior Vice President
EE&C FINANCIAL SERVICES, INC.
By________________________________________
David S. Geller, Senior Vice President
PSS EE&C HEALTH SERVICES, INC.
By________________________________________
David S. Geller, Senior Vice President
MED-DATA INTERFACE SYSTEMS, LLC
By________________________________________
David S. Geller, Senior Vice President
MEDICAL INTERCEPT SYSTEMS, LLC
By________________________________________
David S. Geller, Senior Vice President
CORESTATES BANK, N.A., as Agent
By_______________________________________
Gary R. Johnson, Vice President
CORESTATES BANK, N.A., as Lender
By_______________________________________
Gary R. Johnson, Vice President
Exhibits
- --------
A - Form of Conversion Notice
B - Form of Term Note
C - Form of Borrowing Notice
Riders
- ------
A - Lenders and Commitments
B - Form of Joinder
56
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of PHYSICIAN SUPPORT SYSTEMS, INC., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of SPRING ANESTHESIA GROUP, INC., a
California corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
57
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of INDEPENDENT ANESTHESIA IPA OF
CALIFORNIA, INC., a California corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of INDEPENDENT ANESTHESIA IPA OF ARIZONA,
INC., an Arizona corporation, and that he as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
58
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of NORTH COAST HEALTH CARE MANAGEMENT,
INC., an Ohio corporation, and that he as such officer, being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of NORTH COAST ACCOUNT SYSTEMS, INC., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
59
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of MEDICAL MANAGEMENT SUPPORT, INC., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of DATA PROCESSING SYSTEMS, INC., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
60
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of PSS PBS NORTHWEST, INC., a Delaware
corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of PSS ALM, INC., a Delaware corporation,
and that he as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
61
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of SYNERGISTIC SYSTEMS, INC., a California
corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of EE&C FINANCIAL SERVICES, INC., a New
York corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
62
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of PSS EE&C HEALTH SERVICES, INC., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of MED-DATA INTERFACE SYSTEMS, LLC, a
Texas limited liability company, and that he as such officer, being authorized
to do so, executed the foregoing instrument for the purposes therein contained
by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
63
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF LANCASTER :
On this 13th day of December, 1996, before me, a notary public, the
undersigned officer, personally appeared DAVID S. GELLER, who acknowledged
himself to be a Senior Vice President of MEDICAL INTERCEPT SYSTEMS, LLC, a Texas
limited liability company, and that he as such officer, being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________________
Notary Public
64
EXHIBIT "A"
-----------
FORM OF CONVERSION NOTICE
CoreStates Bank, N.A.
51 South Duke Street
Lancaster, Pennsylvania 17602
Attention: ____________
Ladies and Gentlemen:
The undersigned, Physician Support Systems, Inc. (the "PSS"), refers
to the Loan Agreement dated as of December 13, 1996 (as it may be amended,
modified, extended or restated from time to time, the Loan Agreement"), among
--------------
PSS and its Subsidiaries, the Lenders party thereto, and CoreStates Bank, N.A.,
as Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Loan Agreement. The Borrower
hereby gives you notice pursuant to Section 2.3 of the Loan Agreement that it
elects to convert a Revolving Credit Advance outstanding under the Loan
Agreement into a Term Loan, and in that connection sets forth below the terms on
which such conversion is requested to be made:
(A) Date of Conversion/1/
----------------------
(B) Principal Amount of Conversion/2/
----------------------
(C) Interest rate basis/3/
----------------------
(D) Maturity Date/4/
----------------------
Very truly yours,
PHYSICIAN SUPPORT SYSTEMS, INC.
By:___________________________________
Title:________________________________
- ----------------------
/1/ Can be no later than January 1, 1999, and if the Revolving Credit
Advance is a LIBOR Loan it must be on or after the last day of the
applicable LIBOR Period.
/2/ A minimum of $1,000,000 and $500,000 increments in excess thereof (or
the remaining Revolving Credit Commitment, if less).
/3/ A fixed rate of interest quoted by the Lender or the Intermediate Money
Market Rate.
/4/ Cannot be later than January 1, 2004.
65
EXHIBIT "C"
-----------
FORM OF NOTICE OF BORROWING
CoreStates Bank, N.A.
51 South Duke Street
Lancaster, Pennsylvania 17602
Attention:
----------------------
Ladies and Gentlemen:
The undersigned, Physician Support Systems, Inc., ("PSS"), refers to
the Loan Agreement dated as of December 13, 1996 (as it may be amended,
modified, extended or restated from time to time, the "Loan Agreement"), among
the PSS and its Subsidiaries, the Lenders party thereto, and CoreStates Bank,
N.A., as Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The
Borrower hereby gives you notice that it requests a Revolving Credit Advance in
accordance with the provisions of Section 2.1 under the Credit Agreement, and in
that connection sets forth below the terms on which such Advance is requested to
be made:
REQUEST FOR REVOLVING CREDIT ADVANCE
(A) Date of Borrowing
(which is a Business Day)
----------------------
(B) Principal Amount of
Borrowing/5/
----------------------
(C) Interest rate basis/6/
----------------------
(D) Interest Period and the last
day thereof if a LIBOR Loan/7/
---------------------
Upon acceptance of any or all of the Loans made by the Lenders in response
to this request, the Borrower shall be deemed to have represented and warranted
that the conditions to lending specified in Section 4.2 of the Loan Agreement
have been satisfied.
Very truly yours,
PHYSICIAN SUPPORT SYSTEMS, INC.
By
---------------------------------------
Title:
-----------------------------------
- -------------------
/5/ A minimum of $500,000 and $500,000 increments in excess thereof (or
the remaining amount available under the Revolving Credit Facility,
if less).
/6/ LIBOR Loan or Money Market Loan.
/7/ Subject to the provisions and definitions of the Loan Agreement, but
generally one, two, three, or six months' duration.
66
Dated: December 13, 1996
RIDER A
LENDERS' COMMITMENTS
Lender and Address Percentage Interest in Loans
------------------ ----------------------------------
Revolving Credit
Line of Credit and Term Loans
--------------- -----------------
CoreStates Bank, N.A. 100% 100%
51 South Duke Street
Lancaster, Pennsylvania 17602
Attention: Gary R. Johnson
Telecopy No. 717-295-8544
CORESTATES BANK, N.A.
By
----------------------------------------
Gary R. Johnson, Vice President
67
RIDER "B"
JOINDER
-------
The undersigned, intending to be legally bound, hereby joins in and
becomes a party to the Loan Agreement dated ___________________, 199__ to which
this Joinder is attached as a [Lender] [Borrower], and agrees to be bound by the
terms and conditions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed and delivered as of this _______ day of _____________________, 199__.
------------------------------------------
By
----------------------------------------
Attest:
-----------------------------------
68