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$40,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 20, 1995
BY AND AMONG
HOOPER HOLMES, INC.
AS BORROWER,
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF
AS LENDERS,
AND
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
AS AGENT
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#204596
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................. 1
1.01 Definitions........................................... 1
1.02 Principles of Construction............................ 14
SECTION 2. AMOUNT AND TERMS OF CREDIT.................................. 15
2.01 Revolving Credit...................................... 15
2.02 Revolving Credit Payment and Maturity; Extension of
Maturity........................................... 15
2.03 Procedure for Revolving Credit Loan Borrowings........ 15
2.04 Reduction of Commitment............................... 17
2.05 Interest.............................................. 18
2.06 Conversions and Continuations . . .................... 18
2.07 Letters of Credit..................................... 19
2.08 Letter of Credit Requests............................. 20
2.09 Letter of Credit Participations....................... 20
2.10 Agreement to Repay Letter of Credit Drawings.......... 22
2.11 Indemnification; Nature of Agent's Duties............. 22
2.12 Increased Costs; Illegality; Capital Adequacy;
Funding Loss....................................... 24
2.13 Computation........................................... 26
SECTION 3. FEES........................................................ 26
3.01 Facility Fee.......................................... 26
3.02 Commitment Fee........................................ 26
3.03 Agent's Fee........................................... 26
3.04 Letter of Credit Fee.................................. 26
3.05 Letter of Credit Processing Fee....................... 27
SECTION 4. PREPAYMENTS AND PAYMENTS GENERALLY.......................... 27
4.01 Voluntary Prepayments................................. 27
4.02 Mandatory Prepayments................................. 27
4.03 Application of Mandatory Prepayments.................. 28
4.04 General Provisions as to Payments..................... 28
4.05 Net Payments.......................................... 29
4.06 Debiting of Account................................... 29
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SECTION 5. CONDITIONS................................................ 29
5.01 Documents Required for Initial Advance.............. 29
5.02 Requirements for Any Advance or to Issue any Letter
of Credit......................................... 33
SECTION 6. REPRESENTATIONS AND WARRANTIES............................ 33
6.01 Organization; Authority............................... 33
6.02 Use of Proceeds; Margin Regulation.................... 34
6.03 Specific Financial Statements......................... 34
6.04 Burdensome Agreements................................. 35
6.05 Suits................................................. 35
6.06 Defaults.............................................. 35
6.07 ERISA................................................. 35
6.08 Tax Returns and Taxes................................. 35
6.09 Compliance with Statutes, etc......................... 36
6.10 Environmental Compliance.............................. 36
6.11 No Notification of Dumping of Hazardous Substances.... 36
6.12 No Authorizations or Approvals........................ 36
6.13 Not an Investment Company............................. 36
6.14 Subsidiaries.......................................... 36
6.15 Intellectual Property, etc............................ 36
6.16 Labor Matters......................................... 37
6.17 Security Interests.................................... 37
6.18 Assets and Properties................................. 37
6.19 Insurance............................................. 37
6.20 True and Complete Disclosure.......................... 37
6.21 Insolvency............................................ 38
6.22 ASB Acquisition....................................... 38
SECTION 7. AFFIRMATIVE COVENANTS....................................... 38
7.01 Payment of Indebtedness............................... 38
7.02 Payment of Taxes, Etc................................. 38
7.03 Reporting Requirements................................ 38
7.04 Compliance Certificate................................ 39
7.05 Notice of Certain Events.............................. 40
7.06 Preservation of Property; Insurance................... 40
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7.07 Conduct of Business and Maintenance of Existence...... 40
7.08 Operation of Properties............................... 40
7.09 Access to Properties, Books and Records............... 40
7.10 Keeping of Records and Books of Account............... 40
7.11 ERISA Compliance...................................... 41
7.12 Environmental Liens................................... 41
7.13 Removal of Hazardous Substances....................... 41
7.14 Further Assurances.................................... 42
SECTION 8. NEGATIVE COVENANTS.......................................... 42
8.01 Incur Indebtedness.................................... 42
8.02 Negative Pledge....................................... 42
8.03 Sale of Assets; Liquidation; Merger; Acquisitions..... 43
8.04 Nature of Business.................................... 44
8.05 Dividends, Etc........................................ 44
8.06 Accounts.............................................. 44
8.07 Sale-Leaseback Transactions........................... 44
8.08 Prepayment of Other Indebtedness...................... 45
8.09 Sale or Issuance of Equity............................ 45
8.10 Redemption of Common Stock............................ 45
8.11 Investments........................................... 45
8.12 Loans and Advance Generally........................... 45
8.13 Loans and Advances to Officers........................ 45
8.14 Create Subsidiaries................................... 45
8.15 Accounts Receivable DOH............................... 46
8.16 Hazardous Substances.................................. 46
8.17 Capital Expenditures.................................. 46
8.18 Consolidated Net Worth................................ 46
8.19 Interest Coverage Ratio............................... 47
8.20 Consolidated Funded Debt to Cash Flow Ratio........... 47
8.21 Use of Proceeds....................................... 47
8.22 Amendments to ASB Acquisition Documentation........... 47
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.............................. 47
9.01 Events of Default..................................... 47
9.02 Right of Set-off...................................... 51
9.03 Sharing of Payments, Etc.............................. 51
9.04 Turnover of Property held by Affiliate................ 52
9.05 Remedies Cumulative; No Waiver........................ 52
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SECTION 10. THE AGENT................................................. 52
10.01 Appointment.......................................... 52
10.02 Delegation of Duties................................. 52
10.03 Exculpatory Provisions............................... 53
10.04 Reliance by Agent.................................... 53
10.05 Notice of Default.................................... 53
10.06 Non-Reliance on Agent and Other Lenders.............. 54
10.07 Indemnification...................................... 54
10.08 Agent in Its Individual Capacity..................... 54
10.09 Successor Agent...................................... 55
SECTION 11. MISCELLANEOUS............................................. 55
11.01 Notices.............................................. 55
11.02 Costs and Expenses................................... 55
11.03 Payment Due on a Day Other Than a Business Day....... 56
11.04 Governing Law........................................ 56
11.05 Counterparts; Integration............................ 56
11.06 Amendment or Waiver.................................. 56
11.07 Successors and Assigns............................... 57
11.08 Participations and Assignments....................... 57
11.09 Severability......................................... 58
11.10 Consent to Jurisdiction and Service of Process....... 58
11.11 Confidentiality...................................... 58
11.12 Indemnification...................................... 59
11.13 Inconsistencies...................................... 60
11.14 Headings............................................. 60
11.15 Exhibits and Annexes................................. 60
11.16 Judicial Proceeding; Waivers......................... 60
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C FORM OF LETTER OF CREDIT REQUEST
EXHIBIT D FORM OF BORROWER SECURITY AGREEMENT
EXHIBIT E FORM OF AFFIRMATION OF GUARANTY AND
SECURITY AGREEMENT
EXHIBIT F COMPLIANCE CERTIFICATE OF BORROWER
ANNEX I BORROWER INFORMATION
ANNEX II EXISTING LETTERS OF CREDIT
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of this 20th day of November,
1995, by and among HOOPER HOLMES, INC. (the BORROWER), the
LENDERS listed on the signature pages hereof and FIRST FIDELITY BANK,
NATIONAL ASSOCIATION, as AGENT.
WHEREAS, the Borrower has certain credit accommodations available
to it pursuant to that certain Loan Agreement, dated November 3, 1993, by and
among the Borrower, Health Care (as defined herein), the Agent and the lender
parties thereto (as amended from time to time, the EXISTING LOAN AGREEMENT)
and desires to modify and replace said accommodations, and refinance
outstanding balances thereunder, with the credit facilities provided herein,
and otherwise amend and restate the terms and provisions of the Existing Loan
Agreement in their entirety with the terms and provisions hereof; and
WHEREAS, subject to and upon the terms and conditions herein
set forth, the Lenders are willing to make available to the Borrower the credit
facilities provided herein to replace such existing credit accommodations; and
WHEREAS, for administrative convenience and to properly reflect
(i) the replacement of the credit accommodations provided under the Existing
Loan Agreement with the credit facilities herein provided and (ii) the
relationship and obligations of the Lenders as to one and other with respect to
such credit facilities, the outstanding balances of all Loans under the
Existing Loan Agreement shall be refinanced as Revolving Credit Loans hereunder
and any Letters of Credit issued under the Existing Loan Agreement and
outstanding as of the date hereof, shall be deemed to have been issued
hereunder in accordance with Section 2.07(b) hereof.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
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1.01 DEFINITIONS. Unless the context requires otherwise,
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the following terms used throughout this Agreement shall have the meanings
assigned to such terms below (such meanings to be equally applicable to both
the singular or plural terms of the terms defined):
ACCOUNTS RECEIVABLE shall have the meaning assigned to
such term in the Security Agreement.
ACCOUNTS RECEIVABLE DOH means the average number of days
on hand of all of the Borrower's Accounts Receivable, calculated as follows:
Accounts Receivable DOH equals the total of all the
Borrower's Accounts Receivable (net of reserves) divided by
sales per day (where sales per day equals the Borrower's
quarterly sales divided by 90 days).
AFFILIATE shall mean, as applied to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with, that Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities or other ownership interests having voting power for the
election of directors (or other persons performing similar functions) of such
Person or otherwise to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
AFFIRMATION OF GUARANTY AND SECURITY AGREEMENT shall mean
each of the Affirmations of Guaranty and Security Agreement, dated even date
herewith, provided by each of the Guarantors in favor of the Agent for the
ratable benefit of the Lenders, substantially in the form of EXHIBIT E
hereto.
AGENT shall mean First Fidelity Bank, National
Association, in its capacity as agent for the Lenders hereunder, and its
successors in such capacity.
AGREEMENT shall mean this Credit Agreement, as the same
may be from time to time modified, amended and/or supplemented.
APPLICABLE MARGIN shall mean (A) with respect to Base
Rate Loans, minus 25 basis points (-.25%) and (B) with respect to Eurodollar
Loans, 225 basis points (2.25%); PROVIDED, HOWEVER, that from and after
the first day of any Applicable Margin Adjustment Period to and including the
last day of such Applicable Margin Adjustment Period, the Applicable Margin
shall be equal to the percentages determined by reference to the Consolidated
Funded Debt to Cash Flow Ratio of the Borrower for the Test Period last ended,
as follows:
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
IF SUCH RATIO IS: BASE RATE LOANS EURODOLLAR LOANS
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Greater than or equal Minus 25 basis 225 basis points (2.25%)
to 2.50:1.00 points (-.25%)
Less than 2.50:1.00 but Minus 25 basis 200 basis points (2.00%)
greater than 1.75:1.00 points (-.25%)
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Equal to or less than Minus 50 basis 175 basis points (1.75%)
1.75:1.00 but greater points (-.50%)
than 1.25:1.00
Equal to or less than Minus 50 basis 125 basis points (1.25%)
1.25:1.00 points (-.50%)
Notwithstanding the foregoing, at all times during which there exists a Default
or Event of Default, the Applicable Margin (A) with respect to Base Rate Loans,
shall be zero and (B) with respect to Eurodollar Rate Loans, shall be 225 basis
points (2.25%).
APPLICABLE MARGIN ADJUSTMENT PERIOD shall mean the period
commencing on the first anniversary of the Closing Date and ending on the last
day of the first calendar quarter then ending, and each calendar quarter
occurring thereafter.
APPROVED SUBORDINATED INDEBTEDNESS shall mean
Indebtedness of the Borrower that (i) is subordinated on terms and conditions
approved in writing by the Lenders and (ii) does not constitute Guaranteed
Indebtedness of the Borrower or any Subsidiary or Affiliate of the Borrower.
ASB shall mean American Service Bureau, Inc., an Illinois
corporation and a wholly owned subsidiary of the Borrower.
ASB ACQUISITION shall mean the acquisition by the Borrower
of all of the issued and outstanding capital stock of ASB pursuant to that
certain Agreement of Acquisition, dated as of May 26, 1995, by and between
Olsten, the Borrower and Health Care.
AVAILABILITY shall mean, at any particular time, the
amount by which the Maximum Available Credit Amount at such time exceeds the
Credit Obligations at such time.
BASE RATE shall mean the per annum rate of interest
established by the Agent as its reference rate in making loans, and does not
reflect the rate of interest charged to any particular borrower or class of
borrowers. The Borrower acknowledges that the Base Rate is not tied to any
external index or rate of interest and that the rate of interest charged
hereunder shall change automatically and immediately as of the date of any
change in the Base Rate, without notice to the Borrower.
BASE RATE LOAN shall mean any Loan that bears interest at
a rate of interest based upon the Base Rate.
BUSINESS DAY shall mean any day other than a Saturday,
Sunday, or a day on which the Agent and the Lenders are authorized or obligated
by law or executive order to be closed.
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CAPITAL EXPENDITURES shall mean, with respect to any
Person, without duplication and for any period, the aggregate value attributed
in accordance with GAAP, to acquisitions during such period by such Person of
any asset, tangible or intangible, or replacements or substitutions therefor or
additions thereto which such Person treated as a non-current asset on such
Person's financial statements, including, without limitation, (y) the
acquisition or construction of assets having a useful life of more than one
year, and (z) assets acquired during such period in connection with Capitalized
Leases.
CAPITALIZED LEASE shall mean any lease with respect to
which the obligation to pay rent or other amounts constitutes Capitalized Lease
Obligations.
CAPITALIZED LEASE OBLIGATIONS shall mean obligations to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal property which obligations are required to
be classified and accounted for as capital leases on a balance sheet in
accordance with GAAP.
CLOSING DATE shall mean the date on which all of the
conditions set forth in Section 5.01 hereof have been fulfilled.
CODE shall mean the Internal Revenue Code of 1986, as
amended.
COLLATERAL shall mean all property and interest in
property now owned or hereafter acquired by the Borrower or any other Obligor
in or upon which a lien has been granted to the Agent for the benefit of the
Lenders under any of the Credit Documents.
CONSOLIDATED shall mean an accounting presentation which
includes any consolidated Subsidiary of the Borrower.
CONSOLIDATED FUNDED DEBT TO CASH FLOW RATIO shall mean the
ratio of (A) all Indebtedness of the Borrower which by its terms or by the
terms of any instrument or agreement relating thereto, matures or which is
otherwise payable, one year or more from, or is directly or indirectly
renewable or extendable at the option of the obligor in respect thereof to a
date one year or more from, the date of the creation thereof, and any current
maturities of any such Indebtedness (including, without limitation, all of the
Credit Obligations hereunder and Capital Lease Obligations of the Borrower) to
(B) the Borrower's Consolidated net income (excluding non-cash extraordinary
items or non-cash post-tax non-operating earnings adjustments) PLUS
depreciation PLUS amortization, in each case determined for the relevant
Test Period on a Consolidated basis in accordance with GAAP, consistently
applied.
CREDIT COMMITMENT shall mean, with respect to each
Lender, the amount set forth opposite such Lender's name under the heading
Credit Commitment on the signature pages hereof which is such Lender's Pro Rata
Share of the Maximum Available Credit Amount that such Lender has agreed to
advance hereunder, as the same may be (i) reduced from time to time pursuant to
Section 2.04 hereof or (ii) adjusted from time to time as a result of
assignments to and from the Lenders pursuant to Section 11.08 hereof.
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CREDIT DOCUMENTS shall mean this Agreement, each of the
Revolving Credit Notes, the Security Documents, each Subsidiary Guaranty, each
Notice of Borrowing, each Letter of Credit Request and all other credit
accommodations, notes, loan agreements, guaranties, security agreements,
mortgages, instruments, pledge agreements, assignments, acceptance agreements,
commitments, facilities, reimbursement agreements and any other agreements and
documents, now or hereafter existing, creating, evidencing, guarantying,
securing or relating to any or all of the Obligations, together with all
amendments, supplements, modifications, renewals, or extensions thereof.
CREDIT OBLIGATIONS shall mean, at any particular time,
the sum of (A) the aggregate principal amount of the outstanding Revolving
Credit Loans and (B) the Letter of Credit Outstandings.
DEFAULT shall mean any event, act or condition which,
with notice or the lapse of time, or both, would constitute an Event of
Default.
DRAWINGS shall have the meaning assigned to such term in
Section 2.10(b) hereof.
DUMPING shall mean the releasing, spilling, emptying,
pouring, emitting, dumping or discharging of any hazardous substance into, or
otherwise permitting to exist any hazardous substance in, the environment.
ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement, and to any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
ERISA AFFILIATE shall mean any person (as defined in
Section 3(9) of ERISA) which together with the Borrower or any of its
Subsidiaries would be deemed to be a "single employer" within the meaning of
Section 414 of the Code.
ESCROW AGREEMENT shall mean that certain Escrow
Agreement, dated as of September 29, 1995, by and between the Borrower, Olsten,
and First Fidelity Bank, National Association, as escrow agent thereunder.
ESCROW COLLATERAL shall have the meaning assigned to such
term in the Security Agreement.
EUROCURRENCY RESERVE REQUIREMENTS shall mean, for any
day, the aggregate (without duplication) of the applicable rates (expressed as
a decimal) of reserve requirements for the Agent (including, without
limitation, basic, supplemental, marginal and emergency reserves), in effect on
such day under Regulation D with respect to eurocurrency funding currently
referred to as "Eurocurrency liabilities" in Regulation D.
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EURODOLLAR BUSINESS DAY shall mean any Business Day on
which dealing in the interbank Eurodollar market may be carried on by
commercial banks in London, England.
EURODOLLAR INDEX RATE shall mean, with respect to each
day during each Interest Period pertaining to a Eurodollar Loan, the rate per
annum for deposits in United States dollars for a period equal to the relevant
Interest Period which appears on the Telerate Page 3750 as of 11:00 a.m.
(London time), on the day that is two (2) Eurodollar Business Days prior to the
commencement of such Interest Period. If such rate does not appear on the
Telerate Page 3750, the rate to be utilized shall be the offered rate which
appears, or if two or more such rates appear, the average (rounded up to the
next higher 1/16 of 1%) of the offered rates which appear on the Reuters Screen
LIBO Page as of 11:00 a.m. (London time) on the day that is two (2) Eurodollar
Business Days prior to the commencement of such Interest Period.
EURODOLLAR LOAN shall mean any Loan that bears interest
at a rate of interest based upon the Eurodollar Rate.
EURODOLLAR RATE shall mean, with respect to each day
during each Interest Period pertaining to a Eurodollar Loan, the rate
determined in accordance with the following formula:
Eurodollar Index Rate
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1.00 - Eurocurrency Reserve Requirements
EVENT OF DEFAULT shall have the meaning assigned to such
term in Section 9 hereof.
EXISTING LETTER OF CREDIT shall have the meaning assigned
to such term in Section 2.07(b) hereof.
EXISTING LOAN AGREEMENT shall have the meaning assigned
to such term in the Recitals hereof.
FACILITY shall mean either of the two (2) facilities
established under this Agreement, i.e., the Revolving Credit Facility and the
Letter of Credit Facility.
FASB shall mean the officially released written
statements of the Financial Accounting Standards Board in general usage from
time to time in the accounting profession in the United States.
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FEDERAL FUNDS RATE shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of
the Federal Reserve System arranged by Federal Funds brokers, as published by
the Federal Reserve Bank of New York on the Business Day next preceding such
day for amounts in immediately available funds comparable to the principal
amount of the relevant indebtedness or, if such rate is not so published for any
day for which the next preceding day is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) Federal Funds brokers of recognized standing selected by the Agent.
FEE LETTER shall mean that certain letter of the Borrower
dated August 11, 1995 and addressed to the Lenders.
FIRST FIDELITY TERM LOAN AGREEMENT shall mean that
certain Term Loan Agreement, dated December 31, 1992, by and between the
Borrower and First Fidelity Bank, National Association, as amended from time to
time.
FUNDING LOSSES shall have the meaning assigned to
such term in Section 2.12(c) hereof.
GAAP shall mean generally accepted accounting principles
in effect from time to time in the United States.
GUARANTEED INDEBTEDNESS shall mean, as to any Person, all
Indebtedness of the type referred to in clauses (i) through (ix) of the
definition of Indebtedness in this Agreement guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether or not
such property is received or such services are rendered), or (iv) otherwise to
assure a creditor against loss.
GUARANTORS shall mean Health Care and ASB.
HEALTH CARE shall mean Hooper Holmes Health Care, Inc., a
New Jersey corporation and a wholly owned subsidiary of the Borrower.
INDEBTEDNESS shall mean, as to any Person (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments,
(iii) all obligations of such Person to pay the deferred
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purchase price of property or services, (iv) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property, (v) all Capitalized Lease Obligations of
such Person, (vi) all obligations, contingent or otherwise, of such Person under
acceptances, letters of credit or similar facilities, (vii) all obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any capital stock of such person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, (viii) all obligations of such Person in respect of interest
rate swap agreements, currency swap agreements and other similar agreements
designed to hedge against fluctuations in interest rates or foreign exchange
rates, (ix) all obligations of production payments from property operated by or
on behalf of such Person and other similar arrangements with respect to natural
resources, (x) all Guaranteed Indebtedness of such Person, and (xi) all
Indebtedness of the type referred to in clauses (i) through (x) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness.
INTEREST PERIOD shall mean with respect to any Eurodollar
Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such
Eurodollar Loan and ending three (3) or six (6) months
thereafter, as selected by the Borrower in its Notice of
Borrowing delivered pursuant to Section 2.03(a) hereof, or in
its notice of conversion delivered pursuant to Section
2.06(a) hereof, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar
Loan and ending three (3) or six (6) months thereafter, as
selected by the Borrower in its notice of continuance
delivered pursuant to Section 2.06(b) hereof, with respect
thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Eurodollar Business Day,
such Interest Period shall be extended to the next succeeding
Eurodollar Business Day unless the result of such extension
would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day; and
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(ii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Business
Day of a calendar month.
LENDER shall mean each Lender listed on the signature
page hereto, each assignee which becomes a Lender pursuant to Section 11.08
hereof, and their respective successors and assigns.
LETTER OF CREDIT shall mean each standby letter of credit
issued pursuant to Section 2.07 hereof.
LETTER OF CREDIT FACILITY shall have the meaning assigned
to such term in Section 2.07 hereof.
LETTER OF CREDIT FEE shall have the meaning assigned to
such term in Section 3.04 hereof.
LETTER OF CREDIT OUTSTANDINGS shall mean, at any time,
the sum of, without duplication (i) the aggregate Stated Amount of all
outstanding Letters of Credit; (ii) the aggregate amount of all Unpaid Drawings
in respect of all Letters of Credit; and (iii) the Stated Amount of all Letters
of Credit requested pursuant to Section 2.08 hereof but not yet issued.
LETTER OF CREDIT PROCESSING FEES shall have the meaning
assigned to such term in Section 3.05 hereof.
LETTER OF CREDIT REQUEST shall have the meaning assigned
to such term in Section 2.08 hereof.
LETTER OF CREDIT SUBLIMIT shall mean (A) Five Million
Dollars ($5,000,000) from and after the Closing Date to and including December
30, 1996, (B) Four Million Dollars ($4,000,000) from and after December 31,
1996 to and including December 30, 1997, and (C) Three Million Five Hundred
Thousand Dollars ($3,500,000) from and after December 31, 1997 and thereafter;
PROVIDED, HOWEVER, that in no event shall the Letter of Credit Sublimit be
at any time greater than the Maximum Available Credit Amount.
LIEN shall mean any mortgage, pledge, security interest,
encumbrance, lien or other form of charge or preferential arrangement of any
kind (including, without limitation, any agreement to give any of the
foregoing, any conditional sale or other title retention or any lease in the
nature thereof).
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LOAN shall mean each and every Revolving Credit Loan made
by any Lender hereunder. For purposes of this Agreement, the continuation or
conversion of a Base Rate Loan or Eurodollar Loan shall not constitute the
making of a new Loan.
MAXIMUM AVAILABLE CREDIT AMOUNT shall mean Forty Million
Dollars ($40,000,000), less any reduction to said Maximum Revolving Credit
Amount pursuant to Section 2.04 hereof.
MULTIEMPLOYER PLAN shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
NATURAL RESOURCES shall mean each and all of
the atmosphere, air, waters, earth, land, minerals, flora, fauna, fish,
shellfish, wildlife, biota, and/or other natural resources.
NET CASH PROCEEDS shall mean with respect to the
incurrence or issuance of debt securities or the sale or issuance of any shares
of capital stock, any securities convertible into or exchangeable for shares of
capital stock, or any warrants, rights, options or other securities to acquire
shares of capital stock by the Borrower, the aggregate amount of cash received
from time to time (whether as initial consideration or through payment or
disposition of deferred consideration) by or on behalf of the Borrower in
connection with any such transaction, after deducting therefrom only:
(i) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees
and other similar fees and commissions; and
(ii) the amount of taxes payable in connection with
or as a result of such transaction;
in each case to the extent, but only to the extent, that the amounts so
deducted are at the time of receipt of such cash, actually paid to a Person
that is not an Affiliate of the Borrower and are otherwise properly
attributable to such transaction.
NET WORTH shall mean, at any time:
(a) the total assets of the Borrower which would be
shown as assets on a consolidated balance sheet of the
Borrower as of such time, prepared in accordance with GAAP,
consistently applied, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and
surplus of Subsidiaries, minus
(b) the total liabilities of the Borrower which
would be shown as liabilities on a consolidated balance sheet
of the Borrower and
-10-
its Subsidiaries as of such time, prepared in accordance with
GAAP, consistently applied:
PROVIDED, HOWEVER, that for purposes of the foregoing determination of Net
Worth, increases thereto from stock offering and FASB changes shall not be
included.
NOTICE OF BORROWING shall have the meaning assigned to
such term in Section 2.03(a) hereof.
OBLIGATIONS shall mean any and all obligations and
indebtedness of every kind and description of the Borrower owed to the Agent,
the Lenders or any Affiliate of the Agent or any Lender (including, without
limitation, the Credit Obligations, any interest accrued thereon and any other
amount due hereunder), whether primary or secondary, direct or indirect,
absolute or contingent, sole, joint or several, secured or unsecured, due or to
become due, contractual or tortious, arising by operation of law or otherwise,
or now or hereafter existing, whether incurred by the Borrower, including,
without limitation, principal, interest and fees, including, without
limitation, late fees and expenses, including, without limitation, attorneys'
fees and costs and/or allocated fees and costs of any Lender's in-house legal
counsel.
OBLIGOR shall mean the Borrower, each Guarantor, and
every other maker, endorser, guarantor or surety of or for the Obligations.
OLSTEN shall mean Olsten Corporation, a Delaware
corporation.
PAYMENT OFFICE shall mean the office identified as such
below the signature of the Agent and the Lenders on the signature pages hereto,
or such other office as such parties may designate in writing to the other
parties hereto.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, and any entity
succeeding to any or all of its functions under ERISA.
PERMITTED INVESTMENTS shall mean (i) readily marketable
direct obligations of the Government of the United States of America or any
agency or instrumentality thereof or any full faith and credit obligations of
the United States Government or obligations guaranteed by the United States
Government and its agencies maturing within one (1) year of purchase, (ii)
repurchase agreements having a duration of not more than sixty (60) days that
are collateralized by full faith and credit obligations of the United States
Government or obligations guaranteed by the United States Government and its
agencies, (iii) interests in investment companies registered under the
Investment Company Act of 1940, as amended (or in a separate portfolio of such
an investment company), that invest primarily in full faith and credit
obligations of the United States Government or obligations guaranteed by the
United States Government and its agencies and repurchase agreements
collateralized by such obligations, (iv) time deposits with any office located
in the United States of any bank
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or trust company which is organized under the laws of the United States and has
combined capital, surplus and undivided profits of not less than $500,000,000 or
with any bank which is organized other than under the laws of the United States
(x) the commercial paper of which is rated at least A-1+ by Standard & Poor's
Corporation (S&P) and P-1 by Moody's Investors Service, Inc. (MOODY'S) (or, if
such commercial paper is rated only by S&P, at least A-1+ by S&P, or if such
commercial paper is rated only by Moody's, at least P-1 by Moody's) or (y) the
long term senior debt of which is rated at least AA by S&P and Aa2 by Moody's
(or, if such debt is rated only by S&P, at least AA by S&P, or if such debt is
rated only by Moody's, at least Aa2 by Moody's), (v) commercial paper having a
maturity of not more than one year from the date of such investment and rated at
least A-1 by S&P and P-1 by Moody's (or, if such commercial paper is rated only
by S&P, at least A-1 by S&P or, if such commercial paper is rated only by
Moody's, at least P-1 by Moody's), (vi) instruments held for collection in the
ordinary course of business, (vii) any equity or debt securities or other form
of debt instrument obtained in settlement of debts previously contracted, and
(vii) any equity or debt securities held by the Borrower as of the Closing Date
that are listed on Annex I hereto and any distributions of securities made in
respect thereof.
PERMITTED L/C OBLIGATION shall mean, as to any Letter of
Credit, obligations (i) in connection with the Borrower's "Liberty Mutual"
worker's compensation self-insurance program; (ii) to support Indebtedness
supported by the Existing Letters of Credit; and (iii) to support any other
obligation of the Borrower acceptable to the Agent and the Required Lenders, in
their sole discretion.
PERMITTED LIENS shall mean those Liens permitted to exist
pursuant to Section 8.02 hereof.
PERSON shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
PLAN shall mean any employee benefit plan which is
subject to ERISA and which covers the employees or former employees of the
Borrower, any of its Subsidiaries or an ERISA Affiliate, under which the
Borrower, any of its Subsidiaries or an ERISA Affiliate has any obligation or
liability or under which the Borrower, any of its Subsidiaries or an ERISA
Affiliate has made contributions within the preceding five years. References
herein to a Plan shall include any Multiemployer Plan.
PRO RATA SHARE shall mean, with respect to each of the
Facilities for each Lender at any time, the percentage obtained by dividing
such Lender's Credit Commitment by the Maximum Available Credit Amount (in each
case, as adjusted from time to time in accordance with the provisions of this
Agreement).
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REGULATION D shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
REQUIRED LENDERS shall mean Lenders holding more than
sixty-six and two/thirds percent (66.67%) of the aggregate of all the Credit
Commitments of the Lenders, or, if the Credit Commitments have been terminated,
the Lenders holding more than sixty-six and two/thirds percent (66.67%) of such
Credit Commitments immediately prior to such termination.
REVOLVING CREDIT EXPIRATION DATE shall mean January 2,
1998, as the same may be extended for an additional one (1) year period in
accordance with Section 2.02 hereof.
REVOLVING CREDIT FACILITY shall have the meaning assigned
to such term in Section 2.01 hereof.
REVOLVING CREDIT LOANS shall have the meaning assigned to
such term in Section 2.01 hereof.
REVOLVING CREDIT NOTES shall have the meaning
assigned to such term in Section 2.01 hereof.
REVOLVING CREDIT PERIOD shall mean the period from and
including the Closing Date to but excluding the Revolving Credit Expiration
Date or such earlier date on which the Lenders' obligation to make Revolving
Credit Loans shall have terminated as provided herein.
REUTERS SCREEN LIBO PAGE shall mean the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
SEC shall mean the Securities and Exchange Commission or
any governmental entity which may be substituted therefor.
SECURITY AGREEMENT shall mean the Security Agreement,
dated even date herewith, provided by the Borrower in favor of the Agent for
the ratable benefit of the Lenders, substantially in the form of EXHIBIT D
hereto.
SECURITY DOCUMENTS shall mean, collectively, the Security
Agreement and the Subsidiary Security Agreements, together with all amendments,
supplements and modifications thereof.
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STATED AMOUNT shall mean, as to any Letter of Credit, the
maximum amount available to be drawn thereunder, determined without regard to
whether any conditions to drawing could then be met.
SUBSIDIARY shall mean, as to any Person, any corporation
or other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned or controlled by such Person, one or more of the other Subsidiaries of
such Person or any combination thereof.
SUBSIDIARY GUARANTEES shall mean (i) that certain
Guaranty Agreement, dated September 30, 1995, provided by ASB in favor of the
Agent for the ratable benefit of the Lenders, as affirmed by the Affirmation of
Guaranty and Security Agreement of ASB and (ii) that certain Guaranty
Agreement, dated November 3, 1993, provided by Health Care in favor of the
Agent for the ratable benefit of the Lenders, as affirmed by the Affirmation of
Guaranty and Security Agreement of Health Care.
SUBSIDIARY SECURITY AGREEMENTS shall mean (i) that
certain Security Agreement, dated September 30, 1995, provided by ASB in favor
of the Agent for the ratable benefit of the Lenders, as affirmed by the
Affirmation of Guaranty and Security Agreement of ASB and (ii) that certain
Security Agreement, dated November 3, 1993, provided by Health Care in favor of
the Agent for the ratable benefit of the Lenders, as affirmed by the
Affirmation of Guaranty and Security Agreement of Health Care.
TELERATE PAGE 3750 shall mean the display designated as
"Page 3750" on the Dow Jones Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying London
interbank offered rates of major banks).
TEST PERIOD shall mean, with respect to any applicable
determination under this Agreement, a period of twelve (12) consecutive months
(taken as one accounting period) and ending on the last day of the fiscal
quarter of the Borrower then last ended.
TYPE shall mean any type of Loan determined with
respect to its interest option applicable thereto, i.e., a Base Rate Loan or
Eurodollar Loan.
UNPAID DRAWING shall have the meaning assigned to such
term in Section 2.10 hereof.
1.02 PRINCIPLES OF CONSTRUCTION.
---------------------------
(a) REFERENCES. All references to sections, schedules
and exhibits are to sections, schedules and exhibits in or to this Agreement
unless otherwise specified. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
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Agreement as a whole and not to any particular provision of this Agreement.
(b) ACCOUNTING TERMS. All accounting terms not
specifically defined herein or in any exhibit hereto shall be construed in
accordance with GAAP in conformity with those principles used in the
preparation of the financial statements referred to in Section 7.03 of this
Agreement. Any non-cash accrual accounting charges or gains arising from the
adoption of FASB rulings not yet fully adopted by the Borrower and the
Guarantors shall not be included in the definitions of said accounting terms,
and therefore shall be excluded for the purposes of financial covenant
calculations required pursuant to Sections 8.18, 8.19 and 8.20 hereof.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
--------------------------
2.01 REVOLVING CREDIT. Subject to the terms and
----------------
conditions herein set forth and in reliance upon representations and warranties
set forth herein and in the other Credit Documents, each Lender severally
agrees to make available to the Borrower, a revolving credit facility (the
REVOLVING CREDIT FACILITY), pursuant to which each Lender shall make
advances (each a REVOLVING CREDIT LOAN) to the Borrower from time to time
during the Revolving Credit Period, in an amount not to exceed such Lender's
Pro Rata Share of the Availability. All Revolving Credit Loans comprising the
same advance under this Agreement shall be made by the Lenders simultaneously
and proportionately to their then respective Pro Rata Shares, it being
understood that no Lender shall be responsible for any failure by another
Lender to perform its obligations to make a Revolving Credit Loan hereunder nor
shall the Credit Commitment of any Lender be increased or decreased as a result
of any such failure. The Revolving Credit Loans outstanding under the
Revolving Credit Facility shall be evidenced by Revolving Credit Notes issued
to each of the Lenders, substantially in the form of EXHIBIT A hereto (each
a REVOLVING CREDIT NOTE), with blanks appropriately completed in conformity
herewith. Subject to Section 2.03(c) hereof, the Revolving Credit Loans shall
from time to time be (i) Eurodollar Loans, (ii) Base Rate Loans, or (iii) a
combination thereof, as determined by the Borrower in accordance with Sections
2.03 and 2.06 hereof, PROVIDED that no Revolving Credit Loan shall be
made as a Eurodollar Loan after the day that is three (3) months prior to the
Revolving Credit Expiration Date. Subject to the provisions of this Agreement,
the Borrower from time to time may borrow, repay and reborrow Loans made
hereunder at any time during the Revolving Credit Period.
2.02 REVOLVING CREDIT PAYMENT AND MATURITY; EXTENSION OF
----------------------------------------------------
MATURITY. Subject to the immediately succeeding sentences of this Section
- --------
2.02, the aggregate unpaid principal amount of the Revolving Credit Loans, all
accrued but unpaid interest thereon, and any and all fees payable hereunder,
shall mature and be due and payable on the Revolving Credit Expiration Date.
The Revolving Credit Expiration Date may be extended for an additional one (1)
year period upon the written request of the Borrower to the Agent and the
Lenders made at least six (6) months prior (but not more than nine (9) months
prior) to the then Revolving Credit Expiration Date. Such notice shall be
accompanied by a certificate of
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the chief financial officer of the Borrower stating that no Default or Event of
Default has occurred and is then continuing and that the representations and
warranties contained herein and in the other Credit Documents are true and
correct in all material respects on such date. Neither the Agent nor any Lender
shall be obligated to grant any extensions pursuant to this Section 2.02 and any
such extension shall be in the sole and absolute discretion of each of them, but
the Agent and each Lender agrees to reply to any such request within a
reasonable period of time.
2.03 PROCEDURE FOR REVOLVING CREDIT LOAN BORROWINGS.
----------------------------------------------
(a) NOTICE OF BORROWING. Whenever the Borrower desires
to incur Revolving Credit Loans, the Borrower shall deliver a Notice of
Borrowing (or provide telephonic notice thereof, promptly confirmed in writing)
to the Agent (i) in the case of a Eurodollar Loan, no later than 1:00 p.m.
(prevailing Eastern Standard Time) on the date that is at least three (3)
Eurodollar Business Days prior to the date of the proposed Loan and (ii) in the
case of a Base Rate Loan, no later than 1:00 p.m. (prevailing Eastern Standard
Time) on the day that is at least one (1) Business Day prior to the date of the
proposed Loan. Each such Notice of Borrowing (a NOTICE OF BORROWING) shall
be substantially in the form of EXHIBIT B hereto and shall be irrevocable
and shall specify (i) the principal amount of the proposed Revolving Credit
Loan, (ii) the amount of the Availability as of the date of the funding of the
proposed Revolving Credit Loan, (iii) the date of funding of the proposed
Revolving Credit Loan, (iv) the Type of Revolving Credit Loan proposed, and (v)
in the case of a proposed Revolving Credit Loan in the form of a Eurodollar
Loan, the desired Interest Period. The Agent shall promptly give each Lender
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Revolving Credit Loan, of such Lender's Pro Rata Share thereof and of
the other matters covered by the Notice of Borrowing. Without in any way
limiting the obligation of the Borrower to confirm in writing any notice it may
give hereunder by telephone, the Agent may act prior to receipt of written
confirmation, without liability, upon the basis of such telephonic notice
believed by the Agent in good faith to be from the chief financial officer of
the Borrower, or from any other person designated in writing to the Agent by
the chief financial officer of the Borrower as a person entitled to give
telephonic notices under this Agreement on behalf of the Borrower. In each
such case, the Borrower hereby waives the right to dispute the Agent's record
of the terms of any such telephonic notice.
(b) DISBURSEMENT OF FUNDS. No later than 12:00 noon
(prevailing Eastern Standard Time) on the date of each such Loan, each Lender
will make available its Pro Rata Share of such Revolving Credit Loan requested
to be made on such date in immediately available funds to the Agent at its
Payment Office and the Agent shall make such funds available to the Borrower by
depositing such funds into the Borrower's account at the Agent's Payment
Office. Unless the Agent shall have been notified by any Lender prior to the
date of any such Revolving Credit Loan that such Lender does not intend to make
available to the Agent its Pro Rata Share of such Revolving Credit Loan, the
Agent may assume that such Lender has made such amount available to the Agent
on the date of such Revolving Credit
-16-
Loan and the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower
such Pro Rata Share of such Revolving Credit Loan. If such Pro Rata Share is not
in fact made available to the Agent by such Lender and the Agent has made
available the same to the Borrower, the Agent shall be entitled to recover such
amount from such Lender. If such Lender does not pay such amount forthwith upon
the Agent's demand therefor, the Agent shall promptly notify the Borrower, and
the Borrower shall immediately pay such amount to the Agent. The Agent shall
also be entitled to recover from such Lender or the Borrower, as the case may
be, interest on such amount in respect of each day from the date such amount was
made available by the Agent to the Borrower to the date such amount is recovered
by the Agent, at a rate per annum equal to (x) if paid by such Lender, the
Federal Funds Rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 2.13 hereof, for the respective
Revolving Credit Loans. Nothing in this Section 2.03(b) shall be deemed to
relieve any Lender from its obligation to fulfill its Credit Commitment
hereunder or to prejudice any rights which the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
(c) MINIMUM ADVANCE AND TYPE LIMITATION. Each
Revolving Credit Loan requested hereunder shall be in an amount equal to
$500,000 or any whole multiple thereof, EXCEPT that any Revolving Credit
Loan may be in the aggregate amount of the Availability. At no single time
during the Revolving Credit Period shall there be any more than twelve (12)
Eurodollar Loans outstanding under the Revolving Credit Facility.
2.04 REDUCTION OF COMMITMENT.
-----------------------
(a) MANDATORY REDUCTIONS. The Maximum Available Credit
Amount shall be automatically and permanently reduced as of the date set forth
below to the amount opposite such date:
Reduction Date Maximum Available Credit Amount
-------------- -------------------------------
December 31, 1995 $39,000,000
March 31, 1996 $36,000,000
June 30, 1996 $32,000,000
September 30, 1996 $28,000,000
December 31, 1996 $24,000,000
March 31, 1997 $22,000,000
June 30, 1997 $20,000,000
-17-
The Maximum Available Credit Amount shall be further automatically and
permanently reduced by an amount equal to the amount of any mandatory
prepayment of the Revolving Credit Loan pursuant to Section 4.02(b) and (c)
hereof; PROVIDED, HOWEVER that any such prepayment shall not cause a
permanent reduction of the Maximum Available Credit Amount to an amount that is
less than $20,000,000. In connection with any reduction pursuant to this
Section 2.04(a), each Lender's Credit Commitment shall be likewise reduced
proportionately in accordance with its Pro Rata Share.
(b) VOLUNTARY REDUCTION. The Borrower shall have the
right, upon not less than THREE (3) Business Days' prior written notice to
the Agent (which the Agent shall promptly transmit to the Lenders), to reduce
all or part of the Maximum Available Credit Amount, such reduction to be
permanent and irrevocable upon delivery of said notice. Any partial reduction
of the Maximum Available Credit Amount shall be in a minimum amount equal to
$500,000 or any whole multiple thereof and shall reduce each Lender's Credit
Commitment proportionately in accordance with its Pro Rata Share.
2.05 INTEREST.
--------
(a) INTEREST RATES. Prior to an Event of Default (i)
each Eurodollar Loan shall bear interest for each day during each Interest
Period applicable thereto at a per annum rate equal to the Eurodollar Rate
PLUS the Applicable Margin and (ii) each Base Rate Loan shall bear interest
at a per annum rate equal to the Base Rate MINUS the Applicable Margin in
effect from time to time. Upon and following an Event of Default each Loan
shall bear interest at the DEFAULT RATE, as such term is defined in the
Revolving Credit Notes.
(b) INTEREST ACCRUAL AND PAYMENT DATE. Interest on
each Loan shall accrue from and including the date of the advance of funds with
respect to such Loan or the first day of the relevant Interest Period to but
excluding the date of repayment thereof or the expiration of the Interest
Period and shall be payable in arrears (i) in the case of a Base Rate Loan, on
the last day of each calendar month and (ii) in the case of a Eurodollar Loan
on the last day of the Interest Period with respect thereto and, if such
Interest Period is longer than three (3) months, at intervals of three (3)
months after the first day thereof.
(c) AGENT'S DETERMINATION. The Agent shall determine
each interest rate applicable to the Loans hereunder. The Agent shall give
prompt written notice to the Borrower and the Lenders of each rate of interest
so determined (and, in respect of the Base Rate, any change thereof);
PROVIDED, HOWEVER that the failure of the Agent to give such notice shall
in no way affect the validity or applicability of any such determination or
change. The Agent's determinations under this Section 2.05(c) shall be
conclusive and binding, absent manifest error.
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2.06 CONVERSIONS AND CONTINUATIONS.
-----------------------------
(a) CONVERSIONS. Subject to Section 2.03(c) hereof,
the Borrower may elect from time to time to convert any Loan to any other Type
of Loan by delivering to the Agent an irrevocable notice (or by providing
telephonic notice promptly confirmed in writing) of such election (A) in the
case of a conversion to a Base Rate Loan, at least three (3) Business Days
prior to the expiration of the then current Interest Period with respect to the
Eurodollar Loan to be converted or (B) in the case of a conversion to a
Eurodollar Loan, at least three (3) Eurodollar Business Days prior to the
proposed commencement of the Interest Period of the Eurodollar Loans as so
converted. Any notice delivered pursuant to this Section 2.06(a) with respect
to a conversion to a Eurodollar Loan shall also specify the desired Interest
Period for the Loan as so converted. No Loan may be converted pursuant to this
Section 2.06(a) hereof (i) at any time during which an Event of Default has
occurred and is continuing, (ii) if, after giving effect to such conversion,
Section 2.03(c) hereof is violated, or (iii) if, in case of a conversion to a
Eurodollar Loan, such conversion were to be effective at any time after a date
that is three (3) months prior to the Revolving Credit Expiration Date. The
Agent shall give each Lender notice as promptly as practicable of any such
proposed conversion affecting any of its Loans.
(b) CONTINUANCE OF EURODOLLAR LOAN. The Borrower may
elect to continue any Eurodollar Loan as such upon the expiration of the then
current Interest Period with respect thereto by delivering to the Agent an
irrevocable notice (or by providing telephone notice thereof, promptly
confirmed in writing) of such election, at least three (3) Eurodollar Business
Days prior to the expiration of the then current Interest Period with respect
thereto. Such notice shall also specify the desired Interest Period for the
Loan so continued. No continuance shall be permitted under this Section
2.06(b), (i) at any time during which an Event of Default has occurred and is
continuing or (ii) if the effective date (i.e., the value date) of such
continuance were to occur after a date that is three (3) months prior to the
Revolving Credit Expiration Date. The Agent shall give each Lender notice as
promptly as practicable of any such proposed continuance affecting any of its
Revolving Credit Loans.
(c) AUTOMATIC CONVERSION TO BASE RATE. If the Borrower
fails to notify the Agent of the conversion or continuance of any Eurodollar
Loan within the time specified in this Section 2.06, or is otherwise not
permitted to convert or continue any Eurodollar Loan pursuant to said Section,
then any such Loan shall automatically convert to a Base Rate Loan on the last
day of the then expiring applicable Interest Period.
2.07 LETTERS OF CREDIT.
-----------------
(a) ISSUANCE OF LETTERS OF CREDIT. Subject to and upon
the terms herein set forth and in reliance upon the representations and
warranties herein set forth and in the other Credit Documents, the Borrower at
any time and from time to time on or after the Closing Date and prior to the
Revolving Credit Expiration Date, may request that the Agent issue, for the
account of the Borrower and in support of any Permitted L/C Obligation, an
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irrevocable standby letter of credit or letters of credit in such form as may
be approved by the Agent (the LETTER OF CREDIT FACILITY). Notwithstanding
the foregoing (i) no Letter of Credit shall be issued in a Stated Amount which
(x) when added to the Letter of Credit Outstandings at such time would exceed
the Letter of Credit Sublimit, or (y) when added to the sum of the aggregate
principal amount of the Credit Obligations then outstanding would exceed the
Availability; (ii) each Letter of Credit shall, unless otherwise agreed to by
the Agent and the Required Lenders, have an expiration date occurring no later
than one (1) year after the date of issuance thereof, and in no event occurring
later than the Business Day next preceding the Revolving Credit Expiration
Date; (iii) each Letter of Credit shall be denominated in U.S. dollars; and
(iv) no Letter of Credit shall be issued by the Agent after it has received a
notice in writing from the Required Lenders or the Borrower that one or more of
the conditions specified in Section 5.02 hereof are not then satisfied.
(b) EXISTING LETTER OF CREDIT. Annex II hereto contains a
description of all letters of credit issued pursuant to the Existing Loan
Agreement and outstanding on the Closing Date. Each such letter of credit,
including any extension or renewal thereof (each, as amended from time to time
in accordance with the terms thereof and hereof, an EXISTING LETTER OF
CREDIT) shall constitute a LETTER OF CREDIT for all purposes of this
Agreement, issued, for purposes of Section 2.07(a), on the Closing Date.
2.08 LETTER OF CREDIT REQUESTS. Whenever the Borrower
-------------------------
desires that a Letter of Credit be issued for its account, it shall give the
Agent at least five (5) Business Days' notice (or such lesser number of days as
may be agreed to by the Agent and the Required Lenders). Each notice shall be
executed by the Borrower and shall be in the form of EXHIBIT C hereto (each
a LETTER OF CREDIT REQUEST). The Agent shall promptly transmit copies of
each Letter of Credit Request to each Lender. Each Letter of Credit Request
shall be accompanied by a completed and executed "Letter of Credit Application"
(or an amendment to any then effective application) in the form furnished by
the Agent to the Borrower from time to time. The terms of each such
application are incorporated herein to the extent not inconsistent herewith.
2.09 LETTER OF CREDIT PARTICIPATIONS.
-------------------------------
(a) PARTICIPATIONS. Immediately upon the issuance
--------------
by the Agent of any Letter of Credit, the Agent shall be deemed to have sold
and transferred to each other Lender (each such other Lender, in such capacity
under this Section 2.09, a L/C PARTICIPANT), and each such L/C Participant
shall be deemed irrevocably and unconditionally to have purchased and received
from the Agent, without recourse or warranty, an undivided interest and risk
and income participation (each a L/C PARTICIPATION), to the extent of such
L/C Participant's Pro Rata Share, in such Letter of Credit, each substitute
letter of credit, each drawing made thereunder and the obligations of the
Borrower under this Agreement with respect thereto, and any security thereof or
guaranty pertaining thereto (although Letter of Credit Fees will be paid
directly to the Agent for the ratable account of the L/C Participants as
provided in Section 3.04 and the L/C Participants shall have no right to
receive any portion
-20-
of any Letter of Credit Processing Fees). Upon any change in the Credit
Commitments of the Lenders pursuant to Section 11.08 hereof, it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the L/C Participations pursuant to
this Section 2.09 to reflect the new Pro Rata Shares of the assignor and
assignee Lender.
(b) AGENT'S OBLIGATIONS. In determining whether to pay
under any Letter of Credit, the Agent shall have no obligation relative to the
L/C Participants or the Borrower other than to confirm that any documents
required to be delivered under such Letter of Credit have been delivered and
that they appear to comply on their face with the requirements of such Letter
of Credit. Any action taken or omitted to be taken by the Agent under or in
connection with any Letter of Credit issued by it, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for the
Agent any resulting liability.
(c) PAYMENTS UPON DRAWING. In the event that the Agent
makes any payment under any Letter of Credit issued by it and the Borrower
shall not have reimbursed such amount in full to the Agent pursuant to Section
2.10(a), the Agent shall promptly notify each L/C Participant of such failure,
and each L/C Participant shall promptly and unconditionally pay to the Agent
the amount of such L/C Participant's Pro Rata Share of such unreimbursed
payment in immediately available funds. If the Agent so notifies, prior to
11:00 A.M. (prevailing Eastern Standard Time) on any Business Day, any L/C
Participant required to fund a payment under a Letter of Credit, shall make
available to the Agent such L/C Participant's Pro Rata Share of the amount of
such payment on such Business Day in same day funds. If and to the extent such
L/C Participant shall not have so made its Pro Rata Share of the amount of such
payment available to the Agent, such L/C Participant agrees to pay to the Agent,
forthwith on demand, such amount, together with interest thereon for each day
from such date until the date such amount is paid to the Agent at the Federal
Funds Rate. The failure of any L/C Participant to make available to the Agent
its Pro Rata Share of any payment under any Letter of Credit shall not relieve
any other L/C Participant of its obligation hereunder to make available to the
Agent its Pro Rata Share of any payment under any Letter of Credit on the date
required, as specified above, but no L/C Participant shall be responsible for
the failure of any other L/C Participant to make available to the Agent such
other L/C Participant's Pro Rata Share of any such payment.
(d) L/C PARTICIPANTS' DUTIES ABSOLUTE. The obligations
of the L/C Participants to make payments to the Agent with respect to Letters
of Credit shall be irrevocable and not subject to counterclaim, set-off or
other defense or any other qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;
-21-
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the
Agent, any Lender, or other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any
such Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents;
(v) the occurrence of any Default or Event of Default; or
(vi) the failure of any condition precedent set forth in
Section 5.02 hereof to have been satisfied at the time of the
issuance of any Letter of Credit unless the Agent shall have
received a notice in writing to such effect from such Lender hereof
prior to the issuance of such Letter of Credit.
2.10 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS.
--------------------------------------------
(a) BORROWER'S OBLIGATION TO PAY DRAWINGS. The
Borrower hereby agrees to reimburse the Agent, by making payment to the Agent
in immediately available funds, for any payment or disbursement made by the
Agent under any Letter of Credit issued by it (each such amount so paid until
reimbursed, an UNPAID DRAWING) immediately after, and in any event on the
date of, notice given by the Agent to the Borrower of such payment (which
notice the Agent hereby agrees to give promptly after the making of any payment
or disbursement under a Letter of Credit), with interest on the amount so paid
or disbursed by the Agent, to the extent not reimbursed prior to 1:00 P.M.
(prevailing Eastern Standard Time) on the date of such payment or disbursement,
from and including the date paid or disbursed to but excluding the date the
Agent is reimbursed therefor, at a rate per annum which shall be the Base Rate
as in effect from time to time (plus an additional 300 basis points (3.00%) per
annum, if not reimbursed by the second (2nd) Business Day following any such
notice of payment or disbursement), such interest to be payable on demand.
(b) BORROWER'S OBLIGATIONS ABSOLUTE. The Borrower's
obligations under this Section 2.10 to reimburse the Agent with respect to
Unpaid Drawings (including, in each case, interest thereon) issued by it shall
be absolute and unconditional under any and all circumstances and irrespective
of any set-off, counterclaim or defense to payment which the Borrower or any
other Person may have or have had against the Agent or any Lender,
-22-
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit (each a DRAWING) to conform to the terms of the Letter
of Credit or any non-application or misapplication by the beneficiary of the
proceeds of such Drawing; PROVIDED, that the Borrower shall not be obligated to
reimburse the Agent for any wrongful payment made by the Agent under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Agent.
2.11 INDEMNIFICATION; NATURE OF AGENT'S DUTIES.
-----------------------------------------
(a) INDEMNIFICATION GENERALLY. The Borrower hereby
agrees to protect, indemnify, pay and save the Agent harmless from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that the Agent may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit or (ii) the failure of the Agent to honor a Drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such actions or omissions, herein called
GOVERNMENT ACTS).
(b) ALLOCATION OF RISK. As between the Borrower and
the Agent, the Borrower shall assume all risks of the acts, omissions or misuse
of any Letter of Credit by the beneficiary thereof. The Agent shall not be
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply fully with conditions required in
order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a Drawing under a Letter of Credit or of the
proceeds thereof; and (vii) for any consequences arising from causes beyond the
control of the Agent, including, without limitation, any Government Acts. None
of the above shall affect, impair, or prevent the vesting of any of the Agent's
rights or powers hereunder.
(c) SCOPE OF AGENT'S DUTIES. In furtherance and
extension and not in limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Agent under or in connection with any
Letter of Credit or the related drawing certificates, if taken or omitted in
good faith, shall not put the Agent under any resulting liability to the
Borrower. The Agent shall not, in any way, be liable for any failure by it or
anyone else to pay any Drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the Agent.
-23-
(d) NO LIMITATION AS TO REIMBURSEMENT. Nothing in this
Section 2.11 is intended to limit the reimbursement obligation of the Borrower
contained in Section 2.10 hereof. The obligations of the Borrower under this
Section 2.11 shall survive the termination of this Agreement. No act or
omissions of any current or prior beneficiary of a Letter of Credit shall in
any way affect or impair the rights of the Agent to enforce any right, power or
benefit under this Agreement.
(e) LIMITATION OF INDEMNIFICATION. Notwithstanding
anything to the contrary contained in this Section 2.11, (i) the Borrower shall
have no obligation to indemnify the Agent in respect of any liability incurred
by the Agent arising solely out of the gross negligence or willful misconduct
of the Agent, as determined by a court of competent jurisdiction and (ii) the
Borrower shall have a claim against the Agent and the Agent shall be liable to
the Borrower to the extent, but only to the extent, of any direct, as opposed
to consequential, damages suffered by the Borrower which the Borrower proves
were caused by (x) the Agent's willful misconduct or gross negligence in
determining whether the documents presented under a Letter of Credit complied
with the terms of such Letter of Credit or (y) the Agent's willful or grossly
negligent failure to pay under a Letter of Credit after presentation to it of a
drawing certificate and any other documents strictly complying with the terms
and conditions of such Letter of Credit.
2.12 INCREASED COSTS; ILLEGALITY; CAPITAL ADEQUACY; FUNDING
-------------------------------------------------------
LOSSES.
- ------
(a) INCREASED COSTS AND ILLEGALITY. In the event that
(x) in the case of clause (i) below, the Agent, and (y) in the case of clauses
(ii) and (iii) below, any Lender, shall have determined (which determination in
either case shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising
on or after the date of this Agreement affecting the
relevant capital market, (x) adequate and fair means do
not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of
Eurodollar Rate or (y) such means will not adequately
and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for the relevant Interest Periods; or
(ii) at any time, that such Lender shall incur increased
costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar
Loans because of (x) any change since the date of this
Agreement in any applicable law, governmental rule,
regulation, guideline or order (or in the
interpretation or administration thereof and including
the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example,
but not limited to, in the case of a Eurodollar Loan,
-24-
a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D
to the extent included in the computation of the
Eurodollar Rate) and/or (y) other circumstances
affecting the relevant capital market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by
such Lender in good faith with any law, governmental
rule, regulation, guideline or order (or would conflict
with any such governmental rule, regulation, guideline
or order not having the force of law even though the
failure to comply therewith would not be unlawful), or
has become impracticable as a result of a contingency
occurring after the date of this Agreement which
materially and adversely affects the relevant capital
market;
then, and in any such event, the Lender so affected (or the Agent, in the case
of clause (i) above) shall on such date give notice to the Borrower (and the
other Lenders and/or the Agent, as the case may be) of such determination.
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Agent no longer
exist, and any Notice of Borrowing delivered pursuant to Section 2.03(a) hereof
or notice of conversion or continuance delivered pursuant to Section 2.06 hereof
with respect to a Eurodollar Loan shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Lender, showing in reasonable detail the basis for the calculation thereof,
submitted to the Borrower by such Lender shall, absent manifest error, be final
and conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, Eurodollar Loans shall no longer be available until such
time as such Lender notifies the Borrower that the circumstances giving rise to
such notice no longer exist, any Notice of Borrowing delivered pursuant to
Section 2.03(a) hereof or notice of conversion or continuance delivered pursuant
to Section 2.06 hereof with respect to Eurodollar Loans shall be deemed
rescinded by the Borrower, and any Eurodollar Loans that are then outstanding
shall be automatically converted to Base Rate Loans; PROVIDED, HOWEVER that if
such Lender, in its sole discretion, determines that such circumstances can only
be alleviated by repayment of such Loans, then, upon demand, the Borrower shall
repay in full such Loans, together with accrued but unpaid interest thereon.
(b) CAPITAL ADEQUACY. If after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
-25-
compliance by a Lender or its parent with any request or directive made or
adopted after the date hereof regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's or its
parent's capital or assets as a consequence of such Lender's commitments or
obligations hereunder to a level below that which such Lender or its parent
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's or its parent's policies with respect
to capital adequacy), then from time to time, upon demand, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender or its parent for such reduction. Such Lender, upon determining in good
faith that any additional amounts will be payable pursuant to this Section 2.12,
will give prompt written notice thereof to the Borrower, which notice shall set
forth in reasonable detail the basis of the calculation of such additional
amounts, although the failure to give any such notice shall not release or
diminish any of the Borrower's obligations to pay additional amounts pursuant to
this Section 2.12 upon receipt of such notice.
(c) FUNDING LOSSES. The Borrower shall compensate each
Lender, upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities, including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Lender to fund its Eurodollar Loans (all such losses
FUNDING LOSSES) which such Lender may sustain: (x) if for any reason an advance
of, or conversion from or into, Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or notice of conversion given
pursuant to Section 2.06(a) or (b), as the case may be, (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 2.12(a)); (y)
if any repayment (including any prepayment made pursuant to Section 4.01 or
4.02) or conversion of any of its Eurodollar Loans occurs on a date which is not
the last day of an Interest Period with respect thereto; or (z) as a consequence
of (i) any other default by the Borrower to repay its Loans when required by the
terms of this Agreement or any Note held by such Lender or (ii) any prepayment
or conversion made pursuant to Section 2.12(a). The amount of compensation
available to any Lender pursuant to this Section 2.12(c) shall be determined
based on the assumption that such Lender has funded the entire amount of the
relevant Eurodollar Loan through match funding obtained in the London interbank
market.
2.13 COMPUTATION. Interest and any fees or compensation
-----------
based upon a per annum rate shall be calculated on the basis of a 360 day year
for the actual number of days elapsed.
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SECTION 3. FEES.
----
3.01 ARRANGEMENT FEES. The Borrower shall pay, or have
----------------
paid, to the Agent on or before the Closing Date all fees related to the
arrangement and acceptance of the Credit Commitments described in, and in
accordance with, the Fee Letter. The Agent shall disburse such fees to the
Lenders in accordance with the terms of the Fee Letter. The Borrower
acknowledges that such fees are a liquidated damages amount and, together with
the amounts payable pursuant to Section 5.01(b) hereof, constitute reasonable
compensation to the Agent and the Lenders for their expenses and services in
connection with the arrangement of their respective Credit Commitments and the
negotiation and preparation of this Agreement and the other Credit Documents.
3.02 COMMITMENT FEE. The Borrower shall pay to
--------------
the Agent for the ratable account of the Lenders based on their respective Pro
Rata Shares, quarterly in arrears, a commitment fee for the period from and
including the Closing Date until the Revolving Credit Expiration Date, computed
at a rate equal to 25 basis points (.25%) per annum of the average daily amount
of the Availability. Such fee shall be payable commencing on December 31,
1995, and continuing quarterly on the last Business Day of March, June,
September and December occurring thereafter.
3.03 AGENT'S FEE. The Borrower shall pay to the Agent,
-----------
for its sole account, such additional fees as may be agreed to from time to
time between the Borrower and the Agent, as and when such additional fees are
due.
3.04 LETTER OF CREDIT FEE. The Borrower shall pay to the
--------------------
Agent for the ratable account of the Lenders based on their respective Pro Rata
Shares, quarterly in advance, a fee in respect of the Letters of Credit (the
LETTER OF CREDIT FEE) computed at a rate equal to 100 basis points (1.00%)
per annum of the aggregate Stated Amount of the Letters of Credit outstanding
as of the first day of each January, April, July and October. Such fee shall
be payable commencing on January 2, 1996, and continuing quarterly on the first
Business Day of January, April, July and October occurring thereafter.
3.05 LETTER OF CREDIT PROCESSING FEE. The Borrower shall
-------------------------------
pay to the Agent for its sole account, upon each issuance of, drawing under,
and/or amendment of, a Letter of Credit, such amounts as shall at the time of
such issuance, drawing or amendment be the administrative charge which the
Agent customarily charges for such issuances of, drawings under or amendments
of, letters of credit issued by it (LETTER OF CREDIT PROCESSING FEES). The
issuer of the Existing Letters of Credit shall likewise be entitled to charge
and collect from the Borrower Letter of Credit Processing Fees in respect of
the Existing Letters of Credit.
SECTION 4. PREPAYMENTS AND PAYMENTS GENERALLY.
----------------------------------
4.01 VOLUNTARY PREPAYMENTS. The Borrower may prepay any
---------------------
Loan, in whole or in part, without premium or penalty (except as provided in
Section 2.12(c) hereof) upon at
-27-
least three (3) Business Days' irrevocable notice to each Lender (or one (1)
Business Day's irrevocable notice in the case of a prepayment of a Base Rate
Loan), specifying the date and the amount of the prepayment and whether such
prepayment is in respect of Eurodollar Loans, Base Rate Loans or a combination
thereof; PROVIDED, that any such prepayment shall include all accrued but unpaid
interest in respect of the Loans being prepaid. The principal portion of any
partial prepayment shall be in an amount equal to $500,000 or any whole multiple
thereof.
4.02 MANDATORY PREPAYMENTS.
---------------------
(a) EXCEEDED AVAILABILITY. Immediately upon the Credit
Obligations exceeding the Maximum Available Credit Amount, the Borrower shall
make, or cause to be made, a mandatory prepayment of the Credit Obligations in
an amount equal to such excess, together with accrued but unpaid interest
thereon. Without limiting the foregoing, immediately upon the Letter of Credit
Outstandings exceeding the Letter of Credit Sublimit, the Borrower shall make,
or cause to be made, payment to the Agent in the amount of such excess to be
held as cash collateral (on terms and conditions established by the Agent and
reasonably acceptable to the Borrower) to secure such Letter of Credit
Outstandings in excess of the Letter of Credit Sublimit. Provided that no
Default or Event of Default has occurred and is then continuing, such cash
collateral shall be released by the Agent (on behalf of the Lenders) if and
when the Letter of Credit Outstandings have been reduced to an amount equal to
or less than the Letter of Credit Sublimit then in effect.
(b) EQUITY OR DEBT PLACEMENT PROCEEDS. The Borrower
shall, on the date of receipt of the Net Cash Proceeds from any (i) sale or
issuance of any shares of its common stock, any securities convertible into or
exchangeable for shares of its common stock or any warrant, rights or option to
acquire shares of its common stock to any existing (other than any such
issuance of the Borrower's common stock pursuant to existing employee stock
option and stock purchase plans previously disclosed to the Agent and the
Lenders) or (ii) the incurrence or issuance of any debt securities of the
Borrower, in either case in a public or private offering, prepay the Credit
Obligations in an amount equal to 100% of such Net Cash Proceeds. The foregoing
shall in no way be construed to permit (A) the sale or issuance of any equity
security of the Borrower which (i) by the terms thereof requires the Borrower to
set aside reserves or otherwise make sinking fund or other payments in respect
thereof (other than payments permitted pursuant to Section 8.05 hereof), or (ii)
would otherwise cause to occur a Default or Event of Default hereunder or (B)
the incurrence or issuance of any debt securities of the Borrower which (i) is
secured by a Lien upon any property or assets of the Borrower or any of its
Subsidiaries, (ii) by its terms requires any payment in respect of principal
(whether through amortization, mandatory prepayment, redemption, sinking fund
requirements or other forms of reserves with respect thereto) at any time prior
to the fourth (4th) anniversary of the Closing Date, (iii) by its terms is not
otherwise subordinate to the Credit Obligations on terms reasonably acceptable
to the Agent and the Lenders, and (iv) would otherwise cause to occur a Default
or Event of Default hereunder.
-28-
(c) RECEIPT OF ESCROW PAYMENTS. The Borrower shall, on
the date of receipt thereof, prepay the Credit Obligations by an amount equal
to the amount of any distribution it shall receive of Funds (as such term is
defined in the Escrow Agreement) released to it pursuant to the Escrow
Agreement or otherwise in connection with the ASB Acquisition.
4.03 APPLICATION OF MANDATORY PREPAYMENTS. Any prepayment
------------------------------------
received pursuant to Section 4.02 hereof shall be applied FIRST to reduce
amounts owing in respect of any Base Rate Loans and SECOND to reduce
amounts owing in respect of any Eurodollar Loans (PROVIDED that, if there
is more than one outstanding Eurodollar Loan, then amounts owing in respect of
the Eurodollar Loans with the Interest Period ending on the date that is the
least number of days from the date of such prepayment shall be reduced first
before reduction of amounts owing in respect of other Eurodollar Loans).
Within the order of priority set forth above, the amount of any prepayment
received hereunder shall be applied to the Loans FIRST to reduce amounts
owing in respect of accrued but unpaid interest on the Loans being prepaid and
SECOND to reduce amounts owing in respect of outstanding principal of such
loans. If by operation of the provisions set forth above or any other reason,
payment of principal in respect of a Eurodollar Loan is received (from any
source) on a date other than the last day of the Interest Period pertaining to
such Loan, including, without limitation, due to acceleration of said amount
following the occurrence of an Event of Default, then the Borrower shall pay to
each Lender an additional amount equal to the applicable Funding Losses. Such
Funding Losses shall be payable on demand by such affected Lender.
4.04 GENERAL PROVISIONS AS TO PAYMENTS. The Borrower
---------------------------------
shall make each payment of principal of, and interest on, the Loans and of fees
due hereunder, not later than 2:00 p.m. (prevailing Eastern Standard Time) on
the date when due, in immediately available funds to the Agent at its Payment
Office. Provided that the Agent receives such payments by such time, the Agent
will distribute to each Lender on the same day its Pro Rata Share of each such
payment received by the Agent.
4.05 NET PAYMENTS. All payments made by the Borrower
------------
hereunder shall be made without setoff or counterclaim. All such payments
shall be made free and clear of and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature, now or hereafter imposed by any jurisdiction or by
any department, agency, state or other political subdivision or taxing
authority thereof or therein (but excluding any tax imposed on or measured by
the net income of a Lender pursuant to the laws of the jurisdiction in which
the principal office or Payment Office of such Lender is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office or Payment Office of such Lender is located) and
all interest, penalties, or similar liabilities with respect thereto
(collectively, TAXES). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every net payment of amounts due hereunder, after
withholding or deduction for or on account of any Taxes, will not be less than
the amounts provided for herein. The Borrower shall furnish to the Agent,
within thirty (30) days
-29-
after the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower shall indemnify and hold harmless each Lender and reimburse each Lender
upon the written request of such Lender setting forth the basis for requesting
such amount, for the amount of any Taxes so levied or imposed and paid by such
Lender.
In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made by the Borrower or the Agent
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Credit Document.
4.06 DEBITING OF ACCOUNT. If so requested by the Agent,
-------------------
the Borrower shall maintain a demand deposit account (a DDA ACCOUNT) at the
Agent, and the Agent may, and the Borrower hereby authorizes the Agent to,
debit any such DDA Account or such other account and/or certificate of deposit
maintained by the Borrower with the Agent for the amount of any payment, as and
when such payment becomes due hereunder, whether such payment is for accrued
interest, principal or expense, even if debiting any such account or
certificate of deposit results in a loss or reduction of interest to the
Borrower or the imposition of a penalty applicable to the early withdrawal of
time deposits. Such authorization shall not affect the Borrower's obligation
to pay when due all amounts payable hereunder, whether or not there are
sufficient funds in any accounts of the Borrower. The foregoing rights of the
Agent to debit the Borrower's accounts shall be in addition to, and not in
limitation of, any rights of set-off which the Agent may have hereunder or
under any Credit Document.
SECTION 5. CONDITIONS.
----------
5.01 DOCUMENTS REQUIRED FOR INITIAL ADVANCE. The
--------------------------------------
obligation of each Lender to make the initial advances under the Revolving
Credit Facility requested on the Closing Date is subject to the satisfaction of
all of the following conditions precedent:
(a) CERTAIN DOCUMENTS. The Agent shall have received on or
before the Closing Date all of the following, each in form and substance
satisfactory to each of the Lenders and in such quantities as the Agent shall
reasonably request:
(i) the following Credit Documents, each duly executed and
delivered by the parties thereto:
(A) this Agreement;
(B) the Notes;
(C) the Security Agreement; and
-30-
(D) each Affirmation of Guaranty and Security Agreement;
(ii) a Notice of Borrowing requesting the initial advance
hereunder in an amount at least sufficient to pay in full all
outstanding amounts in respect of the "Revolving Loans" and
the "Term Loan", as such terms are defined in the Existing
Loan Agreement and evidence of the termination of the
"Commitments" thereunder;
(iii) pre-closing UCC lien search report and tax lien and judgment
search reports with respect to the Borrower and the
Guarantors, in all appropriate jurisdictions;
(iv) original UCC-1 financing statements signed by the Borrower or
the Guarantors, as the case may be (or assignments of
existing financing statements) as debtor and naming the Agent
as the secured party, on behalf of the Lenders, prepared for
filing in all appropriate jurisdictions;
(v) an incumbency certificate of an appropriate officer of the
Borrower certifying, as of the Closing Date, the names,
titles and true signatures of the officers certified to
execute the Credit Documents, and the names, titles and true
signatures of such officers of the Borrower authorized to
deliver Notices of Borrowing and Letter of Credit Requests on
behalf of the Borrower;
(vi) a favorable New Jersey and New York law opinion of outside
counsel to the Borrower and the Guarantors addressed to the
Agent and the Lenders to the effect that the Credit Documents
have been duly authorized and executed and are enforceable
against the Borrower and the Guarantors in accordance with
their respective terms, and as to such other matters
reasonably requested by the Agent and the Lenders, including,
without limitation that the Security Agreements create valid
security interests in favor of the Agent in and to all
Collateral described therein and the Escrow Collateral;
(vii) a secretary's certificate for each of the Borrower and the
Guarantors, to which are attached certified copies of (x) the
respective articles of incorporation of the Borrower and the
Guarantors and all amendments thereto, certified by an
appropriate corporate officer, (y) the respective By-Laws of
the Borrower and the Guarantors and all amendments thereto,
and (z) appropriate resolutions and shareholder consents
authorizing the transactions herein contemplated;
(viii) a certificate from the chief financial officer of the
Borrower dated the Closing Date to the effect that as of such
date (i) no Default or Event of
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Default has occurred or is continuing, (ii) since June 30,
1995, there has been no material adverse change in the
business, financial condition or operations of the Borrower
and (iii) each of the representations and warranties of the
Borrower contained in this Agreement are true in all material
respects;
(ix) good standing certificates issued by the appropriate official
of the state in which the Borrower and the Guarantors are
incorporated; and such good standing certificates issued by
the appropriate official of each of the states in which the
Borrower and the Guarantors are qualified as foreign
corporations as the Lenders shall require;
(x) evidence that all applicable approvals have been obtained
from all governmental agencies or private parties which may
be necessary for the Borrower and the Guarantors to transact
business and to consummate the ASB Acquisition, including,
but not limited to, all environmental approvals and all
approvals required under the Hart-Scott-Rodino Act. All of
such approvals and permits shall be legally valid and shall
remain in full force and effect as of the Closing Date;
(xi) true copies of insurance policies and certificates of
insurance evidencing appropriate liability coverage and
hazard insurance on all improvements and buildings;
(xii) complete copies of all executed documents related to the ASB
Acquisition, certified to be true and correct copies thereof
by the secretary of the Borrower;
(xiii)audited financial statements for ASB as of December 31, 1994
and June 30, 1995 and September 30, 1995 management prepared
interim financial statements of ASB;
(xiv) pro forma consolidated financial statements for the Borrower
including income statements, balance sheet and cash flows,
prepared on a consolidating basis, reflecting the financial
condition of the Borrower after giving effect to the
incurrence of the Obligations hereunder and the ASB
Acquisition;
(xv) the "fairness opinion" of Bear Stearns, dated August 30,
1995, prepared for the Borrower in connection with the ASB
Acquisition, and any reports, analyses or opinions provided
by Bear Stearns which in any way relate to or alter the
conclusion set forth therein;
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(xvi) the quarterly consolidated and consolidating financial
statements as of September 30, 1995 for the Borrower and its
Subsidiaries (including ASB) reflecting results satisfactory
to the Agent and the Lenders;
(xvii) a letter from the certified public accountants for the
Borrower, Health Care and ASB consenting to the reliance by
the Agent and the Lenders upon the financial statements of
the Borrower, Health Care and ASB;
(xviii) an update in form and substance satisfactory to the Agent
regarding matters pertaining to the civil investigative
demand served upon the Borrower by the United States
Department of Justice on April 4, 1995, and evidence that the
Borrower has adequately reserved for any exposure resulting
from said investigation;
(xix) confirmation that all agent relationships pertaining to the
home health care business have been terminated and a written
report detailing the remaining health care business of the
Borrower and the Guarantors;
(xx) execution and delivery of documentation in form and substance
satisfactory to First Fidelity Bank, National Association
that the representations, warranties and covenants set forth
herein have been incorporated by reference into the First
Fidelity Term Loan Agreement; and
(xxi) such other documents as the Lenders may reasonably require,
including, without limitation, other agreements, instruments,
or indentures to which any Obligor is a party, including,
without limitation, financing statements, proofs, opinions,
guaranties and other written assurances.
(b) FEES AND EXPENSES. The Borrower shall have paid (or
otherwise satisfied to the satisfaction of the Agent and the Lenders) to the
Agent all fees and expenses due and payable on or prior to the Closing Date,
including, without limitation (i) the fees described in Section 3.01, (ii) any
fees due to the Agent that are referred to in Section 3.03 hereof, and (iii)
all such other fees and expenses incurred by the Agent and Lenders related to
the preparation, negotiation and closing of the transaction contemplated herein
that have been requested by such parties pursuant to invoices submitted to the
Borrower on or prior to the Closing Date.
5.02 REQUIREMENTS FOR ANY ADVANCE AND ISSUANCE OF LETTER OF
-------------------------------------------------------
CREDIT. The obligation of the Lenders to make any Revolving Credit Loans
- ------
and the obligation of the Agent to issue any Letter of Credit, in each case
subsequent to the Closing Date, is subject to satisfaction of the following
conditions:
-33-
(i) the representations and warranties contained in Section 6
hereof are true and correct on and as of the date of funding
of each such Loan or date of issuance such Letter of Credit,
as the case may be;
(ii) no Default or Event of Default has occurred and is
continuing;
(iii) there has been no material adverse change in the Borrower's
or any other Obligor's condition, financial or otherwise,
since the date of this Agreement; and
(iv) all of the Credit Documents remain in full force and effect.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Lenders to enter into this Agreement, the
Borrower represents and warrants with respect to itself and, to the extent
applicable, each of its Subsidiaries, and agrees that each such representation
and warranty shall be deemed to be restated at the time of funding of each Loan
and at the time of issuance of each Letter of Credit, that:
6.01 ORGANIZATION; AUTHORITY. The Borrower and each
-----------------------
Guarantor is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its incorporation, is duly qualified as
a foreign corporation and is in good standing under the laws of each
jurisdiction in which it is required to be qualified because of the business it
conducts or the property it owns, and has the necessary power and authority to
enter into and perform its obligations under the Credit Documents. The
execution and performance of the Credit Documents have been duly authorized by
all necessary and appropriate corporate proceedings on the part of the Borrower
and each Guarantor, and, upon their execution and delivery, they will be valid,
binding, and enforceable in accordance with their terms; the execution and
performance of the Credit Documents will not violate any orders, laws or
regulations applicable to any such Obligor, any of their respective
organizational documents, or any instruments, indentures or agreements
(including any provisions pertaining to subordinated debt) to which they are a
party or by which any such Obligor or any of their respective properties are
bound; and all consents, approvals, licenses, franchises, patents, trademarks
and other general intangibles required in connection with this Agreement, the
other Credit Documents or the operation of any such Obligor's business have
been obtained and are in full force and effect. All of the issued and
outstanding stock of the Borrower and each Guarantor has been validly issued
and fully paid and is non-assessable. Each of the Borrower's Subsidiaries is
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization and each is duly qualified as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which it is required to be qualified because of the business it conducts or the
property it owns.
-34-
6.02 USE OF PROCEEDS; MARGIN REGULATION. The proceeds of
----------------------------------
the Revolving Credit Loans shall be used only for the following purposes: (i)
to repay all amounts outstanding under the Existing Credit Agreement and (ii)
to finance the Borrower's accounts receivable, purchase equipment, make Capital
Expenditures permitted hereunder, and in connection with the Borrower's other
working capital needs. The Letters of Credit shall be used solely to support
Permitted L/C Obligations. The Borrower is not engaged in the business of
extending credit for the purpose of buying or carrying "margin stock" (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System). Neither the making of any Loan, the issuance of any Letter of
Credit, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
6.03 SPECIFIC FINANCIAL STATEMENTS.
-----------------------------
(i) The consolidated and consolidating financial statements of
the Borrower and ASB as of December 31, 1994, audited by KPMG
Peat Marwick and/or Coopers & Lybrand, as the case may be,
and the six (6) and nine (9) month statements as of June 30,
1995 and September 30, 1995, respectively, prepared by
management, copies of which have heretofore been provided to
the Agent, present fairly the financial condition of the
Borrower, Health Care and ASB, as applicable, as of such
dates and the results of operations for the periods then
ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance
with GAAP, consistently applied.
(ii) There has been no material adverse change in the financial
condition of the Borrower, Health Care or ASB or any
Subsidiary or Affiliate of the Borrower, Health Care or ASB
since June 30, 1995. For purposes of this representation, it
is acknowledged that the transactions occurring as of the
closing of the ASB Acquisition shall be deemed not to be a
material adverse change hereunder.
(iii) Except as reflected in the financial statements referred to
in clause (i) of this Section 6.03, the Borrower, Health Care
and ASB have no material liabilities, absolute or contingent.
(iv) The pro forma post-acquisition projections delivered to the
Agent continue to represent Borrower's best estimate of the
future performance of the Borrower and ASB, both separately
and on a Consolidated basis.
6.04 BURDENSOME AGREEMENTS. Neither the Borrower nor any
---------------------
of the Guarantors is a party to any indenture, loan or credit agreement or any
other agreement, contract or instrument, or subject to any certificate of
incorporation, by-law, or corporate
-35-
restriction, which may reasonably be expected to have an adverse affect on its
corporate activities, properties, assets, operations or conditions, financial or
otherwise, or on its ability to carry out its obligations under the Credit
Documents.
6.05 SUITS. Except as disclosed on Annex I hereto, there
-----
are no actions, suits, proceedings, or claims pending or, to the best knowledge
of the Borrower, threatened against the Borrower or its Subsidiaries, or any of
their property that, if determined adversely, are reasonably likely to have a
material adverse effect on the business, properties, assets, operations,
financial condition or prospects of the Borrower, or its Subsidiaries, taken as
a whole.
6.06 DEFAULTS. Neither the Borrower nor any of its
--------
Subsidiaries is in default under any agreement to which it is a party or by
which it or any of its property is bound, or under any indenture or instrument
evidencing any Indebtedness, and neither the execution of, nor performance
under, the Credit Documents will create a default or any Lien or encumbrance
under any such agreement, indenture or instrument other than Liens or
encumbrances in favor of the Lenders.
6.07 ERISA. Each Plan is in substantial compliance with
-----
ERISA and the applicable provisions of the Code and there does not exist with
respect to any such Plan an "accumulated funding deficiency" (as such term is
defined in ERISA). No material liability to the PBGC has been incurred by the
Borrower with respect to any such Plan and no "Reportable Event" under ERISA
has occurred. Neither the Borrower nor any of its Subsidiaries has actual or
anticipated liability under Section 4971 of the Code (relating to tax on
failure to meet the minimum funding standard of Section 412 of the Code) with
respect to any Multiemployer Plan. No proceedings have been instituted to
terminate any Plan and no condition exists which presents a material risk to
the Borrower or any of its Subsidiaries of incurring a liability to or on
account of any Plan pursuant to the provisions of ERISA or the applicable
provisions of the Code.
6.08 TAX RETURNS AND TAXES. Each of the Borrower and its
---------------------
Subsidiaries has filed all federal, state and local tax returns required to be
filed and has paid all taxes, assessments and governmental charges and levies
thereon, including interest and penalties, except where the same are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been set aside, and no liens for taxes have been filed and no
claims are being assessed by a governmental authority with respect to any
taxes. The charges, accruals and reserves on the books of the Borrower or its
Subsidiaries, as the case may be, with respect to taxes or other governmental
charges are adequate.
6.09 COMPLIANCE WITH STATUTES, ETC. Each of the Borrower
------------------------------
and its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including, without limitation, applicable statutes,
regulations, orders and restrictions relating to environmental standards and
-36-
controls), EXCEPT such noncompliances as would not, in the aggregate, have
a material adverse effect on the business, operations, property, assets or
financial condition of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.
6.10 ENVIRONMENTAL COMPLIANCE. To the best of the
------------------------
Borrower's knowledge, after due inquiry and investigation, no Lien has attached
to any revenues or any real or personal property owned by the Borrower or any
of its Subsidiaries in any jurisdiction, arising from an intentional or
unintentional action or omission of the Borrower or any of its Subsidiaries or
any previous owner and/or operator of said real property, resulting from the
Dumping of hazardous substances or wastes into the atmosphere or waters or onto
lands.
6.11 NO NOTIFICATION OF DUMPING OF HAZARDOUS SUBSTANCES.
--------------------------------------------------
Neither the Borrower nor any of its Subsidiaries has received a summons,
citation, directive, letter, or other communication, written or oral, from any
jurisdiction, or political sub-division or any agency or instrumentality
thereof, concerning any intentional or unintentional action or omission on the
part of the Borrower or any of its Subsidiaries arising from the Dumping of
hazardous substances into the atmosphere or waters, or onto the lands in any
jurisdiction.
6.12 NO AUTHORIZATIONS OR APPROVALS. No authorization or
------------------------------
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by the Borrower of this Agreement and the other Credit Documents.
6.13 NOT AN INVESTMENT COMPANY. The Borrower is not an
-------------------------
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
6.14 SUBSIDIARIES. Annex I hereto lists each Subsidiary
------------
of the Borrower (and the direct or indirect ownership interest of the Borrower
therein), in each case existing on the Closing Date. Neither the Borrower nor
any of its Subsidiaries has any interests in any Person other than as set forth
in said Annex I. No such Subsidiary has any Subsidiaries.
6.15 INTELLECTUAL PROPERTY, ETC. The Borrower and each of
--------------------------
its Subsidiaries have obtained all material patents, trademarks, servicemarks,
trade names, copyrights, technology, processes, licenses and other rights
(INTELLECTUAL PROPERTY), free from any burdensome restrictions, that are
necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted. No claim has been asserted or
threatened questioning the use of such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim.
6.16 LABOR MATTERS. Except as disclosed on Annex I,
-------------
neither the Borrower nor any of its Subsidiaries is a party to a labor
contract. There are no strikes, lockouts or other disputes relating to any
collective bargaining or similar agreement to which the Borrower or any of its
Subsidiaries is a party.
-37-
6.17 SECURITY INTERESTS. The Security Documents create,
------------------
as security for the obligations purported to be secured thereby (including,
without limitation, the Obligations hereunder), a valid and enforceable
perfected security interest in and Lien upon all of the Collateral therein
described, superior to and prior to rights of all third persons and subject to
no other Liens (except Permitted Liens), in favor of the Agent on behalf of the
Lenders. No filings or recordations are required in order to perfect the
security interest created under any Security Documents EXCEPT for filings
or recordations required in connection with any such Security Document which
have been made or arranged prior to or on the Closing Date.
6.18 ASSETS AND PROPERTIES. The Borrower and its
---------------------
Subsidiaries have good and marketable title to all of their respective assets
and properties (tangible and intangible) and all such assets and properties are
free and clear of all Liens (except Permitted Liens). Substantially all of the
assets and properties owned by, leased to or used by the Borrower or its
Subsidiaries are in adequate operating condition and repair, ordinary wear and
tear excepted, are free and clear of any known defects EXCEPT such defects
as do not substantially increase with the continued use thereof in the conduct
of normal operation, and such assets are able to serve the function for which
they are currently being used, EXCEPT in each case where the failure of
such asset or property to meet such requirements would not have or is not
expected to have a material adverse effect on the operations of the Borrower or
its Subsidiaries, taken as a whole.
6.19 INSURANCE. Annex I hereto lists all material
---------
insurance contracts and binders of the Borrower and its Subsidiaries which are
currently in full force and effect. Such contracts and binders provide
coverages which are usual and customary in the business of the Borrower and its
Subsidiaries as to amount and scope and otherwise comply with the provisions
regarding insurance set forth in the Security Documents. Each such insurance
contract and binder contains standard lender's endorsement and loss payee
endorsements in favor of the Agent, on behalf of the Lenders, and is subject to
cancellation or reduction in coverage only upon thirty (30) days' prior written
notice thereof to the Agent.
6.20 TRUE AND COMPLETE DISCLOSURE. All factual
----------------------------
information (taken as a whole) heretofore or contemporaneously furnished by the
Borrower to the Agent or any of the Lenders for the purposes of or in
connection with this Agreement or any transactions contemplated herein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of such Persons in writing to any Lender will be, true and accurate
in all material respects on the date as of which such information is dated or
certified and does not omit to state any fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided.
-38-
6.21 INSOLVENCY. After giving effect to the transactions
----------
described herein and the ASB Acquisition, neither the Borrower nor the
Guarantors will be insolvent, have unreasonably small capital with which to
engage in its business or have incurred debts beyond its ability to pay as they
become due.
6.22 THE ASB ACQUISITION. All conditions precedent to the
-------------------
ASB Acquisition have occurred, and the Borrower has acquired free and clear of
liens, good and marketable title to all assets acquired therein including,
without limitation, the shares of stock of ASB (other than such pre-existing de
minimis encumbrances upon such assets, other than the ASB stock, that have been
disclosed in writing to the Lenders).
SECTION 7. AFFIRMATIVE COVENANTS.
---------------------
The Borrower covenants and agrees that for so long as there are any
outstanding Obligations hereunder, or the Agent or the Lenders shall have any
obligation hereunder, the Borrower shall (and, as applicable, shall cause each
of its Subsidiaries (including the Guarantors) to):
7.01 PAYMENT OF INDEBTEDNESS. Pay the Credit Obligations
-----------------------
in accordance with their respective terms and pay and perform its other
Indebtedness and obligations in accordance with their terms.
7.02 PAYMENT OF TAXES, ETC. Pay and discharge all taxes,
----------------------
assessments and governmental charges or levies imposed upon it, or upon its
properties, prior to the date on which penalties attach thereto, PROVIDED,
HOWEVER, that the Borrower and its Subsidiaries shall not be required to pay
or discharge such tax, assessment, governmental charge or levy if the validity,
amount or applicability thereof is being contested by the Borrower or such
Subsidiaries in good faith, by appropriate proceedings and with diligence and
continuity (and for which adequate reserves therefor are maintained on the
books of the Borrower or such Subsidiaries, as the case may be).
7.03 REPORTING REQUIREMENTS. Furnish to the Agent and the
----------------------
Lenders:
(i) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower and the
Guarantors, an annual audit report for the Borrower and the
Guarantors, including, but not limited to, the balance sheet
of the Borrower and the Guarantors as of the end of such
fiscal year and the statements of operations and cash flows
of the Borrower and the Guarantors for such fiscal year,
setting forth in comparative form the corresponding figures
for the preceding fiscal year, prepared in accordance with
GAAP, consistently applied, all in reasonable detail and
prepared on a Consolidated and consolidating basis and in
each case duly certified by independent certified public
accountants of recognized standing acceptable to the Agent.
At the same
-39-
time as the annual report is so provided to the Agent and the
Lenders, the Borrower shall also provide to the Agent and the
Lenders its Annual Report on Form 10-K (or successor form)
prescribed by the SEC for such fiscal year; and
(ii) as soon as available and in any event within forty-five (45)
days after the end of the first three quarters of each fiscal
year of the Borrower and the Guarantors, management prepared
Consolidated and consolidating financial statements
including, but not limited to, a balance sheet, income
statement and cash flow statement prepared in accordance with
GAAP, consistently applied, in form and substance
satisfactory to the Agent for the quarter and the period
commencing at the end of the previous fiscal year and ending
with the end of such quarter. In addition, at the times of
delivery to the Agent and the Lenders of such quarterly
reports, the Borrower shall also deliver to the Agent and the
Lenders its Quarterly Report on Form 10-Q (or successor form)
prescribed by the SEC for such fiscal year; and
(iii) promptly after filing, copies of any and all public
disclosures of the Borrower whether to the SEC or otherwise,
including but not limited to any reports on Form 8-K (or
successor form) prescribed by the SEC, and any proxy and
registration statements; and
(iv) within fifteen (15) days of the end of each month, a written
report as to the progress of collection of the receivables
sold to Olsten in accordance with that certain Accounts
Receivable Collection Agreement, dated as of May 26, 1995, by
and between, the Borrower, Olsten and Health Care; and
(v) within six (6) months after the end of the Borrower's fiscal
year, a management letter prepared by the independent
certified public accountants of the Borrower; and
(vi) within thirty (30) days of the end of each quarter, an aging
report of the Borrower's and Guarantors' accounts receivable
as of the last day of the month then ended in form and
substance satisfactory to the Agent; and
(vii) such other information as may be reasonably requested by the
Agent and any Lender respecting the condition or operations,
financial or otherwise, of the Borrower and the Subsidiaries
and their respective businesses.
7.04 COMPLIANCE CERTIFICATES. Furnish to the Agent and
-----------------------
the Lenders, together with each set of financial statements described in
clauses (i) and (ii) of Section 7.03 hereof, a compliance certificate,
substantially in the form of EXHIBIT F hereto, signed by the
-40-
Borrower's chief financial officer, certifying that: (i) all representations and
warranties set forth in this Agreement and in any other Credit Document are true
and correct as of the date thereof; (ii) none of the covenants in this Agreement
or in any other Credit Document has been breached; and (iii) no Default or Event
of Default under this Agreement or under any other Credit Document has occurred
and is continuing.
7.05 NOTICE OF CERTAIN EVENTS. Promptly give written
------------------------
notice to the Agent and the Lenders of: (i) the occurrence of any Default or
Event of Default; (ii) the commencement of any proceeding (administrative or
otherwise) or litigation which, if adversely determined, would materially and
adversely affect its financial condition or ability to conduct business; and
(iii) the formation of any Subsidiary of the Borrower after the date of this
Agreement, which notice shall be accompanied by the resolution of the Board of
Directors of such Subsidiary authorizing such Subsidiary to execute a guaranty
of the Obligations, satisfactory in form and substance to the Lenders, together
with such guaranty duly executed by such Subsidiary.
7.06 PRESERVATION OF PROPERTY; INSURANCE. Keep and
-----------------------------------
maintain all of its properties and assets in good order and repair; maintain
all insurance coverages described in Section 6.19 hereof and such other
extended coverage, general liability, hazard, malpractice, business
interruption and property insurance in amounts deemed satisfactory to the Agent
and as is customary for businesses similar to the Borrower's business and
deliver to the Agent certificates of all such insurance in effect; and cause
all such policies to contain a standard lender's endorsement and loss payee
endorsements in favor of the Agent, on behalf of the Lenders, and to be subject
to cancellation or reduction in coverage only upon thirty (30) days' prior
written notice thereof to the Agent.
7.07 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
------------------------------------------------
Continue to engage in business of the same general type as now conducted and
preserve, renew and keep in full force and effect its corporate existence and
rights, privileges and franchises necessary or desirable in the normal conduct
of business and which are material to the Borrower and each of its
Subsidiaries.
7.08 OPERATION OF PROPERTIES. Conduct its business and
-----------------------
operate its properties, in compliance with all applicable orders, rules and
regulations promulgated by the jurisdictions and agencies thereof where such
business is conducted and where such properties are located, and duly file or
cause to be filed such reports and/or information as may be required or
appropriate under applicable orders, regulations or law.
7.09 ACCESS TO PROPERTIES, BOOKS AND RECORDS. Upon
---------------------------------------
reasonable notice, at any reasonable time and from time to time, permit the
Agent's and/or the Lenders' representatives and/or agents full and complete
access to any or all of the Borrower's and its Subsidiaries' properties and
financial records, to make extracts from and/or audit such records, and to
examine and discuss the Borrower's properties, business, finances and affairs
with the Borrower's officers and outside accountants.
-41-
7.10 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep
---------------------------------------
adequate records and books of account reflecting all its financial
transactions.
7.11 ERISA COMPLIANCE. Comply with all the applicable
----------------
provisions of ERISA now or hereafter in effect with respect to each of its
Plans and notify the Lenders of the following events, as soon as possible and
in any event within ten (10) days after the Borrower knows or has reason to
know thereof: (i) the occurrence of any "Reportable Event" (as defined in
ERISA) with respect to any Plan; (ii) the occurrence of a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
with respect to any Plan, (iii) the institution of proceedings or the taking or
expected taking of any other action by the PBGC or the Borrower or any ERISA
Affiliate to terminate or withdraw or partially withdraw from any Plan and,
with respect to a Multiemployer Plan, the "Reorganization" or "Insolvency" of
such Plans (as such terms are defined in ERISA); (iv) the failure of the
Borrower or any ERISA Affiliate to make a required installment under Section
412 (m) of the Code or any other payment required under Section 412 of the Code
on or before the due date or (v) the adoption of an amendment with respect to a
Plan so that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Code, and in addition to
such notice, deliver to the Lenders a certificate signed by the chief financial
officer of the Borrower or of the respective ERISA Affiliate describing what
action the Borrower or the respective ERISA Affiliate proposes to take with
respect thereto and when known, any action taken or threatened by the Internal
Revenue Service or the PBGC, together with a copy of any notice to the PBGC or
the Internal Revenue Service or any notice delivered by the PBGC or the
Internal Revenue Service.
7.12 ENVIRONMENTAL LIENS. In the event that there shall
-------------------
be filed a Lien against any property of the Borrower by any jurisdiction,
political sub-division, agency or instrumentality thereof arising from an
intentional or unintentional act or omission of the Borrower, resulting in the
Dumping of hazardous substances or wastes into the atmosphere or waters or onto
lands then, within thirty (30) days from the date that the Borrower is given
notice that the Lien has been placed against such property, or within such
shorter period of time in the event that such jurisdiction, political
sub-division, agency, or instrumentality thereof has commenced steps to cause
such property to be sold pursuant to the Lien, either (i) pay the claim and
remove the Lien from the applicable property or (ii) furnish such jurisdiction,
political subdivision, agency or instrumentality thereof that imposed the Lien
with one of the following: (a) a bond satisfactory to such jurisdiction,
political sub-division, agency, or instrumentality thereof that imposed the
Lien in the amount of the claim out of which the Lien arises, (b) a cash
deposit in the amount of the claim out of which the Lien arises, or (c) other
security reasonably satisfactory to such jurisdiction, political sub-division,
agency, or instrumentality thereof in an amount sufficient to discharge the
claim out of which the Lien arises.
7.13 REMOVAL OF HAZARDOUS SUBSTANCES. Should the Borrower
-------------------------------
cause or permit any intentional or unintentional act or omission resulting in
the Dumping of hazardous substances or wastes into the atmosphere or waters or
onto the lands resulting in damage to
-42-
the Natural Resources without having obtained a permit issued by the appropriate
governmental authorities, promptly remediate said damage in accordance with all
applicable federal, state, and local orders, statutes, laws, ordinances, rules
and regulations.
7.14 FURTHER ASSURANCES. Do, execute, acknowledge and
------------------
deliver or cause to be done, executed, acknowledged and delivered all such
further instruments, acts, deeds, and assurances as may be reasonably requested
by the Agent or the Lenders for the purpose of carrying out the provisions and
intent of the Credit Documents.
SECTION 8. NEGATIVE COVENANTS.
------------------
For so long as any Obligations are outstanding, or the Lenders
shall have any obligation hereunder, the Borrower shall not (and shall not, as
applicable, permit any of its Subsidiaries (including the Guarantors) to):
8.01 INCUR INDEBTEDNESS. Incur, create, assume, or permit
------------------
to exist any Indebtedness, EXCEPT:
(a) Indebtedness of the Borrower owing to the Lenders and the
Agent under this Agreement and the Notes;
(b) other Indebtedness of the Borrower or any of its Subsidiaries
owing to the Agent;
(c) Indebtedness existing on the Closing Date that is listed on
Annex I hereto;
(d) Approved Subordinated Indebtedness;
(e) Indebtedness in respect of normal trade debt arising in the
ordinary course of business which does not significantly exceed the levels of
such debt historically incurred by the Borrower or its Subsidiary, as the case
may be;
(f) Indebtedness incurred in connection with a private or public
offering of debt securities of the Borrower contemplated by, and in accordance
with, Section 4.02(b) hereof, if, and only if, the Net Cash Proceeds of any
such offering are applied to reduce the Credit Obligations in accordance with
Section 4.03 hereof;
(g) Indebtedness secured by Liens permitted by Section 8.02(g);
and
(h) Indebtedness that constitutes Guaranteed Indebtedness of the
Borrower that has been incurred by the Borrower solely by virtue of the
Borrower's endorsement of checks or drafts negotiated in the ordinary course of
the Borrower's business.
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8.02 NEGATIVE PLEDGE. Create, permit to exist, or suffer
---------------
the creation of, any Lien, on any of its properties or assets (real or
personal, tangible or intangible), EXCEPT:
(a) Liens in favor of the Agent, on behalf of the Lenders,
created pursuant to the Security Documents;
(b) Liens existing on the Closing Date that are listed on Annex I
hereto;
(c) Liens for taxes, assessments or governmental charges or
levies to the extent not required to be paid by Section 7.02 hereof;
(d) Liens imposed by law, such as materialmen's, mechanics',
carriers, workmen's, and repairmen's Liens and other similar Liens arising in
the ordinary course of business securing obligations which are not overdue for
a period of more than thirty (30) days;
(e) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation or to secure public or statutory
obligations of the Borrower;
(f) Liens acknowledged to exist with respect to the assets and
properties of ASB pursuant to Section 6.22 hereof;
(g) Liens for finance leases of equipment leased by the Borrower
or any of its Subsidiaries, which do not constitute Capitalized Leases or
purchase money Liens upon or in property acquired or held by the Borrower or
any of its Subsidiaries in the ordinary course of business to secure the
purchase price of such property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of any such property to be subject to
such Liens, or Liens existing on any such property at the time of the leasing,
acquisition, or extensions, renewals or replacements of any of the foregoing
for the same or a lesser amount, PROVIDED that no such Lien shall extend to
or cover any property other than the property being leased or acquired and no
such extension, renewal or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed or replaced, and
PROVIDED, FURTHER, that (i) the aggregate principal amount of the
Indebtedness at any one time outstanding secured by Liens permitted pursuant to
this clause (g) shall not exceed $100,000 at any one time outstanding and (ii)
any such Indebtedness shall not otherwise be prohibited by the terms of this
Agreement; and
(h) the replacement, extension or renewal of any Lien permitted
by clauses (a) through (g) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase of
principal amount) of the Indebtedness secured thereby.
8.03 SALE OF ASSETS; LIQUIDATION; MERGER; ACQUISITIONS.
-------------------------------------------------
Convey, lease, sell, transfer or assign any assets or properties presently
owned or hereafter acquired EXCEPT dispositions of inventory in the
ordinary course of business for value received and such other
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dispositions of assets and properties that are not material to the business or
operations of the Borrower or any of its Subsidiaries, if such asset or property
is replaced with reasonable promptness or is otherwise obsolete; liquidate or
discontinue its normal operations with intent to liquidate; enter into any
merger or consolidation; or acquire all or substantially all of the assets,
stock or other equity interests of another entity. Notwithstanding the
foregoing, any of the Borrower's Subsidiaries may merge with or be consolidated
into the Borrower and the Borrower's Subsidiaries may merge with or be
consolidated into other Subsidiaries of the Borrower, in each case upon not less
than sixty (60) days' prior written notice to the Agent and the Lenders and on
terms reasonably acceptable to the Agent and the Required Lenders.
8.04 NATURE OF BUSINESS. Engage (directly or indirectly)
------------------
in any business other than the business in which it is generally engaged on the
Closing Date.
8.05 DIVIDENDS, ETC.. Declare or make any dividend
---------------
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of stock of the Borrower,
or purchase, redeem, or otherwise acquire for value (or permit any Subsidiary
to do so) any shares of any class of stock of the Borrower or any warrants,
rights or options to acquire any such shares, now or hereafter outstanding;
EXCEPT that the Borrower may declare and pay quarterly cash dividends in
respect of its capital stock in an amount not to exceed (i) for the calendar
quarters ending September 30, 1995 and payable in November of 1995, $.01 per
share per quarter up to $75,000 in the aggregate for such quarter; (ii) for the
calendar quarter ending December 31, 1995 and payable in February of 1996, $.01
per share up to $75,000 in the aggregate for such quarter, (iii) for the
calendar quarter ending March 31, 1996 and payable in May of 1996, $.02 per
share up to $140,000 in the aggregate for such quarter; (iv) for the calendar
quarter ending June 30, 1996 and payable in August of 1996, $.03 per share up
to $210,000 in the aggregate for such quarter; (v) for the calendar quarter
ending September 30, 1996 and payable in November of 1996, $.03 per share up to
$210,000 in the aggregate for such quarter; and (vi) for each subsequent
calendar quarter then ending, $.05 up to $375,000 in the aggregate for each
such quarter; PROVIDED, HOWEVER, that if immediately after giving effect to
any such proposed dividend payment, a Default or Event of Default would exist,
then no such dividend payment shall be permitted hereunder and; PROVIDED
FURTHER that in no event shall any of the quarterly dividends permitted under
this Section 8.05 exceed thirty percent (30%) of the Borrower's quarterly
average net income (determined in accordance with clause (B) of the definition
of Consolidated Funded Debt to Cash Flow Ratio and exclusively from continued
operations) for the four (4) quarters immediately preceding the relevant
ex-dividend date. The Borrower may from time to time request that the Agent
and the Lenders permit the payment of quarterly dividends in addition to the
amounts set forth in this Section 8.05 by written notice to the Agents and the
Lenders specifying the time and amount of such additional dividends;
PROVIDED, HOWEVER, that no such additional dividends shall be permitted
hereunder without the prior written consent of the Required Lenders (which
consent may or may not be given in each Lender's sole and absolute discretion)
and any such consent shall be effective only in the specific instance
requested.
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8.06 ACCOUNTS. Sell, assign, transfer or dispose of any
--------
of its accounts or notes receivable, with or without recourse, EXCEPT to
the Agent or the Lenders.
8.07 SALE-LEASEBACK TRANSACTIONS. Enter into any
---------------------------
sale-leaseback transaction or any transaction howsoever termed which would have
the same or substantially the same result or effect as a sale-leaseback.
8.08 PREPAYMENT OF OTHER INDEBTEDNESS. Prepay any
--------------------------------
Indebtedness not required to be prepaid, EXCEPT to the Lenders or any
Affiliate of any of the Lenders, or cause or permit to be accelerated any
amounts on any outstanding Indebtedness now existing or hereafter arising.
8.09 SALE OR ISSUANCE OF EQUITY. Sell, issue, or agree to
--------------------------
sell or issue, any shares of its capital stock, any securities convertible into
or exchangeable for shares of its capital stock or any warrants, rights,
options or other securities to acquire shares of its capital stock; other than
(i) any issuance of the Borrower's common stock pursuant to existing employee
stock option and stock purchase plans previously disclosed to the Agent and the
Lenders and (ii) any such sale or issuance contemplated by, and in accordance
with Section 4.02(b) hereof, if and only if, the Net Cash Proceeds of any such
offering are applied to reduce the Credit Obligations in accordance with
Section 4.03 hereof.
8.10 REDEMPTION OF COMMON STOCK. Enter into any agreement
--------------------------
to, or purchase or retire shares of the Borrower's common stock or pay or make
other similar payments in respect thereof, EXCEPT that, if there is not
then existing any Default or Event of Default (and no Default or Event of
Default will result therefrom), the Borrower may purchase, redeem or retire
shares of its common stock in an amount not to exceed twenty-five percent (25%)
of the average daily trading volume of its common stock on the American Stock
Exchange during the four (4) week period ending on the day immediately prior to
such purchase, redemption or retirement, which amount shall not exceed 25,000
shares and the consideration paid in respect thereof shall not exceed $500,000,
in each case cumulatively in any calendar year.
8.11 INVESTMENTS. Purchase or make any investment in the
-----------
stock, securities or evidences of indebtedness of (other than as permitted
pursuant to Section 8.12 hereof), or make capital contributions to, or other
forms of investments in, any Person EXCEPT Permitted Investments.
8.12 LOANS AND ADVANCES GENERALLY. Other than as
----------------------------
permitted pursuant to Section 8.13 hereof, loan or make advances, or other
forms of extensions of credit, to any Subsidiary or Affiliate of the Borrower,
or any other Person (other than as permitted under Section 8.11 hereof);
PROVIDED HOWEVER, that the Borrower may make such loans, advances and other
forms of extension of credit to such parties in the ordinary course of business
at arm's length and on commercially reasonable terms.
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8.13 LOANS AND ADVANCES TO OFFICERS. Loan or make
------------------------------
advances, or other forms of extensions of credit, to any officer, director or
shareholder of the Borrower or any Subsidiary or to any Affiliate of any of the
foregoing other than at arm's length and/or commercially reasonable terms or
which in the aggregate for all such loans and advances do not exceed $1,000,000
outstanding at any time.
8.14 CREATE SUBSIDIARIES. Create, permit to exist, or
-------------------
invest or otherwise participate in any Subsidiaries or any partnership, joint
venture or other enterprise (other than the Subsidiaries and Persons listed in
Annex I hereto).
8.15 ACCOUNTS RECEIVABLE DOH. Permit its Accounts
-----------------------
Receivable DOH to exceed (i) seventy (70) days during the calendar year ending
December 31, 1996 and (ii) sixty-five (65) days during the calendar year ending
December 31, 1997, measured quarterly on a ninety (90) day basis.
8.16 HAZARDOUS SUBSTANCES. Cause or permit to exist a
--------------------
Dumping of hazardous substances or wastes into the atmosphere or waters or onto
lands resulting in damage to the Natural Resources unless the Dumping is
pursuant to and in compliance with the conditions of a permit issued by the
appropriate federal, state, or local governmental authorities.
8.17 CAPITAL EXPENDITURES. Incur or agree to make, on a
--------------------
Consolidated basis, Capital Expenditures in an amount in excess of (i)
$2,000,000 in the aggregate for the calendar year ending December 31, 1996
and (ii) $2,500,000 in the aggregate for the calendar year ending December 31,
1997.
8.18 CONSOLIDATED NET WORTH. Permit its Consolidated Net
----------------------
Worth at any time during the periods specified below to be less than the amount
set forth opposite such period:
MEASURING PERIOD MINIMUM NET WORTH
---------------- ------------------
Closing Date through
December 31, 1995 $33,000,000
March 31, 1996 through
June 29, 1996 $33,600,000
June 30, 1996 through
September 29, 1996 $34,300,000
September 30, 1996 through
December 30, 1996 $36,000,000
December 31, 1996 through
March 30, 1997 $37,750,000
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March 31, 1997 through
June 29, 1997 $39,000,000
June 30, 1997 through
September 29, 1997 $40,500,000
September 30, 1997 through
December 30, 1997 $42,000,000
December 31, 1997 and
thereafter $43,750,000
8.19 INTEREST COVERAGE RATIO. Permit the ratio of its
-----------------------
Consolidated EBIT to its Consolidated Interest Expense to be less than 2.25 to
1.00 as at the fiscal quarter ending March 31, 1996 and 3:00:1.00 as at the
fiscal quarter ending June 30, 1996, measured on a quarterly basis FOR THAT
QUARTER. As used in this Section 8.19, EBIT shall mean earnings (less
extraordinary or unusual gains included in net income) before interest and
income taxes or taxes based on or measured by income as undistributed earnings,
in each case as determined in accordance with GAAP, and INTEREST EXPENSE
shall mean all cash and non-cash interest (including capitalized interest)
accrued during the relevant period on or in connection with any Indebtedness,
in each case determined in accordance with GAAP.
8.20 CONSOLIDATED FUNDED DEBT TO CASH FLOW RATIO. Permit
-------------------------------------------
its Consolidated Funded Debt to Cash Flow Ratio as at the measuring dates set
forth below to be greater than the ratio set forth opposite such date for the
relevant Test Period:
MEASURING DATE RATIO
-------------- -----
September 30, 1996 3.60:1.00
December 31, 1996 2.10:1.00
March 31, 1997 1.70:1.00
June 30, 1997 1.40:1.00
September 30, 1997 1.20:1.00
December 31, 1997 1.00:1.00
8.21 USE OF PROCEEDS. Use the proceeds of the Revolving
---------------
Credit Loans, and the Letters of Credit, for any purpose other than the
purposes set forth in Section 6.02 hereof.
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8.22 AMENDMENTS TO ASB ACQUISITION DOCUMENTATION. Amend,
-------------------------------------------
modify, waive or permit the amendment, modification or waiver of any provision
of any document executed and/or delivered in connection with the ASB
Acquisition, including, without limitation, the Escrow Agreement and the
Accounts Receivable Collection Agreement, dated as of May 26, 1995, by and
between the Borrower, Health Care and Olsten.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
9.01 EVENTS OF DEFAULT. Upon the occurrence of any of the
-----------------
following events (each an EVENT OF DEFAULT):
(i) PAYMENT DEFAULT. The Borrower shall (a) default in the
payment when due of any principal of the Loans or Unpaid
Drawings or (b) default in the payment of interest on the
Loans or any other amounts owing hereunder, under the Notes or
under any other Credit Document, and such default shall
continue for a period of five (5) or more days;
(ii) NEGATIVE COVENANT BREACH. The Borrower shall default in
the due performance or observance by it of any term, covenant
or agreement contained in Section 8 hereof;
(iii) OTHER COVENANT BREACHES. The Borrower shall default in
the due performance or observance of any term, covenant or
agreement (other than those referred to in clauses (i) and
(ii) above) contained in this Agreement, the Notes or any
other Credit Document, and such default shall continue
unremedied for a period of at least ten (10) days after the
earlier to occur of (a) the date the Borrower obtains actual
knowledge of such default or (b) the date notice of such
default is given to the Borrower by the Agent;
(iv) DEFAULT UNDER OTHER AGREEMENTS. (a) The Borrower or any
of its Subsidiaries shall default in any payment with respect
to any Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness was created or default in the observance or
performance of any agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent
on behalf of such holder or holders) to cause (determined
without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its
stated maturity; (b) any such Indebtedness shall be declared
to be due and payable, or required to be prepaid as a
mandatory prepayment, prior to
-49-
the stated maturity thereof; or (c) without limiting the
generality of the foregoing, the occurrence of an "Event of
Default" (as defined therein) under the First Fidelity Term
Loan Agreement;
(v) VOLUNTARY BANKRUPTCY. The Borrower or any of its
Subsidiaries commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under the United
States Bankruptcy Code or under any similar foreign, federal,
state, or local statute, or any dissolution or liquidation
proceeding, or makes a general assignment for the benefit of
creditors, or takes any action for the purpose of effecting
any of the foregoing;
(vi) INVOLUNTARY BANKRUPTCY. Any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under the
United States Bankruptcy Code or under similar foreign,
federal, state or local statute, or any dissolution or
liquidation proceeding, is involuntarily commenced against or
in respect of the Borrower or any of its Subsidiaries or an
order for relief is entered in any such proceeding and is not
dismissed within sixty (60) days;
(vii) APPOINTMENT OF RECEIVER. The appointment, or the filing
of a petition seeking the appointment, of a custodian,
receiver, trustee, or liquidator for the Borrower or any of
its Subsidiaries or any of their respective properties or the
taking of possession of any part of such property at the
instance of any governmental authority;
(viii) INSOLVENCY. The Borrower or any Guarantor becomes
insolvent (however defined), is generally not paying its
debts as they become due, or has suspended transaction of its
usual business;
(ix) REORGANIZATION. The dissolution, merger, consolidation,
or reorganization of the Borrower or any of its Subsidiary
(other than as expressly permitted under Section 8.03
hereof);
(x) ACTION IN FURTHERANCE OF CERTAIN DEFAULTS. The Borrower
or any of its Subsidiaries has taken any corporate action for
the purpose of effecting any of the events described in
clauses (iv), (vi) or (viii) above;
(xi) MATERIAL MISSTATEMENT. Any statement, representation or
warranty made in or pursuant to this Agreement or any other
Credit Document or to induce the Lenders to enter into this
Agreement or to enter into the transactions referred to in
this Agreement shall prove to be untrue or misleading in any
material respect;
-50-
(xii) MATERIAL ADVERSE CHANGE. The occurrence of a material
adverse change in the financial condition of the Borrower or
any of its Subsidiaries or the occurrence of any event which,
in the sole opinion of the Lenders, impairs the financial
responsibility of the Borrower or any of its Subsidiaries;
(xiii) GRANTING OF SECURITY INTEREST. The Borrower or any of
its Subsidiaries transfers or grants any Lien on or other
form of security interest in any of their respective
properties on which the Agent, on behalf of the Lenders, has
a Lien, without the prior written consent of the Required
Lenders;
(xiv) ENTRY OF JUDGMENT. The entry or issuance of judgments,
orders, decrees or fines against the Borrower or any of its
Subsidiaries which, in the aggregate, involve liabilities in
excess of the sum of $100,000 (the discharge of which is not
the obligation of any insurance company) and any such
judgments or orders involving liabilities in excess of said
sum shall have continued unbonded or unsatisfied and without
stay of execution or agreement between the parties thereon for
a period of thirty (30) days after the entry or issuance of
such judgment; or
(xv) TRANSFER OF ASSETS. The Borrower or any of its
Subsidiaries transfers or sells all or substantially all of
their respective assets, without the prior written consent of
the Lenders;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing the Agent shall, upon the written request of
the Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Lender
to enforce its claim against the Borrower, except as otherwise specifically
provided for in this Agreement (PROVIDED that, if an Event of Default
specified in clause (v), (vi), (vii) or (viii) above shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare all of the
Credit Commitments terminated, whereupon the Credit Commitment of each Lender
shall forthwith terminate immediately and any fees theretofore accrued shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Credit
Obligations and all other Obligations owing hereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower; (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms; (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default as
specified in clause (v) (vi), (vii) or (viii) above, it will pay) to the Agent
such additional amounts of cash to be held as cash collateral for the
Borrower's reimbursement obligations for Drawings that may subsequently occur
under any Letter of
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Credit then outstanding, equal to the Stated Amount of all such Letters of
Credit; and (v) take any action with respect to any or all of the Liens and
security interests created pursuant to any Security Document to the extent the
Agent and/or the Lenders are permitted to do so pursuant to the terms of such
Security Document.
Notwithstanding anything contained in the foregoing
paragraph, if at any time within sixty (60) days after an acceleration of the
Loans pursuant to the preceding paragraph, the Borrower shall pay all arrears
of interest and all payments on account of principal which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in the
Credit Documents) and all Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived to the
satisfaction of the Lenders, then the Lenders, by written notice to the
Borrower, may at their option rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or impair any right consequent thereon. The provisions of this paragraph are
intended merely to bind the Lenders to a decision which may be made at the
election of the Lenders and are not intended to benefit the Borrower and do not
grant the Borrower the right to require the Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
Without limiting the generality of the remedies available to the Lenders
pursuant to the Credit Documents or by law following an Event of Default, (y)
the rate of interest on the principal portion of the Obligations incurred
hereunder shall be increased to a rate equal to the lesser of: (i) the highest
rate of interest set forth in the Credit Documents, or (ii) the highest rate of
interest allowed by law, such rate of interest to apply to such Obligations
upon and after an Event of Default, maturity, whether by acceleration or
otherwise, and the entry of a judgment in favor of the Lenders with respect to
any or all of such Obligations and (z) the Letter of Credit Fee shall be
increased to 300 basis points (3.00%) at all times during which an Event of
Default continues to exist.
9.02 RIGHT OF SET-OFF. If any of the Obligations shall be
----------------
due and payable or any one or more Events of Default shall have occurred,
whether or not any Lender shall have made demand under any Credit Document and
regardless of the adequacy of any collateral or other form of security for the
Obligations or other means of obtaining repayment of the Obligations, each
Lender shall have the right, without notice to the Borrower or any other
Obligor, and is specifically authorized hereby to set-off against and apply to
the then unpaid balance of the Obligations any items or funds of the Borrower
and/or any Obligor held by each Lender or any Affiliate of such Lender, any and
all deposits (whether general or special, time or demand, matured or unmatured)
or any other property of the Borrower and/or any Obligor, including, without
limitation, securities and/or certificates of deposit, now or hereafter
maintained by the Borrower and/or any Obligor for its or their own account with
any Lender or any Affiliate thereof, and any other indebtedness at any time
held or owing by the Lender or any Affiliate to or for the credit or the
account of the Borrower and/or any Obligor, even if effecting such set-off
results in a loss or reduction of interest or the imposition of a penalty
applicable to the early withdrawal of time deposits. For such purpose, each
Lender shall have,
-52-
and the Borrower hereby grants to each Lender, a first Lien on and security
interest in such deposits, property, funds and accounts and the proceeds
thereof.
9.03 SHARING OF PAYMENTS, ETC. If any Lender shall obtain
-------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Loans made by it in excess of its
Pro Rata Share of payments on account of the Loans obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations
in the Loans made by them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them, PROVIDED, HOWEVER,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's Pro Rata
Share according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 9.03
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation. The foregoing shall in no way obligate any Lender to seek payment
in respect of the Obligations of the Borrower hereunder through such Lender's
right of set-off or otherwise at any time, or in any particular order relative
to such other rights or remedies such Lender may possess, in a manner that
prejudices or impairs (as determined in such Lender's sole discretion) any other
right or remedy such Lender may possess to enforce claims against the Borrower
in respect of Obligations of the Borrower hereunder or such other Obligations of
the Borrower owed to such Lender.
9.04 TURNOVER OF PROPERTY HELD BY AFFILIATE. The Borrower
--------------------------------------
further authorizes each Affiliate of any Lender, upon and following the
occurrence of an Event of Default, at the request of the Lender so affiliated,
and without notice to the Borrower, to turn over to such Lender any property of
the Borrower, including, without limitation, funds and securities, held by such
Affiliate for the Borrower's account and to debit, for the benefit of such
Lender, any deposit account maintained by the Borrower with such Affiliate
(even if such deposit account is not then due or there results a loss or
reduction of interest or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the amount requested
by such Lender up to the amount of the Obligations, and to pay or transfer such
amount or property to such Lender for application to the Obligations.
9.05 REMEDIES CUMULATIVE; NO WAIVER. The rights, powers
------------------------------
and remedies of the Agent and the Lenders provided in this Agreement and any of
the Credit Documents are cumulative and not exclusive of any right, power or
remedy provided by law or equity. No failure or delay on the part of the Agent
or the Lenders in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
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SECTION 10. THE AGENT.
---------
10.01 APPOINTMENT. Each Lender hereby irrevocably
-----------
designates and appoints First Fidelity Bank, National Association as the Agent
of such Lender under this Agreement, and each such Lender irrevocably
authorizes First Fidelity Bank, National Association, as the Agent for such
Lender, to take such action on its behalf under the provisions of this
Agreement and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Credit Document or otherwise exist against the Agent.
10.02 DELEGATION OF DUTIES. The Agent may execute any of
--------------------
its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys in-fact selected by it with reasonable care.
10.03 EXCULPATORY PROVISIONS. Neither the Agent nor any of
----------------------
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Credit
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Credit Document or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
any other Credit Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Notes or
any other Credit Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Credit Document, or to inspect the property, books or
records of the Borrower.
10.04 RELIANCE BY AGENT. The Agent shall be entitled to
-----------------
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the
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owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the Notes and the other
Credit Documents in accordance with a request of the Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes. Without limiting the
generality of the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder or under any Credit Documents in accordance with the instructions of
the Lenders.
10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Event of Default hereunder
unless the Agent has received notice from a Lender or the Borrower referring to
this Agreement, describing such Event of Default and stating that such notice
is a "notice of default". In the event that the Agent receives such a notice,
the Agent shall give notice thereof to the Lenders. The Agent shall take such
action with respect to such Event of Default as shall be reasonably directed by
the Lenders; PROVIDED that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Lenders.
10.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
---------------------------------------
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent 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 appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents 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 analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Credit
Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
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creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
10.07 INDEMNIFICATION. The Lenders agree to indemnify the
---------------
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their Pro Rata Shares from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement, any of the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; PROVIDED that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. If, however, the Agent shall have been reimbursed by the
Borrower in respect of any amounts previously paid to the Agent by the Lenders
pursuant to this Section 10.07, then the Agent shall pay to the Lenders their
Pro Rata Shares of such duplicative reimbursement. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
10.08 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
--------------------------------
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Credit Documents. With respect to its Loans made
or renewed by it and any Note issued to it, the Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
Lender and may exercise the same as though it were not the Agent, and the terms
LENDER and LENDERS shall include the Agent in its individual capacity.
10.09 SUCCESSOR AGENT. The Agent may resign as Agent upon
---------------
ten (10) days' notice to the Lenders. If the Agent shall resign as Agent under
this Agreement, then the Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower. If a successor Agent shall not have been so appointed within said
ten (10) day period, the Agent, with the approval of the Borrower, shall
appoint from among the Lenders a successor agent for the Lenders. Any such
successor agent shall succeed to the rights, powers and duties of the Agent,
and the term AGENT shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes.
After any retiring Agent's resignation 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 the Agent under this Agreement.
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SECTION 11. MISCELLANEOUS.
-------------
11.01 NOTICES. Unless otherwise expressly stated notices
-------
and communications under this Agreement and the other Credit Documents shall be
in writing and shall be delivered by either (i) hand-delivery, (ii) first class
mail (postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy, to the addresses and telecopy numbers listed in
this Agreement. Notice by telecopy shall be deemed to have been delivered and
received when sent. Notice by overnight courier shall be deemed to have been
delivered and received on the date scheduled for delivery. Notice by mail
shall be deemed to have been delivered and received three (3) calendar days
after the date first deposited in the United States mail. Notice by hand
delivery shall be deemed to have been delivered and received upon delivery. A
party may change its address and/or telecopier number by delivering written
notice to the other parties as specified herein.
11.02 COSTS AND EXPENSES. Whether or not the transactions
------------------
contemplated by the Credit Documents are fully consummated, the Borrower shall
promptly pay (or reimburse, as the Agent and/or any of the Lenders, as the case
may be, may elect) all costs and expenses which the Agent or the Lenders have
incurred or may hereafter incur in connection with the negotiation,
preparation, reproduction, interpretation, perfection, monitoring,
administration and enforcement of the Credit Documents, the collection of all
amounts due under the Credit Documents, and all amendments, modifications,
consents or waivers, if any, to the Credit Documents. Such costs and expenses
shall include, without limitation, the fees and disbursements of counsel to the
Agent and/or any of the Lenders (including the Agent's in-house counsel), the
costs of appraisals, costs of environmental studies, searches of public
records, costs of filing and recording documents with public offices, internal
and/or external audit and/or examination fees and costs, stamp, excise and
other taxes and costs and expenses incurred by the Agent or any of the Lenders,
and the fees of the accountants, consultants or other professionals engaged by
the Agent or the Lenders in connection with the transactions contemplated in
this Agreement and the other Credit Documents. Without limiting the generality
of the foregoing, the Borrower shall reimburse the Agent for the costs and
expenses of Shanley & Fisher, P.C., counsel to the Agent, for services rendered
in consideration with the preparation and negotiation of the Credit Documents
and matters related thereto. Such reimbursement shall be payable within ten
(10) days after presentation to the Borrower of an invoice itemizing such costs
and expenses. The Borrower's reimbursement obligations under this paragraph
shall survive any termination of the Credit Documents.
11.03 PAYMENT DUE ON A DAY OTHER THAN A BUSINESS DAY. If
----------------------------------------------
any payment due or action to be taken under this Agreement or any Credit
Document falls due or is required to be taken on a day that is not a Business
Day, such payment or action shall be made or taken on the next succeeding
Business Day and such extended time shall be included in the computation of
interest.
11.04 GOVERNING LAW. This Agreement shall be construed in
-------------
accordance with and governed by the substantive laws of the State of New Jersey
without reference to conflict of laws principles.
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11.05 COUNTERPARTS; INTEGRATION. This Agreement may be
-------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were on the same
instrument. This Agreement and the other Credit Documents constitute the sole
agreement of the parties with respect to the subject matter hereof and thereof
and supersede all oral negotiations and prior writings with respect to the
subject matter hereof and thereof.
11.06 AMENDMENT OR WAIVER. Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Required Lenders; PROVIDED, that no such
change, waiver, discharge or termination shall, without the consent of each
Lender, (i) extend the final maturity of any Loan or Note, or any portion
thereof, or reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase in
interest rates) thereon or fees payable hereunder or reduce the principal
amount thereof, or increase the Credit Commitment of any Lender over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Credit Commitment shall
not constitute a change in the terms of the Credit Commitment of any Lender),
(ii) release all or substantially all of the Collateral or any Subsidiary
Guaranty (except as expressly provided in the Credit Documents), (iii) amend,
modify or waive any provision of this Section, or Section 2.12, 2.13, 4.05,
8.18, 9.01, 9.02, 9.03, 11.02, 11.08 or 11.11; (iv) reduce any percentage
specified in, or otherwise modify, the definition of Required Lenders; (v)
alter or amend any provision hereof expressly requiring the consent of all of
the Lenders; or (vi) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement. No provision of
Section 10 may be amended without the consent of the Agent. The provisions of
Sections 2.07, 2.08, 2.09, 2.10 and 2.11 shall not be amended or modified in any
way that adversely affects the Agent with respect to its obligation to issue
Letters of Credit, without the Agent's consent.
11.07 SUCCESSORS AND ASSIGNS. This Agreement (i) shall be
----------------------
binding upon the Borrower, the Agent and the Lenders and their successors and
permitted assigns, and (ii) shall inure to the benefit of the Borrower, the
Agent and the Lenders and their respective successors and permitted assigns;
PROVIDED, HOWEVER, that the Borrower may not assign its rights hereunder or
any interest herein without the prior written consent of the Lenders, and any
such assignment or attempted assignment by the Borrower shall be void and of no
effect with respect to the Lenders.
11.08 PARTICIPATIONS AND ASSIGNMENTS. The Borrower hereby
------------------------------
acknowledges and agrees that each Lender may at any time: (I) grant
participations in all or any portion of its rights and obligations hereunder
(including, without limitation, its obligation to make advances hereunder in
accordance with its Credit Commitment) or under its Revolving Credit Note
(collectively, PARTICIPATIONS) to any other lending office or to any other bank,
lending institution or other entity which has the requisite sophistication to
evaluate the merits and risks of investments in Participations (each a
PARTICIPANT); PROVIDED, HOWEVER, that: (i) all amounts
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payable by the Borrower hereunder shall be determined as if such Lender
had not granted such Participation, such Lender (A) shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provisions of this Agreement; and (B) shall not in any event
be relieved from its obligations to make advances hereunder in accordance with
its Credit Commitment; PROVIDED, HOWEVER, that such Lender may agree with
the Participant that such Lender will not agree to any modification, amendment
or waiver of this Agreement without the consent of the Participant if such
amendment, modification or waiver would reduce the principal of or rate of
interest on the Credit Obligations so participated or postpone the date fixed
for any payment of principal of or interest on such Credit Obligations; and
(II) assign up to one hundred percent (100%) of its rights and obligations
hereunder (including, without limitation, its obligation to make advances
hereunder in accordance with its Credit Commitment) or under its Revolving
Credit Note; PROVIDED, HOWEVER, that, except with respect to assignments
between and among Lenders which are parties to this Agreement (as to which the
conditions in clauses (i) through (iii) below shall not be applicable) prior to
such assignment: (i) it has obtained the prior written consent of the Agent
(which consent shall not be unreasonably withheld); (ii) the amount assigned
shall be an amount equal to $2,000,000 or multiples of $1,000,000 in excess
thereof; and (iii) such Lender has paid to the Agent a transfer fee of $2,500.
The rights of First Fidelity Bank, National Association, in its capacity as a
Lender, to assign its rights and obligations hereunder pursuant to clause (II)
of this Section 11.08 is subject to the further restriction that First Fidelity
Bank, National Association shall not be permitted to assign a percentage of its
rights and obligations hereunder, if after giving effect to such an assignment,
it shall possess less than twenty five percent (25%) of the aggregate of all
Credit Commitments. Notwithstanding anything in this Section 11.08 to the
contrary, each Lender may sell or assign, in whole or in part, any or all of
its interest in the Credit Obligations (without the consent of any Person or
any other restriction) to (i) any Affiliate of such Lender, (ii) any Federal
Reserve Bank in connection with a pledge of said interest as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System, and (iii) any Person at any time after an Event of Default. The holder
of any sale, assignment or Participation permitted pursuant to this Section
11.08, if the applicable agreement between the relevant Lender and such holder
so provides, (i) shall be entitled to all of the rights, obligations and
benefits of a Lender hereunder and (ii) shall be deemed to hold and may exercise
the rights of set-off or banker's lien with respect to any and all obligations
of such holder to the Borrower, in each case as fully as though the Borrower
were directly indebted to such holder. The Borrower authorizes each Lender to
provide information concerning the Borrower to any prospective purchaser,
assignee or participant. The information provided may include, but is not
limited to, amounts, terms, balances, payment history, and any financial or
other information about the Borrower. The Borrower agrees to indemnify, defend,
and release any Lender that has so disclosed such information, and hold such
Lender harmless, at the Borrower's cost and expense, from and against any and
all lawsuits, claims, actions, proceedings, or suits against such Lender arising
out of or relating to such Lender's reporting or disclosure of such information.
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11.09 SEVERABILITY. The illegality or unenforceability of
------------
any provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder. In lieu of any illegal or unenforceable provision in this
Agreement, there shall be added automatically as a part of this Agreement a
legal and enforceable provision as similar in terms to such illegal or
unenforceable provision as may be possible.
11.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
----------------------------------------------
Borrower irrevocably appoints each and every senior vice president (or higher
ranking officer) of the Borrower as its attorneys upon whom may be served, by
regular or certified mail at the address set forth in this Agreement, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Agreement or any of the other Credit Documents.
The Borrower hereby consents that any action or proceeding against it may be
commenced and maintained in any court within the State of New Jersey or in the
United States District Court for the District of New Jersey by service of
process on any such officer. The Borrower and Guarantor further agree that
such courts of the State of New Jersey and the United States District Court for
the District of New Jersey shall have jurisdiction with respect to the subject
matter hereof and the person of the Borrower and all collateral for the
Obligations. Notwithstanding the foregoing, the Borrower agrees that any
action brought by the Borrower shall be commenced and maintained only in a
court in the federal judicial district or county in which the Agent has its
principal place of business in New Jersey.
11.11 CONFIDENTIALITY. Each Lender shall hold, and shall
---------------
cause its Participants and prospective Participants, if any, to agree to hold,
all non-public information obtained pursuant to the requirements of any Credit
Document which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of such nature
and in accordance with safe and sound banking practices and in any event may
make disclosure reasonably required by any bona fide assignee, transferee or
participant or as legally required or reasonably requested by any governmental
agency or representative thereof or pursuant to legal process.
11.12 INDEMNIFICATION.
---------------
(a) The Borrower agrees to indemnify the Agent and each Lender,
their respective Affiliates and each of their respective directors, officers,
agents and employees (each an INDEMNITEE) and hold each Indemnitee harmless
from and against any and all liabilities, losses, damages, costs and expenses
of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement, the other Credit
Documents or any actual or proposed use of proceeds of Loans hereunder;
PROVIDED that no Indemnitee shall have the right to be indemnified
hereunder for
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such Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
(b) Without limiting the generality of the foregoing, the
Borrower shall indemnify, defend and hold harmless each Indemnitee with respect
to any and all claims, expenses, demands, losses, costs, fines or liabilities
of any kind (including, without limitation, those involving death, personal
injury or property damage and including reasonable attorneys fees and costs)
arising from or in any way related to any hazardous materials or a dangerous
environmental condition within, on, from, related to or affecting any real
property owned or occupied by the Borrower including, without limitation, any
and all claims that may arise as a result of an intentional or unintentional
act or omission of the Borrower, any previous owner and/or operator of real
property owned or occupied by the Borrower that resulted in the Dumping of
hazardous substances or wastes into the atmosphere or waters or onto the lands
and that resulted in damage to the Natural Resources or to any persons or
property.
(c) If, after receipt of any payment of all or any part of the
Obligations, any Lender is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible set-off, or a diversion
of trust funds), then this Agreement and the other Credit Documents shall
continue in full force and effect, and the Borrower shall be liable for, and
shall indemnify, defend and hold harmless such Lender with respect to, the full
amount so surrendered.
(d) The provisions of this subsection shall survive the
termination of this Agreement and the other Credit Documents and shall be and
remain effective notwithstanding the payment of the Obligations, the release of
any security interest, lien or encumbrance securing the Obligations or any
other action which the Lenders may have taken in reliance upon their receipt of
such payment. Any action by the Lenders shall be deemed to have been
conditioned upon any payment of the Obligations having become final and
irrevocable.
11.13 INCONSISTENCIES. The Credit Documents are intended
---------------
to be consistent. However, in the event of any inconsistencies between this
Agreement and any of the other Credit Documents, the terms of this Agreement
shall govern, but such inconsistency shall not otherwise affect the validity or
enforceability of such inconsistent Credit Document.
11.14 HEADINGS. The headings of sections and paragraphs
--------
have been included herein for convenience only and shall not be considered in
interpreting this Agreement.
11.15 EXHIBITS AND ANNEXES. The Exhibits and Annexes
--------------------
attached hereto and the provisions thereof, are incorporated herein.
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11.16 JUDICIAL PROCEEDING; WAIVERS.
----------------------------
(I) EACH PARTY TO THIS AGREEMENT AGREES THAT ANY SUIT, ACTION OR
PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY ANY PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF
ANY PARTY, ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT
AND NOT BY A JURY.
(II) EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, EACH PARTY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
(III) THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE
LENDERS WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties by themselves or their duly
authorized representatives have executed this Agreement the day and year first
above written.
WITNESS OR ATTEST: HOOPER HOLMES, INC.
By: /s/ Robert W. Jewett By: /s/ Fred Lash
----------------------------- -----------------------------
Name: Robert William Jewett Name: Fred Lash
Title: S.V.P., General Counsel Title: S.V.P., C.F.O. &
and Secretary Treasurer
Address: 170 Mt. Airy Road Address: 170 Mt. Airy Road
Basking Ridge, NJ 07920 Basking Ridge, NJ 07920
Attn: Fred Lash
Senior Vice President,
Chief Financial Officer
and Treasurer
Telecopier No.: (908) 953-6304
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, INDIVIDUALLY AND AS AGENT
By: /s/ William E. Johnston
Credit Commitment: -----------------------------
$17,000,000.00 Name: William E. Johnston
Title: Vice President
Address: 1889 Highway #27, NO2701
Edison, NJ 08817
Telecopier No.: (908) 985-4651
Payment Office:
Address: 1889 Highway #27, NO2701
Edison, NJ 08817
Telecopier No.: (908) 985-4651
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MIDLANTIC BANK, N.A.
Credit Commitment: By: /s/ Michael A. Richards
$17,000,000.00 --------------------------------
Name: Michael A. Richards
Title: Assistant Vice President
Address: Metro Park Plaza
499 Thornall Street
P.O. Box 600
Edison, NJ 08818-0600
Telecopier No.: (908) 321-2144
Payment Office:
Address: Metro Park Plaza
499 Thornall Street
P.O. Box 600
Edison, NJ 08818-0600
Telecopier No.: (908) 321-2144
BROWN BROTHERS HARRIMAN & CO.
Credit Commitment: By: /s/ William J. Whelan, Jr.
$6,000,000.00 -----------------------------
Name: William J. Whelan, Jr.
Title: Manager
Address: 40 Water Street
Boston, MA 02109
Attn: Victoria E. Carson
Telecopier No.: (617) 589-3178
Payment Office:
Address: 40 Water Street
Boston, MA 02109
Telecopier No.: (617) 589-3178
Total Credit Commitment:
$40,000,000
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