EXHIBIT 4.6
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MAY 18, 1998
AMONG
EVEREST HEALTHCARE SERVICES CORPORATION,
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
and
the Lenders
which are or become parties hereto
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TABLE OF CONTENTS
Page
SECTION 1. THE CREDITS.......................................................... 1
Section 1.1. Revolving Credit................................................. 1
Section 1.2. Revolving Loans.................................................. 2
Section 1.3. Letters of Credit................................................ 2
(a) General Terms.................................................... 2
(b) Applications..................................................... 2
(c) The Reimbursement Obligation..................................... 3
(d) The Participating Interests...................................... 4
(e) Indemnification.................................................. 5
Section 1.4. Acquisition Financing Credit..................................... 5
Section 1.5. Supplemental Revolving Credit.................................... 6
Section 1.6. Manner of Borrowing Loans........................................ 8
(a) Generally........................................................ 8
(b) Reimbursement Obligation......................................... 8
(c) Agent Reliance on Bank Funding................................... 8
(d) Reliance......................................................... 9
Section 1.7. Commitment Conversion Option..................................... 9
SECTION 2. INTEREST............................................................. 9
Section 2.1. Options.......................................................... 9
Section 2.2. Domestic Rate Portion............................................ 10
Section 2.3. LIBOR Portions................................................... 10
Section 2.4. Manner of Rate Selection......................................... 11
Section 2.5. Change of Law.................................................... 11
Section 2.6. Unavailability of Deposits or Inability to Ascertain the
Adjusted LIBOR Rate.............................................. 11
Section 2.7. Taxes and Increased Costs........................................ 12
Section 2.8. Funding Indemnity................................................ 13
Section 2.9. Lending Branch................................................... 13
Section 2.10. Discretion of Lenders as to Manner of Funding.................... 13
Section 2.11. Computation of Interest.......................................... 14
Section 2.12. Capital Adequacy................................................. 14
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND
NOTATIONS............................................................ 14
Section 3.1. Revolving Credit Commitment Fee.................................. 14
Section 3.2. Acquisition Financing Commitment Fee............................. 14
Section 3.3. Letter of Credit Fees............................................ 15
Section 3.4. Audit Fees....................................................... 15
Section 3.5. Agent's Fee...................................................... 15
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Section 3.6. Voluntary Prepayments............................................ 15
Section 3.7. Mandatory Prepayments............................................ 16
Section 3.8. Terminations..................................................... 17
Section 3.9. Place and Application............................................ 19
Section 3.10. Notations and Requests........................................... 20
SECTION 4. THE COLLATERAL AND GUARANTIES........................................ 21
Section 4.1. Collateral....................................................... 21
Section 4.2. Guaranties....................................................... 21
Section 4.3. Further Assurances............................................... 21
Section 4.4. Liens on After-Acquired Real Property............................ 21
Section 5. REPRESENTATIONS AND WARRANTIES....................................... 21
Section 5.1. Organization and Qualification................................... 22
Section 5.2. Subsidiaries..................................................... 22
Section 5.3. Corporate Authority and Validity of Obligations.................. 22
Section 5.4. Use of Proceeds; Margin Stock.................................... 23
Section 5.5. Financial Reports................................................ 23
Section 5.6. No Material Adverse Change....................................... 24
Section 5.7. Full Disclosure.................................................. 24
Section 5.8. Trademarks, Franchises, and Licenses............................. 24
Section 5.9. Governmental Authority and Licensing............................. 24
Section 5.10. Good Title....................................................... 24
Section 5.11. Litigation and Other Controversies............................... 24
Section 5.12. Taxes............................................................ 25
Section 5.13. Approvals........................................................ 25
Section 5.14. Affiliate Transactions........................................... 25
Section 5.15. Investment Company; Public Utility Holding Company............... 25
Section 5.16. ERISA............................................................ 25
Section 5.17. Compliance with Laws............................................. 26
Section 5.18. Other Agreements................................................. 26
Section 5.19. No Default....................................................... 26
Section 5.20. Solvency......................................................... 26
SECTION 6. CONDITIONS PRECEDENT................................................. 26
Section 6.1. All Advances..................................................... 26
Section 6.2. Initial Advance.................................................. 27
SECTION 7. COVENANTS............................................................ 29
Section 7.1. Maintenance of Business.......................................... 29
Section 7.2. Maintenance of Properties........................................ 29
Section 7.3. Taxes and Assessments............................................ 29
Section 7.4. Insurance........................................................ 29
Section 7.5. Financial Reports................................................ 30
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Section 7.6. Inspection....................................................... 32
Section 7.7. Current Ratio.................................................... 32
Section 7.8. Total Senior Funded Debt to Total Capitalization................. 32
Section 7.9. Leverage Ratios.................................................. 32
Section 7.10. Net Worth........................................................ 33
Section 7.11. Fixed Charge Coverage Ratio...................................... 33
Section 7.12. Dialysis Patients................................................ 33
Section 7.13. Indebtedness for Borrowed Money.................................. 34
Section 7.14. Liens............................................................ 35
Section 7.15. Investments, Acquisitions, Loans, Advances and Guaranties........ 36
Section 7.16. Mergers, Consolidations and Sales................................ 39
Section 7.17. Maintenance of Subsidiaries...................................... 39
Section 7.18. Dividends and Certain Other Restricted Payments.................. 40
Section 7.19. ERISA............................................................ 41
Section 7.20. Compliance with Laws............................................. 41
Section 7.21. Burdensome Contracts with Affiliates............................. 41
Section 7.22. No Changes in Fiscal Year........................................ 41
Section 7.23. Formation of Subsidiaries........................................ 41
Section 7.24. Change in the Nature of Business................................. 41
Section 7.25. Subordinated Debt................................................ 42
Section 7.26. Use of Loan Proceeds............................................. 42
Section 7.27. Assets and Earnings Concentrations............................... 42
Section 7.28. No Restrictions on Subsidiary Distributions...................... 42
SECTION 8. EVENTS OF DEFAULT AND REMEDIES....................................... 42
Section 8.1. Events of Default................................................ 42
Section 8.2. Non-Bankruptcy Remedies.......................................... 44
Section 8.3. Bankruptcy Remedies.............................................. 45
Section 8.4. Collateral for Undrawn Letters of Credit......................... 45
SECTION 9. DEFINITIONS; INTERPRETATIONS......................................... 45
Section 9.1. Definitions...................................................... 45
Section 9.2. Interpretation................................................... 60
SECTION 10. THE AGENT............................................................ 61
Section 10.1. Appointment and Authorization.................................... 61
Section 10.2. Rights as a Lender............................................... 61
Section 10.3. Standard of Care................................................. 61
Section 10.4. Costs and Expenses............................................... 62
Section 10.5. Indemnity........................................................ 62
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SECTION 11. MISCELLANEOUS........................................................ 63
Section 11.1. Withholding Taxes................................................ 63
(a) Payments Free of Withholding..................................... 63
(b) U.S Withholding Tax Exemptions................................... 63
(c) Inability of Lender to Submit Forms.............................. 64
Section 11.2. Non-Business Days................................................ 64
Section 11.3. No Waiver, Cumulative Remedies................................... 64
Section 11.4. Waivers, Modifications and Amendments............................ 64
Section 11.5. Costs and Expenses............................................... 64
Section 11.6. Documentary Taxes................................................ 66
Section 11.7. Survival of Representations...................................... 66
Section 11.8. Construction..................................................... 66
Section 11.9. Notices.......................................................... 66
Section 11.10. Lender's Obligations Several..................................... 67
Section 11.11. Headings......................................................... 67
Section 11.12. Severability of Provisions....................................... 67
Section 11.13. Counterparts..................................................... 67
Section 11.14. Binding Nature and Governing Law................................. 67
Section 11.15. Entire Understanding............................................. 67
Section 11.16. Extension of the Revolving Credit Commitments.................... 67
Section 11.17. Participations................................................... 68
Section 11.18. Assignment Agreements............................................ 68
Section 11.19. Confidentiality.................................................. 69
Section 11.20. Reaffirmation of Collateral Documents............................ 70
Section 11.21. Submission to Jurisdiction; Waiver of Jury Trial................. 70
Signature Page.......................................................................... 71
EXHIBIT A - Revolving Credit Note
EXHIBIT B - Notice of Payment Request
EXHIBIT C - Acquisition Financing Note
EXHIBIT D - Term Note
EXHIBIT E - Supplemental Revolving Credit Note
EXHIBIT F - Borrowing Base Certificate
EXHIBIT G - Compliance Certificate
EXHIBIT H - Opinion of Counsel
EXHIBIT I - Assignment and Acceptance
SCHEDULE 5.2 - Subsidiaries
SCHEDULE 5.12 - Tax Matters
SCHEDULE 5.14 - Affiliate Transactions
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
and the other Lenders from time to time party hereto
Ladies and Gentlemen:
The undersigned, Everest Healthcare Services Corporation, a Delaware
corporation (the "Company"), refers to that certain Credit Agreement dated as of
April 16, 1996, as amended and restated by that certain Amended and Restated
Credit Agreement dated as of May 15, 1997, as amended, currently in effect among
the Company, Harris Trust and Savings Bank, as agent, and the lenders party
thereto (the "Original Credit Agreement"). The Company hereby requests that the
aggregate commitments available under the Original Credit Agreement be
increased, that certain additional amendments be made to the Original Credit
Agreement and, for the sake of clarity and convenience, that the Original Credit
Agreement be restated in its entirety as so amended. This Second Amended and
Restated Credit Agreement amends and replaces in its entirety the Original
Credit Agreement, and from the Effective Date all references made to the
Original Credit Agreement in any Loan Document or in any other instrument or
document shall, without more, be deemed to refer to this Second Amended and
Restated Credit Agreement. This Second Amended and Restated Credit Agreement
shall become effective as of May 18, 1998 (the "Effective Date"), and supersedes
all provisions of the Original Credit Agreement as of such date, upon the
execution of this Second Amended and Restated Credit Agreement by each of the
parties hereto and the fulfillment of the conditions precedent contained in
Section 6.2 hereof.
SECTION 1. THE CREDITS.
Section 1.1. Revolving Credit. Subject to the terms and conditions hereof,
each Lender, by its acceptance hereof, severally agrees to extend a revolving
credit (the "Revolving Credit") to the Company in the aggregate amount of such
Lender's commitment to extend the Revolving Credit as set forth on the
applicable signature page hereof or pursuant to Section 11.18 hereof (its
"Revolving Credit Commitment" and cumulatively for all Lenders the "Revolving
Credit Commitments") (subject to any reductions thereof pursuant to the terms
hereof) prior to the Termination Date. The Revolving Credit, subject to all of
the terms and conditions hereof, may be utilized by the Company in the form of
Revolving Loans and Letters of Credit, all as more fully hereinafter set forth;
provided, however, that the aggregate principal amount of the Revolving Loans
and L/C Obligations outstanding at any one time shall not at any time exceed the
lesser of (i) the Revolving Credit Commitments then in effect and (ii) the
Borrowing Base as then determined and computed. During the period from and
including the date thereof to but not including the Termination Date, the
Company may use the Revolving Credit Commitments by borrowing, repaying and
reborrowing Revolving Loans in whole or in part and/or by having the Agent issue
Letters of Credit, having such Letters of Credit expire or otherwise terminate
without
having been drawn upon or, if drawn upon, reimbursing the Agent for each such
drawing, and having the Agent issue new Letters of Credit, all in accordance
with the terms and conditions of this Agreement. For all purposes of this
Agreement, where a determination of the unused or available amount of the
Revolving Credit Commitments is necessary, the Revolving Loans and L/C
Obligations shall all be deemed to utilize the Revolving Credit Commitments. The
obligations of the Lenders hereunder are several and not joint, and no Lender
shall under any circumstances be obligated to extend credit hereunder in excess
of its Revolving Credit Commitment.
Section 1.2. Revolving Loans. Subject to the terms and conditions hereof,
the Revolving Credit may be availed of in the form of loans (individually a
"Revolving Loan" and collectively the "Revolving Loans"). Each Borrowing of
Revolving Loans shall be made ratably by the Lenders in accordance with their
Percentages. Each Borrowing of Revolving Loans shall be in an amount of $50,000
or such greater amount which is an integral multiple of $50,000; provided,
however, that (i) a Borrowing made to repay a Reimbursement Obligation may be
made in the amount thereof and (ii) a Borrowing of Revolving Loans, or any part
thereof, which bears interest with reference to the Adjusted LIBOR Rate shall be
in such greater amount as is required by Section 2 hereof. All Revolving Loans
made by a Lender shall be evidenced by a single Revolving Credit Note of the
Company (individually a "Revolving Credit Note" and collectively the "Revolving
Credit Notes", which shall include the Revolving Credit Notes issued pursuant to
Section 11.18 hereof) payable to the order of such Lender in the amount of its
Revolving Credit Commitment, each Revolving Credit Note to be in the form (with
appropriate insertions) attached hereto as Exhibit A. Each Revolving Credit
Note shall be dated the date of issuance thereof, be expressed to bear interest
as set forth in Section 2 hereof, and be expressed to mature on the Termination
Date. Without regard to the principal amount of each Revolving Credit Note
stated on its face, the actual principal amount at any time outstanding and
owing by the Company on account thereof shall be the sum of all Revolving Loans
then or theretofore made thereon less all payments of principal actually
received thereon.
Section 1.3. Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, as part of
the Revolving Credit, the Agent shall issue standby letters of credit (each a
"Letter of Credit") for the account of the Company in U.S. Dollars in an
aggregate undrawn face amount up to the amount of the L/C Commitment. Each
Letter of Credit shall be issued by the Agent, but each Lender shall be
obligated to reimburse the Agent for such Lender's Percentage of the amount of
each draft drawn under a Letter of Credit and, accordingly, each Letter of
Credit shall be deemed to utilize the Revolving Credit Commitment of each Lender
pro rata in accordance with its Percentage thereof.
(b) Applications. At any time before the Termination Date, the Agent
shall, at the request of the Company, issue one or more Letters of Credit to or
for the account of the Company in a form satisfactory to the Agent, with
expiration dates no later than 12 months from the date of issuance (or be
cancelable not later than 12 months from the date of issuance and each renewal),
in an aggregate face amount as set forth above, upon the receipt
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of an application for the relevant Letter of Credit in the form then customarily
prescribed by the Agent duly executed by the Company (each an "Application").
For purposes of this Agreement and the other Loan Documents, Harris Trust and
Savings Bank Standby Letter of Credit SPL no. 33769 issued for the account of
WSKC Dialysis Services, Inc. (f/k/a West Suburban Kidney Center, S.C.) in favor
of BankAmerica Trust & Banking Corporation (Cayman) Limited shall be deemed a
Letter of Credit issued under this Agreement, and the Company agrees that from
and after the date of this Agreement the Company shall be jointly and severally
liable with WSKC Dialysis Services, Inc. for all obligations owing to Harris
Trust and Savings Bank with respect to such Letter of Credit, including all
reimbursement obligations arising under or relating to that certain Application
and Agreement for Irrevocable Standby Letter of Credit dated December 8, 1989,
as amended, with respect thereto (which agreement shall be deemed an Application
for all purposes of this Agreement and the other Loan Documents). On the
Termination Date, the Company shall pay to the Agent an amount equal to the
aggregate amounts undrawn on all Letters of Credit which are outstanding on that
date to be held as cash collateral for the Obligations of the Company with
respect to such Letters of Credit. Notwithstanding anything contained in any
Application to the contrary, (i) the obligation of the Company to pay fees in
connection with each Letter of Credit shall be as set forth in Section 3.3
hereof and (ii) except during the existence of an Event of Default, the Agent
will not call for the funding by the Company of any amount under a Letter of
Credit, or any other form of collateral security for the obligations of the
Company in connection with such Letter of Credit, before being presented with a
drawing thereunder other than the collateral security contemplated by this
Agreement and the Collateral Documents. The Agent will promptly notify the
Lenders of each issuance by the Agent of a Letter of Credit. If the Agent issues
any Letter of Credit with an expiration date that is automatically extended
unless the Agent gives notice that the expiration date will not so extend beyond
its then scheduled expiration date, the Agent will give such notice of non-
renewal before the time necessary to prevent such automatic extension if, before
such required notice date, (i) the expiration date of such Letter of Credit if
so extended would be after the Termination Date, (ii) the Revolving Credit
Commitments have been terminated or (iii) a Default or an Event of Default has
occurred and is continuing and the Required Lenders have given the Agent
instructions not to so permit the extension of the expiration date of such
Letter of Credit. The Agent agrees to issue amendments to the Letter(s) of
Credit increasing the amount, or extending the expiration date, thereof at the
request of the Company subject to the conditions of Section 6 and the other
terms of this Section 1.3. Without limiting the generality of the foregoing, the
Agent will not issue, amend or extend the expiration date of any Letter of
Credit if any Lender notifies the Agent of any failure to satisfy or otherwise
comply with the conditions and terms of Section 6 and of this Section 1.3 and
directs the Agent not to take such action.
(c) The Reimbursement Obligation. Subject to Section 1.3(b) hereof, the
obligation of the Company to reimburse the Agent for all drawings under a Letter
of Credit (a "Reimbursement Obligation") shall be governed by the Application
related to such Letter of Credit, except that (i) reimbursement of each drawing
shall be made in immediately available funds at the Agent's principal office in
Chicago, Illinois by no later than 12:00 noon Chicago time on the date when such
drawing is paid if the Company has been informed of such drawing by the Agent on
or before 11:30 a.m. Chicago time on the date when such
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drawing is paid or, if notice of such drawing is given to Company after 11:30
a.m. Chicago time on the date when such drawn is paid, by the end of such day
and (ii) the Company's Reimbursement Obligation shall bear interest (which the
Company hereby promises to pay), whether before or after judgment, until payment
in full thereof at the rate per annum equal to 2% plus the Applicable Margin for
Revolving Loans plus the Domestic Rate as in effect from time to time. If the
Company does not make any such reimbursement payment on the date due and the
Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the Agent in
discharge of any of the relevant Reimbursement Obligations shall be distributed
in accordance with Section 1.3(d) below.
(d) The Participating Interests. Each Lender (other than the Lender then
acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Lender (a "Participating Lender"), an undivided percentage
participating interest (a "Participating Interest"), to the extent of its
Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by the Company to pay any
Reimbursement Obligation in respect of a Letter of Credit at the time required
on the date the related drawing is paid, as set forth in Section 1.3(c) above,
or if the Agent is required at any time to return to the Company or to a
trustee, receiver, liquidator, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Lender shall, not
later than the Business Day it receives a certificate in the form of Exhibit B
hereto from the Agent to such effect, if such certificate is received before
2:00 p.m. Chicago time, or not later than the following Business Day, if such
certificate is received after such time, pay to the Agent an amount equal to
such Lender's Percentage of such unpaid or recaptured Reimbursement Obligation
together with interest on such amount accrued from the date the related payment
was made by the Agent to the date of such payment by such Participating Lender
at a rate per annum equal to (i) from the date the related payment was made by
the Agent to the date 2 Business Days after payment by such Participating Lender
is due hereunder, the Federal Funds Rate for each such day and (ii) from the
date 2 Business Days after the date such payment is due from such Participating
Lender to the date such payment is made by such Participating Lender, the
Domestic Rate in effect for each such day. Each such Participating Lender shall
thereafter be entitled to receive its Percentage of each payment received in
respect of the relevant Reimbursement Obligation and of interest paid thereon,
with the Agent retaining its Percentage as a Lender hereunder.
The several obligations of the Participating Lenders to the Agent under
this Section 1.3 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Lender may have or
have had against the Company, the Agent, any other Lender or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of any Revolving Credit Commitment of any Lender, and each payment
by a Participating Lender under this Section 1.3 shall be made without any
offset, abatement, withholding or reduction whatsoever. The Agent shall be
entitled to offset amounts received
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for the account of a Lender under this Agreement against unpaid amounts due from
such Lender to the Agent hereunder (whether as fundings of participations,
indemnities or otherwise), but shall not be entitled to offset against amounts
owed to the Agent by any Lender arising outside this Agreement.
(e) Indemnification. The Participating Lenders shall, to the extent of
their respective Percentages, indemnify the Agent (to the extent not reimbursed
by the Company) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from the Agent's gross negligence or willful misconduct) that the Agent may
suffer or incur in connection with any Letter of Credit. The obligations of the
Participating Lenders under this Section 1.3(e) and all other parts of this
Section 1.3 shall survive termination of this Agreement, the Applications, and
all drafts and any other documents presented in connection with a drawing under
any Letter of Credit.
Section 1.4. Acquisition Financing Credit. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make on or after the date of
this Agreement one or more loans (individually an "Acquisition Financing Loan"
and collectively the "Acquisition Financing Loans") to the Company in the
aggregate amount of such Lender's commitment to make its Acquisition Financing
Loans as set forth on the applicable signature page hereof or pursuant to
Section 11.18 hereof (its "Acquisition Financing Commitment" and cumulatively
for all Lenders the "Acquisition Financing Commitments") (subject to increases
thereof pursuant to Section 1.7 hereof and to any reductions thereof pursuant to
the terms hereof) prior to the Acquisition Financing Termination Date. Each
Borrowing of Acquisition Financing Loans shall be made ratably by the Lenders in
accordance with their Percentages. Each Borrowing of Acquisition Financing Loans
shall be in an amount of $250,000 or such greater amount which is an integral
multiple of $100,000; provided, however, that a Borrowing of Acquisition
Financing Loans, or any part thereof, which bears interest with reference to the
Adjusted LIBOR Rate shall be in such greater amount as is required by Section 2
hereof. The principal amount of each Acquisition Financing Loan shall
permanently reduce the amount available to the Company under each Lender's
Acquisition Financing Commitment, and no amount repaid or prepaid on any
Acquisition Financing Loan may be borrowed again. The proceeds of each
Acquisition Financing Loan shall be used solely for the purposes set forth in
Section 5.4(d) hereof. All Acquisition Financing Loans made by a Lender to the
Company shall initially be evidenced by a single Acquisition Financing Note of
Company (individually an "Acquisition Financing Note" and collectively the
"Acquisition Financing Notes", which shall include the Acquisition Financing
Notes issued pursuant to Section 11.18 hereof) payable to the order of such
Lender in the amount of its Acquisition Financing Commitment, each Acquisition
Financing Note to be in the form (with appropriate insertions) attached hereto
as Exhibit C. Each Acquisition Financing Note shall be dated the date of
issuance thereof, be expressed to bear interest as set forth in Section 2
hereof, and be expressed to mature on the Acquisition Financing Termination
Date. Without regard to the principal amount of each Acquisition Financing Note
stated on its face, the actual principal amount at any time outstanding and
owing by the Company on account thereof shall be the sum of all Acquisition
Financing Loans then or theretofore made thereon less all payments of principal
actually received
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thereon and all amounts refinanced and evidenced by a Term Note as provided in
Section 1.4(b) below. The obligations of the Lenders hereunder are several and
not joint, and no Lender shall under any circumstances be obligated to extend
credit hereunder in excess of its Acquisition Financing Commitment.
(b) Subject to the terms and conditions hereof, the Company shall have the
option on or prior to the Acquisition Financing Termination Date to convert all
or any part of the outstanding Acquisition Financing Loans into one or more term
loans (individually a "Term Loan" and collectively the "Term Loans"). Each
Borrowing of Term Loans shall be made ratably by the Lenders in accordance with
their Percentages of the outstanding Acquisition Financing Loans being
converted. Each Borrowing of Term Loans shall be in an amount of $5,000,000 or
such greater amount which is an integral multiple of $1,000,000; provided,
however, that (i) a Borrowing made in connection with the conversion of all then
outstanding Acquisition Financing Loans and which is accompanied by the
termination in whole of the Acquisition Financing Commitments may be made in the
amount of the outstanding Acquisition Financing Loans being so converted and
(ii) a Borrowing of Term Loans, or any part thereof, which bears interest with
reference to the Adjusted LIBOR Rate shall be in such greater amount as is
required by Section 2 hereof. Each Term Loan made by a Lender shall be
evidenced by a Term Note of the Company (individually a "Term Note" and
collectively the "Term Notes", which shall include the Term Notes issued
pursuant to Section 11.18 hereof) payable to the order of such Lender in an
amount equal to such Lender's Percentage of the Acquisition Financing Loans
converted, each Term Note to be in the form (with appropriate insertions)
attached hereto as Exhibit D. Each Term Note shall be dated the date of
issuance thereof, be expressed to bear interest as set forth in Section 2
hereof, and be expressed to mature in 20 consecutive quarterly principal
installments, with the first 19 principal installments of a Term Note to be in
an amount equal to 1/28th of the original principal amount of the Term Loan
evidenced thereby, commencing on the date which is three calendar months after
the date on which the relevant Acquisition Financing Loans are converted into
such Term Loan and continuing on the same date of each and every third calendar
month thereafter (or if no such date exists for any one or more of such
installments, then on the last day of such third calendar month), with a final
payment of both principal and interest not sooner paid due on the fifth
anniversary date of the date on which the relevant Acquisition Financing Loans
were converted into the relevant Borrowing of Term Loans. The principal amount
of each Term Loan made by Lender hereunder shall concurrently reduce by like
amount the amount outstanding under its Acquisition Financing Note, and no
amount repaid or prepaid on any Term Loan may be borrowed again. Any
Acquisition Financing Loans which are not converted into Term Loans pursuant to
this Section 1.4(b) shall be due and payable on the Acquisition Financing
Termination Date.
Section 1.5. Supplemental Revolving Credit. (a) Subject to the terms and
conditions hereof, and only for so long as the Acquisition Financing Commitments
remain outstanding, each Lender, by its acceptance hereof, severally agrees to
extend a supplemental revolving credit (the "Supplemental Revolving Credit") to
the Company in the aggregate amount of such Lender's commitment to extend the
Supplemental Revolving Credit as set forth on the applicable signature page
hereof or pursuant to Section 11.18 hereof (its "Supplemental Revolving Credit
Commitment" and cumulatively for all Lenders the "Supplemental
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Revolving Credit Commitments") (subject to any reductions thereof pursuant to
the terms hereof) prior to the Supplemental Revolving Credit Termination Date.
The Supplemental Revolving Credit, subject to all of the terms and conditions
hereof, may be utilized by the Company in the form of loans (individually a
"Supplemental Revolving Loan" and collectively the "Supplemental Revolving
Loans"), all as more fully hereinafter set forth; provided, however, that:
(i) the aggregate principal amount of the Supplemental Revolving
Loans outstanding at any one time shall not at any time exceed the
difference between (x) the Supplemental Revolving Credit Commitments then
in effect minus (y) the aggregate amount of loans and advances made by the
Company or any Restricted Subsidiary to, and guarantees made by the Company
or any Restricted Subsidiary in respect of the obligations of, any Person
(other than Restricted Subsidiaries) in which the Company, directly or
indirectly, holds an equity interest in (determined in accordance with
Section 7.15 hereof, but determined exclusive of any such loans or advances
financed with the proceeds of a Supplemental Revolving Loan); and
(ii) the sum of the aggregate principal amount of the Supplemental
Revolving Loans at any one time outstanding plus the original principal
amount of all Acquisition Financing Loans made hereunder (without regard to
any subsequent payments of principal thereon) shall not at any time exceed
the difference of (i) $65,000,000 plus any portion (up to $5,000,000) of
the Revolving Credit Commitments converted into Acquisition Financing
Commitments pursuant to Section 1.7 hereof minus (ii) all amounts of the
Acquisition Financing Commitments voluntarily terminated pursuant to
Section 3.8 hereof.
The proceeds of each Supplemental Revolving Loan shall be used solely for the
purposes set forth in Section 5.4(b) hereof. During the period from and
including the date thereof to but not including the Supplemental Revolving
Credit Termination Date, the Company may use the Supplemental Revolving Credit
Commitments by borrowing, repaying and reborrowing Supplemental Revolving Loans
in whole or in part, all in accordance with the terms and conditions of this
Agreement.
(b) Each Borrowing of Supplemental Revolving Loans shall be made ratably by
the Lenders in accordance with their Percentages. Each Borrowing of Supplemental
Revolving Loans shall be in an amount of $50,000 or such greater amount which is
an integral multiple of $50,000; provided, however, that a Borrowing of
Supplemental Revolving Loans, or any part thereof, which bears interest with
reference to the Adjusted LIBOR Rate shall be in such greater amount as is
required by Section 2 hereof. All Supplemental Revolving Loans made by a Lender
shall be evidenced by a single Supplemental Revolving Credit Note of the Company
(individually a "Supplemental Revolving Credit Note" and collectively the
"Supplemental Revolving Credit Notes", which shall include the Supplemental
Revolving Credit Notes issued pursuant to Section 11.18 hereof) payable to the
order of such Lender in the amount of its Supplemental Revolving Credit
Commitment, each Supplemental Revolving Credit Note to be in the form (with
appropriate insertions) attached hereto as Exhibit E. Each Supplemental
Revolving Credit Note shall be dated the date of issuance thereof, be
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expressed to bear interest as set forth in Section 2 hereof, and be expressed to
mature on the Supplemental Revolving Credit Termination Date. Without regard to
the principal amount of each Supplemental Revolving Credit Note stated on its
face, the actual principal amount at any time outstanding and owing by the
Company on account thereof shall be the sum of all Supplemental Revolving Loans
then or theretofore made thereon less all payments of principal actually
received thereon. The obligations of the Lenders hereunder are several and not
joint, and no Lender shall under any circumstances be obligated to extend credit
hereunder in excess of its Supplemental Revolving Credit Commitment.
Section 1.6. Manner of Borrowing Loans.
(a) Generally. The Company shall give the Agent notice (which may be
written or oral, but if oral, promptly confirmed in writing, including notice by
telecopy) by 10:00 a.m. Chicago time on any Business Day of each request for any
Borrowing of Loans, in each case specifying the amount of each such Borrowing,
the type of Loan being requested, and the date such Borrowing is to be made
(which shall be a Business Day). The Agent shall notify each Lender of its
receipt of each such notice by 12:00 noon Chicago time on the Business Day any
Borrowing of Loans constituting the Domestic Rate Portion is to be made and by
12:00 noon Chicago time on the Business Day it receives such a request for any
Borrowing of Loans constituting a LIBOR Portion. Each Borrowing shall initially
constitute part of the relevant Domestic Rate Portion except to the extent the
Company has timely elected that such Borrowing, or any part thereof, constitute
part of a LIBOR Portion as provided in Section 2 hereof. Not later than 2:00
p.m. Chicago time on the date specified for any Borrowing of Loans to be made
hereunder, each Lender shall make the proceeds of its Loan comprising part of
such Borrowing available in immediately available funds to the Agent in Chicago,
Illinois, except in the case of the Term Loans, in which case each Lender shall
record the Term Loan made by it as part of the conversion of the Acquisition
Financing Loans, or such portion thereof, held by it into such Term Loan on its
books and records and shall effect the repayment in whole or in part, as
appropriate, of the Acquisition Financing Loans through the proceeds of such
Term Loan. Subject to all of the terms and conditions hereof, the proceeds of
each Lender's Loan shall be made available to the Company in accordance with the
instruction of the Company at the office of the Agent in Chicago, Illinois and
in funds there current.
(b) Reimbursement Obligation. In the event the Company fails to give
notice pursuant to Section 1.6(a) above of a Borrowing equal to the amount of a
Reimbursement Obligation and has not notified the Agent by 11:30 a.m. Chicago
time on the day such Reimbursement Obligation becomes due that the Company
intends to repay such Reimbursement Obligation through funds not borrowed under
this Agreement, the Company shall be deemed to have requested a Borrowing of
Revolving Loans constituting part of the Domestic Rate Portion on such day in
the amount of the Reimbursement Obligation then due, subject to Section 6
hereof, which Borrowing shall be applied to pay the Reimbursement Obligation
then due.
(c) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent
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of the proceeds of a Loan (which notice shall be effective upon receipt) that
such Lender does not intend to make such payment, the Agent may assume that such
Lender has made such payment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to the Company the
proceeds of the Loan to be made by such Lender and, if any Lender has not in
fact made such payment to the Agent, such Lender shall, on demand, pay to the
Agent the amount made available to the Company attributable to such Lender
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Company and ending
on (but excluding) the date such Lender pays such amount to the Agent at a rate
per annum equal to the Federal Funds Rate. If such amount is not received from
such Lender by the Agent immediately upon demand, the Company will, on demand,
repay to the Agent the proceeds of the Loan attributable to such Lender with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan, but without such payment being considered a payment or
prepayment of a Loan under Section 2.8 hereof, so that the Company will have no
liability under Section 2.8 with respect to such payment.
(d) Reliance. All requests for Borrowings and selection of interest rates
to be applicable thereto may be written or oral, including by telephone or
telecopy. The Company agrees that the Agent may rely on any such notice given
by any person the Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation (the Company hereby
indemnifying the Agent and Lenders from any liability or loss ensuing from such
reliance), and in the event any such telephonic or other oral notice conflicts
with any written confirmation, such oral or telephonic notice shall govern if
the Agent has acted in reliance thereon.
Section 1.7. Commitment Conversion Option. At any time prior to the
Acquisition Financing Termination Date, the Company shall have the option from
time to time to convert up to $5,000,000 of the Revolving Credit Commitments in
the aggregate into Acquisition Financing Commitments provided that (a) the
Company shall give the Agent and the Lenders not less than five (5) Business
Days prior written notice of the Company's exercise of such option, (b) the
minimum amount of Revolving Credit Commitments converted at any one time into
Acquisition Financing Commitments pursuant hereto shall not be less than
$1,000,000 at such time, or such greater amount which is an integral multiple of
$1,000,000, (c) the Revolving Credit Commitments shall be permanently reduced by
the amount so converted to Acquisition Financing Commitments, which reduction
shall be applied ratably among the Lenders in accordance with their Percentages,
and (d) after giving effect to the conversion, the Revolving Loans and L/C
Obligations then outstanding must not exceed the lesser of the Borrowing Base
then outstanding or the Revolving Credit Commitments in effect after giving
effect to such conversion.
SECTION 2. INTEREST.
Section 2.1. Options. Subject to all of the terms and conditions of this
Section 2, portions of the principal indebtedness evidenced by the Notes (all of
the indebtedness evidenced by Notes of the same type and, with respect to the
Term Notes, relating to the same Borrowing, and bearing interest at the same
rate for the same period of time being
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hereinafter referred to as a "Portion") may, at the option of the Company, bear
interest with reference to the Domestic Rate ("Domestic Rate Portions") or with
reference to the Adjusted LIBOR Rate ("LIBOR Portions"), and Portions may be
converted from time to time from one basis to the other. All of the indebtedness
evidenced by the Notes of the same type and, with respect to the Term Notes,
relating to the same Borrowing, which is not part of a LIBOR Portion shall
constitute a single Domestic Rate Portion. All of the indebtedness evidenced by
the Notes of the same type and, with respect to the Term Notes, relating to the
same Borrowing, which bears interest with reference to a particular Adjusted
LIBOR Rate for a particular Interest Period shall constitute a single LIBOR
Portion. Anything contained herein to the contrary notwithstanding, there shall
not be more than 6 LIBOR Portions applicable to Notes of the same type and, with
respect to the Term Notes, relating to the same Borrowing, outstanding at any
one time and each Lender shall have a ratable interest in each Portion. The
Company hereby promises to pay interest on each Portion applicable to it at the
rates and times specified in this Section 2.
Section 2.2. Domestic Rate Portion. Each Domestic Rate Portion shall bear
interest (which the Company hereby promises to pay at the times herein provided)
at the rate per annum determined by adding the Applicable Margin to the Domestic
Rate as in effect from time to time, provided that if a Domestic Rate Portion is
not paid when due (whether by lapse of time, acceleration or otherwise), such
Portion shall bear interest (which the Company hereby promises to pay at the
times hereinafter provided), whether before or after judgment, and until payment
in full thereof, at the rate per annum determined by adding 2% to the sum of the
Applicable Margin plus the Domestic Rate as in effect from time to time.
Interest on the Domestic Rate Portions shall be payable on the last day of each
March, June, September and December in each year and at maturity of the
applicable Notes, and interest after maturity shall be due and payable upon
demand.
Section 2.3. LIBOR Portions. Each LIBOR Portion shall bear interest (which
the Company hereby promises to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum determined by adding the
Applicable Margin to the Adjusted LIBOR Rate for such Interest Period, provided
that if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise), such Portion shall bear interest (which the Company
hereby promises to pay at the times hereinafter provided), whether before or
after judgment, and until payment in full thereof, through the end of the
Interest Period then applicable thereto at the rate per annum determined by
adding 2% to the interest rate otherwise applicable thereto and effective at the
end of such Interest Period, such LIBOR Portion shall automatically be converted
into and added to the applicable Domestic Rate Portion and shall thereafter bear
interest at the interest rate applicable to such Domestic Rate Portion after
default. Interest on each LIBOR Portion shall be due and payable on the last day
of each Interest Period applicable thereto (provided that if any Interest Period
is longer than three months, then interest on the LIBOR Portion having such
Interest Period shall be due and payable on the date occurring every three
months after the date such Interest Period began and on the last day of such
Interest Period), and interest after maturity shall be due and payable upon
demand. The Company shall notify the Agent on or before 10:00 a.m. Chicago time
on the third Business Day preceding the end of an Interest Period applicable to
a LIBOR Portion whether such LIBOR Portion is to continue as a
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LIBOR Portion, in which event the Company shall notify the Agent of the new
Interest Period selected therefor, and in the event the Company shall fail to so
notify the Agent, such LIBOR Portion shall automatically be converted into and
added to the applicable Domestic Rate Portion as of and on the last day of such
Interest Period. The Agent shall promptly notify each Lender of each notice
received from the Company pursuant to the foregoing provisions. Each LIBOR
Portion shall be in an amount equal to $500,000 or such greater amount which is
an integral multiple of $100,000. Anything contained herein to the contrary
notwithstanding, the obligation of the Lenders to create, continue or effect by
conversion any LIBOR Portion shall be conditioned upon the fact that at the time
no Default or Event of Default shall have occurred and be continuing.
Section 2.4. Manner of Rate Selection. The Company shall notify the Agent
by 10:00 a.m. Chicago time at least 3 Business Days prior to the date upon which
it requests that any LIBOR Portion be created or that any part of the applicable
Domestic Rate Portion be converted into a LIBOR Portion (such notice to specify
in each instance the amount thereof and the Interest Period selected therefor)
and the Agent shall advise each Lender of each such notice by 12:00 noon Chicago
time on the same Business Day it receives such notice. If any request is made
to convert a LIBOR Portion into the applicable Domestic Rate Portion, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the creation,
continuance or conversion of Portions under this Agreement shall, subject to
Section 2.6 hereof, be irrevocable.
Section 2.5. Change of Law. Notwithstanding any other provisions of this
Agreement or the Notes, if at any time a Lender shall determine in good faith
that any change in applicable laws, treaties or regulations or in the
interpretation thereof makes it unlawful for such Lender to create or continue
to maintain LIBOR Portions, it shall promptly so notify the Agent (which shall
in turn promptly notify the Company and the other Lenders) and the obligation of
such Lender to create, continue or maintain any LIBOR Portion under this
Agreement shall terminate until it is no longer unlawful for such Lender to
create, continue or maintain LIBOR Portions. The Company shall, on demand, if
the continued maintenance of a LIBOR Portion is unlawful, thereupon prepay the
outstanding principal amount of the LIBOR Portion, together with all interest
accrued thereon and all other amounts payable to the affected Lender with
respect thereto under this Agreement; provided, however, that the Company may
instead elect to convert the principal amount of the affected LIBOR Portion into
the applicable Domestic Rate Portion, subject to the terms and conditions of
this Agreement.
Section 2.6. Unavailability of Deposits or Inability to Ascertain the
Adjusted LIBOR Rate. Notwithstanding any other provision of this Agreement or
the Notes, if prior to the commencement of any Interest Period, (a) any Lender
shall inform the Agent that such Lender has determined that United States dollar
deposits in the amount of any LIBOR Portion scheduled to be outstanding during
such Interest Period are not readily available to such Lender in the offshore
interbank market or (b) the Required Lenders shall advise the Agent that LIBOR
as determined by the Agent will not adequately and fairly reflect the cost to
such Lenders of funding such LIBOR Portion for such Interest Period, the Agent
shall
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promptly give notice thereof to the Company and each other Lender and the
obligations of the Lenders to create, continue or effect by conversion any LIBOR
Portion in such amount and for such Interest Period shall terminate until the
circumstances giving rise to such termination no longer exist.
Section 2.7. Taxes and Increased Costs. With respect to the LIBOR Portions,
if any Lender shall determine in good faith that any change in any applicable
law, treaty, regulation or guideline (including, without limitation, Regulation
D of the Board of Governors of the Federal Reserve System) or any new law,
treaty, regulation or guideline, or any interpretation of any of the foregoing
by any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having jurisdiction
over such Lender or its lending branch or the Portions contemplated by this
Agreement (whether or not having the force of law) shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, such Lender which is not in any instance already
accounted for in computing the Adjusted LIBOR Rate;
(ii) subject such Lender, the LIBOR Portions or any Note to the
extent it evidences such Portions, to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt obligations
and any interest or penalties with respect thereto), duty, charge, stamp
tax, fee, deduction or withholding in respect of this Agreement, any LIBOR
Portion or any Note to the extent it evidences such a Portion, except such
taxes as may be measured by the overall net income or gross receipts of
such Lender or its lending branches and imposed by the jurisdiction, or any
political subdivision or taxing authority thereof, in which such Lender's
principal executive office or its lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to such Lender hereunder or under any Note to
the extent it evidences any LIBOR Portion (other than by a change in
taxation of the overall net income or gross receipts of such Lender or its
lending branches); or
(iv) impose on such Lender any penalty with respect to the foregoing
or any other condition regarding this Agreement, any LIBOR Portion, or any
Note to the extent it evidences any LIBOR Portion;
and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received or receivable by such Lender, then the
Company shall pay on demand to the Agent for the account of such Lender from
time to time as specified by such Lender such additional amounts as such Lender
shall reasonably determine are sufficient to compensate and indemnify it for
such increased cost or reduced amount. If a Lender makes such a claim for
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compensation, it shall provide to the Company (with a copy to the Agent) a
certificate setting forth in reasonable detail the computation of the increased
cost or reduced amount as a result of any event mentioned herein and such
certificate shall be deemed prima facie correct.
Section 2.8. Funding Indemnity. In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
such Lender to fund or maintain its part of any LIBOR Portion or the relending
or reinvesting of such deposits or other funds or amounts paid or prepaid to
such Lender) as a result of:
(i) any payment of a LIBOR Portion on a date other than the last day
of the then applicable Interest Period for any reason, whether before or
after default, and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by any of the Company to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement;
then, upon the demand of such Lender, the Company shall pay on demand to the
Agent for the account of such Lender such amount as will reimburse such Lender
for such loss, cost or expense. If a Lender requests such a reimbursement, it
shall provide the Company (with a copy to the Agent) with a certificate setting
forth in reasonable detail the computation of the loss, cost or expense giving
rise to the request for reimbursement and such certificate shall be deemed prima
facie correct.
Section 2.9. Lending Branch. Each Lender may, at its option, elect to
make, fund or maintain its Loans hereunder at the branches or offices specified
on the signature pages hereof or on any Assignment Agreement executed and
delivered pursuant to Section 11.18 hereof or at such other of its branches or
offices as such Lender may from time to time elect. To the extent reasonably
possible, a Lender shall designate an alternative branch or funding office with
respect to its pro rata share of the LIBOR Portions to reduce any liability of
the Company to such Lender under Section 2.7 hereof or to avoid the
unavailability of an interest rate option under Section 2.6 hereof, so long as
such designation is not otherwise disadvantageous to the Lender.
Section 2.10. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Notes in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including
determinations under Sections 2.6, 2.7 and 2.8 hereof) shall be made as if each
such Lender had actually funded and maintained its share of each LIBOR Portion
during each Interest Period applicable thereto through the purchase of deposits
in the offshore interbank market in the amount of its share of such LIBOR
Portion, having a maturity corresponding to such Interest Period and bearing an
interest rate equal to LIBOR for such Interest Period.
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Section 2.11. Computation of Interest. All interest on the Notes, and all
fees, charges and commissions due hereunder, shall be computed on the basis of a
year of 360 days for the actual number of days elapsed, except that interest on
the Domestic Rate Portions of the Notes and on Reimbursement Obligations with
respect to Letters of Credit shall be computed on the basis of a year of 365 or
366 days (as the case may be) for the actual number of days elapsed.
Section 2.12. Capital Adequacy. If any Lender shall determine that any
applicable law, rule or regulation regarding capital adequacy instituted after
the date hereof, or any change in the interpretation or administration of any
applicable law, rule or regulation regarding capital adequacy by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by such Lender (or its
lending office) with any request or directive 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 capital as a consequence of its obligations hereunder or credit
extended by it hereunder to a level below that which such Lender could have
achieved but for such law, rule, regulation, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, within 15
days after demand by such Lender, the Company shall pay to the Agent for the
account of such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Any Lender claiming compensation under this Section
shall accompany its demand for compensation with a certificate (with a copy to
the Agent) setting forth the additional amount or amounts to be paid to it
hereunder in reasonable detail, which certificate shall be conclusive if
reasonably determined. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS.
Section 3.1. Revolving Credit Commitment Fee. For the period from the
date hereof to but not including the Termination Date, the Company shall pay to
the Agent for the account of the Lenders in accordance with their Percentages a
commitment fee at the rate per annum equal to 3/8 of 1% per annum on the average
daily unused amount of the Revolving Credit Commitments hereunder. Such fee
shall be payable in arrears on the last day of each March, June, September, and
December in each year (commencing with the first of such dates after the date
hereof) and on the Termination Date.
Section 3.2. Acquisition Financing Commitment Fee. For the period from
the date hereof to but not including the Acquisition Financing Termination Date,
the Company shall pay to the Agent for the account of the Lenders in accordance
with their Percentages a commitment fee at the rate per annum equal to 1/2 of 1%
per annum on the average daily unused amount of the Acquisition Financing
Commitments hereunder. For purposes of this Section, Supplemental Revolving
Loans shall be deemed a utilization of the Acquisition Financing Commitments.
Such fee shall be payable in arrears on the last day of each March, June,
September, and December in each year (commencing with the first of such dates
after the date hereof) and on the date the Acquisition Financing Termination
Date.
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Section 3.3. Letter of Credit Fees. Quarterly in arrears, on the last day
of each March, June, September, and December in each year (commencing on the
first of such dates after the date hereof), the Company shall pay to the Agent,
for the benefit of the Lenders, a letter of credit fee at the rate of 1% per
annum applied to the daily average face amount of Letters of Credit outstanding
during such quarter. In addition, the Company shall pay to the Agent for its own
use and benefit the Agent's standard drawing, negotiation, amendment and other
administrative fees for each Letter of Credit, as such standard fees may be
established by the Agent from time to time.
Section 3.4. Audit Fees. The Company shall pay to the Agent for its own
use and benefit charges for audits of the Collateral by the Agent in such
amounts as the Agent may from time to time request (the Agent acknowledging and
agreeing that such charges shall be computed in the same manner as it at the
time customarily uses for the assessment of charges for similar collateral
audits); provided, however, that in the absence of any Default or Event of
Default, the Company shall not be required to pay the Agent for more than one
such audit per calendar year.
Section 3.5. Agent's Fee. The Company shall pay to the Agent, for its own
use and benefit, such agency and arrangement fees as may from time to time be
mutually agreed upon by the Company and the Agent.
Section 3.6. Voluntary Prepayments. The Company shall have the privilege
of prepaying the Revolving Credit Notes and the Supplemental Revolving Credit
Notes in whole or in part (but if in part, then in a minimum amount of $50,000
or such greater amount which is an integral multiple of $50,000) and the
Acquisition Financing Notes and the Term Notes in whole or in part (but if in
part, then in a minimum amount of $100,000 or such greater amount which is an
integral multiple of $100,000) at any time upon 1 Business Day's prior notice to
the Agent (such notice if received subsequent to 12:00 noon Chicago time on a
given day to be treated as though received at the opening of business on the
next Business Day), which shall promptly so notify the Lenders, by paying to the
Agent for the account of the Lenders the principal amount to be prepaid and (i)
if such a prepayment prepays the Term Notes relating to the same Borrowing in
full, accrued interest thereon to the date of prepayment, (ii) if such a
prepayment prepays the Revolving Credit Notes in full and is accompanied by the
termination in whole of the Revolving Credit Commitments, accrued interest
thereon to the date of prepayment plus any commitment fee which has accrued and
is unpaid plus any prepayment fee due under Section 3.8 hereof, (iii) if such a
prepayment prepays the Acquisition Financing Notes in full and is accompanied by
the termination in whole of the Acquisition Financing Commitments, accrued
interest thereon to the date of prepayment plus any commitment fee which has
accrued and is unpaid plus any prepayment fee due under Section 3.8 hereof, (iv)
if such a prepayment prepays the Supplemental Revolving Credit Notes in full and
is accompanied by the termination in whole of the Supplemental Revolving Credit
Commitments, accrued interest thereon to the date of prepayment plus any
prepayment fee due under Section 3.8 hereof, and (v) any amounts due to the
Lenders under Section 2.8 hereof.
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Section 3.7. Mandatory Prepayments. (a) The Company covenants and agrees
that if at any time the sum of the unpaid principal balance of the Revolving
Loans and the L/C Obligations outstanding at any one time shall be in excess of
the Borrowing Base as then determined and computed, the Company shall
immediately and without notice or demand pay over the amount of the excess to
the Agent for the account of the Lenders as and for a mandatory prepayment on
such Obligations, with each such prepayment first to be applied to the Revolving
Credit Notes until payment in full thereof with any remaining balance to be held
by the Agent as collateral security for the Obligations owing under the
Applications with respect to the Letters of Credit.
(b) On January 31st of each year (commencing January 31, 1999), the
Company shall pay over to the Agent for the account of the Lenders as and for a
mandatory prepayment on the Acquisition Financing Notes and the Term Notes an
amount equal to 50% of Excess Cash Flow for the most recently completed fiscal
year, provided that if the ratio of Total Senior Funded Debt as of the last day
of the fiscal year then ended to Adjusted EBITDA for the fiscal year then ended
is less than 3.0 to 1.0, then the mandatory prepayment due hereunder shall be
reduced to 25% of Excess Cash Flow for such year. Mandatory prepayments of the
Acquisition Financing Notes and Term Notes pursuant to this Section 3.7(b) shall
be applied first to the Term Notes then outstanding (which application shall be
made to the most recent Borrowing of Term Loans made to the Company and applied
to the several installments thereon in the inverse order of maturity) and then
to the Acquisition Financing Notes.
(c) The Company covenants and agrees that if at any time the sum of the
unpaid principal balance of the Supplemental Revolving Loans then outstanding
plus the original principal amount of all Acquisition Financing Loans made
hereunder (determined without regard to any subsequent payments of principal
thereon) shall be in excess of the difference between the sum of $65,000,000
plus any portion (up to $5,000,000) of the Revolving Credit Commitments
converted into Acquisition Financing Commitments pursuant to Section 1.7 hereof,
minus all amounts of the Acquisition Financing Commitments voluntarily
terminated pursuant to Section 3.8 hereof, the Company shall immediately and
without notice or demand pay over the amount of the excess to the Agent for the
account of the Lenders as and for a mandatory prepayment on the Supplemental
Revolving Credit Notes.
(d) If the Company or any Subsidiary shall at any time or from time to
time make or agree to make a Disposition or shall suffer an Event of Loss
resulting in Net Cash Proceeds in excess of $1,000,000 in any fiscal year of the
Company, then (x) the Company shall promptly notify the Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Cash
Proceeds to be received by the Company or such Subsidiary in respect thereof)
and (y) promptly upon, and in no event later than the Business Day after,
receipt by the Company or the Subsidiary of the Net Cash Proceeds of such
Disposition or Event of Loss, the Company shall prepay the Acquisition Financing
Notes and the Term Notes in an aggregate amount equal to 100% of the amount of
such Net Cash Proceeds; provided that in the case of each Disposition and Event
of Loss, if the Company states in its notice of such event that the Company or
the applicable Subsidiary intends to reinvest, within 180 days of the applicable
Disposition or receipt of Net Cash Proceeds from
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an Event of Loss, the Net Cash Proceeds thereof in assets in a Permitted Line of
Business, then so long as no Default or Event of Default then exists, the
Company shall not be required to make a mandatory prepayment under this Section
3.7(d) in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds
are actually reinvested in such similar assets within such 180 day period.
Promptly after the end of such 180-day period, the Company shall notify the
Agent whether the Company or such Subsidiary has reinvested such Net Cash
Proceeds in assets in a Permitted Line of Business, and to the extent such Net
Cash Proceeds have not been so reinvested, the Company shall promptly prepay the
Acquisition Financing Notes and Term Notes in the amount of such Net Cash
Proceeds not so reinvested. The amount of each such prepayment shall be applied
first to the Term Notes then outstanding (which application shall be made to the
most recent Borrowing of Term Loans made to the Company and applied to the
several installments thereon in the inverse order of maturity) and then to the
Acquisition Financing Notes. The Company acknowledges that its performance
hereunder shall not limit the rights and remedies of the Lenders for any breach
of any other provisions of this Agreement.
(e) Notwithstanding anything in Sections 3.7(a), (b), (c) or (d) to the
contrary, prior to the final maturity of the relevant Notes, the Company shall
not be required to make any prepayment of any LIBOR Portions pursuant to Section
3.7(a), (b), (c) or (d) until the last day of the Interest Period with respect
thereto (provided that, in the case of clause (d), any such cash collateral
shall have the same effect as a prepayment of the Loans for purposes of the
Senior Subordinated Notes or any issue of Subordinated Debt requiring that
Subordinated Debt be retired out of the proceeds of any such Disposition or
Event of Loss after giving effect to any mandatory prepayment of the
Obligations) so long as (i) no Default or Event of Default then exists and (ii)
an amount equal to the principal amount of such LIBOR Portions is deposited by
the Company in a segregated cash collateral account with the Agent for the
benefit of the Lenders to be held in such account on terms reasonably
satisfactory to the Agent. The amount held on deposit in such account shall if
and when requested by the Company be invested in direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America with a remaining maturity of one
year or less, or other investments mutually satisfactory to the Company and the
Agent. On the last day of such Interest Period, the amount held in such account
shall be applied so as to make such prepayment, and except during the
continuance of any Default or Event of Default, any balance remaining on deposit
in such account after such application shall be remitted to the Company.
Section 3.8. Terminations. (a) Voluntary. The Company shall have the
privilege upon 1 Business Day's prior notice to the Agent (which shall promptly
notify the Lenders) to ratably terminate the Revolving Credit Commitments and/or
the Acquisition Financing Commitments and/or the Supplemental Revolving Credit
Commitments in whole or in part (but if in part then in the amount of $500,000
or such greater amount which is an integral multiple of $500,000) and upon
payment of any prepayment premium required by the terms of the following
sentence. On the effective date of any such termination of the Commitments, or
any part thereof, the Company shall pay as a prepayment premium to the Agent for
the account of the Lenders, as liquidated damages for the loss of bargain and
not as a penalty, an amount equal to 3/8 of 1% per annum, in the case of any
termination of the
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Revolving Credit Commitments, and 1/2 of 1% per annum, in the case of any
termination of the Acquisition Financing Commitments, times the aggregate
Commitments then being terminated multiplied by a fraction, the numerator of
which is the number of days remaining in the initial 12-month term of this
Agreement and the denominator of which is 360 days. No partial terminations of
the Revolving Credit Commitments may be made below the L/C Commitment then in
effect, unless the L/C Commitment is concurrently reduced by a like amount. No
partial terminations of the Acquisition Financing Commitments may be made below
the Supplemental Revolving Credit Commitments then in effect, unless the
Supplemental Revolving Credit Commitments are concurrently reduced by a like
amount. Not later than the termination date stated in such notice, there shall
be made such payments to the Agent as may be necessary to reduce the sum of the
aggregate outstanding principal amount of the relevant Loans to the amount to
which the relevant Commitments have been reduced, together with (x) any amount
due the Lenders under this Section 3.8 and under Section 2.8 hereof and (y) in
the case of a termination in whole, all interest, fees and other amounts due on
the Obligations. The foregoing to the contrary notwithstanding, (i) no
termination of the Revolving Credit Commitment may be effected hereunder if as a
result thereof the outstanding aggregate amount of L/C Obligations would exceed
the L/C Commitment as reduced by such termination and (ii) the relevant
Commitments may not be terminated below $5,000,000 except concurrently with
their termination in whole.
(b) Mandatory Revolving Credit Terminations. If at any time Net Cash
Proceeds remain after the prepayment of the Acquisition Financing Notes and Term
Notes in full pursuant to Section 3.7(d) hereof, the Acquisition Financing
Commitments and the Revolving Credit Commitments shall terminate by an amount
equal to 100% of such excess proceeds (first to the Acquisition Financing
Commitments until reduced to zero and then to the Revolving Credit Commitments).
(c) Mandatory Termination Upon a Change of Control. After the occurrence
of a Change of Control, the Required Lenders may, by written notice to the
Company at any time on or before the date occurring 90 days after the date the
Company notifies the Lenders of such Change of Control, terminate the remaining
Commitments and all other obligations of the Lenders hereunder on the date
stated in such notice (which shall in no event be sooner than 30 days after the
occurrence of such Change of Control). On the date the Commitments are so
terminated, all outstanding Obligations (including, without limitation, all
principal of and accrued interest on the Notes) shall forthwith be due and
payable without further demand, presentment, protest, or notice of any kind and
the Company shall immediately pay to the Lenders the full amount then available
for drawing under each Letter of Credit, such amount to be held by the Agent as
collateral security for the Letters of Credit and the Applications therefor and
any remaining Obligations (the Company agreeing to immediately make such payment
on the date the Commitments are so terminated and acknowledging and agreeing
that the Lenders would not have an adequate remedy at law for the failure by the
Company to honor any such demand and that the Lenders, and the Agent on their
behalf, shall have the right to require the Company to specifically perform such
undertaking whether or not any drawings or other demands for payment have been
made under any of the Letters of Credit).
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(d) Any termination of the Commitments pursuant to this Section may not
be reinstated.
Section 3.9. Place and Application. All payments of principal, interest,
fees and any other Obligations shall be made to the Agent at its office 111 West
Monroe Street, Chicago, Illinois (or at such other place as the Agent may
specify) in immediately available and freely transferable funds at the place of
payment. All such payments shall be made without set-off or counterclaim and
without reduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholdings, restrictions
or conditions of any nature imposed by any government or political subdivision
or taxing authority thereof. Payments received by the Agent after 12:00 noon
Chicago time shall be deemed received as of the opening of business on the next
Business Day. Except as herein provided, all payments shall be received by the
Agent for the ratable account of the Lenders and shall be promptly distributed
by the Agent to the Lenders in accordance with their Percentages. Unless the
Company otherwise directs, payments (including prepayments) on any Loans shall
be deemed first applied to the applicable Domestic Rate Portion until payment in
full thereof, with any balance applied to the LIBOR Portions in the order in
which their Interest Periods expire. Any amount prepaid on the Revolving Credit
Notes or Supplemental Revolving Credit Notes may, subject to all of the terms
and conditions hereof, be borrowed, repaid and borrowed again. No amounts
prepaid on the Acquisition Financing Notes or the Term Notes may be reborrowed,
and any partial prepayments (whether voluntary or mandatory) shall be applied to
the several installments of such Notes in the inverse order of maturity. All
payments (whether voluntary or required) shall be accompanied by any amount due
the Lenders under Section 2.8 hereof, but no acceptance of such a payment
without requiring payment of amounts due under Section 2.8 shall preclude a
later demand by the Lenders for any amount due them under Section 2.8 in respect
of such payment.
Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Agent or any of the Lenders after
the occurrence and during the continuation of an Event of Default shall be
remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Agent in monitoring, verifying, protecting, preserving or
enforcing the Liens on the Collateral or by the Agent in protecting,
preserving or enforcing rights under the Loan Documents, and in any event
all costs and expenses of a character which the Company has agreed to pay
under Section 11.5 hereof (such funds to be retained by the Agent for its
own account unless the Agent has previously been reimbursed for such costs
and expenses by the Lenders, in which event such amounts shall be remitted
to the Lenders to reimburse them for payments theretofore made to the
Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Notes and the other Loan Documents, in each case
other than for principal or in reimbursement or collateralization of L/C
Obligations, ratably as
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among the Agent and the Lenders in accord with the amount of such interest
and other fees or amounts owing each;
(c) third, to the payment of the principal of the Notes and any
unpaid Reimbursement Obligations and to the Agent to be held as collateral
security for any other L/C Obligations (until the Agent is holding an
amount of cash equal to the then outstanding amount of all such L/C
Obligations), the aggregate amount paid to or held as collateral security
for the Lenders to be allocated pro rata as among the Lenders in accordance
with the then respective aggregate unpaid principal balances of their Loans
and interests in the Letters of Credit;
(d) fourth, to the Agent and the Lenders ratably in accordance with
the amounts of any other indebtedness, obligations or liabilities of the
Company owing to each of them and secured by the Collateral Documents
(other than those described in clause (e) below) unless and until all such
indebtedness, obligations and liabilities have been fully paid and
satisfied;
(e) fifth, to the payment of the Hedging Liability (if any) pro rata
as among the Lenders to whom such Hedging Liability is owed in accordance
with the then respective unpaid amounts of such liability; and
(f) fifth, to the Company or whoever else may be lawfully entitled
thereto.
In the event that the amount of any Hedging Liability is not fixed and
determined at the time any funds are to be allocated thereto pursuant to the
above provisions, such funds so allocated shall be held by the Agent as
collateral security until such Hedging Liability is fixed and determined and the
same shall then be applied to the Hedging Liability, with any surplus
reallocated among the Lenders, to cover any deficiency which would not have
existed had the exact amount of the Hedging Liability been known at the time
such funds were originally distributed.
Section 3.10. Notations and Requests. All Borrowings made against the
Notes, the status of all amounts evidenced by the Notes as constituting part of
the applicable Domestic Rate Portion or LIBOR Portion and the rates of interest
and Interest Periods applicable to such Portions shall be recorded by the
Lenders on their books or, at their option in any instance, endorsed on the
reverse side of the Notes and the unpaid principal balances and status, rates
and Interest Periods so recorded or endorsed by the Lenders shall be prima facie
evidence in any court or other proceeding brought to enforce the Notes of the
principal amount remaining unpaid thereon, the status of such Borrowings and the
interest rates and Interest Periods applicable thereto. Prior to any
negotiation of any Note, the Lender holding such Note shall endorse thereon the
status of all amounts evidenced thereby as constituting part of the Domestic
Rate Portion or LIBOR Portion and the rates of interest and the Interest Periods
applicable thereto.
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SECTION 4. THE COLLATERAL AND GUARANTIES.
Section 4.1. Collateral. The Obligations shall be secured by valid and
enforceable security interests in and liens on all now owned or hereafter
acquired accounts, general intangibles, instruments, documents, chattel paper,
investment property, inventory, equipment, real estate and certain other goods
and assets of the Company and of each Restricted Subsidiary pursuant to one or
more Collateral Documents from such Persons, each in form and substance
satisfactory to the Agent. The Obligations shall also be secured by an
assignment of key-man life insurance owned and benefiting the Company on the
life of Craig Moore for a period of not less than three years, with the amount
of such insurance to be not less than $7,500,000 from the date hereof through
and including December 31, 1998, which assignment and the life insurance policy
subject thereto shall each be in form and substance satisfactory to the Agent.
Section 4.2. Guaranties. The payment and performance of the Obligations
shall at all times be guaranteed by each Restricted Subsidiary pursuant to a
guaranty agreement executed by such Restricted Subsidiary in form and substance
satisfactory to the Agent (individually a "Guaranty" and collectively the
"Guaranties").
Section 4.3. Further Assurances. The Company agrees that it will, and
will cause each Restricted Subsidiary to, from time to time at the request of
the Agent or the Required Lenders, execute and deliver such documents and do
such acts and things as the Agent or the Required Lenders may reasonably request
in order to provide for or perfect or protect such Liens on the Collateral. In
the event the Company or any Restricted Subsidiary forms or acquires any
Restricted Subsidiary after the date hereof, the Company shall within 10
Business Days of such formation or acquisition cause such newly formed or
acquired Restricted Subsidiary to execute a Guaranty and such Collateral
Documents as the Agent may then require, and the Company shall also deliver, or
cause such Restricted Subsidiary to deliver, at the Company's cost and expense,
such other instruments, documents, certificates, and opinions required by the
Agent in connection therewith.
Section 4.4. Liens on After-Acquired Real Property. In the event that the
Company or any Restricted Subsidiary owns or hereafter acquires any real
property, at the request of the Required Lenders, the Company shall, or shall
cause such Restricted Subsidiary to, execute and deliver to the Agent (or a
security trustee therefor) a mortgage or deed of trust acceptable in form and
substance to the Agent for the purpose of granting to the Agent for the benefit
of the Lenders a lien on such real property to secure the Obligations, shall pay
all taxes, costs and expenses incurred by the Agent in recording such mortgage
or deed of trust, and shall at its expense supply to the Agent a Phase I
environmental site assessment, a survey and a mortgagee's policy of title
insurance from a title insurer reasonably acceptable to the Agent insuring the
validity of such mortgage or deed of trust and its status as a first lien
(subject to liens permitted by this Agreement) on the real property encumbered
thereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders as follows:
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Section 5.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying.
Section 5.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying. Schedule 5.2 hereto (as the same may be
deemed amended pursuant to Section 7.15(g) or 7.16 hereof) identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Company and the
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 5.2 (as the same may be deemed amended
pursuant to Section 7.15(g) or 7.16 hereof) as owned by the Company or a
Subsidiary are owned, beneficially and of record, by the Company or such
Subsidiary free and clear of all Liens other than the Liens granted in favor of
the Agent pursuant to the Collateral Documents. Except as disclosed on Schedule
5.2 hereof, there are no outstanding commitments or other obligations of any
Subsidiary to issue, and no options, warrants or other rights of any Person to
acquire, any shares of any class of capital stock or other equity interests of
any Subsidiary.
Section 5.3. Corporate Authority and Validity of Obligations. The Company
has full right and authority to enter into this Agreement and the other Loan
Documents executed by it, to make the borrowings herein provided for, to issue
its Notes in evidence thereof, to grant to the Agent the Liens described in the
Collateral Documents executed by the Company, and to perform all of its
obligations hereunder and under the other Loan Documents executed by it. Each
Restricted Subsidiary has full right and authority to enter into the Loan
Documents executed by it, to guarantee the Obligations, to grant to the Agent
the Liens described in the Collateral Documents executed by such Restricted
Subsidiary, and to perform all of its obligations under the Loan Documents
executed by it. The Loan Documents delivered by the Company and by each of its
Restricted Subsidiaries have been duly authorized, executed and delivered by
such Person and constitute valid and binding obligations of such Person
enforceable in accordance with their terms except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and this Agreement and the other Loan Documents
do not, nor does the performance or
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observance by the Company or any Restricted Subsidiary of any of the matters and
things herein or therein provided for, (a) contravene or constitute a default
under any provision of law or any judgment, injunction, order or decree binding
upon the Company or any Restricted Subsidiary or any provision of the charter,
articles of incorporation or by-laws of the Company or any Restricted
Subsidiary, (b) contravene or constitute a default under any covenant, indenture
or agreement of or affecting the Company or any Restricted Subsidiary or any of
its Property, in each case where such contravention or default is reasonably
likely to have a Material Adverse Effect, or (c) result in the creation or
imposition of any Lien on any Property of the Company or any Restricted
Subsidiary other than the Liens granted in favor of the Agent pursuant to the
Collateral Documents.
Section 5.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Loans and other extensions of credit made available hereunder
solely for its general working capital purposes and for such other legal and
proper purposes as are consistent with all applicable laws, except that (a)
Revolving Loan proceeds shall not be used, directly or indirectly, to invest in,
or make loans or advances to, Persons who are not Restricted Subsidiaries, (b)
Supplemental Revolving Loan proceeds shall only be used by the Company to make
loans and advances, directly or indirectly through a Restricted Subsidiary, to
Persons (other than Restricted Subsidiaries) to the extent permitted by Section
7.15(i) hereof, (c) Letters of Credit shall only be issued in support of
insurance policy obligations of the Company or any Restricted Subsidiary or for
such other purpose as is acceptable to the Agent in its sole discretion and (d)
the proceeds of the Acquisition Financing Loans shall only be used to acquire
the assets or equity interests of another Person in accordance with the terms of
Section 7.15(g) hereof and to finance the acquisition and construction of new
facilities and expansion to existing facilities operating in a Permitted Line of
Business. Neither the Company nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 5.5. Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as at September 30, 1997, and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
Ernst & Young, independent public accountants, and the unaudited interim
consolidated balance sheet of the Company and its Subsidiaries as at February
28, 1998, and the related consolidated statements of income and retained
earnings of the Company and its Subsidiaries for the 5 months then ended,
heretofore furnished to the Lenders, fairly present in all material respects the
consolidated financial condition of the Company and its Subsidiaries as at said
dates and the consolidated results of their operations and cash flows for the
periods then ended in conformity with generally accepted accounting principles
applied on a consistent basis. Neither the Company nor any Subsidiary has
contingent liabilities which are material to it other than as indicated on such
financial statements or,
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with respect to future periods, on the financial statements furnished pursuant
to Section 7.5 hereof.
Section 5.6. No Material Adverse Change. Since February 28, 1998, there
has been no change in the condition (financial or otherwise) or business
prospects of the Company or any Subsidiary, except for the issuance of the
Senior Subordinated Notes and those occurring in the ordinary course of
business, none of which individually or in the aggregate have been materially
adverse.
Section 5.7. Full Disclosure. The statements and information furnished to
the Lenders in connection with the negotiation of this Agreement and the other
Loan Documents and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a material
fact or omit a material fact necessary to make the material statements contained
herein or therein not misleading, the Lenders acknowledging that as to any
projections furnished to the Lenders, the Company only represents that the same
were prepared on the basis of information and estimates the Company believed to
be reasonable at the time made.
Section 5.8. Trademarks, Franchises, and Licenses. The Company and its
Subsidiaries own, possess, or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person.
Section 5.9. Governmental Authority and Licensing. The Company and its
Subsidiaries have received all licenses, permits, and approvals of all Federal,
state, local, and foreign governmental authorities, if any, necessary to conduct
their business as now conducted and to receive Medicare and Medicaid
reimbursement and/or payments for health care currently provided by them,
including all certificates of need and other licenses, permits, and approvals,
if any, required to own and/or operate any health care facilities or services
currently owned or operated by them, in each case where the failure to obtain or
maintain the same is reasonably likely to have a Material Adverse Effect. No
investigation or proceeding which, if adversely determined, is reasonably likely
to result in revocation or denial of any material license, permit, or approval,
or of any right to receive reimbursement or payments under Medicare or other
governmental third-party reimbursement or prospective payment program, is
pending or, to the knowledge of the Company, threatened.
Section 5.10. Good Title. The Company and its Subsidiaries each have good
and defensible title to their assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to the
Lenders (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of business), subject to no Liens other than such thereof as are
permitted by Section 7.14 hereof.
Section 5.11. Litigation and Other Controversies. There is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the
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Company threatened, against the Company or any Subsidiary which if adversely
determined is reasonably likely to have a Material Adverse Effect.
Section 5.12. Taxes. Except as disclosed on Schedule 5.12 hereof, all tax
returns required to be filed by the Company or any Subsidiary in any
jurisdiction have, in fact, been filed, and all taxes, assessments, fees and
other governmental charges upon the Company or any Subsidiary or upon any of
their respective Properties, income or franchises, which are shown to be due and
payable in such returns, have been paid, except such taxes, assessments, fees
and governmental charges, if any, as are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and as to which adequate reserves established in accordance with GAAP have been
provided. The Company does not know of any proposed additional tax assessment
against the Company or any of its Subsidiaries for which adequate provisions in
accordance with GAAP have not been made on their accounts. Adequate provisions
in accordance with GAAP for taxes on the books of the Company and each
Subsidiary have been made for all open years, and for its current fiscal period.
Section 5.13. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company, any Subsidiary, or any other Person, is or will be necessary to the
valid execution, delivery or performance by the Company of this Agreement or by
the Company or any Subsidiary of any other Loan Document, except for such
approvals which have been obtained prior to or concurrently with the execution
and delivery of this Agreement and which remain in full force and effect.
Section 5.14. Affiliate Transactions. Except for agreements in effect on
the date hereof and described on Schedule 5.14 attached hereto, neither the
Company nor any Subsidiary is a party to any contracts or agreements with any of
its Affiliates (other than with Wholly-Owned Subsidiaries) on terms and
conditions which are less favorable to the Company or such Subsidiary than would
be usual and customary in similar contracts or agreements between Persons not
affiliated with each other.
Section 5.15. Investment Company; Public Utility Holding Company. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 5.16. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Company nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a
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Welfare Plan, other than liability for continuation coverage described in
article 6 of Title I of ERISA.
Section 5.17. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, laws and regulations relating to the providing of health care services,
and laws and regulations establishing quality criteria and standards for air,
water, land and toxic or hazardous wastes and substances), where any such non-
compliance, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect. Neither the Company nor any Subsidiary has received
notice to the effect that its operations are not in compliance with any of the
requirements of applicable federal, state or local environmental, health and
safety statutes and regulations or are the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, where
any such non-compliance or remedial action, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
Section 5.18. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary, or any of their Properties, which default
if uncured is reasonably likely to have a Material Adverse Effect.
Section 5.19. No Default. No Default or Event of Default has occurred and
is continuing.
Section 5.20. Solvency. The Company and its Subsidiaries are solvent,
able to pay their debts as they become due, and have sufficient capital to carry
on their business and all businesses in which they are about to engage.
SECTION 6. CONDITIONS PRECEDENT.
Section 6.1. All Advances. The obligation of the Lenders to make any Loan
or other financial accommodation to the Company hereunder (including the first
such accommodation) shall be subject to the conditions precedent that as of the
time of the making of each such accommodation:
(a) each of the representations and warranties set forth herein and
in the other Loan Documents shall be and remain true and correct as of said
time, except to the extent the same expressly relate to an earlier date;
(b) the Company and each Restricted Subsidiary shall be in
compliance with all of the terms and conditions hereof and of the other
Loan Documents, and no Default or Event of Default shall have occurred and
be continuing;
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(c) after giving effect to such extension of credit, the aggregate
principal amount of all Revolving Loans and L/C Obligations outstanding
under this Agreement shall not exceed the lesser of (i) the Revolving
Credit Commitments then in effect and (ii) the Borrowing Base;
(d) in the case of any Borrowing of Term Loans, the Agent shall have
received for each of the Lenders a duly executed and completed Term Note
for such Lender in the amount of its Term Loan;
(e) in the case of the issuance of any Letter of Credit, the Agent
shall have received a properly completed Application therefor and, in the
case of an extension or increase in the amount of the Letter of Credit, the
Agent shall have received a written request therefor, in a form acceptable
to the Agent, with such Application or written request, in each case to be
accompanied by the fees required by this Agreement; and
(f) such extension of credit shall not violate any order, judgment or
decree of any court or other authority or any provision of law or
regulation applicable to the Agent or any Lender (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System) as then in effect.
The Company's request for any Loan or Letter of Credit shall constitute its
warranty as to the facts specified in subsections (a) through (e), both
inclusive, above.
Section 6.2. Initial Advance. At or prior to the time of the initial
Loans or other financial accommodation hereunder, the following conditions
precedent shall also have been satisfied:
(a) the Agent shall have received the following for the account of
the Lenders (each to be properly executed and completed) and the same shall
have been approved as to form and substance by the Agent:
(i) the Revolving Credit Notes, Acquisition Financing Notes,
and the Supplemental Revolving Credit Notes;
(ii) a Consent and Reaffirmation of Guaranty and Security
Documents from each Restricted Subsidiary;
(iii) an Amended and Restated Mortgage and Security Agreement
with Assignment of Rents from The Extracorporeal Alliance, L.L.C.
covering certain real property located in Bay County, Florida;
(iv) copies (executed or certified as may be appropriate) of
resolutions of the Board of Directors of the Company and of
resolutions of the Board of Directors (or other governing body) of
each Restricted Subsidiary, in each case authorizing the execution,
delivery and performance of the Loan Documents to which it is a party
and all other documents relating thereto;
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(v) an incumbency certificate containing the name, title and
genuine signature of the Company's Authorized Representatives and each
authorized signatory of each Restricted Subsidiary;
(vi) a good standing certificate (or its equivalent) for the
Company and each Restricted Subsidiary, dated as of a date no earlier
than 60 days prior to the date hereof, from the appropriate
governmental offices in the state of its incorporation or organization
and in each state in which it is qualified to do business as a foreign
corporation or organization;
(vii) articles of incorporation and by-laws for the Company and
articles of incorporation and by-laws (or equivalent organizational
documents) for each Restricted Subsidiary, in each case certified by
such Person's corporate Secretary or other appropriate officer
acceptable to the Agent; and
(viii) evidence of the maintenance of insurance by the Company
and each Restricted Subsidiary as required hereby or by the Collateral
Documents;
(b) the UCC financing statements requested in connection with the
Collateral Documents shall have been executed and delivered to the Agent;
(c) the Lenders shall have received a borrowing base certificate in
substantially the form of Exhibit F setting forth the computation of the
Borrowing Base at such time and a compliance certificate in substantially
the form of Exhibit G setting forth the computation of the financial
covenants as of such time;
(d) all legal matters incident to the transactions contemplated
hereby shall be acceptable to the Lenders and their counsel, and the Agent
shall have received for the account of the Lenders the favorable written
opinion of counsel to the Company and its Restricted Subsidiaries, in the
form of Exhibit H hereto or in such other form as is acceptable to the
Agent and its counsel;
(e) the Agent shall have received for itself and for the Lenders the
initial fees, if any, called for hereby;
(f) each Lender shall have received such valuations and
certifications as it may require in order to satisfy itself as to the value
of the Collateral, the financial condition of the Company and its
Subsidiaries, and the lack of material contingent liabilities of the
Company and its Subsidiaries;
(g) the Lenders shall have received a certified copy of the Indenture
setting forth the terms and conditions applicable to the Senior
Subordinated Notes;
(h) all loans outstanding under the Original Credit Agreement shall
have been paid and satisfied in full out of the proceeds of the issuance of
the Senior Subordinated
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Notes and, on the effective date of this Agreement, the outstanding
principal balance of all Loans shall be zero; and
(i) the Agent shall have received for the account of the
Lenders such other agreements, instruments, documents, certificates and
opinions as the Agent may reasonably request.
SECTION 7. COVENANTS.
The Company agrees that, so long as any credit is available to or in use by
the Company hereunder, except to the extent compliance in any case or cases is
waived in writing by the Required Lenders:
Section 7.1. Maintenance of Business. The Company shall, and shall cause
each of its Subsidiaries to, preserve and maintain its existence, except as
otherwise provided in Section 7.16(c) hereof. The Company shall, and shall
cause each of its Subsidiaries to, preserve and keep in force and effect all
licenses, permits, franchises, approvals, patents, trademarks, trade names,
trade styles, copyrights, and other proprietary rights necessary to the proper
conduct of its business (including, without limitation, all such licenses,
permits, franchises, and approvals referred to in Sections 5.8 and 5.9 of this
Agreement) where the failure to do so is reasonably likely to have a Material
Adverse Effect.
Section 7.2. Maintenance of Properties. The Company shall, and shall
cause each of its Subsidiaries to, maintain, preserve and keep its property,
plant and equipment in good repair, working order and condition (ordinary wear
and tear excepted) and shall from time to time make all needful and proper
repairs, renewals, replacements, additions and betterments thereto so that at
all times the efficiency thereof shall be fully preserved and maintained, except
to the extent that, in the reasonable business judgment of the Company, any such
Property is no longer necessary for the proper conduct of the business of such
Person.
Section 7.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each of its Subsidiaries to duly pay and discharge,
all taxes, rates, assessments, fees and governmental charges upon or against it
or its Properties, in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings which prevent enforcement
of the matter under contest and adequate reserves are provided therefor.
Section 7.4. Insurance. The Company shall insure and keep insured, and
shall cause each of its Subsidiaries to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each of its
Subsidiaries to insure, such other hazards and risks (including professional
liability, employers' and public liability risks) with good and responsible
insurance companies as and
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to the extent usually insured by Persons similarly situated and conducting
similar businesses. The Company shall in any event maintain, and cause each of
its Subsidiaries to maintain, insurance on the Collateral to the extent required
by the Collateral Documents. The Company shall, upon the reasonable request of
the Agent, furnish to the Agent and each Lender a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
Section 7.5. Financial Reports. The Company shall, and shall cause each
of its Subsidiaries to, maintain a standard system of accounting in accordance
with GAAP and shall furnish to the Agent, each Lender and each of their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as the Agent or such
Lender may reasonably request; and without any request, shall furnish to the
Agent and the Lenders:
(a) as soon as available, and in any event within 25 days after the
last day of each calendar month, a Borrowing Base certificate in the form
attached hereto as Exhibit F showing the computation of the Borrowing Base
in reasonable detail as of the close of business on the last day of such
month, prepared by the Company and certified to by the Company's chief
financial officer, or another officer of the Company reasonably acceptable
to the Agent;
(b) as soon as available, and in any event within 45 days after the
close of each fiscal quarter of the Company, a copy of the consolidated and
summary consolidating balance sheet of the Company and its Restricted
Subsidiaries (and of the Company and its Subsidiaries) as of the last day
of such period and the consolidated and summary consolidating statements by
business segments of income, retained earnings and cash flows of the
Company and its Restricted Subsidiaries (and of the Company and its
Subsidiaries) for the fiscal quarter and for the fiscal year-to-date period
then ended, each in reasonable detail showing in comparative form the
figures for the corresponding date and period in the previous fiscal year,
prepared by the Company in accordance with GAAP and certified to by the
Company's chief financial officer, or another officer of the Company
reasonably acceptable to the Agent;
(c) as soon as available, and in any event within 120 days after the
close of each fiscal year of the Company, a copy of the consolidated
balance sheet of the Company and its Subsidiaries as of the last day of the
period then ended and the consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for the period
then ended, and accompanying notes thereto, each in reasonable detail
showing in comparative form the figures for the previous fiscal year,
accompanied by an unqualified opinion thereon of Ernst & Young or another
firm of independent public accountants of recognized national standing,
selected by the Company and reasonably satisfactory to the Required
Lenders, to the effect that the financial statements have been prepared in
accordance with GAAP and present fairly, in all material respects, in
accordance with GAAP the consolidated financial condition of the Company
and its Subsidiaries as of the close of such fiscal year and the results of
their operations and cash flows for the fiscal year then ended and that an
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examination of such accounts in connection with such financial statements
has been made in accordance with generally accepted auditing standards and,
accordingly, such examination included such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances;
(d) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the Company
or any Subsidiary to its stockholders, and copies of each regular, periodic
or special report, registration statement or prospectus filed by the
Company or any of its Subsidiaries with any securities exchange or the
Securities Exchange Commission or any successor agency;
(e) promptly after receipt thereof, a copy of each audit made by any
regulatory agency of the books and records of the Company or any of its
Subsidiaries or of any notice of any such audit or of any notice of
material noncompliance with any applicable law, regulation, or guideline
relating to the Company or any of its Subsidiaries or any of their
respective businesses;
(f) as soon as available, and in any event within 120 days after the
end of each fiscal year of the Company, a copy of the Company's
consolidated and consolidating business plan for the following fiscal year,
such business plan to show the Company's projected consolidated and
consolidating revenues, expenses, and balance sheet on a month-by-month
basis, such business plan to be in reasonable detail prepared by the
Company and in form reasonably satisfactory to the Required Lenders;
(g) promptly after the occurrence thereof, notice of any Change of
Control; and
(h) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Company, written notice of any threatened
or pending litigation or governmental proceeding or labor controversy
against the Company or any of its Subsidiaries which, if adversely
determined, is reasonably likely to have a Material Adverse Effect or of
the occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Lenders pursuant to
subsections (b) and (c) of this Section 7.5 shall be accompanied by a written
certificate in the form attached hereto as Exhibit G signed by the chief
financial officer of the Company, or another officer of the Company reasonably
acceptable to the Agent, to the effect that to the best of such officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Company or any
Subsidiary to remedy the same. Such certificate shall also set forth the
calculations supporting such statements in respect of Sections 7.7, 7.8, 7.9,
7.10, 7.11 and 7.12 of this Agreement.
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Section 7.6. Inspection. The Company shall, and shall cause each of its
Subsidiaries to, permit the Agent, each Lender and each of their duly authorized
representatives and agents to visit and inspect any of its Properties, corporate
books and financial records, to examine and make copies of its books of accounts
and other financial records, and to discuss its affairs, finances and accounts
with, and to be advised as to the same by, its executive officers, employees and
independent public accountants (and by this provision the Company hereby
authorizes such accountants to discuss with the Agent and such Lenders the
finances and affairs of the Company and of each of its Subsidiaries) at such
reasonable times during business hours and intervals as the Agent or any such
Lender may designate with prior notice to the Company. Confidential information
obtained during any such visit or inspection shall be subject to the provisions
of Section 11.19 hereof.
Section 7.7. Current Ratio. The Company shall at all times maintain a
Current Ratio of not less than 1.0 to 1.0.
Section 7.8. Total Senior Funded Debt to Total Capitalization. The
Company shall not, at any time during each of the periods specified below,
permit the ratio of (a) Total Senior Funded Debt to (b) Total Capitalization to
exceed:
RATIO SHALL NOT BE
FROM AND INCLUDING TO AND INCLUDING GREATER THAN
the date hereof 9/30/98 .60 to 1.0
10/01/98 9/30/99 .50 to 1.0
10/01/99 and at all times thereafter .45 to 1.0
Section 7.9. Leverage Ratios. (a) Total Senior Funded Debt to Adjusted
EBITDA. As of the last day of each fiscal quarter of the Company ending during
each of the periods specified below, so long as no portion of the Senior
Subordinated Notes are then outstanding, the Company shall not permit the ratio
of (i) Total Senior Funded Debt as of the last day of such fiscal quarter to
(ii) Adjusted EBITDA for the four fiscal quarters then ended to exceed:
RATIO SHALL NOT BE
FROM AND INCLUDING TO AND INCLUDING GREATER THAN
the date hereof 9/30/98 3.0 to 1.0
10/01/98 9/30/99 2.5 to 1.0
10/01/99 and at all times thereafter 2.0 to 1.0
(b) Total Funded Debt to Adjusted EBITDA. As of the last day of each
fiscal quarter of the Company ending during each of the periods specified below,
so long as any
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portion of the Senior Subordinated Notes are then outstanding, the Company shall
not permit the ratio of (i) Total Funded Debt as of the last day of such fiscal
quarter to (ii) Adjusted EBITDA for the four fiscal quarters then ended to
exceed:
RATIO SHALL NOT BE
FROM AND INCLUDING TO AND INCLUDING GREATER THAN
the date hereof 9/30/99 4.5 to 1.0
10/01/99 9/30/00 4.0 to 1.0
10/01/00 and at all times thereafter 3.5 to 1.0
Section 7.10. Net Worth. The Company shall, at all times, maintain Net
Worth of not less than the sum of (a) $59,763,772 plus (b) 75% of Net Income for
each fiscal year of the Company ending after the date hereof (commencing with
the fiscal year ending September 30, 1998) for which such Net Income is a
positive amount (i.e., there shall be no reduction to the amount of Net Worth
required to be maintained hereunder for any fiscal year in which Net Income is
less than zero) plus (c) 100% of the Net Issuance Proceeds from the issuance of
any equity securities by the Company or its Restricted Subsidiaries subsequent
to the date of this Agreement.
Section 7.11. Fixed Charge Coverage Ratio. As of the last day of each
fiscal quarter of the Company ending during the periods specified below, the
Company shall maintain a ratio of EBITDA for the four fiscal quarters of the
Company then ended to Fixed Charges for the same four fiscal quarters then ended
of not less than:
RATIO SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
the date hereof 9/30/99 2.25 to 1.0
10/01/99 and at all times thereafter 2.50 to 1.0
Section 7.12. Dialysis Patients. The Company and its Restricted
Subsidiaries shall, at all times during the periods set forth below, have on a
combined basis (and without duplication) active renal dialysis care patients of
not less than:
FROM AND TO AND MINIMUM
INCLUDING INCLUDING ACTIVE PATIENTS
the date hereof 09/29/98 3,325
09/30/98 09/29/99 3,591
09/30/99 09/29/2000 3,878
09/30/2000 09/29/2001 4,189
09/30/2001 09/29/2002 4,524
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09/30/2002 09/29/2003 4,886
09/30/2003 09/29/2004 5,276
Section 7.13. Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any of its Subsidiaries to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
(a) the Obligations of the Company owing to the Agent and the Lenders
hereunder;
(b) Capitalized Lease Obligations entered into in the ordinary course
of business;
(c) obligations of the Company arising out of interest rate hedging
agreements entered into with financial institutions in the ordinary course
of business;
(d) guaranties expressly permitted by Section 7.15 hereof;
(e) indebtedness from time to time owing by any Restricted Subsidiary
to the Company or to any other Restricted Subsidiary arising in the
ordinary course of business;
(f) indebtedness from time to time owing by any Non-Restricted
Subsidiary to the Company or any Restricted Subsidiary which, in the
aggregate for all Non-Restricted Subsidiaries, does not exceed $15,000,000
at any one time outstanding;
(g) indebtedness from time to time owing by any Non-Restricted
Subsidiary to any Person (other than the Company or any Restricted
Subsidiary), and any renewals or refinancings thereof;
(h) unsecured Subordinated Debt in an aggregate original principal
amount not to exceed $7,000,000 owing by The Extracorporeal Alliance,
L.L.C. ("Alliance") to Bay Extracorporeal Technologies, Inc. ("BeTech"),
Great Lakes Medical Services, Inc. ("Services"), and Great Lakes Perfusion,
Inc. ("Perfusion"), and Michael Hurdle ("Hurdle"), and their successors and
assigns, together with such additional Subordinated Debt issued to such
Persons pursuant to the terms of that certain Agreement for Sale of Assets
and L.L.C. Interests, dated as of November 26, 1996, by and among Alliance,
BeTech, Services, Perfusion, Hurdle, the Company, Rick Kuntz ("Kuntz"),
Chet Czaplicka ("Czaplicka") and Gregory Lewis ("Lewis") (the "Alliance
Purchase Agreement") or the Put/Call Agreements (as such term is defined in
the Alliance Purchase Agreement) executed and delivered in connection
therewith, as reduced from time to time by permitted payments of principal
thereon;
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(i) unsecured Subordinated Debt consisting of the Senior Subordinated
Notes, as reduced from time to time by permitted payments of principal
thereon; and
(j) other indebtedness of the Company and its Subsidiaries arising in
the ordinary course of business (and not incurred in connection with an
acquisition) in an aggregate amount not to exceed $1,500,000 at any one
time outstanding, provided that, if such indebtedness is secured, the
indebtedness shall only be subject to Liens permitted by Section 7.14(e)
hereof.
Section 7.14. Liens. The Company shall not, nor shall it permit any of
its Subsidiaries to, create, incur or permit to exist any Lien of any kind on
any Property owned by the Company or any of its Subsidiaries; provided, however,
that the foregoing shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Company or any of its Subsidiaries is a party or other
cash deposits required to be made in the ordinary course of business,
provided in each case that the obligation is not for borrowed money and
that the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings which prevent enforcement of the matter under
contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Company and its Subsidiaries secured
by a pledge of assets permitted under this subsection, including interest
and penalties thereon, if any, shall not be in excess of $500,000 at any
one time outstanding;
(d) the Liens granted in favor of the Agent for the benefit of the
Lenders pursuant to the Collateral Documents;
(e) Liens on property of the Company or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 7.13(b) or 7.13(j) hereof, representing or incurred to finance,
refinance or refund the purchase price of Property, provided that no such
Lien shall extend to or cover other Property of the Company or such
Subsidiary other than the respective Property so acquired, and the
principal amount of indebtedness secured by any such Lien shall at no time
exceed the original purchase price of such Property;
-35-
(f) Liens on Property of any Non-Restricted Subsidiary securing
indebtedness of such Subsidiary permitted by Section 7.13(f) or 7.13(g)
hereof; and
(g) Liens on limited liability company units in Alliance repurchased
pursuant to the terms of those certain Put/Call Agreements (as defined in
the Alliance Purchase Agreement) executed and delivered in connection with
the Alliance Purchase Agreement, but only to the extent such Liens secure
Subordinated Debt permitted under Section 7.13(h) hereof and which Liens
are at all times junior and subordinate to the Liens of the Agent therein
pursuant to the terms of the relevant subordination agreement relating to
such Subordinated Debt.
Section 7.15. Investments, Acquisitions, Loans, Advances and Guaranties.
The Company shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person or division
thereof, or be or become liable as endorser, guarantor, surety or otherwise for
any debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America, provided
that any such obligations shall mature within one year of the date of
issuance thereof;
(b) investments in commercial paper rated at least P-1 by Moody's
Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation
maturing within one year of the date of issuance thereof;
(c) investments in certificates of deposit issued by any Lender or by
any United States commercial bank having capital and surplus of not less
than $100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(e) the Company's investments from time to time in its Restricted
Subsidiaries, and investments made from time to time by a Restricted
Subsidiary in another Restricted Subsidiary;
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(f) intercompany advances made from time to time between the Company
and one or more Restricted Subsidiaries or between Restricted Subsidiaries
in the ordinary course of business;
(g) one or more Acquisitions by the Company or any Subsidiary of the
stock or assets of other Persons if and only so long as (i) the Acquired
Business is in a Permitted Line of Business, (ii) the Acquisition is not a
Hostile Acquisition, (iii) forty-five days prior to the consummation of any
such Acquisition, or such shorter period as the Agent may agree to in
writing, the Company shall have notified the Lenders of the proposed
transaction in reasonable detail as to the terms thereof (including sources
and uses of funds therefor) and furnished the Lenders historic and pro
forma financial information and, for a dialysis-related Acquisition,
financial valuation analysis supporting the purchase price per patient and,
for all Acquisitions, compliance calculations reasonably satisfactory to
the Agent demonstrating no Default or Event of Default exists or, on a pro
forma basis, would occur after giving effect to such transaction, (iv) with
respect to any Acquisition occurring after the date of this Agreement when
the cumulative Total Consideration for all Acquisitions occurring after the
date of this Agreement for which the Required Lenders have not given their
prior written consent thereto pursuant to clause (v) below is less than or
equal to $10,000,000, any one of the following shall be satisfied (the
Company, when notifying the Agent and the Lenders of the proposed
Acquisition pursuant to this Section 7.15(g), shall designate which of the
following conditions, A, B or C, is being utilized): (A) with respect to
any dialysis-related Acquisition, the Total Consideration paid for the
Acquired Business shall not exceed the lesser of 6.5 multiplied by
Acquisition EBITDA of the Acquired Business for the four fiscal quarter
period ending immediately proceeding the date of the Acquisition or $65,000
multiplied by the number of dialysis patents of the Acquired Business, (B)
with respect to any perfusion-related Acquisition, (x) the Total
Consideration paid for the Acquired Business shall not exceed the product
of 1.5 multiplied by the net revenues (i.e., gross revenues less
contractual discounts) of the Acquired Business for the four fiscal quarter
period ending immediately preceding the date of the Acquisition, (y) the
projected annual Acquired Business Cash Flow for a period of not less than
three (3) years following the date of the relevant Acquisition (as
reasonably determined by the Company in good faith and established to the
reasonable satisfaction of the Agent) is greater than $1.00 per annum, and
(z) the projected annual internal rate of return of the Acquired Business
for a period of not less than three (3) years following the date of the
relevant Acquisition (expressed as a percentage based on the ratio of
projected annual Acquired Business Cash Flow to Total Consideration paid
for the Acquired Business, all as reasonably determined by the Company in
good faith and established to the reasonable satisfaction of the Agent) is
greater than 15% per annum, or (C) the cumulative Total Consideration for
all Acquisitions occurring after the date of this Agreement and not
qualifying under (A) or (B) above is less than or equal to $3,000,000, (v)
with respect to any Acquisition occurring after the date of this Agreement
when the cumulative Total Consideration for all Acquisitions occurring
after the date of this Agreement for which the Required Lenders have not
given their prior written consent thereto pursuant to this clause (v) is
greater than $10,000,000,
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the Required Lenders have given their prior written consent to the relevant
Acquisition, (vi) no Default or Event of Default exists or would arise
immediately after giving effect to any such Acquisition, and the Company
shall have provided to the Agent a written certificate attesting to the
Company's compliance with the requirements set forth herein (including,
where relevant, its computation of the purchase price guidelines set forth
in clause (iv) above), and (vii) if such transaction results in a new
Subsidiary, within 10 Business Days of such formation or acquisition, as
the case may be, the Company shall cause such new Subsidiary to execute and
deliver to the Agent (with sufficient number of copies for each Lender) a
Guaranty and such Collateral Documents as the Agent may require, together
with such other instruments, documents, certificates and opinions required
at that time by the Agent, each of which to be in form and substance
satisfactory to the Agent (including, without limitation, Board of Director
resolutions (or their equivalent) of such Subsidiary authorizing the
execution, delivery, and performance of such Loan Documents by such
Subsidiary), and Schedule 4.1 and 5.2 of this Agreement shall from and
after such date be deemed amended to include reference to such Subsidiary;
(h) Guaranties executed by one or more Restricted Subsidiaries in
favor of the Agent and the Lenders;
(i) investments in, loan and advances to, and guarantees in respect
of the obligations of, Non-Restricted Subsidiaries and other Persons (other
than Subsidiaries) in which the Company, directly or indirectly, holds an
equity interest in, aggregating not more than $15,000,000 at any one time
outstanding;
(j) guaranties issued by the Company or any Restricted Subsidiary
guaranteeing or otherwise supporting the repayment of indebtedness of the
Company or a Restricted Subsidiary otherwise permitted by Section 7.13
hereof;
(k) the loan outstanding on the date of this Agreement owing by
Nephrology Associates of Northern Illinois, Ltd. to the Company in the
amount of $6,811,897.34, as the same may be increased by interest payable
thereon and as reduced by repayments of principal thereon;
(l) trade receivables from time to time owing to the Company or any
of its Subsidiaries created or acquired in the ordinary course of its
business;
(m) the purchase on or before June 30, 1998, by the Company or any of
its Restricted Subsidiaries of nine (9) real estate sites commonly known as
101 N. Scoville, Oak Park, Illinois; 3525 N. Lake, Ft. Wayne, Indiana; 7017
S. Anthony, Ft. Wayne, Indiana; 230 Bellmeade, Evansville, Indiana; 3501
North Avenue, Chicago, Illinois; 7723 S. Western Avenue, Chicago, Illinois;
7718 S. Claremont, Chicago, Illinois; 455 Mercy Lane, Aurora, Illinois; and
3514-16 W. Roosevelt, Chicago, Illinois from ARE Partnership for an
aggregate purchase price of not more than $5,000,000; and
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(n) other investments, loans and advances in addition to those
otherwise permitted by this Section in an aggregate amount not to exceed
$500,000 at any one time outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guaranties permitted under this Section, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guaranties shall be taken at
the amount of the obligations guaranteed thereby.
Section 7.16. Mergers, Consolidations and Sales. The Company shall not,
nor shall it permit any of its Subsidiaries to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any part
of its Property, including any disposition of Property as part of a sale and
leaseback transaction, or in any event sell or discount (with or without
recourse) any of its notes or accounts receivable; provided, however, that this
Section shall not apply to nor operate to prevent:
(a) the sale of inventory in the ordinary course of business;
(b) the sale, transfer, lease, or other disposition of Property of
the Company or any Subsidiary to one another in the ordinary course of
its business;
(c) a merger of any Restricted Subsidiary with and into the Company
or any other Restricted Subsidiary; provided that, in the case of any
merger involving the Company, the Company is the corporation surviving
the merger;
(d) the sale, transfer, or other disposition of any tangible personal
property that, in the reasonable business judgment of the Company or its
Subsidiary, has become uneconomical, obsolete, or worn out, and which is
disposed of in the ordinary course of business; and
(e) the sale, transfer, lease, or other disposition of Property of
the Company or any Subsidiary aggregating for the Company and its
Subsidiaries not more than $1,000,000 during any 12-month period.
In the event of any merger permitted by Section 7.16(c) above, the Company shall
give the Agent and the Lenders prior written notice of any such event and,
immediately after giving effect to any such merger, Schedule 5.2 of this
Agreement shall be deemed amended excluding reference to any such Subsidiary
merged out of existence. So long as no Default or Event of Default has occurred
and is continuing or would arise as a result thereof, upon the written request
of the Company, the Agent shall release its Lien on any Property sold pursuant
to subsections (a), (d), or (e) above.
Section 7.17. Maintenance of Subsidiaries. The Company shall not assign,
sell or transfer, or permit any of its Subsidiaries to issue, assign, sell or
transfer, any shares of capital stock of a Subsidiary; provided, however, that
the foregoing shall not operate to
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prevent (w) the Lien on the capital stock of each Subsidiary granted to the
Agent pursuant to the Collateral Documents, (x) the issuance, sale and transfer
to any person of any shares of capital stock of a Subsidiary solely for the
purpose of qualifying, and to the extent legally necessary to qualify, such
person as a director of such Subsidiary, (y) any transaction permitted by
Section 7.16(c) above, and (z) the issuance of capital stock of a Restricted
Subsidiary if after giving effect to such issuance such Subsidiary remains a
Restricted Subsidiary.
Section 7.18. Dividends and Certain Other Restricted Payments. The
Company shall not, nor shall it permit any Subsidiary to, during any fiscal year
(i) declare or pay any dividends on or make any other distributions in respect
of any class or series of its capital stock (other than dividends payable solely
in its capital stock) or (ii) directly or indirectly purchase, redeem or
otherwise acquire or retire any of its capital stock, except that:
(w) nothing herein contained shall prevent the repurchase by (1)
Alliance of its units pursuant to the terms of those certain Put/Call
Agreements (as defined in the Alliance Purchase Agreement) executed and
delivered in connection with the Alliance Purchase Agreement, (2)
Alliance of the units of Tri-State Perfusion, L.L.C. held by Tri-State
Perfusion Services, Inc., pursuant to Section 6.4 of the Limited
Liability Company Agreement of Tri-State Perfusion, L.L.C., (3) Alliance
of the units of Perfusion Resource Association, L.L.C. held by Perfusion
Resource Association, Inc., pursuant to Section 6.5 of the Limited
Liability Company Agreement of Perfusion Resource Association, L.L.C. or
(4) Saint Margaret Mercy Dialysis Centers, L.L.C., of its units (other
than units held by or for the account of the Company) on terms reasonably
acceptable to the Agent and the Required Lenders, provided that in each
case any consideration to be paid therefor (other than consideration in
the form of additional Subordinated Debt permitted by Section 7.13(i)
hereof) shall only be payable so long as no Default or Event of Default
exists prior to or would result after giving effect to such payment;
(x) nothing herein contained shall prevent the making of dividends or
distributions out of earnings by a Wholly-Owned Subsidiary to the
Company;
(y) nothing herein contained shall prevent the making of dividends or
distributions out of earnings by any other Subsidiary ratably to its
equity interest holders so long as no Default or Event of Default exists
prior to or would result after giving effect to any such dividend, except
that any Subsidiary which is either a partnership or limited liability
company may make distributions to the extent necessary to allow each of
its partners or members, as the case may be, to make payment of its
federal and state income tax liability attributable to such Subsidiary's
taxable income regardless of whether or not a Default or Event of Default
then exists; and
(z) the Company may declare and pay dividends on its capital stock in
an aggregate amount during any fiscal year not to exceed 10% of Net
Income of the Company from the immediately preceding fiscal year so long
as no Default or Event of Default exists prior to or would result after
giving effect to any such dividend.
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Section 7.19. ERISA. The Company shall, and shall cause each of its
Subsidiaries to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed is reasonably
likely to result in the imposition of a Lien against any of its Properties. The
Company shall, and shall cause each of its Subsidiaries to, promptly notify the
Agent and each Lender of (i) the occurrence of any reportable event (as defined
in ERISA) with respect to a Plan, (ii) receipt of any notice from the PBGC of
its intention to seek termination of any Plan or appointment of a trustee
therefor, (iii) its intention to terminate or withdraw from any Plan, and (iv)
the occurrence of any event with respect to any Plan which would result in the
incurrence by the Company or any of its Subsidiaries of any material liability,
fine or penalty, or any material increase in the contingent liability of the
Company or any of its Subsidiaries with respect to any post-retirement Welfare
Plan benefit.
Section 7.20. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to its Properties or business operations, where any
such non-compliance, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect or could result in a Lien upon any of their
Property.
Section 7.21. Burdensome Contracts with Affiliates. Except for agreements
in effect on the date hereof described on Schedule 5.14 attached hereto, the
Company shall not, nor shall it permit any of its Subsidiaries to, enter into
any contract, agreement or business arrangement with any of its Affiliates
(other than with Wholly-Owned Subsidiaries) on terms and conditions which are
less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.
Section 7.22. No Changes in Fiscal Year. The Company shall not, nor shall
it permit any of its Subsidiaries to, change its fiscal year from its present
basis without the prior written consent of the Required Lenders.
Section 7.23. Formation of Subsidiaries. Except for existing Subsidiaries
designated on Schedule 5.2 hereto, Restricted Subsidiaries formed for the
purpose of acquiring all or substantially all of the assets of, or all or
substantially all of the equity interest of, another Person pursuant to an
acquisition permitted by Section 7.15(g) hereof, or Restricted Subsidiaries (and
any such Restricted Subsidiary's Subsidiaries) acquired pursuant to an
acquisition permitted by Section 7.15(g) hereof, the Company shall not, nor
shall it permit any of its Subsidiaries to, form or acquire any Subsidiary
without the prior written consent of the Required Lenders.
Section 7.24. Change in the Nature of Business. The Company shall not,
nor shall it permit any of its Subsidiaries to, engage in any business or
activity if as a result the general nature of the business of the Company or any
of its Subsidiaries would be changed in any material respect from the general
nature of the business engaged in by it as of the date of this Agreement or as
of the date such Person becomes a Subsidiary hereunder.
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Section 7.25. Subordinated Debt. The Company shall at all times ensure
that all Obligations now existing or hereafter arising constitute "Senior Debt",
or words of like import, under each indenture, instrument, or agreement
evidencing or otherwise setting forth the terms or conditions applicable to any
outstanding Subordinated Debt. Neither the Company nor any Subsidiary shall
amend or modify any of the terms and conditions relating to any Subordinated
Debt or make any voluntary prepayment thereof or affect any voluntary redemption
thereof or make any payment on account of Subordinated Debt which is prohibited
under the terms of any instrument or agreement subordinating the same to the
Obligations; provided, however, that nothing contained herein shall prohibit any
payment obligation under Section 7 of the Alliance Purchase Agreement of Hurdle,
Kuntz, BeTech, Services, Perfusion, Czaplicka or Lewis from being satisfied by
set-off in accordance with the terms of the Alliance Purchase Agreement.
Section 7.26. Use of Loan Proceeds. The Company shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 5.4 hereof.
Section 7.27. Assets and Earnings Concentrations. On the last day of each
fiscal quarter of the Company, and on the date of any acquisition permitted by
Section 7.15(g) hereof, and immediately after giving effect thereto, the Company
shall not permit (a) the total assets of its Subsidiaries in which the Company's
ownership interest therein is less than 80% to be more than 15% of the total
consolidated assets of the Company and its Subsidiaries and (b) the total net
income of its Subsidiaries in which the Company's ownership interest therein is
less than 80% to be more than 15% of consolidated net income of the Company and
its Subsidiaries.
Section 7.28. No Restrictions on Subsidiary Distributions. Except as
provided herein, the Company shall not and shall not permit any of its
Restricted Subsidiaries directly or indirectly to create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Restricted Subsidiary to: (1) pay dividends or
make any other distribution on any of such Restricted Subsidiary's capital stock
or other equity interests owned by the Company or any Restricted Subsidiary of
the Company; (2) pay any indebtedness owed to the Company or any other
Restricted Subsidiary; (3) make loans or advances to the Company or any other
Restricted Subsidiary or (4) transfer any of its property or assets to the
Company or any other Restricted Subsidiary.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment when due of all or any part of the
principal of or interest on any Note (whether at the stated maturity
thereof or at any other time provided for in this Agreement) or of any
Reimbursement Obligation or of any fee or other Obligation payable
hereunder or under any other Loan Document;
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(b) default in the observance or performance of any covenant set
forth in Sections 7.5, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14, 7.15,
7.16, 7.17, 7.18, 7.25, 7.26 or 7.27 hereof or of any provision in any Loan
Document dealing with the use, disposition or remittance of the proceeds of
Collateral or requiring the maintenance of insurance thereon;
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within 30 days
after the earlier of (i) the date on which such failure shall first become
known to any officer of the Company or (ii) written notice thereof is given
to the Company by the Agent (provided that the Company shall have an
additional 30 days to cure any such default before the same becomes an
"Event of Default" hereunder if such default is reasonably susceptible to
cure within the additional 30-day period but only so long as the Company
diligently and in good faith works to cure such default during the
additional 30-day period);
(d) any material representation or warranty made herein or in any
other Loan Document or in any certificate furnished to the Agent or the
Lenders pursuant hereto or thereto or in connection with any transaction
contemplated hereby or thereby proves untrue in any material respect as of
the date of the issuance or making or deemed making thereof;
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan Documents
shall for any reason not be or shall cease to be in full force and effect,
or any of the Loan Documents is declared to be null and void, or any of the
Collateral Documents shall for any reason fail to create a valid and
perfected first priority Lien in favor of the Agent in any Collateral
purported to be covered thereby except as expressly permitted by the terms
thereof, or any Subsidiary takes any action for the purpose of terminating,
repudiating or rescinding any Loan Document executed by it or any of its
obligations thereunder;
(f) default shall occur under any Indebtedness for Borrowed Money
aggregating in excess of $500,000 issued, assumed or guaranteed by the
Company or any Subsidiary or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of the
maturity of any such Indebtedness for Borrowed Money (whether or not such
maturity is in fact accelerated), or any such Indebtedness for Borrowed
Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $500,000 in excess of any applicable insurance coverage shall
be entered or filed against any of the Company or any Subsidiary or against
any of its Property and
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which remains undischarged, unvacated, unbonded or unstayed for a period
of 30 days;
(h) the Company or any member of its Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess $500,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Vested Liabilities in excess of $500,000 (collectively, a
"Material Plan") shall be filed under Title IV of ERISA by the Company or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated;
(i) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in good
faith any appointment or proceeding described in Section 8.1(j) hereof; or
(j) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or any
substantial part of any of its Property, or a proceeding described in
Section 8.1(i)(v) shall be instituted against the Company or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days.
Section 8.2. Non-Bankruptcy Remedies. When any Event of Default described
in subsections 8.1(a) to 8.1(h), both inclusive, has occurred and is continuing,
the Agent shall, upon request of the Required Lenders, by notice to the Company,
take any or all of the following actions:
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(a) terminate the obligations of the Lenders to extend any further
credit hereunder on the date (which may be the date thereof) stated in such
notice;
(b) declare the principal of and the accrued interest on the Notes to
be forthwith due and payable and thereupon the Notes, including both
principal and interest, and all fees, charges and other Obligations payable
hereunder and under the other Loan Documents, shall be and become
immediately due and payable without further demand, presentment, protest or
notice of any kind; and
(c) enforce any and all rights and remedies available to it under the
Loan Documents or applicable law.
Section 8.3. Bankruptcy Remedies. When any Event of Default described in
subsection 8.1(i) or 8.1(j) has occurred and is continuing, then the Notes,
including both principal and interest, and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligations of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately terminate. In addition,
the Agent may exercise any and all remedies available to it under the Loan
Documents or applicable law.
Section 8.4. Collateral for Undrawn Letters of Credit. If and when (x)
any Event of Default, other than an Event of Default described in subsections
(i) or (j) of Section 8.1, has occurred and is continuing, the Company shall,
upon demand of the Agent, and (y) any Event of Default described in subsections
(i) or (j) of Section 8.1 has occurred or any Letter of Credit is outstanding on
the Termination Date (whether or not any Event of Default has occurred), the
Company shall, without notice or demand from the Agent, immediately pay to the
Agent the full amount of each Letter of Credit, the Company agreeing to
immediately make each such payment and acknowledging and agreeing that the Agent
and the Lenders would not have an adequate remedy at law for failure of the
Company to honor any such demand and that the Agent shall have the right to
require the Company to specifically perform such undertaking whether or not any
draws have been made under the Letters of Credit.
SECTION 9. DEFINITIONS; INTERPRETATIONS.
Section 9.1. Definitions. The following terms when used herein have the
following meaning:
"Acquired Business" means the entity or assets acquired by the Company or a
Subsidiary in an Acquisition, whether before or after the date hereof.
"Acquired Business Cash Flow" means, with respect to any period, the amount
(if any) by which (A) the difference (if any) of (i) net income of the Acquired
Business for such period plus the sum of all amounts deducted in arriving at
such net income amount in respect of all charges for depreciation of fixed
assets, amortization of intangible assets, and all other
-45-
non-cash items charged to net income for such period, minus (plus) (ii)
additions (reductions) to non-cash working capital of the Acquired Business for
such period (i.e., the increase or decrease in non-cash current assets minus the
current liabilities (excluding the current maturities of long-term debt) of the
Acquired Business from the beginning to the end of such period) exceeds (B) the
aggregate amount of capital expenditures to be incurred by or in connection with
the Acquired Business during such period, adjusted reflecting the Company's
equity interest therein if the Acquired Business is not operated by a Wholly-
owned Subsidiary.
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower or the Subsidiary is the
surviving entity.
"Acquisition EBITDA" means, with reference to any period and any Acquired
Business of a Target, the total net income (as determined in accordance with
GAAP) of such Target arising out of the Acquired Business plus the sum of all
amounts deducted in arriving at such net income amount in respect of (x)
interest expense for such period, (y) federal, state, and local income taxes for
such period, and (z) depreciation of fixed assets and amortization of intangible
assets for such period, and adjusted for non-recurring expenses and non-
recurring revenue reasonably determined by the Company in good faith and
established to the reasonable satisfaction of the Agent.
"Acquisition Financing Commitments" is defined in Section 1.4(a) hereof.
"Acquisition Financing Loans" is defined in Section 1.4(a) hereof.
"Acquisition Financing Notes" is defined in Section 1.4(a) hereof.
"Acquisition Financing Termination Date" means May 15, 1999, or such
earlier date on which the Acquisition Financing Commitments are terminated in
whole pursuant to Sections 3.8, 8.2 or 8.3 hereof.
"Adjusted EBITDA" means, as of the last day of any fiscal quarter of the
Company, the sum (without duplication) of the following:
(i) EBITDA of the Company and is Subsidiaries for the four fiscal
quarters then ended (computed exclusive of that portion of EBITDA
attributable to an Acquired Business acquired during such period); plus
(ii) for each Acquired Business acquired during the fiscal quarter
then ended, Acquisition EBITDA of such Acquired Business for the most
recently completed
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period of four fiscal quarters ending immediately prior to the date of the
relevant Acquisition; plus
(iii) for each Acquired Business acquired prior to the beginning of
the most recently completed fiscal quarter of the Company, but within four
fiscal quarters of the Company then ended, EBITDA of such Acquired Business
for the period from the date of the relevant Acquisition to the last day of
the fiscal quarter then ended multiplied by a fraction, the numerator of
which is 365 and the denominator of which is the number of days elapsed
since the date of the Acquisition and adjusted for non-recurring
Acquisition-related expenses and non-recurring Acquisition-related revenue
for such period as reasonably determined by the Company in good faith and
established to the reasonable satisfaction of the Agent.
"Adjusted LIBOR Rate" means a rate per annum determined by the Agent
pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR
------------------------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing the Adjusted LIBOR
Rate, the maximum rate of all reserve requirements (including, without
limitation, any marginal emergency, supplemental or other special reserves)
imposed by the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D on Eurocurrency liabilities (as such term is
defined in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject to any amendments to such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such Interest Period.
For purposes of this definition, LIBOR Portions shall be deemed to be
Eurocurrency liabilities as defined in Regulation D without benefit of or credit
for prorations, exemptions, or offsets under Regulation D. "LIBOR" means, for
each Interest Period, (a) the LIBOR Index Rate for such Interest Period, if such
rate is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rate of interest per annum (rounded upwards, if
necessary, to nearest 1/100 of 1%) at which deposits in U.S. dollars in
immediately available funds are offered to the Agent at 11:00 a.m. (London,
England time) 2 Business Days before the beginning of such Interest Period by 3
or more major banks in the interbank eurodollar market selected by the Agent for
a period equal to such Interest Period and in an amount equal or comparable to
the principal amount of the applicable LIBOR Portion scheduled to be made by the
Agent as part of such Borrowing. "LIBOR Index Rate" means, for any Interest
Period, the rate per annum (rounded upwards, if necessary, to the next higher
one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
period equal to such Interest Period, which appears on the Telerate Page 3750 as
of 11:00 a.m. (London, England time) on the day 2 Business Days before the
commencement of such Interest Period. "Telerate Page 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
Dollar
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deposits). Each determination of LIBOR made by the Agent shall be
conclusive and binding on the Company and the Lenders absent manifest error.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.
"Agent" means Harris Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Alliance" is defined in Section 7.13(h) hereof.
"Alliance Purchase Agreement" is defined in Section 7.13(h) hereof.
"Applicable Margin" means, with respect to Revolving Loans, Acquisition
Financing Loans, Term Loans, and Supplemental Revolving Loans, the rate per
annum specified below:
Applicable Margin for Domestic Rate Portion
of Revolving Loans: 0%
Applicable Margin for LIBOR Portions
of Revolving Loans: 2.00%
Applicable Margin for Domestic Rate Portion of
Acquisition Financing Loans, Term Loans, and Supplemental
Revolving Loans: 0.25%
Applicable Margin for LIBOR Portions of
Acquisition Financing Loans, Term Loans, and Supplemental
Revolving Loans: 2.25%
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provided, however, that the Applicable Margins shall be subject to quarterly
adjustments (commencing with an adjustment with respect to the fiscal quarter
ending June 30, 1998) as follows:
Applicable Applicable
Margin for Margin for
Domestic Rate LIBOR
Portion of Portions of
If as of the Last Day of the Acquisition Acquisition
Most Recently Completed Applicable Applicable Financing Financing
Fiscal Quarter The Ratio of Margin for Margin for Loans, Term Loans, Term
Total Senior Funded Debt Domestic Rate LIBOR Loans and Loans and
then outstanding to Portion of Portions of Supplemental Supplemental
Adjusted EBITDA for the Revolving Revolving Revolving Revolving
4 Fiscal Quarters then Loans is Loans is Loans is Loans is
ended is
greater than or equal to 2.5 to 1.0 Nil 2.25% .50% 2.50%
less than 2.5 to 1.0 but greater than
or equal to 1.5 to 1.0 Nil 2.00% .25% 2.25%
less than 1.5 to 1.0 Nil 1.75% Nil 2.00%
provided, further, however, that if the Senior Subordinated Notes are
outstanding on the last day of the most recently completed fiscal quarter of the
Company, the Applicable Margins shall instead be subject to quarterly adjustment
as follows:
Applicable Applicable
Margin for Margin
Domestic Rate for LIBOR
If as of the Last Day of the Portion of Portions of
Most Recently Completed Applicable Applicable Acquisition Acquisition
Fiscal Quarter The Ratio of Margin for Margin for Financing Loans, Financing Loans,
Total Funded Debt then Domestic Rate LIBOR Term Loans and Term Loans and
outstanding to Adjusted Portion of Portions of Supplemental Supplemental
EBITDA for the 4 fiscal Revolving Revolving Revolving Revolving
quarters then ended is Loans is Loans is Loans is Loans is
greater than or equal to 3.5 to 1.0 Nil 2.25% .50% 2.50%
less than 3.5 to 1.0 but greater than
or equal to 2.5 to 1.0 Nil 2.00% .25% 2.25%
less than 2.5 to 1.0 Nil 1.75% Nil 2.00%
After the close of each quarterly fiscal period of the Company (the close of
such quarterly fiscal period being hereinafter referred to as the "Margin
Testing Time"), the Agent shall (i) confirm that the financial statements
theretofore furnished to it indicate compliance with the ratios required above
as of the Margin Testing Time and (ii) notify the Company and the Lenders of
such determination and of any change in the Applicable Margin resulting
therefrom. Any change in the Applicable Margin shall be effective on the 3rd
day following the Agent's receipt of the quarterly covenant compliance
certificate called for by Section 7.5
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hereof and with such new Applicable Margin to continue in effect until the
effectiveness of the next redetermination thereof. Any determination by the
Agent of the Applicable Margin shall be conclusive and binding upon the Company
and the Lenders provided that it has been made in good faith and based upon the
financial statements described above.
"Application" is defined in Section 1.3 hereof.
"Authorized Representative" means those persons shown on the list of
individuals provided by the Company pursuant to Section 6.2 hereof or on any
update of any such list provided by the Company to the Agent, or any further or
different individuals so named by an Authorized Representative of the Company in
a written notice to the Agent.
"Borrowing" means the total of Loans of a single type made to the Company
by all the Lenders on a single date, and if such Loans are to be part of a LIBOR
Portion, for a single Interest Period. Borrowings of Loans are made and
maintained ratably from each of the Lenders according to their Percentages of
the relevant Commitment.
"Borrowing Base" means, as of any time it is to be determined, 75% of the
then outstanding unpaid amount of Eligible Accounts; provided that the Borrowing
Base shall be computed only as against and on so much of the Collateral as is
included on the certificates to be furnished from time to time by the Company
pursuant to Section 7.5(a) hereof and, if required by the Agent or the Required
Lenders pursuant to any of the terms hereof or any Collateral Document, as
verified by such other evidence reasonably required to be furnished to the Agent
or the Lenders pursuant hereto or pursuant to any such Collateral Document.
"Business Day" shall mean any day (other than a Saturday or Sunday) on
which banks are not authorized or required to close in Chicago, Illinois and,
when used with respect to LIBOR Portions, a day on which banks are also dealing
in United States Dollar deposits in London, England.
"Capital Lease" means any lease of Property (whether real or personal)
which in accordance with GAAP is required to be capitalized on the balance sheet
of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole to any Person or group of
related Persons for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Group") together with any Affiliates
thereof; (ii) the approval by the holders of capital stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company; (iii) the
acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) in one or more transactions by any Person or Group other than a
Person who is a stockholder of the Company as of the date hereof or Group
comprised solely of such Persons
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(the "Control Group") of either more than 25% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Company or
more than 25% of the aggregate issued and outstanding common stock of the
Company and such beneficial ownership percentage is greater than the beneficial
ownership of the Control Group; (iv) Home Dialysis of America, Inc. or WSKC
Dialysis Services, Inc. cease to be a Restricted Subsidiary and a Wholly-Owned
Subsidiary of the Company; (v) the replacement of a majority of the Board of
Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by a vote of at least
a majority of the Board of Directors of the Company then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved; or (vi) any "Change of Control" (or words of like import), as defined
in any instrument, agreement or indenture relating to any issue of Subordinated
Debt, shall occur, the effect of which is to cause the acceleration of any
Subordinated Debt or to enable the holder of any Subordinated Debt to cause the
Company or any Subsidiary to repurchase, redeem, repay, or otherwise retire any
Subordinated Debt.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent by the Collateral
Documents.
"Collateral Documents" means all security agreements, pledge agreements,
assignments, financing statements and other documents as shall from time to time
secure or relate to the Obligations.
"Commitments" means and includes the Revolving Credit Commitments, the L/C
Commitment, the Acquisition Financing Commitments, and the Supplemental
Revolving Credit Commitments. The parties acknowledge that the aggregate
Commitments available to the Company do not exceed $100,000,000 as of the date
of this Agreement.
"Company" is defined in the introductory paragraph of this Agreement.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Current Ratio" means, at any time the same is to be determined, the ratio
of consolidated current assets of the Company and its Restricted Subsidiaries to
consolidated current liabilities of the Company and its Restricted Subsidiaries,
each as determined in accordance with GAAP.
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"Current Maturities" means, as at any time the same is to be determined,
all payments of principal due within 12 calendar months after that date with
respect to any Indebtedness for Borrowed Money included within the definition of
Total Funded Debt.
"Default" means any event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, constitute an Event of
Default.
"Disposition" means the sale, lease, conveyance, or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 7.16(a) or 7.16(b) hereof.
"Domestic Rate" means a fluctuating interest rate per annum equal at all
times to the greater of (i) the rate of interest announced by the Agent from
time to time as its prime commercial rate as in effect on such day, with any
change in such rate resulting from a change in said prime commercial rate to be
effective as of the date of the relevant change in said prime commercial rate;
and (ii) the sum of (x) the rate determined by the Agent to be the average
(rounded upwards, if necessary, to the next higher 1/100 of 1% of the rates per
annum quoted to the Agent at approximately 10:00 a.m. Chicago time (or as soon
thereafter as is practicable) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) by two or more Federal funds
brokers selected by the Agent for the sale to the Agent at face value of Federal
funds in the secondary market in an amount equal or comparable to the principal
amount owed to the Agent for which such rate is being determined, plus (y) 3/8
of 1%.
"Domestic Rate Portions" is defined in Section 2.1(a) hereof.
"EBITDA" means, with reference to any period, Net Income for such period
plus the sum of all amounts deducted in arriving at such Net Income amount in
respect of (w) non-reoccurring acquisition expenses incurred in connection with
an acquisition permitted by Section 7.15(g) hereof, (x) Interest Expense for
such period, (y) federal, state and local income taxes for such period, and (z)
depreciation of fixed assets and amortization of intangible assets for such
period.
"Eligible Account" means each account receivable of the Company and of each
Restricted Subsidiary who has executed and delivered a Guaranty and the
Collateral Documents called for by this Agreement that:
(a) arises out of the sale by the Company or such Subsidiary of goods
delivered to and accepted by, or out of the rendition of services fully
performed by the Company or such Subsidiary and accepted by, the account
debtor on such account receivable;
(b) the account debtor on such account receivable is located within
the United States of America;
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(c) is the valid, binding and legally enforceable obligation of the
account debtor obligated thereon and such account debtor is not (i) an
Affiliate of the Company or such Subsidiary, (ii) a shareholder, director,
officer or employee of the Company or any Subsidiary, (iii) a debtor under
any proceeding under the United States Bankruptcy Code, as amended, or any
other comparable bankruptcy or insolvency law, or (iv) an assignor for the
benefit of creditors;
(d) is not evidenced by an instrument or chattel paper unless the same
has been endorsed and delivered to the Agent;
(e) is an asset of the Company or such Subsidiary to which it has good
and marketable title, is freely assignable, is subject to a perfected,
first priority Lien in favor of the Agent for the benefit of the Lenders,
and is free and clear of any other Lien other than Liens permitted by
Section 7.14(a) and (b) hereof;
(f) is net of any credit or allowance given by the Company or such
Subsidiary to such account debtor;
(g) is not subject to any asserted offset, counterclaim or other
defense with respect thereto;
(h) is not unpaid more than 120 days after the original invoice date
(which must be not more than 5 days subsequent to the shipment date or the
date services were fully performed by the Company or such Subsidiary); and
(i) does not arise from a sale to an account debtor on a bill-and-
hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any
other repurchase or return basis.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"Event of Default" means any event or condition specified as such in
Section 8.1 hereof.
"Event of Loss" means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.
"Excess Cash Flow" means, with respect to any period, the amount (if any)
by which (x) EBITDA during such period exceeds (y) the sum of (i) capital
expenditures for the Company and its Restricted Subsidiaries during such period
(computed on a consolidated basis in accordance with GAAP) plus (ii) Current
Maturities of the Company and its Restricted Subsidiaries as of the last day of
such period plus (iii) federal, state and local income taxes of the Company and
its Restricted Subsidiaries actually paid during such period
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plus (iv) interest charges of the Company and its Restricted Subsidiaries
actually paid during such period
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Domestic Rate.
"Fixed Charges" means, with reference to any period, the sum of (a) the
aggregate amount of payments required to be made by the Company and its
Restricted Subsidiaries during such period in respect of principal on all
Indebtedness for Borrowed Money (whether at maturity, as a result of mandatory
sinking fund redemption, mandatory prepayment, acceleration or otherwise), plus
(b) Interest Expense for the same period.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Lenders pursuant to Section 7.5 hereof.
"Hedging Liability" means the liability of the Company to any of the
Lenders in respect of any interest rate swaps, interest rate caps, interest rate
collars, or other interest rate hedging arrangements as the Company may from
time to time enter into with any one or more of the Lenders party to this
Agreement. Unless and until the amount of the Hedging Liability is fixed and
determined, the Hedging Liability shall be deemed to be 4% per annum of the
notional amount of the hedge from the date of computation to the date the hedge
expires.
"Hostile Acquisition" means the acquisition of the capital stock or other
equity interests of a Person through a tender offer or similar solicitation of
the owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the Board of Directors of
such Person or by similar action if such Person is not a corporation, and as to
which such approval has not been withdrawn.
"Indebtedness for Borrowed Money" shall mean for the Company and its
Subsidiaries the sum (without duplication) of (i) all indebtedness of the
Company and each of its Subsidiaries for borrowed money, whether current or
funded, or secured or unsecured, (ii) all indebtedness for the deferred purchase
price of Property or services, (iii) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to Property
acquired by the Company or any of its Subsidiaries (even though the rights and
remedies of the seller or lender under such agreement in the event of a default
are limited to repossession or sale of such Property), (iv) all indebtedness
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of Property subject to such mortgage or Lien, (v) all obligations
under leases which shall have been or must be, in accordance with GAAP, recorded
as Capital Leases in respect of which the Company or any of its Subsidiaries is
liable as lessee, (vi) any liability in respect of banker's acceptances or
letters of credit, (vii) any indebtedness, whether or not assumed, secured by
Liens on Property acquired by the Company or any of its Subsidiaries at the time
of acquisition thereof and (viii) all indebtedness referred to in clause (i),
(ii), (iii), (iv), (v),
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(vi) or (vii) above which is directly or indirectly guaranteed by the Company or
any of its Subsidiaries or which any of the foregoing have agreed (contingently
or otherwise) to purchase or otherwise acquire or in respect of which any of
them have otherwise assured a creditor against loss, it being understood that
the term "Indebtedness for Borrowed Money" shall not include trade payables
arising in the ordinary course of business.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Company and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, (a) with respect to any LIBOR Portion of Revolving
Loans, the period commencing on, as the case may be, the creation, continuation
or conversion date with respect to such LIBOR Portion and ending 1, 2, 3 or 6
months thereafter as selected by the Company in its notice as provided herein
and (b) with respect to any LIBOR Portion of Acquisition Financing Loans, Term
Loans or Supplemental Revolving Loans, the period commencing on, as the case may
be, the creation, continuation or conversion date with respect to such LIBOR
Portion and ending 6 or 12 months thereafter as selected by the Company in its
notice as herein provided; provided that, all of the foregoing provisions
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding 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 Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the relevant Notes;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment scheduled to
be made during such Interest Period without paying part of a LIBOR Portion
on a date other than the last day of the Interest Period applicable
thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"L/C Commitment" means $1,000,000, as reduced pursuant to Section 3.8
hereof.
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"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lenders" means Harris Trust and Savings Bank and all other lenders
becoming parties hereto pursuant to Section 11.18 hereof.
"Letter of Credit" is defined in Section 1.3 hereof.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind or nature in respect of any Property, including the
interest of a vendor or lessor under any conditional sale, Capital Lease or
other title retention arrangement.
"Loan Documents" means this Agreement, the Notes, the Applications, the
Collateral Documents, the Guaranties, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.
"Loans" means and includes Revolving Loans, the Acquisition Financing
Loans, the Term Loans, and the Supplemental Revolving Loans.
"Material Adverse Effect" means (a) a material adverse change in, or
material adverse effect upon, the business, Property, condition (financial or
otherwise), results of operations or business prospects of the Company and its
Subsidiaries taken as a whole, (b) a material adverse effect upon the ability of
the Company or any Restricted Subsidiary to perform its obligations under the
Loan Documents, or (c) a material adverse effect upon the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.
"Net Cash Proceeds" means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or for
such Person's account, net of (i) reasonable direct costs relating to such
Disposition, (ii) sale, use, or other transactional taxes paid or payable by
such Person as a direct result of such Disposition, and (iii) amounts required
to be applied to repay principal of, premium, if any, and interest on any
Indebtedness for Borrowed Money secured by a Lien on the Property (or portion
thereof) sold or otherwise disposed of (other than the Obligations hereunder)
which is required to be and is repaid in connection with such Disposition and
(b) with respect to any Event of Loss of a Person, cash and cash equivalent
proceeds received by or for such Person's account (whether as a result of
payments made under any applicable insurance policy therefor or in connection
with condemnation proceedings or otherwise), net of reasonable direct costs
incurred in connection with the collection of such proceeds, awards or other
payments.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Company and its Restricted Subsidiaries for such period computed on
a consolidated basis in accordance with GAAP.
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"Net Worth" means, at any time the same is to be determined, total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) which would appear on a
consolidated balance sheet of the Company and its Restricted Subsidiaries
prepared on a consolidated basis in accordance with GAAP.
"Net Issuance Proceeds" means, as to any issuance of equity by the Company
or its Restricted Subsidiaries, cash proceeds and non-cash proceeds received or
receivable by such Person in connection therewith, net of reasonable out-of-
pocket costs and expenses paid or incurred in connection therewith.
"Non-Restricted Subsidiary" means any Subsidiary which is not a Restricted
Subsidiary.
"Notes" means and includes the Revolving Credit Notes, the Acquisition
Financing Notes, the Term Notes, and the Supplemental Revolving Credit Notes.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Company or any Subsidiary arising under or in relation to any
Loan Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means, for each Lender, the percentage of the applicable
Commitments represented by such Lender's Commitment or, if the Commitments have
been terminated, the percentage held by such Lender (including through
participation interests in L/C Obligations) of the aggregate principal amount of
all outstanding Obligations.
"Permitted Affiliates" means Nephrology Associates of Northern Illinois,
Ltd., ARE Partnership, and Continental Health Care, Ltd.
"Permitted Line of Business" means any Person in the business of providing
health care services such as delivery of dialysis and nephrology services and
extracorporeal services such as plasmapheresis, intra-operative autotransfusion,
perfusion, physician management and health management services and any other
business line reasonably related thereto consented to in writing by the Required
Lenders, which consent shall not be unreasonably delayed or withheld.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
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"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group, or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"Portion" is defined in Section 2.1(a) hereof.
"Property" means, as to any Person, all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent balance sheet of such Person and its subsidiaries under GAAP.
"Reimbursement Obligation" is defined in Section 1.3 hereof.
"Required Lenders" means, at any time, Lenders whose Commitments aggregate
66-2/3% or more of the total Commitments or, if at the time no Commitments are
outstanding, Lenders holding 66-2/3% or more of the aggregate outstanding
principal balance of the Notes and the credit risk with respect to the Letters
of Credit.
"Restricted Subsidiary" means each of those existing Subsidiaries listed on
Schedule 4.1 hereof, any other Subsidiary existing as of the date hereof who is
hereafter designated in writing by the Company to the Agent to become a
"Restricted Subsidiary" and who thereafter executes and delivers a Guaranty and
such Collateral Documents required pursuant to Section 4 hereof, and any other
Subsidiaries formed or acquired after the date hereof who are required to
execute and deliver a Guaranty and Collateral Documents pursuant to Section
7.15(g) hereof.
"Revolving Credit Commitments" is defined in Section 1.1 hereof.
"Revolving Credit Notes" is defined in Section 1.2 hereof.
"Revolving Loans" is defined in Section 1.2 hereof.
"Senior Subordinated Notes" means those certain $100,000,000 9.75% Senior
Subordinated Notes due 2008 issued pursuant to that certain Indenture dated May
5, 1998.
"Subordinated Debt" means the Senior Subordinated Notes and any other
Indebtedness for Borrowed Money of the Company or of any Restricted Subsidiary
owing to any Person on terms and conditions, and in such amounts, acceptable to
the Agent and the Required Lenders in their sole discretion and which is
subordinated in right of payment to the prior payment in full of the Obligations
pursuant to written subordination provisions satisfactory to the Agent and the
Required Lenders.
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"subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
The term "Subsidiary" shall mean, when used with reference to the Company, a
subsidiary of, respectively, the Company or any of its direct or indirect
Subsidiaries.
"Supplemental Revolving Credit" is defined in Section 1.5 hereof.
"Supplemental Revolving Credit Commitments" is defined in Section 1.5
hereof.
"Supplemental Revolving Loans" is defined in Section 1.5 hereof.
"Supplemental Revolving Credit Notes" is defined in Section 1.5 hereof.
"Supplemental Revolving Credit Termination Date" means May 15, 1999, or
such earlier date on which the Supplemental Revolving Credit Commitments are
terminated in whole pursuant to Section 3.8, 8.2 or 8.3 hereof.
"Target" means the Persons whose assets or equity interests are the subject
of an Acquisition.
"Term Loans" is defined in Section 1.4(b) hereof.
"Term Notes" is defined in Section 1.4(b) hereof.
"Termination Date" means May 15, 2001, or such earlier date on which the
Revolving Credit Commitments are terminated in whole pursuant to Section 3.8,
8.2 or 8.3 hereof, or such later date to which the Revolving Credit Commitments
are extended pursuant to Section 11.16 hereof.
"Total Capitalization" means, at any time the same is to be determined, the
sum of Total Funded Debt plus Net Worth.
"Total Consideration" means the total amount (but without duplication) of
(a) cash paid in connection with any Acquisition, plus (b) indebtedness payable
to the seller in connection with such Acquisition, plus (c) the fair market
value of any equity securities, including any warrants or options therefor,
delivered in connection with any Acquisition, plus (d) the present value of
covenants not to compete entered into in connection with such Acquisition or
other future payments which are required to be made over a period of time
(discounted at the Domestic Rate), but only to the extent not included in clause
(a), (b), or (c) above, plus (e) the amount of indebtedness assumed in
connection with such Acquisition.
"Total Funded Debt" means, at any time the same is to be determined, the
aggregate of all Indebtedness for Borrowed Money of the Company and its
Restricted Subsidiaries at such time, including all Indebtedness for Borrowed
Money of any other Person which is directly
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or indirectly guaranteed by the Company or any of its Restricted Subsidiaries or
which the Company or any of its Restricted Subsidiaries has agreed (contingently
or otherwise) to purchase or otherwise acquire or in respect of which the
Company or any of its Restricted Subsidiaries has otherwise assured a creditor
against loss.
"Total Senior Funded Debt" means, at any time the same is to be determined,
Total Funded Debt at such time minus the principal balance of Subordinated Debt
then outstanding.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Voting Stock" of any Person means capital stock or other equity interests
of any class or classes (however designated) having ordinary power for the
election of directors or other similar governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more wholly-owned subsidiaries of the Company within the meaning of this
definition.
Section 9.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "hereof", "herein", and "hereunder" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement. For purposes of determining the
"Applicable Margin" and for purposes of computing the covenants set forth in
Section 7.7, 7.8, 7.9, 7.10, 7.11, 7.15(g), and 7.18(z) of this Agreement, the
assets (e.g., amounts due from and investments in affiliates), equity and
earnings attributable to Persons (other than Restricted Subsidiaries and
Permitted Affiliates) in which the Company has an ownership interest therein
shall be excluded in making such determinations and computations, except to the
extent any such earnings are actually received by the Company or a Restricted
Subsidiary in the form of a cash dividend or other cash distribution.
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SECTION 10. THE AGENT.
Section 10.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Company or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the Lenders except as expressly set forth herein. The Agent may resign at any
time by sending 20 days prior written notice to the Company and the Lenders. In
the event of any such resignation, the Required Lenders may appoint a new agent
after consultation with the Company (and, so long as no Default or Event of
Default exists, the Company's prior written consent) which shall succeed to all
the rights, powers and duties of the Agent hereunder and under the other Loan
Documents. Any resigning Agent shall be entitled to the benefit of all the
protective provisions hereof with respect to its acts as an agent hereunder, but
no successor Agent shall in any event be liable or responsible for any actions
of its predecessor. If the Agent resigns and no successor is appointed, the
rights and obligations of such Agent shall be automatically assumed by the
Required Lenders and (i) the Company shall be directed to make all payments due
each Lender hereunder directly to such Lender and (ii) the Agent's rights in the
Collateral Documents shall be assigned without representation, recourse or
warranty to the Lenders as their interests may appear.
Section 10.2. Rights as a Lender. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it was not the Agent. The
terms "Lender" and "Lenders" as used herein and in all other Loan Documents
shall, unless the context otherwise expressly indicates, include the Agent in
its individual capacity as Lender.
Section 10.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the Notes or any of the other Obligations or of
the Loan Documents or of the Liens provided for thereby or of any other
documents called for hereby or thereby or of the Collateral. The Agent need not
verify the worth or existence of the Collateral and may rely exclusively on
reports of the Company with respect thereto. Neither the Agent nor any
director, officer, employee, agent or representative thereof (including any
security trustee therefor) shall in any event be liable for any clerical errors
or errors in judgment, inadvertence or oversight, or for action taken or omitted
to be taken by it or them hereunder or under the Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct. The Agent shall not incur any liability to the Lenders under or in
respect of this Agreement or any other Loan Documents by acting upon any notice,
certificate, warranty, instruction or statement (oral or written) of anyone
(including anyone in good faith believed by it to be
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authorized to act on behalf of the Company), unless it has actual knowledge of
the untruthfulness of same. The Agent may execute any of its duties hereunder by
or through representatives, employees, agents, and attorneys-in-fact and shall
not be answerable to the Lenders for the default or misconduct of any such
representatives, employees, agents or attorneys-in-fact selected with reasonable
care. The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder, and shall
incur no liability to the Lenders and be fully protected in acting upon the
advice of such counsel. The Agent shall be entitled to assume that no Default or
Event of Default exists unless notified to the contrary by a Lender. The Agent
shall in all events be fully protected in acting or failing to act in accordance
with the instructions of the Required Lenders. Upon the occurrence of an Event
of Default hereunder, the Agent shall take such action with respect to the
enforcement of its Liens on the Collateral and the preservation and protection
thereof as it shall be directed to take by the Required Lenders but, unless and
until the Required Lenders have given such direction, the Agent shall take or
refrain from taking such actions as the Agent determines are appropriate and in
the best interest of all Lenders. The Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to take any
such action. The Agent may treat the owner of any Note as the holder thereof
until written notice of transfer shall have been filed with the Agent signed by
such owner in form satisfactory to the Agent. Each Lender acknowledges that it
has independently and without reliance on the Agent or any other Lender and
based upon such information, investigations and inquiries as it deems
appropriate made its own credit analysis and decision to extend credit to the
Company. It shall be the responsibility of each Lender to keep itself informed
as to the creditworthiness of the Company and the Agent shall have no liability
to any Lender with respect thereto.
Section 10.4. Costs and Expenses. Each Lender agrees to reimburse the
Agent for all costs and expenses (including, without limitation, reasonable
attorneys' fees) suffered or incurred by the Agent or any security trustee in
performing its duties hereunder and under the other Loan Documents, or in the
exercise of any right or power imposed or conferred upon the Agent hereby or
thereby, to the extent that the Agent is not promptly reimbursed for same by the
Company after making request of the Company for payment thereof, or out of the
Collateral, all such costs and expenses to be borne by the Lenders ratably in
accordance with their Percentages. If any Lender fails to reimburse the Agent
for its share of any such costs and expenses, such costs and expenses shall be
paid pro rata by the remaining Lenders, but without in any manner releasing the
defaulting Lender from its liability hereunder.
Section 10.5. Indemnity. The Lenders shall ratably indemnify and hold the
Agent, and its directors, officers, employees, agents, representatives or
attorneys-in-fact (including as such any security trustee therefor), harmless
from and against any liabilities, losses, costs or expenses suffered or incurred
by it hereunder or under the other Loan Documents or in connection with the
transactions contemplated hereby or thereby, regardless of when asserted or
arising, except to the extent it is promptly reimbursed for the same by the
Company or out of the Collateral and except to the extent that any event giving
rise to a
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claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified. If any Lender defaults in its obligations hereunder,
its share of the obligations shall be paid pro rata by the remaining Lenders,
but without in any manner releasing the defaulting Lender from its liability
hereunder.
SECTION 11. MISCELLANEOUS.
Section 11.1. Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law
and subject to Section 11.1(b) hereof, each payment by the Company under this
Agreement or the other Loan Documents shall be made without withholding for or
on account of any present or future taxes (other than overall net income taxes
on the recipient) imposed by or within the jurisdiction in which the Company is
domiciled, any jurisdiction from which the Company makes any payment, or (in
each case) any political subdivision or taxing authority thereof or therein. If
any such withholding is so required, the Company shall make the withholding, pay
the amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
each Lender and the Agent free and clear of such taxes (including such taxes on
such additional amount) is equal to the amount which that Lender or the Agent
(as the case may be) would have received had such withholding not been made. If
the Agent or any Lender pays any amount in respect of any such taxes, penalties
or interest the Company shall reimburse the Agent or that Lender for that
payment on demand in the currency in which such payment was made. If the Company
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Lender or
Agent on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Company and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and 30 days after the date hereof, two duly
completed and signed copies of either Form 1001 (relating to such Lender and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents and the Obligations) or Form 4224 (relating to all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents and the
Obligations) of the United States Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Company and the Agent such
additional duly completed and signed copies of one or the other of such Forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) requested by the Company in a
written notice, directly or through the Agent, to such Lender and (ii) required
under then-current United States law or regulations to avoid or reduce United
States withholding taxes on payments in respect of all amounts to be received by
such Lender, including fees, pursuant to the Loan Documents or the Obligations.
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(c) Inability of Lender to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Company or Agent any form or certificate that such Lender is obligated to submit
pursuant to subsection (b) of this Section 11.1 or that such Lender is required
to withdraw or cancel any such form or certificate previously submitted or any
such form or certificate otherwise becomes ineffective or inaccurate, such
Lender shall promptly notify the Company and the Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
Section 11.2. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a
day which is not a Business Day, interest on such principal amount shall
continue to accrue during such extension at the rate per annum then in effect,
which accrued amount shall be due and payable on the next scheduled date for the
payment of interest.
Section 11.3. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Agent or any Lender in the exercise of any power or right shall
operate as a waiver thereof or as an acquiescence in any default, nor shall any
single or partial exercise of any right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies
hereunder of the Agent and the Lenders are cumulative to, and not exclusive of,
any rights or remedies which any of them would otherwise have.
Section 11.4. Waivers, Modifications and Amendments. Any provision hereof
or of the other Loan Documents may be amended, modified, waived or released and
any Default or Event of Default and its consequences may be rescinded and
annulled upon the written consent of the Company and the Required Lenders;
provided, however, that without the written consent of each Lender no such
amendment, modification or waiver shall increase the amount or extend the terms
of such Lender's Commitments or reduce the amount of any principal of or
interest rate applicable to, or extend the maturity of, any Obligation owed to
it or reduce the amount of fees or other amounts to which it is entitled
hereunder or release any guaranty of any Obligations or release all or any
substantial (in value) part of the collateral security afforded by the Loan
Documents (except in connection with a sale or other disposition permitted to be
effected by the provisions hereof or of the Loan Documents) or change this
Section 11.4 or change the definition of "Required Lenders" or change the number
of Lenders required to take any action hereunder or under the other Loan
Documents. No amendment, modification or waiver of the Agents' protective
provisions shall be effective without the prior written consent of the Agent.
Section 11.5. Costs and Expenses. (a) The Company agrees to pay on demand
all reasonable costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and in
connection with any one or more assignments of the Obligations and Commitments
(as set forth in Section 11.18 hereof) and
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in connection with any consents hereunder or thereunder and any waivers or
amendments hereto or thereto, including the reasonable fees and expenses of
counsel for the Agent with respect to all of the foregoing, and all recording,
filing, title insurance or other fees, costs and taxes incident to perfecting a
Lien upon the collateral security for the Obligations, and all reasonable costs
and expenses (including reasonable attorneys' fees) incurred by the Agent, the
Lenders or any other holders of the Obligations in connection with a default or
the enforcement of the Loan Documents, and all reasonable costs, fees and taxes
of the types enumerated above incurred in supplementing (and recording or filing
supplements to) the Loan Documents in connection with assignments contemplated
by Section 11.18 hereof if counsel to the Agent believes such supplements to be
appropriate or desirable. The Company agrees to indemnify and save the Lenders,
the Agent and any security trustee for the Agent or the Lenders harmless from
any and all liabilities, losses, costs and expenses incurred by the Lenders or
the Agent in connection with any action, suit or proceeding brought against the
Agent, any security trustee or any Lender by any Person which arises out of the
transactions contemplated or financed by any of the Loan Documents or out of any
action or inaction by the Agent, any security trustee or any Lender thereunder,
including without limitation those caused by the negligence of any party but
except for such thereof as is caused by the gross negligence or willful
misconduct of the party indemnified and except for costs or liabilities incurred
in suits which are exclusively among the Lenders or the Lenders and the Agent.
The provisions of this Section 11.5 and the protective provisions of Section 2
hereof shall survive payment of the Obligations.
(b) The Company unconditionally agrees to forever indemnify, defend and
hold harmless, and covenants not to sue for any claim for contribution against,
the Agent and the Lenders for any damages, costs, loss or expense, including
without limitation, response, remedial or removal costs, arising out of any of
the following: (i) any presence, release, threatened release or disposal of any
hazardous or toxic substance or petroleum by the Company or any Subsidiary or
otherwise occurring on or with respect to its property (whether owned or
leased), (ii) the operation or violation of any environmental law, whether
federal, state, or local, and any regulations promulgated thereunder, by the
Company or any Subsidiary or otherwise occurring on or with respect to its
property (whether owned or leased), (iii) any claim for personal injury or
property damage in connection with the Company or any Subsidiary or otherwise
occurring on or with respect to its property (whether owned or leased), and (iv)
the inaccuracy or breach of any environmental representation, warranty or
covenant by the Company or any Subsidiary made herein or in any promissory note,
mortgage, deed of trust, security agreement or any other instrument or document
evidencing or securing any Obligations or setting forth terms and conditions
applicable thereto or otherwise relating thereto, except for damages arising
from the willful misconduct or gross negligence of, or material breach of the
Loan Documents by, the party claiming indemnification. This indemnification
shall survive the payment and satisfaction of all Obligations and the
termination of this Agreement, and shall remain in force beyond the expiration
of any applicable statute of limitations and payment or satisfaction in full of
any single claim under this indemnification. This indemnification shall be
binding upon the successors and assigns of the Company and shall inure to the
benefit of Agent and the Lenders and their directors, officers, employees,
agents, and collateral trustees, and their successors and assigns.
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Section 11.6. Documentary Taxes. The Company agrees that it will pay any
documentary, stamp or similar taxes payable in respect to any Loan Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit to it
is then in use or available.
Section 11.7. Survival of Representations. All representations and
warranties made herein and in the other Loan Documents and in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and the other Loan Documents, and shall continue in full force and
effect with respect to the date as of which they were made as long as any credit
is in use or available hereunder.
Section 11.8. Construction. Nothing contained herein shall be deemed or
construed to permit any act or omission which is prohibited by the terms of any
Collateral Document, the covenants and agreements contained herein being in
addition to and not in substitution for the covenants and agreements contained
in the Collateral Documents.
Section 11.9. Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, in the case of the Company, or on the appropriate
signature page hereof, in the case of the Lenders and the Agent, or such other
address or telecopier number as such party may hereafter specify by notice to
the Agent and the Company given by United States certified or registered mail,
by telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder to the Company shall
be addressed to:
Everest Healthcare Services Corporation
101 North Scoville Avenue
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Telephone: (708) 386-9076
Telecopy: (708) 386-1711
with a copy of any notice
of default also sent to: Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Ms. Susan B. Schneider
Telephone: (312) 902-5624
Telecopy: (312) 902-1061
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
postage prepaid, addressed as aforesaid or (iii) if given by
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any other means, when delivered at the addresses specified in this Section;
provided that any notice given pursuant to Section 1 or Section 2 hereof shall
be effective only upon receipt.
Section 11.10. Lender's Obligations Several. The obligations of the
Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by the Lenders pursuant hereto shall be deemed to
constitute the Lenders a partnership, association, joint venture or other
entity.
Section 11.11. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
Section 11.12. Severability of Provisions. Any provision of this
Agreement which is unenforceable or prohibited in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such unenforceability or
prohibition without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction. All
rights, remedies and powers provided in this Agreement and the other Loan
Documents may be exercised only to the extent that the exercise thereof does not
violate any applicable mandatory provisions of law, and all the provisions of
this Agreement and other Loan Documents are intended to be subject to all
applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this Agreement or
the other Loan Documents invalid or unenforceable.
Section 11.13. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 11.14. Binding Nature and Governing Law. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Agent and the Lenders and the benefit of their successors and
permitted assigns, including any subsequent holder of an interest of the
Obligations. This Agreement and the rights and duties of the parties hereto
shall be construed and determined in accordance with, and shall be governed by,
the internal laws of the State of Illinois without regard to principles of
conflicts of law. The Company may not assign its rights hereunder without the
written consent of the Agent and the Lenders.
Section 11.15. Entire Understanding. This Agreement, together with the
other Loan Documents, constitute the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.
Section 11.16. Extension of the Revolving Credit Commitments. The Company
shall have the option to request a maximum of two one-year extensions to the
Termination Date pursuant to this Section. No less than 120 days prior to, but
no more than 150 days prior to, May 15, 1999 (and, if the Termination Date has
been extended pursuant to this Section, May 15, 2000), the Company may advise
the Agent in writing of the Company's desire to extend the Termination Date for
an additional 12 months and the Agent shall promptly
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notify the Lenders of each such request, provided that the Termination Date
shall in no event be extended pursuant to this Section beyond May 15, 2003. If
the Company makes any such request, each Lender agrees to notify the Company and
the Agent within 60 days of such request stating whether such Lender is
declining or consenting to any such request, or consenting to such request
subject to specified terms and conditions. In the event that a Lender fails to
so notify the Agent and the Company during such period, such Lender shall be
deemed to have refused the requested extension. In the event that each Lender is
agreeable to such extension (it being understood that the Lenders may accept or
decline such a request in their sole discretion and on such terms as they may
elect), the Company and the Lenders shall enter into such documents as the Agent
may reasonably deem necessary or appropriate to reflect such extension, and all
reasonable costs and expenses incurred by the Agent in connection therewith
(including reasonable attorneys' fees) shall be paid by the Company. In the
event any Lender declines a request to extend the Termination Date as provided
above, the Company shall have the option to require, at the Company's expense,
such Lender to assign, at par plus accrued interest and fees, without recourse
all of its interests, rights and obligations hereunder (including all of its
Commitments and the Loans and other amounts at the time owing to it hereunder
and its Notes and its interest in the Letters of Credit) to another Lender or to
another bank, financial institution or other entity specified by the Company
willing to provide such financing, provided that (i) such assignment shall not
conflict with or violate any law, rule or regulation or order of any court or
other governmental authority, (ii) the Company shall have received the written
consent of the Agent to such assignment, which consent shall not be unreasonably
withheld or delayed, (iii) the Company shall have paid to the assigning Lender
all monies other than such principal, interest and fees accrued and owing
hereunder to it, and (iv) the assignment is entered into in accordance with the
requirements of Section 11.18 hereof.
Section 11.17. Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other bank or lending institution (a
"Participant") provided that (i) no Participant shall thereby acquire any direct
rights under this Agreement, (ii) no Lender shall agree with a Participant not
to exercise any of its rights hereunder without the consent of such Participant
except for rights which under the terms hereof may only be exercised by all
Lenders, and (iii) no sale of a participation in extensions of credit shall in
any manner relieve the selling Lender of its obligations hereunder.
Section 11.18. Assignment Agreements. Each Lender may, from time to time
upon at least 5 Business Days' notice to the Agent and the Company, assign to
other banks or lending institutions all or part of its rights and obligations
under this Agreement (including, without limitation, the indebtedness evidenced
by the Notes then owned by such assigning Lender, together with an equivalent
proportion of its obligation to make loans and advances and participate in
Letters of Credit hereunder) pursuant to an Assignment Agreement in the form
attached hereto as Exhibit I (the "Assignment Agreements"); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of the assigning Lender's rights and obligations under this Agreement
and the assignment shall cover the same percentage of such Lender's Commitments,
Loans, Notes and interests in Letters of Credit; (ii) unless the Agent otherwise
consents, the aggregate amount of the Commitments, Loans, Notes and interests in
the Letters of Credit of the assigning Lender
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being assigned pursuant to each such assignment (determined as of the effective
date of the relevant Assignment Agreement) shall in no event be less than
$5,000,000 and shall be an integral multiple of $1,000,000 and, unless the
assigning Lender shall have assigned all of its Commitments, Loans, Notes and
interests in Letters of Credit, the aggregate amount of Commitments, Loans,
Notes, and interests in Letters of Credit retained by the assigning Lender shall
in no event be less than $5,000,000; (iii) the Agent and the Company must each
consent, which consent shall not be unreasonably withheld and shall be evidenced
by execution of a counterpart of the relevant Assignment Agreement in the space
provided thereon for such acceptance, to each such assignment to a party which
was not an original signatory of this Agreement; and (iv) the assigning Lender
must pay to the Agent a processing and recordation fee of $3,000 and any
reasonable out-of-pocket attorney's fees incurred by the Agent in connection
with such Assignment Agreement. Upon the execution of each Assignment Agreement
by the assigning Lender thereunder, the assignee lender thereunder, the Company
and the Agent and payment to such assigning Lender by such assignee lender of
the purchase price for the portion of the indebtedness of the Company being
acquired by it, (i) such assignee lender shall thereupon become a "Lender" for
all purposes of this Agreement with Commitments in the amount set forth in such
Assignment Agreement and with all the rights, powers and obligations afforded a
Lender hereunder, (ii) such assigning Lender shall have no further liability for
funding the portion of its Commitments assumed by such other Lender and (iii)
the address for notices to such assignee Lender shall be as specified in the
Assignment Agreement executed by it. Concurrently with the execution and
delivery of such Assignment Agreement, the Company shall execute and deliver
Notes to the assignee Lender in the respective amounts of its Commitments and
new Notes to the assigning Lender in the respective amounts of its Commitments
after giving effect to the reduction occasioned by such assignment, all such
Notes to constitute "Notes" for all purposes of this Agreement and the other
Loan Documents.
Section 11.19. Confidentiality. Any information disclosed by the Company or
any of its Subsidiaries to the Agent or any Lender which was designated
proprietary or confidential at the time of its receipt by the Agent or such
Lender, and which it is not otherwise in the public domain, shall not be
disclosed by the Agent or such Lender to any other Person except (i) to its
independent accountants and legal counsel (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such information and instructed to keep such information confidential), (ii)
pursuant to statutory and regulatory requirements, (iii) pursuant to any
mandatory court order, subpoena or other legal process, (iv) to the Agent or any
other Lender, (v) pursuant to any agreement heretofore or hereafter made between
such Lender and the Company which permits such disclosure, (vi) in connection
with the exercise of any remedy under the Loan Documents, or (vii) subject to an
agreement containing provisions substantially the same as those of this Section,
to any participant in or assignee of, or prospective participant in or assignee
of, any Obligation or Commitment (it being understood that prior to any such
disclosures contemplated by clauses (ii) and (iii) above, the Agent or such
Lender shall, if practicable, give the Company prior written notice of such
disclosure).
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Section 11.20. Reaffirmation of Collateral Documents. The Company has
heretofore executed and delivered to the Agent an Amended and Restated Security
Agreement dated as of May 15, 1997 and an Amended and Restated Pledge Agreement
dated as of May 15, 1997 and certain other Collateral Documents for the benefit
of the Agent and the Lenders. The Company hereby agrees that, notwithstanding
the execution and delivery of this Agreement, all Collateral Documents
heretofore executed and delivered to the Agent shall remain in full force and
effect and shall secure all the Obligations of the Company hereunder and under
the other Loan Documents and that all rights and remedies of the Agent and the
Lenders thereunder, and all Obligations of the Company thereunder and all Liens
created and provided for thereunder, shall be and remain in full force and
effect and shall not be affected, impaired, or discharged hereby. The Company
hereby acknowledges and agrees, and the Agent and the Lenders hereby acknowledge
and agree, that the "Credit Agreement" and the "Notes" referred to in the
Amended and Restated Security Agreement, Amended and Restated Pledge Agreement,
and such other Collateral Documents shall from and after the date hereof be
deemed a reference to this Agreement and the Notes issued hereunder.
Section 11.21. Submission to Jurisdiction; Waiver of Jury Trial. The
Company hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. THE COMPANY, THE AGENT, AND EACH LENDER HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
[SIGNATURE PAGES TO FOLLOW]
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 18th day of May, 1998.
EVEREST HEALTHCARE SERVICES
CORPORATION
By /s/ JOHN B. BOURKE
-----------------------------------
Name John B. Bourke
Title Chief Financial Officer
Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.
Each of the Lenders hereby agrees with each other Lender that if it should
receive or obtain any payment (whether by voluntary payment, by realization upon
collateral, by the exercise of rights of set-off or banker's lien, by
counterclaim or cross action, or by the enforcement of any rights under the
Agreement or the other Loan Documents or otherwise) in respect of the
Obligations, in a greater amount than such Lender would have received had such
payment been made to the Agent and been distributed among the Lenders as
contemplated by Section 3.9 hereof, then in that event the Lender receiving such
disproportionate payment shall purchase for cash without recourse from the other
Lenders an interest in the Obligations owed to such Lenders in such amount as
shall result in a distribution of such payment as contemplated by Section 3.9
hereof. In the event any payment made to a Lender and shared with the other
Lenders pursuant to the provisions hereof is ever recovered from such Lender,
the Lenders receiving a portion of such payment hereunder shall restore the same
to the payor Lender, but without interest. In the event any amount paid to the
Agent under the Applications shall ever be recovered from the Agent, each Lender
shall reimburse the Agent for its pro rata share of the amount so recovered.
Amount and Percentage of Commitments:
Revolving Credit Acquisition Financing Harris Trust and Savings Bank
Commitment Commitment
$10,500,000 $19,500,000
Supplemental By: /s/ GLORIA COMPEAN-ENDICOTT
-----------------------------
Revolving Credit Name: Gloria Compean-Endicott
Commitment Title: Vice President
$4,500,000
Address:
111 West Monroe Street, 4E
P.O. Box 755
Chicago, Illinois 60690
Attention: Ms. Gloria Compean-
Endicott
Telephone: (312) 461-2324
Telecopy: (312) 461-7365
Revolving Credit Acquisition Financing Comerica Bank
Commitment Commitment
$5,600,000 $10,400,000
Supplemental By: /s/ COLLEEN M. MURPHY
-----------------------------
Revolving Credit Name: Colleen M. Murphy
Commitment Title: Assistant Vice President
$2,400,000
Address:
Comerica Bank
Two Mid American Plaza, Suite 616
Oakbrook Terrace, Illinois 60181
Attention: Colleen Murphy
Telephone: (630) 645-7376
Telecopy: (630) 575-2164
Revolving Credit Acquisition Financing Firstar Bank Illinois
Commitment Commitment
$4,025,000 $7,475,000
Supplemental By: /s/ MICHAEL CONWAY
-----------------------------
Revolving Credit Name: Michael Conway
Commitment Title: Vice President
$1,725,000
Address:
9575 West Higgins Road
Rosemont, Illinois 60018
Attention: Victor Narusis
Telephone: (847) 318-6330
Telecopy: (847) 696-9437
Revolving Credit Acquisition Financing Mercantile Bank National Association
Commitment Commitment
$4,025,000 $7,475,000
Supplemental By: /s/ MARY ANN LEMONDS
--------------------------------
Revolving Credit Name: Mary Ann Lemonds
Commitment Title: Vice President
$1,725,000
Address:
721 Locust
St. Louis, Missouri 63101
Attention: Mary Ann Lemonds
Telephone: (314) 425-8178
Telecopy: (314) 418-8394
Revolving Credit Acquisition Financing Bank of America National Trust and
Commitment Commitment Savings Association
$3,850,000 $7,150,000
Supplemental By: /s/ SARAH A. RUSHER
--------------------------------
Revolving Credit Name: Sarah A. Rusher
Commitment Title: Vice President
$1,650,000
Address:
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Sarah A. Rusher
Telephone: (312) 828-1005
Telecopy: (312) 765-2193
Revolving Credit Acquisition Financing Key Corporate Capital Inc.
Commitment Commitment
$3,500,000 $6,500,000
Supplemental By: /s/ LAURIE MULLER-GIRARD
------------------------------
Revolving Credit Name: Laurie Muller-Girard
Commitment Title: Vice President
$1,500,000
Address:
Mailcode: OH-01-27-0605
127 Public Square
Cleveland, Ohio 44114
Attention: Laurie Muller-Girard
Telephone: (216) 689-3599
Telecopy: (216) 689-5970
Revolving Credit Acquisition Financing M&I Marshall & Ilsley Bank
Commitment Commitment
$3,500,000 $6,500,000
Supplemental By: /s/ STEPHEN F. GEIMER
-------------------------------
Revolving Credit Name: Stephen F. Geimer
Commitment Title: Vice President
$1,500,000
Address:
770 N. Water Street
P.O. Box 2035
Milwaukee, Wisconsin 53201
Attention: Stephen F. Geimer
Telephone: (414) 765-7677
Telecopy: (414) 765-7625
EXHIBIT A
REVOLVING CREDIT NOTE
Chicago, Illinois
$__________ _________________, 19__
On the Termination Date, for value received, the undersigned, Everest
Healthcare Services Corporation, a Delaware corporation (the "Company") hereby
promises to pay to the order of _____________________________________________
(the "Lender"), at the principal office of Harris Trust and Savings Bank in
Chicago, Illinois, the principal sum of (i)____________________________________
________________ Dollars ($_________), or (ii) such lesser amount as may at the
time of the maturity hereof, whether by acceleration or otherwise, be the
aggregate unpaid principal amount of all Revolving Loans owing from the Company
to the Lender under the Credit Agreement hereinafter mentioned.
This Note evidences Revolving Loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain Second
Amended and Restated Credit Agreement dated as of May 18, 1998, among the
Company, Harris Trust and Savings Bank, individually and as Agent, and the other
Lenders which are now or may from time to time hereafter become parties thereto
(said Credit Agreement, as the same may from time to time be modified, amended
or restated being referred to herein as the "Credit Agreement") made and to be
made to the Company by the Lender under the Credit Agreement, and the Company
hereby promises to pay interest at the office specified above on each Revolving
Loan evidenced hereby at the rates and times specified therefor in the Credit
Agreement.
Each Revolving Loan made under the Credit Agreement by the Lender to the
Company against this Note, any repayment of principal hereon, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion, in the case of any LIBOR Portion, and the interest rates and Interest
Periods applicable thereto shall be endorsed by the holder hereof on the reverse
side of this Note or recorded on the books and records of the holder hereof
(provided that such entries shall be endorsed on the reverse side hereof prior
to any negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records of the
Lender shall be prima facie evidence of the unpaid balance of this Note, the
status of each loan from time to time as part of a Domestic Rate Portion or a
LIBOR Portion and, in the case of any LIBOR Portion, the interest rates and
Interest Periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms have in the Credit Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including reasonable attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflicts of law.
EVEREST HEALTHCARE SERVICES
CORPORATION
By _______________________________
Name____________________________
Title___________________________
-2-
EXHIBIT B
NOTICE OF PAYMENT REQUEST
[DATE]
[NAME OF LENDER]
[ADDRESS]
Attention:
Reference is made to the Second Amended and Restated Credit Agreement,
dated as of May __, 1998, among Everest Healthcare Services Corporation, the
Lenders named therein, and Harris Trust and Savings Bank, as Agent (the "Credit
Agreement"). Capitalized terms used herein and not defined herein have the
meanings assigned to them in the Credit Agreement. [THE COMPANY HAS FAILED TO
PAY A REIMBURSEMENT OBLIGATION IN THE AMOUNT OF $__________. YOUR PERCENTAGE OF
THE UNPAID REIMBURSEMENT OBLIGATION IS $___________] OR [HARRIS TRUST AND
SAVINGS BANK HAS BEEN REQUIRED TO RETURN A PAYMENT BY THE COMPANY OF A
REIMBURSEMENT OBLIGATION IN THE AMOUNT OF $__________. YOUR PERCENTAGE OF THE
RETURNED REIMBURSEMENT OBLIGATIONS IS $____________].
Very truly yours,
HARRIS TRUST AND SAVINGS BANK, as Agent
By_____________________________________
Name_________________________________
Title________________________________
EXHIBIT C
ACQUISITION FINANCING NOTE
Chicago, Illinois
$_________ ___________________,19__
On the Acquisition Financing Termination Date, for value received, the
undersigned, Everest Healthcare Services Corporation, a Delaware corporation
(the "Company"), hereby promises to pay to the order of ______________________
(the "Lender"), at the principal office of Harris Trust and Savings Bank in
Chicago, Illinois, the principal sum of (i) ______________________________
Dollars ($______________), or (ii) such lesser amount as may at the time of
maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid
principal amount of all Acquisition Financing Loans owing from the Company to
the Lender under the Credit Agreement hereinafter mentioned.
This Note evidences Acquisition Financing Loans constituting part of a
"Domestic Rate Portion" and "LIBOR Portions" as such terms are defined in that
certain Second Amended and Restated Credit Agreement dated as of May 18, 1998,
among the Company, Harris Trust and Savings Bank, individually and as Agent
thereunder, and the other Lenders which are now or may from time to time
hereafter become parties thereto (said Credit Agreement, as the same may be
amended, modified or restated from time to time, being referred to herein as the
"Credit Agreement") made and to be made to the Company by the Lender under the
Credit Agreement, and the Company hereby promises to pay interest at the office
specified above on each Acquisition Financing Loan evidenced hereby at the rates
and at the times specified therefor in the Credit Agreement.
Each Acquisition Financing Loan made under the Credit Agreement by the
Lender to the Company against this Note, any repayment of principal hereon, the
status of such loan from time to time as part of the Domestic Rate Portion or a
LIBOR Portion and, in the case of any LIBOR Portion, the interest rate and
Interest Period applicable thereto shall be endorsed by the holder hereof on the
reverse side of this Note or recorded on the books and records of the holder
hereof (provided that such entries shall be endorsed on the reverse side of this
Note prior to any negotiation hereof). The Company agrees that in any action or
proceeding instituted to collect or enforce collection of this Note, the entries
so endorsed on the reverse side of this Note or recorded on the books and
records of the holder hereof shall be prima facie evidence of the unpaid balance
of this Note and the status of each loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayment are required to be made hereon,
all in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms are defined in the Credit Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including reasonable attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflict of law.
EVEREST HEALTHCARE SERVICES
CORPORATION
By___________________________________
Name_______________________________
Title______________________________
-2-
EXHIBIT D
TERM NOTE
Chicago, Illinois
$________ ___________________, 19__
For Value Received, the undersigned, Everest Healthcare Services
Corporation, a Delaware corporation (the "Company") hereby promises to pay to
the order of _______________________________________________________ (the
"Lender"), at the principal office of Harris Trust and Savings Bank in Chicago,
Illinois, the principal sum of __________________________________________
Dollars ($_________), in twenty (20) consecutive principal installments
commencing on ____________, 199___ and continuing on the ____ day of each
____________, ___________, _____________ and ________ occurring thereafter to
and including ____________, _____________, with the first nineteen principal
installments each to be in an amount equal to 1/28th of the original principal
amount of this Note, with the final installment in the amount of all principal
not sooner paid due on _______________, __________, of the final maturity
hereof.
This Note evidence a Term Loan constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain Second
Amended and Restated Credit Agreement dated as of May 18, 1998, among the
Company, Harris Trust and Savings Bank, individually and as Agent, and the other
Lenders which are now or may from time to time hereafter become parties thereto
(said Credit Agreement, as the same may from time to time be modified, amended
or restated being referred to herein as the "Credit Agreement") made to the
Company by the Lender under the Credit Agreement, and the Company hereby
promises to pay interest at the office specified above on the Term Loan
evidenced hereby at the rates and times specified therefor in the Credit
Agreement.
The Term Loan made under the Credit Agreement by the Lender to the Company
against this Note, any repayment of principal hereon, the status of such loan
from time to time as part of the Domestic Rate Portion or a LIBOR Portion, in
the case of any LIBOR Portion, and the interest rates and Interest Periods
applicable thereto shall be endorsed by the holder hereof on the reverse side of
this Note or recorded on the books and records of the holder hereof (provided
that such entries shall be endorsed on the reverse side hereof prior to any
negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records of the
Lender shall be prima facie evidence of the unpaid balance of this Note, the
status of such loan from time to time as part of a Domestic Rate Portion or a
LIBOR Portion and, in the case of any LIBOR Portion, the interest rates and
Interest Periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note
may be declared to be, or be and become, due prior to its expressed maturity,
voluntary prepayments may be made hereon, and certain prepayments are required
to be made hereon, all in the events, on the terms and with the effects provided
in the Credit Agreement. All capitalized terms used herein without definition
shall have the same meanings herein as such terms have in the Credit Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including reasonable attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflicts of law.
EVEREST HEALTHCARE SERVICES
CORPORATION
By______________________________
Name__________________________
Title_________________________
-2-
EXHIBIT E
SUPPLEMENTAL REVOLVING CREDIT NOTE
Chicago, Illinois
$________ ___________________, 19__
On the Supplemental Revolving Credit Termination Date, for value received,
the undersigned, Everest Healthcare Services Corporation, a Delaware corporation
(the "Company") hereby promises to pay to the order of _______________________
_____________________ (the "Lender"), at the principal office of Harris Trust
and Savings Bank in Chicago, Illinois, the principal sum of (i)________________
____________________________________ Dollars ($_________), or (ii) such lesser
amount as may at the time of the maturity hereof, whether by acceleration or
otherwise, be the aggregate unpaid principal amount of all Supplemental
Revolving Loans owing from the Company to the Lender under the Credit Agreement
hereinafter mentioned.
This Note evidences Supplemental Revolving Loans constituting part of a
"Domestic Rate Portion" and "LIBOR Portions" as such terms are defined in that
certain Second Amended and Restated Credit Agreement dated as of May 18, 1998,
among the Company, Harris Trust and Savings Bank, individually and as Agent, and
the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as the same may from time to time be
modified, amended or restated being referred to herein as the "Credit
Agreement") made and to be made to the Company by the Lender under the Credit
Agreement, and the Company hereby promises to pay interest at the office
specified above on each Supplemental Revolving Loan evidenced hereby at the
rates and times specified therefor in the Credit Agreement.
Each Supplemental Revolving Loan made under the Credit Agreement by the
Lender to the Company against this Note, any repayment of principal hereon, the
status of each such loan from time to time as part of the Domestic Rate Portion
or a LIBOR Portion, in the case of any LIBOR Portion, and the interest rates and
Interest Periods applicable thereto shall be endorsed by the holder hereof on
the reverse side of this Note or recorded on the books and records of the holder
hereof (provided that such entries shall be endorsed on the reverse side hereof
prior to any negotiation hereof). The Company agrees that in any action or
proceeding instituted to collect or enforce collection of this Note, the entries
so endorsed on the reverse side hereof or recorded on the books and records of
the Lender shall be prima facie evidence of the unpaid balance of this Note, the
status of each loan from time to time as part of a Domestic Rate Portion or a
LIBOR Portion and, in the case of any LIBOR Portion, the interest rates and
Interest Periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms have in the Credit Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including reasonable attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflicts of law.
EVEREST HEALTHCARE SERVICES
CORPORATION
By___________________________________
Name_______________________________
Title______________________________
-2-
EXHIBIT F
BORROWING BASE CERTIFICATE
To: Harris Trust and Savings Bank, as Agent
under, and the Lenders party to,the Credit
Agreement described below.
Pursuant to the terms of the Second Amended and Restated Credit Agreement
dated as of May 18, 1998, among us (the "Credit Agreement"), we submit this
Borrowing Base Certificate to you and certify that the information set forth
below and on any attachments to this Certificate is true, correct and complete
as of the date of this Certificate.
A. ACCOUNTS IN BORROWING BASE
1. Gross Accounts ______________
Less
(a) Ineligible sales or services
(i.e., not within the U.S.) ______________
(b) Owed by an account
debtor who is a Subsidiary
or an Affiliate ______________
(c) Owed by an account
debtor who is in an
insolvency or
reorganization proceeding ______________
(d) Credits/allowances/
retainage ______________
(e) Unpaid more than 120
days ______________
(f) Otherwise ineligible ______________
2. Total Deductions
(sum of lines A1a - A1f) ______________
3. Eligible Accounts
(line A1 minus line A2) ______________
4. Accounts in Borrowing Base
(line A3 x .75) ______________
B. Revolving Credit Advances
1. Revolving Credit Loans ______________
2. Letters of Credit ______________
3. Total Revolving Credit Outstanding
(line B1 plus B2) ______________
C. Unused Availability
(line A4 minus line B3) ______________
Dated as of this ___________ day of __________________, 19____.
EVEREST HEALTHCARE SERVICES
CORPORATION
By______________________________
___________________, ____________
(Print or Type Name) (Title)
-2-
EXHIBIT G
COMPLIANCE CERTIFICATE
To: Harris Trust and Savings Bank, as Agent
under, and the Lenders party to, the Credit
Agreement described below
This Compliance Certificate is furnished to the Agent and the Lenders
pursuant to that certain Second Amended and Restated Credit Agreement dated as
of May 18, 1998, by and among Everest Healthcare Services Corporation (the
"Company") and you (the "Credit Agreement"). Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed thereto
in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________________________ of the
Company;
2. I have reviewed the terms of the Credit Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate, except as set forth below;
4. The financial statements required by Section 7.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete as of the date and for the periods covered thereby;
and
5. The Schedule I hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
-2-
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _________ day of
__________________ 19___.
Everest Healthcare Services
Corporation
By_______________________________________
_______________________, ________________
(Print or Type Name) (Title)
SCHEDULE I
TO COMPLIANCE CERTIFICATE
COMPLIANCE CALCULATIONS
FOR MAY 18, 1998 SECOND AMENDED AND RESTATED CREDIT AGREEMENT
CALCULATIONS AS OF _____________, 199____
================================================================================
A. CURRENT RATIO (SECTION 7.7)
1. Consolidated current assets $___________
2. Consolidated current liabilities $___________
3. Ratio of line A1 to A2 _____: 1.0
4. Line A3 ratio must not be less than 1.0: 1.0
5. The Company is in compliance (circle yes or no) yes/no
B. TOTAL SENIOR FUNDED DEBT TO TOTAL CAPITALIZATION (SECTION 7.8)
1. Total Funded Debt $___________
2. Principal owing on Subordinated Debt ___________
3. Line B1 minus B2 ("Total Senior Funded Debt") ___________
4. Net Worth ___________
5. Sum of Line B1 and B4 ("Total Capitalization") ___________
6. Ratio of Line B3 to B5 ____: 1.0
7. Line B6 ratio not to exceed ____: 1.0
8. The Company is in compliance (circle yes or no) yes/no
C. TOTAL SENIOR FUNDED DEBT TO ADJUSTED EBITDA (SECTION 7.9)
1. Total Funded Debt $___________
2. Principal owing on Subordinated Debt ___________
-2-
3. Line C1 minus C2 ("Total Senior Funded Debt") ___________
4. Net Income for past 4 quarters ___________
5. Interest Expense for past 4 quarters (relating
to operations owned for 4 quarters then ended) ___________
6. Income Taxes for past 4 quarters (relating to
operations owned for 4 quarters then ended) ___________
7. Depreciation and Amortization Expense for past
4 quarters (relating to operations owned for
4 quarters then ended) ___________
8. Non-recurring acquisition expenses (relating to
operations owned for 4 quarters then ended) ___________
9. Sum of Lines C4, C5, C6, C7 and C8 ___________
10. Net Income arising out of Acquired Business
for past 4 quarters (for Acquired Business owned for
less than 1 quarter) ___________
11. Interest Expense arising out of Acquired Business
for past 4 quarters (for Acquired Business owned
for less than 1 quarter) ___________
12. Income Taxes arising out of Acquired Business
for past 4 quarters (for Acquired Business owned
for less than 1 quarter) ___________
13. Depreciation and Amortization Expense arising
out of Acquired Business for past 4 quarters (for
Acquired Business owned for less than 1 quarter) ___________
14. Non-recurring expenses and revenue arising out
of Acquired Business for past 4 quarters (for
Acquired Business owned for less than 1 quarter) ___________
15. Sum of Lines C10, C11, C12, C13 and C14
("Acquisition EBITDA") ___________
16. Net Income arising out of Acquired Business since
Acquisition (for Acquired Business owned more
than 1 quarter but less than 4 quarters) ___________
-3-
17. Interest Expense arising out of Acquired Business
since Acquisition (for Acquired Business owned
more than 1 quarter but less than 4 quarters) ___________
18. Income Taxes arising out of Acquired Business
since Acquisition (for Acquired Business owned
more than 1 quarter but less than 4 quarters) ___________
19. Depreciation and Amortization Expense arising
out of Acquired Business since Acquisition (for
Acquired Business owned more than 1 quarter but
less than 4 quarters) ___________
20. Non-recurring expenses and revenue arising out
of Acquired Business since Acquisition (for
Acquired Business owned more than 1 quarter but
less than 4 quarters) ___________
21. Sum of Lines C16, C17, C18, C19 and C20 ___________
22. 365 divided by number of days since Acquisition ___________
23. Line 21 multiplied by Line 22 ___________
24. Sum of Lines 9, 15, 23 ("Adjusted EBITDA") ___________
25. Ratio of Line C3 to C24 ____: 1.0
26. Line C25 ratio must not exceed ____: 1.0
27. The Company is in compliance (circle yes or no) yes/no
D. NET WORTH (SECTION 7.10)
1. Net Worth $___________
2. Line D1 shall not be less than $___________
3. The Company is in compliance (circle yes or no) yes/no
E. FIXED CHARGE COVERAGE RATIO (SECTION 7.11)
1. EBITDA (Line C9 above) for past 4 quarters $___________
-4-
2. Principal payments on Indebtedness for Borrowed
Money for past 4 quarters $___________
3. Interest Expense for past 4 quarters $___________
4. Sum of Line E2 and E3 ("Fixed Charges") $___________
5. Ratio of Line E1 to Line E4 ____: 1.0
6. Line E5 ratio must not be less than ____: 1.0
7. The Company is in compliance (circle yes or no) yes/no
F. PATIENT TREATMENTS (SECTION 7.12)
1. Active patients as of last day of measurement
period ___________
2. Line F1 must not be less than ___________
3. The Company is in compliance (circle yes or no) yes/no
EXHIBIT H
OPINION OF COUNSEL
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS APPEARS HERE]
May 18, 1998
Harris Trust and Savings Bank, as
Agent, and the Lenders who are
or become a party to the Second
Amended and Restated Credit
Agreement referred to below
Ladies and Gentlemen:
We have acted as counsel to EVEREST HEALTHCARE SERVICES CORPORATION, a
Delaware corporation (the "Company"), in connection with that certain Second
Amended and Restated Credit Agreement dated as of MAY 18, 1998 (the "Credit
Agreement") by and among the Company, Harris Trust and Savings Bank,
individually and as agent (in such capacity, the "Agent"), and the Lenders named
therein. Capitalized terms used herein, but not otherwise defined herein, shall
have the meanings ascribed to such terms in the Credit Agreement.
We also have acted as counsel to the following subsidiaries of the Company
in connection with their incurrence of certain obligations arising under or in
connection with the Loan Documents (as defined below):
1. Amarillo Acute Dialysis Specialists, L.L.C., a Texas limited liability
company ("AMARILLO ACUTE");
2. Con-Med Supply Company, Inc., an Illinois corporation ("CON-MED");
3. Continental Health Care, Ltd., an Illinois corporation ("CONTINENTAL");
4. Dialysis Services of Cincinnati, Inc., an Ohio corporation ("CINCINNATI");
5. Dialysis Specialists of Corpus Christi, L.L.C., a Texas limited liability
company ("CORPUS CHRISTI");
6. Dialysis Specialists of South Texas, L.L.C., a Texas limited liability
company ("DSST");
7. DuPage Dialysis, Ltd., an Illinois corporation ("DUPAGE");
8. Everest Management, Inc., a Delaware corporation ("EVEREST MANAGEMENT");
9. Hemo Dialysis of Amarillo, L.L.C., a Texas limited liability company
("HEMO");
10. Home Dialysis of America, Inc., an Arizona corporation ("HDA");
11. Home Dialysis of Dayton, Inc., an Ohio corporation ("HDD");
12. Home Dialysis of Eastgate, Inc., an Ohio corporation ("HDE");
13. Home Dialysis of Mount Auburn, Inc., an Ohio corporation ("HDM");
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS APPEARS HERE]
Harris Trust and Savings Bank
Re: KMZ Opinion Letter/Everest
May 18, 1998
Page 2
14. Lake Avenue Dialysis Center, Inc., an Indiana corporation ("LAKE AVENUE");
15. Mercy Dialysis Center, Inc., a Wisconsin corporation ("MERCY");
16. New York Dialysis Management, Inc., a New York corporation ("NEW YORK
DIALYSIS");
17. North Buckner Dialysis Center, Inc., a Delaware corporation (NORTH
BUCKNER");
18. Northwest Indiana Dialysis, Inc., an Indiana corporation ("NORTHWEST");
19. Ohio Valley Dialysis Center, Inc., an Indiana corporation ("OHIO VALLEY");
20. Perfusion Resource Association, L.L.C., a Delaware limited liability
company ("PRA");
21. Saint Margaret Mercy Dialysis Centers, L.L.C., an Illinois limited
liability company ("Saint Margaret");
22. The Extracorporeal Alliance, L.L.C., a Delaware limited liability company
("ALLIANCE");
23. Tri-State Perfusion, L.L.C. a Delaware limited liability company ("TRI-
STATE"); and
24. WSKC Dialysis Services, Inc., an Illinois corporation ("WSKC");
(Alliance, Amarillo Acute, Cincinnati, Con-Med, Continental, Corpus Christi,
DSST, DuPage, Everest Management, HDA, HDD, HDE, HDM, Hemo, Lake Avenue, Mercy,
New York Dialysis, North Buckner, Northwest, Ohio Valley, PRA, Saint Margaret,
Tri-State and WSKC hereinafter are referred to individually as a "Subsidiary
Guarantor" and collectively as the "Subsidiary Guarantors"). This opinion is
delivered to you at the request of our clients pursuant to Section 6.2 of the
Credit Agreement.
In rendering the opinion set forth herein, we have examined:
(i) the Credit Agreement;
(ii) the Consent and Reaffirmation of Guaranty and Security Documents;
(iii) the Notes; and
(iv) the Amended and Restated Mortgage and Security Agreement with
Assignment of Rents (Florida).
(the documents described in clauses (i) through (iv) preceding hereinafter are
referred to collectively as the "Loan Documents").
We also have examined and are familiar with:
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS APPEARS HERE]
Harris Trust and Savings Bank
Re: KMZ Opinion Letter/Everest
May 18, 1998
Page 3
(i) a copy of the Articles or Certificate of Incorporation and bylaws of
each of the Company, Cincinnati, Con-Med, Continental, DuPage, Everest
Management, HDA, HDD, HDE, HDM, Lake Avenue, Mercy, New York Dialysis, North
Buckner, Northwest, Ohio Valley and WSKC (hereinafter referred to individually
as a "Corporate Obligor," and collectively as the "Corporate Obligors"), and a
copy of the Articles of Organization or Certificate of Formation and the
Operating Agreement, or its functional equivalent, of Alliance, Amarillo Acute,
Corpus Christi, DSST, Hemo, PRA, Saint Margaret and Tri-State (hereinafter
referred to individually as an "LLC Obligor" and collectively as the "LLC
Obligors");
(ii) the Certificates of Good Standing for the Company and each of the
Subsidiary Guarantors (hereinafter individually as a "Transaction Party" and
collectively as the "Transaction Parties"); and
(iii) a copy, certified by an appropriate officer of the Company and each
Corporate Obligor, of certain resolutions adopted by the board of directors of
the Company and each such Corporate Obligor.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures (other than those on behalf of any Transaction Party), the
authenticity of the documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified,
conformed or reproduced copies.
We have assumed further that:
(i) all natural persons involved in the transaction contemplated by the
Loan Documents (the "Transactions") have sufficient legal capacity to enter into
and perform their respective obligations under the Loan Documents and to carry
out their roles in the Transactions;
(ii) each party to any Loan Document, other than any Transaction Party
(collectively, the "Other Parties"), has satisfied all legal requirements that
are applicable to it to the extent necessary to make such Loan Document
enforceable against it;
(iii) each of the Other Parties has complied with all legal requirements
pertaining to its status as such status relates to its rights to enforce any
Loan Document to which it is a party against any Transaction Party which is a
party thereto;
(iv) the conduct of the parties to any Loan Document complies with any
requirement of good faith, fair dealing and conscionability;
(v) there has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence; and
(vi) all statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies applicable to this opinion generally are
available to lawyers practicing in Illinois and are in a format that makes legal
research reasonably feasible.
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS APPEARS HERE]
Harris Trust and Savings Bank
Re: KMZ Opinion Letter/Everest
May 18, 1998
Page 4
In rendering this opinion, as to questions of fact material to this
opinion, we have relied, to the extent we have deemed such reliance appropriate,
without investigation, upon certificates and other communications from public
officials, upon a certificate (the "Officer's Certificate") of an officer of
each of the Transaction Parties attached hereto as Exhibit A, and upon
representations of the Transaction Parties set forth in the Loan Documents.
Wherever we indicate that our opinion with respect to the existence or
absence of facts is based on our knowledge, our opinion is based solely on the
current actual knowledge of the attorneys in this firm who are representing the
Transaction Parties in connection with the execution and delivery of the Loan
Documents, and we have conducted no special investigation of factual matters in
connection with this opinion.
The opinion set forth below is subject to the following qualifications:
(i) the effects of bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance and other similar laws affecting the rights
and remedies of creditors generally; and
(ii) the effects of general principles of equity, whether applied by a
court of law or equity, with respect to the performance and enforcement of the
Loan Documents.
Based upon the foregoing and subject to the qualifications stated herein,
we are of the opinion that:
1. Each of the Corporate Obligors is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has the requisite corporate power and authority to carry on its business as
now conducted.
2. Each of the LLC Obligors is a limited liability company duly organized
and validly existing and in good standing under the laws of the state of its
organization and has the requisite power and authority to carry on its business
as now conducted.
3. Each Transaction Party has all requisite power and authority to enter
into, deliver and perform its obligations under the Loan Documents to which such
Person is a party.
4. The execution, delivery and performance by each Transaction Party of
each Loan Document to which such Person is a party have been duly authorized by
all requisite action and such Loan Documents have been duly executed and
delivered by each Transaction Party which is a party thereto.
5. Each Loan Document to which any Transaction Party is a party constitutes
the legal, valid and binding obligation of such Person enforceable against such
Person in accordance with its terms.
6. Except for those already obtained, no order, authorization, consent,
license or exemption of, or filing or registration with, any court or
governmental department, agency, instrumentality or regulatory body, whether
local, state or federal, is or will be required in connection with the lawful
execution and delivery of the Loan Documents to which any Transaction Party is a
party or the observance and performance by such Person of any of the terms
thereof.
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS APPEARS HERE]
Harris Trust and Savings Bank
Re: KMZ Opinion Letter/Everest
May 18, 1998
Page 5
7. The execution and delivery by each Transaction Party of each Loan
Document to which such Person is a party and the performance by such Person of
such Person's obligations thereunder do not: (i) violate the Articles or
Certificate of Incorporation and bylaws of such Person or the Certificate of
Formation or operating agreement of such Person, as appropriate, or (ii) result
in a breach of any of the terms or conditions of any laws or regulations
applicable to such Person; provided, however, that we express no opinion to the
extent any such performance requires any reassignment of any Medicare or
medicaid receivables.
The opinions expressed above are limited to the laws of the State of
Illinois, the General Corporation Law of the State of Delaware, the Delaware
Limited Liability Company Act and the laws of the United States of America, and
we do not express any opinion herein concerning any other law. In addition, we
express no opinion herein concerning any statutes, ordinances, administrative
decisions, rules or regulations of any county, town, municipality or special
political subdivision (whether created or enabled through legislative action at
the federal, state or regional level) brought to our attention. This opinion is
solely for the information of the addressees hereof and is not to be quoted in
whole or in part or otherwise referred to, nor is it to be filed with any
governmental agency or any other person or entity without our prior written
consent. No one other than the addressees hereof is entitled to rely upon this
opinion. This opinion is rendered solely for the purposes stated herein and
should not be relied upon for any other purpose. This opinion is limited to the
matters set forth herein and no opinion is intended to be implied or may be
inferred beyond those expressly stated herein. This opinion is given as of the
date hereof and we assume no obligation to advise you of changes which hereafter
may be brought to our attention.
Respectfully Submitted,
KATTEN MUCHIN & ZAVIS
/s/ Katten Muchin & Zavis
OFFICER'S CERTIFICATE
---------------------
THE UNDERSIGNED hereby delivers this Officer's Certificate to Katten Muchin
& Zavis for its use in connection with the delivery of its letter of opinion of
even date herewith (the "KMZ Opinion"), delivered pursuant to that certain
Second Amended and Restated Credit Agreement dated as of May 18, 1998 (the
"Credit Agreement") by and among the Company (all capitalized terms not
otherwise defined herein shall have the meanings given to such terms in the KMZ
Opinion), the Lenders and the Agent. The undersigned hereby certifies to
Katten Muchin & Zavis as follows:
1. The undersigned is an officer of each Transaction Party and is familiar
with the matters set forth herein with respect to each Transaction Party.
2. The correct legal name, together with the state of incorporation or
organization, as applicable, of each Transaction Party, is set forth on
Schedule 1 hereto.
----------
3. Schedule 2 hereto lists all Persons in which any Transaction Party has an
----------
ownership interest of 51% or greater.
By: /s/ John B. Bourke
---------------------------------
John B. Bourke, an authorized
officer of each Transaction Party
EXHIBIT A
---------
SCHEDULE 1
----------
================================================================================
TRANSACTION STATE OF
PARTY ORGANIZATION
- --------------------------------------------------------------------------------
Amarillo Acute Dialysis Specialists, L.L.C. Texas
- --------------------------------------------------------------------------------
Con-Med Supply Company, Inc. Illinois
- --------------------------------------------------------------------------------
Continental Health Care, Ltd. Illinois
- --------------------------------------------------------------------------------
Dialysis Services of Cincinnati, Inc. Ohio
- --------------------------------------------------------------------------------
Dialysis Specialists of Corpus Christi, L.L.C. Texas
- --------------------------------------------------------------------------------
Dialysis Specialists of South Texas, L.L.C. Texas
- --------------------------------------------------------------------------------
DuPage Dialysis, Ltd. Illinois
- --------------------------------------------------------------------------------
Everest Healthcare Services Corporation Delaware
- --------------------------------------------------------------------------------
Everest Management, Inc. Delaware
- --------------------------------------------------------------------------------
Hemo Dialysis of Amarillo, L.L.C. Texas
- --------------------------------------------------------------------------------
Home Dialysis of America, Inc. Arizona
- --------------------------------------------------------------------------------
Home Dialysis of Dayton, Inc. Ohio
- --------------------------------------------------------------------------------
Home Dialysis of Eastgate, Inc. Ohio
- --------------------------------------------------------------------------------
Home Dialysis of Mount Auburn, Inc. Ohio
- --------------------------------------------------------------------------------
Lake Avenue Dialysis Center, Inc. Indiana
- --------------------------------------------------------------------------------
Mercy Dialysis Center, Inc. Wisconsin
- --------------------------------------------------------------------------------
New York Dialysis Management, Inc. New York
- --------------------------------------------------------------------------------
North Buckner Dialysis Center, Inc. Delaware
- --------------------------------------------------------------------------------
Northwest Indiana Dialysis, Inc. Indiana
- --------------------------------------------------------------------------------
Ohio Valley Dialysis Center, Inc. Indiana
- --------------------------------------------------------------------------------
Perfusion Resource Association, L.L.C. Delaware
- --------------------------------------------------------------------------------
Saint Margaret Mercy Dialysis Centers, L.L.C. Delaware
- --------------------------------------------------------------------------------
The Extracorporeal Alliance, L.L.C. Delaware
- --------------------------------------------------------------------------------
Tri-State Perfusion, L.L.C. Delaware
- --------------------------------------------------------------------------------
WSKC Dialysis Services, Inc. Illinois
================================================================================
EXHIBIT A
---------
SCHEDULE 2
----------
Percentage of
Ownership Interest in
Transaction Party Subsidiary Subsidiary
- ---------------------------------------------------------------------------------------------------------
Continental Health Care, Ltd. 100%
DuPage Dialysis, Inc. 100%
Everest Management, Inc. 100%
Home Dialysis of America, Inc. 100%
Lake Avenue Dialysis Center, Inc. 100%
Mercy Dialysis Center, Inc. 100%
Everest Healthcare Services
Corporation New York Dialysis Management, Inc. 100%
North Buckner Dialysis Center, Inc. 100%
Northwest Indiana Dialysis, Inc. 100%
Ohio Valley Dialysis Center, Inc. 100%
Saint Margaret Mercy Dialysis Centers, Inc. 80%
The Extracorporeal Alliance, L.L.C. 80%
WSKC Dialysis Services, Inc. 100%
- ---------------------------------------------------------------------------------------------------------
Amarillo Acute Dialysis Specialists, L.L.C. 100%
Dialysis Services of Cincinnati, Inc. 65%
Dialysis Specialists of Corpus Christi, L.L.C. 100%
Dialysis Specialists of South Texas, L.L.C. 100%
Home Dialysis of America, Inc. Hemo Dialysis of Amarillo, L.L.C. 100%
Home Dialysis of Dayton, Inc. 100%
Home Dialysis of Eastgate, Inc. 60.9%
Home Dialysis of Mount Auburn, Inc. 80.5%
- ---------------------------------------------------------------------------------------------------------
Continental Health Care, Ltd. Con-Med Supply Company, Inc. 100%
- ---------------------------------------------------------------------------------------------------------
Perfusion Resource Association, L.L.C. 70%
The Extracorporeal Alliance, L.L.C. Tri-State Perfusion, L.L.C. 51%
=========================================================================================================
EXHIBIT I
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19_____
Reference is made to the Second Amended and Restated Credit Agreement dated
as of May 18, 1998 (the "Credit Agreement") among Everest Healthcare Services
Corporation, a Delaware corporation (the "Company"), the Lenders (as defined in
the Credit Agreement) and Harris Trust and Savings Bank, as Agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein
with the same meaning.
_____________________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitments as in effect on the Effective
Date and the Loans, if any, owing to the Assignor on the Effective Date and the
Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Revolving Credit Commitment is $____________, its Acquisition Financing
Commitment is $____________, and its Supplemental Revolving Credit Commitment is
$____________, (B) the aggregate outstanding principal amount of Loans made by
it under the Credit Agreement that have not been repaid is $____________
($____________ Revolving Loans, $___________ Term Loan, $_____________
Acquisition Financing Loans, and $______________ Supplemental Revolving Loans)
and a description of the interest rates and interest periods for such Loans is
attached as Schedule I hereto, and (C) the aggregate principal amount of
Assignor's outstanding L/C Obligations is $___________; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim, lien, or encumbrance of any kind; (iii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or any
Subsidiary or the performance or observance by the Company or any Subsidiary of
any of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Section 7.5(b) and (c) thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) specifies as its lending
offices (and address for notices) the offices set forth beneath its name on the
signature pages hereof.
4. As consideration for the assignment and sale contemplated in Section 1
hereof, the Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $________________./*/ It is understood that commitment
and/or Letter of Credit fees accrued to the date hereof with respect to the
interest assigned hereby are for the account of the Assignor and such fees
accruing from and including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same to
such other party.
5. The effective date for this Assignment and Acceptance shall be
_____________, 19__ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Company for its
acceptance on behalf of the Company and to the Agent for acceptance and
recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 11.18 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the Company
to execute and deliver to the Assignee Notes payable to the Assignee in the
amount of its Commitments and new Notes to the Assignor in the amount of its
Commitments after giving effect to the assignment hereunder.
______________________
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or
by formula rather than as a fixed sum.
-2-
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
[ASSIGNOR LENDER]
By_________________________________
Name_____________________________
Title____________________________
[ASSIGNEE LENDER]
By_________________________________
Name_____________________________
Title____________________________
Lending Office (and
address for notices):
Accepted and consented this _____ day of
___________, 19__
Everest Healthcare Services Corporation
By ___________________________________
Name_______________________________
Title______________________________
Accepted and consented to by the Agent
this ______ day of ___________, 19__
Harris Trust and Savings Bank, as Agent
By ___________________________________
Name_______________________________
Title______________________________
-3-
SCHEDULE I
PRINCIPAL TYPE OF LAST DAY OF
AMOUNT LOAN INTEREST RATE INTEREST PERIOD
SCHEDULE 4.1
RESTRICTED SUBSIDIARIES
JURISDICTION PERCENTAGE
NAME OF ORGANIZATION OWNERSHIP
WSKC Dialysis Services, Inc. Illinois 100%/1/
Ohio Valley Dialysis Center, Inc. Indiana 100%/1/
Northwest Indiana Dialysis, Inc. Indiana 100%/1/
New York Dialysis Management, Inc. New York 100%/1/
Mercy Dialysis Center, Inc. Wisconsin 100%/1/
DuPage Dialysis, Ltd. Illinois 100%/1/
Lake Avenue Dialysis Center, Inc. Indiana 100%/1/
Home Dialysis of America, Inc. Arizona 100%/1/
Amarillo Acute Dialysis Specialists, L.L.C. Texas 100%/2/
Dialysis Specialists of Corpus Christi, L.L.C. Texas 100%/2/
Home Dialysis of Eastgate, Inc. Ohio 95%/2/
Dialysis Services of Cincinnati, Inc. Ohio 65%/2/
Saint Margaret Mercy Dialysis Centers, L.L.C. Illinois 80%/1/
Everest Management, Inc. Delaware 100%/1/
The Extracorporeal Alliance, L.L.C. Delaware 80%/1/
Continental Health Care, Ltd. Illinois 100%/1/
_____________
/1/ owned by Everest Healthcare Services Corporation
/2/ owned by Home Dialysis of America. Inc
-1-
JURISDICTION PERCENTAGE
NAME OF ORGANIZATION OWNERSHIP
Con-Med Supply Company, Inc. Illinois 100%/3/
North Buckner Dialysis Center, Inc. Delaware 100%/1/
Home Dialysis of Mount Auburn, Inc. Ohio 80.5%/2/
Dialysis Specialists of South Texas, L.L.C. Texas 100%/4/
Hemo Dislyais of Amarillo, L.L.C. Texas 100%/2/
Tri-State Perfusion, L.L.C. Delaware 51%/5/
Perfusion Resource Association, L.L.C. Delaware 70%/5/
Home Dialysis of Dayton, Inc. Ohio 100%/2/
________________
/3/ owned by Continental Health Care, Ltd
/4/ owned 77.8% by Home Dialysis of America, Inc.; 22.2% by Everest Healthcare
Services Corporation
/5/ owned by The Extracorporeal Alliance, L.L.C.
SCHEDULE 5.2
SUBSIDIARIES
JURISDICTION
OF PERCENTAGE
NAME ORGANIZATION OWNERSHIP
WSKC Dialysis Services, Inc. Illinois 100%/1/
Ohio Valley Dialysis Center, Inc. Indiana 100%/1/
Northwest Indiana Dialysis, Inc. Indiana 100%/1/
New York Dialysis Management, Inc. New York 100%/1/
Mercy Dialysis Center, Inc. Wisconsin 100%/1/
DuPage Dialysis, Ltd. Illinois 100%/1/
Lake Avenue Dialysis Center, Inc. Indiana 100%/1/
Home Dialysis of America, Inc. Arizona 100%/1/
Amarillo Acute Dialysis Specialists, L.L.C. Texas 100%/2/
Dialysis Specialists of Corpus Christi, L.L.C. Texas 100%/2/
Home Dialysis of Eastgate, Inc. Ohio 95%/2/
Dialysis Specialists of Marietta, Ltd. Ohio 51%/2/
Dialysis Services of Cincinnati, Inc. Ohio 65%/2/
Saint Margaret Mercy Dialysis Centers, L.L.C. Illinois 80%/1/
Everest Management, Inc. Delaware 100%/1/
________________
/1/ owned by everest Healthcare Services Corporation
/2/ owned by Home Dialysis of America, Inc.
JURISDICTION
OF PERCENTAGE
NAME ORGANIZATION OWNERSHIP
The Extracorporeal Alliance, L.L.C. Delaware 80%/1/
Continental Health Care, Ltd. Illinois 100%/1/
Con-Med Supply Company, Inc. Illinois 100%/3/
North Buckner Dialysis Center, Inc. Delaware 100%/1/
Home Dialysis of Mount Auburn, Inc. Ohio 80.5%/2/
Dialysis Specialists of South Texas, L.L.C. Texas 100%/4/
Hemo Dialysis of Amarillo, L.L.C. Texas 100%/2/
Tri-State Perfusion, L.L.C. Delaware 51%/5/
Perfusion Resource Association, L.L.C. Delaware 70.%/5/
Home Dialysis of Dayton, Inc. Ohio 100%/2/
Dialysis Specialists of Northeast Ohio, Ltd. Ohio 51%/1/
_____________________
/3/ owned by Continental Health Care, Ltd.
/4/ owned 77.8% by Home Dialysis of America, Inc.; 22.2% by Everest Healthcare
Services Corporation
/5/ owned by The Extracorporeal Alliance, L.L.C.
SCHEDULE 5.12
TAX MATTERS
AS OF MAY 18, 1998, EXTENSIONS WERE IN EFFECT FOR THE FOLLOWING TAX RETURNS OF
EACH OF THE FOLLOWING ENTITLES:
====================================================================================================
EVEREST HEALTHCARE SERVICES, INC. NEW YORK DIALYSIS MANAGEMENT, INC.
--------------------------------- ----------------------------------
FEDERAL INCOME TAX RETURN (CONSOLIDATED) NEW YORK CORPORATE RETURN
ILLINOIS INCOME TAX RETURN (CONSOLIDATED) NEW YORK MTA SURCHARGE RETURN
INDIANA INCOME TAX RETURN NEW YORK CITY GENERAL CORPORATE TAX
LOUISIANA INCOME TAX RETURN
NEBRASKA CORPORATE INCOME TAX RETURN
OHIO FRANCHISE / INCOME TAX RETURN
MERCY DIALYSIS CENTER, INC.
---------------------------
WISCONSIN INCOME TAX RETURN
HOME DIALYSIS OF EASTGATE, INC.
-------------------------------
OHIO INCOME TAX RETURN
CINCINNATI INCOME TAX RETURN OHIO VALLEY DIALYSIS CENTER, INC.
---------------------------------
INDIANA INCOME TAX RETURN
AMARILLO ACUTE DIALYSIS SPECIALISTS. L.L.C. DUPAGE DIALYSIS, LTD.
------------------------------------------- ---------------------
TEXAS FRANCHISE RETURN INDIANA INCOME TAX RETURN
DIALYSIS SPECIALISTS OF CORPUS CHRISTI. L.L.C. *DIALYSIS SPECIALISTS OF SOUTH TEXAS, L.L.C.
---------------------------------------------- -------------------------------------------
TEXAS FRANCHISE RETURN TEXAS FRANCHISE RETURN
NORTHWEST INDIANA DIALYSIS, INC. HOME DIALYSIS OF MOUNT AUBURN, INC.
------------------------------- -----------------------------------
INDIANA INCOME TAX RETURN OHIO FRANCHISE / INCOME TAX RETURN
LAKE AVENUE DIALYSIS CENTER, INC. HOME DIALYSIS OF AMARILLO, L.L.C.
--------------------------------- ---------------------------------
INDIANA INCOME TAX RETURN TAXES FRANCHISE RETURN
WEST SUBURBAN KIDNEY CENTER, INC. DIALYSIS SERVICES OF CINCINNATI, INC.
--------------------------------- -------------------------------------
INDIANA INCOME TAX RETURN OHIO FRANCHISE / INCOME TAX RETURN
====================================================================================================
* Since no payments will be required, the filing of an extension is not
necessary.
* * *
OTHER TAXES ASSESSMENTS, FEES AND GOVERNMENTAL CHARGES
AS OF
MAY 18, 1998
NONE
SCHEDULE 5.14
AFFILIATE TRANSACTIONS
1. NANI-IL. Nephrology Associates of Northern Illinois, Ltd. ("NANI-IL") is a
medical service corporation that provides dialysis and dialysis related
services.
. Company pays NANI-IL consulting fee of $1,284,920 per year (plus an
incentive fee of no greater than $80,080 per year).
. Under a management services agreement between NANI-IL and the Company,
NANI-IL pays the Company an annual fee of $825,000 for certain
administrative services.
. NANI-IL has a loan payable to the Company of approximately
$6,811,897.34 (as of March 31, 1998). The loan payable bears interest
at the prime rate plus 1% per annum and is due on demand.
2. ARE Partnership. The founding directors of the Company, along with two of
its shareholders, are partners in the ARE Partnership. ARE owns real
property which it leases to the Company and certain of its subsidiaries.
The Company is in the process of purchasing the real estate owned by ARE.
3. Three M&L Partnership. Three M&L Partnership, owned by one of the Company's
directors and one of the Company's shareholders, owns three properties on
which certain dialysis facilities of the Company and certain of its
subsidiaries are located. They are:
Location Lease Term Rent
-------- ---------- ----
3501-3 North Avenue, Chicago expired February 1, 1997 $2,979 per month
(month to month)
7718 Claremont, Chicago expired August 31, 1993 $2,050 per month
(month to month)
7723 S. Western, Chicago expires August 31, 1998 $1,053 per month
4. Security General. Security General is a partnership owned by the Company's
founding directors and the Company's chief financial officer. Security
General owns a 6.67% interest in an insurance company which provides
property, casualty and worker compensation insurance to the Company and its
subsidiaries.