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EXHIBIT 10.15
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CREDIT AGREEMENT
AMONG
ORTHALLIANCE, INC.,
THE LENDERS NAMED HEREIN,
AND
FIRST UNION NATIONAL BANK,
AS AGENT
$55,000,000 REVOLVING CREDIT FACILITY
LEAD ARRANGER
FIRST UNION CAPITAL MARKETS CORP.
DATED AS OF MARCH 26, 1999
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS
1.1 Defined Terms.........................................................5
1.2 Accounting Terms.....................................................20
1.3 Other Terms; Construction............................................21
ARTICLE II.
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments..........................................................21
2.2 Borrowings...........................................................21
2.3 Disbursements; Funding Reliance; Domicile of Loans...................22
2.4 Notes................................................................23
2.5 Termination and Reduction of Commitments.............................23
2.6 Mandatory Payments and Prepayments...................................24
2.7 Voluntary Prepayments................................................24
2.8 Interest.............................................................24
2.9 Fees.................................................................26
2.10 Interest Periods.....................................................26
2.11 Conversions and Continuations........................................27
2.12 Method of Payments; Computations.....................................28
2.13 Recovery of Payments.................................................29
2.14 Use of Proceeds......................................................29
2.15 Pro Rata Treatment...................................................30
2.16 Increased Costs; Change in Circumstances; Illegality; etc............31
2.17 Taxes................................................................32
2.18 Compensation.........................................................34
ARTICLE III.
CONDITIONS OF BORROWING
3.1 Conditions of Initial Borrowing......................................35
3.2 Conditions of All Borrowings.........................................38
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power.....................................38
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4.2 Authorization; Enforceability........................................39
4.3 No Violation.........................................................39
4.4 Governmental and Third-Party Authorization; Permits..................39
4.5 Litigation...........................................................40
4.6 Taxes................................................................40
4.7 Subsidiaries.........................................................40
4.8 Full Disclosure......................................................41
4.9 Margin Regulations...................................................41
4.10 No Material Adverse Change...........................................41
4.11 Financial Matters....................................................41
4.12 Ownership of Properties..............................................42
4.13 ERISA................................................................42
4.14 Environmental Matters................................................43
4.15 Compliance With Laws.................................................44
4.16 Regulated Industries.................................................44
4.17 Insurance............................................................44
4.18 Material Contracts...................................................44
4.19 Security Documents...................................................44
4.20 Labor Relations......................................................45
4.21 Year 2000 Compatibility..............................................45
ARTICLE V.
AFFIRMATIVE COVENANTS
5.1 Financial Statements.................................................45
5.2 Other Business and Financial Information.............................46
5.3 Corporate Existence; Franchises; Maintenance of Properties...........48
5.4 Compliance with Laws.................................................49
5.5 Payment of Obligations...............................................49
5.6 Insurance............................................................49
5.7 Maintenance of Books and Records; Inspection.........................49
5.8 Permitted Acquisitions...............................................49
5.9 Creation or Acquisition of Subsidiaries..............................51
5.10 Additional Security..................................................51
5.11 Further Assurances...................................................52
5.12 Year 2000 Compatibility..............................................52
ARTICLE VI.
FINANCIAL COVENANTS
6.1 Leverage Ratio.......................................................52
6.2 Coverage Ratio.......................................................52
6.3 Consolidated Net Worth...............................................52
6.4 Capital Expenditures.................................................53
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ARTICLE VII.
NEGATIVE COVENANTS
7.1 Merger; Consolidation................................................53
7.2 Indebtedness.........................................................53
7.3 Liens................................................................54
7.4 Disposition of Assets................................................55
7.5 Investments..........................................................56
7.6 Restricted Payments..................................................57
7.7 Transactions with Affiliates.........................................58
7.8 Lines of Business....................................................58
7.9 Certain Amendments...................................................58
7.10 Limitation on Certain Restrictions...................................59
7.11 No Other Negative Pledges............................................59
7.12 Fiscal Year..........................................................59
7.13 Accounting Changes...................................................59
ARTICLE VIII.
EVENTS OF DEFAULT
8.1 Events of Default....................................................59
8.2 Remedies: Termination of Commitments, Acceleration, etc..............62
8.3 Remedies: Set-Off....................................................62
ARTICLE IX.
THE AGENT
9.1 Appointment..........................................................63
9.2 Nature of Duties.....................................................63
9.3 Exculpatory Provisions...............................................63
9.4 Reliance by Agent....................................................64
9.5 Non-Reliance on Agent and Other Lenders..............................64
9.6 Notice of Default....................................................65
9.7 Indemnification......................................................65
9.8 The Agent in its Individual Capacity.................................65
9.9 Successor Agent......................................................66
9.10 Collateral Matters...................................................66
ARTICLE X.
MISCELLANEOUS
10.1 Fees and Expenses....................................................67
10.2 Indemnification......................................................67
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10.3 Governing Law; Consent to Jurisdiction...............................68
10.4 Arbitration; Preservation and Limitation of Remedies.................68
10.5 Notices..............................................................69
10.6 Amendments, Waivers, etc.............................................70
10.7 Assignments, Participations..........................................71
10.8 No Waiver............................................................73
10.9 Successors and Assigns...............................................73
10.10 Survival.............................................................74
10.11 Severability.........................................................74
10.12 Construction.........................................................74
10.13 Confidentiality......................................................74
10.14 Counterparts; Effectiveness..........................................74
10.15 Disclosure of Information............................................75
10.16 Entire Agreement.....................................................75
10.17 Amended and Restated Credit Agreement................................75
EXHIBITS
Exhibit A Form of Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Pledge and Security Agreement
Exhibit F Subsidiary Guaranty
Exhibit G Form of Opinion of Munger, Tolles & Olson
Exhibit H Form of Financial Condition Certificate
Exhibit I Form of Compliance Certificate for Permitted Acquisitions
SCHEDULES
Schedule 1.1 Excluded Subsidiaries
Schedule 4.4 Consents and Approvals
Schedule 4.7 Subsidiaries
Schedule 4.12 Real Property Interests
Schedule 4.17 Insurance
Schedule 4.18 Material Contracts
Schedule 7.2 Indebtedness
Schedule 7.3 Liens
Schedule 7.5 Investments
Schedule 7.7 Transactions with Affiliates
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 26th day of March, 1999 (this
"Agreement"), is made among ORTHALLIANCE, INC., a Delaware corporation with its
principal offices in Torrance, California (the "Borrower"), the banks and
financial institutions listed on the signature pages hereto or that become
parties hereto after the date hereof (collectively, the "Lenders"), and FIRST
UNION NATIONAL BANK ("First Union"), as agent for the Lenders (in such capacity,
the "Agent").
RECITALS
A The Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility in the aggregate principal amount of
$55,000,000. The Borrower will use the proceeds of this facility for working
capital, including the financing of certain patient receivables, and general
corporate purposes, including permitted acquisitions, all as more fully
described herein.
B The Lenders are willing to make available to the Borrower the
credit facility described herein subject to and on the terms and conditions set
forth in this Agreement. This Agreement amends and restates the Credit
Agreement, dated as of December 30, 1997, between the Borrower and First Union
as amended by the First Amendment dated as of October 20, 1998.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
set forth below (such meanings to be equally applicable to the singular and
plural forms thereof):
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
"Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the date hereof, by which the Borrower
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, or all or substantially all of the assets, of any Person, whether
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through purchase of assets, merger or otherwise, or (ii) acquires securities or
other ownership interests of any Person having at least a majority of combined
voting power of the then outstanding securities or other ownership interests of
such Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of the Borrower issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by the Borrower and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of the Borrower and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the Securities and Exchange Commission, (v) all amounts paid in
respect of covenants not to compete, consulting agreements, severance agreements
and other affiliated contracts in connection with such Acquisition, (vi) the
amount of all transaction fees and expenses (including, without limitation,
legal, accounting and finders' fees and expenses) incurred by the Borrower and
its Subsidiaries in connection with such Acquisition and (vii) the aggregate
fair market value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate per annum equal to the Base Rate as in effect at such time
plus the Applicable Margin Percentage for Base Rate Loans as in effect at such
time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
"Adjustment Date" shall have the meaning given to such term in the
definition of the term "Applicable Margin Percentage."
"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
"Affiliated Orthodontist" shall mean an orthodontist or dentist or
group of orthodontists or dentists (including in each case professional
corporations) that has entered into a Service Agreement with the Borrower or its
Subsidiaries.
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"Agent" shall mean First Union, in its capacity as Agent appointed
under ARTICLE IX, and its successors and permitted assigns in such capacity.
"Agreement" shall mean this Credit Agreement, including all Schedules
and Exhibits hereto, as amended, modified or supplemented from time to time.
"Annualized EBITDA" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis, as of the last day of any fiscal quarter,
the product of (i) Consolidated EBITDA for the two (2) consecutive fiscal
quarters ending on such date, multiplied by (ii) two (2).
"Annualized EBITDAR" shall mean, at any time with respect to the
Borrower and its Subsidiaries on a consolidated basis, as of the last day of any
fiscal quarter, the product of (i) the sum of (a) Consolidated EBITDA for the
two (2) consecutive fiscal quarters ending on such date, plus (b) Corporate Rent
for the two consecutive fiscal quarters ending on such date, multiplied by (ii)
two (2).
"Applicable Margin Percentage" shall mean, at any time from and after
the Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to SECTION 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to SECTION 2.8 for purposes of
determining the Adjusted LIBOR Rate, and (c) to be used in calculating the
commitment fee payable pursuant to SECTION 2.9(B), in each case as determined
under the following matrix with reference to the Leverage Ratio:
Applicable Margin Applicable Margin Applicable
Percentage for Percentage for Commitment Fee
Tier Leverage Ratio LIBOR Loans Base Rate Loans --------------
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I. Less than or equal to 1.0 to 1.0 1.000% 0.000% 0.250%
II. Greater than 1.0 to 1.0 but less than
or equal to 1.5 to 1.0 1.250% 0.250% 0.300%
III. Greater than 1.5 to 1.0
but less than or equal to 2.0 to 1.0 1.625% 0.625% 0.375%
IV. Greater than 2.0 to 1.0
but less than or equal to 2.5 to 1.0 2.000% 1.000% 0.375%
V. Greater than 2.5 to 1.0 2.500% 1.500% 0.500%
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to SECTION
2.9(B) shall be adjusted effective as of such date (based upon the calculation
of the Leverage Ratio as of the last day of the fiscal period to which such
Adjustment Date relates) in accordance with the above matrix; provided, however,
that, notwithstanding the foregoing or anything else herein to the contrary, if
at any time the Borrower shall have failed to deliver the financial statements
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and a Compliance Certificate as required by SECTION 5.1(A) or SECTION 5.1(B), as
the case may be, and SECTION 5.2(A), or if at any time a Default or Event of
Default shall have occurred and be continuing, then at the election of the
Required Lenders, at all times from and including the date on which such
statements and Compliance Certificate are required to have been delivered (or
the date of occurrence of such Default or Event of Default, as the case may be)
to the date on which the same shall have been delivered (or such Default or
Event of Default cured or waived, as the case may be), each Applicable Margin
Percentage shall be determined in accordance with the above matrix as if the
Leverage Ratio were greater than 2.5 to 1.0 (notwithstanding the actual Leverage
Ratio). For purposes of this definition, "Adjustment Date" shall mean, with
respect to any fiscal quarter of the Borrower beginning with the fiscal quarter
ending September 30, 1999, the tenth (10th) day (or, if such day is not a
Business Day, on the next succeeding Business Day) after delivery by the
Borrower in accordance with SECTION 5.1(A) or SECTION 5.1(B), as the case may
be, of (i) financial statements for the most recently completed applicable
fiscal period and (ii) a duly completed Compliance Certificate with respect to
such fiscal period. Until the first Adjustment Date, the Applicable Margin
Percentage shall be as shown for Tier III in the above matrix.
"Assignee" shall have the meaning given to such term in
SECTION 10.7(A).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of EXHIBIT D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower duly authorized by resolution of the board
of directors of the Borrower to take such action on its behalf, and whose
signature and incumbency shall have been certified to the Agent by the secretary
or an assistant secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C.ss.ss. 101 et seq., as amended
from time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the applicable Adjusted Base Rate.
"Borrower Margin Stock" shall mean shares of capital stock of the
Borrower that are held by the Borrower or any of its Subsidiaries and that
constitute Margin Stock.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.11) on a single date of one or more Loans of a single Type and, in the case of
LIBOR Loans, as to which a single Interest Period is in effect.
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"Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., (iii) time deposits and certificates of deposit
maturing within 90 days from the date of issuance and issued by a bank or trust
company organized under the laws of the United States of America or any state
thereof that has combined capital and surplus of at least $500,000,000 and that
has (or is a subsidiary of a bank holding company that has) a long-term
unsecured debt rating of at least A or the equivalent thereof by Standard &
Poor's Ratings Services or at least A2 or the equivalent thereof by Moody's
Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above, and (v) money market funds at
least 95% of the assets of which are continuously invested in securities of the
type described in clause (i) above.
"Closing Date" shall mean the date upon which the conditions precedent
to the initial Borrowing set forth in SECTION 3.1 shall have been satisfied.
"Collateral" shall mean all right, title and interest of the Borrower
and each of its Subsidiaries in (i) the Service Agreements and the proceeds
thereof, (ii) the Securities (as defined in the Pledge and Security Agreement)
owned by such Borrower or Subsidiary and the proceeds thereof, (iii) the
Accounts (as defined in the Pledge and Security Agreement) owned by such
Borrower or Subsidiary and the proceeds thereof, and (iv) all other property and
interests in property that shall from time to time be pledged or be purported to
be pledged as direct or indirect security for the Obligations pursuant to any
one or more of the Security Documents.
"Commitment" shall mean, with respect to any Lender at any time, the
amount set forth opposite such Lender's name on its signature page hereto under
the caption "Commitment" or, if such Lender has entered into one or more
Assignment and Acceptances, the amount set forth for such Lender at such time in
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the Register maintained by the Agent pursuant to SECTION 10.7(B) as such
Lender's "Commitment," as such amount may be reduced at or prior to such time
pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C, together with a Covenant Compliance
Worksheet.
"Consolidated EBITDA" shall mean, for the Borrower and its Subsidiaries
on a consolidated basis, for any period, the aggregate of (i) Consolidated Net
Income for such period, plus (ii) the sum of Consolidated Interest Expense,
federal, state, local and other income taxes, depreciation, amortization of
intangible assets, and extraordinary or nonrecurring noncash losses (including
in connection with the sale or write-down of assets) and other noncash expenses
or charges reducing income for such period, all to the extent taken into account
in the calculation of Consolidated Net Income for such period, minus (iii) the
sum of extraordinary or nonrecurring cash or noncash gains (including in
connection with the sale or write-up of assets) and other noncash credits
increasing income for such period, all to the extent taken into account in the
calculation of Consolidated Net Income for such period.
"Consolidated Funded Debt" shall mean, as of any date of determination,
the aggregate (without duplication) of all Funded Debt of the Borrower and its
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP. For purposes of determining Consolidated Funded Debt as of any date,
each Contingent Obligation of the Borrower and its Subsidiaries required to be
included in such determination shall be valued at the maximum aggregate
principal amount (whether or not drawn or outstanding) of the Indebtedness that
is the corresponding "primary obligation" (as such term is defined in the
definition of Contingent Obligation) as of such date.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of the Borrower and its
Subsidiaries for such period in respect of Consolidated Funded Debt (including,
without limitation, all such interest expense accrued or capitalized during such
period, whether or not actually paid during such period), (ii) all net amounts
payable under or in respect of Hedge Agreements, to the extent paid or accrued
by the Borrower and its Subsidiaries during such period, and (iii) all
commitment fees and other ongoing fees in respect of Consolidated Funded Debt
(including the commitment fee provided for under SECTION 2.9(B) and the fees
provided for under the Fee Letter) paid, accrued or capitalized during such
period.
"Consolidated Net Income" shall mean, for any period, net income (or
loss) for the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination,
the net worth of the Borrower and its Subsidiaries as of such date, determined
on a consolidated basis in accordance with GAAP but excluding any Disqualified
Capital Stock.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the "primary obligation") of another Person (the
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"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business.
"Corporate Capital Expenditures" shall mean, for any period, the
aggregate amount (whether paid in cash or accrued as a liability) that would, in
accordance with GAAP, be included on the consolidated statement of cash flows of
the Borrower and its Subsidiaries for such period as additions to equipment,
fixed assets, real property or improvements or other capital assets (including,
without limitation, capital lease obligations); provided, however, that
Corporate Capital Expenditures shall not include any such expenditures (i) for
replacements and substitutions for capital assets, to the extent made with the
proceeds of insurance, (ii) made in connection with Permitted Acquisitions,
(iii) for additions to or replacements of equipment used in the existing
practice locations of an Affiliated Orthodontist, or (iv) Practice Capital
Expenditures.
"Corporate Rent" shall mean, for any period, all amounts paid, payable
or accrued during such period by the Borrower and its Subsidiaries on a
consolidated basis with respect to all leases of real and personal property,
excluding (i) any such amounts that are directly reimbursable pursuant to an
effective Service Agreement and (ii) intercompany items.
"Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C.
"Credit Documents" shall mean this Agreement, the Notes, the Fee
Letter, the Pledge and Security Agreement, the Subsidiary Guaranty, any other
Security Documents, and all other agreements, instruments, documents and
certificates now or hereafter executed and delivered to the Agent or any Lender
by or on behalf of the Borrower or any of its Subsidiaries with respect to this
Agreement and the transactions contemplated hereby, in each case as amended,
modified, supplemented or restated from time to time.
"Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" means, with respect to any Person, any
Capital Stock of such Person that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event or otherwise, (i) matures or is mandatorily redeemable or
subject to any mandatory repurchase requirement, pursuant to a sinking fund
obligation or otherwise, (ii) is redeemable or subject to any mandatory
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repurchase requirement at the sole option of the holder thereof, or (iii) is
convertible into or exchangeable for (whether at the option of the issuer or the
holder thereof) (a) debt securities or (b) any Capital Stock referred to in (i)
or (ii) above, in each case under (i), (ii) or (iii) above at any time on or
prior to the Maturity Date; provided, however, that only the portion of Capital
Stock that so matures or is mandatorily redeemable, is so redeemable at the
option of the holder thereof, or is so convertible or exchangeable on or prior
to the Maturity Date shall be deemed to be Disqualified Capital Stock.
"Dollars" or "$" shall mean dollars of the United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower or
any of its Subsidiaries, within the meaning of Sections 414(b), (c) or
(o)(without regard to Section 414(m)) of the Internal Revenue Code or Section
4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Borrower or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Borrower or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
Plan for which the Borrower or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
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"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders (which approval shall not be unreasonably withheld), in each
case subject to the approval of the Borrower (which approval shall not be
unreasonably withheld); provided, however, that no such approval by the Borrower
shall be required if a Default or Event of Default has occurred and is
continuing.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
"Event of Default" shall have the meaning given to such term in
SECTION 8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Excluded Subsidiaries" shall mean the Subsidiaries listed on SCHEDULE
1.1, provided that, other than as noted on SCHEDULE 1.1, any such Subsidiary
shall no longer qualify as an Excluded Subsidiary if at any time it enters into
a Service Agreement or holds assets with a fair market value in excess of
$100,000.
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"Facility" shall mean the revolving line of credit facility established
by the Lenders under SECTION 2.1.
"Fair Market Value" shall mean, with respect to any Capital Stock of
the Borrower given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.
"Federal Funds Rate" shall mean, for any period, a fluctuating per
annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" shall mean the letter from First Union to the Borrower,
dated February 17, 1999, relating to certain fees payable by the Borrower in
respect of the transactions contemplated by this Agreement, as amended, modified
or supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed certificate, substantially in the form of EXHIBIT H, together with the
attachments thereto.
"Financial Officer" shall mean, with respect to the Borrower, the chief
financial officer, principal accounting officer or treasurer of the Borrower.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness
of such Person that by its terms or by the terms of any instrument or agreement
relating thereto matures more than one year from, or is renewable or extendable
at the option of the debtor to a date more than one year from, the date of
creation thereof (including an option of the debtor under a revolving credit or
similar arrangement obligating the lender or lenders to extend credit over a
period of one year or more), including any current maturities of such
Indebtedness.
"GAAP" shall mean generally accepted accounting principles, as set
forth in the statements, opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained, as in
effect from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
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"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates, with respect to the Notes.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not drawn
or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any (for purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors or other
governing body of the issuer of such Disqualified Capital Stock), (viii) the net
termination obligations of such Person under any Hedge Agreements, calculated as
of any date as if such agreement or arrangement were terminated as of such date,
(ix) all Contingent Obligations of such Person and (x) all indebtedness referred
to in clauses (i) through (ix) above secured by any Lien on any property or
asset owned or held by such Person regardless of whether the indebtedness
secured thereby shall have been assumed by such Person or is nonrecourse to the
credit of such Person.
"Interest Period" shall have the meaning given to such term in
SECTION 2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
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"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the applicable Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising
part of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest (rounded upward, if necessary,
to the nearest 1/16 of one percentage point) appearing on Telerate Page 3750 (or
any successor page) or (z) if no such rate is available, the rate of interest
determined by the Agent to be the rate or the arithmetic mean of rates (rounded
upward, if necessary, to the nearest 1/16 of one percentage point) at which
Dollar deposits in immediately available funds are offered by First Union to
first-tier banks in the London interbank Eurodollar market, in each case under
(y) and (z) above at approximately 11:00 a.m., London time, two (2) Business
Days prior to the first day of such Interest Period for a period substantially
equal to such Interest Period and in an amount substantially equal to the amount
of First Union's LIBOR Loan comprising part of such Borrowing, by (ii) the
amount equal to 1.00 minus the Reserve Requirement (expressed as a decimal) for
such Interest Period.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereunder pursuant to
SECTION 10.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on its signature page hereto or
in an Assignment and Acceptance, or such other office as may be otherwise
designated in writing from time to time by such Lender to the Borrower and the
Agent. A Lender may designate separate Lending Offices as provided in the
foregoing sentence for the purposes of making or maintaining different Types of
Loans, and, with respect to LIBOR Loans, such office may be a domestic or
foreign branch or Affiliate of such Lender.
"Leverage Ratio" shall mean, as of the last day of any fiscal quarter,
the ratio of (i) Consolidated Funded Debt as of such date to (ii) Annualized
EBITDA as of such date.
"Licenses" shall mean any and all licenses, including provisional
licenses, certificates of need, accreditations, permits, franchises, rights to
conduct business, approvals by a Governmental Authority or otherwise, consents,
qualifications, operating authority and any other authorizations.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
"Limitation" shall mean a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement and the loss of any other rights.
"Loans" shall have the meaning given to such term in SECTION 2.1.
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"Margin Stock" shall have the meaning given to such term in Regulation
U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, prospects, business, properties
or assets of the Borrower and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, prospects, business,
properties or assets of the Borrower and its Subsidiaries, taken as a whole,
(ii) the ability of the Borrower or any Subsidiary to perform its obligations
under this Agreement or any of the other Credit Documents to which it is a party
or (iii) the legality, validity or enforceability of this Agreement or any of
the other Credit Documents or the rights and remedies of the Agent and the
Lenders hereunder and thereunder.
"Material Contract" shall have the meaning given to such term in
SECTION 4.18.
"Maturity Date" shall mean March 26, 2002.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A, together with any amendments, modifications
and supplements thereto, substitutions therefor and restatements thereof.
"Notice of Borrowing" shall have the meaning given to such term in
SECTION 2.2(B).
"Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 2.11(B).
"Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans and
all fees, expenses, indemnities and other obligations owing, due or payable at
any time by the Borrower to the Agent, any Lender or any other Person entitled
thereto, under this Agreement or any of the other Credit Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Participant" shall have the meaning given to such term in
SECTION 10.7(D).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in SECTION 7.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Borrower, (iii) in the case of an Acquisition involving the
acquisition of control of Capital Stock of any Person, immediately after giving
effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be the Borrower
or a Wholly Owned Subsidiary, and (iv) all of the conditions and requirements of
SECTIONS 5.8 AND 5.9 applicable to such Acquisition are satisfied; or (b) any
other Acquisition to which the Required Lenders (or the Agent on their behalf)
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shall have given their prior written consent (which consent may be in their sole
discretion and may be given subject to such additional terms and conditions as
the Required Lenders shall establish) and with respect to which all of the
conditions and requirements set forth in this definition and in SECTION 5.9, and
in or pursuant to any such consent, have been satisfied or waived in writing by
the Required Lenders (or the Agent on their behalf).
"Permitted Liens" shall have the meaning given to such term in
SECTION 7.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which the Borrower or any
ERISA Affiliate may have any liability.
"Pledge and Security Agreement" shall mean the First Amended and
Restated Pledge and Security Agreement made by the Borrower and the Subsidiary
Guarantors in favor of the Agent, and dated March 26, 1999 as attached at
EXHIBIT E, as amended, modified or supplemented from time to time.
"Practice Capital Expenditures" shall mean, for any period, the
aggregate amount (whether paid in cash or accrued as a liability) that would, in
accordance with GAAP, be included on the consolidated statement of cash flows of
the Borrower and its Subsidiaries for such period as additions to equipment,
fixed assets, real property or improvements or other capital assets (including,
without limitation, capital lease obligations); but not including Corporate
Capital Expenditures and only to the extent such expenditures are made for (i)
the expansion of the practice of an Affiliated Orthodontist to a new location,
or (ii) the establishment of a practice for an Affiliated Orthodontist.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Projections" shall have the meaning given to such term in
SECTION 4.11(B).
"Register" shall have the meaning given to such term in
SECTION 10.7(B).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reimbursement Approvals" shall mean, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations and any other similar
agreements with or approvals by Governmental Authorities or other Persons.
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"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section 4043(c) of ERISA for which the 30-day notice under Section
4043(a) of ERISA has not been waived by the PBGC (including any failure to meet
the minimum funding standard of, or timely make any required installment under,
Section 412 of the Internal Revenue Code or Section 302 of ERISA, regardless of
the issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such "reportable event" subject to advance notice to the
PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code, and (iv) a cessation of operations described in Section
4062(e) of ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans and
Commitments representing more than sixty-six and two-thirds percent (66 2/3%) of
the aggregate at such time of all outstanding Loans and Commitments.
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean, with respect to the Borrower, the
president, the chief executive officer, the chief financial officer, any
executive officer, or any other Financial Officer of the Borrower, and any other
officer or similar official thereof responsible for the administration of the
obligations of the Borrower in respect of this Agreement.
"Security Documents" shall mean the Pledge and Security Agreement and
all other pledge or security agreements, mortgages, deeds of trust, assignments
or other similar agreements or instruments executed and delivered from time to
time by the Borrower or any of its Subsidiaries pursuant to SECTION 5.9, 5.10 or
5.11 or otherwise in connection with the transactions contemplated hereby, in
each case as amended, modified or supplemented from time to time.
"Service Agreements" shall mean the management Service Agreements and
any related consulting agreements between the Borrower and its Subsidiaries and
any Affiliated Orthodontist, whether now existing or hereafter acquired or
arising, together with any and all extensions, modifications, amendments,
renewals, substitutions or replacements thereof.
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"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean any Subsidiary of the Borrower that
is or is required by SECTION 3.1(A)(II) or SECTION 5.9 to be a guarantor under
the Subsidiary Guaranty and has granted, or is required to grant, to the Agent a
Lien upon and security interest in certain of its personal property assets
pursuant to the Pledge and Security Agreement, including, without limitation,
OrthAlliance Finance, Inc., any other subsidiary that has executed a Service
Agreement and any Excluded Subsidiary that ceases to qualify under the
definition thereof.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty made by the
Subsidiary Guarantors in favor of the Agent and the Lenders, dated December 30,
1997 and attached as EXHIBIT F, as amended, modified or supplemented from time
to time.
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitments pursuant to SECTION 2.5 or SECTION 8.2.
"Third Party Payor Arrangements" shall mean any and all arrangements
with Medicare, Medicaid, CHAMPUS, and any other Governmental Authority, or
quasi-public agency, Blue Cross, Blue Shield, any managed care plans and
organizations including, without limitation, HMO's and preferred provider
organizations, private commercial insurance companies and any similar third
party arrangements, plans or programs for payment or reimbursement in connection
with orthodontic, dental and other health care services, products or supplies.
"Type" shall have the meaning given to such term in SECTION 2.2(A).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Commitment" shall mean, with respect to any Lender at any
time, such Lender's Commitment at such time less the aggregate principal amount
of all Loans made by such Lender that are outstanding at such time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
1.2 Accounting Terms. Except as specifically provided otherwise in
this Agreement, all accounting terms used herein that are not specifically
defined shall have the meanings customarily given them in accordance with GAAP.
Notwithstanding anything to the contrary in this Agreement, for purposes of
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calculation of the financial covenants set forth in ARTICLE VI, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the application used in preparing the most recent financial statements of the
Borrower referred to in Section 5.1(a). In the event that any changes in GAAP
after such date are required to be applied to the Borrower and would affect the
computation of the financial covenants contained in ARTICLE VI, such changes
shall be followed only from and after the date this Agreement shall have been
amended to take into account any such changes.
1.3 Other Terms; Construction. Unless otherwise specified or
unless the context otherwise requires, all references herein to sections,
annexes, schedules and exhibits are references to sections, annexes, schedules
and exhibits in and to this Agreement, and all terms defined in this Agreement
shall have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto.
ARTICLE II.
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments. Each Lender severally agrees, subject to and on
the terms and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not including
the Termination Date, provided that (i) the aggregate principal amount of Loans
at any time outstanding for any Lender shall not exceed such Lender's Commitment
at such time, and (ii) no Borrowing shall be made if, immediately after giving
effect thereto, the sum of the aggregate principal amount of Loans outstanding
at such time would exceed the aggregate Commitments at such time. Subject to and
on the terms and conditions of this Agreement, the Borrower may borrow, repay
and reborrow Loans.
2.2 Borrowings.
(a) The Loans shall, at the option of the Borrower and subject to
the terms and conditions of this Agreement, be either Base Rate Loans or LIBOR
Loans (each, a "Type" of Loan), provided that (i) all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type and (ii) any Loans made on the Closing Date shall be made initially as Base
Rate Loans.
(b) In order to make a Borrowing (other than Borrowings involving
continuations or conversions of outstanding Loans, which shall be made pursuant
to SECTION 2.11), the Borrower will give the Agent written notice not later than
12:00 noon, Charlotte time, three (3) Business Days prior to each Borrowing to
be comprised of LIBOR Loans and one (1) Business Day prior to each Borrowing to
be comprised of Base Rate Loans; provided, however, that requests for the
Borrowing of any Loans to be made on the Closing Date may, at the discretion of
the Agent, be given later than the times specified hereinabove. Each such notice
(each, a "Notice of Borrowing") shall be irrevocable, shall be given in the form
of EXHIBIT B-1 and shall specify (1) the aggregate principal amount and initial
Type of the Loans to be made pursuant to such Borrowing, (2) in the case of a
Borrowing of LIBOR Loans, the initial Interest Period to be applicable thereto,
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and (3) the requested date of such Borrowing (the "Borrowing Date"), which shall
be a Business Day. Upon its receipt of a Notice of Borrowing, the Agent will
promptly notify each Lender of the proposed Borrowing. Notwithstanding anything
to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
comprised of Base Rate Loans shall not be less than $1,000,000, or, if
greater, an integral multiple of $100,000 in excess thereof, and the
aggregate principal amount of each Borrowing comprised of LIBOR Loans
shall not be less than $3,000,000 or, if greater, an integral multiple
of $1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type
of Loans comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration
of the Interest Period to be applicable to any Borrowing of LIBOR
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Lender will make available to the Agent at its office
referred to in SECTION 10.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan or Loans to be made by such Lender. To the extent the
Lenders have made such amounts available to the Agent as provided hereinabove,
the Agent will make the aggregate of such amounts available to the Borrower in
accordance with SECTION 2.3(A) and in like funds as received by the Agent.
2.3 Disbursements; Funding Reliance; Domicile of Loans.
(a) The Borrower hereby authorizes the Agent to disburse the proceeds
of each Borrowing in accordance with the terms of any written instructions from
any of the Authorized Officers, provided that the Agent shall not be obligated
under any circumstances to forward amounts to any account not listed in an
Account Designation Letter. The Borrower may at any time deliver to the Agent an
Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion, if any, of
the relevant Borrowing, the Agent may assume that such Lender has made such
portion available to the Agent in immediately available funds on such Borrowing
Date in accordance with the applicable provisions of SECTION 2.2, and the Agent
may, in reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
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made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and (ii) in
the case of the Borrower, at the rate of interest applicable at such time to the
Type of Loan comprising such Borrowing, as determined under the provisions of
SECTION 2.8. If such Lender shall repay to the Agent such corresponding amount,
such amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement. The failure of any Lender to make any Loan required
to be made by it as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Loan as part of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender as part of any Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4 Notes.
(a) The Loans made by each Lender shall be evidenced by a Note
appropriately completed in substantially the form of EXHIBIT A.
(b) Each Note issued to a Lender with a Commitment shall (i) be
executed by the Borrower, (ii) be payable to the order of such Lender, (iii) be
dated as of the Closing Date, (iv) be in a stated principal amount equal to such
Lender's Commitment, (v) bear interest in accordance with the provisions of
SECTION 2.8, as the same may be applicable from time to time to the Loans made
by such Lender, and (vi) be entitled to all of the benefits of this Agreement
and the other Credit Documents and subject to the provisions hereof and thereof.
(c) Each Lender will record on its internal records the amount and Type
of each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5 Termination and Reduction of Commitments.
(a) The Commitments shall be automatically and permanently terminated
on the Termination Date (or on April 15, 1999, but only if the Closing Date
shall not have occurred on or prior to such date).
(b) At any time and from time to time, upon at least five (5) Business
Days' prior written notice to the Agent, the Borrower may terminate in whole or
reduce in part the aggregate Unutilized Commitments, provided that any such
partial reduction shall be in an aggregate amount of not less than $1,000,000 or
integral multiples thereof. The amount of any such termination or reduction made
under this subparagraph (b) shall be applied ratably to the Commitments and may
not thereafter be reinstated.
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2.6 Mandatory Payments and Prepayments.
(a) Except to the extent due or paid sooner pursuant to the provisions
of this Agreement, the aggregate outstanding principal of the Loans shall be due
and payable in full on the Maturity Date.
(b) In the event that, at any time, the aggregate principal amount of
Loans outstanding at such time shall exceed the aggregate Commitments at such
time, the Borrower will immediately prepay the outstanding principal amount of
the Loans in the amount of such excess.
(c) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
SECTION 2.18 to be paid as a consequence thereof.
2.7 Voluntary Prepayments.
(a) At any time and from time to time, the Borrower shall have the
right to prepay the Loans, in whole or in part, without premium or penalty
(except as provided in clause (iii) below), upon written notice given to the
Agent not later than 12:00 noon, Charlotte time, three (3) Business Days prior
to each intended prepayment of LIBOR Loans and one (1) Business Day prior to
each intended prepayment of Base Rate Loans, provided that (i) each partial
prepayment shall be in an aggregate principal amount of not less than $1,000,000
or, if greater, an integral multiple of $100,000 in excess thereof, (ii) no
partial prepayment of LIBOR Loans made pursuant to any single Borrowing shall
reduce the aggregate outstanding principal amount of the remaining LIBOR Loans
under such Borrowing to less than $3,000,000 or to any greater amount not an
integral multiple of $1,000,000 in excess thereof, and (iii) unless made
together with all amounts required under SECTION 2.18 to be paid as a
consequence of such prepayment, a prepayment of a LIBOR Loan may be made only on
the last day of the Interest Period applicable thereto. Each such notice shall
specify the proposed date of such prepayment and the aggregate principal amount
and Type of the Loans to be prepaid (and, in the case of LIBOR Loans, the
Interest Period of the Borrowing pursuant to which made), and shall be
irrevocable and shall bind the Borrower to make such prepayment on the terms
specified therein. Loans prepaid pursuant to this subsection (a) may be
reborrowed, subject to the terms and conditions of this Agreement.
(b) Each prepayment of the Loans made pursuant to subsection (a) above
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
2.8 Interest.
(a) The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full, (i) at the Adjusted Base Rate applicable to such
Loan, as in effect from time to time during such periods as such Loan is a Base
Rate Loan, and (ii) at the Adjusted LIBOR Rate applicable to such Loan, as in
effect from time to time during such periods as such Loan is a LIBOR Loan.
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(b) Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Loan, any fees or other amount hereunder when due (whether at
maturity, pursuant to acceleration or otherwise), and (at the election of the
Required Lenders) upon the occurrence and during the continuance of any other
Event of Default, all outstanding principal amounts of the Loans and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other accrued and outstanding fees and other amounts hereunder, shall bear
interest at a rate per annum equal to the interest rate applicable from time to
time thereafter to such Loans (whether the Adjusted Base Rate or the Adjusted
LIBOR Rate) plus 2% (or, in the case of fees and other amounts, at the Adjusted
Base Rate plus 2%), and, in each case, such default interest shall be payable on
demand. To the greatest extent permitted by law, interest shall continue to
accrue after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base
Rate Loan or portion thereof paid or prepaid pursuant to the provisions
of SECTION 2.6 OR 2.7, except as provided hereinbelow), in arrears on
the last Business Day of each calendar quarter, beginning with the
first such day to occur after the Closing Date; provided, that in the
event the Loans are repaid or prepaid in full and the Commitments have
been terminated, then accrued interest in respect of all Base Rate
Loans shall be payable together with such repayment or prepayment on
the date thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan
or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6 OR 2.7, except as provided hereinbelow), in arrears on the
last Business Day of the Interest Period applicable thereto (subject to
the provisions of clause (iv) in SECTION 2.10); provided, that in the
event all LIBOR Loans made pursuant to a single Borrowing are repaid or
prepaid in full, then accrued interest in respect of such LIBOR Loans
(and all amounts owing pursuant to SECTION 2.18) shall be payable
together with such repayment or prepayment on the date thereof; and
(iii) in respect of any Loan, on the Termination Date and,
after the Termination Date, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
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aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination of
the Reserve Requirement) shall, absent manifest error, be conclusive and binding
on all parties hereto.
2.9 Fees. The Borrower agrees to pay:
(a) To First Union, for its own account, on the date of its execution
of this Agreement, the fees described in the Fee Letter, in the amounts set
forth therein as due and payable on such date and to the extent not theretofore
paid to First Union;
(b) To the Agent, for the account of each Lender, a commitment fee for
each calendar quarter (or portion thereof) for the period from the date of this
Agreement to the Termination Date, at a per annum rate equal to the Applicable
Margin Percentage in effect for such fee from time to time during such quarter,
on such Lender's ratable share (based on the proportion that its Commitment
bears to the aggregate Commitments) of the average daily aggregate Unutilized
Commitments, payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the Termination Date;
(c) To the Agent, for its own account, an annual administrative fee in
the amount and on the terms as may be agreed by the Borrower and the Agent upon
the primary syndication of the Facility.
2.10 Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two or three-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing
shall at all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such LIBOR Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
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(iii) LIBOR Loans may not be outstanding under more than five
(5) separate Interest Periods at any one time (for which purpose
Interest Periods shall be deemed to be separate even if they are
coterminous);
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that
begins prior to the Closing Date or that expires after the Maturity
Date, with respect to Loans that are to be maintained as LIBOR Loans;
(vi) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period would otherwise expire, such Interest Period shall
expire on the last Business Day of such calendar month; and
(vii) if, upon the expiration of any Interest Period applicable
to a Borrowing of LIBOR Loans, the Borrower shall have failed to elect
a new Interest Period to be applicable to such LIBOR Loans, then the
Borrower shall be deemed to have elected to convert such LIBOR Loans
into Base Rate Loans as of the expiration of the then current Interest
Period applicable thereto.
2.11 Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day occurring on
or after the Closing Date, to elect (i) to convert all or a portion of the
outstanding principal amount of any Base Rate Loans into LIBOR Loans, or to
convert any LIBOR Loans the Interest Periods for which end on the same day into
Base Rate Loans, or (ii) to continue all or a portion of the outstanding
principal amount of any LIBOR Loans the Interest Periods for which end on the
same day for an additional Interest Period, provided that (x) any such
conversion of LIBOR Loans into Base Rate Loans shall involve an aggregate
principal amount of not less than $1,000,000 or, if greater, an integral
multiple of $100,000 in excess thereof; any such conversion of Base Rate Loans
into, or continuation of, LIBOR Loans shall involve an aggregate principal
amount of not less than $3,000,000 or, if greater, an integral multiple of
$1,000,000 in excess thereof; and no partial conversion of LIBOR Loans made
pursuant to a single Borrowing shall reduce the outstanding principal amount of
such LIBOR Loans to less than $3,000,000 or to any greater amount not an
integral multiple of $1,000,000 in excess thereof, (y) except as otherwise
provided in SECTION 2.16(D), LIBOR Loans may be converted into Base Rate Loans
only on the last day of the Interest Period applicable thereto (and, in any
event, if a LIBOR Loan is converted into a Base Rate Loan on any day other than
the last day of the Interest Period applicable thereto, the Borrower will pay,
upon such conversion, all amounts required under SECTION 2.18 to be paid as a
consequence thereof), and (z) no conversion of Base Rate Loans into LIBOR Loans
or continuation of LIBOR Loans shall be permitted during the continuance of a
Default or Event of Default.
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(b) The Borrower shall make each such election by giving the Agent
written notice not later than 12:00 noon, Charlotte time, three (3) Business
Days prior to the intended effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and one (1) Business Day prior to the
intended effective date of any conversion of LIBOR Loans into Base Rate Loans.
Each such notice (each, a "Notice of Conversion/Continuation") shall be
irrevocable, shall be given in the form of EXHIBIT B-2 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount and Type of the
Loans being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender of the
proposed conversion or continuation. In the event that the Borrower shall fail
to deliver a Notice of Conversion/Continuation as provided herein with respect
to any outstanding LIBOR Loans, such LIBOR Loans shall automatically be
converted to Base Rate Loans upon the expiration of the then current Interest
Period applicable thereto (unless repaid pursuant to the terms hereof). In the
event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
2.12 Method of Payments; Computations.
(a) All payments by the Borrower hereunder shall be made without
setoff, counterclaim or other defense, in Dollars and in immediately available
funds to the Agent, for the account of the Lenders entitled to such payment
(except as otherwise provided herein as to payments required to be made to the
Agent for its own account or directly to the Lenders) at its office referred to
in SECTION 10.5, prior to 12:00 noon, Charlotte time, on the date payment is
due. Any payment made as required hereinabove, but after 12:00 noon, Charlotte
time, shall be deemed to have been made on the next succeeding Business Day. If
any payment falls due on a day that is not a Business Day, then such due date
shall be extended to the next succeeding Business Day (except that in the case
of LIBOR Loans to which the provisions of clause (iv) in SECTION 2.10 are
applicable, such due date shall be the next preceding Business Day), and such
extension of time shall then be included in the computation of payment of
interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
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such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date, and the Agent
may, in reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Agent forthwith on demand such amount so distributed to such
Lender, together with interest thereon for each day from the date such amount is
so distributed to such Lender until the date repaid to the Agent, at the Federal
Funds Rate.
(d) Each Lender for whose account any payment is to be made hereunder
may, but shall not be obligated to, debit the amount of any such payment not
made as and when required hereunder to any ordinary deposit account of the
Borrower with such Lender (with prompt notice to the Agent and the Borrower);
provided, however, that the failure to give such notice shall not affect the
validity of such debit by such Lender.
(e) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed for LIBOR Loans and of 365/366 days and the
actual number of days (including the first day, but excluding the last day)
elapsed for Base Rate Loans.
2.13 Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes a payment
or payments to or for the account of the Agent or any Lender, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Obligation intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.14 Use of Proceeds. The proceeds of the Loans shall be used solely
(i) to provide working capital for the Borrower's and the Subsidiaries' general
business purposes, including (x) financing of Permitted Acquisitions together
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with legal and accounting fees and other transaction costs incurred in
connection therewith, (y) financing of patient receivables to the extent
permitted pursuant to Section 7.5(ix) and (z) repurchases of the Borrower's
Common Stock to the extent permitted pursuant to SECTION 7.6(A)(III) and (ii) to
pay certain fees and expenses in connection with this Facility.
2.15 Pro Rata Treatment.
(a) All fundings, continuations and conversions of Loans shall be made
by the Lenders pro rata on the basis of their respective Commitments to provide
Loans (in the case of the initial funding of Loans pursuant to SECTION 2.2) or
on the basis of their respective outstanding Loans (in the case of continuations
and conversions of Loans pursuant to SECTION 2.11, and additionally in all cases
in the event the Commitments have expired or have been terminated), as the case
may be from time to time. All payments on account of principal of or interest on
any Loans, fees or any other Obligations owing to or for the account of any one
or more Lenders shall be apportioned ratably among such Lenders in proportion to
the amounts of such principal, interest, fees or other Obligations owed to them
respectively.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to SECTION 2.16, SECTION 2.18 or SECTION 10.7) applicable to the
payment of any of the Obligations that exceeds its ratable share (according to
the proportion of (i) the amount of such Obligations due and payable to such
Lender at such time to (ii) the aggregate amount of such Obligations due and
payable to all Lenders at such time) of payments on account of such Obligations
then or therewith obtained by all the Lenders to which such payments are
required to have been made, such Lender shall forthwith purchase from the other
Lenders such participations in such Obligations as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each such other Lender shall be rescinded and each such other Lender shall repay
to the purchasing Lender the purchase price to the extent of such recovery,
together with an amount equal to such other Lender's ratable share (according to
the proportion of (i) the amount of such other Lender's required repayment to
(ii) the total amount so recovered from the purchasing Lender) of any interest
or other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to the provisions of this subsection
may, to the fullest extent permitted by law, exercise any and all rights of
payment (including, without limitation, setoff, banker's lien or counterclaim)
with respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
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2.16 Increased Costs; Change in Circumstances; Illegality; etc.
(a) If, at any time after the date hereof and from time to time, the
introduction of or any change in any applicable law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law), shall (i) subject such Lender to any
tax or other charge, or change the basis of taxation of payments to such Lender,
in respect of any of its LIBOR Loans or any other amounts payable hereunder or
its obligation to make, fund or maintain any LIBOR Loans (other than any change
in the rate or basis of tax on the overall net income of such Lender or its
applicable Lending Office), (ii) impose, modify or deem applicable any reserve,
special deposit or similar requirement (other than as a result of any change in
the Reserve Requirement) against assets of, deposits with or for the account of,
or credit extended by, such Lender or its applicable Lending Office, or (iii)
impose on such Lender or its applicable Lending Office any other condition, and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any LIBOR Loans or to reduce the amount of any sum
received or receivable by such Lender hereunder, the Borrower will, promptly
upon demand therefor by such Lender, pay to such Lender such additional amounts
as shall compensate such Lender for such increase in costs or reduction in
return.
(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment or Loans hereunder, of reducing the rate of return on
the capital of such Lender or any Person controlling such Lender to a level
below that which such Lender or controlling Person could have achieved but for
such introduction, change or compliance (taking into account such Lender's or
controlling Person's policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by such Lender therefor, pay to such Lender
such additional amounts as will compensate such Lender or controlling Person for
such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
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shall be deemed to be a request for Base Rate Loans, in each case until the
Agent or the Required Lenders, as the case may be, shall have determined that
the circumstances giving rise to such suspension no longer exist (and the
Required Lenders, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Agent and the Borrower. Upon such notice, (i) each of such Lender's then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Period applicable thereto (or, to the extent any such LIBOR
Loan may not lawfully be maintained as a LIBOR Loan until such expiration date,
upon such notice), be converted into a Base Rate Loan, (ii) the obligation of
such Lender to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to any Borrowing for which the
Agent has received a Notice of Borrowing but for which the Borrowing Date has
not arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall, as to such Lender, be deemed to be a request for a Base Rate Loan, in
each case until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. No failure by the
Agent or any Lender at any time to demand payment of any amounts payable under
this Section shall constitute a waiver of its right to demand payment of any
additional amounts arising at any subsequent time. Nothing in this Section shall
require or be construed to require the Borrower to pay any interest, fees, costs
or other amounts in excess of that permitted by applicable law.
2.17 Taxes.
(a) Any and all payments by the Borrower hereunder or under any Note
shall be made, in accordance with the terms hereof and thereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, other than net income and franchise taxes imposed on the Agent or any
Lender by the United States or by the jurisdiction under the laws of which the
Agent or such Lender, as the case may be, is organized or in which its principal
office or (in the case of a Lender) its applicable Lending Office is located, or
any political subdivision or taxing authority thereof (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
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Note to the Agent or any Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), the Agent or such
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower will make such
deductions, (iii) the Borrower will pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Borrower will deliver to the Agent or such Lender, as the case may be,
evidence of such payment.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within 30
days from the date the Agent or such Lender, as the case may be, makes written
demand therefor.
(c) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit with respect to, any amount of
Taxes (i) previously paid by it and as to which it has been indemnified by or on
behalf of the Borrower or (ii) previously deducted by the Borrower (including,
without limitation, any Taxes deducted from any additional sums payable under
clause (i) of subsection (a) above), the Agent or such Lender, as the case may
be, shall reimburse the Borrower to the extent of the amount of any such
recovery or permanent net tax benefit (but only to the extent of indemnity
payments made, or additional amounts paid, by or on behalf of the Borrower under
this Section with respect to the Taxes giving rise to such recovery or tax
benefit); provided, however, that the Borrower, upon the request of the Agent or
such Lender, agrees to repay to the Agent or such Lender, as the case may be,
the amount paid over to the Borrower (together with any penalties, interest or
other charges), in the event the Agent or such Lender is required to repay such
amount to the relevant taxing authority or other Governmental Authority. The
determination by the Agent or any Lender of the amount of any such recovery or
permanent net tax benefit shall, in the absence of manifest error, be conclusive
and binding.
(d) If any Lender is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender") and claims exemption from United States withholding tax
pursuant to the Internal Revenue Code, such Non-U.S. Lender will deliver to each
of the Agent and the Borrower, on or prior to the Closing Date (or, in the case
of a Non-U.S. Lender that becomes a party to this Agreement as a result of an
assignment after the Closing Date, on the effective date of such assignment),
(i) in the case of a Non-U.S. Lender that is a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code, a properly completed Internal Revenue
Service Form 4224 or 1001, as applicable (or successor forms), certifying that
such Non-U.S. Lender is entitled to an exemption from or a reduction of
withholding or deduction for or on account of United States federal income taxes
in connection with payments under this Agreement or any of the Notes, together
with a properly completed Internal Revenue Service Form W-8 or W-9, as
applicable (or successor forms), and (ii) in the case of a Non-U.S. Lender that
is not a "bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue
Code, a certificate in form and substance reasonably satisfactory to the Agent
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and the Borrower and to the effect that (x) such Non-U.S. Lender is not a "bank"
for purposes of Section 881(c)(3)(A) of the Internal Revenue Code, is not
subject to regulatory or other legal requirements as a bank in any jurisdiction,
and has not been treated as a bank for purposes of any tax, securities law or
other filing or submission made to any governmental authority, any application
made to a rating agency or qualification for any exemption from any tax,
securities law or other legal requirements, (y) is not a 10-percent shareholder
for purposes of Section 881(c)(3)(B) of the Internal Revenue Code and (z) is not
a controlled foreign corporation receiving interest from a related person for
purposes of Section 881(c)(3)(C) of the Internal Revenue Code, together with a
properly completed Internal Revenue Service Form W-8 or W-9, as applicable (or
successor forms). Each such Non-U.S. Lender further agrees to deliver to each of
the Agent and the Borrower an additional copy of each such relevant form on or
before the date that such form expires or becomes obsolete or after the
occurrence of any event (including a change in its applicable Lending Office)
requiring a change in the most recent forms so delivered by it, in each case
certifying that such Non-U.S. Lender is entitled to an exemption from or a
reduction of withholding or deduction for or on account of United States federal
income taxes in connection with payments under this Agreement or any of the
Notes, unless an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required, which event renders all such forms inapplicable or the
exemption to which such forms relate unavailable and such Non-U.S. Lender
notifies the Agent and the Borrower that it is not entitled to receive payments
without deduction or withholding of United States federal income taxes. Each
such Non-U.S. Lender will promptly notify the Agent and the Borrower of any
changes in circumstances that would modify or render invalid any claimed
exemption or reduction.
(e) If any Lender is entitled to a reduction in (and not a complete
exemption from) the applicable withholding tax, the Borrower and the Agent may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If any of
the forms or other documentation required under subsection (d) above are not
delivered to the Agent as therein required, then the Borrower and the Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
2.18 Compensation. The Borrower will compensate each Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund or maintain LIBOR
Loans) that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 8.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan and having a maturity comparable to the
relevant Interest Period; provided, however, that each Lender may fund its LIBOR
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Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section. Determinations
by any Lender for purposes of this Section of any such losses, expenses or
liabilities shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith.
ARTICLE III.
CONDITIONS OF BORROWING
3.1 Conditions of Initial Borrowing. The obligation of each Lender to
make Loans in connection with the initial Borrowing hereunder is subject to the
satisfaction of the following conditions precedent:
(a) The Agent shall have received the following, each dated as of the
date of this Agreement (unless otherwise specified) and, except for the Notes
and any certificates or instruments required to be delivered under the Pledge
and Security Agreement, in sufficient copies for each Lender:
(i) a Note for each Lender that is a party hereto as of the
Closing Date, in the amount of such Lender's Commitment, duly completed
in accordance with SECTION 2.4 and executed by the Borrower;
(ii) an agreement of the Subsidiary Guarantors consenting to
this Agreement and acknowledging their continuing obligations under the
Subsidiary Guaranty with respect to the Obligations;
(iii) the Pledge and Security Agreement, duly completed and
executed by the Borrower and by each Subsidiary Guarantor, together
with any certificates evidencing the Capital Stock pledged thereunder
as of the Closing Date and undated assignments separate from
certificate for any such certificate, duly executed in blank, and any
promissory notes pledged thereunder, duly endorsed in blank; and
(iv) the favorable opinions of Munger, Tolles & Olson, special
counsel to the Borrower, in substantially the form of EXHIBIT G,
addressed to the Agent and the Lenders and addressing such other
matters as the Agent may reasonably request.
(b) The Agent shall have received a certificate, signed by the
president, the chief executive officer or the chief financial officer of the
Borrower, in form and substance satisfactory to the Agent, certifying that (i)
all representations and warranties of the Borrower contained in this Agreement
and the other Credit Documents are true and correct as of the Closing Date, both
immediately before and after giving effect to the consummation of the
transactions contemplated hereby, the making of the initial Loans hereunder and
the application of the proceeds thereof, (ii) no Default or Event of Default has
occurred and is continuing, both immediately before and after giving effect to
the consummation of the transactions contemplated hereby, the making of the
initial Loans hereunder and the application of the proceeds thereof, (iii) both
immediately before and after giving effect to the consummation of the
transactions contemplated hereby, the making of the initial Loans hereunder and
the application of the proceeds thereof, no Material Adverse Change has occurred
since December 31, 1997 and there exists no event, condition or state of facts
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that could reasonably be expected to result in a Material Adverse Change, and
(iv) all conditions to the initial extensions of credit hereunder set forth in
this Section and in SECTION 3.2 have been satisfied or waived as required
hereunder.
(c) The Agent shall have received a certificate of the secretary or an
assistant secretary of each of the Borrower and the Subsidiary Guarantors, in
form and substance satisfactory to the Agent, certifying (i) that attached
thereto is a true and complete copy of the articles or certificate of
incorporation and all amendments thereto of the Borrower or such Subsidiary
Guarantor, as the case may be, certified as of a recent date by the Secretary of
State (or comparable Governmental Authority) of its jurisdiction of
organization, and that the same has not been amended since the date of such
certification, (ii) that attached thereto is a true and complete copy of the
bylaws of the Borrower or such Subsidiary Guarantor, as the case may be, as then
in effect and as in effect at all times from the date on which the resolutions
referred to in clause (iii) below were adopted to and including the date of such
certificate, and (iii) that attached thereto is a true and complete copy of
resolutions adopted by the board of directors of the Borrower or such Subsidiary
Guarantor, as the case may be, authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents to which it is a
party, and as to the incumbency and genuineness of the signature of each officer
of the Borrower or such Subsidiary Guarantor, as the case may be, executing this
Agreement or any of such other Credit Documents, and attaching all such copies
of the documents described above.
(d) The Agent shall have received (i) a certificate as of a recent date
of the good standing of each of the Borrower and its Subsidiaries under the laws
of its jurisdiction of organization, from the Secretary of State (or comparable
Governmental Authority) of such jurisdiction, and (ii) a certificate as of a
recent date of the qualification of each of the Borrower and its Subsidiaries to
conduct business as a foreign corporation in each jurisdiction where it is so
qualified as of the Closing Date, from the Secretary of State (or comparable
Governmental Authority) of such jurisdiction.
(e) All legal matters, documentation, and corporate or other
proceedings incident to the transactions contemplated hereby shall be
satisfactory in form and substance to the Agent; all approvals, permits and
consents of any Governmental Authorities or other Persons required in connection
with the execution and delivery of this Agreement and the other Credit Documents
and the consummation of the transactions contemplated hereby and thereby shall
have been obtained (except for approvals, permits and consents the absence of
which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect), without the imposition of conditions that are not
acceptable to the Agent, and all related filings, if any, shall have been made,
and all such approvals, permits, consents and filings shall be in full force and
effect and the Agent shall have received such copies thereof as it shall have
requested; all applicable waiting periods shall have expired without any adverse
action being taken by any Governmental Authority having jurisdiction; and no
action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before, and no order, injunction or decree
shall have been entered by, any court or other Governmental Authority, in each
case to enjoin, restrain or prohibit, to obtain substantial damages in respect
of, or that is otherwise related to or arises out of, this Agreement, any of the
other Credit Documents or the consummation of the transactions contemplated
hereby or thereby, or that, in the opinion of the Agent, could reasonably be
expected to have a Material Adverse Effect.
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(f) The Agent shall have received certified reports from an independent
search service satisfactory to it listing any judgment or tax lien filing or
Uniform Commercial Code financing statement that names the Borrower or any
Subsidiary Guarantor as debtor in any of the jurisdictions listed on Annex B to
the Pledge and Security Agreement, and the results thereof shall be satisfactory
to the Agent.
(g) The Agent shall have received evidence in form and substance
satisfactory to it that all filings, recordings, registrations and other actions
(including, without limitation, the filing of duly completed and executed UCC-1
financing statements in each jurisdiction listed on Annex B to the Pledge and
Security Agreement) necessary or, in the reasonable opinion of the Agent,
desirable to perfect the Liens created by the Security Documents shall have been
completed, or arrangements satisfactory to the Agent for the completion thereof
shall have been made.
(h) Since December 31, 1997, both immediately before and after giving
effect to the consummation of the transactions contemplated by this Agreement,
there shall not have occurred any Material Adverse Change or any event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change.
(i) The Borrower shall have paid (i) to First Union, the unpaid balance
of the fees described in the Fee Letter, (ii) to the Agent, the initial payment
of the annual administrative fee (if any), and (iii) all other fees and expenses
of the Agent and the Lenders required hereunder or under any other Credit
Document to be paid on or prior to the Closing Date (including fees and expenses
of counsel) in connection with this Agreement and the transactions contemplated
hereby.
(j) The Agent shall have received a Financial Condition Certificate,
together with the Projections as described in Section 4.11(b) and pro forma
balance sheets as of the Closing Date, all of which shall be in form and
substance reasonably satisfactory to the Agent.
(k) The Agent shall have received a Covenant Compliance Worksheet, duly
completed and certified by the chief financial officer of the Borrower and in
form and substance satisfactory to the Agent, demonstrating the Borrower's
compliance with the financial covenants set forth in SECTIONS 6.1 through 6.4,
determined on a pro forma basis as of the Closing Date after giving effect to
the making of the initial Loans hereunder and the consummation of the
transactions contemplated hereby.
(l) The Agent shall have received from the Borrower its consolidated
operating budget and cash flow projections, prepared on an annual basis, for the
period from December 31, 1998 through December 31, 2002, and the same shall be
in form and substance satisfactory to the Agent.
(m) The Agent shall have received evidence in form and substance
reasonably satisfactory to it that all of the requirements of SECTION 5.6 and
those provisions of the Pledge and Security Agreement relating to the
maintenance of insurance have been satisfied, including receipt of certificates
of insurance evidencing the insurance coverages described on SCHEDULE 4.17 and
all other or additional coverages required under the Pledge and Security
Agreement and naming the Agent as loss payee or additional insured, as its
interests may appear.
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(n) The Agent shall have received an Account Designation Letter,
together with written instructions from an Authorized Officer, including wire
transfer information, directing the payment of the proceeds of the initial Loans
to be made hereunder.
(o) The Agent and each Lender shall have received such other documents,
certificates, opinions and instruments in connection with the transactions
contemplated hereby as the Agent shall have reasonably requested.
3.2 Conditions of All Borrowings. The obligation of each Lender to make
any Loans hereunder, including the initial Loans, is subject to the satisfaction
of the following conditions precedent on the relevant Borrowing Date:
(a) The Agent shall have received a Notice of Borrowing in
accordance with SECTION 2.2(B);
(b) Each of the representations and warranties contained in ARTICLE IV
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date (including the Closing Date, in the case of the initial Loans
made hereunder) with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans to be made on such date
(except to the extent any such representation or warranty is expressly stated to
have been made as of a specific date, in which case such representation or
warranty shall be true and correct in all material respects as of such date);
and
(c) No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans to be made on such date.
Each giving of a Notice of Borrowing and the consummation of each
Borrowing shall be deemed to constitute a representation by the Borrower that
the statements contained in subsections (b) and (c) above are true, both as of
the date of such notice or request and as of the relevant Borrowing Date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, the Borrower
represents and warrants to the Agent and the Lenders as follows:
4.1 Corporate Organization and Power. Each of the Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and (ii) is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified, except where the failure to be so
qualified would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect; and each of the Borrower and the Subsidiary
Guarantors has the full corporate power and authority to execute, deliver and
perform the Credit Documents to which it is or will be a party, to own and hold
its property and to engage in its business as presently conducted.
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4.2 Authorization; Enforceability. Each of the Borrower and its
Subsidiaries has taken, or on the Closing Date will have taken, all necessary
corporate action to execute, deliver and perform each of the Credit Documents to
which it is or will be a party, and has, or on the Closing Date (or any later
date of execution and delivery) will have, validly executed and delivered each
of the Credit Documents to which it is or will be a party. This Agreement and
each of the other Credit Documents constitutes, or upon execution and delivery
will constitute, the legal, valid and binding obligation of each of the Borrower
and its Subsidiaries that is a party hereto or thereto, enforceable against it
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, by general equitable principles or by
principles of good faith and fair dealing.
4.3 No Violation. The execution, delivery and performance by each of
the Borrower and its Subsidiaries of this Agreement and each of the other Credit
Documents to which it is or will be a party, and compliance by it with the terms
hereof and thereof, do not and will not (i) violate any provision of its
articles or certificate of incorporation or bylaws or contravene any other
Requirement of Law applicable to it, (ii) conflict with, result in a breach of
or constitute (with notice, lapse of time or both) a default under any
indenture, agreement or other instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject, (iii) result in a
Limitation on any Licenses applicable to the operations of the Borrower or any
of its Subsidiaries or adversely affect the ability of the Borrower or any of
its Subsidiaries to participate in any Third Party Payor Arrangement or (iv)
except for the Liens granted in favor of the Agent pursuant to the Security
Documents, result in or require the creation or imposition of any Lien upon any
of its properties or assets. No Subsidiary is a party to any agreement or
instrument or otherwise subject to any restriction or encumbrance that restricts
or limits its ability to make dividend payments or other distributions in
respect of its Capital Stock, to repay Indebtedness owed to the Borrower or any
other Subsidiary, to make loans or advances to the Borrower or any other
Subsidiary, or to transfer any of its assets or properties to the Borrower or
any other Subsidiary, in each case other than such restrictions or encumbrances
existing under or by reason of the Credit Documents or applicable Requirements
of Law.
4.4 Governmental and Third-Party Authorization; Permits.
(a) No consent, approval, authorization or other action by, notice to,
or registration or filing with, any Governmental Authority or other Person is or
will be required as a condition to or otherwise in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of this Agreement or any of the other Credit Documents to which it is or will be
a party or the legality, validity or enforceability hereof or thereof, other
than (i) filings of Uniform Commercial Code financing statements and other
instruments and actions necessary to perfect the Liens created by the Security
Documents, (ii) consents, authorizations and filings that have been (or on or
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prior to the Closing Date will have been) made or obtained and that are (or on
the Closing Date will be) in full force and effect, which consents,
authorizations and filings are listed on SCHEDULE 4.4, and (iii) consents and
filings the failure to obtain or make which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Each of the Borrower and its Subsidiaries has, and is in good
standing with respect to, all governmental approvals, Licenses, Reimbursement
Approvals and other authorizations necessary to conduct its business as
presently conducted and to own or lease and operate its properties, except for
those the failure to obtain which would not be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect. Without limitation of
the foregoing, the Borrower and each Subsidiary has, to the extent applicable,
(i) obtained and maintains in good standing all required Licenses and
Reimbursement Approvals, except where the failure to do so would not have a
Material Adverse Effect, and (ii) to the extent prudent and customary in the
industry in which the Borrower and such Subsidiary is engaged, obtained and
maintains accreditation from all generally recognized accrediting agencies for
the Borrower and its Subsidiaries. No Medicaid or Medicare certifications are
required for the operation of the business of the Borrower or any Subsidiary and
neither the Borrower nor any Subsidiary is required to have entered into
Medicaid or Medicare provider agreements for the operation of its business.
4.5 Litigation. There are no actions, investigations, suits or
proceedings pending or, to the knowledge of the Borrower, threatened, at law, in
equity or in arbitration, before any court, other Governmental Authority or
other Person, (i) against or affecting the Borrower, any of its Subsidiaries or
any of their respective properties that would, if adversely determined, be
reasonably likely to have a Material Adverse Effect, or (ii) with respect to
this Agreement or any of the other Credit Documents.
4.6 Taxes. Each of the Borrower and its Subsidiaries has timely filed
all federal, state and local tax returns and reports required to be filed by it
and has paid all taxes, assessments, fees and other charges levied upon it or
upon its properties that are shown thereon as due and payable, other than those
that are being contested in good faith and by proper proceedings and for which
adequate reserves have been established in accordance with GAAP. Such returns
accurately reflect in all material respects all liability for taxes of the
Borrower and its Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
or any of its Subsidiaries, and there is no unresolved claim by any Governmental
Authority concerning the tax liability of the Borrower or any of its
Subsidiaries for any period for which tax returns have been or were required to
have been filed, other than claims for which adequate reserves have been
established in accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
4.7 Subsidiaries. SCHEDULE 4.7 sets forth a list, as of the Closing
Date, of all of the Subsidiaries of the Borrower and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of the Borrower in
each class of its capital stock and each direct owner thereof. Except for the
shares of capital stock expressly indicated on SCHEDULE 4.7, there are no shares
of capital stock, warrants, rights, options or other equity securities, or other
Capital Stock of any Subsidiary of the Borrower outstanding or reserved for any
purpose. All outstanding shares of capital stock of each Subsidiary of the
Borrower are duly and validly issued, fully paid and nonassessable. The Borrower
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is the sole legal, record and beneficial owner of, and has good and valid title
to, all such capital stock, free and clear of all Liens other than the Liens
created pursuant to the Pledge and Security Agreement.
4.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower or any of its Subsidiaries for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all other such factual information hereafter furnished to the Agent or any
Lender in writing by or on behalf of the Borrower or any of its Subsidiaries
will be, true and accurate in all material respects on the date as of which such
information is dated or certified (or, if such information has been amended or
supplemented, on the date as of which any such amendment or supplement is dated
or certified) and not made incomplete by omitting to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which such information was provided, not misleading.
4.9 Margin Regulations. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock, to extend credit for such purpose or for any
other purpose that would violate or be inconsistent with Regulations T, U or X
or any provision of the Exchange Act.
4.10 No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1997, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.
4.11 Financial Matters.
(a) The Borrower has heretofore furnished to the Agent copies of (i)
the audited financial statements as of December 31, 1997, and (ii) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of December
31, 1998, and the related statements of income and cash flows for the
twelve-month period then ended. Such financial statements have been prepared in
accordance with GAAP (subject, with respect to the unaudited financial
statements, to the absence of notes required by GAAP and to normal year-end
adjustments) and present fairly the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of the Borrower and its Subsidiaries for the
respective periods then ended. Except as fully reflected in the most recent
financial statements referred to above and the notes thereto, there are no
material liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due).
(b) The Borrower has prepared, and has heretofore furnished to the
Agent a copy of, annual projected balance sheets and statements of income and
cash flows of the Borrower for the years ended December 31, 1999 through
December 31, 2002, giving effect to the extensions of credit made under this
Agreement, and the payment of transaction fees and expenses related to the
foregoing (the "Projections"). In the opinion of management of the Borrower, the
assumptions used in the preparation of the Projections were fair, complete and
reasonable when made and continue to be fair, complete and reasonable as of the
date hereof. The Projections have been prepared in good faith by the executive
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and financial personnel of the Borrower, are complete and represent a reasonable
estimate of the future performance and financial condition of the Borrower,
subject to the uncertainties and approximations inherent in any projections.
(c) Each of the Borrower and its Subsidiaries, after giving effect to
the consummation of the transactions contemplated hereby, (i) has capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) has assets with a fair saleable value, determined on a going
concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
Contingent Obligations, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
4.12 Ownership of Properties. Each of the Borrower and its Subsidiaries
(i) has good and marketable title to all real property owned by it, (ii) holds
interests as lessee under valid leases in full force and effect with respect to
all material leased real and personal property used in connection with its
business, except to the extent that the Borrower and Subsidiaries are not
correctly reflected as lessees under leases acquired by or assigned to the
Borrower or a Subsidiary, so long as the Borrower is making reasonable efforts
to correct such leases and such condition is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, (iii) possesses or
has rights to use licenses, patents, copyrights, trademarks, service marks,
trade names and other assets sufficient to enable it to continue to conduct its
business substantially as heretofore conducted and without any material conflict
with the rights of others, and (iv) has good title to all of its other
properties and assets reflected in the most recent financial statements referred
to in SECTION 4.11(A) (except as sold or otherwise disposed of since the date
thereof in the ordinary course of business), in each case under (i), (ii), (iii)
and (iv) above free and clear of all Liens other than Permitted Liens. SCHEDULE
4.12 lists, as of the Closing Date, all real property interests of the Borrower
and its Subsidiaries, indicating in each case the address of the property, the
nature of use of the premises, and whether such interest is a leasehold or fee
ownership interest.
4.13 ERISA. Each Plan is and has been administered in compliance in all
material respects with all applicable Requirements of Law, including, without
limitation, the applicable provisions of ERISA and the Internal Revenue Code. No
ERISA Event has occurred and is continuing or, to the knowledge of the Borrower,
is reasonably expected to occur with respect to any Plan, in either case that
would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. No Plan has any Unfunded Pension Liability, and neither the
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA, in either instance where the same
would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. Neither the Borrower nor any ERISA Affiliate is required to
contribute to or has, or has at any time had, any liability to a Multiemployer
Plan. To the best of the Borrower's actual knowledge, no condition or event
exists, with respect to any Plan (other than a Multiemployer Plan) which is
sponsored by other than the Borrower or any ERISA Affiliate, and with respect to
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which the Borrower or any ERISA Affiliate and the sponsor thereof are considered
members of an affiliated service group, which would have a Material Adverse
Effect.
4.14 Environmental Matters.
(a) No Hazardous Substances are or have been generated, used, located,
released, treated, disposed of or stored by the Borrower or any of its
Subsidiaries or, to the knowledge of the Borrower, by any other Person
(including any predecessor in interest) or otherwise, in, on or under any
portion of any real property, leased or owned, of the Borrower or any of its
Subsidiaries, except in material compliance with all applicable Environmental
Laws, and no portion of any such real property or, to the knowledge of the
Borrower, any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries, has been contaminated by any Hazardous
Substance, in either case except to the extent the existence of any Hazardous
Substance(s) is not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect; and no portion of any real property, leased or owned,
of the Borrower or any of its Subsidiaries has been or is presently the subject
of an environmental audit, assessment or remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or any of its Subsidiaries has been used by the Borrower or any of its
Subsidiaries or, to the knowledge of the Borrower, by any other Person, as or
for a mine, a landfill, a dump or other disposal facility, a gasoline service
station, or (other than for petroleum substances stored in the ordinary course
of business) a petroleum products storage facility; no portion of such real
property or any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems; and there are not and have never been any underground storage tanks
situated on any real property, leased or owned, of the Borrower or any of its
Subsidiaries, except to the extent any such tanks are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(c) All activities and operations of the Borrower and its Subsidiaries
are in compliance with the requirements of all applicable Environmental Laws,
except to the extent the failure so to comply, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. Each of the
Borrower and its Subsidiaries has obtained all licenses and permits under
Environmental Laws necessary to its respective operations; all such licenses and
permits are being maintained in good standing; and each of the Borrower and its
Subsidiaries is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Borrower nor any of
its Subsidiaries is involved in any suit, action or proceeding, or has received
any notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined, would be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect; and, to the knowledge of
the Borrower, there are no threatened actions, suits, proceedings or
investigations with respect to any such Environmental Claims, nor any basis
therefor.
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4.15 Compliance With Laws. Each of the Borrower and its Subsidiaries
has timely filed all material reports, documents and other materials required to
be filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
4.16 Regulated Industries. Neither the Borrower nor any of its
Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company," or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.17 Insurance. SCHEDULE 4.17 sets forth a true and complete summary of
all insurance policies or arrangements carried or maintained by the Borrower and
its Subsidiaries as of the Closing Date, indicating in each case the insurer,
policy number, expiration, amount and type of coverage and deductibles. The
assets, properties and business of the Borrower and its Subsidiaries are insured
against such hazards and liabilities, under such coverages and in such amounts,
as are customarily maintained by prudent companies similarly situated and under
policies issued by insurers of recognized responsibility.
4.18 Material Contracts. SCHEDULE 4.18 lists, as of the Closing Date,
each "material contract" (within the meaning of Item 601(b)(10) of Regulation
S-K under the Exchange Act) to which the Borrower or any of its Subsidiaries is
a party, by which any of them or their respective properties is bound or to
which any of them is subject (collectively, "Material Contracts"), and also
indicates the parties, subject matter and term thereof. As of the Closing Date,
(i) each Material Contract is in full force and effect and is enforceable by the
Borrower or the Subsidiary that is a party thereto in accordance with its terms,
and (ii) neither the Borrower nor any of its Subsidiaries (nor, to the knowledge
of the Borrower, any other party thereto) is in breach of or default under any
Material Contract in any material respect or has given notice of termination or
cancellation of any Material Contract.
4.19 Security Documents. The provisions of each of the Security
Documents (whether executed and delivered prior to or on the Closing Date or
thereafter) are and will be effective to create in favor of the Agent, for its
benefit and the benefit of the Lenders, a valid and enforceable security
interest in and Lien upon all right, title and interest of each of the Borrower
and its Subsidiaries that is a party thereto in and to the Collateral purported
to be pledged by it thereunder and described therein, and upon (i) the initial
extension of credit hereunder, (ii) the filing of appropriately completed
Uniform Commercial Code financing statements and continuations thereof in the
jurisdictions specified therein, (iii) the filing of appropriately completed
short-form assignments in the U.S. Patent and Trademark Office and the U.S.
Copyright Office, (iv) in the case of uncertificated securities, compliance with
Section 8-313 (or its successor provision) of the applicable Uniform Commercial
Code, and (v) the possession by the Agent of any certificates evidencing the
securities pledged thereby, such security interest and Lien shall constitute a
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fully perfected and first priority security interest in and Lien upon such
right, title and interest of the Borrower or such Subsidiary, as applicable, in
and to such Collateral, to the extent that such security interest and Lien can
be perfected by such filings, actions and possession, subject only to Permitted
Liens.
4.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended. There is (i) no unfair labor practice
complaint before the National Labor Relations Board, or grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, pending
or, to the knowledge of the Borrower, threatened, against the Borrower or any of
its Subsidiaries, (ii) no strike, lock-out, slowdown, stoppage, walkout or other
labor dispute pending or, to the knowledge of the Borrower, threatened, against
the Borrower or any of its Subsidiaries, and (iii) to the knowledge of the
Borrower, no petition for certification or union election or union organizing
activities taking place with respect to the Borrower or any of its Subsidiaries.
4.21 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) the Borrower's
and its Subsidiaries' computer-based systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's or any of its Subsidiaries' systems interface), and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by June 30, 1999. The cost to the Borrower and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of the
year 2000 to the Borrower and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance will continue for the
term of this Agreement to be, sufficient to permit the Borrower and its
Subsidiaries to conduct their respective businesses without a Material Adverse
Effect.
ARTICLE V.
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans together with all other amounts then due and owing hereunder:
5.1 Financial Statements. The Borrower will deliver to each Lender:
(a) As soon as available and in any event within fifty (50) days after
the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending March 31, 1999, unaudited consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries as of the
end of such fiscal quarter and unaudited consolidated and consolidating
statements of income and cash flows for the Borrower and its Subsidiaries for
the fiscal quarter then ended and for that portion of the fiscal year then
ended, in each case setting forth comparative consolidated (or consolidating)
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figures, if applicable, as of the end of and for the corresponding period in the
preceding fiscal year together with comparative budgeted figures for the fiscal
year then ended, all in reasonable detail and prepared in accordance with GAAP
(subject to the absence of notes required by GAAP and subject to normal year-end
adjustments) applied on a basis consistent with that of the preceding quarter or
containing disclosure of the effect on the financial condition or results of
operations of any change in the application of accounting principles and
practices during such quarter; and
(b) As soon as available and in any event within ninety (90) days after
the end of each fiscal year, beginning with the fiscal year ending December 31,
1998, (i) an audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income and cash flows for the Borrower and its Subsidiaries for
the fiscal year then ended, including the notes thereto, in each case setting
forth comparative figures as of the end of and for the preceding fiscal year, if
applicable, together with comparative budgeted figures for the fiscal year then
ended, all in reasonable detail and certified by the independent certified
public accounting firm regularly retained by the Borrower or another independent
certified public accounting firm of recognized national standing reasonably
acceptable to the Required Lenders, together with (y) a report thereon by such
accountants that is not qualified as to going concern or scope of audit and to
the effect that such financial statements present fairly the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated in accordance with
GAAP applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year, and (z) a report by such accountants to the effect that, based on and in
connection with their examination of the financial statements of the Borrower
and its Subsidiaries, they obtained no knowledge of the occurrence or existence
of any Default or Event of Default relating to accounting or financial reporting
matters, or a statement specifying the nature and period of existence of any
such Default or Event of Default disclosed by their audit; provided, however,
that such accountants shall not be liable by reason of the failure to obtain
knowledge of any Default or Event of Default that would not be disclosed or
revealed in the course of their audit examination, and (ii) if and to the extent
requested by the Agent, an unaudited consolidating balance sheet of the Borrower
and its Subsidiaries as of the end of such fiscal year and unaudited
consolidating statements of income and cash flows for the Borrower and its
Subsidiaries for the fiscal year then ended, all in reasonable detail.
(c) Concurrently with each delivery of the financial statements
described in this SECTION 5.1, (i) a current report of all loans made by the
Borrower pursuant to any Service Agreement or otherwise to any Affiliated
Orthodontist and (ii) a current report showing the aging of the accounts
receivable financed by the Borrower or a Subsidiary, and from time to time,
additional accounts receivable aging reports to the extent requested by the
Agent.
5.2 Other Business and Financial Information. The Borrower will
deliver to each Lender:
(a) Concurrently with each delivery of the financial statements
described in SECTION 5.1(A) AND (b), a Compliance Certificate with respect to
the period covered by the financial statements then being delivered, executed by
a Financial Officer of the Borrower, together with a Covenant Compliance
Worksheet reflecting the computation of the financial covenants set forth in
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SECTIONS 6.1 through 6.4 as of the last day of the period covered by such
financial statements;
(b) As soon as available and in any event by the end of each fiscal
year, beginning with the fiscal year ending December 31, 1999, a consolidated
operating budget for the Borrower and its Subsidiaries for the succeeding fiscal
year (prepared on a quarterly basis), consisting of a consolidated balance sheet
and consolidated statements of income and cash flows, together with a
certificate of a Financial Officer of the Borrower to the effect that such
budgets have been prepared in good faith and are reasonable estimates of the
financial position and results of operations of the Borrower and its
Subsidiaries for the period covered thereby; and as soon as available from time
to time thereafter, any modifications or revisions to or restatements of such
budget;
(c) Promptly upon receipt thereof, copies of any "management letter"
submitted to the Borrower or any of its Subsidiaries by its certified public
accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from the Borrower or any
such Subsidiary in respect thereof;
(d) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that the
Borrower or any of its Subsidiaries shall send or make available generally to
its shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that the Borrower or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, and (iii) all press releases and other statements made
available generally by the Borrower or any of its Subsidiaries to the public
concerning material developments in the business of the Borrower or any of its
Subsidiaries;
(e) Promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of the Borrower obtaining knowledge thereof,
written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of a Responsible Officer of the
Borrower specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that the Borrower has taken
and proposes to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower or
any of its Subsidiaries, including any such investigation or proceeding
by any Governmental Authority (other than routine periodic inquiries,
investigations or reviews), that would, if adversely determined, be
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, and any material development in any litigation or other
proceeding previously reported pursuant to SECTION 4.5 or this
subsection;
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(iii) the receipt by the Borrower or any of its Subsidiaries
from any Governmental Authority of (y) any notice asserting any failure
by the Borrower or any of its Subsidiaries to be in compliance with
applicable Requirements of Law or that threatens the taking of any
action against the Borrower or such Subsidiary or sets forth
circumstances that, if taken or adversely determined, would be
reasonably likely to have a Material Adverse Effect, or (z) any notice
of any actual or threatened Limitation on any License, Reimbursement
Agreement or other authorization of the Borrower or any of its
Subsidiaries, where such action would be reasonably likely to have a
Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of the Borrower specifying
the details of such ERISA Event and the action that the Borrower has
taken and proposes to take with respect thereto, (y) a copy of any
notice with respect to such ERISA Event that may be required to be
filed with the PBGC and (z) a copy of any notice delivered by the PBGC
to the Borrower or such ERISA Affiliate with respect to such ERISA
Event;
(v) the occurrence of any material default under, or any
proposed or threatened termination or cancellation of, any Material
Contract or other material contract or agreement to which the Borrower
or any of its Subsidiaries is a party, the termination or cancellation
of which would be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect;
(vi) the occurrence of any of the following: (x) the assertion
of any Environmental Claim against or affecting the Borrower, any of
its Subsidiaries or any of their respective real property, leased or
owned; (y) the receipt by the Borrower or any of its Subsidiaries of
notice of any alleged violation of or noncompliance with any
Environmental Laws; or (z) the taking of any remedial action by the
Borrower, any of its Subsidiaries or any other Person in response to
the actual or alleged generation, storage, release, disposal or
discharge of any Hazardous Substances on, to, upon or from any real
property leased or owned by the Borrower or any of its Subsidiaries;
but in each case under clauses (x), (y) and (z) above, only to the
extent the same would be reasonably likely to have a Material Adverse
Effect; and
(vii) any other matter or event that has, or would be
reasonably likely to have, a Material Adverse Effect, together with a
written statement of a Responsible Officer of the Borrower setting
forth the nature and period of existence thereof and the action that
the Borrower has taken and proposes to take with respect thereto; and
(f) As promptly as reasonably possible, such other information about
the business, condition (financial or otherwise), operations or properties of
the Borrower or any of its Subsidiaries (including any Plan and any information
required to be filed under ERISA) as the Agent or any Lender may from time to
time reasonably request.
5.3 Corporate Existence; Franchises; Maintenance of Properties. The
Borrower will, and will cause each of its Subsidiaries to, (i) maintain and
preserve in full force and effect its corporate existence, except as expressly
permitted otherwise by SECTION 7.1 and (ii) keep all material properties in good
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working order and condition (normal wear and tear excepted) and from time to
time make all necessary repairs to and renewals and replacements of such
properties, except to the extent that any of such properties are obsolete or are
being replaced.
5.4 Compliance with Laws. The Borrower shall, and shall cause each of
its Subsidiaries to, (i) comply in all respects with all applicable Requirements
of Law and (ii) obtain and maintain in effect all Licenses and Reimbursement
Approvals, in each case in respect of the conduct of its business and the
ownership and operation of its properties, except to the extent that the failure
to so comply would not be reasonably likely to have a Material Adverse Effect.
5.5 Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
the Borrower or any of its Subsidiaries; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings and as to which the Borrower or such Subsidiary is
maintaining adequate reserves with respect thereto in accordance with GAAP.
5.6 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance with respect to its assets, properties and business, against
such hazards and liabilities, of such types and in such amounts, as is
customarily maintained by companies in the same or similar businesses similarly
situated, and maintain such other or additional insurance on such terms and
subject to such conditions as may be required under any Security Document.
5.7 Maintenance of Books and Records; Inspection. The Borrower will,
and will cause each of its Subsidiaries to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business and properties, and
prepare all financial statements required under this Agreement, in each case in
accordance with GAAP and in compliance with the requirements of any Governmental
Authority having jurisdiction over it, and (ii) permit employees or agents of
the Agent or any Lender to inspect its properties and examine or audit its
books, records, working papers and accounts and make copies and memoranda of
them, and to discuss its affairs, finances and accounts with its officers and
employees and, upon notice to the Borrower, the independent public accountants
of the Borrower and its Subsidiaries (and by this provision the Borrower
authorizes such accountants to discuss the finances and affairs of the Borrower
and its Subsidiaries), all at such times and from time to time, upon reasonable
notice and during business hours, as may be reasonably requested.
5.8 Permitted Acquisitions.
(a) Subject to the provisions of subsection (b) below and the
requirements contained in the definition of Permitted Acquisition, and subject
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to the other terms and conditions of this Agreement, the Borrower may from time
to time on or after the Closing Date effect Permitted Acquisitions, provided
that, with respect to each Permitted Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted
Acquisition or would exist immediately after giving effect thereto; and
(ii) the Acquisition Amount with respect thereto (regardless
of the form of consideration) (y) shall not exceed $2,000,000, and (z)
together with the aggregate of the Acquisition Amounts (regardless of
the form of consideration) for all other Permitted Acquisitions
consummated during any 12-month period, shall not exceed $50,000,000.
(b) As soon as reasonably practicable after the consummation of any
Permitted Acquisition, the Borrower will deliver to the Agent and each Lender:
(i) a certificate, in substantially the form attached hereto
as EXHIBIT I, executed by a Financial Officer of the Borrower setting
forth a reasonably detailed description of the material terms of such
Permitted Acquisition, including the Acquisition Amount and each Person
or business that is the subject of such Permitted Acquisition (each, a
"Target"), and further to the effect that, to the best of such
individual's knowledge, (x) the consummation of such Permitted
Acquisition will not result in a violation of any provision of this
Section, and after giving effect to such Permitted Acquisition and any
Borrowings made in connection therewith, the Borrower will be in
compliance with the financial covenants contained in SECTIONS 6.1
through 6.4, such compliance determined with regard to calculations
made on a pro forma basis in accordance with GAAP as if each Target had
been consolidated with the Borrower for those periods applicable to
such covenants (such calculations to be attached to the certificate),
(y) the Borrower believes in good faith that it will continue to comply
with such financial covenants for a period of one year following the
date of the consummation of such Permitted Acquisition, and (z) after
giving effect to such Permitted Acquisition and any Borrowings in
connection therewith, the Borrower believes in good faith that it will
have sufficient availability under the Facility to meet its ongoing
working capital requirements; and
(ii) a copy of the fully executed Service Agreement executed
in connection therewith.
(c) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth in
this Section and in the description furnished under clause (i) of subsection (b)
above have been satisfied, that the same is permitted in accordance with the
terms of this Agreement, and that the matters certified to by the Financial
Officer of the Borrower in the certificate referred to in clause (iv) of
subsection (b) above are, to the best of such individual's knowledge, true and
correct in all material respects as of the date such certificate is given, which
representation and warranty shall be deemed to be a representation and warranty
as of the date thereof for all purposes hereunder, including, without
limitation, for purposes of SECTIONS 3.2 and 8.1.
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5.9 Creation or Acquisition of Subsidiaries. Subject to the provisions
of SECTION 7.5, the Borrower may from time to time create or acquire new Wholly
Owned Subsidiaries in connection with Permitted Acquisitions or otherwise, and
the Subsidiary Guarantors of the Borrower may create or acquire new Wholly Owned
Subsidiaries, provided that with respect to each such Subsidiary that has assets
at any time in excess of $100,000, has executed or is likely to execute a
Service Agreement, or is or will be engaged in active business operations:
(a) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or direct or indirect acquisition by the Borrower
thereof, each such new Subsidiary will execute and deliver to the Agent (i) a
joinder to the Subsidiary Guaranty, pursuant to which such new Subsidiary shall
become a party thereto and shall guarantee the payment in full of the
Obligations of the Borrower under this Agreement and the other Credit Documents,
and (ii) a joinder to the Pledge and Security Agreement, pursuant to which such
new Subsidiary shall become a party thereto and shall grant to the Agent a first
priority Lien upon and security interest in its accounts receivable, inventory,
equipment, general intangibles and other personal property as Collateral for its
obligations under the Subsidiary Guaranty, subject only to Permitted Liens;
(b) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or acquisition of any new Subsidiary all or a portion
of the Capital Stock of which is directly owned by the Borrower, the Borrower
will execute and deliver to the Agent an amendment or supplement to the Pledge
and Security Agreement pursuant to which all of the Capital Stock of such new
Subsidiary owned by the Borrower shall be pledged to the Agent, together with
the certificates evidencing such Capital Stock and undated stock powers duly
executed in blank; and concurrently with (and in any event within ten (10)
Business Days thereafter) the creation or acquisition of any new Subsidiary all
or a portion of the Capital Stock of which is directly owned by another
Subsidiary (the "Parent Subsidiary"), the Parent Subsidiary will execute and
deliver to the Agent an appropriate joinder, amendment or supplement to the
Pledge and Security Agreement, pursuant to which all of the Capital Stock of
such new Subsidiary owned by such Parent Subsidiary shall be pledged to the
Agent, together with the certificates evidencing such Capital Stock and undated
stock powers duly executed in blank; and
(c) As promptly as reasonably possible, the Borrower and its
Subsidiaries will deliver any such other documents, certificates and opinions
(including opinions of local counsel in the jurisdiction of organization of each
such new Subsidiary), in form and substance reasonably satisfactory to the
Agent, as the Agent may reasonably request in connection therewith and will take
such other action as the Agent may reasonably request to create in favor of the
Agent a perfected security interest in the Collateral being pledged pursuant to
the documents described above.
5.10 Additional Security. The Borrower will, and will cause each of its
Subsidiaries to, grant to the Agent from time to time security interests, Liens
and mortgages in and upon such assets and properties of the Borrower or such
Subsidiary as are not covered by the Security Documents executed and delivered
on the Closing Date or pursuant to SECTION 5.10 and as may be reasonably
requested from time to time by the Required Lenders (including, without
limitation, Liens on assets acquired by the Borrower or a Subsidiary in
connection with any Permitted Acquisition). Such security interests, Liens and
mortgages shall be granted pursuant to documentation in form and substance
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reasonably satisfactory to the Agent and shall constitute valid and perfected
security interests and Liens, subject to no Liens other than Permitted Liens.
Without limitation of the foregoing, in connection with the grant of any
mortgage or deed of trust with respect to any interest in real property, the
Borrower will, and will cause each applicable Subsidiary to, at the Borrower's
expense, prepare, obtain and deliver to the Agent any environmental assessments,
appraisals, surveys, title insurance and other matters or documents as the Agent
may reasonably request or as may be required under applicable banking laws and
regulations.
5.11 Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Agent or the Required
Lenders to perfect and maintain the validity and priority of the Liens granted
pursuant to the Security Documents and to effect, confirm or further assure or
protect and preserve the interests, rights and remedies of the Agent and the
Lenders under this Agreement and the other Credit Documents.
5.12 Year 2000 Compatibility. The Borrower will, and will cause each of
its Subsidiaries to, take all action reasonably necessary to ensure that its
computer systems are able to operate and effectively process data including
dates on and after January 1, 2000. At the request of the Agent or the Required
Lenders, the Borrower will provide reasonable assurance of its Year 2000
compatibility.
ARTICLE VI.
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans, together with all other amounts then due and owing hereunder:
6.1 Leverage Ratio. The Borrower will not permit the ratio of
Consolidated Funded Debt to Annualized EBITDA as of the last day of any fiscal
quarter to exceed 3.0 to 1.0.
6.2 Coverage Ratio. The Borrower will not permit the ratio of
Annualized EBITDAR to the sum of (i) Consolidated Interest Expense and (ii)
Corporate Rent as of the last day of any fiscal quarter to be less than 2.5 to
1.0.
6.3 Consolidated Net Worth. The Borrower will not permit Consolidated
Net Worth as of the last day of any fiscal quarter, beginning with the fiscal
quarter ending March 31, 1999, to be less than the sum of (i) Consolidated Net
Worth as shown on the balance sheets of the Borrower and its Subsidiaries as of
December 31, 1998, plus (ii) 80% of the aggregate of Consolidated Net Income for
each fiscal quarter ending after December 31, 1998 (provided that Consolidated
Net Income for any such fiscal quarter shall be taken into account for purposes
of this calculation only if positive), plus (iii) 100% of the aggregate amount
of all increases in the stated capital and additional paid-in capital accounts
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of the Borrower and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP, resulting from the issuance of equity securities
(including pursuant to the exercise of options, rights or warrants or pursuant
to the conversion of convertible securities) or other Capital Stock after the
Closing Date.
6.4 Capital Expenditures. The Borrower will not permit Corporate
Capital Expenditures to exceed $750,000 during fiscal year 1999 or $500,000 in
any fiscal year thereafter. The Borrower will not permit Practice Capital
Expenditures during any period of four consecutive fiscal quarters to exceed
$2,000,000; provided, however, that the sum of such Practice Capital
Expenditures shall not exceed an aggregate amount of $4,000,000 during the term
of the Facility.
ARTICLE VII.
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans, together with all other amounts then due and owing hereunder:
7.1 Merger; Consolidation. The Borrower will not, and will not permit
or cause any of its Subsidiaries to, liquidate, wind up or dissolve, or enter
into any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another Person
so long as (x) the Borrower is the surviving entity, (y) unless such
other Person is a Wholly Owned Subsidiary immediately prior to giving
effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTIONS 5.8 and 5.9 shall be satisfied, and (z) immediately after
giving effect thereto, no Default or Event of Default would exist; and
(ii) any Subsidiary may merge or consolidate with another
Person so long as (x) the surviving entity is the Borrower or a
Subsidiary Guarantor, (y) unless such other Person is a Wholly Owned
Subsidiary immediately prior to giving effect thereto, such merger or
consolidation shall constitute a Permitted Acquisition and the
applicable conditions and requirements of SECTIONS 5.8 and 5.9 shall be
satisfied, and (z) immediately after giving effect thereto, no Default
or Event of Default would exist.
7.2 Indebtedness. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than:
(i) Indebtedness incurred under this Agreement, the Notes
and the Subsidiary Guaranty;
(ii) Indebtedness existing on the Closing Date and
described in SCHEDULE 7.2;
(iii) accrued expenses (including salaries, accrued vacation
and other compensation), current trade or other accounts payable and
other current liabilities arising in the ordinary course of business
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and not incurred through the borrowing of money, provided that the same
shall be paid when due except to the extent being contested in good
faith and by appropriate proceedings;
(iv) loans and advances by the Borrower or any Subsidiary
Guarantors to any other Subsidiary Guarantor or by any Subsidiary
Guarantor to the Borrower, provided that any such loan or advance is
subordinated in right and time of payment to the Obligations and is
evidenced by a promissory note, in form and substance satisfactory to
the Agent, pledged to the Agent pursuant to the Security Documents;
(v) Indebtedness of the Borrower under Hedge Agreements
entered into (y) with respect to the Notes and (z) with the prior
written consent of the Agent;
(vi) unsecured Indebtedness of the Borrower that is expressly
subordinated and made junior in right and time of payment to the
Obligations and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including, without
limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form
and substance to the Required Lenders in their sole discretion;
(vii) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of
the purchase price of any equipment, real property or other fixed
assets acquired in the ordinary course of business, including
Indebtedness in respect of capital lease obligations, and any renewals,
refinancings or replacements thereof (subject to the limitations on the
principal amount thereof set forth in this clause (vi)), which
Indebtedness shall not exceed $250,000 in aggregate principal amount
outstanding at any time; and
(viii) other unsecured Indebtedness not exceeding $250,000 in
aggregate principal amount outstanding at any time.
7.3 Liens. The Borrower will not, and will not permit or cause any of
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist, any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or file or permit the filing
of, or permit to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset, income or profits
under the Uniform Commercial Code of any state or under any similar recording or
notice statute, or agree to do any of the foregoing, other than the following
(collectively, "Permitted Liens"):
(i) Liens created under the Security Documents;
(ii) Liens in existence on the Closing Date and set forth
on SCHEDULE 7.3;
(iii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar
Liens incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a period of more
than thirty (30) days or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
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(iv) Liens (other than any Lien imposed by ERISA, the creation
or incurrence of which would result in an Event of Default under
SECTION 8.1(J)) incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory obligations,
surety and appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money) entered into in
the ordinary course of business;
(v) Liens for taxes, assessments or other governmental
charges or statutory obligations that are not delinquent or remain
payable without any penalty or that are being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(vi) Liens securing the purchase money Indebtedness permitted
under clause (vii) of SECTION 7.2, provided that any such Lien (a)
shall attach to such property concurrently with or within ten (10) days
after the acquisition thereof by the Borrower or such Subsidiary, (b)
shall not exceed the lesser of (y) the fair market value of such
property or (z) the cost thereof to the Borrower or such Subsidiary and
(c) shall not encumber any other property of the Borrower or any of its
Subsidiaries;
(vii) any attachment or judgment Lien not constituting an Event
of Default under SECTION 8.1(H) that is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(viii) Liens arising from the filing, for notice purposes only,
of financing statements in respect of true leases;
(ix) Liens on Borrower Margin Stock, to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of the Borrower and its Subsidiaries (including Borrower Margin Stock);
(x) with respect to any real property occupied by the
Borrower or any of its Subsidiaries, all easements, rights of way,
licenses and similar encumbrances on title that do not materially
impair the use of such property for its intended purposes; and
(xi) other Liens securing obligations of the Borrower and its
Subsidiaries not exceeding $100,000 in aggregate amount outstanding at
any time.
7.4 Disposition of Assets. The Borrower will not, and will not permit
or cause any of its Subsidiaries to, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of transactions) all or any
portion of its assets, business or properties (including, without limitation,
any Capital Stock of any Subsidiary), or enter into any arrangement with any
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Person providing for the lease by the Borrower or any Subsidiary as lessee of
any asset that has been sold or transferred by the Borrower or such Subsidiary
to such Person, or agree to do any of the foregoing, except for:
(i) sales of inventory and licenses or leases of intellectual
property and other assets, in each case in the ordinary course of
business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such
equipment is exchanged for, replacement equipment or (z) such equipment
is no longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale or other disposition by the Borrower and its
Subsidiaries of any Borrower Margin Stock to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock),
provided that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a
Subsidiary of the Borrower to the Borrower or to a Subsidiary Guarantor
if, immediately after giving effect thereto, no Default or Event of
Default would exist; and
(v) the sale or disposition of assets outside the ordinary
course of business for fair value and for cash, provided that (x) the
fair market value of such assets, when aggregated with the fair market
value of all other assets the disposition of which is not otherwise
specifically permitted under this Section that are sold during the same
fiscal quarter or the period of three consecutive fiscal quarters
immediately prior thereto, does not exceed $100,000 in the aggregate
for the Borrower and its Subsidiaries, (y) in no event shall the
Borrower or any of its Subsidiaries sell or otherwise dispose of any of
the Capital Stock of any Subsidiary, and (z) immediately after giving
effect thereto, no Default or Event of Default would exist.
(vi) sales of patient receivables, provided that all of the
net proceeds of such sales shall be used to repay the aggregate
outstanding principal and interest of the Loans pursuant to SECTION
2.7.
7.5 Investments. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, directly or indirectly, purchase, own, invest in or
otherwise acquire any Capital Stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or purchase
or otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person (including
pursuant to an Acquisition), or create or acquire any Subsidiary, or become a
partner or joint venturer in any partnership or joint venture (collectively,
"Investments"), or make a commitment or otherwise agree to do any of the
foregoing, other than:
(i) Cash Equivalents;
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(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property and other assets, in each case in the ordinary
course of business,
(iii) Investments consisting of loans and advances to employees
for reasonable travel, relocation and business expenses in the ordinary
course of business, extensions of trade credit in the ordinary course
of business, and prepaid expenses incurred in the ordinary course of
business;
(iv) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (iv) of SECTION 7.2;
(v) Investments existing on the Closing Date and
described in SCHEDULE 7.5;
(vi) Investments of the Borrower under Hedge Agreements
permitted pursuant to, and entered into in accordance with, SECTION
7.2(V);
(vii) Investments consisting of the making of capital
contributions or the purchase of Capital Stock (a) by the Borrower or
any Subsidiary in any other Wholly Owned Subsidiary that is (or
immediately after giving effect to such Investment will be) a
Subsidiary Guarantor, provided that the Borrower complies with the
provisions of SECTION 5.10, and (b) by any Subsidiary in the Borrower;
(viii) Permitted Acquisitions;
(ix) Investments consisting of purchases and acquisitions of
(y) patient receivables of all Affiliated Orthodontists and (z) up to
$1,000,000 in aggregate amount at any time outstanding of patient
receivables of Persons who are not Affiliated Orthodontists; and
(x) other Investments in an aggregate amount, as valued at
the time each such Investment is made, not exceeding $500,000 for all
such Investments from and after the Closing Date.
7.6 Restricted Payments.
(a) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, declare or make any dividend payment,
or make any other distribution of cash, property or assets, in respect of any of
its Capital Stock or any warrants, rights or options to acquire its Capital
Stock, or purchase, redeem, retire or otherwise acquire for value any shares of
its Capital Stock or any warrants, rights or options to acquire its Capital
Stock, or set aside funds for any of the foregoing, except that:
(i) the Borrower may declare and make dividend payments
or other distributions payable solely in its common stock;
(ii) each Wholly Owned Subsidiary of the Borrower may declare
and make dividend payments or other distributions to the Borrower or
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another Wholly Owned Subsidiary of the Borrower, to the extent not
prohibited under applicable Requirements of Law; and
(iii) the Borrower may expend an aggregate amount up to
$2,500,000 to repurchase shares of its Common Stock, provided that no
Default or Event of Default shall have occurred and be continuing or
would occur after giving effect thereto.
(b) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, make (or give any notice in respect of) any voluntary or
optional payment or prepayment of principal on any subordinated indebtedness (as
permitted pursuant to SECTION 7.2(VI)), or directly or indirectly make any
redemption (including pursuant to any change of control provision), retirement,
defeasance or other acquisition for value of any such subordinated indebtedness,
or make any deposit or otherwise set aside funds for any of the foregoing
purposes.
7.7 Transactions with Affiliates. The Borrower will not, and will not
permit or cause any of its Subsidiaries to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service) with any officer, director,
stockholder or other Affiliate of the Borrower or any Subsidiary, except in the
ordinary course of its business and upon fair and reasonable terms that are no
less favorable to it than it would obtain in a comparable arm's length
transaction with a Person other than an Affiliate of the Borrower or such
Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:
(i) transactions described on SCHEDULE 7.7 or otherwise
expressly permitted under this Agreement; and
(ii) the payment by the Borrower of reasonable and customary
fees to members of its board of directors.
7.8 Lines of Business. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by it on the date hereof, (ii) businesses and activities
reasonably related thereto and (iii) to the extent otherwise permitted by this
Agreement, the financing of patient receivables.
7.9 Certain Amendments. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, (i) amend, modify or waive, or permit the
amendment, modification or waiver of, any provision of any agreement or
instrument evidencing or governing any subordinated indebtedness (as permitted
pursuant to SECTION 7.2(VI)), the effect of which would be to (a) increase the
principal amount due thereunder, (b) shorten or accelerate the time of payment
of any amount due thereunder, (c) increase the applicable interest rate or
amount of any fees or costs due thereunder, (d) amend any of the subordination
provisions thereunder (including any of the definitions relating thereto), (e)
make any covenant therein more restrictive or add any new covenant, or (f)
otherwise materially and adversely affect the Lenders, or breach or otherwise
violate any of the subordination provisions applicable thereto, including,
without limitation, restrictions against payment of principal and interest
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thereon, or (ii) amend, modify or change any provision of its articles or
certificate of incorporation or bylaws, or the terms of any class or series of
its Capital Stock, other than in a manner that could not reasonably be expected
to adversely affect the Lenders.
7.10 Limitation on Certain Restrictions. The Borrower will not, and
will not permit or cause any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any restriction
or encumbrance on (i) the ability of the Borrower and its Subsidiaries to
perform and comply with their respective obligations under the Credit Documents
or (ii) the ability of any Subsidiary of the Borrower to make any dividend
payments or other distributions in respect of its Capital Stock, to repay
Indebtedness owed to the Borrower or any other Subsidiary, to make loans or
advances to the Borrower or any other Subsidiary, or to transfer any of its
assets or properties to the Borrower or any other Subsidiary, in each case other
than such restrictions or encumbrances existing under or by reason of the Credit
Documents or applicable Requirements of Law.
7.11 No Other Negative Pledges. The Borrower will not, and will not
permit or cause any of its Subsidiaries to, directly or indirectly, enter into
or suffer to exist any agreement or restriction that prohibits or conditions the
creation, incurrence or assumption of any Lien upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or agree to
do any of the foregoing, other than as set forth in (i) this Agreement and the
Security Documents, (ii) any agreement or instrument creating a Permitted Lien
(but only to the extent such agreement or restriction applies to the assets
subject to such Permitted Lien), and (iii) operating leases of real or personal
property entered into by the Borrower or any of its Subsidiaries as lessee in
the ordinary course of business.
7.12 Fiscal Year. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, change the ending date of its fiscal year to a date
other than December 31.
7.13 Accounting Changes. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, make or permit any material change in its
accounting policies or reporting practices, except as may be required by GAAP.
ARTICLE VIII.
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of or interest
on any Loan, any fee or any other Obligation when due;
(b) The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of SECTIONS 2.14, 5.1, 5.2,
5.3(I), 5.8, 5.9, 5.10 or in ARTICLE VI or ARTICLE VII;
(c) The Borrower or any of its Subsidiaries shall fail to observe,
perform or comply with any condition, covenant or agreement contained in this
Agreement or any of the Credit Documents other than those enumerated in
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subsections (a) and (b) above, and such failure (i) is deemed by the terms of
the relevant Credit Document to constitute an Event of Default or (ii) shall
continue unremedied for any grace period specifically applicable thereto or, if
no such grace period is applicable, for a period of thirty (30) days after the
earlier of (y) the date on which a Responsible Officer of the Borrower acquires
knowledge thereof and (z) the date on which written notice thereof is delivered
by the Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries in this Agreement, any of the other
Credit Documents or in any certificate, instrument, report or other document
furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(e) The Borrower or any of its Subsidiaries shall (i) fail to pay when
due (whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) (y) any principal of or interest on any
Indebtedness (other than the Indebtedness incurred pursuant to this Agreement)
having an aggregate principal amount of at least $100,000 or (z) any termination
or other payment under any Hedge Agreement covering a notional amount of at
least $100,000 or (ii) fail to observe, perform or comply with any condition,
covenant or agreement contained in any agreement or instrument evidencing or
relating to any such Indebtedness, or any other event shall occur or condition
exist in respect thereof, and the effect of such failure, event or condition is
to cause, or permit the holder or holders of such Indebtedness (or a trustee or
agent on its or their behalf) to cause (with the giving of notice, lapse of
time, or both), such Indebtedness to become due, or to be prepaid, redeemed,
purchased or defeased, prior to its stated maturity;
(f) The Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced
against the Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
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(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$100,000 shall be entered or filed against the Borrower or any of its
Subsidiaries or any of their respective properties and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder;
(i) Any Security Document to which the Borrower or any of its
Subsidiaries is now or hereafter a party shall for any reason cease to be in
full force and effect or cease to be effective to give the Agent a valid and
perfected security interest in and Lien upon the Collateral purported to be
covered thereby, subject to no Liens other than Permitted Liens, in each case
unless any such cessation occurs in accordance with the terms thereof or is due
to any act or failure to act on the part of the Agent or any Lender; or the
Borrower or any such Subsidiary shall assert any of the foregoing; or any
Subsidiary Guarantor or any Person acting on behalf of any such Subsidiary
Guarantor shall deny or disaffirm such Subsidiary Guarantor's obligations under
the Subsidiary Guaranty;
(j) Any ERISA Event shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result thereof, together with all other ERISA
Events then existing, the Borrower and its ERISA Affiliates would be reasonably
likely to incur liability to any one or more Plans or Multiemployer Plans or to
the PBGC (or to any combination thereof) in excess of $100,000;
(k) There shall be a Limitation on any one or more Licenses or
Reimbursement Approvals of the Borrower or any of its Subsidiaries or any
License or Reimbursement Approval shall not be renewed, or any other action
shall be taken, by any Governmental Authority or other Person in response to any
alleged failure by the Borrower or any of its Subsidiaries to be in compliance
with applicable Requirements of Law and such action, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect;
(l) Any one or more Environmental Claims shall have been asserted
against the Borrower or any of its Subsidiaries (or a reasonable basis shall
exist therefor); the Borrower and its Subsidiaries would be reasonably likely to
incur liability as a result thereof; and such liability would be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect;
(m) There shall occur (i) any uninsured damage to, or loss, theft or
destruction of, any Collateral or other properties of the Borrower and its
Subsidiaries having an aggregate fair market value in excess of $100,000 or (ii)
any labor dispute, act of God or other casualty that would be reasonably likely
to have a Material Adverse Effect;
(n) Sam Westover shall have ceased to be the chief executive officer of
the Borrower or to continue to perform his current duties as chief executive
officer, and the Borrower shall have failed to hire or appoint a replacement
reasonably satisfactory to the Required Lenders within 120 days thereafter; or
(o) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
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purchases or otherwise, have become, after the date hereof, the "beneficial
owner" (within the meaning of such term under Rule 13d-3 under the Exchange Act)
of securities of the Borrower representing 20% or more of the combined voting
power of the then outstanding securities of the Borrower ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors; or (ii) the Board of Directors of the Borrower shall
cease to consist of a majority of the individuals who constituted the Board of
Directors as of the date hereof or who shall have become a member thereof
subsequent to the date hereof after having been nominated, or otherwise approved
in writing, by at least a majority of individuals who constituted the Board of
Directors of the Borrower as of the date hereof (or their replacements approved
as herein required).
8.2 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 8.1(F) or SECTION 8.1(G), the Commitments shall automatically be
terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 8.1(F) or SECTION 8.1(G), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower); and
(c) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
8.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by the Borrower, at any
such time and from time to time, to the fullest extent permitted by applicable
law, without presentment, demand, protest or other notice of any kind, all of
which are hereby knowingly and expressly waived by the Borrower, to set off and
to apply any and all deposits (general or special, time or demand, provisional
or final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to such Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, the Borrower hereby granting to
each Lender a continuing security interest in and Lien upon all such deposits
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and other property as security for such Obligations. Each Lender agrees promptly
to notify the Borrower and the Agent after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
ARTICLE IX.
THE AGENT
9.1 Appointment. Each Lender hereby irrevocably appoints and authorizes
First Union to act as Agent hereunder and under the other Credit Documents and
to take such actions as agent on its behalf hereunder and under the other Credit
Documents, and to exercise such powers and to perform such duties, as are
specifically delegated to the Agent by the terms hereof or thereof, together
with such other powers and duties as are reasonably incidental thereto.
9.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Agent shall not have, by reason of this Agreement or
any other Credit Document, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Credit Document, express or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein. The Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact that it selects with
reasonable care. The Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts. The Lenders hereby acknowledge that the Agent
shall not be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any other Credit
Document unless it shall be requested in writing to do so by the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders).
9.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of the Borrower, its Subsidiaries or any other
Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document or the existence or possible existence of
any Default or Event of Default, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries.
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9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders (including all subsequent
Lenders).
9.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereinafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action hereunder and under the
other Credit Documents and to make such investigation as it deems necessary to
inform itself as to the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Credit Documents,
the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
concerning the business, prospects, operations, properties, financial or other
condition or creditworthiness of the Borrower, its Subsidiaries or any other
Person that may at any time come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
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9.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 9.4 and 10.6)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.7 Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrower, and without limiting the obligation of the Borrower to
do so, the Lenders agree (i) to indemnify the Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including,
without limitation, at any time following the repayment in full of the Loans and
the termination of the Commitments) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other Credit Document or any documents contemplated by or referred to herein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing, and (ii) to
reimburse the Agent upon demand, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, for any expenses incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, administration, amendment,
modification, waiver or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Credit Documents
(including, without limitation, reasonable attorneys' fees and expenses and
compensation of agents and employees paid for services rendered on behalf of the
Lenders); provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent resulting from the gross
negligence or willful misconduct of the party to be indemnified.
9.8 The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it and the Note or Notes issued to it, the Agent
in its individual capacity and not as Agent shall have the same rights and
powers under the Credit Documents as any other Lender and may exercise the same
as though it were not performing the agency duties specified herein; and the
terms "Lenders," "Required Lenders," "holders of Notes" and any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, make investments in, and generally engage in any kind of banking,
trust, financial advisory or other business with the Borrower, any of its
Subsidiaries or any of their respective Affiliates as if the Agent were not
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performing the agency duties specified herein, and may accept fees and other
consideration from any of them for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
9.9 Successor Agent. The Agent may resign at any time by giving ten
(10) days' prior written notice to the Borrower and the Lenders, provided that,
subject to the last sentence of this section, such resignation shall not be
effective until a successor Agent shall have accepted the appointment. Upon any
notice of resignation by the Agent, the Required Lenders will, with the prior
written consent of the Borrower (which consent shall not be unreasonably
withheld), appoint from among the Lenders a successor to the Agent (provided
that the Borrower's consent shall not be required in the event a Default or
Event of Default shall have occurred and be continuing). If no successor to the
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within such ten-day period, then the retiring Agent
may, on behalf of the Lenders and after consulting with the Lenders and the
Borrower, appoint a successor Agent from among the Lenders. Upon the acceptance
of any appointment as Agent by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder and under the other Credit Documents.
After any retiring Agent's resignation as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent. If no successor to the Agent has accepted appointment as
Agent by the thirtieth (30th) day following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective, and the Lenders shall thereafter perform all of the duties of
the Agent hereunder and under the other Credit Documents until such time, if
any, as the Required Lenders appoint a successor Agent as provided for
hereinabove.
9.10 Collateral Matters.
(a) The Agent is hereby authorized on behalf of the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Security Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all of
the Obligations, (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition expressly permitted hereunder or
under any other Credit Document or to which the Required Lenders have consented
or (iii) otherwise pursuant to and in accordance with the provisions of any
applicable Credit Document. Upon request by the Agent at any time, the Lenders
will confirm in writing the Agent's authority to release Collateral pursuant to
this subsection (b).
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ARTICLE X.
MISCELLANEOUS
10.1 Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of counsel to the Agent) in
connection with (w) the Agent's due diligence investigation in connection with,
and the preparation, negotiation, execution, delivery and syndication of, this
Agreement and the other Credit Documents, and any amendment, modification or
waiver hereof or thereof or consent with respect hereto or thereto, (x) the
administration, monitoring and review of the Loans and the Collateral
(including, without limitation, out-of-pocket expenses for travel, meals,
long-distance telephone calls, wire transfers, facsimile transmissions and
copying and with respect to the engagement of appraisers, consultants, auditors
or similar Persons by the Agent at any time, whether before or after the
Closing, to render opinions concerning the Borrower's financial condition and
the value of the Collateral), (y) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of any Collateral and (z) the
creation, perfection and maintenance of the perfection of the Agent's Liens upon
the Collateral, including, without limitation, Lien search, filing and recording
fees, (ii) to pay upon demand all reasonable out-of-pocket costs and expenses of
the Agent and each Lender (including, without limitation, reasonable attorneys'
fees and expenses) in connection with (y) any refinancing or restructuring of
the credit arrangement provided under this Agreement, whether in the nature of a
"work-out," in any insolvency or bankruptcy proceeding or otherwise and whether
or not consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold the
Agent and each Lender harmless from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties, and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Agent or any Lender), that may be payable in
connection with the transactions contemplated by this Agreement and the other
Credit Documents.
10.2 Indemnification. The Borrower agrees, whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any kind or nature whatsoever,
whether direct, indirect or consequential (collectively, "Indemnified Costs"),
that may at any time be imposed on, incurred by or asserted against any such
Indemnified Person as a result of, arising from or in any way relating to the
preparation, execution, performance or enforcement of this Agreement or any of
the other Credit Documents, any of the transactions contemplated herein or
therein or any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loans (including, without
limitation, in connection with the actual or alleged generation, presence,
discharge or release of any Hazardous Substances on, into or from, or the
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transportation of Hazardous Substances to or from, any real property at any time
owned or leased by the Borrower or any of its Subsidiaries, any other
Environmental Claims or any violation of or liability under any Environmental
Law), or any action, suit or proceeding (including any inquiry or investigation)
by any Person, whether threatened or initiated, related to any of the foregoing,
and in any case whether or not such Indemnified Person is a party to any such
action, proceeding or suit or a subject of any such inquiry or investigation;
provided, however, that no Indemnified Person shall have the right to be
indemnified hereunder for any Indemnified Costs to the extent resulting from the
gross negligence or willful misconduct of such Indemnified Person. All of the
foregoing Indemnified Costs of any Indemnified Person shall be paid or
reimbursed by the Borrower, as and when incurred and upon demand.
10.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE
OTHER CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL
BE DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF). THE
BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT
WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN
THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING
INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR THE BORROWER IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS
SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
10.4 Arbitration; Preservation and Limitation of Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Credit
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Document ("Disputes") between or among the Borrower, its Subsidiaries, the Agent
and the Lenders, or any of them, shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions,
claims arising from documents executed in the future, or claims arising out of
or connected with the transactions contemplated by this Agreement and the other
Credit Documents. Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA"), as in effect from time to time,
and Title 9 of the U.S. Code, as amended. All arbitration hearings shall be
conducted in the city in which the principal office of the Agent is located. The
expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. The panel from which all arbitrators are
selected shall be comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired judge from the highest court
of general jurisdiction, state or federal, of the state where the hearing will
be conducted. Notwithstanding the foregoing, this arbitration provision does not
apply to Disputes under or related to Hedge Agreements. The parties do not waive
applicable federal or state substantive law except as provided herein.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Credit Documents or
under applicable law or by judicial foreclosure and sale, including a proceeding
to confirm the sale; (ii) all rights of self-help, including peaceful occupation
of real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies, including
injunctive relief, sequestration, garnishment, attachment, appointment of a
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute. The parties hereto agree that no party shall
have a remedy of punitive or exemplary damages against any other party in any
Dispute, and each party hereby waives any right or claim to punitive or
exemplary damages that it has now or that may arise in the future in connection
with any Dispute, whether such Dispute is resolved by arbitration or judicially.
The parties acknowledge that by agreeing to binding arbitration they have
irrevocably waived any right they may have to a jury trial with regard to a
Dispute.
10.5 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to OrthAlliance, Inc., 21535 Hawthorne
Boulevard, Suite 200, Torrance, CA 90503, Attention: Sam Westover, Telecopy
No.(310) 792-1350, with a copy to Munger, Tolles & Olson, 355 South Grand
Avenue, 35th Floor, Los Angeles, CA 90071, Attention: Robert Knauss,
Telecopy No. (213) 687-3702;
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(b) if to the Agent, to First Union National Bank, One First Union
Center, TW-5, 301 South College Street, Charlotte, North Carolina 28288-0735,
Attention: David Straut, Telecopy No. (704) 383-9144, with a copy to Kevin
Stephens, First Union Capital Markets Corp., Syndication Agency Services, One
First Union Center, 4th Floor, 301 South College Street, Charlotte, North
Carolina, 28288-0680; and
(c) if to any Lender, to it at the address set forth on its signature
page hereto (or if to any Lender not a party hereto as of the date hereof, at
the address set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Agent shall not be effective until received by the Agent.
10.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Required Lenders (or by the Agent at the
direction or with the consent of the Required Lenders), and then the same shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, modification, waiver,
discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Agent for its own account), or (ii) extend the
Maturity Date or any other date (including any scheduled date for the
termination of any Commitments) fixed for the payment of any principal of or
interest on any Loan (other than additional interest payable under SECTION
2.8(B) at the election of the Required Lenders, as provided therein), any fees
(other than fees payable to the Agent for its own account) or any other
Obligations;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Agent to take, any action hereunder (including as set
forth in the definition of "Required Lenders"), (iii) except as may be otherwise
specifically provided in this Agreement or in any other Credit Document, release
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all or substantially all of the Collateral or release any Subsidiary Guarantor
from its obligations under the Subsidiary Guaranty, or (iv) change any provision
of SECTION 2.15 or this Section; and
(c) unless agreed to by the Agent in addition to the Lenders required
as provided hereinabove to take such action, affect the rights or obligations of
the Agent, as applicable, hereunder or under any of the other Credit Documents;
and provided further that the Fee Letter may be amended or modified, and any
rights thereunder waived, in a writing signed by the parties thereto.
10.7 Assignments, Participations.
(a) Each Lender may assign to one or more other Eligible Assignees
(each, an "Assignee") all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the outstanding Loans made by it and the Note or Notes held by it; provided,
however, that (i) any such assignment (other than an assignment to a Lender or
an Affiliate of a Lender) shall not be made without the prior written consent of
the Agent and the Borrower (to be evidenced by its counterexecution of the
relevant Assignment and Acceptance), which consent shall not be unreasonably
withheld (provided that the Borrower's consent shall not be required in the
event a Default or Event of Default shall have occurred and be continuing), (ii)
each such assignment shall be of a uniform, and not varying, percentage of all
of the assigning Lender's rights and obligations under this Agreement, (iii)
except in the case of an assignment to a Lender or an Affiliate of a Lender, no
such assignment shall be in an aggregate principal amount (determined as of the
date of the Assignment and Acceptance with respect to such assignment) less than
$5,000,000, determined by combining the amount of the assigning Lender's
outstanding Loans and Unutilized Commitment being assigned pursuant to such
assignment (or, if less, the entire Commitment of the assigning Lender) and (iv)
the parties to each such assignment will execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment, and will pay a
nonrefundable processing fee of $3,000 to the Agent for its own account. Upon
such execution, delivery, acceptance and recording of the Assignment and
Acceptance, from and after the effective date specified therein, which effective
date shall be at least five Business Days after the execution thereof (unless
the Agent shall otherwise agree), (A) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of the assigning Lender hereunder with respect thereto and (B)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than rights under the provisions of this Agreement and the
other Credit Documents relating to indemnification or payment of fees, costs and
expenses, to the extent such rights relate to the time prior to the effective
date of such Assignment and Acceptance) and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of such assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto). The terms
and provisions of each Assignment and Acceptance shall, upon the effectiveness
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thereof, be incorporated into and made a part of this Agreement, and the
covenants, agreements and obligations of each Lender set forth therein shall be
deemed made to and for the benefit of the Agent and the other parties hereto as
if set forth at length herein.
(b) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of the Assignee (and, if the assigning Lender has
retained any portion of its rights and obligations hereunder, to the order of
the assigning Lender), prepared in accordance with the applicable provisions of
SECTION 2.4 as necessary to reflect, after giving effect to the assignment, the
Commitments of the Assignee and (to the extent of any retained interests) the
assigning Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Agent will return cancelled Notes to
the Borrower.
(d) Each Lender may, without the consent of the Borrower, the Agent or
any other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion comprising less than all of its rights and
obligations under this Agreement (including, without limitation, a portion of
its Commitments, the outstanding Loans made by it and the Note or Notes held by
it; provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged and such Lender shall remain solely responsible for the
performance of such obligations, (ii) no Lender shall sell any participation
that, when taken together with all other participations, if any, sold by such
Lender, covers all of such Lender's rights and obligations under this Agreement,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and no Lender shall permit any Participant to
have any voting rights or any right to control the vote of such Lender with
respect to any amendment, modification, waiver, consent or other action
hereunder or under any other Credit Document (except as to actions that would
(x) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other
Obligations, (y) extend the Maturity Date or any other date fixed for the
payment of any principal of or interest on any Loan, any fees or any other
Obligations, or (z) increase or extend any Commitment of any Lender), and (iv)
no Participant shall have any rights under this Agreement or any of the other
Credit Documents, each Participant's rights against the granting Lender in
respect of any participation to be those set forth in the participation
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agreement, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not granted such participation. Notwithstanding the
foregoing, each Participant shall have the rights of a Lender for purposes of
SECTIONS 2.16(A), 2.16(B), 2.17, 2.18 and 8.3, and shall be entitled to the
benefits thereto, to the extent that the Lender granting such participation
would be entitled to such benefits if the participation had not been made,
provided that no Participant shall be entitled to receive any greater amount
pursuant to any of such Sections than the Lender granting such participation
would have been entitled to receive in respect of the amount of the
participation made by such Lender to such Participant had such participation not
been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the Assignee or Participant or proposed Assignee or Participant any
information relating to the Borrower and its Subsidiaries furnished to it by or
on behalf of any other party hereto, provided that such Assignee or Participant
or proposed Assignee or Participant agrees in writing to keep such information
confidential to the same extent required of the Lenders under SECTION 10.13.
10.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or be construed to be a
waiver of any Default or Event of Default. No course of dealing between any of
the Borrower and the Agent or the Lenders or their agents or employees shall be
effective to amend, modify or discharge any provision of this Agreement or any
other Credit Document or to constitute a waiver of any Default or Event of
Default. No notice to or demand upon the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent or any Lender to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.
10.9 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i) the
Borrower shall not sell, assign or transfer any of its rights, interests, duties
or obligations under this Agreement without the prior written consent of all of
the Lenders and (ii) any Assignees and Participants shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of SECTION 10.7.
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10.10 Survival. All representations, warranties and agreements made by
or on behalf of the Borrower or any of its Subsidiaries in this Agreement and in
the other Credit Documents shall survive the execution and delivery hereof or
thereof and the making and repayment of the Loans. In addition, notwithstanding
anything herein or under applicable law to the contrary, the provisions of this
Agreement and the other Credit Documents relating to indemnification or payment
of fees, costs and expenses, including, without limitation, the provisions of
SECTIONS 2.16(A), 2.16(B), 2.17, 2.18, 9.7, 10.1 and 10.2, shall survive the
payment in full of all Loans, the termination of the Commitments and any
termination of this Agreement or any of the other Credit Documents.
10.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
10.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
10.13 Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound banking practices, all
nonpublic information provided to it by or on behalf of the Borrower or any of
its Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
directors, employees, agents and affiliates and to its auditors, counsel and
other professional advisors, provided that such persons shall be subject to this
SECTION 10.13, (ii) at the demand or request of any bank regulatory authority,
court or other Governmental Authority having or asserting jurisdiction over such
Lender, as may be required pursuant to subpoena or other legal process, or
otherwise in order to comply with any applicable Requirement of Law, (iii) in
connection with any proceeding to enforce its rights hereunder or under any
other Credit Document or any other litigation or proceeding related hereto or to
which it is a party, (iv) to the Agent or any other Lender, (v) to the extent
the same has become publicly available other than as a result of a breach of
this Agreement and (vi) pursuant to and in accordance with the provisions of
SECTION 10.7(F).
10.14 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Agent and the Borrower of written
or telephonic notification of such execution and authorization of delivery
thereof.
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10.15 Disclosure of Information. The Borrower agrees and consents to
the Agent's disclosure of information relating to this transaction to Gold
Sheets and other similar bank trade publications. Such information will consist
of deal terms and other information customarily found in such publications.
10.16 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE COMMITMENT
LETTER FROM FIRST UNION TO THE BORROWER DATED FEBRUARY 17, 1999, BUT
SPECIFICALLY EXCLUDING THE FEE LETTER, AND (C) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
10.17 Amended and Restated Credit Agreement. This Agreement amends and
restates the Credit Agreement, dated as of December 30, 1997, between the
Borrower and First Union as amended by the First Amendment dated as of October
20, 1998. All references in the Credit Documents to the Credit Agreement shall
be deemed to be references to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
ORTHALLIANCE, INC., as Borrower
By: ___________________________________
Title:_____________________________
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FIRST UNION NATIONAL BANK, as Agent
and as a Lender
By: ____________________________________
Commitment: Title: _____________________________
$25,000,000
Instructions for wire
transfers to the Agent:
First Union National Bank
Charlotte, North Carolina
ABA Routing No. 053000219
For further credit to:
General Ledger No. 465906, RC No. 1802
Attention: Sue Patterson
Re: OrthAlliance, Inc.
Address for notices as a Lender:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Kevin Stephens
Syndication Agency Services
Telephone: (704) 374-2698
Telecopy: (704) 383-0288
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: David Straut
Telephone: (704) 383-8764
Telecopy: (704) 383-9144
[Signatures Continued on Next Page]
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U.S. BANK NATIONAL ASSOCIATION, as a
Lender
By: ____________________________________
Commitment: Title:______________________________
$15,000,000
Instructions for wire
transfers to the Lender:
US Bank National Association
Minneapolis, MN 55402
ABA Routing No. 091000022
Attention: Asset Based Lending Division
Address for notices to the Lender:
US Bank National Association
601 2nd Avenue South
Mail Station MPFP0512
Minneapolis, MN 55402
Attention: Brian C. O'Neill
Vice President
Telephone: (612) 973-0981
Telecopy: (612) 973-0829
Lending Office:
US Bank National Association
601 2nd Avenue South
Mail Station MPFP0512
Minneapolis, MN 55402
Attention: Brian C. O'Neill
Vice President
Telephone: (612) 973-0981
Telecopy: (612) 973-0829
[Signatures Continued on Next Page]
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UNION BANK OF CALIFORNIA N.A., as a
Lender
By:____________________________________
Commitment: Title:______________________________
$15,000,000
Instructions for wire
transfers to the Lender:
Address for notices to the Lender:
Lending Office:
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