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EXHIBIT 10.13
KEYBANK NATIONAL ASSOCIATION
KEY CENTER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
Dated as of June 1, 1998
NCS HealthCare, Inc.
3201 Enterprise Parkway
Suite 220
Beachwood, Ohio 44122
Attention: Jeffrey R. Steinhilber
Senior Vice President
and Chief Financial Officer
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Re: U.S. $50,000,000 Capital Markets Bridge Facility
for NCS HealthCare, Inc.
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Ladies and Gentlemen:
KeyBank National Association, a national banking association (the
"LENDER"), hereby establishes pursuant to this letter ("THIS AGREEMENT") a
committed single draw, non-revolving capital markets bridge credit facility in
favor of NCS HealthCare, Inc. (herein, together with its successors and assigns,
the "BORROWER"), upon and subject to the terms and conditions contained in this
Agreement. Certain terms used herein are defined in section 6 hereof.
1. AMOUNTS AND TERMS OF THE LOANS.
1.1. THE LOANS. The Lender agrees, on the terms and conditions
hereinafter set forth, to make one or more loans (each a "LOAN" and
collectively, the "LOANS") to the Borrower, all of which Loans shall be made on
a single occasion (the "CLOSING DATE"), which shall be a Business Day during the
period from the date hereof until December 31, 1998 (such date, or the earlier
date of termination of the Commitment pursuant to section 1.11 or 5.2, being the
"TERMINATION DATE"). The Loans made hereunder on the Closing Date shall be in an
aggregate amount not to exceed $50,000,000, as such amount may be reduced
pursuant to section 1.11 (the "COMMITMENT"). Each Loan shall be in an amount not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof. No
additional Loans shall be made after the Closing Date, and the amount of any
unused Commitment remaining after Loans are made on the Closing Date shall be
automatically terminated.
1.2. MAKING THE LOANS ON THE CLOSING DATE. (a) The Borrower shall give
the Lender notice, not later than 11:00 A.M. (Cleveland, Ohio time) on the third
Business Day prior to the proposed Closing Date, a. specifying the proposed
Closing Date, b. specifying the amount and Type of each proposed Loan to be made
on the Closing Date, c. selecting the interest rate for each such Loan pursuant
to section 1.6 and, d. if any such Loan is to be a Eurodollar Loan, selecting
the initial Interest Period for such Loan. More than one Loan may be made on the
Closing Date as a Eurodollar Loan, but each such Eurodollar Loan so made shall
have a single Interest Period applicable thereto and no two Eurodollar Loans
made on the Closing Date shall have the same Interest Period. No more than three
Eurodollar Loans may be outstanding hereunder at any time. Not later than 11:00
A.M. (Cleveland, Ohio time) on the Closing Date and upon fulfillment of the
applicable conditions set forth in section 2, the Lender will make the requested
Loan or Loans available to the Borrower in same day funds at the Lender's
principal office in Cleveland, Ohio.
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(b) Anything in section 1.2 (a) above to the contrary notwithstanding,
the Borrower may not select a Eurodollar Rate for any Loan if the principal
amount of such Loan is less than $5,000,000.
(c) The notice from the Borrower to the Lender requesting a Loan or
Loans on the Closing Date shall be irrevocable and binding on the Borrower.
1.3. FEES. The Borrower agrees to pay to the Lender an upfront fee to
the Lender on the date this Agreement becomes effective in the amount separately
agreed upon by the parties hereto. The Borrower agrees to pay to the Lender an
activation fee in connection with the initial Loan made hereunder in accordance
with a separate letter between the Borrower and the Lender.
1.4. NOTE. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made to it by the Lender shall be evidenced by a
promissory note substantially in the form of Exhibit A hereto with blanks
appropriately completed in conformity herewith (the "NOTE").
(b) The Note issued to the Lender shall be entitled to the benefits of
this Agreement as well as the Subsidiary Guaranty and the Pledge Agreement
referred to in the Credit Agreement.
(c). The Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of the Note, endorse on the reverse side thereof or the grid attached
thereto the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation or any error in any such notation shall not affect the
Borrower's obligations in respect of such Loans.
1.5. CONVERSIONS OF LOANS. The Borrower shall have the option to
Convert on any Business Day all, or a portion equal to $5,000,000 or a multiple
of $1,000,000 in excess thereof, of the outstanding principal amount of any
outstanding Loan into a Loan or Loans of the other Type of Loan which can be
made pursuant to this Agreement, PROVIDED that: a. no partial conversion of a
Eurodollar Loan shall reduce the outstanding principal amount of such Eurodollar
Loan to less than $5,000,000; b. any conversion of a Eurodollar Loan into a
Prime Rate Loan shall be made on, and only on, the last day of an Interest
Period for such Eurodollar Loan; c. a Prime Rate Loan may not be converted into
a Eurodollar Loan if a Default or Event of Default has occurred and is in
existence on the date of the Conversion unless the Lender otherwise agrees; and
d. a Eurodollar Loan resulting from a Conversion under this section 1.5 shall
conform to the requirements of sections 1.1 and 1.2. Each such Conversion shall
be effected by the Borrower giving the Lender written notice thereof, prior to
11:00 A.M. (local time) at least three Business Days prior to the Conversion,
specifying the Loan or Loans to be so converted, the Type of Loan or Loans to be
converted into and, if to be converted into a Eurodollar Loan, the Interest
Period to be initially applicable thereto.
1.6. INTEREST. The Borrower shall pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount shall
be paid in full, at the following rates per annum:
(a) PRIME RATE LOANS. During such periods as such Loan is a
Prime Rate Loan, a fluctuating rate per annum equal at all times to the
Prime Rate in effect from time to time, payable quarterly in arrears on
the last Business day of each March, June, September and December and
on the date such Prime Rate Loan shall be Converted (as hereinafter
defined) or paid in full; PROVIDED that any amount of principal which
is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest, from the date on which such amount is
due until such amount is paid in full, payable on demand, at a
fluctuating rate per annum equal at all times to 3% per annum above the
Prime Rate in effect from time to time.
(b) EURODOLLAR LOANS. During such periods as such Loan is a
Eurodollar Loan, a rate per annum equal at all times during the
Interest Period for such Loan to the sum of the Eurodollar Rate for
such Interest Period PLUS (i) from the date hereof to September 30,
1998, an additional 200 basis points per annum and (ii) from and after
such date, an additional 262.50 basis points per annum, payable on the
last
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day of such Interest Period and, if such Interest Period has a duration
of more than three months, on each day which occurs during such
Interest Period every three months from the first day of such Interest
Period; PROVIDED that any amount of principal which is not paid when
due (whether at stated maturity, by acceleration or otherwise) shall
bear interest, from the date on which such amount is due until such
amount is paid in full, payable on demand, at a fluctuating rate per
annum equal at all times to 3% per annum above the Prime Rate in effect
from time to time.
1.7. PREPAYMENTS. (a) VOLUNTARY PREPAYMENTS. The Borrower may, upon at
least three Business Days' notice to the Lender stating the proposed date and
principal amount of the prepayment, and if such notice is given the Borrower
shall, without premium or penalty, prepay the outstanding principal amount of
any Loan, in whole or in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid, PROVIDED that in the case of
any partial prepayment of a Loan the principal amount prepaid shall be at least
$1,000,000, or an integral multiple of $1,000,000 in excess thereof, and
PROVIDED, FURTHER, that in the case of prepayment of any Eurodollar Loan on any
date other than the last day of the Interest Period applicable thereto, such
prepayment shall be accompanied by such breakage compensation as is provided for
in section 1.10.
(b) MANDATORY PREPAYMENTS. The Loans shall be subject to mandatory
prepayment, without premium or penalty, in accordance with the following
provisions:
(i) CERTAIN PROCEEDS OF ASSET SALES AND DEBT OR EQUITY
OFFERINGS. If the Borrower and its Subsidiaries have received after the
date hereof Net Cash Proceeds from any Asset Sale or from any public
offering, Rule 144A offering or private placement with one or more
institutional investors of any debt or equity securities (exclusive of
any syndicated credit facilities), not later than the third Business
Day following the date of receipt of any such Net Cash Proceeds an
amount, conforming to the requirements of section 1.7(a) as to the
amount of any partial prepayment of Loans, at least equal to such Net
Cash proceeds so received shall be applied as a mandatory prepayment of
principal of the then outstanding Loans.
(ii) LOANS EXCEED COMMITMENT. If the outstanding Loans at any
time exceed the Commitment hereunder as then in effect, the Borrower
will immediately prepay Loans in an amount, conforming to the
requirements of section 1.7(a) as to the amount of any partial
prepayment of Loans, at least sufficient to eliminate such excess.
(iii) CHANGE OF CONTROL. On the date on which a Change of
Control occurs, notwithstanding anything to the contrary contained in
this Agreement, no further borrowings shall be made under this
Agreement and the then outstanding principal amount of all Loans, if
any, shall become due and payable and shall be prepaid in full.
(iv) PARTICULAR LOANS TO BE PREPAID. With respect to each
prepayment of Loans required by this section 1.7(b), the Borrower shall
designate the Types of Loans which are to be prepaid and the specific
Loan(s) to which such prepayment is to be applied, PROVIDED that (A)
the Borrower shall first so designate all Loans that are Prime Rate
Loans and Eurodollar Loans with Interest Periods ending on the date of
prepayment prior to designating any other Eurodollar Loans for
prepayment, and (B) if the outstanding principal amount of a Eurodollar
Loan is reduced below $1,000,000 as a result of any such prepayment,
then such Loan shall be Converted into a Prime Rate Loan. In the
absence of a designation by the Borrower as described in the preceding
sentence, the Lender shall, subject to the above, make such designation
in its sole discretion with a view, but no obligation, to minimize
breakage costs. Any prepayment of Loans pursuant to this section 1.7(b)
shall be accompanied by payment of interest accrued to the date of
prepayment on the amount prepaid and, in the case of any prepayment of
a Eurodollar Loan, shall in all events be accompanied by such breakage
compensation as is contemplated by section 1.10.
1.8. INTEREST PERIODS. (a) At the time the Borrower gives the notice of
the Closing Date or a notice of Conversion in respect of the making of, or
conversion into, a Eurodollar Loan (in the case of the initial Interest
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Period applicable thereto) or prior to 11:00 A.M. on the third Business Day
prior to the expiration of an Interest Period applicable to a Eurodollar Loan,
it shall have the right to elect by giving the Lender written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Lender) of the Interest Period applicable to such Loan, which
Interest Period shall, at the option of the Borrower, be a one, two, three or
six month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Eurodollar Loan shall
commence on the date such Loan is made (including the date of any
conversion from a Prime Rate Loan) and each Interest Period occurring
thereafter in respect of such Loan shall commence on the day on which
the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Loan may be selected which
would end after the then scheduled Termination Date; and
(v) no Interest Period may be elected at any time when a
Default under section 5.1(a) or an Event of Default is then in
existence unless the Lender otherwise agrees.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to a
Eurodollar Loan as provided above, the Borrower shall be deemed to have elected
to convert such Loan to a Prime Rate Loan effective as of the expiration date of
such current Interest Period.
1.9. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that the Lender
shall have determined on a reasonable basis (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the
Effective Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that the Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which the Lender deems material with respect to any Eurodollar
Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in
the rate of taxes or similar charges) because of (x) any change since
the Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurodollar Rate pursuant
to the definition thereof) and/or (y) other circumstances adversely
affecting the interbank Eurodollar market or the position of such
Lender in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by the Lender in good
faith with any change since the Effective Date in any law, governmental
rule, regulation, guideline or order, or the interpretation or
application thereof, or would
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conflict with any thereof not having the force of law but with which
the Lender customarily complies or has become impracticable as a result
of a contingency occurring after the Effective Date which materially
adversely affects the interbank Eurodollar market;
THEN, and in any such event, the Lender shall (x) on or promptly following such
date or time and (y) within 10 Business Days of the date on which such event no
longer exists give notice (by telephone confirmed in writing) to the Borrower of
such determination. Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Lender notifies the
Borrower that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, and any notice of the Closing Date or notice of
Conversion given by the Borrower with respect to Eurodollar Loans which have not
yet been incurred or converted shall be deemed rescinded by the Borrower or, in
the case of the notice of the Closing Date, shall, at the option of the
Borrower, be deemed Converted into a notice requesting a Prime Rate Loan to be
made on the Closing Date, (y) in the case of clause (ii) above, the Borrower
shall pay to the Lender, upon written demand therefor, such additional amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as the Lender shall determine) as shall be required to
compensate the Lender, for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to the
Lender, showing the basis for the calculation thereof, which basis must be
reasonable, submitted to the Borrower by the Lender shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in section 1.9(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in section 1.9(a)(ii) or (iii), the Borrower may (and in
the case of a Eurodollar Loan affected pursuant to section 1.9(a)(iii) the
Borrower shall) either a. if the affected Eurodollar Loan is then being made on
the Closing Date, by giving the Lender telephonic notice (confirmed promptly in
writing) thereof on the same date that the Borrower was notified by the Lender
pursuant to section 1.9(a)(ii) or (iii), cancel said borrowing, or convert the
related notice of the Closing Date into a notice requesting a Prime Rate Loan,
or b. if the affected Eurodollar Loan is then outstanding, upon at least one
Business Day's notice to the Lender, require the Lender to Convert each such
Eurodollar Loan into a Prime Rate Loan.
(c) If the Lender shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by the Lender or its parent corporation with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank, or comparable agency, in each case made subsequent to
the Effective Date, has or would have the effect of reducing by an amount
reasonably deemed by the Lender to be material the rate of return on the
Lender's or its parent corporation's capital or assets as a consequence of the
Lender's commitments or obligations hereunder to a level below that which the
Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration the Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by the Lender, the Borrower shall pay
to the Lender such additional amount or amounts as will compensate the Lender or
its parent corporation for such reduction. The Lender, upon determining in good
faith that any additional amounts will be payable pursuant to this section
1.9(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth, in reasonable detail, the basis of the calculation of such
additional amounts, which basis must be reasonable, although the failure to give
any such notice shall not release or diminish any of the Borrower's obligations
to pay additional amounts pursuant to this section 1.9(c) upon the subsequent
receipt of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, a. the
Lender shall not be entitled to compensation or payment or reimbursement of
other amounts under this section 1.9 for any amounts incurred or accruing more
than 90 days prior to the giving of notice to the Borrower of additional costs
or other amounts of the nature described in this section, and b. the Lender
shall not demand compensation for any reduction referred to in section 1.9(c) if
it shall not at the time be the general policy or practice of the Lender to
demand such compensation
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in similar circumstances under comparable provisions of other credit agreements.
1.10. BREAKAGE COMPENSATION. The Borrower shall compensate the Lender,
upon its written request (which request shall set forth the detailed basis for
requesting and the method of calculating such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by the Lender to fund its Eurodollar Loans)
which the Lender may sustain: a. if for any reason (other than a default by the
Lender) a borrowing of a Eurodollar Loan does not occur on a date specified
therefor in the notice of the Closing Date or a notice of Conversion (whether or
not withdrawn by the Borrower or deemed withdrawn pursuant to section 1.9(a));
b. if any repayment, prepayment or Conversion of any Eurodollar Loan occurs on a
date which is not the last day of an Interest Period applicable thereto; c. if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower; or d. as a consequence of (x)
any other default by the Borrower to repay its Eurodollar Loans when required by
the terms of this Agreement or (y) an election made pursuant to section 1.9(b).
1.11. TERMINATION/REDUCTION OF THE COMMITMENT. (a) The Commitment shall
terminate on the earlier of (x) the Termination Date and (y) the date on which a
Change of Control occurs.
(b) Amounts borrowed hereunder and repaid or prepaid may not be
reborrowed. The Commitment shall be considered utilized by the principal amount
of each Loan made hereunder.
(c) The Borrower shall have the right, upon at least three Business
Days' notice to the Lender, to terminate in whole or reduce in part the unused
portion of the Commitment, PROVIDED that each partial reduction shall be in the
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
(d) In the event the Total General Revolving Commitment under the
Credit Agreement is increased above $150,000,000, the then Commitment hereunder
shall be automatically and permanently reduced by the amount of such increase.
(e) If any portion of the Commitment remains unused after Loans are
made on the Closing Date, such unused portion of the Commitment shall be
automatically terminated.
1.12. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment not later than 11:00 A.M. (Cleveland, Ohio time) on the day when due in
U.S. dollars to the Lender at its address referred to herein in same day funds.
(b) The Borrower hereby authorizes the Lender, if and to the extent
payment is not made when due, to charge from time to time against any or all of
the Borrower's accounts with the Lender any amount so due.
(c) All computations of interest shall be made by the Lender on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Lender of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(d) Whenever any payment shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest.
SECTION 2. CONDITIONS OF LENDING.
2.1. CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the Lender
to make its initial Loan is subject to satisfaction of the following conditions:
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(a) EFFECTIVENESS; NOTE. This Agreement shall have been duly
executed and delivered by the parties and shall be in full force and
effect, and there shall have been delivered to the Lender the Note
executed by the Borrower in the amount, maturity and as otherwise
provided herein.
(b) CREDIT AGREEMENT, ETC. The Credit Agreement, and the
Subsidiary Guaranty and the Pledge Agreement referred to therein, shall
each have been duly executed and delivered and shall be in full force
and effect. All conditions specified in section 6.1 of the Credit
Agreement shall have been satisfied or waived.
(c) FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 1.3 and all reasonable fees and expenses of the
Lender and of special counsel to the Lender which have been invoiced on
or prior to such date in connection with the preparation, execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
(d) CORPORATE RESOLUTIONS AND APPROVALS. The Lender shall have
received certified copies of the resolutions of the Board of Directors
of the Borrower approving this Agreement, and of all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to the execution, delivery and performance by the
Borrower of this Agreement.
(e) INCUMBENCY CERTIFICATE. The Lender shall have received a
certificate of the Secretary or an Assistant Secretary of the Borrower,
certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the Note and any other
documents to which the Borrower is a party which may be executed and
delivered in connection herewith.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to the
Lender and the Lender and its special counsel shall have received all
such counterpart originals or certified or other copies of such
documents as the Lender or its special counsel may reasonably request.
2.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Lender to
make each Loan is subject, at the time thereof, to the satisfaction of the
conditions that at the time of such Loan and also after giving effect thereto:
(a) the Borrower shall have complied with the notice
requirements hereof with respect to the making of such Loan;
(b) there shall exist no Default or Event of Default; and
(c) all representations and warranties of the Borrower
contained herein shall be true and correct in all material respects
with the same effect as though such representations and warranties had
been made on and as of the date of such Loan, except to the extent that
such representations and warranties expressly relate to an earlier
specified date, in which case such representations and warranties shall
have been true and correct in all material respects as of the date when
made.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
3.1. GENERAL REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants that a. all of its representations and warranties contained in
section 7 of the Credit Agreement are true and correct, and b. all of such
representations and warranties contained in section 7 of the Credit Agreement
would be true and correct if references therein to the Credit Documents were
instead references to this Agreement and the Note.
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3.2. USE OF PROCEEDS, ETC. No part of the proceeds of any Loan will be
used directly or indirectly to a. purchase or carry Margin Stock, or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock, in
violation of any of the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, or b. finance any Acquisition (as
defined in the Credit Agreement) if such Acquisition is actively opposed by the
Board of Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock. At no time would more than 25% of the value of the assets of the
Borrower or of the Borrower and its consolidated Subsidiaries that are subject
to any "arrangement" (as such term is used in section 221.2(g) of such
Regulation U) hereunder be represented by Margin Stock.
SECTION 4. COVENANTS OF THE BORROWER.
So long as the Note shall remain unpaid or the Lender shall have any
Commitment hereunder:
4.1. CREDIT AGREEMENT COVENANTS. The Borrower will comply with all
covenants and agreements contained in sections 8 and 9 of the Credit Agreement
as originally executed and delivered, regardless of any subsequent modification
or termination of the Credit Agreement, or consent or waiver thereunder, UNLESS
the Lender shall otherwise consent in writing (it being understood that a
consent by the Lender as a Lender under the Credit Agreement shall likewise be
considered a consent hereunder, UNLESS otherwise specified by the Lender at the
time any such consent is given).
4.2. REPORTING REQUIREMENTS. The Borrower will furnish to the Lender at
the time ot times referred to therein copies of all financial statements and
other information furnished or to be furnished pursuant to section 8.1 of the
Credit Agreement, as originally executed and delivered.
4.3. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, permit, upon at least five Business Days' notice to
the Chief Financial Officer or any other Authorized Officer of the Borrower,
officers and designated representatives of the Lender to visit and inspect any
of the properties or assets of the Borrower and any of its Subsidiaries in
whomsoever's possession (but only to the extent the Borrower or such Subsidiary
has the right to do so to the extent in the possession of another person), and
to examine the books of account of the Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants and independent actuaries (the Borrower having been
offered an opportunity to be present by telephone or in person for any
discussions with such independent accountants or independent actuaries), if any,
all at such reasonable times and intervals and to such reasonable extent as the
Lender may request.
SECTION 5. EVENTS OF DEFAULT.
5.1. EVENTS OF DEFAULT. Any of the following events (an "EVENT OF
DEFAULT") shall constitute an Event of Default hereunder:
(a) PAYMENTS: the Borrower shall a. default in the payment
when due of any principal of the Loans; or b. default, and such default
shall continue for five or more Business Days, in the payment when due
of any interest on the Loans or any other amounts owing hereunder; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower herein or in any statement or
certificate delivered or required to be delivered pursuant hereto shall
prove to be untrue in any material respect on the date as of which made
or deemed made; or
(c) CERTAIN NEGATIVE COVENANTS: the Borrower shall a. default
in the due performance or observance by it of any term, covenant or
agreement contained in section 4.1 hereof insofar as it relates to
sections 9.6 through 9.9, inclusive, or section 9.13, of the Credit
Agreement; or b. default, and such default
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shall continue for five or more Business Days after the Borrower shall
first have obtained actual knowledge thereof or the Lender shall have
notified the Borrower thereof in writing, whichever shall first occur,
in the due performance or observance by it of any other term, covenant
or agreement contained in section 4.1 hereof insofar as it relates to
sections 9.2 through 9.5, inclusive, of the Credit Agreement; or
(d) OTHER COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in this Agreement, other than those referred to in section
5.1(a) or (b) or (c) above, and such default shall continue unremedied
for a period of at least 30 days after notice by the Lender; or
(e) DEFAULT UNDER OTHER AGREEMENTS: an Event of Default under
and as defined in the Credit Agreement shall have occurred; or the
Borrower or any of its Subsidiaries shall a. default in any payment
with respect to any Indebtedness (other than the Note) owed to the
Lender, or having an unpaid principal amount of $1,000,000 or greater,
and such default shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such
Indebtedness, or b. default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating thereto
(and all grace periods applicable to such observance, performance or
condition shall have expired), or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or shall be
required to be prepaid (other than by a regularly scheduled required
prepayment or redemption, prior to the stated maturity thereof); or
(f) BANKRUPTCY, ETC.: the Borrower or any of its Material
Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE");
or an involuntary case is commenced against the Borrower or any of its
Material Subsidiaries and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Material Subsidiaries; or the Borrower or
any of its Material Subsidiaries commences (including by way of
applying for or consenting to the appointment of, or the taking of
possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "CONSERVATOR") of itself or
all or any substantial portion of its property) any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency, liquidation, rehabilitation,
conservatorship or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any of its Material
Subsidiaries; or any such proceeding is commenced against the Borrower
or any of its Material Subsidiaries to the extent such proceeding is
consented by such person or remains undismissed for a period of 60
days; or the Borrower or any of its Material Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower
or any of its Material Subsidiaries suffers any appointment of any
conservator or the like for it or any substantial part of its property
which continues undischarged or unstayed for a period of 60 days; or
the Borrower or any of its Material Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate (or similar
organizational) action is taken by the Borrower or any of its Material
Subsidiaries for the purpose of effecting any of the foregoing.
5.2. ACCELERATION, ETC. If an Event of Default shall have occurred and
be continuing, THEN, and in any such event, the Lender (i) may, by notice to the
Borrower, declare the Commitment and its obligation to make Loans to be
terminated, whereupon the same shall forthwith terminate, and (ii) may, by
notice to the Borrower, declare the Note, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Note, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by the Borrower; PROVIDED,
HOWEVER, that in the event of an actual or deemed entry of an order for relief
with respect to the
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Borrower or any of its subsidiaries under the Bankruptcy Code, (A) the
obligation of the Lender to make Loans shall automatically be terminated and (B)
the Loans, the Note, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
5.3. SHARING OF PROCEEDS OF ENFORCEMENT. The Lender irrevocably
undertakes for the benefit of the Administrative Agent and the Lenders party to
the Credit Agreement that all amounts collected (by setoff or otherwise) in
connection with the enforcement of this Agreement and the Note after the
occurrence and during the continuance of an Event of Default hereunder will be
applied as provided in section 10.3 of the Credit Agreement.
The Borrower hereby consents to any such application.
6. DEFINITIONS.
6.1. TERMS DEFINED IN CREDIT AGREEMENT. Unless otherwise defined
herein, terms which are defined in the Credit Agreement, as originally executed
and delivered, are used herein with the same meaning.
6.2. DEFINED TERMS. As used in this Agreement, the following terms have
the following meanings:
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio and, if the
applicable Business Day relates to any Eurodollar Loans, on which
dealings are carried on in the London interbank market.
"CLOSING DATE" shall have the meaning provided in section 1.1.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a
conversion of a Loan of one Type into a Loan of another Type pursuant
to section 1.5 or 1.9.
"CREDIT AGREEMENT" shall mean the Credit Agreement, dated as
of June 1, 1998 (as now in effect or as hereafter amended or otherwise
modified), among the Borrower, the financial institutions party thereto
as Lenders, and KeyBank National Association, as Administrative Agent.
"DEFAULT" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"EFFECTIVE DATE" shall mean the date when this Agreement is
executed and delivered by the parties hereto.
"EURODOLLAR LOAN" shall mean each Loan bearing interest at the
rates provided in section 1.6(b).
"EURODOLLAR RATE" shall mean with respect to each Interest
Period for a Eurodollar Loan, (A) either (i) the rate per annum for
deposits in Dollars of amounts in same day funds comparable to the
outstanding principal amount of the Eurodollar Loan for which an
interest rate is then being determined for a maturity most nearly
comparable to such Interest Period which appears on page 3750 of the
Dow Jones Telerate Screen as of 11:00 A.M. (local time at the Notice
Office) on the date which is two Business Days prior to the
commencement of such Interest Period, or (ii) if such a rate does not
appear on such page, an interest rate per annum equal to the average
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum,
if such average is not such a multiple) of the rate per annum at which
deposits in Dollars are offered to the Lender by prime banks in the
London interbank Eurodollar market for deposits of amounts in Dollars
in same day funds comparable to the outstanding principal amount of the
Eurodollar Loan for which an interest rate is then being determined
with maturities comparable to the Interest Period to be applicable to
such Eurodollar Loan, determined as of 11:00 A.M. (London time) on the
date which is two Business Days prior to the commencement of such
Interest Period, in each case divided (and rounded
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upward to the nearest whole multiple of 1/16th of 1%) by (B) a
percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves and without benefit
of credits for proration, exceptions or offsets which may be available
from time to time) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency liabilities as defined in Regulation
D (or any successor category of liabilities under Regulation D).
"PRIME RATE LOAN" means an Loan which bears interest as
provided in section 1.6(a).
"TYPE" of Loan means a Prime Rate Loan or a Eurodollar Loan,
as the case may be.
SECTION 7. MISCELLANEOUS.
7.1. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.2. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the
Borrower, at Suite 220, 3201 Enterprise Parkway, Beachwood, Ohio 44122,
attention: Chief Financial Officer (facsimile: (216) 464-8376); and if to the
Lender at 127 Public Square, Cleveland, Ohio 44114, attention: Large Corporate
Group (facsimile: (216) 689-4981); or at such other address as shall be
designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, and shall be effective when
received.
7.3. NO WAIVER; REMEDIES. No failure on the part of the Lender to
exercise, and no delay in exercising, any right under this Agreement or the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies provided herein are cumulative and not exclusive
of any remedies provided by law.
7.4. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
7.5. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand
all costs and expenses in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement and the other
documents to be delivered in connection herewith, including, without limitation,
the reasonable fees and out-of-pocket expenses of special counsel for the Lender
with respect thereto and with respect to advising the Lender as to its rights
and responsibilities under this Agreement and such other documents. The Borrower
further agrees to pay on demand all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Agreement
and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this section 7.5. In addition, the Borrower shall
pay any and all stamp and other taxes payable or determined to be payable in
connection with the execution, delivery, filing and recording of the this
Agreement and the other documents to be delivered in connection herewith, and
agrees to save the Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
7.6. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default the Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other
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indebtedness at any time owing by the Lender to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or the Note, whether or not the Lender
shall have made any demand hereunder or thereunder and although such obligations
may be unmatured. The Lender agrees promptly to notify the Borrower after any
such set-off and application, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lender under this section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lender may
have.
7.7. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Borrower and the Lender and their respective successors and
assigns, EXCEPT that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lender.
7.8. MARGIN STOCK. The Lender is not relying on any direct or indirect
security of any Margin Stock in extending the credit facilities provided for
herein and this Agreement shall be construed in a manner consistent with such
intention.
7.9. GOVERNING LAW. This Agreement and the Note shall be governed by,
and construed in accordance with, the laws of the State of Ohio.
7.10. WAIVER OF JURY TRIAL. Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement, the Note or the
transactions contemplated hereby or thereby.
7.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the 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 agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Lender.
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If the foregoing correctly sets forth the arrangements between us with
regard to the matters specified above, please sign in the space provided below
and return a counterpart of this letter to the undersigned whereupon this letter
shall be a binding agreement.
Again, we thank you sincerely for this opportunity to be of assistance
to you, and we look forward to a long and mutually beneficial relationship with
you.
Very truly yours,
KEYBANK NATIONAL ASSOCIATION
BY:/S/ THOMAS J. PURCELL
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VICE PRESIDENT
Accepted and agreed as of
the date set forth above.
NCS HEALTHCARE, INC.
BY:/S/ GERALD D. STETHEM
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CHIEF FINANCIAL OFFICER
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