<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________.
Commission file number 0-28622
INSIGHT HEALTH SERVICES CORP.
(Exact name of registrant as specified in its charter)
Delaware 33-0702770
---------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4400 MacArthur Blvd., Suite 800, Newport Beach, CA 92660
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 476-0733
----------------------------------------------------
(Registrant's telephone number including area code)
N/A
---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 2,738,637
shares of Common Stock as of February 17, 1998.
The number of pages in this Form 10-Q is 19.
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of December 31, 1997
(unaudited) and June 30, 1997 3-4
Condensed Consolidated Statements of Operations (unaudited)
for the six months ended December 31, 1997 and 1996 5
Condensed Consolidated Statements of Operations (unaudited)
for the three months ended December 31, 1997 and 1996 6
Condensed Consolidated Statements of Cash Flows (unaudited)
for the six months ended December 31, 1997 and 1996 7
Notes to Condensed Consolidated Financial Statements 8-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12-17
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ----------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 11,785 $ 7,135
Trade accounts receivable, net 20,806 15,645
Other receivables, net 283 358
Other current assets 2,645 1,554
---------- ----------
Total current assets 35,519 24,692
PROPERTY AND EQUIPMENT, net of accumulated depreciation
and amortization of $20,010 and $16,203, respectively 47,860 34,488
INVESTMENT IN PARTNERSHIPS 463 402
OTHER ASSETS 2,507 5,468
INTANGIBLE ASSETS, net 44,271 33,272
---------- ----------
$ 130,620 $ 98.322
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
3
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ----------
(Unaudited)
LIABILITIES, AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of equipment and other notes $ 6,107 $ 15,462
Accounts payable and other accrued expenses 16,306 14,970
---------- ----------
Total current liabilities 22,413 30,432
---------- ----------
LONG-TERM LIABILITIES:
Equipment and other notes, less current portion 71,792 57,733
Other long-term liabilities 702 1,472
---------- ----------
Total long-term liabilities 72,494 59,205
---------- ----------
MINORITY INTEREST 2,015 2,000
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 3,500,000 shares authorized:
Convertible Series A preferred stock,
2,501,760 shares outstanding at June 30, 1997 - 6,750
Convertible Series B preferred stock,
25,000 shares outstanding at December 31, 1997 23,923 -
Convertible Series C preferred stock,
27,953 shares outstanding at December 31, 1997 13,173 -
Common stock, $.001 par value, 25,000,000 shares authorized:
2,734,725 and 2,714,725 shares outstanding at December 31, 1997
and June 30, 1997, respectively 3 3
Additional paid-in capital 23,150 23,100
Accumulated deficit (26,551) (23,168)
---------- ----------
Total stockholders' equity 33,698 6,685
---------- ----------
$ 130,620 $ 98,322
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
4
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
-------------------------
1997 1996
---------- -----------
<S> <C> <C>
REVENUES:
Contract services $ 26,340 $ 23,590
Patient services 28,800 20,470
Other 1,975 1,048
---------- ----------
Total revenues 57,115 45,108
---------- ----------
COSTS OF OPERATIONS:
Costs of services 29,767 24,750
Provision for doubtful accounts 1,046 858
Equipment leases 9,002 9,091
Depreciation and amortization 6,766 4,732
---------- ----------
Total costs of operations 46,581 39,431
---------- ----------
GROSS PROFIT 10,534 5,677
CORPORATE OPERATING EXPENSES 4,256 3,655
PROVISION FOR SUPPLEMENTAL SERVICE FEE TERMINATION 6,309 -
---------- ----------
INCOME (LOSS) FROM COMPANY OPERATIONS (31) 2,022
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS 324 245
---------- ----------
OPERATING INCOME 293 2,267
INTEREST EXPENSE, Net 3,245 1,795
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (2,952) 472
PROVISION FOR INCOME TAXES 431 104
---------- ----------
NET INCOME (LOSS) $ (3,383) $ 368
---------- ----------
---------- ----------
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ (0.49) $ 0.07
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 6,862,631 5,433,846
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
REVENUES:
Contract services $ 12,928 $ 11,867
Patient services 14,987 10,477
Other 1,364 648
---------- ----------
Total revenues 29,279 22,992
---------- ----------
COSTS OF OPERATIONS:
Costs of services 15,577 12,568
Provision for doubtful accounts 544 416
Equipment leases 4,490 4,571
Depreciation and amortization 3,559 2,389
---------- ----------
Total costs of operations 24,170 19,944
---------- ----------
GROSS PROFIT 5,109 3,048
CORPORATE OPERATING EXPENSES 1,898 1,886
PROVISION FOR SUPPLEMENTAL SERVICE FEE TERMINATION 6,309 -
---------- ----------
INCOME (LOSS) FROM COMPANY OPERATIONS (3,098) 1,162
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS 170 138
---------- ----------
OPERATING INCOME (LOSS) (2,928) 1,300
INTEREST EXPENSE, Net 1,559 934
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (4,487) 366
PROVISION FOR INCOME TAXES - 104
---------- ----------
NET INCOME (LOSS) $ (4,487) $ 262
---------- ----------
---------- ----------
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ (0.53) $ 0.05
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 8,508,776 5,432,977
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (3,383) $ 368
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Total depreciation and amortization 6,839 4,857
Amortization of deferred gain on debt restructure (1,319) (544)
Provision for supplemental service fee termination 6,309 -
Cash provided by (used in) changes in operating working capital:
Receivables, net (3,805) (45)
Other current assets (1,191) (741)
Accounts payable and other current liabilities 2,576 109
---------- ----------
Net cash provided by operating activities 6,026 4,004
---------- ----------
INVESTING ACTIVITIES:
Additions to property and equipment (13,452) (1,393)
Acquisitions of imaging centers (12,890) (2,766)
Other (939) 588
---------- ----------
Net cash used in investing activities (27,281) (3,571)
---------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 23,346 -
Stock options and warrants exercised 50 -
Payment of loan fees (2,210) -
Payments on debt and capital lease obligations (78,455) (5,074)
Proceeds from issuance of debt 83,159 5,049
Other 15 -
---------- ----------
Net cash provided by (used in) financing activities 25,905 (25)
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS 4,650 408
CASH AND CASH EQUIVALENTS:
Beginning of period 7,135 6,864
---------- ----------
End of period $ 11,785 $ 7,272
---------- ----------
---------- ----------
SUPPLEMENTAL INFORMATION:
Interest paid $ 3,300 $ 1,881
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
7
<PAGE>
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. MERGER AND RECAPITALIZATION
InSight Health Services Corp. (InSight or Company) is a Delaware corporation
formed on February 23, 1996 in connection with the Agreement and Plan of
Merger, dated as of February 26, 1996 (Merger Agreement), among American
Health Services Corp., a Delaware corporation (AHS), Maxum Health Corp., a
Delaware corporation (MHC or Maxum), InSight and two wholly owned
subsidiaries of InSight, AHSC Acquisition Company, a Delaware corporation
(AHSC Acquisition), and MXHC Acquisition Company, a Delaware corporation
(MXHC Acquisition). Pursuant to the terms of the Merger Agreement, (i) AHSC
Acquisition merged with and into AHS and MXHC Acquisition merged with and
into Maxum (collectively, Merger), (ii) each outstanding share of common
stock, par value $.03 per share, of AHS (AHS Common Stock) was converted into
the right to receive one-tenth of a share of common stock, par value $.001
per share, of InSight (Common Stock), (iii) each outstanding share of Series
B Senior Convertible Preferred Stock, par value $ .03 per share, of AHS (AHS
Series B Preferred Stock) which was convertible into 100 shares of AHS Common
Stock was converted into the right to receive ten (10) shares of Common
Stock, (iv) each outstanding share of Series C Preferred Stock, par value
$.03 per share, of AHS (the AHS Series C Preferred Stock), which was issued
immediately prior to the consummation of the Merger, was converted into the
right to receive 1.25088 shares of Series A Preferred Stock, par value $.001
per share, of InSight (the InSight Series A Preferred Stock), (v) each
outstanding share of common stock, par value $.01 per share, of Maxum (Maxum
Common Stock) was converted into the right to receive .598 of a share of
Common Stock, (vi) each outstanding share of Series B Preferred Stock, par
value $.01 per share, of Maxum (the Maxum Series B Preferred Stock), which
was issued immediately prior to the consummation of the Merger, was converted
into the right to receive 83.392 shares of InSight Series A Preferred Stock,
and (vii) each outstanding option, warrant or other right to purchase AHS
Common Stock and Maxum Common Stock was converted into the right to acquire,
on the same terms and conditions, shares of Common Stock, with the number of
shares and exercise price applicable to such option, warrant or other right
adjusted based on the applicable exchange ratio for the underlying AHS Common
Stock or Maxum Common Stock.
Concurrent with the consummation of the Merger, AHS and MHC completed a debt
restructuring with General Electric Company (GE), the primary creditor of MHC
and AHS. This restructuring resulted in the reduction of certain debt and
operating lease obligations and cancellation of certain stock warrants of MHC
and AHS in exchange for, among other things, the issuance to GE, immediately
prior to the consummation of the Merger, of Maxum Series B Preferred Stock and
AHS Series C Preferred Stock.
At the effective time of the Merger, Maxum Series B Preferred Stock and AHS
Series C Preferred Stock issued to GE was converted into the right to receive
such number of shares of InSight Series A Preferred Stock that is convertible
into such number of shares of Common Stock representing approximately 48% of
InSight Common Stock outstanding at the effective time of the Merger (after
giving effect to such conversion).
Under an amended equipment maintenance service agreement, GE was also entitled
to receive for ten years an annual supplemental service fee equal to 14% of the
Company's pretax income, subject to certain adjustments. In connection with the
Company's recapitalization described below, GE surrendered its rights under the
amended equipment service agreement to receive the supplemental service fee.
The Merger was accounted for using the purchase method of accounting in
accordance with generally accepted accounting principles. MHC was treated as
the acquiror for accounting purposes.
On September 13, 1996, AHS changed its name to InSight Health Corp. (IHC).
On October 14, 1997, InSight consummated a recapitalization (Recapitalization)
pursuant to which (a) certain investors affiliated with TC Group, LLC and its
affiliates (collectively, Carlyle), a private merchant bank headquartered in
Washington, D.C., made a cash investment of $25 million in the Company and
received therefor (i) 25,000 shares of newly issued Convertible Preferred Stock,
Series B of the Company, par value $0.001 per share (Series B Preferred Stock),
initially convertible, at the option of the holders thereof, in the aggregate
into 2,985,075 shares of Common Stock, and (ii) warrants (Carlyle Warrants) to
purchase up to 250,000 shares of Common Stock at the current exercise price of
$10.00 per share; (b) GE (i) surrendered its rights under the amended equipment
8
<PAGE>
service agreement to receive supplemental service fee payments equal to 14%
of pretax income in exchange for (i) the issuance of 7,000 shares of newly
issued Convertible Preferred Stock, Series C of the Company, par value $0.001
per share (Series C Preferred Stock) initially convertible, at the option of
GE, in the aggregate into 835,821 shares of Common Stock, (ii) warrants (GE
Warrants) to purchase up to 250,000 shares of Common Stock at the current
exercise price of $10.00 per share, and (iii) exchanged all of its InSight
Series A Preferred Stock for an additional 20,953 shares of Series C
Preferred Stock, initially convertible, at the option of the holders thereof,
in the aggregate into 2,501,760 shares of Common Stock; and (c) the Company
executed a Credit Agreement with NationsBank, N.A. pursuant to which
NationsBank, as agent and lender, provided a total of $125 million in senior
secured credit (Bank Financing), including (i) a $50 million term loan
facility consisting of a $20 million tranche with increasing amortization
over a five- year period and a $30 million tranche with increasing
amortization over a seven-year period, principally repayable in years 6 and
7, (ii) a $25 million revolving working capital facility with a five-year
maturity, and (iii) a $50 million acquisition facility, which was increased
by an additional $25 million on December 19, 1997.
The terms of the Series B Preferred Stock and the Series C Preferred Stock
(collectively, Preferred Stock) are substantially the same. The Preferred
Stock has a liquidation preference of $1,000 per share. It will participate
in any dividends paid with respect to the Common Stock. There is no
mandatory or optional redemption provision for the Preferred Stock. The
Preferred Stock is convertible at an initial conversion price of $8.375 per
share.
For so long as Carlyle and its affiliates own at least 33% of the Series B
Preferred Stock or GE and its affiliates own at least 33% of the Series C
Preferred Stock, respectively, the approval of at least 67% of the holders of
such series of Preferred Stock is required before the Company may take
certain actions including, but not limited to, amending its certificate of
incorporation or bylaws, changing the number of directors or the manner in
which directors are selected, incurring indebtedness in excess of $15 million
in any fiscal year, issuing certain equity securities below the then current
market price or the then applicable conversion price, acquiring equity
interests or assets of entities for consideration equal to or greater than
$15 million, and engaging in mergers for consideration equal to or greater
than $15 million. The Preferred Stock will vote with the Common Stock on an
as-if-converted basis on all matters except the election of directors,
subject to an aggregate maximum Preferred Stock percentage of 37% of all
votes entitled to be cast on such matters. Assuming the conversion of all of
the Series B Preferred Stock into Common Stock and the exercise of all of the
Carlyle Warrants, Carlyle would own approximately 31% of the Common Stock of
the Company, on a fully diluted basis. Assuming the conversion of all of the
Series C Preferred Stock and the exercise of the GE Warrants, GE would own
approximately 34% of the Common Stock of the Company, on a fully diluted
basis.
Pursuant to the terms of the Recapitalization, the number of directors
comprising the Company's Board of Directors (the Board) is currently fixed at
nine. Six directors (Common Stock Directors) are to be elected by the common
stockholders, one of whom (Joint Director) is to be proposed by Carlyle and
GE and approved by a majority of the Board in its sole discretion. Of the
three remaining directors (Preferred Stock Directors), two are to be elected
by the holders of the Series B Preferred Stock and one is to be elected by
the holders of the Series C Preferred Stock, in each case acting by written
consent and without a meeting of the common stockholders. As long as Carlyle
and certain affiliates thereof own an aggregate of at least 50% of the Series
B Preferred Stock, originally purchased thereby, the holders of the Series B
Preferred Stock will have the right to elect two Preferred Stock Directors
and as long as Carlyle and certain affiliates thereof own an aggregate of at
least 25% of such stock, such holders will have the right to elect one
Preferred Stock Director. As long as GE and its affiliates own an aggregate
of at least 25% of the Series C Preferred Stock, originally purchased
thereby, GE will have the right to elect one Preferred Stock Director. If
any such ownership percentage falls below the applicable threshold, the
Preferred Stock Director(s) formerly entitled to be elected by Carlyle or GE,
as the case may be, will be initially appointed by the Board, and will
thereafter be elected by the common stockholders. The Board currently
consists of eight directors, five of whom are Common Stock Directors and
three of whom are Preferred Stock Directors. The vacancy created for the
Joint Director has not yet been filled.
At any time after October 22, 1998, all of the Series B Preferred Stock and the
Series C Preferred Stock may be converted into a newly created Convertible
Preferred Stock, Series D of the Company, par value $0.001 per share (Series D
Preferred Stock). The Series D Preferred Stock allows the number of directors
to be automatically increased to a number which would permit each of Carlyle and
GE, by filling the newly created vacancies, to achieve representation on the
Board proportionate to their respective common stock ownership percentages on an
as-if-converted basis but would limit such representation to less than two
thirds of the Board of Directors for a certain
9
<PAGE>
period of time. The Series D Preferred Stock has a liquidation preference of
$0.001 per share but no mandatory or optional redemption provision. It will
participate in any dividends paid with respect to the Common Stock and is
convertible into 6,322,660 shares of Common Stock.
Holders of the Preferred Stock also have a right of first offer with respect
to future sales in certain transactions or proposed transactions not
involving a public offering by the Company of its Common Stock or securities
convertible into Common Stock. Holders of the Preferred Stock are also
entitled to certain demand and "piggyback" registration rights.
2. INTERIM FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements of the Company
included herein have been prepared in accordance with generally accepted
accounting principles for interim financial statements and do not include all
of the information and disclosures required by generally accepted accounting
principles for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes included as part of the Company's Annual Report on Form
10-K for the period ended June 30, 1997 filed with the Securities and
Exchange Commission on October 14, 1997. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for fair
presentation of results for the period have been included. The results of
operations for the six months ended December 31, 1997, are not necessarily
indicative of the results to be achieved for the full fiscal year.
Certain reclassifications have been made to conform prior year amounts to the
current year presentation.
3. INVESTMENTS IN PARTNERSHIPS
Set forth below is the summarized income statement data of the Company's
unconsolidated partnerships (amounts in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net revenues $ 1,188 $ 1,127 $ 2,480 $ 2,152
Expenses 825 812 1,720 1,592
-------- -------- -------- --------
Net income $ 363 $ 315 $ 760 $ 560
-------- -------- -------- --------
-------- -------- -------- --------
Equity in earnings
of partnerships $ 170 $ 138 $ 324 $ 245
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
10
<PAGE>
Set forth below is the summarized combined financial data of the Company's three
50% or less owned and controlled entities which are consolidated (amounts in
thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ------------
(unaudited)
<S> <C> <C>
Condensed Combined
Balance Sheet Data:
Current assets $ 2,804 $ 2,596
Total assets 4,083 4,288
Current liabilities 794 727
Long-term debt 240 424
Minority interest equity 1,663 1,702
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Condensed Combined Statement
of Operations Data:
Net revenues $ 1,820 $ 1,736 $ 3,648 $ 3,487
Expenses 1,340 1,294 2,574 2,556
Provision for center profit distribution 238 230 542 481
-------- -------- -------- --------
Net income $ 242 $ 212 $ 532 $ 450
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The provision for center profit distribution shown above represents the minority
interest in the income of these combined entities.
5. INCOME PER COMMON SHARE
In fiscal 1998, the Company adopted Statement of Financial Accounting Standards
No. 128 (SFAS No. 128), Earnings Per Share (EPS). SFAS No. 128 replaces primary
EPS and fully diluted EPS with basic EPS and diluted EPS. Basic EPS is computed
by dividing reported earnings by weighted average shares outstanding. Diluted
EPS is computed in the same way as the previously used fully diluted EPS, except
that the calculation now uses the average share price for the reporting period
to compute dilution from options and warrants under the treasury stock method.
The number of shares used in computing income per common share is equal to the
weighted average number of common and common equivalent shares outstanding
during the respective period. For the periods ended December 31, 1996, basic
EPS is equal to diluted EPS. Common stock equivalents relating to options,
warrants and convertible preferred stock are not included for the periods ended
December 31, 1997 due to their antidilutive effect.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CENTERS IN OPERATION
InSight provides diagnostic imaging, treatment and related management services
in 26 states throughout the United States. InSight's services are provided
through a network of 36 mobile magnetic resonance imaging ("MRI") facilities
("Mobile Facilities"), 29 fixed-site MRI facilities ("Fixed Facilities"), 13
multi-modality imaging centers ("Centers"), one Leksell Stereotactic Gamma Unit
treatment center ("Gamma Knife"), and one radiation oncology center. An
additional radiation oncology center is operated by the Company as part of one
of its Centers. The Company's operations are located throughout the United
States, with a substantial presence in California, primarily Los Angeles county,
and northern Texas, primarily the Dallas-Ft. Worth metroplex.
At its Centers, InSight offers other services in addition to MRI including
diagnostic and fluoroscopic x-ray, mammography, diagnostic ultrasound, nuclear
medicine, nuclear cardiology, computed tomography ("CT") and cardiovascular
services. The Company offers additional services through a variety of
arrangements including equipment rental, technologist services and
training/applications, marketing, radiology management services, patient
scheduling, utilization review and billing and collection services.
ACQUISITIONS
InSight believes a consolidation in the diagnostic imaging industry is
occurring and is necessary in order to provide surviving companies the
opportunity to achieve operating and administrative efficiencies through
consolidation. The strategy of InSight is focused on five interrelated
initiatives: (i) consolidation of the highly fragmented diagnostic imaging
industry through acquisition of organizations which either strategically fit
into its regional networking strategy or provide significant cost savings;
(ii) development of a radiology co-source product where InSight will provide
management services for radiology departments within hospitals; (iii)
development of regional networks of radiology providers and physicians
designed to provide the highest quality and most cost-effective unit of
diagnostic information to the broadest population in a given market; (iv)
development of a network of open MRI systems; and (v) new business
initiatives focused on broadening its range of services to managed care
organizations, hospitals and physician management companies to include
radiology management services; information management services; unbundling of
current core services such as billing and collections, technician training
and staffing, and asset management and continued evaluation of opportunities
with emerging technologies. InSight believes that long-term viability is
contingent upon its ability to successfully participate in this industry
consolidation. As part of its consolidation strategy, InSight completed
three acquisitions during fiscal 1997 and four to date during fiscal 1998 as
follows:
In September 1996, InSight completed the acquisition of a Fixed Facility in
Hayward, California. The transaction included the purchase of certain assets,
primarily diagnostic equipment. The purchase price of approximately $2.8
million was financed by GE.
In May 1997, InSight acquired certain assets, primarily Mobile Facilities, in
Maine and New Hampshire, and assumed certain equipment related liabilities. The
purchase price of approximately $6.8 million and an additional $0.4 million for
working capital requirements were financed by GE.
In June 1997, InSight completed the acquisition of a Center in Chattanooga,
Tennessee. The transaction included the purchase of certain assets, primarily
diagnostic equipment, and the assumption of certain equipment related
liabilities. The purchase price of approximately $9.0 million was financed by
GE.
In July 1997, InSight completed the acquisition of a Center in Columbus, Ohio.
As part of this transaction, InSight also acquired a majority ownership interest
in the development of a new Center in Dublin, Ohio. The transactions included
the purchase of certain assets, primarily diagnostic equipment, and the
assumption of certain equipment related liabilities. The purchase price of
approximately $5.5 million and approximately $0.5 million for the Center under
development were financed by GE.
In November 1997, InSight completed the acquisition of a Center in Murfreesboro,
Tennessee. The Bank Financing discussed below was used to finance the purchase
price of approximately $2.3 million.
In November 1997, InSight completed the acquisition of a Fixed Facility in
Redwood City, California. The transaction included the purchase of certain
assets, primarily diagnostic equipment. The Bank Financing discussed below
was used to finance the purchase price of approximately $0.3 million.
12
<PAGE>
In November, 1997, the Company completed the acquisition of a Center in Las
Vegas, Nevada. The transaction included the purchase of certain assets,
primarily land, building and diagnostic equipment. The Bank Financing discussed
below was used to finance the purchase price of approximately $10.3 million.
As discussed below, InSight has an acquisition facility in the amount of $75
million, of which approximately $62 million remains available to the Company.
InSight believes this facility will enhance its ability to participate in the
industry consolidation.
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO DECEMBER 31, 1996
REVENUES: Revenues increased approximately $12.0 million, or approximately
26.6%, for the six months ended December 31, 1997, compared to the same period
in 1996. The increase in revenues was due primarily to the acquisitions
discussed above (approximately $7.8 million) and an increase in contract
services, patient services and other revenues at existing facilities
(approximately $4.2 million).
Contract services revenues increased approximately $2.8 million, or
approximately 11.7%, for the six months ended December 31, 1997, compared to the
same period in 1996. This increase was due primarily to the acquisitions
discussed above (approximately $1.0 million) and an increase in revenues at
existing facilities (approximately $1.8 million). The increase at existing
facilities was due to higher utilization (approximately 8%) offset by reductions
in reimbursement (approximately 2%) from customers, primarily hospitals.
InSight's contract services revenues, primarily earned by its Mobile
Facilities, represent approximately 46% of total revenues. Each year
approximately one-quarter to one-third of the contract services agreements
are subject to renewal. It is expected that some high volume customer
accounts will elect not to renew their agreements and instead will purchase
or lease their own diagnostic imaging equipment and some customers may choose
an alternative services provider. In the past where agreements have not been
renewed, the Company has been able to obtain replacement customer accounts;
however, it is not always possible to obtain replacement accounts and some
replacement accounts have been smaller than the lost account. The
non-renewal of a single customer agreement would not have a material impact
on InSight's contract services revenues; however, non-renewal of several
agreements could have a material impact on contract services revenues.
In addition, the Company's contract services revenues with regard to its Mobile
Facilities in certain markets depend in part on some customer accounts with high
volume. If the future reimbursement levels of such customers were to decline or
cease or if such customers were to become financially insolvent and if such
agreements were not replaced with new accounts or with the expansion of services
on existing accounts, InSight's contract services revenues would be adversely
affected.
Patient services revenues increased approximately $8.3 million, or approximately
40.7%, for the six months ended December 31, 1997, compared to the same period
in 1996. The increase in revenues was due primarily to the acquisitions
discussed above (approximately $6.8 million), and an increase in revenues at
existing facilities (approximately $1.5 million). The increase at existing
facilities was due to higher utilization (approximately 11%) partially offset by
nominal declines in reimbursement from third party payors.
Management believes that any future increases in revenues at existing facilities
can only be achieved by higher utilization and not by increases in procedure
prices since reimbursement is declining; however, excess capacity of diagnostic
imaging equipment, increased competition, and the expansion of managed care may
impact utilization and make it difficult for the Company to achieve revenue
increases in the future, absent the execution of provider agreements with
managed care companies and other payors, and the execution of the Company's
strategic initiatives. No single source accounts for more than 10% of InSight's
revenues.
COSTS OF OPERATIONS: Costs of operations increased approximately $7.2
million, or approximately 18.1%, for the six months ended December 31, 1997,
compared to the same period in 1996. This increase was due primarily to an
increase in costs due to the acquisitions discussed above (approximately $5.0
million), and an increase in costs at existing facilities (approximately $2.2
million). The increase at existing facilities was due primarily to increases
in
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<PAGE>
costs of services and depreciation and amortization.
Costs of services, including the provision for doubtful accounts, increased
approximately $5.2 million, or approximately 20.3%, for the six months ended
December 31, 1997, compared to the same period in 1996. The increase in costs
was due primarily to the acquisitions discussed above (approximately $3.8
million) and an increase in costs at existing facilities (approximately $1.4
million). The increase in costs at existing facilities was due primarily to (i)
salary and benefits and (ii) an increase in sales tax and property taxes, offset
by reduced costs in service supplies and equipment maintenance.
Equipment leases and depreciation and amortization increased approximately $1.9
million, or approximately 14.1%, for the six months ended December 31, 1997,
compared to the same period in 1996. The increase was due primarily to the
acquisitions discussed above (approximately $1.3 million) and an increase in
costs at existing facilities (approximately $0.6 million). The increase at
existing facilities was primarily due to the Company upgrading its existing
diagnostic medical equipment.
GROSS PROFIT: Gross profit increased approximately $4.9 million during the six
months ended December 31, 1997, compared to the same period in 1996. The
increase was due to the acquisitions discussed above (approximately $2.8
million), and an increase at existing facilities (approximately $2.1 million).
CORPORATE OPERATING EXPENSES: Corporate operating expenses increased
approximately $0.6 million for the six months ended December 31, 1997, compared
to the same period in 1996. The increase was primarily due to additional
consulting, legal and travel costs associated with the Company's acquisition
activities.
PROVISION FOR SUPPLEMENTAL SERVICE FEE TERMINATION: As part of the
Recapitalization and Bank Financing discussed below, the Company issued to GE
7,000 shares of Series C Preferred Stock to terminate GE's rights to receive
supplemental service fee payments equal to 14% of InSight's pre-tax income. The
Series C Preferred Stock was valued at $7.0 million and the Company recorded a
one-time provision of approximately $6.3 million, net of amounts previously
accrued, for the Preferred Stock issuance.
INTEREST EXPENSE NET: Interest expense, net increased approximately $1.5
million for the six months ended December 31, 1997, compared to the same
period in 1996. The increase was due primarily to additional debt related to
the acquisitions discussed above (approximately $1.5 million) and additional
debt related to the Company upgrading its existing diagnostic medical
equipment, offset by reduced interest as a result of (i) the reduction in
interest rate and the extinguishment of approximately $23 million in
long-term debt as a result of the Recapitalization and Bank Financing
discussed below (approximately $0.5 million), and (ii) amortization of
long-term debt.
PROVISION FOR INCOME TAXES: During the six months ended December 31, 1997,
the Company recorded a provision for income taxes of approximately $431,000.
The provision was due primarily to increased income from the Company's
operations and reflects the anticipated tax rate for the full fiscal year.
INCOME (LOSS) PER COMMON SHARE: On a basic and diluted basis, net (loss) per
common share was ($0.49) for the six months ended December 31, 1997, compared
to net income per common share of $0.07 for the same period in 1996.
Excluding the one-time provision for supplemental service fee termination,
net income per common share on a diluted basis would have been $0.42. The
improvement in net income per common share before provision for supplemental
service fee termination is the result of (i) increased gross profit, (ii) an
increase in earnings from unconsolidated partnerships, offset by (i)
increased corporate operating expenses, (ii) increased interest expense, and
(iii) the provision for income taxes.
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO DECEMBER 31, 1996
REVENUES: Revenues increased approximately $6.3 million, or approximately
27.3%, for the three months ended December 31, 1997, compared to the same period
in 1996. The increase in revenues was due primarily to the acquisitions
discussed above (approximately $4.3 million) and an increase in contract
services, patient services and other revenues at existing facilities
(approximately $2.0 million).
Contract services revenues increased approximately $1.1 million, or
approximately 8.9%, for the three months
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<PAGE>
ended December 31, 1997, compared to the same period in 1996. This increase
was due primarily to the acquisitions discussed above (approximately $0.6
million) and an increase in revenues at existing facilities (approximately
$0.5 million). The increase at existing facilities was due to higher
utilization (approximately 6%) offset by reductions in reimbursement
(approximately 2%) from customers, primarily hospitals.
Patient services revenues increased approximately $4.5 million, or approximately
43.0%, for the three months ended December 31, 1997, compared to the same period
in 1996. The increase in revenues was due primarily to the acquisitions
discussed above (approximately $3.8 million), and an increase in revenues at
existing facilities (approximately $0.7 million). The increase at existing
facilities was due to higher utilization (approximately 6%) partially offset by
nominal declines in reimbursement from third party payors.
COSTS OF OPERATIONS: Costs of operations increased approximately $4.2 million,
or approximately 21.2%, for the three months ended December 31, 1997, compared
to the same period in 1996. This increase was due primarily to the acquisitions
discussed above (approximately $2.9 million), and an increase in costs at
existing facilities (approximately $1.3 million). The increase at existing
facilities was due primarily to increases in costs of services and depreciation
expense, primarily related to the Company upgrading its existing diagnostic
medical equipment.
Costs of services, including the provision for doubtful accounts, increased
approximately $3.1 million, or approximately 24.2%, for the three months ended
December 31, 1997, compared to the same period in 1996. The increase in costs
was due primarily to the acquisitions discussed above (approximately $2.1
million) and an increase in costs at existing facilities (approximately $1.0
million). The increase in costs at existing facilities was due primarily to (i)
salary and benefits and (ii) an increase in service supplies, offset by reduced
costs in equipment maintenance.
Equipment leases and depreciation and amortization increased approximately $1.1
million, or approximately 15.6%, for the three months ended December 31, 1997,
compared to the same period in 1996. The increase was due primarily to the
acquisitions discussed above (approximately $0.7 million) and an increase in
costs at existing facilities (approximately $0.4 million). The increase at
existing facilities was primarily due to the Company upgrading its existing
diagnostic medical equipment.
GROSS PROFIT: Gross profit increased approximately $2.1 million during the
three months ended December 31, 1997, compared to the same period in 1996. The
increase was due to the acquisitions discussed above (approximately $1.4
million), and an increase at existing facilities (approximately $0.7 million).
CORPORATE OPERATING EXPENSES: Corporate operating expenses increased
approximately $0.1 million for the three months ended December 31, 1997,
compared to the same period in 1996. The increase was primarily due to
additional consulting and travel costs associated with the Company's acquisition
activities.
PROVISION FOR SUPPLEMENTAL SERVICE FEE TERMINATION: As part of the
Recapitalization and Bank Financing discussed below, the Company issued to GE
7,000 shares of Series C Preferred Stock to terminate GE's rights to receive
supplemental service fee payments equal to 14% of InSight's pre-tax income.
The Series C Preferred Stock was valued at $7.0 million and the Company
recorded a one-time provision of approximately $6.3 million , net of amounts
previously accrued, for the Preferred Stock issuance.
INTEREST EXPENSE, NET: Interest expense, net increased approximately $0.6
million for the three months ended December 31, 1997, compared to the same
period in 1996. The increase was due primarily to additional debt related to
the acquisitions discussed above (approximately $0.8 million) and additional
debt related to the Company upgrading its existing diagnostic medical
equipment, offset by reduced interest as a result of (i) the reduction in
interest rate and the extinguishment of approximately $23 million in
long-term debt as a result of the Recapitalization and Bank Financing
discussed below (approximately $0.5 million), and (ii) amortization of
long-term debt.
PROVISION FOR INCOME TAXES: During the three months ended December 31, 1997,
the Company did not record a provision for income taxes due to the loss
resulting from the provision for supplemental service fee termination.
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INCOME (LOSS) PER COMMON SHARE: On a basic and diluted basis, net income
(loss) per common share was ($0.53) for the three months ended December 31,
1997, compared to net income per common share of $0.05 for the same period in
1996. Excluding the one-time provision for supplemental service fee
termination, net income per common share on a diluted basis would have been
$0.21. The improvement in net income per common share before the provision
for supplemental service fee termination is the result of (i) increased gross
profit, (ii) an increase in earnings from unconsolidated partnerships, and
(iii) a reduction in the provision for income taxes offset by (i) increased
corporate operating expenses and (ii) increased interest expense.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
InSight operates in a capital intensive, high fixed cost industry that requires
significant amounts of working capital to fund operations, particularly the
initial start-up and development expenses of new operations, and yet is
constantly under external pressure to contain costs and reduce prices. Revenues
and cash flows have been adversely affected by an increased collection cycle,
competitive pressures and major restructurings within the health care industry.
This adverse effect on revenues and cash flow is expected to continue,
especially in the mobile diagnostic imaging business. Management believes that
InSight's long-term success is based upon its ability to successfully execute
its five interrelated strategic initiatives.
InSight continues to pursue acquisition opportunities. InSight believes that
the expansion of its business through acquisitions is a key factor in achieving
and maintaining profitability. Generally, acquisition opportunities are aimed
at increasing revenues and profits, and maximizing utilization of existing
capacity. Incremental operating profit resulting from future acquisitions will
vary depending on geographic location, whether facilities are Mobile or Fixed,
the range of services provided and the Company's ability to integrate the
acquired businesses into its existing infrastructure. Since the Merger, InSight
has completed six acquisitions, as discussed above.
The Company consummated the Recapitalization on October 14, 1997 pursuant to
which (a) the Company issued to Carlyle 25,000 shares of Series B Preferred
Stock having a liquidation preference of $1,000 per share and warrants to
purchase 250,000 shares of InSight Common Stock at the current exercise price
of $10.00 per share, generating net proceeds to the Company (after related
transaction costs of approximately $2.0 million) of approximately $23.0
million; (b) the Company issued to GE 7,000 shares of Series C Preferred
Stock, with a liquidation preference of $1,000 per share, in consideration of
the termination of GE's right to receive supplemental service fee payments
equal to 14% of InSight's pre-tax income, and issued to GE an additional
20,953 shares of Series C Preferred Stock in exchange for all of GE's shares
of Series A Preferred Stock; and (c) the Company executed a Credit Agreement
with NationsBank which, was consummated October 22, 1997 and included, (i) a
$50 million term loan facility consisting of a $20 million tranche with
increasing amortization over a five-year period and a $30 million tranche
with increasing amortization over a seven-year period principally repayable
in years 6 and 7, (ii) a $25 million revolving working capital facility with
a five-year maturity, and (iii) a $50 million acquisition facility, which was
increased by an additional $25 million on December 19, 1997. The net
proceeds from the Carlyle investment were used to refinance a portion of the
outstanding GE indebtedness (approximately $23 million). At the initial
funding of the Bank Financing, all of the term loan facility was drawn down
to refinance all of the remaining GE indebtedness (approximately $47 million)
and approximately $10 million of the revolving facility was drawn down for
working capital purposes.
InSight's operations are principally dependent on its ability (either directly
or indirectly through its hospital customers) to attract referrals from
physicians and other health care providers representing a variety of
specialties. The Company's eligibility to provide service in response to a
referral is often dependent on the existence of a contractual arrangement with
the referred patient's insurance carrier (primarily if the insurance is provided
by a managed care organization). Managed care contracting has become very
competitive and reimbursement schedules are nearing Medicare reimbursement
levels.
In connection with the Merger, certain financial accommodations with GE became
effective in June 1996. The GE indebtedness was repaid in full from the
proceeds of the Carlyle investment and the Bank Financing. The terms of the
Series B Preferred Stock and the Series C Preferred Stock, as well as the Bank
Financing, contain certain restrictions on InSight's ability to act without
first obtaining a waiver or consent from Carlyle, GE and NationsBank.
Working capital increased to approximately $13.1 million at December 31, 1997
from a deficit of approximately $5.7 million at June 30, 1997. This increase in
working capital of approximately $18.8 million is primarily due to
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(i) net income before depreciation and amortization, (ii) the repayment of
approximately $23.0 million in long-term debt, and (iii) and the
reclassification of the current portion of debt to long-term debt as a result
of the Bank Financing, offset by the current portion of additional debt
incurred as a result of the Company's acquisition strategy discussed above
and principal payments on long-term debt. As part of the Bank Financing,
the Company has a $25 million working capital facility, of which $14 million
was available to the Company as of December 31, 1997.
Cash and cash equivalents increased to approximately $11.8 million at December
31, 1997 from approximately $7.1 million at June 30, 1997. This increase of
approximately $4.7 million resulted primarily from (i) net income before
depreciation, amortization and provision for supplemental service fee
(approximately $8.4 million), (ii) proceeds from issuance of preferred stock
(approximately $23.3 million), (iii) proceeds from issuance of debt, net of loan
fees (approximately $80.9 million), and (iv) an increase in accounts payable and
other current liabilities. The increase was offset by (i) payments on long-term
debt (approximately $78.4 million), (ii) additions to property and equipment
(approximately $13.5 million), (iii) acquisitions of imaging centers
(approximately $12.9 million), and (iv) an increase in receivables and other
current assets.
The Company has committed to purchase, at an aggregate cost of approximately
$5.6 million, three MRI systems for delivery during the quarter ending March
31, 1998. The Bank Financing may be used to finance the purchase of such
equipment. In addition, the Company has committed to purchase or lease from
GE, at an aggregate cost of approximately $24 million, including siting
costs, 20 open MRI systems for delivery and installation over the next two
years. The Company may purchase, lease or upgrade other MRI systems as
opportunities arise to place new equipment into service when new contract
services agreements are signed, existing agreements are renewed, acquisitions
are completed, or new imaging centers are developed in accordance with the
Company's strategic initiatives. As of December 31, 1997, the Company has
installed three of the open MRI systems.
The Company has assessed and continues to assess the impact of the Year 2000
Issue on its reporting systems and operations. The Year 2000 Issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year. As the century date occurs, date sensitive systems
may recognize the Year 2000 as 1900 or not at all. This inability to recognize
or properly treat Year 2000 may cause the Company's systems to process critical
financial and operational information incorrectly. The Company has developed a
plan to modify existing computer systems and applications, but the Company has
not determined the final amounts necessary to modify existing computer systems
and applications. If the Company's remediation plan is not successful, there
could be a significant disruption of the Company's ability to transact business
with its customers and suppliers.
Certain statements contained in this report are forward-looking statements that
involve a number of risks and uncertainties. The factors that could cause actual
results to differ materially include the following: availability of financing;
limitations and delays in reimbursement by third-party payors; contract renewals
and financial stability of customers; technology changes; governmental
regulation; conditions within the health care environment; adverse utilization
trends for certain diagnostic imaging procedures; aggressive competition;
general economic factors; InSight's inability to carry out its business strategy
due to rising purchase prices of imaging centers and companies; and the risk
factors listed from time to time in InSight's filings with the Securities and
Exchange Commission ("SEC").
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) The following is a list of securities sold by the Company during
the period covered by this report on Form 10-Q which, pursuant to the
exemption provided under Section 4(2) of the Securities Act of 1933, as
amended ("Securities Act"), were not registered under the Securities Act:
1. On October 14, 1997, the Company issued to Carlyle, in
consideration of a $25 million cash investment in the Company, 25,000 shares
of Series B Preferred Stock and warrants to purchase up to 250,000 shares of
Common Stock at the current exercise price of $10.00 per share. The Company
also issued to GE (i) on October 14, 1997, in consideration of the surrender
of GE's rights to the supplemental service fee described in Part I, Item 2
above, 7,000 shares of Series C Preferred Stock and warrants to purchase up
to 250,000 shares of Common Stock at the current exercise price of $10.00 per
share, and (ii) on November 20, 1997, in exchange for all of GE's InSight
Series A Preferred Stock, an additional 20,953 shares of Series C Preferred
Stock.
2. On November 6, 1997, the Company issued to the Estate of Cal
Kovens, pursuant to the exercise of warrants and in consideration of a cash
payment of $50,000, 20,000 shares of Common Stock.
3. On October 14, 1997, in lieu of an automatic grant under the
Company's 1996 Directors' Stock Option Plan to the two directors elected by
the holders of the Series B Preferred Stock, at the request of such directors
the Company issued to TC Group, LLC, a Carlyle affiliate, a warrant to
purchase 30,000 shares of Common Stock at an exercise price of $7.25 per
share, which vests cumulatively at the rate of 833.33 shares per month and is
exercisable at any time up to October 14, 2007. On November 20, 1997, in lieu
of an automatic grant under the Company's 1996 Directors' Stock Option Plan to
the director elected by the holder of the Series C Preferred Stock, at the
request of such director the Company issued to GE a warrant to purchase
15,000 shares of Common Stock at an exercise price of $10.00 per share, which
vests cumulatively at the rate of 416.67 shares per month and is exercisable
at any time up to November 20, 2007.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a)-(c) On October 14, 1997, in accordance with the terms of the Series
B Preferred Stock, each of David W. Dupree and Glenn A. Youngkin was elected a
director by the holders of the Series B Preferred Stock acting by written
consent. On November 20, 1997, in accordance with the terms of the Series C
Preferred Stock, Michael E. Aspinwall was elected a director by the holder of
the Series C Preferred Stock acting by written consent.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
<TABLE>
<S> <C>
10.29 Credit Agreement dated as of October 14, 1997 among the
Company as Borrower, certain subsidiaries of the Company
as Guarantors, the several lenders named therein and
NationsBank, N.A. as lender and agent, filed herewith.
10.30 First Amendment to Credit Agreement dated as of November 17,
1997, filed herewith.
10.31 Second Amendment to Credit Agreement and Assignment dated as
December 19, 1997, file herewith.
</TABLE>
(b) REPORTS ON FORM 8-K.
Amendments to current reports on Form 8-K/A were filed with the SEC
by the Company on August 15, 1997 and September 15, 1997 relating
to the acquisition of certain assets of Mobile Imaging Consortium,
Limited Partnership and Mobile Imaging Consortium, New Hampshire,
and relating to the acquisition of certain assets of Desmond L.
Fischer, M.D. (d/b/a/ Chattanooga Outpatient Center), respectively.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSIGHT HEALTH SERVICES CORP.
/s/ E. Larry Atkins
-------------------------------------------
E. Larry Atkins
President and Chief Executive Officer
/s/ Thomas V. Croal
-------------------------------------------
Thomas V. Croal
Executive Vice President,
Chief Financial Officer and Secretary
February 17, 1998
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[EXECUTION COPY]
CREDIT AGREEMENT
Dated as of October 14, 1997
among
INSIGHT HEALTH SERVICES CORP.,
as Borrower,
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N. A.,
as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 COMPUTATION OF TIME PERIODS.. . . . . . . . . . . . . . . . . . . . 30
1.3 ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . 31
2.1 REVOLVING LOANS.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2 LETTER OF CREDIT SUBFACILITY. . . . . . . . . . . . . . . . . . . . 33
2.3 ACQUISITION LOANS.. . . . . . . . . . . . . . . . . . . . . . . . . 38
2.4 TRANCHE A TERM LOAN.. . . . . . . . . . . . . . . . . . . . . . . . 41
2.5 TRANCHE B TERM LOAN.. . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES. . . . . . . . . . 46
3.1 DEFAULT RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.2 EXTENSION AND CONVERSION. . . . . . . . . . . . . . . . . . . . . . 46
3.3 PREPAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.4 TERMINATION AND REDUCTION OF COMMITTED AMOUNTS;
INCREASE OF COMMITMENT.. . . . . . . . . . . . . . . . . . . . . . 49
3.5 FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.6 CAPITAL ADEQUACY. . . . . . . . . . . . . . . . . . . . . . . . . . 53
3.7 LIMITATION ON EURODOLLAR LOANS. . . . . . . . . . . . . . . . . . . 54
3.8 ILLEGALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.9 REQUIREMENTS OF LAW.. . . . . . . . . . . . . . . . . . . . . . . . 54
3.10 TREATMENT OF AFFECTED LOANS. . . . . . . . . . . . . . . . . . . . 55
3.11 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.12 COMPENSATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.13 PRO RATA TREATMENT.. . . . . . . . . . . . . . . . . . . . . . . . 59
3.14 SHARING OF PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . 59
3.15 PAYMENTS, COMPUTATIONS, ETC. . . . . . . . . . . . . . . . . . . . 60
3.16 EVIDENCE OF DEBT.. . . . . . . . . . . . . . . . . . . . . . . . . 62
3.17 Mandatory Assignment.. . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 4 GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.1 THE GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.2 OBLIGATIONS UNCONDITIONAL.. . . . . . . . . . . . . . . . . . . . . 63
4.3 REINSTATEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.4 CERTAIN ADDITIONAL WAIVERS. . . . . . . . . . . . . . . . . . . . . 65
4.5 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.6 RIGHTS OF CONTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . 65
4.7 CONTINUING GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 5 CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.1 CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 67
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5.2 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. . . . . . . . . . . . . 68
5.3 CONDITIONS TO ALL EXTENSIONS OF CREDIT. . . . . . . . . . . . . . . 71
SECTION 6 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 72
6.1 FINANCIAL CONDITION.. . . . . . . . . . . . . . . . . . . . . . . . 72
6.2 NO MATERIAL CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . 73
6.3 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . . 73
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.. . . . . . . . . . . 73
6.5 NO CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.6 NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.7 OWNERSHIP.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.8 INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.9 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.10 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.11 COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . . . 75
6.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.13 SUBSIDIARIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.14 GOVERNMENTAL REGULATIONS, ETC. . . . . . . . . . . . . . . . . . . 77
6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.. . . . . . . . . . . . . . 78
6.16 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . 78
6.17 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 79
6.18 SOLVENCY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.19 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.20 LOCATION OF COLLATERAL.. . . . . . . . . . . . . . . . . . . . . . 79
6.21 DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.22 NO BURDENSOME RESTRICTIONS.. . . . . . . . . . . . . . . . . . . . 80
6.23 BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.24 LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.25 NATURE OF BUSINESS.. . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 80
7.1 INFORMATION COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . 80
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES. . . . . . . . . . . . . . 83
7.3 BOOKS AND RECORDS.. . . . . . . . . . . . . . . . . . . . . . . . . 83
7.4 COMPLIANCE WITH LAW.. . . . . . . . . . . . . . . . . . . . . . . . 83
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.. . . . . . . . . . . . . . 84
7.6 INSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.7 MAINTENANCE OF PROPERTY.. . . . . . . . . . . . . . . . . . . . . . 85
7.8 PERFORMANCE OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . 85
7.9 USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.10 AUDITS/INSPECTIONS.. . . . . . . . . . . . . . . . . . . . . . . . 85
7.11 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 86
7.12 ADDITIONAL CREDIT PARTIES. . . . . . . . . . . . . . . . . . . . . 87
7.13 PLEDGED ASSETS.. . . . . . . . . . . . . . . . . . . . . . . . . . 87
7.14 INTEREST RATE PROTECTION.. . . . . . . . . . . . . . . . . . . . . 88
7.15 UPSTREAMING OF INCOME FROM JOINT VENTURES. . . . . . . . . . . . . 89
ii
<PAGE>
7.16 FURTHER ASSURANCES.. . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 8 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 90
8.1 INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.2 LIENS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
8.3 NATURE OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . 92
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.. . . . . . . . . . . . . 92
8.5 ASSET DISPOSITIONS. . . . . . . . . . . . . . . . . . . . . . . . 93
8.6 INVESTMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 94
8.7 RESTRICTED PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . 94
8.8 PREPAYMENTS OF INDEBTEDNESS, ETC. . . . . . . . . . . . . . . . . 94
8.9 TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . 94
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS. . . . . . . . . . . . . . 95
8.11 LIMITATION ON RESTRICTED ACTIONS.. . . . . . . . . . . . . . . . 95
8.12 OWNERSHIP OF SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . 95
8.13 SALE LEASEBACKS. . . . . . . . . . . . . . . . . . . . . . . . . 96
8.14 RESTRICTED CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . . 96
8.15 NO FURTHER NEGATIVE PLEDGES. . . . . . . . . . . . . . . . . . . 96
8.16 OPERATING LEASE OBLIGATIONS. . . . . . . . . . . . . . . . . . . 96
8.17 NO FOREIGN SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . 97
8.18 JOINT VENTURE OPERATIONS.. . . . . . . . . . . . . . . . . . . . 97
SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 97
9.1 EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . 97
9.2 ACCELERATION; REMEDIES. . . . . . . . . . . . . . . . . . . . . . 99
SECTION 10 AGENCY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 100
10.1 APPOINTMENT, POWERS AND IMMUNITIES.. . . . . . . . . . . . . . . 100
10.2 RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . . . . . 101
10.3 DEFAULTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.4 RIGHTS AS A LENDER.. . . . . . . . . . . . . . . . . . . . . . . 102
10.5 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 102
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. . . . . . . . . . . . . 102
10.7 SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 103
11.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.2 RIGHT OF SET-OFF; ADJUSTMENTS. . . . . . . . . . . . . . . . . . 105
11.3 BENEFIT OF AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . 105
11.4 NO WAIVER; REMEDIES CUMULATIVE.. . . . . . . . . . . . . . . . . 107
11.5 EXPENSES; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 107
11.6 AMENDMENTS, WAIVERS AND CONSENTS.. . . . . . . . . . . . . . . . 108
11.7 COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.8 HEADINGS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.9 SURVIVAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. . . . . . . . 110
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<PAGE>
11.11 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.12 ENTIRETY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.13 BINDING EFFECT; TERMINATION.. . . . . . . . . . . . . . . . . . 111
11.14 SOURCE OF FUNDS.. . . . . . . . . . . . . . . . . . . . . . . . 111
11.15 CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1.1A Joint Ventures
Schedule 1.1B Investments
Schedule 1.1C Liens
Schedule 2.1(a) Lenders
Schedule 3.3(b)(vii) Special Asset Dispositions
Schedule 5.2(c)(i) Form of Legal Opinion of McDermott, Will & Emery
Schedule 5.2(c)(ii) Form of Local Corporate Counsel Opinion
Schedule 5.2(f) Corporate Structure
Schedule 5.2(i) Form of Solvency Opinion
Schedule 6.1(c) Absence of Undisclosed Liabilities
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.9 Litigation
Schedule 6.12 ERISA
Schedule 6.13 Subsidiaries
Schedule 6.15 Funded Indebtedness to be Refinanced
Schedule 6.16 Environmental Disclosures
Schedule 6.17 Intellectual Property
Schedule 6.20(a)(i) Primary Real Properties
Schedule 6.20(a)(ii) Secondary Real Properties
Schedule 6.20(b) Collateral Locations
Schedule 6.20(c) Chief Executive Offices/Principal Places of Business
Schedule 6.23 Broker's Fees
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
Schedule 8.16 Existing Operating Leases
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 1.1B Form of Security Agreement
Exhibit 1.1C Form of Subordination Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(e) Form of Acquisition Loan Note
Exhibit 2.4(f) Form of Tranche A Term Note
Exhibit 2.5(f) Form of Tranche B Term Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 3.4(b) Form of New Commitment Agreement
i
<PAGE>
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
ii
</TABLE>
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 14, 1997 (as amended, modified,
restated or supplemented from time to time, the "CREDIT AGREEMENT"), is by and
among INSIGHT HEALTH SERVICES CORP., a Delaware corporation (the "BORROWER"),
the Guarantors (as defined herein), the Lenders (as defined herein) and
NATIONSBANK, N. A., as Agent for the Lenders (in such capacity, the "AGENT").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $125 million
credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"ACQUISITION", by any Person, means an acquisition by such Person, to
the extent not constituting a capital expenditure under GAAP, of all or a
majority of the Capital Stock or all or substantially all of the Property
of another Person, whether or not involving a merger or consolidation with
such Person.
"ACQUISITION LOAN COMMITMENT" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Acquisition Loan Commitment Percentage
of the Acquisition Loan Committed Amount, to make Acquisition Loans in
accordance with the provisions of Section 2.3(a).
"ACQUISITION LOAN COMMITMENT PERCENTAGE" means, for any Lender, the
percentage identified as its Acquisition Loan Commitment Percentage on
SCHEDULE 2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
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"ACQUISITION LOAN COMMITTED AMOUNT" shall have the meaning assigned to
such term in Section 2.3(a).
"ACQUISITION LOAN UNUSED FEE" shall have the meaning assigned to such
term in Section 3.5(a)(ii).
"ACQUISITION LOAN UNUSED FEE CALCULATION PERIOD" shall have the
meaning assigned to such term in Section 3.5(a)(ii).
"ACQUISITION LOANS" shall have the meaning assigned to such term in
Section 2.3(a).
"ACQUISITION NOTE" or "ACQUISITION NOTES" means the promissory notes
of the Borrower in favor of each of the Lenders evidencing the Acquisition
Loans provided pursuant to Section 2.3(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.
"ADDITIONAL COMMITMENT" means, with respect to any Lender which
executes a New Commitment Agreement in accordance with Section 3.4(b), the
commitment of such Lender in an aggregate principal amount up to the amount
specified in such New Commitment Agreement (i) to make Acquisition Loans in
accordance with the provisions of Section 2.3(a).
"ADDITIONAL CREDIT PARTY" means each Person that becomes a Guarantor
after the Closing Date by execution of a Joinder Agreement.
"ADJUSTED BASE RATE" means the Base Rate PLUS the Applicable
Percentage.
"ADJUSTED EURODOLLAR RATE" means the Eurodollar Rate PLUS the
Applicable Percentage.
"AFFILIATE" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENCY SERVICES ADDRESS" means NationsBank, N. A., NC1-001-15-04, 101
North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency
Services, or such other address as may be identified by written notice from
the Agent to the Borrower.
"AGENT" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
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"AGENT'S FEE LETTER" means that certain letter agreement, dated as of
October 7, 1997, between the Agent and the Borrower, as amended, modified,
restated or supplemented from time to time.
"AGENT'S FEES" shall have the meaning assigned to such term in Section
3.5(c).
"APPLICABLE LENDING OFFICE" means, for each Lender, the office of such
Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Borrower by written notice as the office
by which its Eurodollar Loans are made and maintained.
"APPLICABLE PERCENTAGE" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, any
Acquisition Loan, any Tranche A Term Loan or any Tranche B Term Loan, the
applicable rate of the Revolving Unused Fee for any day for purposes of
Section 3.5(a)(i), the applicable rate of the Acquisition Loan Unused Fee
for any day for purposes of Section 3.5(a)(ii), the applicable rate of the
Standby Letter of Credit Fee for any day for purposes of Section 3.5(b)(i)
or the applicable rate of the Trade Letter of Credit Fee for any day for
purposes of Section 3.5(b)(ii), the appropriate applicable percentage
corresponding to the Total Leverage Ratio in effect as of the most recent
Calculation Date:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
APPLICABLE APPLICABLE
PERCENTAGE FOR PERCENTAGE APPLICABLE
PRICING LEVERAGE APPLICABLE PERCENTAGE FOR APPLICABLE PERCENTAGE FOR STANDBY LETTER FOR TRADE PERCENTAGE
LEVEL RATIO EURODOLLAR LOANS BASE RATE LOANS OF CREDIT FEE LETTER OF FOR UNUSED
CREDIT FEE FEES
- -------------------------------------------------------------------------------------------------------------------------------
REVOLVING REVOLVING
LOANS, LOANS,
ACQUISITION TRANCHE B ACQUISITION TRANCHE B
LOANS AND TERM LOANS LOANS AND TERM LOANS
TRANCHE A TERM TRANCHE A TERM
LOANS LOANS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I LESS THAN 1.50% 2.50% 0.50% 1.50% 1.50% 0.75% 0.375%
2.00 to
1.00
- -------------------------------------------------------------------------------------------------------------------------------
II MORE OR 1.75% 2.50% 0.75% 1.50% 1.75% 0.875% 0.375%
LESS THAN
2.00 to
1.00 but
LESS THAN
2.25 to
1.00
- -------------------------------------------------------------------------------------------------------------------------------
III MORE OR 2.00% 2.50% 1.00% 1.50% 2.00% 1.00% 0.375%
LESS THAN
1.00 but
LESS THAN
2.50 to
1.00
- -------------------------------------------------------------------------------------------------------------------------------
IV MORE OR 2.25% 2.75% 1.25% 1.75% 2.25% 1.125% 0.50%
LESS THAN
2.50 to
1.00 but
LESS THAN
3.25 to
1.00
- -------------------------------------------------------------------------------------------------------------------------------
V MORE OR 2.50% 2.75% 1.50% 1.75% 2.50% 1.25% 0.50%
LESS THAN
3.25 to
1.00
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly on
the date (each a "CALCULATION DATE") five Business Days after the date by
which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(c) for the most recently
ended fiscal quarter of the Consolidated Parties; PROVIDED, HOWEVER, that
(i) the initial Applicable Percentages shall be based on Pricing Level IV
(as shown above) and shall remain at Pricing Level IV until the Calculation
Date occurring on September 30, 1998 and, thereafter, the Pricing Level
shall be determined by the Leverage Ratio as of the last day of the most
recently ended fiscal quarter of the Consolidated Parties preceding the
applicable Calculation Date, and (ii) if the Borrower fails to provide the
officer's certificate to the Agency Services Address as required by Section
7.1(c) for the last day of the most
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<PAGE>
recently ended fiscal quarter of the Consolidated Parties preceding the
applicable Calculation Date, the Applicable Percentage from such
Calculation Date shall be based on Pricing Level III until such time as
an appropriate officer's certificate is provided, whereupon the Pricing
Level shall be determined by the Leverage Ratio as of the last day of
the most recently ended fiscal quarter of the Consolidated Parties
preceding such Calculation Date. Each Applicable Percentage shall be
effective from one Calculation Date until the next Calculation Date.
Any adjustment in the Applicable Percentages shall be applicable to all
existing Loans as well as any new Loans made or issued.
"APPLICATION PERIOD", in respect of any Asset Disposition, shall have
the meaning assigned to such term in Section 8.5.
"ASSET DISPOSITION" means the disposition of any or all of the assets
(including without limitation the Capital Stock of a Subsidiary) of any
Consolidated Party, whether by sale, lease, transfer or otherwise, other
than (a) the sale of inventory in the ordinary course of business for fair
consideration, (b) the sale or disposition of machinery and equipment no
longer used or useful in the conduct of such Person's business and (c) any
Equity Transaction.
"ASSET DISPOSITION PREPAYMENT EVENT" means, with respect to any Asset
Disposition other than an Excluded Asset Disposition, the failure of the
Borrower to apply (or cause to be applied) the Net Cash Proceeds of such
Asset Disposition to the purchase, acquisition or construction of Eligible
Assets during the Application Period for such Asset Disposition.
"BANKRUPTCY CODE" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"BANKRUPTCY EVENT" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of ninety (90) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or
4
<PAGE>
make any general assignment for the benefit of creditors; or (iv) such
Person shall be unable to, or shall admit in writing its inability to,
pay its debts generally as they become due.
"BASE RATE" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate
due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or Federal
Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate determined
by reference to the Base Rate.
"BORROWER" means the Person identified as such in the heading hereof,
together with any permitted successors and assigns.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New
York are authorized or required by law to close, EXCEPT THAT, when used in
connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar deposits in London,
England.
"CALCULATION DATE" has the meaning set forth in the definition of
"Applicable Percentage" set forth in this Section 1.1.
"CAPITAL LEASE" means, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"CAPITAL STOCK" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation
that confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
dollar denominated time deposits and certificates of deposit of (i) any
Lender, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "APPROVED BANK"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes
5
<PAGE>
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing within
six months of the date of acquisition, (d) repurchase agreements with a
bank or trust company (including any of the Lenders) or recognized
securities dealer having capital and surplus in excess of $500,000,000
for direct obligations issued by or fully guaranteed by the United
States of America in which any Credit Party shall have a perfected first
priority security interest (subject to no other Liens) and having, on
the date of purchase thereof, a fair market value of at least 100% of
the amount of the repurchase obligations and (e) Investments, classified
in accordance with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of 1940, as
amended, which are administered by reputable financial institutions
having capital of at least $500,000,000 and the portfolios of which are
limited to Investments of the character described in the foregoing
subdivisions (a) through (d).
"CENTRAL COAST" means a direct or indirect Subsidiary of the Borrower
to be created subsequent to the Closing Date for the purpose of operating a
diagnostic imaging center project in California.
"CERTIFICATES OF DESIGNATION" means a collective reference to the
Series B Certificate of Designation and the Series C Certificate of
Designation.
"CHANGE OF CONTROL" means any of the following events: without the
prior written consent of the Required Lenders, (a) either the Sponsor or GE
shall transfer any Capital Stock in the Borrower in a manner that requires
approval of the Borrower's Board of Directors pursuant to Section 6.14 of
the Sponsor Investment Agreement or Section 6.14 of the GE Investment
Agreement, (b) any Person other than the Sponsor or GE or two or more
Persons other than the Sponsor or GE acting in concert shall have acquired
beneficial ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of,
control over, 33% or more of the Capital Stock of the Borrower, (c) during
any period of up to 24 consecutive months commencing after the Closing
Date, individuals who at the beginning of such 24 month period were
directors of the Borrower (together with any new director (i) whose
election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for
election was previously so approved or (ii) appointed by the Sponsor and/or
GE) cease for any reason to constitute a majority of the directors of the
Borrower then in office or (d) the occurrence of (i) a breach by the
Sponsor of Section 6.14 of the Sponsor Investment Agreement or (ii) a
breach by GE of Section 6.14 of the GE Investment Agreement. As used
herein, "beneficial ownership" shall have the meaning provided in
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"CLOSING DATE" means the date hereof.
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"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"COLLATERAL" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral
Documents.
"COLLATERAL DOCUMENTS" means a collective reference to the Security
Agreement, the Pledge Agreement, the Mortgage Instruments and such other
documents executed and delivered in connection with the attachment and
perfection of the Agent's security interests and liens arising thereunder,
including without limitation, UCC financing statements and patent and
trademark filings.
"COMMITMENT" means (i) with respect to each Lender, the Revolving
Commitment of such Lender, the Acquisition Loan Commitment of such Lender,
the Tranche A Term Loan Commitment and the Tranche B Term Loan Commitment
of such Lender and (ii) with respect to the Issuing Lender, the LOC
Commitment.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, all capital
expenditures of the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, cash
interest expense (including the amortization of debt discount and premium,
the interest component under Capital Leases and the implied interest
component under Synthetic Leases) of the Consolidated Parties on a
consolidated basis for such period, as determined in accordance with GAAP;
provided, however, that, notwithstanding anything to the contrary set forth
in this Credit Agreement, (i) for any calculation as of the fiscal quarter
ending March 31, 1998 for the twelve-month period then ended, Consolidated
Cash Interest Expense shall be determined based on Consolidated Cash
Interest Expense for the one-quarter period then ended multiplied by 4,
(ii) for any calculation as of the fiscal quarter ending June 30, 1998 for
the twelve-month period then ended, Consolidated Cash Interest Expense
shall be determined based on Consolidated Cash Interest Expense for the
two-quarter period then ended multiplied by 2 and (iii) for any calculation
as of the fiscal quarter ending September 30, 1998 for the twelve-month
period then ended, Consolidated Cash Interest Expense shall be determined
based on Consolidated Cash Interest Expense for the two-quarter period then
ended multiplied by 1.33.
"CONSOLIDATED CASH TAXES" means, for any period, the aggregate of all
taxes of the Consolidated Parties on a consolidated basis for such period,
as determined in accordance with GAAP, to the extent the same are paid in
cash during such period.
"CONSOLIDATED EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted
for (A) Consolidated Interest Expense,
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(B) total federal, state, local and foreign income, value added and
similar taxes, (C) depreciation and amortization expense and (D)
minority interests (provided that minority interests shall not
constitute more than 10% of Consolidated EBITDA for any period), all as
determined in accordance with GAAP.
"CONSOLIDATED EBITDAR" means, for any period, the sum of (i)
Consolidated EBITDA for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted
for Consolidated Rental Expense, all as determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, interest
expense (including the amortization of debt discount and premium, the
interest component under Capital Leases and the implied interest component
under Synthetic Leases) of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP; provided, however,
that, notwithstanding anything to the contrary set forth in this Credit
Agreement, (i) for any calculation as of the fiscal quarter ending March
31, 1998 for the twelve-month period then ended, Consolidated Interest
Expense shall be determined based on Consolidated Interest Expense for the
one-quarter period then ended multiplied by 4, (ii) for any calculation as
of the fiscal quarter ending June 30, 1998 for the twelve-month period then
ended, Consolidated Interest Expense shall be determined based on
Consolidated Interest Expense for the two-quarter period then ended
multiplied by 2 and (iii) for any calculation as of the fiscal quarter
ending September 30, 1998 for the twelve-month period then ended,
Consolidated Interest Expense shall be determined based on Consolidated
Interest Expense for the two-quarter period then ended multiplied by 1.33.
"CONSOLIDATED NET INCOME" means, for any period, net income (excluding
extraordinary, unusual items and gains or losses on Asset Dispositions)
after taxes for such period of the Consolidated Parties on a consolidated
basis, as determined in accordance with GAAP.
"CONSOLIDATED PARTIES" means a collective reference to the Borrower
and its Subsidiaries, and "CONSOLIDATED PARTY" means any one of them.
"CONSOLIDATED RENTAL EXPENSE" means, for any period, rental expense
under Operating Leases of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP.
"CONSOLIDATED RESTRICTED CAPITAL EXPENDITURES" means, for any period
for the Consolidated Parties on a consolidated basis, all capital
expenditures for such period, as determined in accordance with GAAP, other
than any capital expenditure representing the purchase price of equipment,
or the costs of construction or purchase price, for, or other costs
associated with the acquisition or new construction of, an additional
facility.
"CONSOLIDATED SCHEDULED FUNDED DEBT PAYMENTS" means, as of the end of
each fiscal quarter of the Consolidated Parties, for the Consolidated
Parties on a consolidated
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basis, the sum of all scheduled payments of principal on Funded
Indebtedness (other than Funded Indebtedness retired in connection with
the Recapitalization) for the applicable period ending on such date
(including the principal component of payments due on Capital Leases
during the applicable period ending on such date); it being understood
that Scheduled Funded Debt Payments shall not include voluntary
prepayments or the mandatory prepayments required pursuant to Section
3.3.
"CONSOLIDATED TOTAL ASSETS" means, at any time, total assets of the
Consolidated Parties on a consolidated basis at such time, as determined in
accordance with GAAP.
"Consolidated Working Capital" means, at any time, the excess of (a)
the sum of all amounts (other than cash, Cash Equivalents and bank
overdrafts) that would, in conformity with GAAP, be set forth opposite the
caption "total current assets" (or any like caption) on a consolidated
balance sheet of the Consolidated Parties at such time over (ii) the sum of
all amounts that would, in conformity with GAAP, be set forth opposite the
caption "total current liabilities" (or any like caption) on a consolidated
balance sheet of the Consolidated Parties at such time, but excluding (a)
the current portion of any Funded Indebtedness, and (b) the current portion
of deferred income taxes.
"CONTINUE", "CONTINUATION", and "CONTINUED" shall refer to the
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a conversion
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"CREDIT DOCUMENTS" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, each Joinder Agreement, the
Agent's Fee Letter, the Collateral Documents and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto (in each case as the same may be amended,
modified, restated, supplemented, extended, renewed or replaced from time
to time), and "CREDIT DOCUMENT" means any one of them.
"CREDIT PARTIES" means a collective reference to the Borrower and the
Guarantors, and "CREDIT PARTY" means any one of them.
"CREDIT PARTY OBLIGATIONS" means, without duplication, (i) all of the
obligations of the Credit Parties to the Lenders (including the Issuing
Lender) and the Agent, whenever arising, under this Credit Agreement, the
Notes, the Collateral Documents or any of the other Credit Documents
(including, but not limited to, any interest accruing after the occurrence
of a Bankruptcy Event with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and
(ii) all liabilities and obligations, whenever arising, owing from the
Borrower to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
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"DEBT ISSUANCE" means the issuance of any Indebtedness for borrowed
money by any Consolidated Party.
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" means, at any time, any Lender that (a) has failed
to make a Loan or purchase a Participation Interest required pursuant to
the term of this Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to the Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement within one Business Day of when due, unless such amount is
subject to a good faith dispute or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or with respect to
which (or with respect to any of assets of which) a receiver, trustee or
similar official has been appointed.
"DOLLARS" and "$" means dollars in lawful currency of the United
States of America.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws
of any State of the United States or the District of Columbia.
"EFFECTIVE DATE" means the date on which the conditions set forth in
Section 5.2 to the making of the initial Loans and/or the issuance of the
initial Letter of Credit, as applicable, shall have been fulfilled (or
waived in the sole discretion of the Lenders) and on which the initial
Loans shall have been made and/or the initial Letters of Credit shall have
been issued.
"ELIGIBLE ASSETS" means another business or any substantial part of
another business or other long-term assets, in each case, in, or used or
useful in, the same or a similar line of business as the Consolidated
Parties were engaged in on the Closing Date or any reasonable extensions or
expansions thereof.
"ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate of a Lender;
and (iii) any other Person approved by the Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 11.3, the Borrower (such approval not
to be unreasonably withheld or delayed by the Borrower and such approval to
be deemed given by the Borrower if no objection is received by the
assigning Lender and the Agent from the Borrower within five Business Days
after notice of such proposed assignment has been provided by the assigning
Lender to the Borrower); PROVIDED, HOWEVER, that neither the Borrower nor
an Affiliate of the Borrower shall qualify as an Eligible Assignee.
"ENVIRONMENTAL LAWS" means any and all lawful and applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened
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releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"EQUITY ISSUANCE" means any issuance by any Consolidated Party to any
Person which is not a Credit Party of (a) shares of its Capital Stock, (b)
any shares of its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to the conversion
of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA AFFILIATE" means an entity which is under common control with
any Consolidated Party within the meaning of Section 4001(a)(14) of ERISA,
or is a member of a group which includes the Borrower and which is treated
as a single employer under Sections 414(b) or (c) of the Code.
"ERISA EVENT" means (i) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any
Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
ERISA; (iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii)
the conditions for imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (vii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA.
"EURODOLLAR LOAN" means any Loan that bears interest at a rate based
upon the Eurodollar Rate.
"EURODOLLAR RATE" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to the quotient
obtained by dividing (a) the Interbank Offered Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Eurodollar Reserve
Requirement for such Eurodollar Loan for such Interest Period.
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"EURODOLLAR RESERVE REQUIREMENT" means, at any time, the maximum rate
at which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the
Eurodollar Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Loans. The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Requirement.
"EVENT OF DEFAULT" means such term as defined in Section 9.1.
"EXCESS CASH FLOW" means, with respect to any fiscal year period of
the Consolidated Parties on a consolidated basis, an amount equal to (a)
Consolidated EBITDA for such period MINUS (b) Consolidated Capital
Expenditures for such period MINUS (c) Consolidated Cash Interest Expense
for such period MINUS (d) Federal, state and other income taxes actually
paid by the Consolidated Parties on a consolidated basis during such period
MINUS (e) Consolidated Scheduled Funded Debt Payments made during such
period MINUS (f) total consideration (including any assumption of
liabilities (other than current working capital liabilities not
constituting Indebtedness), but excluding consideration consisting of any
Capital Stock of the Borrower), fees and expenses actually paid by the
Consolidated Parties on a consolidated basis in connection with Permitted
Acquisitions during such period PLUS/MINUS (g) changes in Consolidated
Working Capital for such period.
"EXCLUDED ASSET DISPOSITION" means any Asset Disposition by any
Consolidated Party to any Credit Party if (a) the Credit Parties shall
cause to be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the Credit Parties to
be in compliance with the terms of Section 7.13 after giving effect to such
Asset Disposition and (b) after giving effect such Asset Disposition, no
Default or Event of Default exists.
"EXCLUDED EQUITY ISSUANCE" means (1) any Asset Disposition and (2) any
Equity Issuance to the Sponsor or GE, including without limitation the
issuance and sale by the Borrower of preferred capital stock pursuant to
Section 2.1 of the GE Investment Agreement or Section 2.1 of the Sponsor
Investment Agreement.
"EXECUTIVE OFFICER" of any Person means any of the chief executive
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
"FEES" means all fees payable pursuant to Section 3.5.
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"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; PROVIDED that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual capacity)
on such day on such transactions as determined by the Agent.
"FIXED CHARGE COVERAGE RATIO" means, as of the end of any fiscal
quarter of the Consolidated Parties for the twelve month period ending on
such date, the ratio of (a) Consolidated EBITDAR for the applicable period
MINUS Consolidated Restricted Capital Expenditures for the applicable
period MINUS Consolidated Cash Taxes for the applicable period to (b)
Consolidated Cash Interest Expense for the applicable period PLUS
Consolidated Scheduled Funded Debt Payments for the applicable period PLUS
Consolidated Rental Expense for the applicable period.
"FOREIGN SUBSIDIARY" means, with respect to any Person, any Subsidiary
of such Person which is not a Domestic Subsidiary of such Person.
"FUNDED INDEBTEDNESS" means, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of
the types referred to in clause (e), (f), (g), (i), (k) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1, (b) all
Indebtedness of another Person of the type referred to in clause (a) above
secured by (or for which the holder of such Funded Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, Property owned or acquired
by such Person, whether or not the obligations secured thereby have been
assumed, (c) all Guaranty Obligations of such Person with respect to
Indebtedness of the type referred to in clause (a) above of another Person
and (d) Indebtedness of the type referred to in clause (a) above of any
partnership or unincorporated joint venture in which such Person is legally
obligated or has a reasonable expectation of being liable with respect
thereto.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3.
"GE" means General Electric Company, a New York corporation, and its
Affiliates.
"GE INVESTMENT AGREEMENT" means that certain Securities Purchase
Agreement dated as of October 14, 1997 by and among GE and the Borrower.
"GE Payoff Letter" means the payoff letter dated October 14, 1997
delivered by GE to the Borrower and pursuant to which and GE agrees to
terminate the Master Debt Restructuring Agreement upon payment by the
Borrower to GE of certain indebtedness
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owing by the Borrower to GE as of the date of such letter, all on the
terms set forth more fully therein.
"GE REGISTRATION RIGHTS AGREEMENT" means that certain Registration
Rights Agreement dated as of a date on or before the Effective Date by and
between the Borrower and GE.
"GE WARRANT AGREEMENT" means that certain Warrant Agreement dated as
of a date on or before the Effective Date by and between the Borrower and
GE.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTOR" means each of the Persons identified as a "Guarantor" on
the signature pages hereto and each Additional Credit Party which may
hereafter execute a Joinder Agreement, together with their successors and
permitted assigns, and "GUARANTOR" means any one of them
"GUARANTY OBLIGATIONS" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including
without limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"HEDGING AGREEMENTS" means any interest rate protection agreement or
foreign currency exchange agreement between any Consolidated Party and any
Lender, or any Affiliate of a Lender.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the
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deferred purchase price of Property or services purchased by such Person
(other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) all obligations of
such Person under take-or-pay or similar arrangements or under
commodities agreements, (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out
of the proceeds of production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (g) all Guaranty Obligations of such Person, (h) the principal
portion of all obligations of such Person under Capital Leases, (i) all
obligations of such Person under Hedging Agreements, (j) the maximum
amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed),
(k) all preferred Capital Stock issued by such Person and required by
the terms thereof to be redeemed, or for which mandatory sinking fund
payments are due, by a fixed date occurring prior to the Maturity Date
for the Tranche B Term Loan, (l) the principal portion of all
obligations of such Person under Synthetic Leases, (m) for purposes of
any calculation made under the financial covenants set forth in Section
7.11 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis" set forth in Section 1.1),
the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer, (n) in the
case of the Consolidated Parties for purposes of any calculation made
under the financial covenants set forth in Section 7.11 (including
without limitation for purposes of the definitions of "Applicable
Percentage" and "Pro Forma Basis" set forth in Section 1.1) as of the
end of any fiscal quarter of the Consolidated Parties, the Indebtedness
of any Person whose results of operations would, in accordance with
GAAP, be included in earnings of unconsolidated Persons on an income
statement of the Consolidated Parties for any period ending on such
fiscal quarter-end.
"INTERBANK OFFERED RATE" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750
(or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "Interbank Offered Rate" shall mean, for any
Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
"INTEREST COVERAGE RATIO" means, as of the end of any fiscal
quarter of the Consolidated Parties for the twelve month period ending
on such date, the ratio of (a) Consolidated EBITDA for such period to
(b) Consolidated Cash Interest Expense for such period.
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"INTEREST PAYMENT DATE" means (a) as to Base Rate Loans, the last
day of each fiscal quarter of the Borrower and the Maturity Date, and
(b) as to Eurodollar Loans, the last day of each applicable Interest
Period and the Maturity Date, and in addition where the applicable
Interest Period for a Eurodollar Loan is greater than three months, then
also the date three months from the beginning of the Interest Period and
each three months thereafter.
"INTEREST PERIOD" means, as to Eurodollar Loans, a period of one,
two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); PROVIDED, HOWEVER, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (b)
no Interest Period shall extend beyond the Maturity Date, (c) with
regard to the Acquisition Loans, no Interest Period shall extend beyond
any Principal Amortization Payment Date unless the portion of
Acquisition Loans comprised of Base Rate Loans together with the portion
of Acquisition Loans comprised of Eurodollar Loans with Interest Periods
expiring prior to the date such Principal Amortization Payment is due,
is at least equal to the amount of such Principal Amortization Payment
due on such date, (d) with regard to the Tranche A Term Loans, no
Interest Period shall extend beyond any Principal Amortization Payment
Date unless the portion of Tranche A Term Loans comprised of Base Rate
Loans together with the portion of Tranche A Term Loans comprised of
Eurodollar Loans with Interest Periods expiring prior to the date such
Principal Amortization Payment is due, is at least equal to the amount
of such Principal Amortization Payment due on such date, (e) with regard
to the Tranche B Term Loans, no Interest Period shall extend beyond any
Principal Amortization Payment Date unless the portion of Tranche B Term
Loans comprised of Base Rate Loans together with the portion of Tranche
B Term Loans comprised of Eurodollar Loans with Interest Periods
expiring prior to the date such Principal Amortization Payment is due,
is at least equal to the amount of such Principal Amortization Payment
due on such date and (f) where an Interest Period begins on a day for
which there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"INVESTMENT" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of such other Person or (b) any deposit with, or advance,
loan or other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other assets in the
ordinary course of business) or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit issued on
behalf of such Person) incurred for the benefit of such Person, but
excluding any Restricted Payment to such Person.
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"INVESTMENT AGREEMENTS" means a collective reference to the GE
Investment Agreement and the Sponsor Investment Agreement.
"INVESTMENT DOCUMENTS" means a collective reference to the
Investment Agreements, the Registration Rights Agreements, the Warrant
Agreements and the Certificates of Designation.
"ISSUING LENDER" means NationsBank.
"ISSUING LENDER FEES" shall have the meaning assigned to such term
in Section 3.5(b)(ii).
"JOINDER AGREEMENT" means a Joinder Agreement substantially in the
form of EXHIBIT 7.12 hereto, executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 7.12.
"JOINT VENTURE" means an entity which meets the following criteria:
(a) it was organized pursuant to an express joint
venture, partnership or limited liability company agreement;
(b) it is a venture among two or more Persons and,
except for purposes of the definition of "Indebtedness" set forth
in this Section 1.1, at least one of such Persons is, and one of
such Persons is not, the Borrower or a Wholly Owned Subsidiary of
the Borrower;
(c) it operates a business for profit in which
there is a joint proprietary interest in the subject matter;
(d) the venture involves a right of mutual control
of the subject of the enterprise;
(e) each of the venturers has contributed or will
contribute capital, materials, services or knowledge;
(f) each of the venturers has a right to share in
the profits of the venture; and
(g) each of the venturers has a duty to share in
the losses of the venture.
The term "Joint Venture" shall in any event include the Persons
identified on SCHEDULE 1.1B.
"LENDER" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way
of assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
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"LETTER OF CREDIT" means any letter of credit issued by the Issuing
Lender for the account of the Borrower in accordance with the terms of
Section 2.2.
"LEVERAGE RATIO" means, as of the end of any fiscal quarter of the
Consolidated Parties for the twelve month period ending on such date,
the ratio of (a) all Funded Indebtedness (including without limitation
Subordinated Indebtedness) of the Consolidated Parties on a consolidated
basis on the last day of such period to (b) Consolidated EBITDA for such
period.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof); PROVIDED, HOWEVER, the term "Lien" in
respect of any Property of any Person shall not include any interest of
title of a lessor (or any related filing) under any Operating Lease of
such Property under which such Person is the lessee.
"LOAN" or "LOANS" means the Revolving Loans, the Acquisition Loans,
the Tranche A Term Loans and/or the Tranche B Term Loans (or a portion
of any Revolving Loan, any Acquisition Loan, any Tranche A Term Loan or
Tranche B Term Loan bearing interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate), individually or collectively, as appropriate.
"LOC COMMITMENT" means the commitment of the Issuing Lender to
issue Letters of Credit in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount.
"LOC COMMITTED AMOUNT" shall have the meaning assigned to such term
in Section 2.2.
"LOC DOCUMENTS" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned or
at risk or (ii) any collateral security for such obligations.
"LOC OBLIGATIONS" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit PLUS
(ii) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed by the
Borrower.
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"MASTER DEBT RESTRUCTURING AGREEMENT" means that certain Master
Debt Restructuring Agreement dated as of June 26, 1996 by and among GE,
the Borrower, American Health Services Corp., Maxum Health Corp. and
certain subsidiaries of Maxum Health Corp., as amended through the
Closing Date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the condition (financial or otherwise), operations, business, assets,
liabilities or prospects of the Consolidated Parties taken as a whole,
(ii) the ability of the Credit Parties taken as a whole to perform any
material obligation under the Credit Documents or (iii) the material
rights and remedies of the Lenders under the Credit Documents.
"MATURITY DATE" means (i) as to the Revolving Loans, Letters of
Credit (and the related LOC Obligations) and the Tranche A Term Loan,
October 14, 2002, (ii) as to the Acquisition Loans, October 14, 2003 and
(iii) as to the Tranche B Term Loan, October 14, 2004.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
"MORTGAGE INSTRUMENTS" shall have the meaning assigned such term in
Section 5.2(c).
"MORTGAGE POLICIES" shall have the meaning assigned such term in
Section 5.2(c).
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" means a Plan which any Consolidated Party
or any ERISA Affiliate and at least one employer other than the
Consolidated Parties or any ERISA Affiliate are contributing sponsors.
"NATIONSBANK" means NationsBank, N. A. and its successors.
"NET CASH PROCEEDS" means the aggregate cash proceeds received by
the Consolidated Parties in respect of any Asset Disposition, Equity
Issuance or Debt Issuance, net of (a) direct costs (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and (b) taxes paid or payable as a result thereof; it being
understood that "Net Cash Proceeds" shall include, without limitation,
any cash received upon the sale or other disposition of any non-cash
consideration received by the Consolidated Parties in any Asset
Disposition, Equity Issuance or Debt Issuance.
"NEW COMMITMENT AGREEMENT" means such term as is defined in Section
3.4(b).
"NOTE" or "NOTES" means the Revolving Notes, the Acquisition Notes,
the Tranche A Term Notes and/or the Tranche B Term Notes, individually
or collectively, as appropriate.
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"NOTICE OF BORROWING" means a written notice of borrowing in
substantially the form of EXHIBIT 2.1(b)(i), as required by Section
2.1(b)(i), Section 2.3(b)(i), Section 2.4(b) or Section 2.5(b).
"NOTICE OF EXTENSION/CONVERSION" means the written notice of
extension or conversion in substantially the form of EXHIBIT 3.2, as
required by Section 3.2.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"OPEN MRI" means Open MRI, a Delaware corporation and a Wholly
Owned Subsidiary of the Borrower.
"OTHER TAXES" means such term as is defined in Section 3.11.
"PARTICIPATION INTEREST" means a purchase by a Lender of a
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2 or in any Loans as provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"PERMITTED ACQUISITION" means an Acquisition by the Borrower or any
Wholly Owned Subsidiary of the Borrower for the fair market value of the
Capital Stock or Property acquired, PROVIDED that (i) the Capital Stock
or Property acquired in such Acquisition relates to a line of business
similar to the business of the Borrower or any of its Wholly Owned
Subsidiaries engaged in on the Closing Date, (ii) the Agent shall have
received all items in respect of the Capital Stock or Property acquired
in such Acquisition (and/or the seller thereof) required to be delivered
by the terms of Section 7.12 and/or Section 7.13, (iii) in the case of
an Acquisition of the Capital Stock of another Person, the board of
directors (or other comparable governing body) of such other Person
shall have duly approved such Acquisition, (iv) the Borrower shall have
delivered to the Agent a Pro Forma Compliance Certificate demonstrating
that, upon giving effect to such Acquisition on a Pro Forma Basis, the
Credit Parties shall be in compliance with all of the covenants set
forth in Section 7.11, (v) the representations and warranties made by
the Credit Parties in any Credit Document shall be true and correct in
all material respects at and as if made as of the date of such
Acquisition (after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier date, (vi)
if the aggregate consideration (including any assumption of liabilities
(other than current working capital liabilities not constituting
Indebtedness), but excluding consideration consisting of any Capital
Stock of the Borrower) for any such transaction is greater than
$7,500,000, then the Required Lenders shall have approved such
transaction, (vii) if such transaction involves the purchase of an
interest in a partnership between the Borrower (or a subsidiary of the
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Borrower) as a general partner and entities unaffiliated with the
Borrower as the other partners, such transaction shall be effected by
having such equity interest acquired by a corporate holding company
directly wholly-owned by the Borrower newly formed for the sole purpose
of effecting such transaction and (viii) after giving effect to such
Acquisition, the Revolving Committed Amount shall be at least $5,000,000
greater than the sum of the Revolving Loans outstanding PLUS LOC
Obligations outstanding].
"PERMITTED CAPITAL EXPENDITURE" means any capital expenditure by
the Borrower or any Wholly Owned Subsidiary of the Borrower, PROVIDED
that (i) such capital expenditure shall represent the purchase price of
equipment, or the costs of construction or purchase price, for, or other
costs associated with the acquisition or new construction of, an
additional facility, (ii) such capital expenditure shall have been
approved by the Required Lenders and (iii) the aggregate principal
amount of all Acquisition Loans used to finance capital expenditures
shall not exceed 20% of the Acquisition Loan Committed Amount.
"PERMITTED INVESTMENTS" means Investments which are either (i) cash
and Cash Equivalents; (ii) accounts receivable created, acquired or made
by any Consolidated Party in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; (iii)
Investments consisting of Capital Stock, obligations, securities or
other property received by any Consolidated Party in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iv) Investments existing as of the Closing Date and
set forth in SCHEDULE 1.1B; (v) Guaranty Obligations permitted by
Section 8.1; (vi) transactions permitted by Section 8.9; (vii) advances
or loans to directors, officers, employees, agents, customers or
suppliers made in the ordinary course of business for reasonable
business and which do not exceed $1,000,000 in the aggregate at any one
time outstanding for all of the Consolidated Parties; (viii) Investments
in any Credit Party; (ix) Permitted Acquisitions; and (x) Investments in
Joint Ventures not to exceed $5,000,000.
"PERMITTED LIENS" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or
Liens for taxes being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is
not yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, PROVIDED that such
Liens secure only amounts not yet due and payable or, if due and
payable, are unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate proceedings for
which adequate reserves determined
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in accordance with GAAP have been established (and as to which the
Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) PROVIDED that the judgments secured shall,
within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged
within 60 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money Indebtedness
(including Capital Leases and Synthetic Leases) to the extent permitted
under Section 8.1(c), PROVIDED that any such Lien attaches to such
Property concurrently with or within 90 days after the acquisition
thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of any Consolidated Party;
(ix) any interest of title of a lessor under, and Liens arising
from UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by
this Credit Agreement;
(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(xi) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xiii) Liens existing as of the Closing Date and set forth on
SCHEDULE 1.1C; PROVIDED that no such Lien shall at any time be extended
to or cover any Property other than the Property subject thereto on the
Closing Date (other than a substitution of like Property);
(xiv) Liens on any Property owned by any Subsidiary of the
Borrower which is a Joint Venture;
(xv) extensions, renewals or replacements of Liens referred
to in clause (i) through (xv) above.
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"PERSON" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"PLAN" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which any
Consolidated Party or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of ERISA.
"PRIMARY REAL PROPERTIES" shall have the meaning assigned such term
in Section 7.16.
"PLEDGE AGREEMENT" means the pledge agreement dated as of the
Closing Date in the form of EXHIBIT 1.1A to be executed in favor of the
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"PRIME RATE" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"PRINCIPAL AMORTIZATION PAYMENT" means a principal payment on the
Acquisition Loans as set forth in Section 2.3(c), on the Tranche A Term
Loans as set forth in Section 2.4(d) or on the Tranche B Term Loans as
set forth in Section 2.5(d).
"PRINCIPAL AMORTIZATION PAYMENT DATE" means the date a Principal
Amortization Payment is due.
"PRINCIPAL OFFICE" means the principal office of NationsBank,
presently located at Charlotte, North Carolina.
"PRO FORMA BASIS" means, with respect to any transaction, that such
transaction shall be deemed to have occurred (for purposes of
calculating compliance in respect of such transaction with each of the
financial covenants set forth in Section 7.11 as of the most recent
fiscal quarter end preceding the date of such transaction with respect
to which the Agent has received the Required Financial Information) as
of the first day of the four fiscal-quarter period ending as of such
fiscal quarter end. As used herein, "TRANSACTION" shall mean (i) any
incurrence or assumption of Indebtedness as referred to in Section
8.1(f), (ii) any merger or consolidation as referred to in Section 8.4,
(iii) any Asset Disposition as referred to in Section 8.5 or (iv) any
Permitted Acquisition as referred to in Section 8.6 and clause (ix) of
the definition of "PERMITTED INVESTMENT" set forth in this Section 1.1.
With respect to any transaction of
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the type described in clause (i) above regarding Indebtedness which has
a floating or formula rate, the implied rate of interest for such
Indebtedness for the applicable period for purposes of this definition
shall be determined by utilizing the rate which is or would be in effect
with respect to such Indebtedness as at the relevant date of
determination. With respect to any transaction of the type described in
clause (ii) or (iv) above, any Indebtedness incurred by the Borrower or
any of its Subsidiaries in order to consummate such transaction (A)
shall be deemed to have been incurred on the first day of the applicable
period four fiscal-quarter period and (B) if such Indebtedness has a
floating or formula rate, then the implied rate of interest for such
Indebtedness for the applicable period for purposes of this definition
shall be determined by utilizing the rate which is or would be in effect
with respect to such Indebtedness as at the relevant date of
determination. In connection with any calculation of the financial
covenants set forth in Section 7.11 upon giving effect to a transaction
on a Pro Forma Basis for purposes of Section 8.1(f), Section 8.4,
Section 8.5 or Section 8.6 and clause (ix) of the definition of
"PERMITTED INVESTMENT" set forth in this Section 1.1, as applicable:
(A) for purposes of any such calculation in respect of any
incurrence or assumption of Indebtedness as referred to in Section
8.1(f), any Indebtedness which is retired in connection with such
incurrence or assumption shall be excluded and deemed to have been
retired as of the first day of the applicable period;
(B) for purposes of any such calculation in respect of any
Asset Disposition as referred to in Section 8.5, (1) income
statement items (whether positive or negative) attributable to the
Property disposed of in such Asset Disposition shall be excluded
and (2) any Indebtedness which is retired in connection with such
Asset Disposition shall be excluded and deemed to have been retired
as of the first day of the applicable period;
(C) for purposes of any such calculation in respect of any
merger or consolidation as referred to in Section 8.4 or any
Permitted Acquisition as referred to in Section 8.6 and clause (ix)
of the definition of "PERMITTED INVESTMENT" set forth in this
Section 1.1, (1) any Indebtedness incurred by the Borrower or any
of its Subsidiaries in connection with such transaction shall be
deemed to have been incurred as of the first day of the applicable
period and (2) income statement items (whether positive or
negative) attributable to the Property acquired in such transaction
or to the Investment comprising such transaction, as applicable,
shall be included to the extent relating to the relevant period; and
(D) for purposes of any such calculation, the principles set
forth in the second paragraph of Section 1.3 shall be applicable.
"PRO FORMA COMPLIANCE CERTIFICATE" means a certificate of the chief
financial officer of the Borrower delivered to the Agent in connection
with (i) any incurrence, assumption or retirement of Indebtedness as
referred to in Section 8.1(f), (ii) any merger or consolidation as
referred to in Section 8.4, (iii) any Asset Disposition as referred to
in Section 8.5 or (iv) any Permitted Acquisition as referred to in
Section 8.6 and clause (ix) of the definition of "PERMITTED INVESTMENT"
set forth in this Section 1.1, as applicable, and containing reasonably
detailed calculations, upon giving effect to the applicable transaction
on a Pro Forma Basis, of the Interest Coverage Ratio, the Fixed Charge
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Coverage Ratio, the Leverage Ratio and the minimum Consolidated EBITDA
covenant as of the most recent fiscal quarter end preceding the date of
the applicable transaction with respect to which the Agent shall have
received the Required Financial Information.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"REAL PROPERTIES" shall have the meaning assigned such term in
Section 7.16.
"RECAPITALIZATION" means the recapitalization of the Borrower
pursuant to and as evidenced by the terms of the Investment Documents
(including without limitation the making by the Sponsor of a preferred
equity investment of at least $25 million in cash (less fees and
expenses) in the Borrower and the termination of the Supplemental
Service Fee (as defined in the GE Investment Agreement) in exchange for
7,000 shares of Series C Preferred Stock in the Borrower) pursuant to
the GE Investment Agreement, the refinancing of the existing Funded
Indebtedness of the Borrower described on SCHEDULE 6.15 in an aggregate
principal amount not to exceed $80 million (plus per diem interest on
such principal amount), the termination of the Master Debt Restructuring
Agreement pursuant to the terms of the GE Payoff Letter.
"REGISTER" shall have the meaning given such term in Section 11.3(c).
"REGISTRATION RIGHTS AGREEMENTS" means a collective reference to
the GE Registration Rights Agreement and the Sponsor Registration Rights
Agreement.
"REGULATION G, T, U, OR X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion
thereof.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"REQUIRED FINANCIAL INFORMATION" means, with respect to the
applicable Calculation Date, (i) the financial statements of the
Consolidated Parties required to be delivered pursuant to Section 7.1(a)
or (b) for the fiscal period or quarter ending as of such Calculation
Date, and (ii) the certificate of the chief financial officer of the
Borrower required by Section 7.1(c) to be delivered with the financial
statements described in clause (i) above.
"REQUIRED LENDERS" means, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate more than least 50% of (i) the sum of (a)
the Revolving Commitments (and Participation Interests therein), (b) the
Acquisition Loan Commitments (and Participation Interests therein)
and/or, after conversion of any portion of the Acquisition Loans to a
term loan, the outstanding term loan portion of the Acquisition Loans,
(c) the outstanding Tranche A Term Loans (and Participation Interests
therein) and (d) the outstanding Tranche B Term Loans (and
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Participation Interests therein) or (ii) if the Commitments have been
terminated, the outstanding Loans and Participation Interests (including
the Participation Interests of the Issuing Lender in any Letters of
Credit).
"REQUIREMENT OF LAW" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its material
property is subject.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital
Stock of any Consolidated Party, now or hereafter outstanding, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of Capital Stock of any Consolidated Party, now or hereafter
outstanding and (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock of any Consolidated Party,
now or hereafter outstanding.
"REVOLVING COMMITMENT" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of
the Revolving Committed Amount, (i) to make Revolving Loans in
accordance with the provisions of Section 2.1(a) and (ii) to purchase
Participation Interests in Letters of Credit in accordance with the
provisions of Section 2.2(c).
"REVOLVING COMMITMENT PERCENTAGE" means, for any Lender, the
percentage identified as its Revolving Commitment Percentage on SCHEDULE
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"REVOLVING COMMITTED AMOUNT" shall have the meaning assigned to
such term in Section 2.1(a).
"REVOLVING LOANS" shall have the meaning assigned to such term in
Section 2.1(a).
"REVOLVING NOTE" or "REVOLVING NOTES" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1(e), individually or collectively,
as appropriate, as such promissory notes may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to time.
"REVOLVING UNUSED FEE" shall have the meaning assigned to such term
in Section 3.5(a)(i).
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"REVOLVING UNUSED FEE CALCULATION PERIOD" shall have the meaning
assigned to such term in Section 3.5(a)(i).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Consolidated Party of any Property,
whether owned by such Consolidated Party as of the Closing Date or later
acquired, which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person from whom funds
have been, or are to be, advanced by such Person on the security of such
Property.
"SECONDARY REAL PROPERTIES" shall have the meaning assigned such
term in Section 7.16.
"SECURITY AGREEMENT" means the security agreement dated as of the
Closing Date in the form of EXHIBIT 1.1B to be executed in favor of the
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"SERIES B CERTIFICATE OF DESIGNATION" means the Certificate of
Designation, Preferences and Rights of Convertible Preferred Stock,
Series B of the Borrower, to be filed with the Delaware Secretary of
State on or prior to the Closing Date.
"SERIES C CERTIFICATE OF DESIGNATION" means the Certificate of
Designation, Preferences and Rights of Series C Preferred of the
Borrower, to be filed with the Delaware Secretary of State on or prior
to the Closing Date.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer
Plan.
"SOLVENT" or "SOLVENCY" means, with respect to any Person as of a
particular date, that on such date (i) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (ii) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
as such debts and liabilities mature in their ordinary course, (iii)
such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such
Person is engaged or is to engage, (iv) the fair value of the Property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person
and (v) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured. In computing the amount of contingent liabilities at any time,
it is intended
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that such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"SPONSOR" means TC Group, L.L.C., a Delaware Limited Liability
Company, and its Affiliates.
"SPONSOR INVESTMENT AGREEMENT" means that certain Securities
Purchase Agreement dated as of October 14, 1997 by and among the Sponsor
and the Borrower.
"SPONSOR REGISTRATION RIGHTS AGREEMENT" means that certain
Registration Rights Agreement dated as of a date on or before the
Effective Date by and between the Borrower and the Sponsor.
"SPONSOR WARRANT AGREEMENT" means that certain Warrant Agreement
dated as of a date on or before the Effective Date by and between the
Borrower and the Sponsor.
"STANDBY LETTER OF CREDIT FEE" shall have the meaning assigned to
such term in Section 3.5(b)(i).
"SUBORDINATED INDEBTEDNESS" means any Indebtedness incurred by the
Borrower which by its terms is specifically subordinated in right of
payment to the prior payment of the obligations of the Credit Parties
under this Credit Agreement and the other Credit Documents on terms and
conditions satisfactory to the Required Lenders.
"SUBORDINATION AGREEMENT" means a subordination agreement in
substantially the form of EXHIBIT 1.1C by and between the Agent and GE,
pursuant to which the Agent agrees to the subordination, on the terms
and conditions set forth more fully therein, of the security interest of
the Agent in any Collateral consisting of Property (i) leased by any
Credit Party under any Capital Lease or Operating Lease with respect to
which GE is the lessor or (ii) subject to any other conditional sale or
other financing arrangement to which GE is a party.
"SUBSIDIARY" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at
such time, any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at
such time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, association, joint venture or
other entity of which such Person directly or indirectly through
Subsidiaries owns at such time more than 50% of the Capital Stock.
"SYNTHETIC LEASE" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease.
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"TAXES" means such term as is defined in Section 3.11.
"TRADE LETTER OF CREDIT FEE" shall have the meaning assigned to
such term in Section 3.5(b)(ii).
"TRANCHE A TERM LOAN" shall have the meaning assigned to such term
in Section 2.4(a).
"TRANCHE A TERM LOAN COMMITMENT" means, with respect to each
Lender, the commitment of such Lender to make its portion of the Tranche
A Term Loan in a principal amount equal to such Lender's Tranche A Term
Loan Commitment Percentage of the Tranche A Term Loan Committed Amount.
"TRANCHE A TERM LOAN COMMITMENT PERCENTAGE" means, for any Lender,
the percentage identified as its Tranche A Term Loan Commitment
Percentage on SCHEDULE 2.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 11.3.
"TRANCHE A TERM LOAN COMMITTED AMOUNT" shall have the meaning
assigned to such term in Section 2.4(a).
"TRANCHE A TERM NOTE" or "TRANCHE A TERM NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Tranche A Term Loans provided pursuant to Section 2.4(f),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, restated, supplemented, extended, renewed or
replaced from time to time.
"TRANCHE B TERM LOAN" shall have the meaning assigned to such term
in Section 2.5(a). "TRANCHE B TERM LOAN COMMITMENT" means, with respect
to each Lender, the commitment of such Lender to make its portion of the
Tranche B Term Loan in a principal amount equal to such Lender's Tranche
B Term Loan Commitment Percentage of the Tranche B Term Loan Committed
Amount.
"TRANCHE B TERM LOAN COMMITMENT PERCENTAGE" means, for any Lender,
the percentage identified as its Tranche B Term Loan Commitment
Percentage on SCHEDULE 2.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 11.3.
"TRANCHE B TERM LOAN COMMITTED AMOUNT" shall have the meaning
assigned to such term in Section 2.5(a).
"TRANCHE B TERM NOTE" or "TRANCHE B TERM NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Tranche B Term Loans
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provided pursuant to Section 2.5(f), individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to time.
"UNUSED ACQUISITION LOAN COMMITTED AMOUNT" means, for any period,
the amount by which (a) the then applicable Acquisition Loan Committed
Amount exceeds (b) the daily average sum for such period of the
outstanding aggregate principal amount of all Acquisition Loans.
"UNUSED REVOLVING COMMITTED AMOUNT" means, for any period, the
amount by which (a) the then applicable Revolving Committed Amount
exceeds (b) the daily average sum for such period of (i) the outstanding
aggregate principal amount of all Revolving Loans PLUS (ii) the
outstanding aggregate principal amount of all LOC Obligations.
"VOTING STOCK" means, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though
the right so to vote has been suspended by the happening of such a
contingency.
"WARRANT AGREEMENTS" means a collective reference to the GE Warrant
Agreement and the Sponsor Warrant Agreement.
"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary 100%
of whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly Owned Subsidiaries.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein)
be made by application of GAAP applied on a basis consistent with the most
recent annual or quarterly financial statements delivered pursuant to Section
7.1 (or, prior to the delivery of the first financial statements pursuant to
Section 7.1, consistent with the financial statements as at June 30, 1997);
PROVIDED, HOWEVER, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or
(b) the Agent or the Required Lenders shall so object in writing within 60
days after delivery of such financial statements, then such calculations
shall be made on a basis consistent with the most recent
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financial statements delivered by the Borrower to the Lenders as to which no
such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 7.11 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis" set forth in Section 1.1),
(i)(A) income statement items (whether positive or negative) attributable to
the Property disposed of in any Asset Disposition as contemplated by Section
8.5, as applicable, shall be excluded to the extent relating to any period
occurring prior to the date of such transaction and (B) Indebtedness which is
retired in connection with any such Asset Disposition shall be excluded and
deemed to have been retired as of the first day of the applicable period and
(ii) income statement items (whether positive or negative) attributable to
any Property acquired in any Investment transaction (including without
limitation any Permitted Acquisition) contemplated by Section 8.6 shall be
included to the extent relating to any period applicable in such calculations
occurring after the date of such transaction (and, notwithstanding the
foregoing, during the first four fiscal quarters following the date of such
transaction, shall be included on an annualized basis).
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) REVOLVING COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower
such Lender's Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("REVOLVING LOANS") from time to
time from the Effective Date until the Maturity Date, or such earlier
date as the Revolving Commitments shall have been terminated as provided
herein for the purposes hereinafter set forth; PROVIDED, HOWEVER, that
the sum of the aggregate principal amount of outstanding Revolving Loans
shall not exceed TWENTY-FIVE MILLION DOLLARS ($25,000,000) (as such
aggregate maximum amount may be reduced from time to time as provided in
Section 3.4, the "REVOLVING COMMITTED AMOUNT"); PROVIDED, FURTHER, (A)
with regard to each Lender individually, such Lender's outstanding
Revolving Loans shall not exceed such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount, and (B) the aggregate
principal amount of outstanding Revolving Loans PLUS LOC Obligations
outstanding shall not exceed the Revolving Committed Amount. Revolving
Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request; PROVIDED, HOWEVER,
that no more than 16 Eurodollar Loans shall be outstanding hereunder at
any time. For purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they
begin on the same date, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new
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Eurodollar Loan with a single Interest Period. Revolving Loans hereunder
may be repaid and reborrowed in accordance with the provisions hereof.
(b) REVOLVING LOAN BORROWINGS.
(i) NOTICE OF BORROWING. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephonic notice
promptly confirmed in writing) to the Agent not later than 12:00
Noon (Charlotte, North Carolina time) on the Business Day prior to
the date of the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the borrowing
shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest Period
in the case of a Eurodollar Loan, then such notice shall be deemed
to be a request for an Interest Period of one month, or (II) the
type of Revolving Loan requested, then such notice shall be deemed
to be a request for a Base Rate Loan hereunder. The Agent shall
give notice to each affected Lender promptly upon receipt of each
Notice of Borrowing pursuant to this Section 2.1(b)(i), the
contents thereof and each such Lender's share of any borrowing to
be made pursuant thereto.
(ii) MINIMUM AMOUNTS. Each Eurodollar Loan and Base Rate Loan
that is a Revolving Loan shall be in a minimum aggregate principal
amount of $1,000,000 and integral multiples of $100,000 in excess
thereof (or the remaining amount of the Revolving Committed Amount,
if less).
(iii) ADVANCES. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available to
the Agent for the account of the Borrower as specified in SECTION
3.15(a), or in such other manner as the Agent may specify in
writing, by 2:00 P.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing in Dollars and in
funds immediately available to the Agent. Such borrowing will then
be made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Lenders
and in like funds as received by the Agent.
(c) REPAYMENT. The principal amount of all Revolving Loans shall
be due and payable in full on the Maturity Date, unless accelerated
sooner pursuant to Section 9.2.
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(d) INTEREST. Subject to the provisions of Section 3.1,
(i) BASE RATE LOANS. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) REVOLVING NOTES. The Revolving Loans made by each Lender shall
be evidenced by a duly executed promissory note of the Borrower to such
Lender in an original principal amount equal to such Lender's Revolving
Commitment Percentage of the Revolving Committed Amount and in
substantially the form of EXHIBIT 2.1(e).
2.2 LETTER OF CREDIT SUBFACILITY.
(a) ISSUANCE. Subject to the terms and conditions hereof and of
the LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender
agrees to issue, and each Lender severally agrees to participate in the
issuance by the Issuing Lender of, standby and trade Letters of Credit
in Dollars from time to time from the Effective Date until the date five
(5) days prior to the Maturity Date as the Borrower may request, in a
form acceptable to the Issuing Lender; PROVIDED, HOWEVER, that (i) the
LOC Obligations outstanding shall not at any time exceed EIGHT MILLION
DOLLARS ($8,000,000) (the "LOC COMMITTED AMOUNT") and (ii) the sum of
the aggregate principal amount of outstanding Revolving Loans PLUS LOC
Obligations outstanding shall not at any time exceed the Revolving
Committed Amount. No Letter of Credit shall (x) have an original expiry
date more than one year from the date of issuance or (y) as originally
issued or as extended, have an expiry date extending beyond the Maturity
Date. Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry dates of each Letter of Credit shall
be a Business Day.
(b) NOTICE AND REPORTS. The request for the issuance of a Letter
of Credit shall be submitted by the Borrower to the Issuing Lender at
least three (3) Business Days prior to the requested date of issuance.
The Issuing Lender will, at least quarterly and more frequently upon
request, disseminate to each of the Lenders a detailed report specifying
the Letters of Credit which are then issued and outstanding and any
activity with respect thereto which may have occurred since the date of
the prior report, and including therein, among other things, the
beneficiary, the face amount and the expiry date, as well as any payment
or expirations which may have occurred.
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(c) PARTICIPATION. Each Lender, upon issuance of a Letter
of Credit, shall be deemed to have purchased without recourse a
Participation Interest from the applicable Issuing Lender in such Letter
of Credit and the obligations arising thereunder and any collateral
relating thereto, in each case in an amount equal to its pro rata share
of the obligations under such Letter of Credit (based on the respective
Revolving Commitment Percentages of the Lenders) and shall absolutely,
unconditionally and irrevocably assume and be obligated to pay to the
Issuing Lender and discharge when due, its pro rata share of the
obligations arising under such Letter of Credit. Without limiting the
scope and nature of each Lender's Participation Interest in any Letter
of Credit, to the extent that the Issuing Lender has not been reimbursed
as required hereunder or under any such Letter of Credit, each such
Lender shall pay to the Issuing Lender its pro rata share of such
unreimbursed drawing in same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to the provisions of
subsection (d) below. The obligation of each Lender to so reimburse the
Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the Issuing
Lender under any Letter of Credit, together with interest as hereinafter
provided.
(d) REIMBURSEMENT. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify the Issuing Lender that the
Borrower intends to otherwise reimburse the Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the Lenders
make a Revolving Loan in the amount of the drawing as provided in
subsection (e) below on the related Letter of Credit, the proceeds of
which will be used to satisfy the related reimbursement obligations.
The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a
Revolving Loan obtained hereunder or otherwise) in same day funds. If
the Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear interest
at a per annum rate equal to the Adjusted Base Rate PLUS 2%. The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
setoff, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the beneficiary
of the Letter of Credit drawn upon or any other Person, including
without limitation any defense based on any failure of the Borrower or
any other Credit Party to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The
Issuing Lender will promptly notify the other Lenders of the amount of
any unreimbursed drawing and each Lender shall promptly pay to the Agent
for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's pro rata share of such
unreimbursed drawing. Such payment shall be made on the day such notice
is received by such Lender from the Issuing Lender if such notice is
received at or before 2:00 P.M. (Charlotte, North Carolina time)
otherwise such payment shall be made at or before 12:00 Noon (Charlotte,
North Carolina time) on the Business Day next succeeding the day such
notice is received. If such Lender does not pay such amount to the
Issuing Lender in full upon such request, such Lender shall, on demand,
pay to the Agent for the account of the Issuing Lender interest on the
unpaid amount during the
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period from the date of such drawing until such Lender pays such amount
to the Issuing Lender in full at a rate per annum equal to, if paid
within two (2) Business Days of the date that such Lender is required to
make payments of such amount pursuant to the preceding sentence, the
Federal Funds Rate and thereafter at a rate equal to the Base Rate.
Each Lender's obligation to make such payment to the Issuing Lender, and
the right of the Issuing Lender to receive the same, shall be absolute
and unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the obligations of the Borrower hereunder and shall
be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and
without any further action on the part of the Issuing Lender or such
Lender, acquire a Participation Interest in an amount equal to such
payment (excluding the portion of such payment constituting interest
owing to the Issuing Lender) in the related unreimbursed drawing portion
of the LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrower with respect
thereto.
(e) REPAYMENT WITH REVOLVING LOANS. On any day on which
the Borrower shall have requested, or been deemed to have requested, a
Revolving Loan advance to reimburse a drawing under a Letter of Credit,
the Agent shall give notice to the Lenders that a Revolving Loan has
been requested or deemed requested by the Borrower to be made in
connection with a drawing under a Letter of Credit, in which case a
Revolving Loan advance comprised of Base Rate Loans (or Eurodollar Loans
to the extent the Borrower has complied with the procedures of Section
2.1(b)(i) with respect thereto) shall be immediately made to the
Borrower by all Lenders (notwithstanding any termination of the
Commitments pursuant to Section 9.2) PRO RATA based on the respective
Revolving Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section
9.2) and the proceeds thereof shall be paid directly to the Issuing
Lender for application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make its pro rata share of each such
Revolving Loan immediately upon any such request or deemed request in
the amount, in the manner and on the date specified in the preceding
sentence NOTWITHSTANDING (i) the amount of such borrowing may not comply
with the minimum amount for advances of Revolving Loans otherwise
required hereunder, (ii) whether any conditions specified in Section 5.3
are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) failure for any such request or deemed request for
Revolving Loan to be made by the time otherwise required hereunder, (v)
whether the date of such borrowing is a date on which Revolving Loans
are otherwise permitted to be made hereunder or (vi) any termination of
the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving
Loan cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower or any
Credit Party), then each such Lender hereby agrees that it shall
forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Issuing Lender such
Participation Interests in the outstanding LOC Obligations as shall be
necessary to cause each such
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Lender to share in such LOC Obligations ratably (based upon the
respective Revolving Commitment Percentages of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to
Section 9.2)), PROVIDED that at the time any purchase of Participation
Interests pursuant to this sentence is actually made, the purchasing
Lender shall be required to pay to the Issuing Lender, to the extent not
paid to the Issuer by the Borrower in accordance with the terms of
subsection (d) above, interest on the principal amount of Participation
Interests purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date
of payment for such Participation Interests, at the rate equal to, if
paid within two (2) Business Days of the date of the Revolving Loan
advance, the Federal Funds Rate, and thereafter at a rate equal to the
Base Rate.
(f) DESIGNATION OF CONSOLIDATED PARTIES AS ACCOUNT PARTIES.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a), a Letter of
Credit issued hereunder may contain a statement to the effect that such
Letter of Credit is issued for the account of a Consolidated Party other
than the Borrower, provided that notwithstanding such statement, the
Borrower shall be the actual account party for all purposes of this
Credit Agreement for such Letter of Credit and such statement shall not
affect the Borrower's reimbursement obligations hereunder with respect
to such Letter of Credit.
(g) RENEWAL, EXTENSION. The renewal or extension of any
Letter of Credit shall, for purposes hereof, be treated in all respects
the same as the issuance of a new Letter of Credit hereunder.
(h) UNIFORM CUSTOMS AND PRACTICES. The Issuing Lender may
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (the "UCP"), in which case the
UCP may be incorporated therein and deemed in all respects to be a part
thereof.
(i) INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(i) In addition to its other obligations under this
Section 2.2, the Borrower hereby agrees to pay, and protect,
indemnify and save each Lender harmless from and against, any and
all claims, demands, liabilities, damages, losses, costs, charges
and expenses (including reasonable attorneys' fees) that such
Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or (B) the
failure of such Lender to honor a drawing under a Letter of Credit
as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or
Governmental Authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Lenders
(including the Issuing Lender), the Borrower shall assume all risks
of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. No Lender (including the Issuing
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Lender) shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid
or ineffective for any reason; (C) for errors, omissions,
interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher; (D) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under
a Letter of Credit or of the proceeds thereof; and (E) for any
consequences arising from causes beyond the control of such Lender,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any
action taken or omitted by any Lender (including the Issuing
Lender), under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not
put such Lender under any resulting liability to the Borrower or
any other Credit Party. It is the intention of the parties that
this Credit Agreement shall be construed and applied to protect and
indemnify each Lender (including the Issuing Lender) against any
and all risks involved in the issuance of the Letters of Credit,
all of which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. No Lender (including the
Issuing Lender) shall, in any way, be liable for any failure by
such Lender or anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other cause beyond
the control of such Lender.
(iv) Nothing in this subsection (h) is intended to
limit the reimbursement obligations of the Borrower contained in
subsection (d) above. The obligations of the Borrower under this
subsection (h) shall survive the termination of this Credit
Agreement. No act or omissions of any current or prior beneficiary
of a Letter of Credit shall in any way affect or impair the rights
of the Lenders (including the Issuing Lender) to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (h), the Borrower shall have no
obligation to indemnify any Lender (including the Issuing Lender)
in respect of any liability incurred by such Lender (A) arising
solely out of the gross negligence or willful misconduct of such
Lender, as determined by a court of competent jurisdiction, or (B)
caused by such Lender's failure to pay under any Letter of Credit
after presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit, as determined by a
court of competent jurisdiction, unless such payment is prohibited
by any law, regulation, court order or decree.
37
<PAGE>
(j) RESPONSIBILITY OF ISSUING LENDER. It is expressly
understood and agreed that the obligations of the Issuing Lender
hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Lender shall be entitled to assume
that the conditions precedent set forth in Section 5.3 have been
satisfied unless it shall have acquired actual knowledge that any such
condition precedent has not been satisfied; PROVIDED, HOWEVER, that
nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section
2.2 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
(k) CONFLICT WITH LOC DOCUMENTS. In the event of any
conflict between this Credit Agreement and any LOC Document (including
any letter of credit application), this Credit Agreement shall control.
2.3 ACQUISITION LOANS.
(a) ACQUISITION LOAN COMMITMENT. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to make
available to the Borrower such Lender's Acquisition Loan Commitment
Percentage of revolving credit loans requested by the Borrower in
Dollars ("ACQUISITION LOANS") from time to time from the Effective Date
until October 14, 1999, or such earlier date as the Acquisition Loan
Commitments shall have been terminated as provided herein for the
purpose of financing the purchase price of, and fees and expenses in
connection with, Permitted Acquisitions and Permitted Capital
Expenditures; PROVIDED, HOWEVER, that the sum of the aggregate principal
amount of outstanding Acquisition Loans shall not exceed FIFTY MILLION
DOLLARS ($50,000,000) (as such aggregate maximum amount may be reduced
or increased from time to time as provided in Section 3.4, the
"ACQUISITION LOAN COMMITTED AMOUNT"); PROVIDED, FURTHER, (A) with regard
to each Lender individually, such Lender's outstanding Acquisition Loans
shall not exceed such Lender's Acquisition Loan Commitment Percentage of
the Acquisition Loan Committed Amount, and (B) the aggregate principal
amount of outstanding Acquisition Loans shall not exceed the Acquisition
Loan Committed Amount. Acquisition Loans may consist of Base Rate Loans
or Eurodollar Loans, or a combination thereof, as the Borrower may
request; PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall
be outstanding hereunder at any time. For purposes hereof, Eurodollar
Loans with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period.
Acquisition Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.
38
<PAGE>
(b) ACQUISITION LOAN BORROWINGS.
(i) NOTICE OF BORROWING. The Borrower shall request an
Acquisition Loan borrowing by written notice (or telephonic notice
promptly confirmed in writing) to the Agent not later than 12:00 Noon
(Charlotte, North Carolina time) on the Business Day prior to the date
of the requested borrowing in the case of Base Rate Loans, and on the
third Business Day prior to the date of the requested borrowing in the
case of Eurodollar Loans. Each such request for borrowing shall (A) be
irrevocable, (B) specify (1) that an Acquisition Loan is requested, (2)
the date of the requested borrowing (which shall be a Business Day), (3)
the aggregate principal amount to be borrowed, (4) whether the borrowing
shall be comprised of Base Rate Loans, Eurodollar Loans or a combination
thereof, and if Eurodollar Loans are requested, the Interest Period(s)
therefor and (C) be accompanied by a certificate of the chief financial
of the Borrower describing in reasonable detail the Permitted
Acquisition to which such requested borrowing relates. If the Borrower
shall fail to specify in any such Notice of Borrowing (I) an applicable
Interest Period in the case of a Eurodollar Loan, then such notice shall
be deemed to be a request for an Interest Period of one month, or (II)
the type of Acquisition Loan requested, then such notice shall be deemed
to be a request for a Base Rate Loan hereunder. The Agent shall give
notice to each affected Lender promptly upon receipt of each Notice of
Borrowing pursuant to this Section 2.3(b)(i), the contents thereof and
each such Lender's share of any borrowing to be made pursuant thereto.
(ii) MINIMUM AMOUNTS. Each Eurodollar Loan or Base Rate
Loan that is an Acquisition Loan shall be in a minimum aggregate
principal amount of $1,000,000 and integral multiples of $100,000 in
excess thereof (or the remaining amount of the Acquisition Loan
Committed Amount, if less).
(iii) ADVANCES. Each Lender will make its Acquisition Loan
Commitment Percentage of each Acquisition Loan borrowing available to
the Agent for the account of the Borrower as specified in SECTION
3.15(a), or in such other manner as the Agent may specify in writing, by
2:00 P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent.
(c) REPAYMENT.
(i) The principal amount of all Acquisition Loans advanced
during the period from the Effective Date to and including October 14,
1998 shall be repaid in twenty (20) consecutive quarterly installments
as follows, unless accelerated sooner pursuant to Section 9.2:
39
<PAGE>
- ----------------------------------------------------------------
PRINCIPAL
PRINCIPAL AMORTIZATION AMORTIZATION
PAYMENT DATES PAYMENT
- -----------------------------------------------------------------
December 31, 1998, March 31, 3.75%
1999, June 30, 1999 and
September 30, 1999
- -----------------------------------------------------------------
December 31, 1999, March 31, 4.375%
2000, June 30, 2000 and
September 30, 2000
- -----------------------------------------------------------------
December 31, 2000, March 31, 5.0%
2001, June 30, 2001 and
September 30, 2001
- -----------------------------------------------------------------
December 31, 2001, March 31, 5.625%
2002, June 30, 2002 and
September 30, 2002
- -----------------------------------------------------------------
December 31, 2002, March 31, 6.25%
2003, June 30, 2003 and
September 30, 2003
- -----------------------------------------------------------------
(ii) The principal amount of all Acquisition Loans advanced
during the period from October 14, 1998 to and including October 14,
1999 shall be repaid in sixteen (16) consecutive quarterly installments
as follows, unless accelerated sooner pursuant to Section 9.2:
- ----------------------------------------------------------------
PRINCIPAL
PRINCIPAL AMORTIZATION AMORTIZATION
PAYMENT DATES PAYMENT
- -----------------------------------------------------------------
December 31, 1999, March 31, 5.0%
2000, June 30, 2000 and
September 30, 2000
- -----------------------------------------------------------------
December 31, 2000, March 31, 6.25%
2001, June 30, 2001 and
September 30, 2001
- -----------------------------------------------------------------
December 31, 2001, March 31, 6.25%
2002, June 30, 2002 and
September 30, 2002
- -----------------------------------------------------------------
December 31, 2002, March 31, 7.5%
2003, June 30, 2003 and
September 30, 2003
- -----------------------------------------------------------------
40
<PAGE>
(d) INTEREST. Subject to the provisions of Section 3.1,
(i) BASE RATE LOANS. During such periods as
Acquisition Loans shall be comprised in whole or in part of Base
Rate Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as
Acquisition Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at a per
annum rate equal to the Adjusted Eurodollar Rate.
Interest on Acquisition Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) ACQUISITION NOTES. The Acquisition Loans made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in an original principal amount equal to such
Lender's Acquisition Loan Commitment Percentage of the Acquisition Loan
Committed Amount and in substantially the form of EXHIBIT 2.3(e).
2.4 TRANCHE A TERM LOAN.
(a) TRANCHE A TERM COMMITMENT. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein each Lender severally agrees to make
available to the Borrower on the Effective Date such Lender's Tranche A
Term Loan Commitment Percentage of a term loan in Dollars (the "TRANCHE
A TERM LOAN") in the aggregate principal amount of TWENTY MILLION
DOLLARS ($20,000,000) (the "TRANCHE A TERM LOAN COMMITTED AMOUNT") for
the purposes hereinafter set forth. The Tranche A Term Loan may consist
of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrower may request; PROVIDED, HOWEVER, that no more than 16 Eurodollar
Loans shall be outstanding hereunder at any time. For purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period.
Amounts repaid on the Tranche A Term Loan may not be reborrowed.
(b) BORROWING PROCEDURES. The Borrower shall submit an
appropriate Notice of Borrowing to the Agent not later than 12:00 Noon
(Charlotte, North Carolina time) on the Effective Date, with respect to the
portion of the Tranche A Term Loan initially consisting of a Base Rate
Loan, or on the third Business Day prior to the Effective Date, with
respect to the portion of the Tranche A Term Loan initially consisting of
one or more Eurodollar Loans, which Notice of Borrowing shall be
irrevocable and shall specify (i) that the funding of a Tranche A Term Loan
is requested and (ii) whether the funding of the Tranche A Term Loan shall
be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof,
and if Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrower shall fail to deliver such Notice of Borrowing to the Agent by
12:00 Noon. (Charlotte, North
41
<PAGE>
Carolina time) on the third Business Day prior to the Effective Date, then
the full amount of the Tranche A Term Loan shall be disbursed on the
Effective Date as a Base Rate Loan. Each Lender shall make its Tranche A
Term Loan Commitment Percentage of the Tranche A Term Loan available to
the Agent for the account of the Borrower at the office of the Agent
specified in SCHEDULE 2.1(a), or at such other office as the Agent may
designate in writing, by 2:00 P.M. (Charlotte, North Carolina time) on
the Effective Date in Dollars and in funds immediately available to the
Agent.
(c) MINIMUM AMOUNTS. Each Eurodollar Loan or Base Rate Loan
that is part of the Tranche A Term Loan shall be in an aggregate principal
amount that is not less than $2,500,000 and integral multiples of $500,000
(or the then remaining principal balance of the Tranche A Term Loan, if
less).
(d) REPAYMENT OF TRANCHE A TERM LOAN. The principal amount
of the Tranche A Term Loan shall be repaid in twenty (19) consecutive
quarterly installments as follows, unless accelerated sooner pursuant to
Section 9.2:
42
<PAGE>
- -----------------------------------------------------------------
TRANCHE A TERM
PRINCIPAL AMORTIZATION LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION
PAYMENT
- -----------------------------------------------------------------
March 31, 1998, June 30, 1998 $666,666.67
and September 30, 1998
- -----------------------------------------------------------------
December 31, 1998, March 31, $750,000
1999, June 30, 1999 and
September 30, 1999
- -----------------------------------------------------------------
December 31, 1999, March 31, $1,000,000
2000, June 30, 2000 and
September 30, 2000
- -----------------------------------------------------------------
December 31, 2000, March 31, $1,250,000
2001, June 30, 2001 and
September 30, 2001
- -----------------------------------------------------------------
December 31, 2001, March 31, $1,500,000
2002, June 30, 2002 and
September 30, 2002
- -----------------------------------------------------------------
(e) INTEREST. Subject to the provisions of Section 3.1, the
Tranche A Term Loan shall bear interest at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as the
Tranche A Term Loan shall be comprised in whole or in part of Base
Rate Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as the
Tranche A Term Loan shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at a per
annum rate equal to the Adjusted Eurodollar Rate.
Interest on the Tranche A Term Loan shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(f) TRANCHE A TERM NOTES. The portion of the Tranche A Term
Loan made by each Lender shall be evidenced by a duly executed promissory
note of the Borrower to such Lender in an original principal amount equal
to such Lender's Tranche A Term Loan Commitment Percentage of the Tranche A
Term Loan and substantially in the form of EXHIBIT 2.4(f).
43
<PAGE>
2.5 TRANCHE B TERM LOAN.
(a) TRANCHE B TERM COMMITMENT. Subject to the terms and
conditions hereof and in reliance upon the representations and warranties
set forth herein, each Lender severally agrees to make available to the
Borrower on the Effective Date such Lender's Tranche B Term Loan Commitment
Percentage of a term loan in Dollars (the "TRANCHE B TERM LOAN") in the
aggregate principal amount of THIRTY MILLION DOLLARS ($30,000,000) (the
"TRANCHE B TERM LOAN COMMITTED AMOUNT") for the purposes hereinafter set
forth. The Tranche B Term Loan may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request;
PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall be
outstanding hereunder at any time. For purposes hereof, Eurodollar Loans
with different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings, extensions
and conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period. Amounts repaid on the Tranche B Term Loan
may not be reborrowed.
(b) BORROWING PROCEDURES. The Borrower shall submit an
appropriate Notice of Borrowing to the Agent not later than 12:00 Noon
(Charlotte, North Carolina time) on the Effective Date, with respect to the
portion of the Tranche B Term Loan initially consisting of a Base Rate
Loan, or on the third Business Day prior to the Effective Date, with
respect to the portion of the Tranche B Term Loan initially consisting of
one or more Eurodollar Loans, which Notice of Borrowing shall be
irrevocable and shall specify (i) that the funding of a Tranche B Term Loan
is requested and (ii) whether the funding of the Tranche B Term Loan shall
be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof,
and if Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrower shall fail to deliver such Notice of Borrowing to the Agent by
12:00 Noon (Charlotte, North Carolina time) on the third Business Day prior
to the Effective Date, then the full amount of the Tranche B Term Loan
shall be disbursed on the Effective Date as a Base Rate Loan. Each Lender
shall make its Tranche B Term Loan Commitment Percentage of the Tranche B
Term Loan available to the Agent for the account of the Borrower at the
office of the Agent specified in SCHEDULE 2.1(a), or at such other office
as the Agent may designate in writing, by 2:00 P.M. (Charlotte, North
Carolina time) on the Effective Date in Dollars and in funds immediately
available to the Agent.
(c) MINIMUM AMOUNTS. Each Eurodollar Loan or Base Rate Loan
that is part of the Tranche B Term Loan shall be in an aggregate principal
amount that is not less than $2,500,000 and integral multiples of $500,000
(or the then remaining principal balance of the Tranche B Term Loan, if
less).
(d) REPAYMENT OF TRANCHE B TERM LOAN. The principal amount
of the Tranche B Term Loan shall be repaid in twenty-eight (27) consecutive
quarterly installments as follows, unless accelerated sooner pursuant to
Section 9.2:
44
<PAGE>
- -----------------------------------------------------------------------
TRANCHE B TERM
PRINCIPAL AMORTIZATION LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION
PAYMENT
- -----------------------------------------------------------------------
March 31, 1998, June 30, 1998 $333,333.33
and September 30, 1998
- -----------------------------------------------------------------------
December 31, 1998, March 31, $250,000
1999, June 30, 1999, September 30,
1999, December 31, 1999, March 31,
2000, June 30, 2000, September 30,
2000, December 31, 2000, March 31,
2001, June 30, 2001, September 30,
2001, December 31, 2001, March 31,
2002, June 30, 2002 and
September 30, 2002
- -----------------------------------------------------------------------
December 31, 2002, March 31, $2,500,000
2003, June 30, 2003 and
September 30, 2003
- -----------------------------------------------------------------------
December 31, 2003, March 31, $3,750,000
2004, June 30, 2004 and
September 30, 2004
- -----------------------------------------------------------------------
(e) INTEREST. Subject to the provisions of Section 3.1, the
Tranche B Term Loan shall bear interest at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as the
Tranche B Term Loan shall be comprised in whole or in part of Base
Rate Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as the
Tranche B Term Loan shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at a per
annum rate equal to the Adjusted Eurodollar Rate.
Interest on the Tranche B Term Loan shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(f) TRANCHE B TERM NOTES. The portion of the Tranche B Term
Loan made by each Lender shall be evidenced by a duly executed promissory
note of the Borrower to such Lender in an original principal amount equal
to such Lender's Tranche B Term Loan Commitment Percentage of the Tranche B
Term Loan and substantially in the form of EXHIBIT 2.5(f).
45
<PAGE>
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees or other amounts, then the Adjusted Base Rate PLUS 2%).
3.2 EXTENSION AND CONVERSION.
Subject to the terms of Section 5.3, the Borrower shall have the option, on
any Business Day, to extend existing Loans into a subsequent permissible
Interest Period or to convert Loans into Loans of another interest rate type;
PROVIDED, HOWEVER, that (i) except as provided in Section 3.8, Eurodollar Loans
may be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base Rate
Loans may be converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion, (iii) Loans
extended as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "INTEREST PERIOD" set forth in Section 1.1 and shall be in
such minimum amounts as provided in, with respect to Revolving Loans, Section
2.1(b)(ii), with respect to Acquisition Loans, Section 2.3(b)(ii), with respect
to the Tranche A Term Loan, Section 2.4(c), or, with respect to the Tranche B
Term Loan, Section 2.5(c), (iv) no more than 16 Eurodollar Loans shall be
outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period) and (v) any request for extension
or conversion of a Eurodollar Loan which shall fail to specify an Interest
Period shall be deemed to be a request for an Interest Period of one month.
Each such extension or conversion shall be effected by the Borrower by giving a
Notice of Extension/Conversion (or telephonic notice promptly confirmed in
writing) to the office of the Agent specified in specified in SCHEDULE 2.1(a),
or at such other office as the Agent may designate in writing, prior to 12:00
Noon (Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall be irrevocable and shall constitute a representation and warranty by the
Borrower of the matters specified in subsections (b), (c) and (d) of
Section 5.3. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this Section, or any
such conversion or extension is not
46
<PAGE>
permitted or required by this Section, then such Eurodollar Loan shall be
automatically converted into a Base Rate Loan at the end of the Interest
Period applicable thereto. The Agent shall give each Lender notice as
promptly as practicable of any such proposed extension or conversion
affecting any Loan.
3.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower shall have the
right to prepay Loans in whole or in part from time to time, but
otherwise without premium or penalty; PROVIDED, HOWEVER, that each
partial prepayment of Loans shall be in a minimum principal amount of
$2,500,000 and integral multiples of $500,000. Subject to the foregoing
terms, amounts prepaid under this Section 3.3(a) shall be applied as the
Borrower may elect; PROVIDED that if the Borrower fails to specify a
voluntary prepayment then such prepayment shall be applied first to
Revolving Loans, second to the outstanding revolving loan portion of the
Acquisition Loans and third pro rata to the outstanding term loan
portion of the Acquisition Loans, the Tranche A Term Loan and the
Tranche B Term Loan (in each case ratably to the remaining Principal
Amortization Payments thereof), in each case first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest Period
maturities. One or more holders of the Tranche B Term Loans may decline
to accept a voluntary prepayment under this Sections 3.3(a) to the
extent there are sufficient Tranche A Term Loans outstanding and/or
outstandings under the term loan portion of the Acquisition Loans to be
paid with such prepayment, in which case such declined prepayments shall
be allocated pro rata among the outstanding term loan portion of the
Acquisition Loans, the Tranche A Term Loans and the Tranche B Term Loans
held by Lenders accepting such prepayment. All prepayments under this
Section 3.3(a) shall be subject to Section 3.12 and be accompanied by
interest on the principal amount prepaid through the date of prepayment.
(b) MANDATORY PREPAYMENTS.
(i) REVOLVING COMMITTED AMOUNT. If at any time, the
sum of the aggregate principal amount of outstanding Revolving Loans
PLUS LOC Obligations outstanding shall exceed the Revolving Committed
Amount, the Borrower immediately shall prepay the Revolving Loans and
(after all Revolving Loans have been repaid) cash collateralize the
LOC Obligations, in an amount sufficient to eliminate such excess.
(ii) EXCESS CASH FLOW. Within 90 days after the end
of each fiscal year (commencing with the fiscal year ending June
30, 1998), the Borrower shall prepay the Loans in an amount equal
to (w) 50% of the Excess Cash Flow earned during such prior fiscal
year LESS (x) the amount of any voluntary prepayments of the
Tranche A Term Loan, the Tranche B Term Loan, (to the extent
accompanied by a reduction in the Revolving Committed Amount) the
Revolving Loans or (to the extent accompanied by a reduction in the
Acquisition Loan Committed Amount) the Acquisition Loans pursuant
to Section 3.3(a) during such prior fiscal year LESS (z) the amount
of any mandatory prepayments of the Tranche A Term Loan, the
47
<PAGE>
Tranche B Term Loan, (to the extent accompanied by a reduction in the
Revolving Committed Amount) the Revolving Loans or (to the extent
accompanied by a reduction in the Acquisition Loan Committed Amount)
the Acquisition Loans pursuant to Section 3.3(b)(iii), (iv) or (v)
during such prior fiscal year. Any payments of Excess Cash Flow
shall be applied as set forth in clause (vii) below.
(iii) ASSET DISPOSITIONS. Immediately upon the
occurrence of any Asset Disposition Prepayment Event, the Borrower
shall prepay the Loans in an aggregate amount equal to 100% of the
Net Cash Proceeds of the related Asset Disposition not applied (or
caused to be applied) by the Consolidated Parties during the related
Application Period to the purchase, acquisition or construction of
Eligible Assets as contemplated by the terms of Section 8.5(e)
(such prepayment to be applied as set forth in clause (vii) below).
(iv) DEBT ISSUANCES. Immediately upon receipt by any
Consolidated Party of proceeds from any Debt Issuance (excluding
Indebtedness permitted pursuant to Section 8.1), the Borrower shall
prepay the Loans in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Debt Issuance to the Lenders (such prepayment
to be applied as set forth in clause (vii) below).
(v) ISSUANCES OF EQUITY. Immediately upon receipt by
a Consolidated Party of proceeds from any Equity Issuance other
than an Excluded Equity Issuance, the Borrower shall prepay the
Loans in an aggregate amount equal to (a) if (after giving effect on
a pro forma basis to the reduction of Indebtedness resulting from
the prepayment required hereunder in connection with such Equity
Issuance) the Leverage Ratio as of the most recent fiscal quarter
end preceding the date of such Equity Issuance with respect to which
the Agent has received the Required Financial Information is equal
to or greater than 2.25 to 1.00, 66-2/3% of the Net Cash Proceeds
of such Equity Issuance or (b) if (after giving effect on a pro
forma to the reduction of Indebtedness resulting from the prepayment
required hereunder in connection with such Equity Issuance) the
Leverage Ratio as of the most recent fiscal quarter end preceding
the date of such Equity Issuance with respect to which
the Agent has received the Required Financial Information is less
than 2.25 to 1.00, 33-1/3% of the Net Cash Proceeds of such Equity
Issuance (such prepayments shall be applied as set forth in
clause (vii) below).
(vi) ACQUISITION PURCHASE PRICE REDUCTIONS.
Immediately upon receipt by a Consolidated Party of proceeds from a
post-closing purchase price reduction in respect of any Acquisition
financed in whole or in part with the proceeds of any Acquisition
Loans, the Borrower shall prepay the Loans to the Lenders in an
aggregate amount equal to 100% of such purchase price reduction
(such prepayments shall be applied as set forth in clause (vii)
below).
(vii) APPLICATION OF MANDATORY PREPAYMENTS. All
amounts required to be paid pursuant to this Section 3.3(b) shall
be applied as follows: (A) with respect to all amounts prepaid
pursuant to Section 3.3(b)(i), to Revolving Loans and (after all
48
<PAGE>
Revolving Loans have been repaid) to a cash collateral account in
respect of LOC Obligations, (B) with respect to all amounts prepaid
pursuant to Section 3.3(b)(ii), pro rata to the Tranche A Term Loan,
the Tranche B Term Loan and, if applicable, any term loan portion of
the Acquisition Loans (in each case ratably to the remaining
Principal Amortization Payments thereof), (C) with respect to all
amounts prepaid pursuant to Section 3.3(b)(iii) (other than in
respect of any Asset Disposition involving Property described on
SCHEDULE 3.3(b)(vii)), (iv) or (v), pro rata to (1) Revolving Loans
and (after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations (with a
corresponding reduction in the Revolving Committed Amount in an
amount equal to all amounts applied pursuant to this clause (1)),
(2) any term loan portion of the Acquisition Loans (ratably to the
remaining Principal Amortization Payments thereof), (3) the Tranche
A Term Loan (ratably to the remaining Principal Amortization
Payments thereof) and the Tranche B Term Loan (ratably to the
remaining Principal Amortization Payments thereof), (D) with
respect to all amounts prepaid pursuant to Section 3.3(b)(iii) in
respect of any Asset Disposition involving Property described on
SCHEDULE 3.3(b)(vii), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in respect of
LOC Obligations (without any reduction in the Revolving Committed
Amount) and (E) with respect to all amounts prepaid pursuant to
Section 3.3(b)(vi), first, to any revolving loan portion of the
Acquisition Loans (ratably to the remaining Principal Amortization
Payments thereof) and then to any term loan portion of the
Acquisition Loans (ratably to the remaining Principal Amortization
Payments thereof). One or more holders of the Tranche B Term Loans
may decline to accept a mandatory prepayment under Sections
3.3(b)(ii), (iii), (iv) or (v) to the extent there are sufficient
outstandings under the Tranche A Term Loans and/or any term portion
of the Acquisition Loans to be paid with such prepayment, in which
case such declined prepayments shall be allocated pro rata the term
loan portion(s) of the Acquisition Loans, the Tranche A Term Loans
and the Tranche B Term Loans held by Lenders accepting such
prepayments. Within the parameters of the applications set forth
above, prepayments shall be applied first to Base Rate Loans and
then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.12 and be accompanied by interest on the
principal amount prepaid through the date of prepayment.
3.4 TERMINATION AND REDUCTION OF COMMITTED AMOUNTS; INCREASE
OF COMMITMENT.
(a) TERMINATION AND REDUCTION OF COMMITTED AMOUNTS.
(i) VOLUNTARY REDUCTIONS.
(A) The Borrower may from time to time permanently
reduce or terminate the Revolving Committed Amount in whole or in part
(in minimum aggregate amounts of $2,500,000 or in integral multiples
of $500,000 in excess
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thereof (or, if less, the full remaining amount of the then
applicable Revolving Committed Amount)) upon five Business Days'
prior written notice to the Agent; PROVIDED, HOWEVER, no such
termination or reduction shall be made which would cause the
aggregate principal amount of outstanding Revolving Loans PLUS LOC
Obligations outstanding to exceed the Revolving Committed Amount,
unless, concurrently with such termination or reduction, the
Revolving Loans are repaid to the extent necessary to eliminate
such excess. The Agent shall promptly notify each affected Lender
of receipt by the Agent of any notice from the Borrower pursuant to
this Section 3.4(a)(i).
(B) The Borrower may from time to time permanently
reduce or terminate the Acquisition Loan Committed Amount in whole
or in part (in minimum aggregate amounts of $2,500,000 or in
integral multiples of $500,000 in excess thereof (or, if less, the
full remaining amount of the then applicable Acquisition Loan
Committed Amount)) upon five Business Days' prior written notice to
the Agent; PROVIDED, HOWEVER, no such termination or reduction
shall be made which would cause the aggregate principal amount of
outstanding Acquisition Loans to exceed the Acquisition Loan
Committed Amount, unless, concurrently with such termination or
reduction, the Acquisition Loans are repaid to the extent necessary
to eliminate such excess. The Agent shall promptly notify each
affected Lender of receipt by the Agent of any notice from the
Borrower pursuant to this Section 3.4(a)(ii).
(ii) MANDATORY REDUCTIONS.
(A) On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section 3.3(b)(iii)
the Revolving Committed Amount automatically shall be permanently
reduced by the amount of such required prepayment and/or reduction.
(B) The Acquisition Loan Committed Amount
automatically shall be (A) permanently reduced on October 14, 1998
by an amount equal to the principal amount of all Acquisition Loans
advanced during the period from the Effective Date to and including
October 14, 1998 and (B) terminated on October 14, 1999.
(iii) MATURITY DATE. The Revolving Commitments of the Lenders,
the LOC Commitment of the Issuing Lender and the Acquisition Loan
Commitments of the Lenders automatically shall terminate on the Maturity
Date.
(iv) GENERAL.
(A) The Borrower shall pay to the Agent for the account
of the Lenders in accordance with the terms of Section 3.5(a)(i),
on the date of each termination or reduction of the Revolving
Committed Amount, the Revolving Unused Fee accrued through the date
of such termination or reduction on the amount of the Revolving
Committed Amount so terminated or reduced.
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<PAGE> (B) The Borrower shall pay to the Agent for the
account of the Lenders in accordance with the terms of Section
3.5(a)(ii), on the date of each termination or reduction of the
Acquisition Loan Committed Amount, the Acquisition Loan Unused Fee
accrued through the date of such termination or reduction on the
amount of the Acquisition Loan Committed Amount so terminated or
reduced.
(b) INCREASE IN ACQUISITION LOAN COMMITMENTS. The Borrower
shall have the right upon at least fifteen (15) Business Days' prior
written notice to the Agent to increase the Acquisition Loan Committed
Amount by up to $25,000,000, in a single increase, at any time on or after
the Effective Date, SUBJECT, HOWEVER, in any such case, to satisfaction of
the following conditions precedent:
(A) no Default or Event of Default has occurred and
is continuing on the date on which such Acquisition Loan Committed
Amount increase is to become effective;
(B) the representations and warranties set forth in
Section 6 of this Credit Agreement shall be true and correct in all
material respects on and as of the date on which such Acquisition
Loan Committed Amount increase is to become effective;
(C) on or before the date on which such Acquisition
Loan Committed Amount increase is to become effective, the Agent
shall have received, for its own account, the mutually acceptable
fees and expenses required by separate agreement of the Borrower
and the Agent to be paid in connection with such increase;
(D) such Acquisition Loan Committed Amount increase
shall be an integral multiple of $1,000,000 and shall in no event
be less than $5,000,000; and
(E) such requested Commitment increase shall be
effective on such date only to the extent that, on or before such
date, (A) the Agent shall have received and accepted a
corresponding amount of Additional Commitment(s) pursuant to a
commitment letter(s) acceptable to the Agent from one or more
Lenders acceptable to the Agent and, with respect to any Lender
that is not at such time a Lender hereunder, the Borrower and (B)
each such Lender has executed an agreement in the form of EXHIBIT
3.4(b) hereto (each such agreement a "NEW COMMITMENT AGREEMENT"),
accepted in writing therein by the Agent and, with respect to any
Lender that is not at such time a Lender hereunder, the Borrower,
with respect to the Additional Commitment of such Lender.
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3.5 FEES.
(a) UNUSED FEES.
(i) REVOLVING CREDIT FACILITY UNUSED FEE. In
consideration of the Revolving Commitments of the Lenders
hereunder, the Borrower agrees to pay to the Agent for the account
of each Lender a fee (the "REVOLVING UNUSED FEE") on such Lender's
Revolving Commitment Percentage of the Unused Revolving Committed
Amount computed at a per annum rate for each day during the
applicable Revolving Unused Fee Calculation Period (hereinafter
defined) at a rate equal to the Applicable Percentage in effect
from time to time. The Revolving Unused Fee shall commence to
accrue on the Effective Date and shall be due and payable in
arrears on the last business day of each March, June, September and
December (and any date that the Revolving Committed Amount is
reduced as provided in Section 3.4(a) and the Maturity Date) for
the immediately preceding quarter (or portion thereof) (each such
quarter or portion thereof for which the Revolving Unused Fee is
payable hereunder being herein referred to as an "REVOLVING UNUSED
FEE CALCULATION PERIOD"), beginning with the first of such dates to
occur after the Effective Date.
(ii) ACQUISITION LOAN UNUSED FEE. In consideration
of the Acquisition Loan Commitments of the Lenders hereunder, the
Borrower agrees to pay to the Agent for the account of each Lender
a fee (the "ACQUISITION LOAN UNUSED FEE") on such Lender's
Acquisition Loan Commitment Percentage of the Unused Acquisition
Loan Committed Amount computed at a per annum rate for each day
during the applicable Acquisition Loan Unused Fee Calculation
Period (hereinafter defined) at a rate equal to the Applicable
Percentage in effect from time to time. The Acquisition Loan
Unused Fee shall commence to accrue on the Effective Date and shall
be due and payable in arrears on the last business day of each
March, June, September and December (and any date that the
Revolving Committed Amount is reduced as provided in Section 3.4(a)
and the Maturity Date) for the immediately preceding quarter (or
portion thereof) (each such quarter or portion thereof for which
the Acquisition Loan Unused Fee is payable hereunder being herein
referred to as an "ACQUISITION LOAN UNUSED FEE CALCULATION
PERIOD"), beginning with the first of such dates to occur after the
Effective Date.
(b) LETTER OF CREDIT FEES.
(i) STANDBY LETTER OF CREDIT ISSUANCE FEE. In
consideration of the issuance of standby Letters of Credit
hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "STANDBY LETTER OF CREDIT FEE")
on such Lender's Revolving Commitment Percentage of the average
daily maximum amount available to be drawn under each such standby
Letter of Credit computed at a per annum rate for each day from the
date of issuance to the date of expiration equal to the Applicable
Percentage. The Standby Letter of Credit Fee will be payable
quarterly in arrears on the last Business Day of each March, June,
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September and December for the immediately preceding quarter (or a
portion thereof).
(ii) TRADE LETTER OF CREDIT DRAWING FEE. In
consideration of the issuance of trade Letters of Credit hereunder,
the Borrower promises to pay to the Agent for the account of each
Lender a fee (the "TRADE LETTER OF CREDIT FEE") equal to the
Applicable Percentage on such Lender's Revolving Commitment
Percentage of the amount of each drawing under any such trade
Letter of Credit. The Trade Letter of Credit Fee will be payable on
each date of drawing under a trade Letter of Credit.
(iii) ISSUING LENDER FEES. In addition to the
Standby Letter of Credit Fee payable pursuant to clause (i) above
and the Trade Letter of Credit Fee payable pursuant to clause (ii)
above, the Borrower promises to pay to the Issuing Lender for its
own account without sharing by the other Lenders (a) a standby
letter of credit fronting fee equal to 0.25% on the average daily
maximum amount available to be drawn under each such standby Letter
of Credit (such fee to be payable quarterly in arrears on the last
Business Day of each March, June, September and December for the
immediately preceding quarter (or a portion thereof)), (b) a trade
letter of credit drawing fee equal to 0.25% on the amount of each
drawing under any such trade Letter of Credit (such fee to be
payable on each date of drawing under a trade Letter of Credit) and
(c) the customary charges from time to time of the Issuing Lender
with respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of
Credit (collectively, the "ISSUING LENDER FEES").
(c) ADMINISTRATIVE FEES. The Borrower agrees to pay to the
Agent, for its own account and NationsBanc Montgomery Securities, Inc., as
applicable, the fees referred to in the Agent's Fee Letter (collectively,
the "AGENT'S FEES").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Any Lender claiming compensation under this Section 3.6 shall
furnish to the Borrower and the Agent a statement setting forth in reasonable
detail the additional amount or amounts payable to it hereunder and the
calculations used to determine such amount or amounts, which statement shall be
conclusive and binding on the
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parties hereto in the absence of manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
3.7 LIMITATION ON EURODOLLAR LOANS.
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or Convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.
3.8 ILLEGALITY.
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 REQUIREMENTS OF LAW.
(a) If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar Loans, or
change the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Credit Agreement or its Notes in
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respect of any Eurodollar Loans (other than taxes imposed on the overall
net income of such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other than
the Eurodollar Reserve Requirement utilized in the determination of the
Adjusted Eurodollar Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or commitments of,
such Lender (or its Applicable Lending Office), including the Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the United States market for certificates of deposit
or the London interbank market any other condition affecting this Credit
Agreement or its Notes or any of such extensions of credit or liabilities
or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrower under this Section 3.9(a), the Borrower may, by notice to such Lender
(with a copy to the Agent), suspend the obligation of such Lender to make or
Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 3.10 shall be applicable); PROVIDED
that such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 3.9 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section 3.9 shall furnish to the Borrower and
the Agent a statement setting forth in reasonable detail the additional amount
or amounts payable to it hereunder and the calculations used to determine such
amount or amounts, which statement shall be conclusive and binding on the
parties hereto in the absence of manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
3.10 TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make any Eurodollar Loan or to Continue,
or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such Eurodollar Loans (or, in the case of a
Conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the
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Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 3.8 or
3.9 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 TAXES.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
EXCLUDING, in the case of each Lender and the Agent, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which such Lender (or its Applicable Lending Office) or the
Agent (as the case may be) is organized or any political subdivision
thereof (all such non-excluded taxes, duties, 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 under this Credit
Agreement or any other Credit Document to any Lender or the Agent, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 3.11) such Lender or the Agent receives an
amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, and (iv)
the Borrower shall furnish to the Agent, at its address referred to in
Section 11.1, the original or a certified copy of a receipt evidencing
payment thereof.
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(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any payment
made under this Credit Agreement or any other Credit Document or from the
execution or delivery of, or otherwise with respect to, this Credit
Agreement or any other Credit Document (hereinafter referred to as "OTHER
TAXES").
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.11) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide the Borrower and
the Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the
rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Credit Agreement is effectively
connected with the conduct of a trade or business in the United States,
(ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Lender is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Credit Agreement or any of
the other Credit Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form pursuant to
Section 3.11(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under Section 3.11(a) or 3.11(b) with respect to Taxes
imposed by the United States; PROVIDED, HOWEVER, that should a Lender,
which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 3.11, then such
Lender will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such Lender.
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(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a certified
copy of a receipt evidencing such payment.
(h) Any Lender claiming compensation under this Section 3.11
shall furnish to the Borrower and the Agent a statement setting forth in
reasonable detail the additional amount or amounts payable to it hereunder
and the calculations used to determine such amount or amounts, which
statement shall be conclusive and binding on the parties hereto in the
absence of manifest error.
(i) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 3.11 shall survive the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.12 COMPENSATION.
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of the
Loans pursuant to Section 9.2) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Section 5 to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Loan on the date for such borrowing, Conversion, Continuation,
or prepayment specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrower set forth in this Section 3.12 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
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3.13 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) LOANS. Each Loan, each payment or (subject to the terms
of Section 3.3) prepayment of principal of any Loan or reimbursement
obligations arising from drawings under Letters of Credit, each payment of
interest on the Loans or reimbursement obligations arising from drawings
under Letters of Credit, each payment of Revolving Unused Fees, each
payment of Acquisition Loan Unused Fees, each payment of the Standby Letter
of Credit Fee, each payment of the Trade Letter of Credit Fee, each
reduction of the Revolving Committed Amount and each conversion or
extension of any Loan, shall be allocated pro rata among the Lenders in
accordance with the respective principal amounts of their outstanding Loans
and Participation Interests.
(b) ADVANCES. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable share of
a borrowing hereunder; PROVIDED, HOWEVER, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Agent shall have been notified by any
Lender prior to the date of any requested borrowing that such Lender does
not intend to make available to the Agent its ratable share of such
borrowing to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such borrowing,
and the Agent in reliance upon such assumption, may (in its sole discretion
but without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be, interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent at a per annum
rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate. Nothing contained in this Section
3.13(b) shall be deemed to constitute a waiver by the Borrower of its
rights in respect of any claim for breach of contract relating to the
wrongful failure (as determined by a court of competent jurisdiction) of
any Lender to make any Loan on the date of the requested borrowing.
3.14 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC Obligations or any other obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
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any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a Participation Interest in such Loans, LOC Obligations and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation Interest theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a Participation Interest may, to the fullest extent permitted by
law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such Participation Interest as fully as if such
Lender were a holder of such Loan, LOC Obligations or other obligation in the
amount of such Participation Interest. Except as otherwise expressly provided
in this Credit Agreement, if any Lender or the Agent shall fail to remit to the
Agent or any other Lender an amount payable by such Lender or the Agent to the
Agent or such other Lender pursuant to this Credit Agreement on the date when
such amount is due, such payments shall be made together with interest thereon
for each date from the date such amount is due until the date such amount is
paid to the Agent or such other Lender at a rate per annum equal to the Federal
Funds Rate. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.14 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 under this Section 3.14 to share in the benefits of any recovery
on such secured claim.
3.15 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in dollars in immediately
available funds, without offset, deduction, counterclaim or withholding of
any kind, at the Agent's office specified in SCHEDULE 2.1(a) not later than
2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Agent may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the Agent (with
notice to the Borrower). The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Agent the Loans, LOC
Obligations, Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall distribute such payment to the Lenders in
such manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.13(a)). The Agent will distribute such payments to such Lenders,
if any such payment is received prior to 12:00 Noon (Charlotte, North
Carolina time) on a Business Day in like funds as received prior to the end
of such Business Day and otherwise the Agent will distribute such payment
to such Lenders on the next succeeding Business Day. Whenever
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any payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the
period of such extension), except that in the case of Eurodollar Loans,
if the extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made on the
next preceding Business Day. Except as expressly provided otherwise
herein, all computations of interest and fees shall be made on the basis
of actual number of days elapsed over a year of 360 days, except with
respect to computation of interest on Base Rate Loans which (unless the
Base Rate is determined by reference to the Federal Funds Rate) shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest
shall accrue from and include the date of borrowing, but exclude the
date of payment.
(b) ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event of
Default, all amounts collected or received by the Agent or any Lender on
account of the Credit Party Obligations or any other amounts outstanding
under any of the Credit Documents or in respect of the Collateral shall be
paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each
of the Lenders in connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Credit Party Obligations owing
to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations (including the payment or cash collateralization
of the outstanding LOC Obligations);
SIXTH, to all other Credit Party Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH" above;
and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
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In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding
Loans and LOC Obligations held by such Lender bears to the aggregate then
outstanding Loans and LOC Obligations) of amounts available to be applied
pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and
(iii) to the extent that any amounts available for distribution pursuant to
clause "FIFTH" above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Agent in a
cash collateral account and applied (A) first, to reimburse the Issuing
Lender from time to time for any drawings under such Letters of Credit and
(B) then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses "FIFTH" and "SIXTH" above in
the manner provided in this Section 3.15(b).
3.16 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time under this Credit Agreement. Each Lender will
make reasonable efforts to maintain the accuracy of its account or accounts
and to promptly update its account or accounts from time to time, as
necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder from or for the account of the Borrower and each Lender's share
thereof. The Agent will make reasonable efforts to maintain the accuracy
of the subaccounts referred to in the preceding sentence and to promptly
update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this Section 3.16
(and, if consistent with the entries of the Agent, subsection (a)) shall be
prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; PROVIDED, HOWEVER, that the failure of any
Lender or the Agent to maintain any such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Loans made by such
Lender in accordance with the terms hereof.
3.17 Mandatory Assignment.
In the event that any Lender delivers to the Borrower, a demand for payment
in accordance with Section 3.6, 3.9 or 3.11 then, provided that no Default or
Event of Default has
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occurred and is continuing at such time, the Borrower may, at its own expense
(such expense to include the administrative fee payable to the Agent under
Section 11.3(b)), and with the consent of the Agent (such consent not to be
unreasonably withheld), require such Lender to transfer and assign in whole,
without recourse (in accordance with and subject to the terms and conditions
of Section 11.3), all of its interests, rights and obligations under this
Credit Agreement to an Eligible Assignee which shall assume such assigned
obligations; PROVIDED that (i) such assignment shall not conflict with any
law, rule or regulation or order of any court or any Governmental Authority
and (ii) the Borrower or such assignee shall have paid to the assigning
Lender in immediately available funds the principal of and interest accrued
to the date of such payment on the Loans made by it hereunder and all other
amounts owed to it hereunder.
SECTION 4
GUARANTY
4.1 THE GUARANTY.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter provided the prompt payment of the Credit Party Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Credit Party Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Credit Party
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or
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equitable discharge or defense of a surety or guarantor, it being the intent
of this Section 4.2 that the obligations of the Guarantors hereunder shall be
absolute and unconditional under any and all circumstances. Each Guarantor
agrees that such Guarantor shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of
the Credit Party Obligations for amounts paid under this Section 4 until such
time as the Lenders (and any Affiliates of Lenders entering into Hedging
Agreements) have been paid in full, all Commitments under this Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the
Lenders in connection with monies received under the Credit Documents or
Hedging Agreements. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by law, the occurrence of any
one or more of the following shall not alter or impair the liability of any
Guarantor hereunder which shall remain absolute and unconditional as
described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be waived or any other guarantee of any of the Credit Party Obligations or
any security therefor shall be released, impaired or exchanged in whole or
in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Credit Party Obligations shall
fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined
to be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement or any other agreement or instrument referred to in the
Credit Documents or Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Credit Party Obligations.
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4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. Sections
26-7 through 26-9, inclusive, to the extent applicable. Each Guarantor further
agrees that such Guarantor shall have no right of recourse to security for the
Credit Party Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of contribution
pursuant to Section 4.6.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors acknowledge and agree that their obligations hereunder are
secured in accordance with the terms of the Security Agreements and the other
Collateral Documents and that the Lenders may exercise their remedies thereunder
in accordance with the terms thereof.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6
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shall be subordinate and subject in right of payment to the prior payment in
full to the Agent and the Lenders of the Guaranteed Obligations, and none of
the Guarantors shall exercise any right or remedy under this Section 4.6
against any other Guarantor until payment and satisfaction in full of all of
such Guaranteed Obligations. For purposes of this Section 4.6, (a)
"GUARANTEED OBLIGATIONS" shall mean any obligations arising under the other
provisions of this Section 4; (b) "EXCESS PAYMENT" shall mean the amount paid
by any Guarantor in excess of its Pro Rata Share of any Guaranteed
Obligations; (c) "PRO RATA SHARE" shall mean, for any Guarantor in respect of
any payment of Guaranteed Obligations, the ratio (expressed as a percentage)
as of the date of such payment of Guaranteed Obligations of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount
by which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of
all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrower and the Guarantors hereunder) of the Borrower and all of the
Guarantors; PROVIDED, HOWEVER, that, for purposes of calculating the Pro Rata
Shares of the Guarantors in respect of any payment of Guaranteed Obligations,
any Guarantor that became a Guarantor subsequent to the date of any such
payment shall be deemed to have been a Guarantor on the date of such payment
and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such payment; and (d) "CONTRIBUTION SHARE" shall mean, for
any Guarantor in respect of any Excess Payment made by any other Guarantor,
the ratio (expressed as a percentage) as of the date of such Excess Payment
of (i) the amount by which the aggregate present fair salable value of all of
its assets and properties exceeds the amount of all debts and liabilities of
such Guarantor (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable
value of all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds the amount of
all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrower and the Guarantors hereunder) of the Borrower and all of the
Guarantors other than the maker of such Excess Payment; PROVIDED, HOWEVER,
that, for purposes of calculating the Contribution Shares of the Guarantors
in respect of any Excess Payment, any Guarantor that became a Guarantor
subsequent to the date of any such Excess Payment shall be deemed to have
been a Guarantor on the date of such Excess Payment and the financial
information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such Excess
Payment. This Section 4.6 shall not be deemed to affect any right of
subrogation, indemnity, reimbursement or contribution that any Guarantor may
have under applicable law against the Borrower in respect of any payment of
Guaranteed Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after such time,
if ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.4.
4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall apply
to all Credit Party Obligations whenever arising.
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SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
Subject to the terms of Section 11.13(a), this Credit Agreement shall
become effective at such time as the following conditions shall have been
satisfied (in form and substance acceptable to the Lenders):
(a) EXECUTED CREDIT DOCUMENTS. Receipt by the Agent of duly
executed copies of: (i) this Credit Agreement; (ii) the Notes; (iii) the
Collateral Documents and (iv) all other Credit Documents, each in form and
substance acceptable to the Agent in its sole discretion.
(b) CORPORATE DOCUMENTS. Receipt by the Agent of the
following:
(i) CHARTER DOCUMENTS. Copies of the articles or
certificates of incorporation or other charter documents of each
Credit Party certified to be true and complete as of a recent date by
the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Closing Date.
(ii) BYLAWS. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Closing Date.
(iii) RESOLUTIONS. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by
a secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(iv) GOOD STANDING. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material Adverse
Effect and (B) to the extent available, a certificate indicating
payment of all corporate franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) INCUMBENCY. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary to be
true and correct as of the Closing Date.
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(c) EVIDENCE OF INSURANCE. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Consolidated Parties
evidencing liability and casualty insurance meeting the requirements set
forth in the Credit Documents, including, but not limited to, naming the
Agent as loss payee on behalf of the Lenders.
(d) FEES AND EXPENSES. Payment by the Credit Parties of all
fees and expenses owed by them to the Lenders and the Agent as of the
Closing Date, including, without limitation, payment to the Agent of any
fees set forth in the Fee Letter which are payable on such date.
(e) OTHER. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Consolidated Parties.
5.2 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT.
The obligation of the Lenders to make the initial Loans or the Issuing
Lender to issue the initial Letter of Credit, whichever shall occur first, shall
be subject to satisfaction of the following conditions (in form and substance
acceptable to the Lender) in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(a) PERSONAL PROPERTY COLLATERAL. The Agent shall have
received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Agent's security
interest in the Collateral, copies of the financing statements on file
in such jurisdictions and evidence that no Liens exist other than
Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Agent's security interest in the
Collateral;
(iii) searches of ownership of intellectual property in
the appropriate governmental offices and such patent/trademark/
copyright filings as requested by the Agent in order to perfect the
Agent's security interest in the Collateral;
(iv) all stock certificates evidencing the Capital
Stock pledged to the Agent pursuant to the Pledge Agreement, together
with duly executed in blank undated stock powers attached thereto;
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(v) such patent/trademark/copyright filings as
requested by the Agent in order to perfect the Agent's security
interest in the Collateral;
(vi) all instruments and chattel paper in the
possession of any of the Credit Parties, together with allonges or
assignments as may be necessary or appropriate to perfect the Agent's
security interest in the Collateral;
(vii) duly executed consents as are necessary, in the
Agent's sole discretion, to perfect the Lenders' security interest in
the Collateral; and
(viii) in the case of any personal property Collateral
located at a premises leased by a Credit Party, such estoppel letters,
consents and waivers from the landlords on such real property as may
be required by the Agent.
(b) PRIORITY OF LIENS. The Agent shall have received
satisfactory evidence (including without limitation payoff letters in form
and substance reasonably satisfactory to the Agent) from holders of any
secured Indebtedness set forth on SCHEDULE 6.15) that none of the
Collateral is subject to any other Liens other than Permitted Liens.
(c) OPINIONS OF COUNSEL. The Agent shall have received, in
each case dated as of the Closing Date:
(i) a legal opinion of McDermott, Will & Emery,
general counsel for the Credit Parties, substantially in the form of
SCHEDULE 5.2(c)(i); and
(ii) a legal opinion of special local counsel for the
Credit Parties for the State of Texas, substantially in the form of
SCHEDULE 5.2(c)(ii).
(d) AVAILABILITY. After giving effect to the initial Loans
made and Letters of Credit issued hereunder on the Effective Date, there
shall be at least $15 million of availability existing under the Revolving
Committed Amount.
(e) CONSUMMATION OF RECAPITALIZATION. The Recapitalization
shall have been consummated in accordance with the terms of the Investment
Agreements (without waiver of any conditions precedent to the obligations
of the buyer thereunder) and the expenses related to the Recapitalization
shall not exceed $6,000,000. The Agent shall have received final copies of
each of the Investment Documents, together with all exhibits and schedules
thereto, certified by an officer of the Borrower.
(f) CORPORATE STRUCTURE. The corporate capital and ownership
structure of the Consolidated Parties, after consummation of the
transactions contemplated by this Credit Agreement and the Investment
Agreements, shall be as described in SCHEDULE 5.2(f).
(g) GOVERNMENT CONSENT. Receipt by the Agent of evidence
that all governmental, shareholder and material third party consents
(including Hart-Scott-Rodino clearance) and approvals necessary or
desirable in connection with the Recapitalization and
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the related financings and other transactions contemplated hereby and
expiration of all applicable waiting periods without any action being
taken by any authority that could restrain, prevent or impose any
material adverse conditions on the Recapitalization or such other
transactions or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the judgment of the Agent
could have such effect.
(h) LITIGATION. There shall not exist (i) any order, decree,
judgment, ruling or injunction which restrains the consummation of the
Recapitalization in the manner contemplated by the Investment Agreements or
(ii) any pending or threatened action, suit, investigation or proceeding
against a Consolidated Party that could reasonably be expected to have a
Material Adverse Effect.
(i) SOLVENCY OPINION. Receipt by the Agent of an opinion
Valuation Research in substantially the form of SCHEDULE 5.2(i) as to the
financial condition, solvency and related matters of the Consolidated
Parties after consummation of the Recapitalization in the manner
contemplated by Investment Agreements and the initial borrowings under the
Credit Documents.
(j) OFFICER'S CERTIFICATES. The Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Borrower as of the Effective Date stating that (A) each Consolidated Party
is in compliance with all existing material financial obligations, (B) all
governmental, shareholder and third party consents and approvals, if any,
with respect to the Credit Documents and the transactions contemplated
thereby have been obtained, (C) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator
or governmental instrumentality that purports to affect any Consolidated
Party or any transaction contemplated by the Credit Documents, if such
action, suit, investigation or proceeding could reasonably be expected to
have a Material Adverse Effect, (D) the Recapitalization shall have been
consummated in accordance with the terms of the Investment Agreements and
(E) immediately after giving effect to this Credit Agreement, the other
Credit Documents and all the transactions contemplated therein to occur on
such date, (1) each of the Credit Parties is Solvent, (2) no Default or
Event of Default exists, (3) all representations and warranties contained
herein and in the other Credit Documents are true and correct in all
material respects, and (4) the Credit Parties are in compliance with each
of the financial covenants set forth in Section 7.11.
(k) SUBORDINATION AGREEMENT. Receipt by the Agent of a copy
of the Subordination Agreement duly executed by GE.
(l) FINANCIAL STATEMENTS. Receipt and satisfactory review by
the Agent of (i) the consolidated financial statements of the Consolidated
Parties, including balance sheets and income and cash flow statements for
the fiscal year ended June 30, 1997 and (ii) pro forma consolidated balance
sheet, statement of earnings and statement of cash flow of the Consolidated
Parties for fiscal years 1995, 1996 and 1997, giving effect to the
Recapitalization and the transactions contemplated by the Investment
Documents prepared by Arthur Andersen in accordance with GAAP consistently
applied throughout the periods covered thereby.
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(m) CHANGE IN MARKET. The absence of any material disruption
of, or a material adverse change in, financial, banking or capital market
conditions.
(n) FEES AND EXPENSES. Payment by the Credit Parties of all
fees and expenses owed by them to the Lenders and the Agent as of the
Effective Date, including, without limitation, payment to the Agent of any
fees set forth in the Fee Letter which are payable on such date.
(o) OTHER. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Consolidated Parties.
5.3 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligations of each Lender to make, convert or extend any Loan and of
the Issuing Lender to issue or extend any Letter of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1 and satisfaction on the Effective Date of
the conditions set forth in Section 5.2:
(a) The Borrower shall have delivered (i) in the case of any
Revolving Loan, any Acquisition Loan, any portion of the Tranche A Term
Loan or any portion of the Tranche B Term Loan, an appropriate Notice of
Borrowing or Notice of Extension/Conversion or (ii) in the case of any
Letter of Credit, the Issuing Lender shall have received an appropriate
request for issuance in accordance with the provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6
shall, subject to the limitations set forth therein, be true and correct in
all material respects as of such date (except for those which expressly
relate to an earlier date);
(c) There shall not have been commenced against any Credit
Party an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded; and
(d) Immediately after giving effect to the making of such
Loan (and the application of the proceeds thereof) or to the issuance of
such Letter of Credit, as the case may be, (i) the sum of the aggregate
principal amount of outstanding Revolving Loans PLUS
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LOC Obligations outstanding shall not exceed the Revolving Committed
Amount, and (ii) the LOC Obligations shall not exceed the LOC Committed
Amount.
The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for a Letter of Credit pursuant to Section 2.2(b) shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b), (c) and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 FINANCIAL CONDITION.
(a) The audited consolidated balance sheet of the
Consolidated Parties as of June 30, 1996 and the audited consolidated
statements of earnings and statements of cash flows for the year ended
June 30, 1996 have heretofore been furnished to the Agent. Such audited
financial statements (including the notes thereto) (i) have been audited
by Arthur Andersen, (ii) have been prepared in accordance with GAAP
consistently, applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition, results of
operations and cash flows of the Consolidated Parties as of such date
and for such period. The unaudited interim balance sheets of the
Consolidated Parties as at the end of, and the related unaudited interim
statements of earnings and of cash flows for, each fiscal month and
quarterly period ended after June 30, 1997 and prior to the Closing Date
have heretofore been furnished to the Agent. Such unaudited interim
financial statements for each such quarterly period, (i) have been
prepared by independent certified public accountants in accordance with
GAAP consistently applied throughout the periods covered thereby,
subject to audit, normal year-end adjustments and the absence of notes
and (ii) present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition, results of
operations and cash flows of the Consolidated Parties as of such date
and for such periods.
(b) The pro forma consolidated balance sheet, statement of
earnings and statement of cash flow of the Consolidated Parties for the two
most recent fiscal years prepared by Arthur Andersen in accordance with
GAAP consistently applied throughout the periods covered thereby, have
heretofore been furnished to the Agent. Such pro forma balance sheet is
based upon reasonable assumptions and upon information not know to be
incorrect or misleading in any material respect.
(c) Except as otherwise disclosed in SCHEDULE 6.1(c), the
financial statements delivered to the Lenders pursuant to Section 7.1(a)
and (b), (i) have been prepared in accordance with GAAP (except as may
otherwise be permitted under Section 7.1(a) and
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(b)) and (ii) present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated financial condition, results
of operations and cash flows of the Consolidated Parties as of such date
and for such periods.
6.2 NO MATERIAL CHANGE.
Since the later of (i) June 30, 1997 and (ii) the then most recent fiscal
year end with respect to which the Agent has received the Required Financial
Information, (a) there has been no Material Adverse Effect and (b) except as
otherwise permitted under this Credit Agreement, no dividends or other
distributions have been declared, paid or made upon the Capital Stock in a
Consolidated Party nor has any of the Capital Stock in a Consolidated Party been
redeemed, retired, purchased or otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING.
Each of the Consolidated Parties (a) is duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its incorporation
or organization, (b) has the corporate or other necessary power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No material consent
or authorization of, filing with, notice to or other similar act by or in
respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of any Credit Party in connection with the
borrowings or other extensions of credit hereunder or with the execution,
delivery, performance, validity or enforceability of the Credit Documents to
which such Credit Party is a party, except for (i) consents, authorizations,
notices and filings described in SCHEDULE 6.4, all of which have been obtained
or made or have the status described in such SCHEDULE 6.4 and (ii) filings to
perfect the Liens created by the Collateral Documents. This Credit Agreement has
been, and each other Credit Document to which any Credit Party is a party will
be, duly executed and delivered on behalf of the Credit Parties. This Credit
Agreement constitutes, and each other Credit Document to which any Credit Party
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of such Credit Party enforceable against such party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium
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or similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).
6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any material
Requirement of Law or any other material law, regulation (including, without
limitation, Regulation U or Regulation X), order, writ, judgment, injunction,
decree or permit applicable to it, (c) violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the violation of
which could reasonably be expected to have a Material Adverse Effect, or (d)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Credit Documents) upon or with respect to its
properties.
6.6 NO DEFAULT.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.7 OWNERSHIP.
Each Consolidated Party is the owner of, and has good and marketable title
to, all of its respective assets and none of such assets is subject to any Lien
other than Permitted Liens.
6.8 INDEBTEDNESS.
Except as otherwise permitted under Section 8.1, the Consolidated Parties
have no Indebtedness.
6.9 LITIGATION.
Except as disclosed in SCHEDULE 6.9, there are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Credit Party, threatened against any Consolidated Party which
might have a Material Adverse Effect.
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6.10 TAXES.
Each Consolidated Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet delinquent or
(ii) that are being contested in good faith and by proper proceedings, and
against which adequate reserves are being maintained in accordance with GAAP.
No Credit Party is aware as of the Closing Date of any proposed tax assessments
against it or any other Consolidated Party that if made would have or could
reasonably be expected to have a Material Adverse Effect.
6.11 COMPLIANCE WITH LAW.
Each Consolidated Party is in compliance with all Requirements of Law and
all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not have a Material Adverse Effect.
6.12 ERISA.
Except as disclosed and described in SCHEDULE 6.12 attached hereto:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan; (iii) each Plan has been maintained, operated, and
funded in compliance with its own terms and in material compliance with the
provisions of ERISA, the Code, and any other applicable federal or state
laws; and (iv) no lien in favor of the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to
the date on which this representation is made or deemed made (determined,
in each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA Affiliate
has incurred, or, to the best knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan.
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Neither any Consolidated Party nor any ERISA Affiliate would become subject
to any withdrawal liability under ERISA if any Consolidated Party or any
ERISA Affiliate were to withdraw completely from all Multiemployer Plans
and Multiple Employer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. Neither any
Consolidated Party nor any ERISA Affiliate has received any notification
that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA),
and no Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or
may subject any Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which any
Consolidated Party or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates
has any material liability with respect to "expected post-retirement
benefit obligations" within the meaning of the Financial Accounting
Standards Board Statement 106. Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and
Section 4980B of the Code apply has been administered in compliance in all
material respects of such sections.
(f) Neither the execution and delivery of this Credit Agreement
nor the consummation of the financing transactions contemplated
thereunder will involve any transaction which is subject to the
prohibitions of Sections 404, 406 or 407 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code. The
representation by the Credit Parties in the preceding sentence is made in
reliance upon and subject to the accuracy of the Lenders' representation in
Section 11.14 with respect to their source of funds and is subject, in the
event that the source of the funds used by the Lenders in connection with
this transaction is an insurance company's general asset account, to the
application of Prohibited Transaction Class Exemption 95-60, 60 Fed. Reg.
35,925 (1995), compliance with the regulations issued under Section
401(c)(1)(A) of ERISA, or the issuance of any other prohibited transaction
exemption or similar relief, to the effect that assets in an insurance
company's general asset account do not constitute assets of an "employee
benefit plan" within the meaning of Section 3(3) of ERISA of a "plan"
within the meaning of Section 4975(e)(1) of the Code.
6.13 SUBSIDIARIES.
Set forth on SCHEDULE 6.13 is a complete and accurate list of all
Subsidiaries (including Subsidiaries which are Joint Ventures) of each
Consolidated Party. Information on SCHEDULE 6.13 includes jurisdiction of
incorporation, the number of shares of each class of Capital Stock
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outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Consolidated Party; and the number and
effect, if exercised, of all outstanding options, warrants, rights of
conversion or purchase and all other similar rights with respect thereto.
The outstanding Capital Stock of all such Subsidiaries is validly issued,
fully paid and non-assessable and is owned by each such Consolidated Party,
directly or indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents). Other than
as set forth in SCHEDULE 6.13, no Consolidated Party has outstanding any
securities convertible into or exchangeable for its Capital Stock nor does
any such Person have outstanding any rights to subscribe for or to purchase
or any options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to its Capital Stock. SCHEDULE 6.13 may be updated
from time to time by the Borrower by giving written notice thereof to the
Agent.
6.14 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation G or
Regulation U, or for the purpose of purchasing or carrying or trading in
any securities. If requested by any Lender or the Agent, the Borrower will
furnish to the Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in Regulation
U. No indebtedness being reduced or retired out of the proceeds of the
Loans was or will be incurred for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U or any "margin security"
within the meaning of Regulation T. "Margin stock" within the meaning of
Regulation U does not constitute more than 25% of the value of the
consolidated assets of the Consolidated Parties. None of the transactions
contemplated by this Credit Agreement (including, without limitation, the
direct or indirect use of the proceeds of the Loans) will violate or result
in a violation of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, or regulations issued pursuant thereto,
or Regulation G, T, U or X.
(b) No Consolidated Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or the
Investment Company Act of 1940, each as amended. In addition, no
Consolidated Party is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, and is
not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder
of any Consolidated Party is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director",
"executive officer" and "principal shareholder" (when used with reference
to any Lender) have the respective meanings assigned thereto in Regulation
O issued by the Board of Governors of the Federal Reserve System.
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(d) Each Consolidated Party has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way
and other rights, consents and approvals which are necessary for the
ownership of its respective Property and to the conduct of its respective
businesses as presently conducted unless the failure to do so would not
have a Material Adverse Effect.
(e) No Consolidated Party is in violation of any applicable
statute, regulation or ordinance of the United States of America, or of any
state, city, town, municipality, county or any other jurisdiction, or of
any agency thereof (including without limitation, environmental laws and
regulations), which violation could reasonably be expected to have a
Material Adverse Effect.
(f) Each Consolidated Party is current with all material
reports and documents, if any, required to be filed with any state or
federal securities commission or similar agency and is in full compliance
in all material respects with all applicable rules and regulations of such
commissions unless the failure to do so would not have a Material Adverse
Effect.
6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Revolving Loans, Tranche A Term Loan and Tranche B Term
Loan shall be used solely by the Borrower (i) to refinance on the Effective Date
in connection with the Recapitalization the outstanding principal balance of the
existing Funded Indebtedness of the Borrower described on SCHEDULE 6.15 in an
aggregate amount not to exceed $80 million, (ii) to pay on the Effective Date
fees and expenses in connection with the Recapitalization in an aggregate amount
not to exceed $6,000,000 and (iii) for working capital and general corporate
purposes (other than Permitted Acquisitions and Permitted Capital Expenditures)
of the Borrower and its Wholly Owned Subsidiaries on and after the Effective
Date. The proceeds of the Acquisition Loans shall be used solely by the
Borrower to finance the purchase price of, and fees and expenses in connection
with, Permitted Acquisitions and Permitted Capital Expenditures on and after the
Effective Date. The Letters of Credit shall be used only for or in connection
with appeal bonds, reimbursement obligations arising in connection with surety
and reclamation bonds, reinsurance, domestic or international trade transactions
and obligations not otherwise aforementioned relating to transactions entered
into by the applicable account party in the ordinary course of business.
6.16 ENVIRONMENTAL MATTERS.
Except as disclosed and described in SCHEDULE 6.16 attached hereto,
Environmental Laws and liabilities thereunder, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Each of the
Properties owned, leased or operated by the Consolidated Parties is in
compliance with all Environmental Laws except where liability under such
Environmental Laws could not reasonably be expected to have a Material Adverse
Effect.
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6.17 INTELLECTUAL PROPERTY.
Each Consolidated Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"INTELLECTUAL PROPERTY") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use could not have a Material Adverse Effect. Set forth on SCHEDULE 6.17 is
a list of all Intellectual Property owned by each Consolidated Party or that any
Consolidated Party has the right to use. Except as provided on SCHEDULE 6.17,
no claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party know
of any such claim, and to the Credit Parties' knowledge the use of such
Intellectual Property by any Consolidated Party does not infringe on the rights
of any Person, except for such claims and infringements that in the aggregate,
could not have a Material Adverse Effect. SCHEDULE 6.17 may be updated from
time to time by the Borrower by giving written notice thereof to the Agent.
6.18 SOLVENCY.
Each Credit Party is and, after consummation of the Recapitalization and
the other transactions contemplated by this Credit Agreement, will be Solvent.
6.19 INVESTMENTS.
All Investments of each Consolidated Party are Permitted Investments.
6.20 LOCATION OF COLLATERAL.
Set forth on SCHEDULE 6.20(a)(i) is a list of all Primary Real Properties
with street address, county and state where located. Set forth on SCHEDULE
6.20(a)(ii) is a list of all Secondary Real Properties with street address,
county and state where located. Set forth on SCHEDULE 6.20(b) is a list of all
locations where any tangible personal property of a Consolidated Party is
located, including county and state where located. Set forth on SCHEDULE
6.20(c) is the chief executive office and principal place of business of each
Consolidated Party. SCHEDULE 6.20(a), 6.20(b) and 6.20(c) may be updated from
time to time by the Borrower giving written notice thereof to the Agent.
6.21 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein, in light of the circumstances under which such
information
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is or is to be used, not misleading. It is understood by the Agent and the
Lenders that all of the estimates and assumptions on which any projections
and forecasts are based may not prove to be correct and that actual future
financial performance may vary from such projections or forecasts.
6.22 NO BURDENSOME RESTRICTIONS.
No Consolidated Party is a party to any agreement or instrument or subject
to any other obligation or any charter or corporate restriction or any provision
of any applicable law, rule or regulation which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.23 BROKERS' FEES.
Except as disclosed on SCHEDULE 6.23, no Consolidated Party has any
obligation to any Person in respect of any finder's, broker's, investment
banking or other similar fee in connection with any of the transactions
contemplated under the Credit Documents.
6.24 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of a Consolidated Party as of the Closing Date and none
of the Consolidated Parties has suffered any strikes, walkouts, work stoppages
or other material labor difficulty within the last five years.
6.25 NATURE OF BUSINESS.
As of the Closing Date, the Consolidated Parties are engaged in the
business of providing diagnostic imaging services and ancillary services to the
healthcare industry.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Agent and the
Lenders:
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(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and
in any event within 90 days after the close of each fiscal year of the
Consolidated Parties, a consolidated balance sheet and income statement of
the Consolidated Parties, as of the end of such fiscal year, together with
related consolidated statements of operations and retained earnings and of
cash flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and audited
by independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not be
limited as to the scope of the audit or qualified as to the status of the
Consolidated Parties as a going concern.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
and in any event within 45 days after the close of each fiscal quarter of
the Consolidated Parties (other than the fourth fiscal quarter, in which
case 90 days after the end thereof) a consolidated and consolidating
balance sheet and income statement of the Consolidated Parties, as of the
end of such fiscal quarter, together with related consolidated and
consolidating statements of operations and retained earnings and of cash
flows for such fiscal quarter in each case setting forth in comparative
form consolidated and consolidating figures for the corresponding period of
the preceding fiscal year, all such financial information described above
to be in reasonable form and detail and reasonably acceptable to the Agent,
and accompanied by a certificate of the chief financial officer of the
Borrower to the effect that such quarterly financial statements fairly
present in all material respects the financial condition of the
Consolidated Parties and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments.
(c) OFFICER'S CERTIFICATE. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b) above, a
certificate of the chief financial officer of the Borrower substantially in
the form of EXHIBIT 7.1(c), (i) demonstrating compliance with the financial
covenants contained in Section 7.11 by calculation thereof as of the end of
each such fiscal period and (ii) stating that no Default or Event of
Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Credit Parties
propose to take with respect thereto.
(d) ANNUAL BUDGETS AND PLAN. At least 15 days prior to the
end of each fiscal year of the Borrower, beginning with the fiscal year
ending June 30, 1998, an annual budget and plan for the Consolidated
Parties containing, among other things, pro forma financial statements for
the next fiscal year.
(e) COMPLIANCE WITH CERTAIN PROVISIONS OF THE CREDIT
AGREEMENT. Within 90 days after the end of each fiscal year of the
Borrower, a certificate containing information regarding (i) the
calculation of Excess Cash Flow and (ii) the amount of all Asset
Dispositions, Debt Issuances and Equity Issuances that were made during the
prior fiscal year.
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(f) ACCOUNTANT'S CERTIFICATE. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating further whether, in
the course of their audit, they have become aware of any Default or Event
of Default and, if any such Default or Event of Default exists, specifying
the nature and extent thereof.
(g) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to any Consolidated Party in connection with any annual,
interim or special audit of the books of such Person.
(h) REPORTS. Promptly upon transmission or receipt thereof,
(i) copies of any filings and registrations with, and reports to or from,
the Securities and Exchange Commission, or any successor agency, and copies
of all financial statements, proxy statements, notices and reports as any
Consolidated Party shall send to its shareholders or to a holder of any
Indebtedness owed by any Consolidated Party in its capacity as such a
holder and (ii) upon the request of the Agent, all reports and written
information to and from the United States Environmental Protection Agency,
or any state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any state
or local agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety matters.
(i) NOTICES. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent immediately of (i) the occurrence of
an event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the Credit
Parties propose to take with respect thereto, and (ii) the occurrence of
any of the following with respect to any Consolidated Party (A) the
pendency or commencement of any litigation, arbitral or governmental
proceeding against such Person which if adversely determined is likely to
have a Material Adverse Effect, (B) the institution of any proceedings
against such Person with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation, including
but not limited to, Environmental Laws, the violation of which could
reasonably be expected to have a Material Adverse Effect, or (C) any notice
or determination concerning the imposition of any withdrawal liability by
a Multiemployer Plan against such Person or any ERISA Affiliate, the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA or the termination
of any Plan.
(j) ERISA. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent promptly (and in any event within
five business days) of: (i) of any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or could reasonably
lead to, an ERISA Event; (ii) with respect to any Multiemployer Plan, the
receipt of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the Borrower or any of its ERISA Affiliates, or
of a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including
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extensions) thereof of all amounts which any Consolidated Party or any
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that could reasonably be expected to have a Material
Adverse Effect, together with a description of any such event or condition
or a copy of any such notice and a statement by the chief financial officer
of the Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is being
taken or is proposed to be taken by the Credit Parties with respect
thereto. Promptly upon request, the Credit Parties shall furnish the Agent
and the Lenders with such additional information concerning any Plan as may
be reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(k) OTHER INFORMATION. With reasonable promptness upon any
such request, such other information regarding the business, properties or
financial condition of any Consolidated Party as the Agent or the Required
Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4 or Section 8.5, each
Credit Party will, and will cause each of its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence, rights,
franchises and authority if the failure to do so could reasonably be expected to
have a Material Adverse Effect.
7.3 BOOKS AND RECORDS.
Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect.
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7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Credit Party will, and will cause each of its Subsidiaries to, pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; PROVIDED, HOWEVER, that no Consolidated
Party shall be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) could
reasonably be expected to have a Material Adverse Effect.
7.6 INSURANCE.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering
such risks and liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice (or as
otherwise required by the Collateral Documents). The Agent shall be named
as loss payee or mortgagee, as its interest may appear, and/or additional
insured with respect to any such insurance providing coverage in respect of
any Collateral, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Agent, that it will use good faith efforts to
give the Agent thirty (30) days prior written notice before any such policy
or policies shall be altered or canceled, and that no act or default of any
Consolidated Party or any other Person shall affect the rights of the Agent
or the Lenders under such policy or policies. The present insurance
coverage of the Consolidated Parties is outlined as to carrier, policy
number, expiration date, type and amount on SCHEDULE 7.6.
(b) In case of any material loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, such Credit Party
shall promptly give written notice thereof to the Agent generally
describing the nature and extent of such damage or destruction. In case of
any loss, damage to or destruction of the Collateral of any Credit Party or
any part thereof, such Credit Party, whether or not the insurance proceeds,
if any, received on account of such damage or destruction shall be
sufficient for that purpose, at such Credit Party's cost and expense, will
promptly repair or replace the Collateral of such Credit Party so lost,
damaged or destroyed; PROVIDED, HOWEVER, that such Credit Party need not
repair or replace the Collateral of such Credit Party so lost, damaged or
destroyed to the extent the failure to make such repair or replacement (i)
is desirable to the proper conduct of the business of such Credit Party in
the ordinary course and otherwise in the best interest of such Credit
Party; and (ii) would not materially impair the rights and benefits of the
Agent or the Lenders under the Collateral Documents, any other Credit
Document or any Hedging
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Agreement. In the event a Credit Party shall receive any proceeds of such
insurance in a net amount in excess of $500,000, such Credit Party will
immediately pay over such proceeds to the Agent, for payment on the Credit
Party Obligations; PROVIDED, HOWEVER, that the Agent agrees to release such
insurance proceeds to such Credit Party for replacement or restoration of
the portion of the Collateral of such Credit Party lost, damaged or
destroyed if, but only if, (A) no Default or Event of Default shall have
occurred and be continuing at the time of release, (B) written application
for such release is received by the Agent from such Credit Party within
30 days of receipt of such proceeds and (C) the Agent has received evidence
reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been or will be replaced or restored to its condition
immediately prior to the loss, destruction or other event giving rise to
the payment of such insurance proceeds.
7.7 MAINTENANCE OF PROPERTY.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
Each Credit Party will, and will cause each of its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans and will use the Letters of
Credit solely for the purposes set forth in Section 6.15.
7.10 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Agent or its representatives to investigate and verify the accuracy
of information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of such Person. The Credit Parties
agree
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that the Agent, and its representatives, may conduct an annual audit of the
Collateral, at the expense of the Borrower.
7.11 FINANCIAL COVENANTS.
The Credit Parties hereby agree that:
(a) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as
of the last day of each fiscal quarter of the Consolidated Parties, shall
be greater than or equal to:
(i) for the period from March 31, 1998 to and including
December 31, 1999, 2.50 to 1.00;
(ii) for the period from January 1, 2000 to and including
December 31, 2000, 2.75 to 1.00; and
(iii) for the period from January 1, 2001 and at all
times thereafter, 3.00 to 1.00.
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio, as of the last day of each fiscal quarter of the Consolidated
Parties, shall be greater than or equal to:
(i) for the period from March 31, 1998 to and including
December 31, 1999, 1.00 to 1.00; and
(ii) for the period from January 1, 2000 and at all times
thereafter, 1.10 to 1.00.
(c) LEVERAGE RATIO. The Leverage Ratio, as of the last day
of each fiscal quarter of the Consolidated Parties, shall be less than or
equal to:
(i) for the period from March 31, 1998 to and including
December 31, 1999, 4.00 to 1.00;
(ii) for the period from January 1, 2000 to and including
December 31, 2000, 3.50 to 1.00; and
(iii) for the period from January 1, 2001 and at all
times thereafter, 3.25 to 1.00.
(d) MINIMUM EBITDA. Consolidated EBITDA, as of March 31,
1998 and as of the last day of each fiscal quarter of the Consolidated
Parties thereafter, in each case for the 4-quarter period then ended, shall
be equal to or greater than $20,000,000:
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(e) CERTAIN CALCULATION PROCEDURES. The parties hereto
acknowledge and agree that, notwithstanding any other provision hereof to
the contrary, for purposes of all calculations made in determining
compliance with the financial covenants set forth in this Section 7.11,
(i)(A) income statement items (whether positive or negative) attributable
to the Property disposed of in any Asset Disposition as contemplated by
Section 8.5, as applicable, shall be excluded to the extent relating to any
period occurring prior to the date of such transaction and (B) Indebtedness
which is retired in connection with any such Asset Disposition shall be
excluded and deemed to have been retired as of the first day of the
applicable period and (ii) income statement items (whether positive or
negative) attributable to any Property acquired in any Investment
transaction (including without limitation any Permitted Acquisition)
contemplated by Section 8.6 shall be included to the extent relating to any
period applicable in such calculations occurring after the date of such
transaction (and, notwithstanding the foregoing, during the first four
fiscal quarters following the date of such transaction, shall be included
on an annualized basis).
7.12 ADDITIONAL CREDIT PARTIES.
As soon as practicable and in any event within 30 days after any Person
which is not a Joint Venture becomes a Subsidiary of any Credit Party, the
Borrower shall provide the Agent with written notice thereof setting forth
information in reasonable detail describing all of the assets of such Person and
shall (a) cause such Person to execute a Joinder Agreement in substantially the
same form as EXHIBIT 7.12, (b) cause all of the Capital Stock of such Person
owned by the Consolidated Parties to be delivered to the Agent (together with
undated stock powers signed in blank) and pledged to the Agent pursuant to an
appropriate pledge agreement(s) in substantially the form of the Pledge
Agreement and otherwise in form acceptable to the Agent and (c) cause such
Person to (i) if such Person owns or leases any real property located in the
United States of America or deemed to be material by the Agent or the Required
Lenders in its or their sole reasonable discretion, deliver to the Agent with
respect to such real property documents, instruments and other items of the
types required to be delivered pursuant to Section 5.2(c) all in form, content
and scope reasonably satisfactory to the Agent and (ii) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord's waivers, certified resolutions and other organizational and
authorizing documents of such Person, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above and the
perfection of the Agent's liens thereunder) and other items of the types
required to be delivered pursuant to Section 5.2(b), all in form, content and
scope reasonably satisfactory to the Agent.
7.13 PLEDGED ASSETS.
Each Credit Party will, and will cause each of its Subsidiaries which is
not a Joint Venture to, cause (i) all of its owned real and personal property
located in the United States, (ii) to the extent deemed to be material by the
Agent or the Required Lenders in its or their sole reasonable
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discretion, all of its other owned real and personal property and (iii) all
of its leased real property located in the United States, to be subject at
all times to first priority (subject to Permitted Liens), perfected and, in
the case of real property (whether leased or owned), title insured Liens in
favor of the Agent pursuant to the terms and conditions of the Collateral
Documents or, with respect to any such property acquired subsequent to the
Closing Date, such other additional security documents as the Agent shall
reasonably request. With respect to any real property (whether leased or
owned) located in the United States of America acquired by any direct or
indirect Subsidiary of the Borrower which is not a Joint Venture subsequent
to the Closing Date, such Person will cause to be delivered to the Agent with
respect to such real property: (i) if the value of such real property is
greater than or equal to $1,000,000, documents, instruments and other items
of the types required to be delivered pursuant to Section 7.16(i)-(iv) in
form acceptable to the Agent and (ii) if the value of such real property is
greater than $250,000 but less than $1,000,000, documents, instruments and
other items of the types required to be delivered pursuant to Section
7.16(ii) and (iv) in a form acceptable to Agent. Without limiting the
generality of the above, the Credit Parties will cause 100% of the Capital
Stock in each direct or indirect Subsidiary of the Borrower which is not a
Joint Venture to be subject at all times to a first priority (subject to
Permitted Liens), perfected Lien in favor of the Agent pursuant to the terms
and conditions of the Collateral Documents or such other security documents
as the Agent shall reasonably request.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire any
intellectual property, securities, instruments, chattel paper or other personal
property required to be delivered to the Agent as Collateral hereunder or under
any of the Collateral Documents or (b) acquire or lease any real property, the
Borrower shall promptly (and in any event within three (3) Business Days) after
any Executive Officer of a Credit Party acquires knowledge of same notify the
Agent of same. Each Credit Party shall, and shall cause each of its Subsidiaries
to, take such action (including but not limited to the actions set forth in
Sections 5.2(a) and Section 7.16 (as qualified by this Section 7.13)) at its own
expense as requested by the Agent to ensure that the Agent has a first priority
(subject to Permitted Liens), perfected Lien to secure the Credit Party
Obligations in (i) all owned real property and personal property of the Credit
Parties located in the United States, (ii) to the extent deemed to be material
by the Agent or the Required Lenders in its or their sole reasonable discretion,
all other owned real and personal property of the Credit Parties and (iii) all
leased real property located in the United States, subject in each case only to
Permitted Liens. Each Credit Party shall, and shall cause each of its
Subsidiaries to, adhere to the covenants regarding the location of personal
property as set forth in the Security Agreements.
7.14 INTEREST RATE PROTECTION.
Within six months of the Effective Date, the Borrower shall enter into
interest rate protection agreements protecting against fluctuations in interest
rates as to which the material terms are reasonably satisfactory to the Agent
and the Borrower, which agreements shall provide coverage in an amount equal to
at least $25 million and for a duration of at least 3 years.
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7.15 UPSTREAMING OF INCOME FROM JOINT VENTURES.
The Credit Parties will cause each of the Joint Ventures to distribute to the
Borrower from time to time (and in any event at least once during each fiscal
year of the Borrower) the Borrower's share of the net income before taxes for
such period (as determined in accordance with GAAP) of such Joint Venture.
7.16 FURTHER ASSURANCES.
(a) Within 90 days after the Closing Date, the Credit Parties
shall deliver to the Agent:
(i) fully executed and notarized mortgages, deeds of
trust or deeds to secure debt (each, as the same may be amended,
modified, restated or supplemented from time to time, a "MORTGAGE
INSTRUMENT" and collectively the "MORTGAGE INSTRUMENTS") encumbering
the fee interest and/or leasehold interest of any Credit Party in each
real property asset designated in SCHEDULE 6.20(a)(i) (each a "PRIMARY
REAL PROPERTY" and collectively the "PRIMARY REAL PROPERTIES");
(ii) in the case of each leasehold interest of any
Credit Party in each real property asset designated in SCHEDULE
6.20(a)(ii) (each a "SECONDARY REAL PROPERTY" and collectively
"SECONDARY REAL PROPERTIES") or Primary Real Property (each Primary
Real Property or Secondary Real Property a "REAL PROPERTY" and
collectively the "REAL PROPERTIES"), (a) such estoppel letters,
consents and waivers from the landlords on such real property as may
be required by the Agent, which estoppel letters shall be in the form
and substance reasonably satisfactory to the Agent and (b) evidence
that the applicable lease, a memorandum of lease with respect thereto,
or other evidence of such lease in form and substance reasonably
satisfactory to the Agent, has been or will be recorded in all places
to the extent necessary or desirable, in the reasonable judgment of
the Agent, so as to enable the Mortgage Instrument encumbering such
leasehold interest to effectively create a valid and enforceable first
priority lien (subject to Permitted Liens) on such leasehold interest
in favor of the Agent (or such other Person as may be required or
desired under local law) for the benefit of Lenders;
(iii) ALTA mortgagee title insurance policies issued by
Chicago Title Insurance Company (the "MORTGAGE POLICIES"), in amounts
reasonably satisfactory to the Agent, assuring the Agent that each of
the Mortgage Instruments creates a valid and enforceable first
priority mortgage lien on the applicable Primary Real Property, free
and clear of all defects and encumbrances except Permitted Liens,
which Mortgage Policies shall be in form and substance reasonably
satisfactory to the Agent and shall provide for affirmative insurance
and such reinsurance as the Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to the Agent;
and
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(iv) Evidence satisfactory to the Agent that each of
the Real Properties, and the uses of the Real Properties, are in
compliance in all material respects with all applicable laws,
regulations and ordinances including without limitation health and
environmental protection laws, erosion control ordinances, storm
drainage control laws, doing business and/or licensing laws, zoning
laws (the evidence submitted as to zoning should include the zoning
designation made for each of the Real Properties, the permitted uses
of each such Real Properties under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building
setbacks) and laws regarding access and facilities for disabled
persons including, but not limited to, the federal Architectural
Barriers Act, the Fair Housing Amendments Act of 1988, the
Rehabilitation Act of 1973 and the Americans with Disabilities Act of
1990.
(b) Within 30 days after the Closing Date, the Credit Parties
shall deliver to the Agent (i) evidence satisfactory to the Agent that the
good standing status of each Subsidiary identified in SCHEDULE 6.13 as not
being in good standing in any listed jurisdiction has been reinstated to
good standing status in each such jurisdiction and (ii) evidence
satisfactory to the Agent that each Subsidiary identified in SCHEDULE 6.13
as having incomplete tax data available for any listed jurisdiction is in
good tax standing in each such jurisdiction.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1 INDEBTEDNESS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries set
forth in SCHEDULE 8.1 (and renewals, refinancings and extensions thereof on
terms and conditions no less favorable to such Person than such existing
Indebtedness);
(c) (i) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by the Borrower or any
of its Subsidiaries which is not a Joint Venture other than Open MRI
or Central Coast to finance the purchase of fixed assets PROVIDED that
(A) the total of all such Indebtedness for all
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such Persons taken together shall not exceed an aggregate principal
amount of $5,000,000 (excluding any such Indebtedness of the Borrower
or any of its Subsidiaries other than Open MRI or Central Coast
referred to in subsection (b) above) at any one time outstanding;
(B) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed; and (C) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(ii) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by Open MRI to finance
the purchase of fixed assets PROVIDED that (A) the total outstanding
principal of all such Indebtedness (including any such Indebtedness of
Open MRI referred to in subsection (b) above), taken together with the
aggregate original equipment cost of all Property leased by Open MRI
under Operating Leases, shall not exceed at any time an aggregate
principal amount of $20,000,000; (B) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and (C)
no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of
such refinancing;
(iii) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by Central Coast to
finance the purchase of fixed assets PROVIDED that (A) the total
outstanding principal of all such Indebtedness shall not exceed at any
time an aggregate principal amount of $6,000,000 (including any such
Indebtedness of Central Coast referred to in subsection (b) above);
(B) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed; and (C) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its Subsidiaries in
respect of Hedging Agreements entered into in order to manage existing or
anticipated interest rate or exchange rate risks and not for speculative
purposes;
(e) intercompany Indebtedness arising out of loans and advances
permitted under Section 8.6; and
(f) in addition to the Indebtedness otherwise permitted by
this Section 8.1, other unsecured Indebtedness hereafter incurred by the
Borrower PROVIDED that (A) the loan documentation with respect to such
Indebtedness shall not contain covenants or default provisions relating to
any Consolidated Party that are more restrictive than the covenants and
default provisions contained in the Credit Documents, (B) the Borrower
shall have delivered to the Agent a Pro Forma Compliance Certificate
demonstrating that, upon giving effect on a Pro Forma Basis to the
incurrence of such Indebtedness and to the concurrent retirement of any
other Indebtedness of any Consolidated Party, no Default or Event of
Default would exist hereunder and (C) the aggregate principal amount of
such Indebtedness shall not exceed $2,500,000 at any time.
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8.2 LIENS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
The Credit Parties will not permit any Consolidated Party to substantively
alter the character or conduct of the business conducted by such Person as of
the Closing Date.
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Except in connection with an Asset Disposition permitted by the terms of
Section 8.5, the Credit Parties will not permit any Consolidated Party to
enter into any transaction of merger or consolidation or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution); PROVIDED
that, notwithstanding the foregoing provisions of this Section 8.4, (a) the
Borrower may merge or consolidate with any of its Wholly Owned Subsidiaries
PROVIDED that (i) the Borrower shall be the continuing or surviving
corporation, (ii) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may
request so as to cause the Credit Parties to be in compliance with the
terms of Section 7.13 after giving effect to such transaction and (iii) the
Borrower shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect on a Pro Forma Basis to
such transaction, no Default or Event of Default would exist, (b) any
Credit Party other than the Borrower may merge or consolidate with any
other Credit Party other than the Borrower PROVIDED that (i) the Credit
Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Agent may request so as to cause the
Credit Parties to be in compliance with the terms of Section 7.13 after
giving effect to such transaction and (ii) the Borrower shall have
delivered to the Agent a Pro Forma Compliance Certificate demonstrating
that, upon giving effect on a Pro Forma Basis to such transaction, no
Default or Event of Default would exist, (c) any Consolidated Party which
is not a Credit Party may be merged or consolidated with or into any Credit
Party PROVIDED that (i) such Credit Party shall be the continuing or
surviving corporation, (ii) the Credit Parties shall cause to be executed
and delivered such documents, instruments and certificates as the Agent may
request so as to cause the Credit Parties to be in compliance with the
terms of Section 7.13 after giving effect to such transaction and (iii) the
Borrower shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect on a Pro Forma Basis to
such transaction, no Default or Event of Default would exist, (d) any
Consolidated Party which is not a Credit Party may be merged or
consolidated with or into any other Consolidated Party which is not a
Credit Party PROVIDED the Borrower shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect on a
Pro Forma Basis to such transaction, no Default or Event of Default would
exist, (e)
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the Borrower or any Wholly Owned Subsidiary of the Borrower may merge with
any Person other than a Consolidated Party in connection with a Permitted
Acquisition if (i) the Borrower or such Wholly Owned Subsidiary shall be
the continuing or surviving corporation, (ii) the Credit Parties shall
cause to be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the Credit Parties to
be in compliance with the terms of Section 7.13 after giving effect to such
transaction and (iii) the Borrower shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect on a
Pro Forma Basis to such transaction, no Default or Event of Default would
exist and (f) any Wholly Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time.
8.5 ASSET DISPOSITIONS.
The Credit Parties will not permit any Consolidated Party to make any Asset
Disposition (including, without limitation, any Sale and Leaseback Transaction)
other than Excluded Asset Dispositions unless (a) the consideration paid in
connection therewith is cash or Cash Equivalents, (b) if such transaction is a
Sale and Leaseback Transaction, such transaction is permitted by the terms of
Section 8.13, (c) such transaction does not involve the sale or other
disposition of a minority equity interest in any Consolidated Party, (d) the
aggregate net book value of all of the assets sold or otherwise disposed of by
the Consolidated Parties in all such transactions after the Closing Date shall
not exceed $2,500,000, (e) if the book value of the assets disposed of pursuant
to such Asset Disposition exceeds $1,000,000, the Borrower shall have delivered
to the Agent a Pro Forma Compliance Certificate demonstrating that, upon giving
effect on a Pro Forma Basis to such transaction, no Default or Event of Default
would exist hereunder, and (f) no later than 15 days prior to such Asset
Disposition, the Agent and the Lenders shall have received a certificate of an
officer of the Borrower specifying the anticipated or actual date of such Asset
Disposition, briefly describing the assets to be sold or otherwise disposed of
and setting forth the net book value of such assets, the aggregate consideration
and the Net Cash Proceeds to be received for such assets in connection with such
Asset Disposition, and thereafter the Borrower shall, within the period of 30
days following the consummation of such Asset Disposition (with respect to any
such Asset Disposition, the "APPLICATION PERIOD"), apply (or cause to be
applied) an amount equal to the Net Cash Proceeds of such Asset Disposition to
(i) the purchase, acquisition or, in the case of improvements to real property,
construction of Eligible Assets or (ii) to the prepayment of the Loans in
accordance with the terms of Section 3.3(b)(iii).
Upon a sale of assets or the sale of Capital Stock of a Consolidated Party
permitted by this Section 8.5, the Agent shall (to the extent applicable)
deliver to the Borrower, upon the Borrower's request and at the Borrower's
expense, such documentation as is reasonably necessary to evidence the release
of the Agent's security interest, if any, in such assets or Capital Stock,
including, without limitation, amendments or terminations of UCC financing
statements, if any, the return of stock certificates, if any, and the release of
such Subsidiary from all of its obligations, if any, under the Credit Documents.
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8.6 INVESTMENTS.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for Permitted Investments.
8.7 RESTRICTED PAYMENTS.
The Credit Parties will not permit any Consolidated Party which is not a
Joint Venture to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (a) to make dividends payable
solely in the same class of Capital Stock of such Person and, in connection with
any such stock dividend, to make cash dividends in respect of fractional shares,
(b) to make dividends or other distributions payable to any Credit Party
(directly or indirectly through Subsidiaries), (c) as permitted by Section 8.8,
(d) pursuant to the terms of either of the Investment Agreements, any payments
made in connection with the Recapitalization and (e) to purchase, redeem or
otherwise acquire shares of its Capital Stock, or warrants or options to acquire
any such shares, with the proceeds received from the substantially concurrent
issue of its Capital Stock.
8.8 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Credit Parties will not permit any Consolidated Party which is not a
Joint Venture to, if any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result thereof (a)
after the issuance thereof, amend or modify (or permit the amendment or
modification of) any of the terms of any Indebtedness if such amendment or
modification would add or change any terms in a manner adverse to the issuer of
such Indebtedness, or shorten the final maturity or average life to maturity or
require any payment to be made sooner than originally scheduled or increase the
interest rate applicable thereto or change any subordination provision thereof,
or (b) make (or give any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.9 TRANSACTIONS WITH AFFILIATES.
The Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary or Affiliate of such Person other than (a)
advances of working capital to any Credit Party, (b) transfers of cash and
assets to any Credit Party, (c) transactions permitted by Section 8.1, Section
8.4, Section 8.5, Section 8.6, or Section 8.7, (d) transactions contemplated by
the Investment Agreements, including any and all payments required to be paid
pursuant to the terms thereof, (e) normal compensation and reimbursement of
expenses of officers and directors and (f) except as otherwise specifically
limited in this Credit Agreement, other transactions which are entered into in
the ordinary course of such Person's business on terms and conditions
substantially as favorable to such Person as would
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be obtainable by it in a comparable arms-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Credit Parties will not permit any Consolidated Party to change its
fiscal year or amend, modify or change its articles of incorporation (or
corporate charter or other similar organizational document) or bylaws (or other
similar document) without providing prior written notice to the Agent and the
Lenders.
8.11 LIMITATION ON RESTRICTED ACTIONS.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, (ii) applicable law, (iii) any
document or instrument governing Indebtedness incurred pursuant to Section
8.1(c), PROVIDED that any such restriction contained therein relates only to the
asset or assets constructed or acquired in connection therewith or (iv) any
Permitted Lien or any document or instrument governing any Permitted Lien,
PROVIDED that any such restriction contained therein relates only to the asset
or assets subject to such Permitted Lien.
8.12 OWNERSHIP OF SUBSIDIARIES.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit any Consolidated Party to (i)
permit any Person (other than the Borrower or any Wholly Owned Subsidiary
of the Borrower) to own any Capital Stock of any Subsidiary of the Borrower
which is not a Joint Venture, (ii) permit any Subsidiary of the Borrower
which is not a Joint Venture to issue Capital Stock (except to the Borrower
or to a Wholly-Owned Subsidiary of the Borrower), (iii) permit, create,
incur, assume or suffer to exist any Lien on any Capital Stock, in each
case except (A) as a result of or in connection with a dissolution, merger
or disposition of a Subsidiary permitted under Section 8.4 or Section 8.5
or (B) for Permitted Liens and (iv) notwithstanding anything to the
contrary contained in clause (ii) above, permit any Subsidiary of the
Borrower which is not a Joint Venture to issue any shares of preferred
Capital Stock.
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8.13 SALE LEASEBACKS.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real, personal or mixed), whether now owned or hereafter
acquired, (a) which such Consolidated Party has sold or transferred or is to
sell or transfer to a Person which is not a Consolidated Party or (b) which such
Consolidated Party intends to use for substantially the same purpose as any
other Property which has been sold or is to be sold or transferred by such
Consolidated Party to another Person which is not a Consolidated Party in
connection with such lease.
8.14 RESTRICTED CAPITAL EXPENDITURES.
The Credit Party will not permit Consolidated Restricted Capital
Expenditures to exceed (i) for the period from the Closing Date through December
31, 1998, $12,000,000 and (ii) for any 12-month period thereafter, $15,000,000.
8.15 NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not permit any Consolidated Party which is not a
Joint Venture to enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, except (a) pursuant to this Credit Agreement and the other
Credit Documents, (b) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), PROVIDED that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith and (c) in connection with any Permitted Lien
or any document or instrument governing any Permitted Lien, PROVIDED that any
such restriction contained therein relates only to the asset or assets subject
to such Permitted Lien.
8.16 OPERATING LEASE OBLIGATIONS.
(a) The Credit Parties will not permit the aggregate obligations of the
Consolidated Parties other than Open MRI which are not Joint Ventures for the
payment of rental under Operating Leases (other than in respect of Operating
Leases existing as of the Closing Date and described in SCHEDULE 8.16 (and
renewals, refinancings and extensions thereof)) for any fiscal year to exceed at
any time an aggregate principal amount of $2,500,000.
(b) The Credit Parties will not permit the aggregate original equipment
cost of all Property leased by Open MRI under Operating Leases, taken together
with the outstanding principal of all purchase money Indebtedness (including
Capital Leases and Synthetic Leases) of Open MRI permitted under Section
8.1(c)(ii), to exceed at any time an aggregate amount of $20,000,000.
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8.17 NO FOREIGN SUBSIDIARIES.
None of the Credit Party will create, acquire or permit to exist any direct
or indirect Foreign Subsidiary.
8.18 JOINT VENTURE OPERATIONS.
The Credit Parties will not permit, as of as of the last day of each fiscal
quarter, the portion of Consolidated EBITDA attributable to the Borrower and its
Subsidiaries which are not Joint Ventures for the four quarter then ended to be
less than 75% of Consolidated EBITDA for such period.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "EVENT OF DEFAULT"):
(a) PAYMENT. Any Credit Party shall
(i) default in the payment when due of any principal
of any of the Loans or of any reimbursement obligations arising from
drawings under Letters of Credit, or
(ii) default, and such default shall continue for three
(3) or more Business Days, in the payment when due of any interest on
the Loans or on any reimbursement obligations arising from drawings
under Letters of Credit, or of any Fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection
herewith or therewith; or
(b) REPRESENTATIONS. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any of
the other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was deemed to have been
made; or
(c) COVENANTS. Any Credit Party shall
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(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2, 7.9, 7.11
or 8.1 through 8.18, inclusive;
(ii) default in the due performance or observance of
any term, covenant or agreement contained in Section 7.1(a), (b), (c)
or (d), Section 7.12 or Section 7.13 and such default shall continue
unremedied for a period of at least 5 days after the earlier of a
responsible officer of a Credit Party becoming aware of such default
or notice thereof by the Agent; or
(iii) default in the due performance or observance by it
of any other term, covenant or agreement (other than those referred to
in subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1 hereof)
contained in this Credit Agreement or the other Credit Documents
(subject to applicable grace or cure periods, if any) and such default
shall continue unremedied for a period of at least 30 days after the
earlier of a responsible officer of a Credit Party becoming aware of
such default or notice thereof by the Agent; or
(d) FAILURE OF FULL FORCE AND EFFECT. Except as a result of
or in connection with a dissolution, merger or disposition of a Subsidiary
permitted under Section 8.4 or Section 8.5, any Credit Document shall fail
to be in full force and effect or to give the Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby, or
any Credit Party shall so state in writing; or
(e) BANKRUPTCY, ETC. Any Bankruptcy Event shall occur with
respect to any Consolidated Party; or
(f) DEFAULTS UNDER OTHER AGREEMENTS. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) having an outstanding principal amount in excess of $1,000,000
in the aggregate, (A) any Consolidated Party shall (1) default in any
payment (beyond the applicable grace period with respect thereto, if any)
with respect to any such Indebtedness, or (2) the occurrence and
continuance of a default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall occur
or condition exist, the effect of which default or other event or condition
is to cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (determined without
regard to whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity; or (B) any such
Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
(g) JUDGMENTS. One or more judgments or decrees shall be
entered against one or more of the Consolidated Parties involving a
liability of $1,000,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage and has the ability to perform) and any such judgments or
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decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if
such event or condition could reasonably be expected to have a Material
Adverse Effect: (i) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, shall exist with respect to any Plan, or any lien shall arise on
the assets of any Consolidated Party or any ERISA Affiliate in favor of the
PBGC or a Plan; (ii) an ERISA Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA;
(iii) an ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (A) the termination of such Plan for purposes of Title
IV of ERISA, or (B) any Consolidated Party or any ERISA Affiliate incurring
any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency or (within the
meaning of Section 4245 of ERISA) such Plan; or (iv) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the Code) or breach of fiduciary responsibility shall occur which may
subject any Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which any
Consolidated Party or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability; or
(j) INDEMNIFICATION CLAIM UNDER INVESTMENT AGREEMENTS. The
Borrower shall be required to make any indemnification payment of
$1,000,000 or more under Article VIII of either of the Investment
Agreements (to the extent not paid or fully covered by insurance provided
by a carrier who has acknowledged coverage and has the ability to perform)
and any such indemnification payment shall remain unpaid for at least 60
days from the date of demand thereof; or
(k) OWNERSHIP. There shall occur a Change of Control.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
(a) TERMINATION OF COMMITMENTS. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) ACCELERATION. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by the
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Borrower to the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
(c) CASH COLLATERAL. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the occurrence of
an Event of Default under Section 9.1(f), it will immediately pay) to the
Agent additional cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security for the LOC
Obligations in respect of subsequent drawings under all then outstanding
Letters of Credit in an amount equal to the maximum aggregate amount which
may be drawn under all Letters of Credits then outstanding.
(d) ENFORCEMENT OF RIGHTS. Enforce any and all rights and
interests created and existing under the Credit Documents including,
without limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without the
giving of any notice or other action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT, POWERS AND IMMUNITIES.
Each Lender hereby irrevocably appoints and authorizes the Agent to act as
its agent under this Credit Agreement and the other Credit Documents with such
powers and discretion as are specifically delegated to the Agent by the terms of
this Credit Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agent (which term as used in
this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof
shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible
to the Lenders for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Credit Document, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall not be
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responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Credit Party or the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Credit Document; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.2 RELIANCE BY AGENT.
The Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 11.3(b) hereof.
As to any matters not expressly provided for by this Credit Agreement, the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the Lenders; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or that is contrary to any Credit Document or
applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking any such action.
10.3 DEFAULTS.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or Event of Default unless the Agent has received written notice
from a Lender or the Borrower specifying 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 of the occurrence of a Default or Event of Default, the
Agent shall give prompt notice thereof to the Lenders. The Agent shall (subject
to Section 10.2 hereof) 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 interest of the Lenders.
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10.4 RIGHTS AS A LENDER.
With respect to its Commitment and the Loans made by it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Agent, and NationsBank (and any successor acting as Agent) and its Affiliates
may accept fees and other consideration from any Credit Party or any of its
Subsidiaries or Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the Lenders.
10.5 INDEMNIFICATION.
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Borrower
under such Section) ratably in accordance with their respective Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Lender) in any way relating to or
arising out of any Credit Document or the transactions contemplated thereby or
any action taken or omitted by the Agent under any Credit Document (including
any of the foregoing arising from the negligence of the Agent; PROVIDED that no
Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or expenses payable by
the Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements in this
Section 10.5 shall survive the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Credit Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Credit Documents. Except for notices, reports, and other documents
and information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the
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affairs, financial condition, or business of any Credit Party or any of its
Subsidiaries or Affiliates that may come into the possession of the Agent or
any of its Affiliates.
10.7 SUCCESSOR AGENT.
The Agent may resign at any time by giving notice thereof to the Lenders
and the Borrower. Upon any such resignation, the Borrower, with the consent of
the Required Lenders (such consent not to be unreasonably withheld) shall have
the right to appoint a successor Agent from among the Lenders. If no successor
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial bank organized
under the laws of the United States of America having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Agent, set forth below, and, in the case of the Lenders, set forth on
SCHEDULE 2.1(a), or at such other address as such party may specify by written
notice to the other parties hereto:
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if to the Borrower or the Guarantors:
c/o Insight Health Services Corp.
4400 MacArthur Boulevard
Suite 800
Newport Beach, CA 92660
Attn: Thomas V. Croal, CFO
Telephone: (714) 476-0733
Telecopy: (714) 851-5981
with a copy to:
TC Group, L.L.C.
1001 Pennsylvania Avenue
Washington DC 20004-2505
Attn: David Dupree
Telephone: (202) 626-1250
Telecopy: (202) 347-1818
if to the Agent:
NationsBank, N. A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 388-1108
Telecopy: (704) 388-9436
with a copy to:
NationsBank, N. A.
700 Louisiana Street
Houston, Texas 77002
Attn: Scott Singhoff
Telephone: (713) 247-6961
Telecopy: (713) 247-6360
11.2 RIGHT OF SET-OFF; ADJUSTMENTS.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) 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 indebtedness at any time owing by such
Lender (or any of its Affiliates) to or for the credit or the account of any
Credit Party against any
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and all of the obligations of such Person now or hereafter existing under
this Credit Agreement, under the Notes, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand
under hereunder or thereunder and although such obligations may be unmatured.
Each Lender agrees promptly to notify any affected Credit Party after any
such set-off and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 11.2 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
11.3 BENEFIT OF AGREEMENT.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns
of the parties hereto; PROVIDED that none of the Credit Parties may assign
or transfer any of its interests and obligations without prior written
consent of the Lenders; PROVIDED FURTHER that the rights of each Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and obligations
under this Credit Agreement, any such partial assignment shall be in
an amount at least equal to $5,000,000 (or, if less, the remaining
amount of the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Credit Agreement and the Notes; and
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and Acceptance
in the form of Exhibit 11.3(b) hereto, together with any Note subject
to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Credit Agreement. Upon the consummation of any assignment pursuant to this
Section 11.3(b), the assignor, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee.
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If the assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the
Borrower and the Agent certification as to exemption from deduction
or withholding of Taxes in accordance with Section 3.11.
(c) The Agent shall maintain at its address referred to in
Section 11.1 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 Commitment 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 Credit Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such assignment
and payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit
11.3(b) hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(e) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under this Credit
Agreement (including all or a portion of its Commitment and its Loans);
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Credit
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in Sections 3.7 through 3.12,
inclusive, and the right of set-off contained in Section 11.2, and (iv) the
Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Credit
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Notes and to
approve any amendment, modification, or waiver of any provision of this
Credit Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, extending any scheduled principal payment
date or date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(f) Notwithstanding any other provision set forth in this
Credit Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations hereunder.
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(g) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender from
time to time to assignees and participants (including prospective assignees
and participants).
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Agent or any Lender and any of the Credit
Parties shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 EXPENSES; INDEMNIFICATION.
(a) The Borrower agrees to pay on demand all costs and expenses of the
Agent in connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for the Agent
(including the cost of internal counsel) with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
attorneys' fees and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Credit Documents and the other documents to be delivered
hereunder.
(b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their Affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "INDEMNIFIED PARTY") from and against
any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loans
(including any of the foregoing arising from the negligence of the Indemnified
Party), except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 11.5 applies,
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such indemnity shall be effective whether or not such investigation, litigation
or proceedings brought by the Borrower, its directors, shareholders or
creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. The Borrower agrees not to assert any
claim against the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisers,
on any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Credit Documents, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.5 shall survive the repayment of the Loans, LOC Obligations and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, PROVIDED, HOWEVER, that:
(a) without the consent of each Lender affected thereby,
neither this Credit Agreement nor any other Credit Document may be amended
to
(i) extend the final maturity of any Loan or the time
of payment of any reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit, or extend or waive any
Principal Amortization Payment of any Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal amount of any Loan
or of any reimbursement obligation, or any portion thereof, arising
from drawings under Letters of Credit,
(v) increase the Commitment of a Lender over the
amount thereof in effect (it being understood and agreed that a waiver
of any Default or Event of Default or mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender),
(v) except as the result of or in connection with an
Asset Disposition permitted by Section 8.5, release all or
substantially all of the Collateral,
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(vi) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4, release the Borrower or substantially all of the other
Credit Parties from its or their obligations under the Credit
Documents,
(vii) except amend, modify or waive any provision of
this Section 11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.14, 3.15, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the
Borrower or all or substantially all of the other Credit Parties of
any of its or their rights and obligations under (or in respect of)
the Credit Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of Section
10 may be amended;
(c) without the consent of the Issuing Lender, no provision
of Section 2.2 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to
vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any
of the parties hereto of an executed counterpart of this Credit Agreement shall
be as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
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11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in Section
2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Notes and the making of the Loans hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts
of the State of North Carolina in Mecklenburg County, or of the United
States for the Western District of North Carolina, and, by execution and
delivery of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. Each of
the Credit Parties further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 11.1,
such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time
on or after the Closing Date when it shall have been executed by the
Borrower, the Guarantors and the Agent, and the Agent shall have received
copies hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors, the
Agent and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no
Loans, LOC Obligations or any other amounts payable hereunder or under any
of the other Credit Documents shall remain outstanding, no Letters of
Credit shall be outstanding, all of the Credit Party Obligations have been
irrevocably satisfied in full and all of the Commitments hereunder shall
have expired or been terminated.
11.14 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee benefit
plan (or its related trust) has any interest;
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(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender, such
Lender has disclosed to the Borrower the name of each employee benefit plan
whose assets in such account exceed 10% of the total assets of such account
as of the date of such purchase (and, for purposes of this subsection (b),
all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance company's general account, such insurance company
has complied with all of the requirements of the regulations issued under
Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.15 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
11.16 CONFIDENTIALITY.
The Agent and each Lender (each, a "LENDING PARTY") agrees to keep
confidential any information furnished or made available to it by the Borrower
pursuant to this Credit Agreement that is marked confidential; PROVIDED that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or Affiliate
of any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Credit Agreement, (g) in connection with any litigation to
which such Lending Party or any of its Affiliates may be a party, (h) to the
extent necessary in connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, and (i) subject to provisions
substantially similar to those contained in this Section 11.16, to any actual or
proposed participant or assignee; PROVIDED, HOWEVER, that in the event that any
Lending Party is requested to disclose any confidential information pursuant to
clause (c), (d), (e) or (g) above, then such Lending Party shall, to the extent
lawfully permitted, use reasonable best efforts to promptly notify the Borrower.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: INSIGHT HEALTH SERVICES CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
GUARANTORS: INSIGHT HEALTH CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
RADIOLOGY SERVICES CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
OPEN MRI, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MAXUM HEALTH CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
[Signatures Continued]
S-1
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RADIOSURGERY CENTERS, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MTS ENTERPRISES, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
QUEST FINANCIAL SERVICES, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MAXUM HEALTH SERVICES CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
DIAGNOSTEMPS, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
[Signatures Continued]
S-2
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DIAGNOSTIC SOLUTIONS CORP.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MAXUM HEALTH SERVICES
OF NORTH TEXAS, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MAXUM HEALTH SERVICES
OF ARLINGTON, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
MAXUM HEALTH SERVICES
OF DALLAS, INC.
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
NORTH DALLAS DIAGNOSTIC CENTER, INC..
By:
-------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and
Secretary
[Signatures Continued]
S-3
<PAGE>
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
S-4
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated as of
November 17, 1997, is by and among InSight Health Services Corp. (the
"BORROWER"), the subsidiaries of the Borrower identified on the signature
pages hereto (the "GUARANTORS"), the several lenders identified on the
signature pages hereto (each a "LENDER" and, collectively, the "LENDERS") and
NationsBank, N.A., as agent for the Lenders (in such capacity, the "AGENT").
Capitalized terms used herein which are not defined herein and which are
defined in the Credit Agreement shall have the same meanings as therein
defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent entered
into that certain Credit Agreement dated as of October 14, 1997 (the
"EXISTING CREDIT AGREEMENT").
WHEREAS, the Borrower and the Guarantors have requested that the
Existing Credit Agreement be amended to allow InSight Health Corp. to
purchase certain assets of Mountain Diagnostics, Inc.
WHEREAS, the parties have agreed to amend the Existing Credit Agreement
as set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
PART 1
DEFINITIONS
SUBPART 1.1 CERTAIN DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"AMENDED CREDIT AGREEMENT" means the Existing Credit Agreement as
amended hereby.
"AMENDMENT NO. 1 EFFECTIVE DATE" is defined in SUBPART 3.1.
SUBPART 1.2 OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
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PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this PART 2. Except as so amended, the Existing Credit Agreement and
all other Credit Documents shall continue in full force and effect.
SUBPART 2.1 AMENDMENTS TO SECTION 1.1.
A. The following definitions are hereby added to Section 1.1 of the
Existing Credit Agreement in appropriate alphabetical order:
"GE EQUIPMENT" shall have the meaning assigned to such term in the
definition of "MD ASSETS".
"MD ASSETS" means (i) the assets of Mountain Diagnostics purchased or
acquired by InSight Health Corp. pursuant to the Order Confirming Sale of
Certain Assets of the Estate of Mountain Diagnostics, Inc. (Case No.
BK-S-96-2500-RCJ) entered by the Honorable R. Clive Jones of the United
States Bankruptcy Court for the District of Nevada on November 14, 1997
and (ii) the equipment described in Schedule attached hereto (the "GE
EQUIPMENT").
"MOUNTAIN DIAGNOSTICS" means Mountain Diagnostics, Inc., a Nevada
corporation.
B. The following definition is hereby amended in its entirety to
read as follows:
"PERMITTED ACQUISITION" means (a) an Acquisition by the Borrower or
any Wholly Owned Subsidiary of the Borrower for the fair market value of
the Capital Stock or Property acquired, PROVIDED that (i) the Capital Stock
or Property acquired in such Acquisition relates to a line of business
similar to the business of the Borrower or any of its Wholly Owned
Subsidiaries engaged in on the Closing Date, (ii) the Agent shall have
received all items in respect of the Capital Stock or Property acquired in
such Acquisition (and/or the seller thereof) required to be delivered by
the terms of Section 7.12 and/or Section 7.13, (iii) in the case of an
Acquisition of the Capital Stock of another Person, the board of directors
(or other comparable governing body) of such other Person shall have duly
approved such Acquisition, (iv) the Borrower shall have delivered to the
Agent a Pro Forma Compliance Certificate demonstrating that, upon giving
effect to such Acquisition on a Pro Forma Basis, the Credit Parties shall
be in compliance with all of the covenants set forth in Section 7.11, (v)
the representations and warranties made by the Credit Parties in any Credit
Document shall be true and correct in all material respects at and as if
made as of the date of such Acquisition (after giving effect thereto)
except to the extent such representations and warranties expressly relate
to an earlier date, (vi) if the aggregate
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consideration (including any assumption of liabilities (other than
current working capital liabilities not constituting Indebtedness), but
excluding consideration consisting of any Capital Stock of the Borrower)
for any such transaction is greater than $7,500,000, then the Required
Lenders shall have approved such transaction, (vii) if such transaction
involves the purchase of an interest in a partnership between the
Borrower (or a subsidiary of the Borrower) as a general partner and
entities unaffiliated with the Borrower as the other partners, such
transaction shall be effected by having such equity interest acquired by
a corporate holding company directly wholly-owned by the Borrower newly
formed for the sole purpose of effecting such transaction and (viii)
after giving effect to such Acquisition, the Revolving Committed Amount
shall be at least $5,000,000 greater than the sum of the Revolving Loans
outstanding PLUS LOC Obligations outstanding or (b) subject to the terms
of Section 7.13 and Section 7.16, the Acquisition by InSight Health
Corp. of the MD Assets on or before November 18, 1997.
SUBPART 2.2. AMENDMENT TO SECTION 2.3. Section 2.3(a) of the Existing
Credit Agreement is amended in its entirety to read as follows:
(a) ACQUISITION LOAN COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower such
Lender's Acquisition Loan Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("ACQUISITION LOANS") from time to
time from the Effective Date until October 14, 1999, or such earlier date
as the Acquisition Loan Commitments shall have been terminated as provided
herein for the purpose of financing the purchase price of, and fees and
expenses in connection with, Permitted Acquisitions and Permitted Capital
Expenditures; PROVIDED, HOWEVER, that the sum of the aggregate principal
amount of outstanding Acquisition Loans shall not exceed FIFTY MILLION
DOLLARS ($50,000,000) (as such aggregate maximum amount may be reduced or
increased from time to time as provided in Section 3.4, the "ACQUISITION
LOAN COMMITTED AMOUNT"); PROVIDED, FURTHER, (A) with regard to each Lender
individually, such Lender's outstanding Acquisition Loans shall not exceed
such Lender's Acquisition Loan Commitment Percentage of the Acquisition
Loan Committed Amount, and (B) the aggregate principal amount of
outstanding Acquisition Loans shall not exceed the Acquisition Loan
Committed Amount. Acquisition Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request;
PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall be
outstanding hereunder at any time. For purposes hereof, Eurodollar Loans
with different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings, extensions
and conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period. Acquisition Loans, other than any term
portion of the Acquisition Loans, hereunder may be repaid and reborrowed
in accordance with the provisions hereof.
SUBPART 2.3 AMENDMENTS TO SECTION 3.3(b)(vii). Section 3.3(b)(vii) of the
Existing Credit Agreement is amended in its entirety to read as follows:
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<PAGE>
(b) (vii) APPLICATION OF MANDATORY PREPAYMENTS. All amounts
required to be paid pursuant to this Section 3.3(b) shall be applied
as follows: (A) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i), to Revolving Loans and (after all Revolving Loans
have been repaid) to a cash collateral account in respect of LOC
Obligations, (B) with respect to all amounts prepaid pursuant to
Section 3.3(b)(ii), pro rata to the Tranche A Term Loan, the Tranche B
Term Loan and, if applicable, any term loan portion of the Acquisition
Loans (in each case ratably to the remaining Principal Amortization
Payments thereof), (C) with respect to all amounts prepaid pursuant to
Section 3.3(b)(iii) (other than in respect of any Asset Disposition
(x) involving Property described on SCHEDULE 3.3(b)(vii) or (y)
involving the Sale and Leaseback Transaction of the real property
portion of the MD Assets as permitted by Section 8.13), (iv) or (v),
pro rata to (1) Revolving Loans and (after all Revolving Loans have
been repaid) to a cash collateral account in respect of LOC
Obligations (with a corresponding reduction in the Revolving Committed
Amount in an amount equal to all amounts applied pursuant to this
clause (1)), (2) any term loan portion of the Acquisition Loans
(ratably to the remaining Principal Amortization Payments thereof),
(3) the Tranche A Term Loan (ratably to the remaining Principal
Amortization Payments thereof) and the Tranche B Term Loan (ratably to
the remaining Principal Amortization Payments thereof), (D) with
respect to all amounts prepaid pursuant to Section 3.3(b)(iii) in
respect of any Asset Disposition involving Property described on
SCHEDULE 3.3(b)(vii), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in respect of LOC
Obligations (without any reduction in the Revolving Committed Amount)
(E) with respect to all amounts prepaid pursuant to Section
3.3(b)(iii) in respect of any Asset Disposition involving the Sale and
Leaseback Transaction of the real property portion of the MD Assets as
permitted by Section 8.13, to Acquisition Loans and (after all
Acquisition Loans have been repaid) as provided in (C) above and (F)
with respect to all amounts prepaid pursuant to Section 3.3(b)(vi),
first, to any revolving loan portion of the Acquisition Loans (ratably
to the remaining Principal Amortization Payments thereof) and then to
any term loan portion of the Acquisition Loans (ratably to the
remaining Principal Amortization Payments thereof). One or more
holders of the Tranche B Term Loans may decline to accept a mandatory
prepayment under Sections 3.3(b)(ii), (iii), (iv) or (v) to the extent
there are sufficient outstandings under the Tranche A Term Loans
and/or any term portion of the Acquisition Loans to be paid with such
prepayment, in which case such declined prepayments shall be allocated
pro rata the term loan portion(s) of the Acquisition Loans, the
Tranche A Term Loans and the Tranche B Term Loans held by Lenders
accepting such prepayments. Within the parameters of the applications
set forth above, prepayments shall be applied first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.12 and be accompanied by interest on the
principal amount prepaid through the date of prepayment.
-4-
<PAGE>
SUBPART 2.4 AMENDMENTS TO SECTION 7.16. Section 7.16 of the Existing
Credit Agreement is hereby amended by adding the following new subsection (c)
immediately following existing subsection (b) thereof:
7.16 FURTHER ASSURANCES.
* * * * * *
(c) On or before February 16, 1998, the Credit Parties shall deliver
to the Agent all documents and information of the types described in
Section 7.16(a) with respect to the real property portion of the MD Assets.
SUBPART 2.5 AMENDMENTS TO SECTION 8.13. Section 8.13 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
8.13 SALE LEASEBACKS.
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, become or remain liable as lessee or as guarantor or other
surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real, personal or mixed), whether now owned
or hereafter acquired, (a) which such Consolidated Party has sold or
transferred or is to sell or transfer to a Person which is not a
Consolidated Party or (b) which such Consolidated Party intends to use for
substantially the same purpose as any other Property which has been sold or
is to be sold or transferred by such Consolidated Party to another Person
which is not a Consolidated Party in connection with such lease; PROVIDED,
HOWEVER, notwithstanding the foregoing, following the Acquisition by
InSight Health Corp. of the MD Assets, InSight Health Corp. may, on or
before February 16, 1998, enter into a Sale and Leaseback Transaction with
respect to the real property portion of the MD Assets provided that the Net
Proceeds from the sale of such real property are applied to the prepayment
of the Loans in accordance with the terms of Section 3.3(b)(iii).
SUBPART 2.6 SCHEDULE 1.1D. The Credit Agreement is amended by adding new
Schedule 1.1D attached hereto as Exhibit A immediately following existing
Schedule 1.1C.
PART 3
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 AMENDMENT NO. 1 EFFECTIVE DATE. This Amendment shall be and
become effective as of the date hereof (the "AMENDMENT NO. 1 EFFECTIVE DATE")
when all of the conditions set forth in this PART 3 shall have been satisfied,
and thereafter this Amendment shall be known, and may be referred to, as
"AMENDMENT NO. 1."
SUBPART 3.2 EXECUTION OF COUNTERPARTS OF AMENDMENT. The Agent shall have
received counterparts (or other evidence of execution, including telephonic
message, satisfactory to the Agent) of this Amendment, which collectively shall
have been duly executed on behalf of each of the Borrower, the Guarantors and
the Required Lenders.
-5-
<PAGE>
SUBPART 3.3 PRIORITY OF LIENS. The Agent shall have received satisfactory
evidence (including without limitation payoff letters in form and substance
reasonably satisfactory to the Agent) that (i) the Agent, on behalf of the
Lenders, holds a perfected, first priority Lien on all Collateral (excluding the
real property portion of the MD Assets), and (ii) none of the Collateral is
subject to any other Liens other than Permitted Liens.
SUBPART 3.4 ORDER OF BANKRUPTCY COURT. The Agent shall have received in
form and substance reasonably satisfactory to it a copy of the final order of
the United States Bankruptcy Court for the Southern District of Nevada approving
the sale of the MD Assets (excluding the GE Equipment) by the bankruptcy trustee
to InSight Health Corp. for a total acquisition price of $9,035,000, such
conveyance being free and clear of all liens, encumbrances, security interests
and other restrictions. The Agent shall also have received in form and
substance reasonably satisfactory to it copies of bills of sale and trustee's
deeds from the bankruptcy trustee conveying the MD Assets (excluding the GE
Equipment) to InSight Health Corp.
SUBPART 3.5 BILL OF SALE. The Agent shall have received in form and
substance reasonably satisfactory to it a bill of sale executed by GE Medical
Systems in favor of InSight Health Corp. representing the conveyance of the GE
Equipment for a price of $1,215,000, such conveyance being free and clear of all
liens, encumbrances, security interests and other restrictions.
SUBPART 3.6 OTHER ITEMS. The Agent shall have received such other
documents, agreements or information which may be reasonably requested by the
Agent.
PART 4
MISCELLANEOUS
SUBPART 4.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to the Agent and the Lenders that, after giving effect to this
Amendment, (a) no Default or Event of Default exists under the Credit Agreement
or any of the other Credit Documents and (b) the representations and warranties
set forth in Section 6 of the Existing Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects as of
the date hereof (except for those which expressly relate to an earlier date).
SUBPART 4.2 REAFFIRMATION OF CREDIT PARTY OBLIGATIONS. Each Credit Party
hereby ratifies the Credit Agreement acknowledges and reaffirms (i) that it is
bound by all terms of the Credit Agreement and (ii) that it is responsible for
the observance and full performance of the Credit Party Obligations.
SUBPART 4.3 CROSS-REFERENCES. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
-6-
<PAGE>
SUBPART 4.4 INSTRUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
SUBPART 4.5 REFERENCES IN OTHER CREDIT DOCUMENTS. At such time as this
Amendment No. 1 shall become effective pursuant to the terms of SUBPART 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment No. 1.
SUBPART 4.6 COUNTERPARTS. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SUBPART 4.7 GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE NEW YORK.
SUBPART 4.8 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[The remainder of this page has been left blank intentionally]
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly
executed on the date first above written.
BORROWER: INSIGHT HEALTH SERVICES CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
GUARANTORS: INSIGHT HEALTH CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
RADIOLOGY SERVICES CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
OPEN MRI, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
RADIOSURGERY CENTERS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MTS ENTERPRISES, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
QUEST FINANCIAL SERVICES, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
DIAGNOSTEMPS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
DIAGNOSTIC SOLUTIONS CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF NORTH TEXAS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF ARLINGTON, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF DALLAS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
NORTH DALLAS DIAGNOSTIC CENTER, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
AND
ASSIGNMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND ASSIGNMENT (this
"AMENDMENT"), dated as of December 19, 1997, is by and among InSight Health
Services Corp. (the "BORROWER"), the subsidiaries of the Borrower identified
on the signature pages hereto (the "GUARANTORS"), the lenders identified on
the signature pages hereto as Existing Lenders (the "EXISTING LENDERS"; such
term shall include NationsBank, N.A. as it may be referred to hereunder as
the "ASSIGNING EXISTING LENDER"), the Persons identified as New Lenders on
the signature pages hereto (the "NEW LENDERS", and together with the Existing
Lenders, the "LENDERS") and NationsBank, N.A., as agent for the Lenders (in
such capacity, the "AGENT"). Capitalized terms used herein which are not
defined herein and which are defined in the Credit Agreement shall have the
same meanings as therein defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Existing Lenders and the
Agent have entered into that certain Credit Agreement dated as of October 14,
1997, as amended, (the "EXISTING CREDIT AGREEMENT").
WHEREAS, the parties to the Existing Credit Agreement have agreed to
amend the Existing Credit Agreement to affect the increase in the Acquisition
Loan Committed Amount and the Tranche B Term Loan Committed Amount pursuant
to Section 3.4(b) of the Existing Credit Agreement (as amended hereby) as set
forth herein.
WHEREAS, the parties to the Existing Credit Agreement and the New
Lenders have agreed that the New Lenders shall become parties to the Existing
Credit Agreement (as amended hereby) by way of assignment by the Assigning
Existing Lender of certain percentages of its Commitments.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
PART 1
DEFINITIONS
SUBPART 1.1 CERTAIN DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"AMENDED CREDIT AGREEMENT" means the Existing Credit Agreement as
amended hereby.
<PAGE>
"AMENDMENT NO. 2 EFFECTIVE DATE" is defined in SUBPART 3.1.
SUBPART 1.2 OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 2
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this PART 2. Except as so amended, the Existing Credit Agreement and
all other Credit Documents shall continue in full force and effect.
SUBPART 2.1 AMENDMENTS TO SECTION 1.1. The following definition is
hereby amended in its entirety to read as follows:
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, cash
interest expense (including the amortization of debt discount and
premium, the interest component under Capital Leases and the implied
interest component under Synthetic Leases) of the Consolidated Parties
on a consolidated basis for such period, as determined in accordance
with GAAP; provided, however, that, notwithstanding anything to the
contrary set forth in this Credit Agreement, (i) for any calculation as
of the fiscal quarter ending March 31, 1998 for the twelve-month period
then ended, Consolidated Cash Interest Expense shall be determined based
on Consolidated Cash Interest Expense for the one-quarter period then
ended multiplied by 4, (ii) for any calculation as of the fiscal quarter
ending June 30, 1998 for the twelve-month period then ended,
Consolidated Cash Interest Expense shall be determined based on
Consolidated Cash Interest Expense for the two-quarter period then ended
multiplied by 2 and (iii) for any calculation as of the fiscal quarter
ending September 30, 1998 for the twelve-month period then ended,
Consolidated Cash Interest Expense shall be determined based on
Consolidated Cash Interest Expense for the three-quarter period then
ended multiplied by 1.33.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, interest
expense (including the amortization of debt discount and premium, the
interest component under Capital Leases and the implied interest
component under Synthetic Leases) of the Consolidated Parties on a
consolidated basis for such period, as determined in accordance with
GAAP; provided, however, that, notwithstanding anything to the contrary
set forth in this Credit Agreement, (i) for any calculation as of the
fiscal quarter ending March 31, 1998 for the twelve-month period then
ended, Consolidated Interest Expense shall be determined based on
Consolidated Interest Expense for the one-quarter period then ended
multiplied by 4, (ii) for any calculation as of the fiscal quarter
ending June 30, 1998 for the twelve-month period then ended,
Consolidated Interest Expense shall be determined based on Consolidated
Interest Expense for the two-quarter period then ended multiplied
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<PAGE>
by 2 and (iii) for any calculation as of the fiscal quarter ending
September 30, 1998 for the twelve-month period then ended, Consolidated
Interest Expense shall be determined based on Consolidated Interest
Expense for the three-quarter period then ended multiplied by 1.33.
"ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) any Approved Fund; and (iv) any other Person approved by
the Agent and, unless an Event of Default has occurred and is continuing
at the time any assignment is effected in accordance with Section 11.3,
the Borrower (such approval not to be unreasonably withheld or delayed
by the Borrower and such approval to be deemed given by the Borrower if
no objection is received by the assigning Lender and the Agent from the
Borrower within five Business Days after notice of such proposed
assignment has been provided by the assigning Lender to the Borrower);
PROVIDED, HOWEVER, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee. For the purposes of
this definition, "Approved Fund" shall mean, with respect to any Lender
that is a fund that invests in bank loans, any other fund that invests
in bank loans which is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.
"MATURITY DATE" means (i) as to the Revolving Loans and Letters of
Credit (and the related LOC Obligations) October 14, 2002, (ii) as to
the Tranche A Term Loan, September 30, 2002, (iii) as to the Acquisition
Loans, September 30, 2003 and (iv) as to the Tranche B Term Loan,
September 30, 2004.
SUBPART 2.2 AMENDMENT TO SECTION 2.3. Section 2.3(a) of the Existing
Credit Agreement is amended in its entirety to read as follows:
(a) ACQUISITION LOAN COMMITMENT. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to make
available to the Borrower such Lender's Acquisition Loan Commitment
Percentage of revolving credit loans requested by the Borrower in
Dollars ("ACQUISITION LOANS") from time to time from the Effective Date
until October 14, 1999, or such earlier date as the Acquisition Loan
Commitments shall have been terminated as provided herein for the
purpose of financing the purchase price of, and fees and expenses in
connection with, Permitted Acquisitions and Permitted Capital
Expenditures; PROVIDED, HOWEVER, that the sum of the aggregate principal
amount of outstanding Acquisition Loans shall not exceed SIXTY-FIVE
MILLION DOLLARS ($65,000,000) (as such aggregate maximum amount may be
reduced or increased from time to time as provided in Section 3.4, the
"ACQUISITION LOAN COMMITTED AMOUNT"); PROVIDED, FURTHER, (A) with regard
to each Lender individually, such Lender's outstanding Acquisition Loans
shall not exceed such Lender's Acquisition Loan Commitment Percentage of
the Acquisition Loan Committed Amount, and (B) the aggregate principal
amount of outstanding Acquisition Loans shall not exceed the Acquisition
Loan Committed Amount. Acquisition Loans may consist of Base Rate Loans
or Eurodollar Loans, or a combination thereof, as the Borrower may
request; PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall
be outstanding hereunder
-3-
<PAGE>
at any time. For purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar Loans, even
if they begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar
Loan with a single Interest Period. Acquisition Loans, other than any
term portion of the Acquisition Loans, hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
SUBPART 2.3. AMENDMENT TO SECTION 2.4(d). Section 2.5(d) of the
Existing Credit Agreement is amended as follows:
(d) REPAYMENT OF TRANCHE A TERM LOAN. The principal amount of the
Tranche A Term Loan shall be repaid in nineteen (19) consecutive
quarterly installments as follows, unless accelerated sooner pursuant to
Section 9.2:
* * * * * * * *
SUBPART 2.4. AMENDMENT TO SECTION 2.5(a). Section 2.5(a) of the
Existing Credit Agreement is amended in its entirety to read as follows:
(a) TRANCHE B TERM COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower
on the Effective Date such Lender's Tranche B Term Loan Commitment
Percentage of a term loan in Dollars (the "TRANCHE B TERM LOAN") in the
aggregate principal amount of FORTY MILLION DOLLARS ($40,000,000) (the
"TRANCHE B TERM LOAN COMMITTED AMOUNT") for the purposes hereinafter set
forth. The Tranche B Term Loan may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request;
PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall be
outstanding hereunder at any time. For purposes hereof, Eurodollar Loans
with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period.
Amounts repaid on the Tranche B Term Loan may not be reborrowed.
SUBPART 2.5. AMENDMENT TO SECTION 2.5(d). Section 2.5(d) of the Existing
Credit Agreement is amended in its entirety to read as follows:
(d) REPAYMENT OF TRANCHE B TERM LOAN. The principal amount of the
Tranche B Term Loan shall be repaid in twenty-seven (27) consecutive
quarterly installments as follows, unless accelerated sooner pursuant to
Section 9.2:
-4-
<PAGE>
<TABLE>
<CAPTION>
TRANCHE B TERM
PRINCIPAL AMORTIZATION LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION
PAYMENT
----------------------------- --------------
<S> <C>
March 31, 1998, June 30, 1998 $333,333.33
and September 30, 1998
December 31, 1998, March 31, $250,000.00
1999, June 30, 1999, September
30, 1999, December 31, 1999,
March 31, 2000, June 30, 2000,
September 30, 2000, December
31, 2000, March 31, 2001, June
30, 2001, September 30, 2001,
December 31, 2001, March 31,
2002, June 30, 2002 and
September 30, 2002
December 31, 2002, March 31, $3,750,000.00
2003, June 30, 2003 and
September 30, 2003
December 31, 2003, March 31, $5,000,000.00
2004, June 30, 2004 and
September 30, 2004
</TABLE>
SUBPART 2.6. AMENDMENT TO SECTION 3.4(b). Section 3.4(b) of the
Existing Credit Agreement is amended in its entirety to read as follows:
(b) INCREASE IN ACQUISITION LOAN COMMITMENTS/TRANCHE B TERM LOAN
COMMITMENTS. The Borrower shall have the right upon at least fifteen
(15) Business Days' prior written notice to the Agent to increase the
Acquisition Loan Committed Amount and/or the Tranche B Term Loan
Committed Amount by an aggregate amount up to $25,000,000, in a single
increase, at any time on or after the Effective Date, SUBJECT, HOWEVER,
in any such case, to satisfaction of the following conditions precedent:
(A) no Default or Event of Default has occurred and is
continuing on the date on which such Acquisition Loan Committed
Amount and/or Tranche B Term Loan Committed Amount increase is to
become effective;
(B) the representations and warranties set forth in Section 6
of this Credit Agreement shall be true and correct in all material
respects on and as of the date on which such Acquisition Loan
Committed Amount and/or Tranche B Term Loan Committed Amount
increase is to become effective;
-5-
<PAGE>
(C) on or before the date on which such Acquisition Loan
Committed Amount and/or Tranche B Term Loan Committed Amount
increase is to become effective, the Agent shall have received, for
its own account, the mutually acceptable fees and expenses required
by separate agreement of the Borrower and the Agent to be paid in
connection with such increase;
(D) such Acquisition Loan Committed Amount and/or Tranche B
Term Loan Committed Amount increase shall be an integral multiple
of $1,000,000 and shall in no event be less than $5,000,000; and
(E) such requested Commitment increase shall be effective on
such date only to the extent that, on or before such date, (a) the
Agent shall have received and accepted a corresponding amount of
Additional Commitment(s) pursuant to a commitment letter(s)
acceptable to the Agent from one or more Lenders acceptable to the
Agent and, with respect to any Lender that is not at such time a
Lender hereunder, the Borrower and (B) each such Lender has
executed an agreement in the form of EXHIBIT 3.4(b) hereto (each
such agreement a "NEW COMMITMENT AGREEMENT"), accepted in writing
therein by the Agent and, with respect to any Lender that is not at
such time a Lender hereunder, the Borrower, with respect to the
Additional Commitment of such Lender.
SUBPART 2.7. AMENDMENT TO SECTION 3.11(d). Section 3.11(d) of the
Existing Credit Agreement is amended in its entirety to read as follows:
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery
of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by the Borrower or the Agent (but
only so long as such Lender remains lawfully able to do so), shall
provide the Borrower and the Agent with (i) Internal Revenue Service
Form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a
party which reduces the rate of withholding tax on payments of interest
or certifying that the income receivable pursuant to this Credit
Agreement is effectively connected with the conduct of a trade or
business in the United States, (ii) Internal Revenue Service Form W-8 or
W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and/or (iii) any other form or certificate required by
any taxing authority (including any certificate required by Sections
871(h) and 881(c) of the Internal Revenue Code), certifying that such
Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Credit Agreement or any of the other Credit
Documents.
-6-
<PAGE>
SUBPART 2.8. AMENDMENT TO SECTION 7.16(b). Section 7.16(b) of the
Existing Credit Agreement is amended in its entirety to read as follows:
(b) On or before January 31,1998, the Credit Parties shall deliver
to the Agent (i) evidence satisfactory to the Agent that the good
standing status of each Subsidiary identified in SCHEDULE 6.13 as not
being in good standing in any listed jurisdiction has been reinstated to
good standing status in each such jurisdiction and (ii) evidence
satisfactory to the Agent that each Subsidiary identified in SCHEDULE
6.13 as having incomplete tax data available for any listed jurisdiction
is in good tax standing in each such jurisdiction.
SUBPART 2.9. AMENDMENT TO SECTION 9.2. Section 9.2 of the Existing
Credit Agreement is amended in its entirety to read as follows:
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite
Lenders (pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Credit Parties take any of the
following actions:
(a) TERMINATION OF COMMITMENTS. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) ACCELERATION. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness
or obligations of any and every kind owing by the Borrower to the Agent
and/or any of the Lenders hereunder to be due whereupon the same shall
be immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
(c) CASH COLLATERAL. Direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an
Event of Default under Section 9.1(e), it will immediately pay) to the
Agent additional cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security for the LOC
Obligations in respect of subsequent drawings under all then outstanding
Letters of Credit in an amount equal to the maximum aggregate amount
which may be drawn under all Letters of Credits then outstanding.
(d) ENFORCEMENT OF RIGHTS. Enforce any and all rights and
interests created and existing under the Credit Documents including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
-7-
<PAGE>
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(e) shall occur, then the Commitments shall automatically
terminate and all Loans, all reimbursement obligations arising from drawings
under Letters of Credit, all accrued interest in respect thereof, all accrued
and unpaid Fees and other indebtedness or obligations owing to the Agent
and/or any of the Lenders hereunder automatically shall immediately become
due and payable without the giving of any notice or other action by the Agent
or the Lenders.
SUBPART 2.10. AMENDMENT TO SECTION 11.3(b)(ii). Section 11.3(b)(ii) of
the Existing Credit Agreement is amended in its entirety to read as follows:
(ii) except in the case of an assignment to another Lender or
an Approved Fund (as referred to in the definition of "Eligible
Assignee") or an assignment of all of a Lender's rights and
obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000 (or,
if less, the remaining amount of the Commitment being assigned by
such Lender) or an integral multiple of $1,000,000 in excess
thereof;
SUBPART 2.11. AMENDMENT TO SECTION 11.3(b)(iv). Section 11.3(b)(iv) of
the Existing Credit Agreement is amended in its entirety to read as follows:
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit 11.3(b) hereto, together with any Note subject to
such assignment and a processing fee of $3,500; provided that no
such fee shall be payable in the case of an assignment by a Lender
to (A) an Affiliate of such Lender or (B) an Approved Fund (as
referred to in the definition of "Eligible Assignee") which is an
Affiliate of such Lender.
SUBPART 2.12 SCHEDULE 2.1(a). SCHEDULE 2.1(a) of the Existing Credit
Agreement is hereby deleted in its entirety and a new schedule in the form of
SCHEDULE 2.1(a) attached hereto is substituted therefor.
SUBPART 2.13 SCHEDULE 6.13. SCHEDULE 6.13 of the Existing Credit
Agreement is hereby deleted in its entirety and a new schedule in the form of
SCHEDULE 6.13 attached hereto is substituted therefor.
PART 3
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 AMENDMENT NO. 2 EFFECTIVE DATE. This Amendment shall be
and become effective as of the date hereof (the "AMENDMENT NO. 2 EFFECTIVE
DATE") when all of the conditions set forth in this PART 3 shall have been
satisfied, and thereafter this Amendment shall be known, and may be referred
to, as "AMENDMENT NO. 2."
-8-
<PAGE>
SUBPART 3.2 EXECUTION OF COUNTERPARTS OF AMENDMENT. The Agent shall
have received counterparts (or other evidence of execution, including
telephonic message, satisfactory to the Agent) of this Amendment, which
collectively shall have been duly executed on behalf of each of the Borrower,
the Guarantors and the Lenders.
SUBPART 3.3 OTHER ITEMS. The Agent shall have received such other
documents, agreements or information which may be reasonably requested by the
Agent.
PART 4
ASSIGNMENTS AND ASSUMPTIONS
The Assigning Existing Lender hereby sells and assigns, without
recourse, to the New Lenders, and the New Lenders hereby purchase and assume,
without recourse, from the Assigning Existing Lender, effective as of the
Amendment No. 2 Effective Date, such interests in the Assigning Existing
Lender's rights and obligations under the Existing Credit Agreement
(including, without limitation, the Commitments of the Assigning Existing
Lender on the Amendment No. 2 Effective Date and the Revolving Loans and LOC
Obligations, the Acquisition Loans, the portions of the Tranche A Term Loan
and the portions of the Tranche B Term Loan owing to the Assigning Existing
Lender which are outstanding on the Amendment No. 2 Effective Date) as shall
be necessary in order to give effect to the reallocations of the Revolving
Committed Amounts and Revolving Commitment Percentages, the Tranche A Term
Loan Committed Amounts and Tranche A Term Loan Commitment Percentages and the
Tranche B Term Loan Committed Amounts and Tranche B Term Loan Commitment
Percentages effected by the amendment to Schedule 2.1(a) to the Existing
Credit Agreement pursuant to SUBPART 2.6. From and after the Amendment No. 2
Effective Date (i) each of the New Lenders shall be a party to and be bound
by the provisions of the Existing Credit Agreement (as amended hereby) and,
to the extent of the interests assigned hereby, have the rights and
obligations of a Lender thereunder and under the other Credit Documents and
(ii) the Assigning Existing Lender shall, to the extent of the interests
assigned hereby, relinquish its rights and be released from its obligations
under the Existing Credit Agreement. The Assigning Existing Lender (i)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Documents or any other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of any Credit Party
or the performance or observance by any Credit Party of any of its
obligations under the Credit Documents or any other instrument or document
furnished pursuant thereto. Each New Lender (i) confirms that it has
received a copy of the Existing Credit Agreement (as amended hereby) together
with copies of the financial statements referred to in Section 7.1 thereof
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Amendment; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assigning Existing Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in
-9-
<PAGE>
taking or not taking action under the Amended Credit Agreement; (iii)
confirms that it is an Eligible Lender; (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
and discretion under the Credit Agreement as are delegated to the Agent by
the terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Amended Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches
any U.S. Internal Revenue Service or other forms required under Section 3.11
of the Amended Credit Agreement.
PART 5
MISCELLANEOUS
SUBPART 5.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to the Agent and the Lenders that, after giving effect to this
Amendment, (a) no Default or Event of Default exists under the Credit
Agreement or any of the other Credit Documents and (b) the representations
and warranties set forth in Section 6 of the Existing Credit Agreement are,
subject to the limitations set forth therein, true and correct in all
material respects as of the date hereof (except for those which expressly
relate to an earlier date).
SUBPART 5.2 REAFFIRMATION OF CREDIT PARTY OBLIGATIONS. Each Credit
Party hereby ratifies the Credit Agreement acknowledges and reaffirms (i)
that it is bound by all terms of the Credit Agreement and (ii) that it is
responsible for the observance and full performance of the Credit Party
Obligations.
SUBPART 5.3 CROSS-REFERENCES. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 5.4 INSTRUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered and applied in accordance with the terms and
provisions of the Existing Credit Agreement.
SUBPART 5.5 REFERENCES IN OTHER CREDIT DOCUMENTS. At such time as this
Amendment No. 2 shall become effective pursuant to the terms of SUBPART 3.1,
all references in the Credit Documents to the "Credit Agreement" shall be
deemed to refer to the Credit Agreement as amended by this Amendment No. 2.
SUBPART 5.6 COUNTERPARTS. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
SUBPART 5.7 GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE NEW YORK.
-10-
<PAGE>
SUBPART 5.8 SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
[The remainder of this page has been left blank intentionally.]
-11-
<PAGE>
IN WITNESS WHEREOF the Borrower, the Guarantors and the Existing Lender
have caused this Amendment to be duly executed on the date first above
written.
BORROWER: INSIGHT HEALTH SERVICES CORP.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
GUARANTORS: INSIGHT HEALTH CORP.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
RADIOLOGY SERVICES CORP.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
OPEN MRI, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH CORP.
By:
----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
RADIOSURGERY CENTERS, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MTS ENTERPRISES, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
QUEST FINANCIAL SERVICES, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES CORP.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
DIAGNOSTEMPS, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
DIAGNOSTIC SOLUTIONS CORP.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF NORTH TEXAS, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF ARLINGTON, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF DALLAS, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
NORTH DALLAS DIAGNOSTIC CENTER, INC.
By:
-----------------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
<PAGE>
EXISTING LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
S-1
<PAGE>
AMARA-1 FINANCE LTD.
By:
------------------------------------------
Name:
Title:
S-2
<PAGE>
STRATA FUNDING LTD.
By:
----------------------------------------
Name:
Title:
S-3
<PAGE>
IN WITNESS WHEREOF the New Lenders have become a party to the Amended
Credit Agreement on the date first above written.
NEW LENDERS:
BANKBOSTON, N.A.
By:
----------------------------------------
Name:
Title:
S-4
<PAGE>
BANQUE PARIBAS
By:
-----------------------------------------
Name:
Title:
S-5
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
S-6
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
S-7
<PAGE>
HELLER FINANCIAL, INC.
By:
----------------------------------
Name:
Title:
S-8
<PAGE>
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By:
----------------------------------
Name:
Title:
S-9
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:
----------------------------------
Name:
Title:
S-10
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
----------------------------------
Name:
Title:
S-11
<PAGE>
This page has been intentionally left blank.
S-12
<PAGE>
INDOSUEZ CAPITAL FUNDING II, LIMITED
BY: INDOSUEZ CAPITAL LUXEMBOURG, AS
COLLATERAL MANAGER
By:
----------------------------------
Name:
Title:
S-13
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
----------------------------------
Name:
Title:
S-14
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<PAGE>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,785
<SECURITIES> 0
<RECEIVABLES> 20,806
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<PP&E> 67,870
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0
37,096
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<TOTAL-LIABILITY-AND-EQUITY> 130,620
<SALES> 55,140
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<CGS> 0
<TOTAL-COSTS> 45,535
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