<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
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Commission File Number: 000-22313
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AMERIPATH, INC.
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(Exact name of registrant as specified in its charter)
Delaware 65-0642485
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7289 Garden Road, Suite 200
Riviera Beach, FL 33404
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(Address, including zip code, of principal executive office)
(561) 845-1850
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Registrant's telephone number, including area code
NOT APPLICABLE
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(Former name, former address and 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 periods 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 issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 11, 1998
- ------------------------------------- -----------------------------------------
Common stock, $.01 par value 20,728,351 shares
<PAGE> 2
AMERIPATH, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page No.
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 1998 (unaudited) and
December 31, 1997 3
Condensed Consolidated Statements of Operations
for the Three and Six month periods ended June 30,
1998 and 1997 (unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the Three and Six month periods ended June 30,
1998 and 1997 (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports filed on Form 8-K 17
SIGNATURES 18
EXHIBITS 19
</TABLE>
2
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERIPATH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
----------- ------------
(Unaudited) *
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,655 $ 397
Accounts receivable, net 28,562 23,520
Inventories 320 268
Other current assets 2,665 2,532
-------- --------
Total current assets 36,202 26,717
-------- --------
PROPERTY AND EQUIPMENT, NET 7,710 6,242
-------- --------
OTHER ASSETS:
Goodwill, net 114,690 100,371
Identifiable intangibles, net 150,075 133,420
Other 2,408 2,477
-------- --------
Total other assets 267,173 236,268
-------- --------
TOTAL ASSETS $311,085 $269,227
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 12,511 $ 11,869
Current portion of long-term debt 1,645 2,720
-------- --------
Total current liabilities 14,156 14,589
LONG-TERM LIABILITIES:
Revolving loan 100,661 6,605
Senior term loan -- 64,350
Subordinated notes 1,156 1,399
Deferred tax liability 36,067 37,467
-------- --------
Total liabilities 152,040 124,410
-------- --------
COMMON STOCKHOLDERS' EQUITY:
Common stock 202 196
Additional paid in capital 140,528 134,590
Retained earnings 18,315 10,031
-------- --------
Total common stockholders' equity 159,045 144,817
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $311,085 $269,227
======== ========
</TABLE>
* Condensed from audited financial statements
The accompanying notes are an integral part of
these financial statements
3
<PAGE> 4
AMERIPATH, INC. AND SUBSIDARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenue $ 40,826 $ 23,264 $ 78,817 $ 45,321
Operating costs:
Cost of services 18,024 10,463 35,212 20,556
Selling, general and administrative expense 6,598 4,273 12,788 8,587
Provision for doubtful accounts 4,112 2,205 8,044 4,327
Amortization expense 2,274 1,211 4,325 2,410
-------- -------- -------- --------
Income from operations 9,818 5,112 18,448 9,441
Other expense:
Interest expense (1,862) (2,125) (3,617) (4,057)
Nonrecurring charge -- (1,289) -- (1,289)
Other expense, net (116) (83) (168) (57)
-------- -------- -------- --------
Income before income taxes 7,840 1,615 14,663 4,038
Provision for income taxes 3,342 694 6,378 1,736
-------- -------- -------- --------
Net income $ 4,498 $ 921 $ 8,285 $ 2,302
======== ======== ======== ========
Basic Earnings Per Common Share:
Basic weighted average shares outstanding 19,884 5,849 19,779 5,821
======== ======== ======== ========
Basic earnings per common share $ 0.23 $ 0.14 $ 0.42 $ 0.36
======== ======== ======== ========
Diluted Earnings Per Common Share:
Diluted weighted average shares outstanding 20,678 11,989 20,550 11,962
======== ======== ======== ========
Diluted earnings per common share $ 0.22 $ 0.08 $ 0.40 $ 0.19
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements
4
<PAGE> 5
AMERIPATH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 9,607 $ 6,114
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (2,047) (1,983)
Purchase of subsidiaries, net of cash acquired (26,843) (1,275)
Payments of contingent notes (4,367) (1,444)
-------- --------
Net cash used in investing activities (33,257) (4,702)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt and stock issuance costs (263) (973)
Offering costs -- (1,591)
Principal payments on long-term debt (1,023) (731)
Borrowings under senior term loan -- 65,000
Issuance of common stock under stock option plan 138 --
Net borrowings (payments) under revolving loan 29,056 (64,344)
-------- --------
Net cash provided by (used in) financing activities 27,908 (2,639)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,258 (1,227)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 397 2,262
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,655 $ 1,035
======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements
5
<PAGE> 6
AMERIPATH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
AmeriPath, Inc. and Subsidiaries (the "Company") and have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and in accordance with Rule 10-01 of Regulation S-X. Accordingly, the
financial statements do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, the accompanying financial statements contain all
adjustments (consisting of normal recurring items) necessary for a fair
presentation of results for the interim periods presented. The results of
operations for any interim periods are not necessarily indicative of results for
a full year. The financial statements and footnote disclosures should be read in
conjunction with the Company's December 31, 1997 audited consolidated financial
statements and the notes thereto, which are included in the Company's Form 10-K
for the year ended December 31, 1997, which was filed under the Securities
Exchange Act of 1934, as amended, (Commission number 000-22313).
Reclassification - Certain amounts have been reclassified to conform to the June
30, 1998 presentation.
NOTE 2 - ACQUISITIONS
During the first six months of 1998, the Company acquired or became affiliated
with seven anatomic pathology practices in Indiana, Texas, Florida, Mississippi
and Wisconsin. The total consideration paid by the Company in connection with
these acquisitions included cash of $25.9 million and 597,741 shares of common
stock. In addition, the Company issued additional purchase price consideration
in the form of contingent notes. In five of the acquisitions, payments under the
notes are contingent upon the achievement of stipulated levels of cumulative
operating earnings (as defined) of the acquired practice over a five year
period. If the maximum levels of cumulative operating earnings for the Practices
specified in the contingent notes are achieved, the Company would be required to
make aggregate maximum payments, including principal and interest, of $21.2
million over the next five years. In the two other acquisitions, payments under
the notes are contingent upon retention of a hospital contract for periods
ranging from three to five years. If the Practice retains the hospital contract
for the specified period, the maximum aggregate payments the Company may be
required to make, including principal and interest, is $1.5 million.
The allocation of the purchase price of the 1997 acquisitions and the 1998
acquisitions (the "Acquisitions") is preliminary, while the Company continues to
obtain the information necessary to determine the fair value of the assets
acquired and liabilities assumed. When the Company obtains final information,
management believes that adjustments, if any, will not be material in relation
to the consolidated financial statements.
The accompanying financial statements include the results of operations of the
1998 acquisitions from the date acquired through June 30, 1998. The following
unaudited pro forma information presents the consolidated results of the
Company's operations and the results of operations of the Acquisitions for the
year ended December 31, 1997 and the six months ended June 30, 1998, after
giving affect to amortization of goodwill and identifiable intangible assets,
interest expense on long-term debt incurred in connection with these
acquisitions, and the reduced level of certain specific operating expenses
(primarily compensation and related expenses attributable to former owners) as
if the acquisitions had been consummated on January 1, 1997. Such unaudited pro
forma information is based on historical financial information with respect to
the Acquisitions and does not include operational or other changes which might
have been effected by the Company.
6
<PAGE> 7
AMERIPATH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The unaudited pro forma information for the six months ended June 30, 1998 and
the year ended December 31, 1997 presented below is for illustrative information
purposes only and is not indicative of results which would have been achieved or
results which may be achieved in the future (in thousands except per share
data).
Pro Forma (unaudited)
-------------------------------
Six Months
Ended Year Ended
June 30, December 31,
1998 1997
--------------- ------------
Net revenue $ 83,760 $158,975
=============== ========
Net income $ 8,993 $ 13,852
=============== ========
Net income per share (diluted) $ 0.43 $ 0.86
=============== ========
NOTE 3 - INTANGIBLE ASSETS
Intangible assets and the related accumulated amortization and amortization
periods are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Amortization Periods
(years)
-------------------------
June 30, December 31, Weighted
1998 1997 Range Average
--------- ------------ ----- --------
<S> <C> <C> <C> <C>
Hospital contracts $ 105,179 $ 91,250 35-40 35.5
Physician client lists 46,158 43,321 17-30 22.0
Laboratory contracts 4,400 4,400 10 10.0
Management service agreement 2,459 -- 25 25.0
--------- ---------
158,196 138,971
Accumulated amortization (8,121) (5,551)
--------- ---------
Balance, net $ 150,075 $ 133,420
========= =========
Goodwill $ 119,503 $ 103,475 15-35 33.9
Accumulated amortization (4,812) (3,104)
--------- ---------
Balance, net $ 114,690 $ 100,371
========= =========
</TABLE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Liability Insurance - The Company is insured with respect to general liability
and medical malpractice risks on a claims made basis. The Company has provided a
reserve for incurred but not reported incidents. It is the opinion of management
that the ultimate resolution of any unasserted claims will not have a material
adverse effect on the Company's financial position or results of operations.
Healthcare Matters - The healthcare industry in general, and the services the
Company provides are subject to extensive federal and state laws and
regulations. Additionally, a significant portion of the Company's net revenue is
from payments by government-sponsored health care programs, principally Medicare
and Medicaid, and is subject to audit and adjustments by applicable regulatory
agencies. Failure
7
<PAGE> 8
AMERIPATH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
to comply with any of these laws or regulations, the results of regulatory
audits and adjustments, or changes in the amounts payable for the Company's
services under these programs could have a material adverse effect on the
Company's financial position and results of operations.
In addition, the Company has contracts to provide pathology services for 27
Columbia/HCA Healthcare Corporation ("Columbia") hospitals. Columbia is
currently under government investigation and is evaluating its operating
strategies including the sale, spin-off or closure of certain hospitals. The
government's investigation of Columbia and Columbia's re-evaluation of its
operating strategies may adversely effect the Company, including but not limited
to, through reduction of revenue, termination or non-renewal of existing
contracts, adverse publicity and/or difficulties obtaining new or expanded
contracts.
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
The following supplemental information presents the non-cash impact on the
balance sheets of assets acquired and liabilities assumed in connection with the
acquisitions or affiliations consummated during the six months ended June 30,
1998. No acquisitions were consummated during the six months ended June 30, 1997
(dollars in thousands):
Six Months
Ended
June 30,
1998
----------
Assets acquired $ 35,382
Liabilities assumed (2,325)
Common stock issued (5,807)
--------
Cash paid 27,250
Less cash acquired (407)
--------
Net cash paid $ 26,843
========
NOTE 6 - CREDIT FACILITY
On April 28, 1998, the Company amended its credit facility with a syndicate of
banks led by co-agents BankBoston N.A. and NationsBank N.A., as lenders and
agents (the "Agents"), which provides for borrowings of up to $200.0 million in
the form of a revolving loan that may be used for working capital purposes (in
an amount limited to 75% of the Company's net accounts receivable, as reflected
on the Company's quarterly consolidated balance sheet) and to fund acquisitions
if not otherwise used for working capital purposes. The Company must comply with
certain requirements as defined in the credit agreement to utilize the credit
facility to fund acquisitions. Interest is payable monthly and all outstanding
advances under the revolving loan are due and payable on April 30, 2003. The
amended credit facility bears interest at variable rates, based, at the
Company's option, on the Agents' base rate or the Eurodollar rate plus a premium
that is adjusted based on the Company's quarterly ratio of total debt to cash
flow. The amended credit facility also requires the quarterly payment of an
annual commitment fee equal 0.25%, on the unused portion of the commitment. The
Company used a portion of the funds under the amended credit facility to
refinance existing indebtedness and will use the remaining availability for its
acquisition program and working capital.
The credit facility contains covenants which, among other things, require the
Company to maintain certain financial operating ratios and impose certain
limitations or prohibitions on the Company with respect to the incidence,
guaranty or assumption of indebtedness, the payment of dividends, cash
distributions, new debt issuance, sale of assets, leasing commitments and annual
capital expenditures, and contains provisions
8
<PAGE> 9
AMERIPATH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
which preclude mergers and acquisitions under certain circumstances. All of the
Company's assets are pledged as collateral under the credit facility.
NOTE 7 - EARNINGS PER SHARE
Earnings per share are computed and presented in accordance with SFAS No. 128,
Earnings Per Share, which the Company adopted in the fourth quarter of 1997.
Basic earnings per share excludes dilution and is computed by dividing income
attributable to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. The
effects of convertible preferred stock are calculated using the as if converted
method and the effects of stock options are calculated using the treasury stock
method. All prior reported earnings per share data has been restated in
accordance with SFAS No. 128 (in thousands except per share data).
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic Earnings Per Common Share:
Net income $ 4,498 $ 921 $ 8,285 $ 2,302
Preferred stock dividends -- (95) -- (189)
-------- -------- -------- --------
Income attributable to common stockholders $ 4,498 $ 826 $ 8,285 $ 2,113
======== ======== ======== ========
Basic weighted average shares outstanding 19,884 5,849 19,779 5,821
-------- -------- -------- --------
Basic earnings per common share $ 0.23 $ 0.14 $ 0.42 $ 0.36
======== ======== ======== ========
Diluted Earnings Per Common Share:
Net income $ 4,498 $ 921 $ 8,285 $ 2,302
======== ======== ======== ========
Weighted average shares outstanding 19,884 5,849 19,779 5,821
Effects of convertible preferred stock
and stock options 794 6,140 771 6,141
-------- -------- -------- --------
Diluted weighted average shares outstanding 20,678 11,989 20,550 $ 11,962
======== ======== ======== ========
Diluted earnings per common share $ 0.22 $ 0.08 $ 0.40 $ 0.19
======== ======== ======== ========
</TABLE>
Options to purchase 50,000 shares of common stock at an average price of $16.73
per share which were outstanding at June 30, 1998 have been excluded from the
calculation of diluted earnings per share for the three and six periods months
ended June 30, 1998 because their effect would be anti-dilutive.
NOTE 8 - NONRECURRING CHARGE
In May 1997, the Company withdrew its registration statement filed with the
Securities and Exchange Commission and postponed it planned initial public
offering of common stock. During the quarter ended June 30, 1997, the Company
recorded a nonrecurring charge of $1.3 million, primarily professional fees and
printing costs, which represented offering costs incurred prior to the
postponement that did not have a continuing benefit after the postponement.
9
<PAGE> 10
AMERIPATH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 9 - SUBSEQUENT EVENTS
Effective July 1, 1998, the Company completed the acquisitions of Severance &
Associates, P.A. and Pathology Affiliated Services, L.L.C. ("Severance") and
Pasadena Pathology, Edward K. Miller, M.D., P.A., d/b/a Pasadena Pathology,
("Pasadena"). Total consideration paid by the Company in connection with these
acquisitions included cash of approximately $12.0 million and 564,577 shares of
common stock. In addition, the Company issued additional purchase price to the
sellers in the form of contingent notes. The contingent notes issued to
Severance are payable upon the achievement of stipulated levels of cumulative
operating earnings of the practice over a five year period. The contingent notes
issued to Pasadena are contingent upon retention of a hospital contract for a
specified period.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
QUALIFICATION OF FORWARD-LOOKING STATEMENTS
The statements contained in this Report that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
without limitation statements regarding the Company's expectations, beliefs,
intentions or strategies regarding the future. All forward-looking statements
included in this document are based on information available to the Company on
the date hereof, and the Company assumes no obligation to update any such
forward-looking statements. The forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause actual results,
experience and effects and the performance or achievements of the Company to be
materially different from those anticipated, expressed or implied by the
forward-looking statements (including, without limitation, those risks,
uncertainties and other factors identified in the Company's Form 10-K for fiscal
1997 under "Business" and elsewhere therein). In evaluating the Company's
business, the following factors, in addition to the other information set forth
herein and in the Company's 10-K, should be carefully considered: competition;
success of the Company's operating initiatives and growth strategy; healthcare
regulation; payment and reimbursement rates under government sponsored
healthcare programs; dependence upon pathologists; labor and technology costs;
general economic conditions; advertising and promotional efforts; availability,
locations and terms of additional practices for acquisition and/or development
and the success of the Company's acquisition strategy. In addition, the
Company's strategy to penetrate and develop new markets involves a number of
risks and challenges and there can be no assurance that the healthcare
regulations of the new states in which the Company enters and other factors will
not have a material adverse effect on the Company. The factors which may
influence the Company's success in each targeted market in connection with this
strategy include: the selection of appropriate qualified practices; negotiation
and execution of definitive acquisition and/or affiliation, management services
and/or employment agreements; the economic stability of each targeted market;
compliance with the healthcare and/or other laws and regulations in each
targeted market, including the regulation of the healthcare industry in each
targeted market on a national, regional and local basis (including health,
safety, waste disposal and zoning laws); compliance with applicable licensing
approval procedures; restrictions under labor and employment laws, especially
non-competition covenants; access to affordable capital; governmental
reimbursement and assistance programs and tax laws.
OVERVIEW
The Company is the leading physician practice management company focused on
anatomic pathology services, based on an analysis of geographic breadth, number
of physicians, number of hospital contracts,
10
<PAGE> 11
number of practices and net revenue. As of June 30, 1998, the Company owned or
was affiliated with 24 anatomic pathology practices (the "Practices") located in
nine states which employed 163 pathologists. The pathologists provide medical
services in 19 outpatient pathology laboratories owned and operated by the
Company and in inpatient laboratories for 97 hospitals and 33 outpatient surgery
centers.
The Company manages and controls all of the non-medical functions of the
Practices, including: (i) recruiting, training, employing and managing the
technical and support staff of the Practices; (ii) developing, equipping and
staffing laboratory facilities; (iii) establishing and maintaining courier
services to transport specimens; (iv) negotiating and maintaining contracts with
hospitals, national clinical laboratories and managed care organizations and
other payors; (v) providing financial reporting and administration, clerical,
purchasing, payroll, billing and collection, information systems, sales and
marketing, risk management, employee benefits, legal, tax and accounting
services to the Practices; (vi) complying with applicable laws and regulations;
and (vii) with respect to the Company's ownership and operation of anatomic
pathology laboratories, providing slide preparation and other technical
services. The Company is not licensed to practice medicine.
RESULTS OF OPERATIONS FOR THE SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1998
AND 1997
The Company derives its net revenue from the Practices it owns or manages. The
Company typically bills government programs (principally Medicare and Medicaid),
indemnity insurance companies, managed care organizations, national clinical
laboratories, physicians and patients on a fee-for-service basis. Net revenue
differs from amounts billed for services due to: (i) Medicare and Medicaid
reimbursements at annually established rates; (ii) payments from managed care
organizations at discounted fee-for-service rates; (iii) negotiated
reimbursement rates with other third party payors; (iv) rates negotiated under
sub-contracts with national clinical laboratories for the provision of anatomic
pathology services; and (v) discounts and other allowances, principally from
private pay accounts.
The majority of services furnished by the Company's pathologists are anatomic
pathology services. Medicare reimbursement for these services represented
approximately 23% of the Company's cash collections for the six months ended
June 30, 1998. As of January 1, 1992, Medicare reimbursed all physician
services, including anatomic pathology services, based on a methodology known as
the Resource-Based Relative Value System ("RBRVS"), which was fully phased in by
1996. Overall, anatomic pathology reimbursement rates declined during the fee
schedule phase-in period, despite an increase in payment rates for certain
pathology services performed by the Company.
In June 1998, the Health Care Financing Administration published proposed
regulations that would recalculate a key component of the RBRVS to reflect
resource consumption rather than historical charge data. Two alternative
approaches to such calculation were proposed and a final decision is expected in
late 1998, with the new fee schedules phased in over the period 1999 to 2002.
The impact of this proposed methodology on the Company's Medicare revenue cannot
be determined at this time, and will depend on the approach selected, changes in
other factors in the RBRVS reimbursement computation and the mix of pathology
services furnished by the Company. Other potential changes in government and
third-party payer reimbursement, resulting from federal, state or local
legislation, the impact of managed care, or other market pressures, may also
create downward pressure on reimbursement and make the market for the Company's
services more competitive, which could in turn have an adverse impact on the
Company's gross profits. The Company's Form 10-K for the year ended December 31,
1997, previously filed with the Securities and Exchange Commission, contains
additional information regarding the complex area of reimbursement.
During the first six months of 1998, the Company acquired or became affiliated
with seven practices, the results of which are included in the Company's
operating results from the effective date of acquisition. Changes in operations
between the three and six month periods ended June 30, 1998 and 1997 were
primarily due to the Acquisitions which were completed during or subsequent to
the second quarter ended
11
<PAGE> 12
June 30, 1997. References to "same practice" means those practices at which the
Company provided services for the entire period of which the amount is
calculated and the entire prior comparable period.
NET REVENUES
Net revenue increased to $78.8 million for the six months ended June 30, 1998 as
compared with $45.3 million for the same period in 1997, an increase of $33.5
million, or 74%. Same practice net revenue increased $6.4 million, or 14.1%,
consisting of a $6.1 million increase in outpatient net revenue and a $300,000
increase in hospital based net revenue. The remaining increase of $27.1 million
was from the Acquisitions, which occurred during or subsequent to the six months
ended June 30, 1997. The increase in same practice net revenue resulted
primarily from the expansion of a contract with a national clinical laboratory
which increased same practice outpatient net revenue by $2.9 million. In
addition, there was an increase in the Medicare reimbursement rate which
increased same practice revenue by approximately $1.1 million.
Net revenue increased to $40.8 million for the three months ended June 30, 1998,
as compared with $23.3 million for the same period in 1997, an increase of $17.5
million, or 75%. Same practice growth increased $3.2 million, or 13.8%,
consisting of a $3.1 million increase in outpatient practice net revenue and a
$100,000 increase in hospital based net revenue. The remaining increase of $14.3
million was from the Acquisitions, which occurred during or subsequent to the
three months ended June 30, 1997. The increase in same practice net revenue
resulted primarily from the expansion of a contract with a national clinical
laboratory which increased same practice outpatient net revenue by $1.4 million.
In addition, there was an increase in the Medicare reimbursement rate which
increased same practice revenue by approximately $600,000.
As of June 30, 1998, Columbia owned 27 of the hospitals with which the Company
has contracts to provide pathology services. For the six months ended June 30,
1998, approximately 23% of the Company's net revenue was generated directly from
these contracts. In addition, the Company has contracts with SmithKline Beecham
Laboratories, Inc. ("SmithKline") to provide pathology services. For the six
months ended June 30, 1998, the net revenue from SmithKline was approximately 7%
of the Company's consolidated net revenue. Generally, the contracts with
Columbia and SmithKline have terms of less than five years and may or may not
contain renewal provisions. Some of the contracts contain clauses that allow for
termination by either party with relatively short notice. Although the Company,
through the acquired practices, has had relationships with these hospitals and
SmithKline for extended periods of time, the termination of one or more of these
contracts could have a material adverse effect on the Company's financial
position and results of operations.
COST OF SERVICES
Cost of services increased by $14.6 million, or 71%, to $35.2 million for the
six months ended June 30, 1998 from $20.6 million for the same period in 1997.
Of this increase, $4.0 million was attributable to same practice growth and
$10.6 million from the Acquisitions which occurred during or subsequent to the
six months ended June 30, 1997. The gross margin on the same practice revenue
for the six months ended June 30, 1998, was approximately 52% as compared to the
Company's consolidated gross margin of approximately 55% due primarily to a
lower fee schedule on the expanded contract with a national clinical laboratory.
Cost of services increased by $7.5 million, or 72%, to $18.0 million for the
three months ended June 30, 1998 from $10.5 million for the same period in 1997.
Of this increase, $1.9 million was attributable to same practice growth and $5.6
million from the Acquisitions which occurred during or subsequent to the three
months ended June 30, 1997. The gross margin on the same practice revenue was
approximately 53% for the three months ended June 30, 1998.
12
<PAGE> 13
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense increased by $4.2 million, or 49%,
to $12.8 million for the six months ended June 30, 1998 from $8.6 million for
the same period in 1997. Of this increase, $1.4 million was attributable to same
practice growth and $2.8 million from the Acquisitions which occurred during or
subsequent to the six months ended June 30, 1997. The same practice increase is
primarily attributable to increased staffing levels in marketing, billing, human
resources and accounting and other costs incurred to expand the Company's
administrative support infrastructure.
Selling, general and administrative expense increased by $2.3 million, or 54%,
to $6.6 million for the three months ended June 30, 1998 from $4.3 million for
the same period in 1997. Of this increase, $800,000 was attributable to same
practice growth and $1.5 million from the Acquisitions which occurred during or
subsequent to the three months ended June 30, 1997. The same practice increase
is primarily attributable to increased staffing levels in marketing, billing,
human resources and accounting and other costs incurred to expand the Company's
administrative support infrastructure.
PROVISION FOR DOUBTFUL ACCOUNTS
The provision for doubtful accounts increased by $3.7 million, or 86%, to $8.0
million for the six months ended June 30, 1998, from $4.3 million for the same
period in 1997. The dollar increase is primarily due to the increase in net
revenues from the Acquisitions which occurred during or subsequent to the six
months ended June 30, 1997. The provision for doubtful accounts as a percentage
of net revenue was 10.2% and 9.5% for the six month periods ended June 30, 1998
and 1997, respectively. The increase in the provision for doubtful accounts as a
percentage of net revenue is due primarily to the increase in hospital based net
revenue. Hospital based practices generally have a higher provision for doubtful
accounts as a percent of net revenue due to a larger concentration of indigent
and private pay patients, more difficulties gathering complete and accurate
billing information and longer billing and collection cycles.
The provision for doubtful accounts increased by $1.9 million, or 86%, to $4.1
million for the three months ended June 30, 1998, from $2.2 million for the same
period in 1997. The dollar increase is primarily due to the completion of the
Acquisitions which occurred during or subsequent to the three months ended June
30, 1997. The provision for doubtful accounts as a percentage of net revenue was
10.1% and 9.5% for the three month periods ended June 30, 1998 and 1997,
respectively. The increase in the provision for doubtful accounts as a
percentage of net revenue is due primarily to the increase in hospital based net
revenue.
AMORTIZATION EXPENSE
Amortization expense increased by $1.9 million, or 80%, to $4.3 million for the
six months ended June 30, 1998, from $2.4 million for the same period in 1997.
This increase is primarily attributable to the amortization of goodwill and net
identifiable intangible assets as a result of the Acquisitions which occurred
during or subsequent to the six months ended June 30, 1997, and payments made on
the contingent notes. Amortization expense is expected to increase in the future
as a result of additional identifiable intangible assets and goodwill arising
from future acquisitions, and any payments required to be made pursuant to the
contingent notes issued in connection with acquisitions. Additionally, the
Company evaluates the carrying values attributable to identifiable intangible
assets and goodwill on an ongoing basis. In the event of an impairment of the
values attributable to goodwill or identifiable intangible assets, there would
be a charge to earnings that could have a material adverse effect on the
Company's financial position and results of operations.
Amortization expense increased by $1.1 million, or 88%, to $2.3 million for the
three months ended June 30, 1998, from $1.2 million for the same period in 1997.
This increase is primarily attributable to the amortization of goodwill and net
identifiable intangible assets as a result of the Acquisitions which
13
<PAGE> 14
occurred during or subsequent to the three months ended June 30, 1997, and
payments made on the contingent notes.
INCOME FROM OPERATIONS
Income from operations increased by $9.0 million, or 95%, to $18.4 million for
the six months ended June 30, 1998 from $9.4 million for the same period in
1997. Of this increase $8.9 million was attributable to the completion of the
Acquisitions subsequent to the six months ended June 30, 1997. The same practice
income from operations increased approximately $1.8 million excluding a $1.7
million increase in expenses associated with increased marketing, human
resources, and accounting and other expenses incurred to expand the Company's
support infrastructure. Income from operations as a percent of net revenue
increased to 10.5% for the six months ended June 30, 1998 as compared 5.1% for
the same period in 1997.
Income from operations increased by $4.7 million, or 92%, to $9.8 million for
the three months ended June 30, 1998 from $5.1 million for the same period in
1997. Of this increase $4.6 million was attributable to the completion of the
Acquisitions subsequent to the three months ended June 30, 1997. The same
practice income from operations increased approximately $1.1 million excluding a
$1.0 million increase in expenses associated with increased marketing, human
resources, and accounting and other expenses incurred to expand the Company's
support infrastructure.
NONRECURRING CHARGE
During the three and six month periods ended June 30, 1997, the Company
wrote-off certain deferred offering costs aggregating $1.3 million, primarily
consisting of professional fees and printing costs related to a registration
statement (relating to an intended initial public offering of shares of common
stock) filed by the Company with the Securities and Exchange Commission that was
withdrawn in May 1997.
INTEREST EXPENSE AND OTHER EXPENSE, NET
Interest expense decreased by $440,000 or 11%, to $3.6 million for the six
months ended June 30, 1998, from $4.1 million for the same period in 1997. The
majority of this decrease was attributable to the lower average amount of debt
outstanding in the first six months of 1998 as compared to the first six months
of 1997 and to more favorable interest rate terms under the Company's amended
$200 million credit facility. The Company's effective annual interest rate on
the $200 million amended credit facility at June 30, 1998, was 6.8%
Interest expense decreased by $263,000 or 12%, to $1.9 million for the three
months ended June 30, 1998, from $2.1 million for the same period in 1997.
INCOME TAX RATE
The effective income tax rate was approximately 43.5% for the six month period
ended June 30, 1998, as compared to approximately 43.0% for six month period
ended June 30, 1997. The increase in the Company's effective tax rate was
primarily due to the non-deductibility of amortization expense relating to
intangible assets from certain of its acquisitions.
The effective income tax rate was approximately 42.6% for the three month period
ended June 30, 1998, as compared to approximately 43.0% for three month period
ended June 30, 1997.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had working capital of approximately $22.0
million, an increase of $9.9 million from the working capital of $12.1 million
available at December 31, 1997. The increase in working capital was due
primarily to increases in cash of $4.3 million and net accounts receivable of
$5.0 million, a decrease in the current portion of long-term debt of $1.1
million offset by an increase in accounts payable and accrued expenses of
$642,000.
For the six month periods ended June 30, 1998 and 1997, cash flows from
operations were $9.6 million and $6.1 million, respectively. For the six month
period ended June 30, 1998, the cash flow from operations and borrowings under
the Company's credit facility were used primarily to: (i) acquire $2.0 million
of property and equipment, primarily for medical equipment and for information
systems as the Company continues to upgrade its billing and financial reporting
systems; (ii) fund the $25.9 million cash portion of the 1998 acquisitions;
(iii) make additional payments of $5.3 million in connection with acquisitions
(or affiliations) the Company completed prior to January 1, 1998, including
contingent note payments of $4.4 million; and (iv) make principal payments on
long term debt.
On April 28, 1998, the Company amended its credit facility with a syndicate of
banks led by co-agents BankBoston N.A. and NationsBank N.A., as lenders and
agents (the "Agents"), which provides for borrowings of up to $200.0 million in
the form of a revolving loan that may be used for working capital purposes (in
an amount limited to 75% of the Company's net accounts receivable, as reflected
on the Company's quarterly consolidated balance sheet) and to fund acquisitions
if not otherwise used for working capital purposes. All outstanding advances
under the revolving loan are due and payable on April 30, 2003. The amended
credit facility bears interest at variable rates, based, at the Company's
option, on the Agents' base rate or the Eurodollar rate plus a premium that is
adjusted based on the Company's quarterly ratio of total debt to cash flow. The
amended credit facility also requires the quarterly payment of an annual
commitment fee equal 0.25%, on the unused portion of the commitment. The Company
used a portion of the funds under the amended credit facility to refinance
existing indebtedness and will use the remaining availability for its
acquisition program and working capital.
The Company anticipates that its cash flows from operations, cash on hand, and
funds available under the amended credit facility, will be sufficient to meet
its working capital requirements and finance any required capital expenditures
for at least the next twelve months. In connection with implementing the
Company's growth strategy over the long term, the Company may be required to
seek additional financing through increases to the amended credit facility,
negotiation of credit facilities with other banks or public offerings or private
placements of equity or debt securities. No assurances can be given that the
Company will be able to extend or increase the credit facility, secure
additional bank borrowings or complete additional debt or equity financing on
terms favorable to the Company or at all.
YEAR 2000 ISSUES
In 1997, the Company initiated a plan to consolidate billing operations and
standardize billing and laboratory information systems. This plan includes the
identification and conversion or replacement of certain computer programs to be
Year 2000 compliant. Purchases of hardware and software have been capitalized
and all other costs associated with this plan are expensed as incurred.
The Company has also initiated formal communications with its vendors and
customers, such as hospitals, to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remediate
their own Year 2000 problems, if any. There can be no assurance that the systems
of other companies, including third-party payors, on which the Company relies
will be timely converted and, if not so timely converted, that such will not
have an adverse effect on the Company's systems, results of operations or
financial position.
15
<PAGE> 16
The Company will utilize both internal and external resources to reprogram,
replace and test the software for Year 2000 modifications. The Company
anticipates completing the Year 2000 project within one year, but not later than
October 31, 1999, which is prior to any anticipated impact on its operating
systems. The total cost of the Year 2000 project is presently estimated to be
between $500,000 and $1.5 million and will be primarily funded through operating
cash flow and its credit facility. The Company does not expect these costs to
have a material adverse effect on its results of operations.
The costs of this effort and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimate,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third party modification plans
and other factors. There can be no assurance that those estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained and resources
utilized in this area, the ability to locate and correct all relevant computer
codes, and similar uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company has become a party to and may in
the future be subject to pending and threatened legal actions and proceedings.
The majority of the pending legal proceedings involve claims of medical
malpractice, particularly cytology, which are generally covered by insurance.
The Company believes that the outcome of such legal actions and proceedings,
individually or in the aggregate, will not have a material adverse effect on the
Company's financial condition, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
In connection with five of the acquisitions completed subsequent to January 1,
1998, the Company issued the following shares of common stock:
<TABLE>
<CAPTION>
Effective Shares
Location Date Issued
------------------- ---------------- ------------
<S> <C> <C> <C>
Anatomic Pathology Associates, LLP Indianapolis, IN February 1, 1998 186,829
Plains Pathology Associates, P.A. Lubbock, TX June 1, 1998 182,320
Southwest Pathology Associates Lubbock, TX June 1, 1998 205,210
Drs. Rogers, White & Smith, M.D., P.A.
(d/b/a Indian River Pathology) Vero Beach, FL June 1, 1998 23,382
</TABLE>
Subsequent to June 30, 1998, the Company acquired Severance & Associates, P.A.
and Pathology Affiliated Services, L.L.C. In connection these acquisitions, the
Company issued to the sellers 564,577 shares of common stock.
The issuance of these shares of common stock was exempt from registration under
the Securities Act pursuant to an exemption provided under Section 4(2) of the
Securities Act based upon, among other things, certain representations made be
the recipients of the stock.
16
<PAGE> 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on May 8, 1998. The
matters voted on at the Annual Meeting and the tabulation of votes on such
matters are as follows:
(a) Election of Class I Directors.
<TABLE>
<CAPTION>
Number Against or
Name Voting For Withheld
- -------------------------- ----------------------- --------------------- ----------------------
<S> <C> <C> <C>
James C. New 14,326,394 14,324,319 2,075
E. Roe Stamps, IV 14,326,394 14,324,319 2,075
</TABLE>
The remaining directors whose terms continued after the meeting were Thomas S.
Roberts, C. Timothy Kilpatrick, M.D., Alan Levin, M.D. and C. Arnold Renschler,
M.D.
(b) Selection of Auditors
The shareholders of the Company ratified the appointment of Deloitte & Touche,
LLP as the Company's independent auditors for the fiscal year ended December 31,
1998, by the following vote:
For Against Abstentions
- ------------------------- ------------------------ ----------------------
14,305,432 1,000 19,972
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) Exhibits
10.10 Amended and Restated Credit Agreement dated as of
April 28, 1998, among AmeriPath, Inc., certain of its
subsidiaries, BankBoston N.A. and certain other
lenders; and Amendment No. 1 thereto dated June 29,
1998.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
17
<PAGE> 18
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.
AmeriPath, Inc.
Date: August 14, 1998 By: /s/ JAMES C. NEW
-----------------
James C. New
President, Chief Executive Officer
and Director (principal executive
officer)
Date: August 14, 1998 By: /s/ ROBERT P. WYNN
-------------------
Robert P. Wynn
Executive Vice President and Chief
Financial Officer (principal
financial officer and principal
accounting officer)
18
<PAGE> 1
EXHIBIT 10.10
AMERIPATH, INC.
CREDIT AGREEMENT
This Agreement, originally dated as of May 29, 1996 and amended and
restated as of April 28, 1998, is among AmeriPath, Inc., a Delaware corporation,
certain Subsidiaries of AmeriPath, Inc. from time to time party hereto, the
Lenders from time to time party hereto and BankBoston, N.A., f/k/a The First
National Bank of Boston, both in its capacity as a Lender and in its capacity as
agent for itself and the other Lenders. The parties agree as follows:
1. RESTATEMENT; DEFINITIONS.
1.1. RESTATEMENT. Effective as of the Initial Closing Date, this
Agreement amends and restates in its entirety the Credit Agreement dated as of
May 29, 1996, as amended and in effect on the date hereof, among the Company,
its Subsidiaries and a group of lenders for which BankBoston is acting as agent.
Amounts in respect of interest, commitment fees, Letter of Credit fees and other
amounts payable hereunder shall be payable in accordance with the terms of this
Agreement as in effect prior to the amendment and restatement on the Initial
Closing Date for periods prior to the Initial Closing Date and in accordance
with this Agreement as amended and restated hereby for periods from and after
the Initial Closing Date.
1.2. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION. Certain capitalized
terms are used in this Agreement and in the other Credit Documents with the
specific meanings defined below in this Section 1. Except as otherwise
explicitly specified to the contrary or unless the context clearly requires
otherwise, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation", (e) accounting terms not otherwise defined herein have the meaning
provided under GAAP, (f) terms defined in the UCC and not otherwise defined
herein have the meaning provided under the UCC, (g) references to a particular
statute or regulation include all rules and regulations thereunder and any
successor statute, regulation or rules, in each case as from time to time in
effect and (h) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement and the
other Credit Documents. References to "the date hereof" mean the date first set
forth above.
1.2.1. "ACCOUNTS" is defined in Section 10.1.2.
1.2.2. "ACCUMULATED BENEFIT OBLIGATIONS" means the actuarial
present value of the accumulated benefit obligations under any Plan,
calculated in accordance with Statement No. 87 of the Financial
Accounting Standards Board.
<PAGE> 2
1.2.3. "ACQUIRED PARTY" shall mean any Person, 100% of the
outstanding capital stock or beneficial interests or substantially all
of the assets of which are acquired by the Borrower in connection with
a Permitted Acquisition.
1.2.4. "ACQUIRED PARTY EBITDA ADJUSTMENT" means (a) for any
calculation made with respect to Sections 6.5.1 or 6.21 of this
Agreement in which six or less full months of the Net Income of an
Acquired Party have been included, and only to the extent not already
included in, Consolidated Net Income, an amount equal to the product of
(i) the number of months in the applicable period in which none of the
Net Income of such Acquired Party was included in Consolidated Net
Income, multiplied by (ii) one-twelfth of Pro Forma EBITDA of such
Acquired Party as of the date of the Acquisition of such Acquired Party
or (b) for any calculation made with respect to Section 6.5.1 or 6.21
of this Agreement in which more than six months but less than one full
year of the Net Income of an Acquired Party have been included, and
only to the extent not already included in, Consolidated Net Income, an
amount equal to the product of (X) the number of months in the
applicable period in which none of the Net Income of such Acquired
Party was included in Consolidated Net Income, MULTIPLIED BY (Y) the
amount of actual EBITDA of such Acquired Party for each full month
following its Acquisition by the Borrower, DIVIDED BY (Z) the number of
full months for which EBITDA of the Acquired Party was included in
Consolidated Net Income.
1.2.5. "ACQUISITION AGREEMENT" means the documentation
pursuant to which the Borrower commits itself to make a Permitted
Acquisition.
1.2.6. "ACQUISITION CLOSING DATE" is defined in
Section 6.21.1(a).
1.2.7. "AFFECTED LENDER" is defined in Section 13.3.
1.2.8. "AFFILIATE" means, with respect to the Borrower (or any
other specified Person), any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with the Borrower (or such specified Person), and shall include (a) any
officer or director or general partner of the Borrower (or such
specified Person) and (b) any Person of which the Borrower (or such
specified Person) or any Affiliate (as defined in clause (a) above) of
the Borrower (or such specified Person) shall, directly or indirectly,
beneficially own either (i) at least 5% of the outstanding equity
securities having the general power to vote or (ii) at least 5% of all
equity interests.
1.2.9. "AGENT" means BankBoston in its capacity as agent for
the Lenders hereunder, as well as its successors and assigns in such
capacity pursuant to Section 12.7.
-2-
<PAGE> 3
1.2.10. "AGGREGATE PERCENTAGE INTEREST" means, with respect to
the Loan, the ratio that the respective Commitments of the Lenders bear
to the total Commitments of all Lenders as from time to time in effect
and reflected in the Register.
1.2.11. "AGREEMENT" means this Agreement as from time to time
amended, modified and in effect.
1.2.12. "APPLICABLE RATE" means, at any date, the sum of:
(a) the rate shown in Exhibit 1 that corresponds to
the current ratio of Consolidated Total Debt to
Consolidated Adjusted EBITDA for the most recently
completed period of four consecutive fiscal quarters
(notwithstanding any subsequent change in such ratio
on any Closing Date due to the occurrence of a
Permitted Acquisition and the resulting inclusion of
an Acquired Party's Pro Forma EBITDA in Consolidated
Adjusted EBITDA and additional Financing Debt in
Consolidated Total Debt);
PLUS (b) an additional 3.00% effective on the day the
Agent notifies the Company that the interest rates
hereunder are increasing as a result of the
occurrence and continuance of an Event of Default
until the earlier of such time as (i) such Event of
Default is no longer continuing or (ii) such Event of
Default is deemed no longer to exist, in each case
pursuant to Section 8.3.
1.2.13. "ARRANGER" means BankBoston Securities, Inc.
1.2.14. "ASSIGNEE" is defined in Section 13.1.1.
1.2.15. "ASSIGNMENT AND ACCEPTANCE" is defined in Section
13.1.1.
1.2.16. "BANKBOSTON" means BankBoston, N.A., f/k/a The First
National Bank of Boston.
1.2.17. "BANKING DAY" means any day other than Saturday,
Sunday or a day on which banks in Boston, Massachusetts are authorized
or required by law or other governmental action to close and, if such
term is used with reference to a LIBOR Pricing Option, any day on which
dealings are effected by first-class banks in the interbank LIBOR
markets in London, England.
1.2.18. "BANKRUPTCY CODE" means Title 11 of the United States
Code.
-3-
<PAGE> 4
1.2.19. "BANKRUPTCY DEFAULT" means an Event of Default
referred to in Section 8.1.10.
1.2.20. "BASE RATE" means, on any date, the greater of (a) the
rate of interest announced by BankBoston at the Boston Office as its
Base Rate or (b) the sum of 1/2% PLUS the Federal Funds Rate.
1.2.21. "BORROWER" means the Company.
1.2.22. "BORROWING BASE" means, on any date, 75% of the
aggregate amount carried as accounts receivable (reduced appropriately
for allowances for contractual adjustments and doubtful accounts) on
the most recent Consolidated balance sheet of the Company and its
Subsidiaries delivered in accordance with Section 6.4.2; PROVIDED,
HOWEVER, that the Borrowing Base shall be reduced to $1.00 at any time
where the Borrower has failed to furnish the computation of the
Borrowing Base required by Section 6.4.2 within five days after such
computation was originally due.
1.2.23. "BOSTON OFFICE" means the principal banking office of
BankBoston in Boston, Massachusetts.
1.2.24. "BY-LAWS" means all written by-laws, rules,
regulations and all other documents relating to the management,
governance or internal regulation of any Person other than an
individual, or interpretive of the Charter of such Person, all as from
time to time in effect.
1.2.25. "CAPITAL EXPENDITURES" means, for any period, amounts
added or required to be added to the property, plant and equipment or
other fixed assets account on the Consolidated balance sheet of the
Company and its Subsidiaries, prepared in accordance with GAAP, in
respect of (a) the acquisition, construction, improvement or
replacement of land, buildings, machinery, equipment, leaseholds and
any other real or personal property, (b) to the extent not included in
clause (a) above, materials, contract labor and direct labor relating
thereto (excluding amounts properly expensed as repairs and maintenance
in accordance with GAAP) and (c) software development costs to the
extent not expensed.
1.2.26. "CAPITALIZED LEASE" means any lease which is required
to be capitalized on the balance sheet of the lessee in accordance with
GAAP, including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board.
1.2.27. "CAPITALIZED LEASE OBLIGATIONS" means the amount of
the liability reflecting the aggregate discounted amount of future
payments under all Capitalized Leases calculated in accordance with
GAAP, including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board.
-4-
<PAGE> 5
1.2.28. "CASH EQUIVALENTS" means:
(a) negotiable certificates of deposit, time deposits
(including sweep accounts), demand deposits and bankers'
acceptances having a maturity of nine months or less and
issued by any United States financial institution having
capital and surplus and undivided profits aggregating at least
$100,000,000 and rated at least Prime-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Ratings Group or
issued by any Lender;
(b) corporate obligations having a maturity of nine
months or less and rated at least Prime-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Ratings Group or
issued by any Lender;
(c) any direct obligation of the United States of
America or any agency or instrumentality thereof, or of any
state or municipality thereof, (i) which has a remaining
maturity at the time of purchase of not more than one year or
which is subject to a repurchase agreement with any Lender (or
any other financial institution referred to in clause (a)
above) exercisable within one year from the time of purchase
and (ii) which, in the case of obligations of any state or
municipality, is rated at least Aa by Moody's Investors
Service, Inc. or AA by Standard & Poor's Ratings Group; and
(d) any mutual fund or other pooled investment
vehicle rated at least Aa by Moody's Investors Service, Inc.
or AA by Standard & Poor's Ratings Group which invests
principally in obligations described above.
1.2.29. "CASH PURCHASE PRICE" means the portion of
consideration for any Permitted Acquisition that constitutes the sum of
(i) cash or Cash Equivalents PLUS (ii) any Financing Debt of the
Acquired Party that the Borrower or one of its subsidiaries assumes
(except Financing Debt permitted by Section 6.6) MINUS (iii) cash or
Cash Equivalents acquired in such acquisition.
1.2.30. "CERCLA" means the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980.
1.2.31. "CERCLIS" means the federal Comprehensive
Environmental Response Compensation Liability Information System List
(or any successor document) promulgated under CERCLA.
1.2.32. "CHARTER" means the articles of organization,
certificate of incorporation, statute, constitution, joint venture
agreement, partnership agreement,
-5-
<PAGE> 6
trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to
time in effect.
1.2.33. "CLOSING DATE" means the Initial Closing Date and each
other date on which any extension of credit is made pursuant to
Sections 2.1, 2.2 or 2.3.
1.2.34. "CODE" means the federal Internal Revenue Code of
1986, as amended from time to time.
1.2.35. "COMMITMENT" means, with respect to any Lender, such
Lender's obligations to extend the credits contemplated by the Credit
Documents; the original Commitments being set forth in Section 12.1 and
the current Commitments being recorded from time to time in the
Register.
1.2.36. "COMPANY" means AmeriPath, Inc., a Delaware
corporation.
1.2.37. "COMPUTATION COVENANTS" means Sections 6.5, 6.6.7,
6.6.11, 6.9.5, 6.10, 6.11, 6.12, 6.17, 6.21 and 6.22.
1.2.38. "CONSOLIDATED" and "CONSOLIDATING", when used with
reference to any term, mean that term as applied to the accounts of the
Company (or other specified Person) and all of its Subsidiaries (or
other specified group of Persons), or such of its Subsidiaries as may
be specified, consolidated (or combined) or consolidating (or
combining), as the case may be, in accordance with GAAP and with
appropriate deductions for minority interests in Subsidiaries.
1.2.39. "CONSOLIDATED ADJUSTED EBITDA" means, for any period,
an amount equal to the sum of (a) Consolidated Net Income of the
Company and its Subsidiaries for such period PLUS (b) all amounts
deducted in computing such Consolidated Net Income in respect of (i)
taxes based upon or measured by income, (ii) Consolidated Interest
Expense and (iii) depreciation and amortization PLUS (c) any Acquired
Party EBITDA Adjustment.
1.2.40. "CONSOLIDATED EBITDA" means, for any period, an amount
equal to the sum of (a) Consolidated Net Income of the Company and its
Subsidiaries for such period PLUS (b) all amounts deducted in computing
such Consolidated Net Income in respect of (i) taxes based upon or
measured by income, (ii) Consolidated Interest Expense and (iii)
depreciation and amortization.
1.2.41. "CONSOLIDATED INTEREST EXPENSE" means, for any period,
the Interest Expense paid and accrued by the Company and its
Subsidiaries on a Consolidated basis.
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1.2.42. "CONSOLIDATED NET INCOME" means, for any period, the
net income (or loss) of the Company and its Subsidiaries, determined in
accordance with GAAP on a Consolidated basis; PROVIDED, HOWEVER, that
Consolidated Net Income shall not include the net amount after taxes
of:
(a) the income (or loss) of any other Person accrued
prior to the date such other Person becomes a Subsidiary or is
merged into or consolidated with such Person;
(b) the income (or loss) of any other Person (other
than a Subsidiary) in which such Person has an ownership
interest; PROVIDED, HOWEVER, that (i) Net Income shall include
amounts in respect of the income of such other Person when
actually received in cash by such Person in the form of
dividends or similar Distributions and (ii) Net Income shall
be reduced by the aggregate amount of all Investments,
regardless of the form thereof, made by such Person in such
other Person for the purpose of funding any deficit or loss of
such other Person;
(c) all amounts included in computing such net income
(or loss) in respect of the write-up of any asset or the
retirement of any Indebtedness or equity at less than face
value after any acquisition;
(d) extraordinary and nonrecurring gains;
(e) the income of any Subsidiary to the extent the
payment of such income in the form of a Distribution or
repayment of Indebtedness to such Person is not permitted,
whether on account of any Charter or By-law restriction, any
agreement, instrument, deed or lease or any law, statute,
judgment, decree or governmental order, rule or regulation
applicable to such Subsidiary; and
(f) any after-tax gains or losses attributable to
returned surplus assets of any Plan.
1.2.43. "CONSOLIDATED OPERATING CASH FLOW" means, for any
period, the total of (i) Consolidated EBITDA MINUS (ii) taxes, based
upon or measured by net taxable income, paid in cash by the Company and
its Subsidiaries MINUS (iii) Capital Expenditures.
1.2.44. "CONSOLIDATED SENIOR DEBT" means all Financing Debt of
the Company and the Subsidiaries on a Consolidated basis other than in
respect of Subordinated Indebtedness.
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1.2.45. "CONSOLIDATED TOTAL DEBT" means, at any date, all
Financing Debt of the Company and its Subsidiaries on a Consolidated
basis.
1.2.46. "CONSOLIDATED TOTAL DEBT SERVICE" means, for any
period, the sum of (i) Consolidated Interest Expense PLUS (ii) the
aggregate amount of all mandatory scheduled payments, prepayments and
sinking fund payments paid or accrued by the Company and its
Subsidiaries during such period with respect to Financing Debt,
including contingent obligations under agreements relating to Permitted
Acquisitions (made before or after the date of this Agreement) or with
respect to principal paid or accrued by the Company in respect of
Subordinated Indebtedness and Contingent Notes (excluding prepayments
permitted by the proviso in Section 6.14 and voluntary prepayments of
the Loan).
1.2.47. "CONSOLIDATED TOTAL LIABILITIES" means, at any date,
all Indebtedness of the Company and its Subsidiaries on a Consolidated
basis.
1.2.48. "CONTINGENT NOTES" means the contingent promissory
notes constituting Subordinated Indebtedness issued to the Sellers in
connection with a Permitted Acquisition made hereunder or under this
Agreement prior to its amendment and restatement on the Initial Closing
Date.
1.2.49. "CREDIT DOCUMENTS" means:
(a) this Agreement, the Notes, each Letter of Credit,
each draft presented or accepted under a Letter of Credit,
each Interest Rate Protection Agreement provided by a Lender
(or an Affiliate of a Lender) to the Borrower or any of its
Subsidiaries and the Subordination Agreement, each as from
time to time in effect;
(b) all financial statements, reports, notices,
mortgages, assignments, UCC financing statements or
certificates delivered to the Agent or any of the Lenders by
the Company, any of its Subsidiaries or any other Obligor in
connection herewith or therewith; and
(c) any other present or future agreement or
instrument from time to time entered into among the Company,
any of its Subsidiaries or any other Obligor, on one hand, and
the Agent, any Letter of Credit Issuer or all the Lenders, on
the other hand, relating to, amending or modifying this
Agreement or any other Credit Document referred to above or
which is stated to be a Credit Document, each as from time to
time in effect.
1.2.50. "CREDIT OBLIGATIONS" means all present and future
liabilities, obligations and Indebtedness of the Company, any of its
Subsidiaries or any other
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Obligor owing to the Agent or any Lender under or in connection with
this Agreement or any other Credit Document, including obligations in
respect of principal, interest, reimbursement obligations under Letters
of Credit and Interest Rate Protection Agreements provided by a Lender
(or an affiliate of a Lender), commitment fees, Letter of Credit fees,
amounts provided for in Sections 3.2.4, 3.5 and 11 and other fees,
charges, indemnities and expenses from time to time owing hereunder or
under any other Credit Document (whether accruing before or after a
Bankruptcy Default).
1.2.51. "CREDIT PARTICIPANT" is defined in Section 13.2.
1.2.52. "CREDIT SECURITY" means all assets now or from time to
time hereafter subjected to a security interest, mortgage or charge (or
intended or required so to be subjected pursuant to this Agreement or
any other Credit Document) to secure the payment or performance of any
of the Credit Obligations, including the assets described in Section
10.1.
1.2.53. "DEFAULT" means any Event of Default and any event or
condition which with the passage of time or giving of notice, or both,
would become an Event of Default and the filing against the Company,
any of its Subsidiaries or any other Obligor of a petition commencing
an involuntary case under the Bankruptcy Code.
1.2.54. "DELINQUENCY PERIOD" is defined in Section 12.4.4.
1.2.55. "DELINQUENT LENDER" is defined in Section 12.4.4.
1.2.56. "DELINQUENT PAYMENT" is defined in Section 12.4.4.
1.2.57. "DISTRIBUTION" means, with respect to the Company (or
other specified Person):
(a) the declaration or payment of any dividend or
distribution, including dividends payable in shares of capital
stock of or other equity interests in the Company (or such
specified Person), on or in respect of any shares of any class
of capital stock of or other equity interests in the Company
(or such specified Person);
(b) the purchase or redemption of any shares of any
class of capital stock of or other equity interest in the
Company (or such specified Person) or of options, warrants or
other rights for the purchase of such shares, directly,
indirectly through a Subsidiary or otherwise;
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<PAGE> 10
(c) any other distribution on or in respect of any
shares of any class of capital stock of or equity or other
beneficial interest in the Company (or such specified Person);
(d) any payment of principal or interest with respect
to, or any purchase, redemption or defeasance of, any
Indebtedness of the Company (or such specified Person) which
by its terms or the terms of any agreement is subordinated to
the payment of the Credit Obligations; and
(e) any payment, loan or advance by the Company (or
such specified Person) to, or any other Investment by the
Company (or such specified Person) in, the holder of any
shares of any class of capital stock of or equity interest in
the Company (or such specified Person), or any Affiliate of
such holder;
PROVIDED, HOWEVER, that the term "Distribution" shall not include (i)
dividends payable in perpetual common stock of or other similar equity
interests in the Company (or such specified Person) or (ii) payments in
the ordinary course of business in respect of (A) reasonable
compensation paid to employees, officers and directors, (B) advances to
employees for travel expenses, drawing accounts and similar
expenditures, or (C) rent paid to, or accounts payable for services
rendered or goods sold by, non-Affiliates that own capital stock of or
other equity interests in the Company (or such specified Person).
1.2.58. "EBITDA" means, for any period, an amount equal to the
sum of (a) the Net Income (or loss) of any Person for such period PLUS
(b) all amounts deducted in computing such Net Income in respect of (i)
taxes based upon or measured by income, (ii) Interest Expense and (iii)
depreciation and amortization.
1.2.59. "ENVIRONMENTAL LAWS" means all applicable federal,
state or local statutes, laws, ordinances, codes, rules, regulations
and guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the environment,
including OSHA.
1.2.60. "EQUITY TRANSACTION" means any issuance or sale by the
Company or any of its Subsidiaries of any shares of capital stock,
other equity interests or options, warrants or other purchase rights to
acquire such capital stock or other equity interests, of the Company or
any of its Subsidiaries, to any Person; PROVIDED, HOWEVER, that the
term "Equity Transaction" shall not include such issuances or sales (i)
to any of the Obligors or their officers, employees and directors, (ii)
to any Person pursuant to the Company's Amended and Restated 1996 Stock
Option Plan or 1996 Director Stock Option Plan or (iii) that comprise a
portion of the Purchase Price in any Permitted Acquisition.
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1.2.61. "ERISA" means the federal Employee Retirement Income
Security Act of 1974.
1.2.62. "ERISA GROUP PERSON" means the Company, any Subsidiary
of the Company and any Person which is a member of the controlled group
or under common control with the Company or any Subsidiary within the
meaning of section 414 of the Code or section 4001(a)(14) of ERISA.
1.2.63. "EVENT OF DEFAULT" is defined in Section 8.1.
1.2.64. "EXCHANGE ACT" means the federal Securities Exchange
Act of 1934.
1.2.65. "FEDERAL FUNDS RATE" means, for any day, the rate
equal to the weighted average (rounded upward to the nearest 1/8%) of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, (a) as such
weighted average is published for such day (or, if such day is not a
Banking Day, for the immediately preceding Banking Day) by the Federal
Reserve Bank of New York or (b) if such rate is not so published for
such Banking Day, as determined by the Agent using any reasonable means
of determination. Each determination by the Agent of the Federal Funds
Rate shall, in the absence of manifest error, be conclusive.
1.2.66. "FINAL MATURITY DATE" means the fifth anniversary of
the date hereof.
1.2.67. "FINANCIAL OFFICER" of the Company (or other specified
Person) means its chief executive officer, chief financial officer,
chief operating officer, chairman, president, treasurer or any of its
vice presidents whose primary responsibility is for its financial
affairs, all of whose incumbency and signatures have been certified to
the Agent by the secretary or other appropriate attesting officer of
the Company (or such specified Person).
1.2.68. "FINANCING DEBT" means each of the items described in
clauses (a) through (e) of the definition of the term "Indebtedness."
1.2.69. "FOREIGN TRADE REGULATIONS" means (a) any act that
prohibits or restricts, or empowers the President or any executive
agency of the United States of America to prohibit or restrict, exports
to or financial transactions with any foreign country or foreign
national, (b) the regulations with respect to certain prohibited
foreign trade transactions set forth at 22 C.F.R. Parts 120-130 and 31
C.F.R. Parts 500-590 and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing.
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1.2.70. "FUNDING LIABILITY" means (a) any LIBOR deposit which
was used (or deemed by Section 3.2.6 to have been used) to fund any
portion of the Loan subject to a LIBOR Pricing Option, and (b) any
portion of the Loan subject to a LIBOR Pricing Option funded (or deemed
by Section 3.2.6 to have been funded) with the proceeds of any such
LIBOR deposit.
1.2.71. "GAAP" means generally accepted accounting principles
as from time to time in effect, including the statements and
interpretations of the United States Financial Accounting Standards
Board.
1.2.72. "GUARANTEE" means, with respect to the Company (or
other specified
Person):
(a) any guarantee by the Company (or such specified
Person) of the payment or performance of, or any contingent
obligation by the Company (or such specified Person) in
respect of, any Indebtedness or other obligation of any
primary obligor;
(b) any other arrangement whereby credit is extended
to a primary obligor on the basis of any promise or
undertaking of the Company (or such specified Person),
including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person),
to a creditor or prospective creditor of such primary obligor,
to (i) pay the Indebtedness of such primary obligor, (ii)
purchase an obligation owed by such primary obligor, (iii) pay
for the purchase or lease of assets or services regardless of
the actual delivery thereof or (iv) maintain the capital,
working capital, solvency or general financial condition of
such primary obligor;
(c) any liability of the Company (or such specified
Person), as a general partner of a partnership in respect of
Indebtedness or other obligations of such partnership;
(d) any liability of the Company (or such specified
Person) as a joint venturer of a joint venture in respect of
Indebtedness or other obligations of such joint venture;
(e) any liability of the Company (or such specified
Person) with respect to the tax liability of others as a
member of a group that is consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or
matured, of the Company (or such specified Person) with
respect to letters of credit, bankers
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acceptances, surety bonds, other financial guarantees and
Interest Rate Protection Agreements,
whether or not any of the foregoing are reflected on the balance sheet
of the Company (or such specified Person) or in a footnote thereto;
PROVIDED, HOWEVER, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of
business. The amount of any Guarantee and the amount of Indebtedness
resulting from such Guarantee shall be the maximum amount that the
guarantor may become obligated to pay in respect of the obligations
(whether or not such obligations are outstanding at the time of
computation).
1.2.73. "GUARANTOR" means each Subsidiary of the Borrower
listed on the signature page hereto or which subsequently becomes party
to this Agreement as a Guarantor.
1.2.74. "HAZARDOUS MATERIAL" means any pollutant, toxic or
hazardous material or waste, including any "hazardous substance" or
"pollutant" or "contaminant" as defined in section 101(14) of CERCLA or
any other Environmental Law or regulated as toxic or hazardous under
RCRA or any other Environmental Law.
1.2.75. "HISTORICAL AVERAGE PAYMENT" means, on any date, with
respect to any Contingent Notes or Restructured Seller Notes, the
quotient of (x) the sum of the amount of principal payments actually
made on such notes in respect of all fiscal years completed before such
date and (y) the number of such completed fiscal years; PROVIDED,
HOWEVER, that on any date on or prior to the end of the second full
fiscal year completed after the issuance of such notes, the Historical
Average Payment for such notes shall be deemed to be $0.
1.2.76. "IMPERMISSIBLE REFERENCE" means, relative to the
opinion or certification of any independent public accountant as to any
financial statement of any Obligor, any qualification or exception to
such opinion or certification
(a) which expresses concern about whether or not such
Obligor will be able to meet its obligations as such become
due, or otherwise will be able to operate or conduct its
business in the future;
(b) which relates to the limited scope of examination
of matters relevant to such financial statement;
(c) which relates to the treatment or classification
of any item in such financial statement and which, as a
condition to its removal, would require an adjustment to such
item the effect of which would be to cause there to be a
Default under Sections 6.5 through 6.23; or
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(d) which, in the reasonable judgment of the Required
Lenders, is not acceptable.
1.2.77. "INDEBTEDNESS" means all obligations, contingent or
otherwise, which in accordance with GAAP are required to be reported
upon the balance sheet of the Company (or other specified Person) as
liabilities, but in any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or
similar instruments;
(c) Capitalized Lease Obligations;
(d) reimbursement obligations, whether contingent or
matured, with respect to letters of credit, bankers
acceptances, surety bonds, other financial guarantees and
Interest Rate Protection Agreements (without duplication of
other Indebtedness supported or guaranteed thereby);
(e) unfunded pension liabilities;
(f) mandatory redemption or dividend rights on
capital stock (or other equity);
(g) obligations that are immediately and directly due
and payable out of the proceeds of or production from
property;
(h) liabilities secured by any Lien existing on
property owned or acquired by the Company (or such specified
Person), whether or not the liability secured thereby shall
have been assumed; and
(i) all Guarantees in respect of Indebtedness of
others.
1.2.78. "INDEMNIFIED PARTY" is defined in Section 11.2.
1.2.79. "INITIAL CLOSING DATE" means the first date on or
prior to April 30, 1998, on which all the conditions set forth in
Section 5.1 have been satisfied.
1.2.80. "INTEREST EXPENSE" means, for any period, the
aggregate amount of interest, including commitment fees and payments in
the nature of interest under Capitalized Leases and Interest Rate
Protection Agreements (whether such interest is
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reflected as an item of expense or capitalized), paid or accrued by any
Person in accordance with GAAP.
1.2.81. "INTEREST RATE PROTECTION AGREEMENT" means any
interest rate swap, interest rate cap, interest rate hedge or other
contractual arrangement that converts variable interest rates into
fixed interest rates, fixed interest rates into variable interest rates
or other similar arrangements.
1.2.82. "INVESTMENT" means, with respect to the Borrower (or
other specified Person):
(a) any share of capital stock, partnership or other
equity interest, evidence of Indebtedness or other security
issued by any other Person;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other
Person;
(d) any acquisition of all or any part of the
business of any other Person or the assets comprising such
business or part thereof; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through
(e) shall be included in the term "Investment" whether they are made or
acquired by purchase, exchange, issuance of stock or other securities,
merger, reorganization or any other method; PROVIDED, HOWEVER, that the
term "Investment" shall not include (i) trade and customer accounts
receivable for property leased, goods furnished or services rendered in
the ordinary course of business and payable in accordance with
customary trade terms, (ii) advances and prepayments to suppliers for
property leased, goods furnished and services rendered in the ordinary
course of business, (iii) advances to employees for travel expenses,
drawing accounts and similar expenditures, (iv) stock or other
securities acquired in connection with the satisfaction or enforcement
of Indebtedness or claims due to the Company (or such specified Person)
or as security for any such Indebtedness or claim or (v) demand
deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost
thereof MINUS any returns of capital in cash on such
Investment (determined in accordance with GAAP without regard
to amounts realized as income on such Investment);
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(B) the amount of any Investment in respect of a
purchase described in clause (d) above shall include the
amount of any Financing Debt assumed in connection with such
purchase or secured by any asset acquired in such purchase
(whether or not any Financing Debt is assumed) or for which
any Person that becomes a Subsidiary is liable on the date on
which the securities of such Person are acquired; and
(C) no Investment shall be increased as the result of
an increase in the undistributed retained earnings of the
Person in which the Investment was made or decreased as a
result of an equity interest in the losses of such Person.
1.2.83. "LEGAL REQUIREMENT" means any present or future
requirement imposed upon any of the Lenders or the Company and its
Subsidiaries by any law, statute, rule, regulation, directive, order,
decree, guideline (or any interpretation thereof by courts or of
administrative bodies) of the United States of America, or any
jurisdiction in which any LIBOR Office is located or any state or
political subdivision of any of the foregoing, or by any board,
governmental or administrative agency, central bank or monetary
authority of the United States of America, any jurisdiction in which
any LIBOR Office is located, or any political subdivision of any of the
foregoing. Any such requirement imposed on any of the Lenders which
such Lender reasonably believes has the force of law shall be deemed to
be a Legal Requirement.
1.2.84. "LENDER" means each of the Persons listed as lenders
on the signature page hereto, including BankBoston in its capacity as a
Lender and such other Persons who may from time to time own an
Aggregate Percentage Interest in the Loan, but the term "Lender" shall
not include any Credit Participant.
1.2.85. "LENDING OFFICER" means such individuals whom the
Agent may designate by notice to the Company from time to time as an
officer who may receive telephone requests for borrowings under Section
2.1.3.
1.2.86. "LETTER OF CREDIT" is defined in Section 2.3.1.
1.2.87. "LETTER OF CREDIT EXPOSURE" means, at any date, the
sum of (a) the aggregate face amount of all drafts that may then or
thereafter be presented by beneficiaries under all Letters of Credit
then outstanding, PLUS (b) the aggregate face amount of all drafts that
the Letter of Credit Issuer has previously accepted under Letters of
Credit but has not paid.
1.2.88. "LETTER OF CREDIT ISSUER" means, for any Letter of
Credit, BankBoston or, in the event BankBoston does not for any reason
issue a requested Letter of Credit, another Lender with a Percentage
Interest in the Revolving Loan willing to issue such
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Letter of Credit in accordance with Section 2.3 and who is reasonably
acceptable to the Agent.
1.2.89. "LIBOR BASE RATE" means, for any LIBOR Interest
Period, the average (rounded upward to the nearest whole multiple of
one sixteenth of one percent (1/16 of 1%)) of the rate of interest per
annum at which deposits in United States Dollars in a principal amount
approximately equal to the principal amount of the portion of the Loan
to be subject to such Interest Period would be quoted on Telerate page
3750 (or such other page as may replace the 3750 page on the Telerate
Service or such other service or services as may be nominated by the
British Bankers' Association for United States Dollar deposits) as of
11:00 AM., London time, at least two London banking days prior to the
first day of the LIBOR Interest Period, the determination of which by
the Agent shall, in the absence of manifest error, be conclusive.
1.2.90. "LIBOR INTEREST PERIOD" means any period, selected as
provided in Section 3.2.1, of one, two, three or six months, commencing
on any Banking Day and ending on the corresponding date in the
subsequent calendar month so indicated (or, if such subsequent calendar
month has no corresponding date, on the last day of such subsequent
calendar month); PROVIDED, HOWEVER, that subject to Section 3.2.3, if
any LIBOR Interest Period so selected would otherwise begin or end on a
date that is not a Banking Day, such LIBOR Interest Period shall
instead begin or end, as the case may be, on the immediately preceding
or succeeding Banking Day as determined by the Agent in accordance with
the then current banking practice in the inter-bank LIBOR market with
respect to LIBOR deposits at the applicable LIBOR Office, which
determination by the Agent shall, in the absence of manifest error, be
conclusive.
1.2.91. "LIBOR OFFICE" means such non-United States office or
international banking facility of the Agent as the Agent may from time
to time select.
1.2.92. "LIBOR PRICING OPTIONS" means the options granted
pursuant to Section 3.2.1 to have the interest on any portion of the
Loan computed on the basis of a LIBOR Rate.
1.2.93. "LIBOR RATE" for any LIBOR Interest Period means the
rate, rounded upward to the nearest 1/100%, obtained by dividing (a)
the LIBOR Base Rate for such LIBOR Interest Period by (b) an amount
equal to 1 MINUS the LIBOR Reserve Rate; PROVIDED, HOWEVER, that if at
any time during such LIBOR Interest Period the LIBOR Reserve Rate
applicable to any outstanding LIBOR Pricing Option changes, the LIBOR
Rate for such LIBOR Interest Period shall automatically be adjusted to
reflect such change, effective as of the date of such change.
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1.2.94. "LIBOR RESERVE RATE" means the stated maximum rate
(expressed as a decimal) of all reserves (including any basic,
supplemental, marginal or emergency reserve or any reserve asset), if
any, as from time to time in effect, required by any Legal Requirement
to be maintained by any Lender against (a) "Eurocurrency liabilities"
as specified in Regulation D of the Board of Governors of the Federal
Reserve System applicable to LIBOR Pricing Options, (b) any other
category of liabilities that includes LIBOR deposits by reference to
which the interest rate on portions of the Loan subject to LIBOR
Pricing Options is determined, (c) the principal amount of or interest
on any portion of the Loan subject to a LIBOR Pricing Option or (d) any
other category of extensions of credit, or other assets, that includes
loans subject to a LIBOR Pricing Option by a non-United States office
of any of the Lenders to United States residents, in each case without
the benefits of credits for prorations, exceptions or offsets that may
be available to a Lender.
1.2.95. "LIEN" means, with respect to the Company (or any
other specified
Person):
(a) any lien, encumbrance, mortgage, pledge, charge
or security interest of any kind upon any property or assets
of the Company (or such specified Person), whether now owned
or hereafter acquired, or upon the income or profits
therefrom;
(b) the acquisition of, or the agreement to acquire,
any property or asset upon conditional sale or subject to any
other title retention agreement, device or arrangement
(including a Capitalized Lease);
(c) the sale, assignment, pledge or transfer for
security of any accounts, general intangibles or chattel paper
of the Company (or such specified Person), with or without
recourse;
(d) the transfer of any tangible property or assets
for the purpose of subjecting such items to the payment of
previously outstanding Indebtedness in priority to payment of
the general creditors of the Company (or such specified
Person); and
(e) the existence for a period of more than 120
consecutive days of any Indebtedness against the Company (or
such specified Person) which if unpaid would by law or upon a
Bankruptcy Default be given any priority over general
creditors.
1.2.96. "LOAN" means the Revolving Loan.
1.2.97. "LOAN ACCOUNT" is defined in Section 2.1.4.
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1.2.98. "MANAGEMENT SERVICES AGREEMENTS" shall mean the
agreements entered into by the Company or any of its Subsidiaries, on
the one hand, and a professional association or corporation which
employs physicians engaged in a pathology practice, on the other hand,
for the long-term management of such physician practice.
1.2.99. "MARGIN STOCK" means "margin stock" within the meaning
of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
1.2.100. "MATERIAL ADVERSE CHANGE" means, since any specified
date or from the circumstances existing immediately prior to the
happening of any specified event, a material adverse change in (a) the
business, assets, financial condition, income or prospects of the
Company (on an individual basis) or the Company and its Subsidiaries
(on a Consolidated basis), whether as a result of (i) general economic
conditions affecting the industry in which the Company and its
Subsidiaries are engaged, (ii) difficulties in obtaining supplies and
raw materials, (iii) fire, flood or other natural calamities, (iv)
environmental pollution, (v) regulatory changes, judicial decisions,
war or other governmental action or (vi) any other event or
development, whether or not related to those enumerated above or (b)
the ability of the Obligors to perform their obligations under the
Credit Documents or (c) the rights and remedies of the Agent and the
Lenders under the Credit Documents.
1.2.101. "MATERIAL AGREEMENTS" is defined in Section 7.2.2.
1.2.102. "MATERIAL PLAN" means any Plan or Plans,
collectively, as to which (a) the excess of (i) the aggregate
Accumulated Benefit Obligations under such Plan or Plans over (ii) the
aggregate fair market value of the assets of such Plan or Plans
allocable to such benefits, all determined as of the then most recent
valuation date or dates for such Plan or Plans, is greater than (b)
$500,000.
1.2.103. "MAXIMUM AMOUNT OF REVOLVING CREDIT" is defined in
Section 2.1.2.
1.2.104. "MULTIEMPLOYER PLAN" means any Plan that is a
"multiemployer plan" as defined in section 4001(a)(3) of ERISA.
1.2.105. "NET EQUITY PROCEEDS" means the cash proceeds
received by the Company or any of its Subsidiaries in connection with
any Equity Transaction (net of related actual out-of-pocket fees and
expenses incurred by the Company in the exercise of the reasonable
business judgment of its officers).
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1.2.106. "NET INCOME" means, for any period, the net income
(or loss) of any Person, determined in accordance with GAAP; PROVIDED,
HOWEVER, that Net Income shall not include:
(a) all amounts included in computing such net income
(or loss) in respect of the write-up of any asset or the
retirement of any Indebtedness or equity at less than face
value after any acquisition;
(b) extraordinary and nonrecurring gains;
(c) any after-tax gains or losses attributable to
returned surplus assets of any Plan.
1.2.107. "NONPERFORMING LENDER" is defined in Section 12.4.4.
1.2.108. "NOTES" means each of the Revolving Notes.
1.2.109. "OBLIGOR" means the Company and each Guarantor.
1.2.110. "OPERATING EARNINGS" means, with respect to any
Person, the sum of (a) the Net Income of such Person PLUS (b) all
amounts deducted in computing such Net Income in respect of (i) taxes
based upon or measured by income, (ii) Interest Expense, (iii)
normalized salaries, benefits, and other compensation to be paid to
physicians employed by, or serving as consultants or independent
contractors to, such Person plus (c) in the case of subsidiaries that
are not required to pay 100% of Operating Earnings under a Management
Services Agreement, any other amounts paid to physicians employed by,
or serving as consultants or independent contractors to, such Person.
1.2.111. "OSHA" means the federal Occupational Health and
Safety Act.
1.2.112. "OVERDUE REIMBURSEMENT RATE" means, at any date, the
highest Applicable Rate then in effect.
1.2.113. "PAYMENT DATE" means the first Banking Day of each
month, commencing with the first such date after the Initial Closing
Date.
1.2.114. "PBGC" means the Pension Benefit Guaranty Corporation
or any successor entity.
1.2.115. "PERCENTAGE INTEREST" means, with respect to the
Revolving Loan or Letter of Credit Exposure, the ratio that the
respective Commitments of the Lenders with respect to such portion of
the Loan (or Letter of Credit Exposure) bear to the total
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Commitments in respect of such portion of the Loan (or Letter of Credit
Exposure) of all Lenders as from time to time in effect and reflected
in the Register.
1.2.116. "PERFORMING LENDER" is defined in Section 12.4.4.
1.2.117. "PERMITTED ACQUISITION" means an Investment by the
Borrower permitted under Section 6.9.5.
1.2.118. "PERSON" means any present or future natural person
or any corporation, association, partnership, joint venture, limited
liability, joint stock or other company, business trust, trust,
organization, business or government or any governmental agency or
political subdivision thereof.
1.2.119. "PLAN" means, at any date, any pension benefit plan
subject to Title IV of ERISA maintained, or to which contributions have
been made or are required to be made, by any ERISA Group Person within
six years prior to such date.
1.2.120. "PLEDGED INDEBTEDNESS" is defined in Section 10.1.6.
1.2.121. "PLEDGED RIGHTS" is defined in Section 10.1.5.
1.2.122. "PLEDGED SECURITIES" means the Pledged Stock, the
Pledged Rights and the Pledged Indebtedness, collectively.
1.2.123. "PLEDGED STOCK" is defined in Section 10.1.4.
1.2.124. "PRO FORMA EBITDA" shall mean, for any period, an
amount calculated on a pro forma basis taking into account the
Permitted Acquisition equal to (a) the historical EBITDA of the
Acquired Party and (b) any non-GAAP adjustment to Net Income to the
extent that such adjustment is approved by the Required Lenders.
1.2.125. "PURCHASE PRICE" means the amount of the
consideration, including, but not limited to, cash or Cash Equivalents,
capital stock, assets, debt, including contingent or other promissory
notes, and any other form of payment, for any Permitted Acquisition;
PROVIDED, HOWEVER, that the amount of any Contingent Note included in
this definition of Purchase Price shall be one-half of the maximum
principal amount of such Contingent Note.
1.2.126. "RCRA" means the federal Resource Conservation and
Recovery Act, 42 U.S.C. ss. 690, ET SEQ.
1.2.127. "REGISTER" is defined in Section 13.1.3.
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1.2.128. "REPLACEMENT LENDER" is defined in Section 13.3.
1.2.129. "RESTRUCTURED SELLER NOTES" means notes issued in
exchange for Contingent Notes or existing Restructured Seller Notes;
PROVIDED, HOWEVER, that,
(a) The Company and the holders of such new notes shall, on or
prior to the date of exchange, have executed and delivered a
Subordination Agreement in the form attached hereto as Exhibit
6.21.1(a), pursuant to which the obligations of the Company and its
Subsidiaries to the holders of the new notes are subordinated to the
Credit Obligations;
(b) The weighted average life to maturity of such new notes
shall be equal to or greater than the weighted average life to maturity
of the outstanding principal of the old notes, in each case calculated
as if the maximum outstanding principal amount were paid;
(c) Immediately before and after such exchange, no Default
shall exist; and
(d) such new notes are either:
(i) new contingent notes for which:
(A) all payments of principal of the new
notes are contingent on the Net
Income of a Subsidiary of the
Borrower (or a division thereof);
(B) The aggregate maximum principal
amount does not exceed the aggregate
maximum outstanding principal amount
of old notes; and
(C) The "Minimum Target" for each year
(as defined in such new notes) is
greater than or equal to such target
for such year in the old notes;
PROVIDED, HOWEVER, that if the old
notes being exchanged have different
"Minimum Targets", or dates
therefor, then the "Minimum Targets"
for each year in the new notes shall
not be less than the sum of the
"Minimum Targets" for such year
under the terms of the old notes; or
(ii) new non-contingent notes for which
(A) the aggregate principal amount does
not exceed the greater of (x)
one-half the remaining aggregate
maximum
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principal amount of old notes for
which payments of principal were
contingent on the Net Income of a
Subsidiary of the Company (or a
division thereof) or (y) the
Historical Average Payment on the
old notes multiplied by the number
of years remaining.
1.2.130. "REQUIRED LENDERS" means, with respect to any
approval, consent, modification, waiver or other action to be taken by
the Agent or the Lenders under the Credit Documents which require
action by the Required Lenders, such Lenders as own at least a majority
of the Aggregate Percentage Interests in the Loan; PROVIDED, HOWEVER,
that with respect to any matters referred to in the proviso to Section
12.6, Required Lenders means such Lenders as own at least the
respective portions of the Aggregate Percentage Interests in the Loan
required by such proviso.
1.2.131. "REVOLVING LOAN" is defined in Section 2.1.4.
1.2.132. "REVOLVING NOTES" is defined in Section 2.1.4.
1.2.133. "SECURITIES ACT" means the federal Securities Act of
1933.
1.2.134. "SELLERS" means the Person or Persons selling or
otherwise transferring the capital stock, partnership or other equity
interest or assets of the Acquired Party to the Borrower pursuant to a
Permitted Acquisition.
1.2.135. "SUBORDINATED INDEBTEDNESS" means Indebtedness of the
Borrower which is subordinated to the Credit Obligations pursuant to a
Subordination Agreement or on terms approved by the Required Lenders in
writing.
1.2.136. "SUBORDINATION AGREEMENT" shall be an agreement in
form and substance substantially similar to Exhibit 6.21.1(a).
1.2.137. "SUBSIDIARY" means any Person of which the Company
(or other specified Person) shall at the time, directly or indirectly
through one or more of its Subsidiaries, or through a trust or similar
entity controlled by the Company (or other specified Person) or a
Subsidiary, (a) owns at least 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally, (b)
holds at least 50% of the partnership, joint venture or similar
interests, (c) is a general partner or joint venturer or (d) with which
the Company or one or more of its Subsidiaries has entered into a
Management Services Agreement.
1.2.138. "TAX" means any present or future tax, levy, duty,
impost, deduction, withholding or other charges of whatever nature at
any time required by any Legal Requirement (a) to be paid by any Lender
or (b) to be withheld or deducted from any
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<PAGE> 24
payment otherwise required hereby to be made to any Lender, in each
case on or with respect to its obligations hereunder, the Loan, any
payment in respect of the Credit Obligations or any Funding Liability
not included in the foregoing; PROVIDED, HOWEVER, that the term "Tax"
shall not include taxes imposed upon or measured by the net income of
such Lender (other than withholding taxes) or franchise taxes.
1.2.139. "UCC" means the Uniform Commercial Code as in effect
in Massachusetts on the date hereof; PROVIDED, HOWEVER, that with
respect to the perfection of the Agent's Lien in the Credit Security
and the effect of nonperfection thereof, the term "UCC" means the
Uniform Commercial Code as in effect in any jurisdiction the laws of
which are made applicable by Section 9-103 of the Uniform Commercial
Code as in effect in Massachusetts.
1.2.140. "UNIFORM CUSTOMS AND PRACTICE" is defined in Section
2.3.7.
1.2.141. "UNITED STATES FUNDS" means such coin or currency of
the United States of America as at the time shall be legal tender
therein for the payment of public and private debts.
1.2.142. "WHOLLY OWNED SUBSIDIARY" means any Subsidiary of
which all of the outstanding capital stock (or other shares of
beneficial interest) entitled to vote generally (other than directors'
qualifying shares) is owned by the Company (or other specified Person)
directly, or indirectly through one or more Wholly Owned Subsidiaries.
1.2.143. "YEAR 2000 COMPLIANT" means, with regard to any
entity, that all software, embedded microchips, and other processing
capabilities utilized by, and material to the business operations or
financial condition of such entity, are able to interpret and
manipulate data involving all calendar dates correctly and without
causing and abnormal ending scenario, including dates in and after the
year 2000.
2. THE CREDITS.
2.1. REVOLVING CREDIT.
2.1.1. REVOLVING LOAN. Subject to all the terms and conditions
of this Agreement and so long as no Default then exists, from time to
time on and after the Initial Closing Date and prior to the Final
Maturity Date the Lenders will, severally in accordance with their
respective Percentage Interests in the Revolving Loan, make loans to
the Borrower in such amounts as may be requested by the Borrower in
accordance with Section 2.1.3. The sum of the aggregate principal
amount of loans made under this Section 2.1.1 at any one time
outstanding PLUS the Letter of Credit Exposure shall in no event exceed
the Maximum Amount of Revolving Credit;
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PROVIDED, HOWEVER, that the sum of the aggregate principal amount of
loans made under this Section 2.1.1 at any time outstanding PLUS the
Letter of Credit Exposure in respect of Letters of Credit issued on
behalf of the Borrower for the purposes of working capital shall in no
event exceed the Borrowing Base. In no event will the principal amount
of loans at any one time outstanding made by any Lender pursuant to
this Section 2.1 exceed such Lender's Commitment.
2.1.2. MAXIMUM AMOUNT OF REVOLVING CREDIT. The term "MAXIMUM
AMOUNT OF REVOLVING CREDIT" means on any date, the lesser of (a)
$200,000,000, or (b) the amount (in an integral multiple of $1,000,000)
to which the then applicable amount shall have been irrevocably reduced
from time to time by notice from the Company to the Agent.
2.1.3. BORROWING REQUESTS. The Borrower may from time to time
request a loan under Section 2.1.1 by providing to the Agent a notice
(which may be given by a telephone call received by a Lending Officer
if promptly confirmed in writing). Such notice must be not later than
noon (Boston time) on the first Banking Day (third Banking Day if any
portion of such loan will be subject to a LIBOR Pricing Option on the
requested Closing Date) prior to the requested Closing Date for such
loan. If such notice requested that a loan, or any portion thereof, be
made subject to a LIBOR Pricing Option, and the Agent shall have
notified the Borrower pursuant to Section 3.2.2 that such election did
not become effective, the notice shall be deemed to have been made for
a loan at the Base Rate. The notice must specify (a) the amount of the
requested loan (which shall be not less than $100,000 and an integral
multiple of $50,000), (b) the requested Closing Date therefor (which
shall be a Banking Day) and (c) the portion of the requested loan that
is to be used for working capital. Upon receipt of such notice, the
Agent will promptly inform each other Lender with Percentage Interests
in the Revolving Loan (by telephone or otherwise). Each such loan will
be made at the Boston Office by depositing the amount thereof to the
general account of the Borrower with the Agent. In connection with each
such loan, the Borrower shall furnish to the Agent a certificate in
substantially the form of Exhibit 5.2.1.
2.1.4. LOAN ACCOUNT; NOTES. The Agent will establish on its
books a loan account for the Borrower (the "LOAN ACCOUNT"), which the
Agent shall administer as follows: (a) the Agent shall add to the Loan
Account, and the Loan Account shall evidence, the principal amount of
all loans from time to time made by the Lenders to the Borrower
pursuant to Section 2.1.1 and (b) the Agent shall reduce the Loan
Account by the amount of all payments made on account of the
Indebtedness evidenced by the Loan Account. The aggregate principal
amount of the Indebtedness evidenced by the Loan Account is referred to
as the "REVOLVING LOAN". The Revolving Loan shall be deemed owed to
each Lender severally in accordance with such Lender's Percentage
Interest in the Revolving Loan, and all payments credited to the Loan
Account shall be
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for the account of each Lender in accordance with its Percentage
Interest in the Revolving Loan. The Borrower's obligations to pay each
Lender's Percentage Interest in the Revolving Loan shall be evidenced
by a separate note of such Borrower in substantially the form of
Exhibit 2.1.4 (the "REVOLVING NOTES"), payable to each Lender in
maximum principal amount equal to such Lender's Percentage Interest in
the Revolving Loan.
2.2. [Intentionally Omitted]
2.3. LETTERS OF CREDIT.
2.3.1. ISSUANCE OF LETTERS OF CREDIT. Subject to all the terms
and conditions of this Agreement and so long as no Default then exists,
from time to time on and after the Initial Closing Date and prior to
the Final Maturity Date, the Letter of Credit Issuer will issue for the
account of the Borrower one or more irrevocable documentary or standby
letters of credit (the "LETTERS OF CREDIT"). Letter of Credit Exposure
shall in no event exceed $1,000,000.
2.3.2. REQUESTS FOR LETTERS OF CREDIT. The Borrower may from
time to time request a Letter of Credit to be issued by providing to
the Letter of Credit Issuer (and the Agent if the Letter of Credit
Issuer is not the Agent) a notice which is actually received not less
than five Banking Days prior to the requested Closing Date for such
Letter of Credit specifying (a) the amount of the requested Letter of
Credit, (b) the beneficiary thereof, (c) the requested Closing Date and
(d) the principal terms of the text for such Letter of Credit. Each
Letter of Credit will be issued by forwarding it to the Borrower or to
such other Person as directed in writing by the Borrower. In connection
with the issuance of any Letter of Credit, the Borrower shall furnish
to the Letter of Credit Issuer (and the Agent if the Letter of Credit
Issuer is not the Agent) a certificate in substantially the form of
Exhibit 5.2.1 and any customary application forms required by the
Letter of Credit Issuer.
2.3.3. FORM AND EXPIRATION OF LETTERS OF CREDIT. Each Letter
of Credit issued under this Section 2.3 and each draft accepted or paid
under such a Letter of Credit shall be issued, accepted or paid, as the
case may be, by the Letter of Credit Issuer at its principal office. No
Letter of Credit shall provide for the payment of drafts drawn
thereunder, and no draft shall be payable, at a date which is later
than the earlier of (a) the date 12 months after the date of issuance
of such Letter of Credit or (b) the Final Maturity Date. Each Letter of
Credit and each draft accepted under a Letter of Credit shall be in
such form and minimum amount, and shall contain such terms, as the
Letter of Credit Issuer and the Borrower may agree upon at the time
such Letter of Credit is issued, including a requirement of not less
than three Banking Days after presentation of a draft before payment
must be made thereunder.
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2.3.4. LENDERS' PARTICIPATION IN LETTERS OF CREDIT. Upon the
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Percentage Interest in the Revolving Loan, shall
automatically be deemed granted by the Letter of Credit Issuer to each
Lender with a Percentage Interest in the Revolving Loan on the date of
such issuance and the Lenders shall automatically be obligated, as set
forth in Section 12.4, to reimburse the Letter of Credit Issuer to the
extent of their respective Percentage Interests in the Revolving Loan
for all obligations incurred by the Letter of Credit Issuer to third
parties in respect of such Letter of Credit not reimbursed by the
Company. The Letter of Credit Issuer will send to each Lender with a
Percentage Interest in the Revolving Loan (and the Agent if the Letter
of Credit Issuer is not the Agent) a confirmation regarding the
participations in Letters of Credit outstanding during such month.
2.3.5. PRESENTATION. The Letter of Credit Issuer may accept or
pay any draft presented to it, regardless of when drawn and whether or
not negotiated, if such draft, the other required documents and any
transmittal advice are presented to the Letter of Credit Issuer and
dated on or before the expiration date of the Letter of Credit under
which such draft is drawn. Except insofar as instructions actually
received may be given by the Borrower in writing expressly to the
contrary with regard to, and prior to, the Letter of Credit Issuer's
issuance of any Letter of Credit for the account of the Borrower and
such contrary instructions are reflected in such Letter of Credit, the
Letter of Credit Issuer may honor as complying with the terms of the
Letter of Credit and with this Agreement any drafts or other documents
otherwise in order signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in possession, assignee for
benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to
draw or issue such drafts or other documents.
2.3.6. PAYMENT OF DRAFTS. At such time as a Letter of Credit
Issuer makes any payment on a draft presented or accepted under a
Letter of Credit, the Borrower will on demand pay to such Letter of
Credit Issuer in immediately available funds the amount of such
payment. Unless the Borrower shall otherwise pay to the Letter of
Credit Issuer the amount required by the foregoing sentence, such
amount shall be considered a loan under Section 2.1.1 to the Borrower
and part of the Revolving Loan.
2.3.7. UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500, and any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and
adhered to by the Letter of Credit Issuer (the "UNIFORM CUSTOMS AND
PRACTICE"), shall be binding on the Company and the Letter of Credit
Issuer except to the extent otherwise provided herein, in any Letter of
Credit or in any other Credit Document. Anything in the Uniform Customs
and Practice to the contrary notwithstanding:
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(a) Neither the Borrower nor any beneficiary of any Letter of
Credit shall be deemed an agent of any Letter of Credit Issuer.
(b) With respect to each Letter of Credit, neither the Letter
of Credit Issuer nor its correspondents shall be responsible for or
shall have any duty to ascertain:
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any endorsements;
(iii) delay in giving, or failure to give, notice of
arrival, notice of refusal of documents or of discrepancies in
respect of which any Letter of Credit Issuer refuses the
documents or any other notice, demand or protest;
(iv) the performance by any beneficiary under any
Letter of Credit of such beneficiary's obligations to the
Borrower;
(v) inaccuracy in any notice received by the Letter
of Credit Issuer; or
(vi) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any instrument, draft,
certificate or other document required by such Letter of
Credit to be presented before payment of a draft, or the
office held by or the authority of any Person signing any of
the same.
(c) The occurrence of any of the events referred to in the
Uniform Customs and Practice or in the preceding clauses of this
Section 2.3.7 shall not affect or prevent the vesting of any of the
Letter of Credit Issuer's rights or powers hereunder or the Borrower's
obligation to make reimbursement of amounts paid under any Letter of
Credit or any draft accepted thereunder.
(d) The Borrower will promptly examine (i) each Letter of
Credit (and any amendments thereof) sent to it by the Letter of Credit
Issuer and (ii) all instruments and documents delivered to it from time
to time by the Letter of Credit Issuer. The Borrower will notify the
Letter of Credit Issuer of any claim of noncompliance by notice
actually received within three Banking Days after receipt of any of the
foregoing documents, the Borrower being conclusively deemed to have
waived any such claim against such Letter of Credit Issuer and its
correspondents unless such notice is given. The Letter of Credit Issuer
shall have no obligation or responsibility to send any such Letter of
Credit or any such instrument or document to the Borrower.
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(e) In the event of any conflict between the provisions of
this Agreement and the Uniform Customs and Practice, the provisions of
this Agreement shall govern.
2.3.8. SUBROGATION. Upon any payment by a Letter of Credit
Issuer under any Letter of Credit and until the reimbursement of such
Letter of Credit Issuer by the Borrower with respect to such payment,
the Letter of Credit Issuer shall be entitled to be subrogated to, and
to acquire and retain, the rights which the Person to whom such payment
is made may have against the Borrower, all for the benefit of the
Lenders.
2.3.9. MODIFICATION, CONSENT, ETC. If the Borrower requests or
consents in writing to any modification or extension of any Letter of
Credit, or waives any failure of any draft, certificate or other
document to comply with the terms of such Letter of Credit, and if the
Letter of Credit Issuer consents thereto, the Letter of Credit Issuer
shall be entitled to rely on such request, consent or waiver. This
Agreement shall be binding upon the Borrower with respect to such
Letter of Credit as so modified or extended, and with respect to any
action taken or omitted by such Letter of Credit Issuer pursuant to any
such request, consent or waiver.
2.4. APPLICATION OF PROCEEDS.
2.4.1. REVOLVING LOAN. Subject to Section 2.4.4, the Borrower
will apply the proceeds of the Revolving Loan (a) to fund Permitted
Acquisitions, (b) to refinance existing indebtedness, and (c) for
working capital to the extent of the Borrowing Base.
2.4.2. [Intentionally Omitted]
2.4.3. LETTERS OF CREDIT. Letters of Credit shall be issued
only for such lawful corporate purposes as the Borrower has requested
in writing and to which the Letter of Credit Issuer agrees.
2.4.4. SPECIFICALLY PROHIBITED APPLICATIONS. The Borrower will
not, directly or indirectly, apply any part of the proceeds of any
extension of credit made pursuant to the Credit Documents to purchase
or to carry Margin Stock or to any transaction prohibited by the
Foreign Trade Regulations, by other Legal Requirements applicable to
the Lenders or by the Credit Documents.
2.5. NATURE OF OBLIGATIONS OF LENDERS TO MAKE EXTENSIONS OF CREDIT. The
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this Agreement shall be
reduced by the amount of unborrowed Commitment of the Lender so failing to
perform and the Percentage Interests in the portion of the Loan to which such
Commitment relates shall be appropriately adjusted. Lenders that have not failed
to perform
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their obligations to make the extensions of credit contemplated by Section 2
may, if any such Lender so desires, assume, in such proportions as the Required
Lenders may agree, the obligations of any Lender who has so failed and the
Percentage Interests in the portion of the Loan to which such obligations relate
shall be appropriately adjusted. The provisions of this Section 2.5 shall not
affect the rights of the Borrower against any Lender failing to perform its
obligations hereunder.
3. INTEREST; LIBOR PRICING OPTIONS; FEES.
3.1. INTEREST. The Loan shall accrue and bear interest at a rate per
annum which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of any portion of the Loan, the Borrower will, on each
Payment Date, pay the accrued and unpaid interest on the portions of the Loan
which were not subject to a LIBOR Pricing Option. On the last day of each LIBOR
Interest Period or on any earlier termination of any LIBOR Pricing Option, the
Borrower will pay the accrued and unpaid interest on the portions of the Loan
that were subject to the LIBOR Pricing Option, which expired or terminated on
such date. In the case of any LIBOR Interest Period longer than three months,
the Borrower will also pay the accrued and unpaid interest on the portion of the
Loan subject to the LIBOR Pricing Option having such LIBOR Interest Period at
three-month intervals, the first such payment to be made on the last Banking Day
of the three-month period that begins on the first day of such LIBOR Interest
Period. On the stated or any accelerated maturity of the Loan, the Borrower will
pay all accrued and unpaid interest on the portion of the Loan evidenced by its
Loan Account, including any accrued and unpaid interest on any portion of such
Loan which is subject to a LIBOR Pricing Option. Upon the occurrence and during
the continuance of an Event of Default, the Lenders may require accrued interest
to be payable on demand or at regular intervals more frequent than each Payment
Date. All payments of interest hereunder for each portion of the Loan shall be
made to the Agent for the account of each Lender in accordance with such
Lender's Percentage Interest in such portion of the Loan.
3.2. LIBOR PRICING OPTIONS.
3.2.1. ELECTION OF LIBOR PRICING OPTIONS. Subject to all of
the terms and conditions hereof and so long as no Default exists, the
Borrower may from time to time, by irrevocable notice to the Agent
actually received not less than three Banking Days prior to the
commencement of the LIBOR Interest Period selected in such notice,
elect to have such portion of the Loan as the Borrower may specify in
such notice accrue and bear interest during the LIBOR Interest Period
so selected at the Applicable Rate computed on the basis of the LIBOR
Rate. No such election shall become effective:
(a) if, prior to the commencement of any such LIBOR Interest
Period, the Agent determines that (i) the electing or granting of the
LIBOR Pricing Option in question would violate a Legal Requirement,
(ii) LIBOR deposits in an amount
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comparable to the principal amount of the Loan as to which such LIBOR
Pricing Option has been elected and which have a term corresponding to
the proposed LIBOR Interest Period are not readily available in the
inter-bank LIBOR market, or (iii) by reason of circumstances affecting
the inter-bank LIBOR market, adequate and reasonable methods do not
exist for ascertaining the interest rate applicable to such deposits
for the proposed LIBOR Interest Period; or
(b) if any Lender shall have advised the Agent by telephone or
otherwise at or prior to noon (Boston time) on the second Banking Day
prior to the commencement of such proposed LIBOR Interest Period (and
shall have subsequently confirmed in writing) that, after reasonable
efforts to determine the availability of such LIBOR deposits, such
Lender reasonably anticipates that LIBOR deposits in an amount equal to
the Percentage Interest of such Lender in the portion of the Loan as to
which such LIBOR Pricing Option has been elected and which have a term
corresponding to the LIBOR Interest Period in question will not be
offered in the LIBOR market to such Lender at a rate of interest that
does not exceed the anticipated LIBOR Base Rate.
3.2.2. NOTICE TO LENDERS AND THE BORROWER. The Agent will
promptly inform each Lender (by telephone or otherwise) of each notice
received by it from the Borrower pursuant to Section 3.2.1 and of the
LIBOR Interest Period specified in such notice. Upon determination by
the Agent of the LIBOR Rate for such LIBOR Interest Period or in the
event such election shall not become effective, the Agent will promptly
notify the Borrower and each Lender (by telephone or otherwise) of the
LIBOR Rate so determined or why such election did not become effective,
as the case may be.
3.2.3. SELECTION OF LIBOR INTEREST PERIODS. LIBOR Interest
Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any LIBOR
Pricing Option shall be $500,000 and an integral multiple of $100,000;
(b) no more than 6 LIBOR Pricing Options shall be outstanding
at any one time;
(c) no LIBOR Interest Period with respect to any part of the
Loan subject to a LIBOR Pricing Option shall expire later than the
Final Maturity Date.
3.2.4. ADDITIONAL INTEREST. If any portion of the Loan subject
to a LIBOR Pricing Option is repaid, or any LIBOR Pricing Option is
terminated for any reason (including acceleration of maturity), on a
date which is prior to the last Banking Day of the LIBOR Interest
Period applicable to such LIBOR Pricing Option, the Borrower will pay
to the Agent for the account of each Lender in accordance with such
Lender's Percentage Interest in such portion of the Loan, in addition
to any amounts of interest
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otherwise payable hereunder, an amount equal to the present value
(calculated in accordance with this Section 3.2.4) of interest for the
unexpired portion of such LIBOR Interest Period on the portion of the
Loan so repaid, or as to which a LIBOR Pricing Option was so
terminated, at a per annum rate equal to the excess, if any, of (a) the
LIBOR Rate applicable to such LIBOR Pricing Option MINUS (b) the lowest
rate of interest obtainable by the Agent upon the purchase of debt
securities customarily issued by the Treasury of the United States of
America which have a maturity date approximating the last Banking Day
of such LIBOR Interest Period. The present value of such additional
interest shall be calculated by discounting the amount of such interest
for each day in the unexpired portion of such LIBOR Interest Period
from such day to the date of such repayment or termination at a per
annum interest rate equal to the interest rate determined pursuant to
clause (b) of the preceding sentence, and by adding all such amounts
for all such days during such period. The determination by the Agent of
such amount of interest shall, in the absence of manifest error, be
conclusive. For purposes of this Section 3.2.4, if any portion of the
Loan which was to have been subject to a LIBOR Pricing Option is not
outstanding on the first day of the LIBOR Interest Period applicable to
such LIBOR Pricing Option other than for reasons described in Section
3.2.1, the Borrower shall be deemed to have terminated such LIBOR
Pricing Option.
3.2.5. VIOLATION OF LEGAL REQUIREMENTS. If any Legal
Requirement shall prevent any Lender from funding or maintaining
through the purchase of deposits in the interbank LIBOR market any
portion of the Loan subject to a LIBOR Pricing Option or otherwise from
giving effect to such Lender's obligations as contemplated by Section
3.2, (a) the Agent may by notice to the Borrower terminate all of the
affected LIBOR Pricing Options, (b) the portion of the Loan subject to
such terminated LIBOR Pricing Options shall immediately bear interest
thereafter at the Applicable Rate computed on the basis of the Base
Rate and (c) the Borrower shall make any payment required by Section
3.2.4.
3.2.6. FUNDING PROCEDURE. The Lenders may fund any portion of
the Loan subject to a LIBOR Pricing Option out of any funds available
to the Lenders. Regardless of the source of the funds actually used by
any of the Lenders to fund any portion of the Loan subject to a LIBOR
Pricing Option, however, all amounts payable hereunder, including the
interest rate applicable to any such portion of the Loan and the
amounts payable under Sections 3.2.4 or 3.5, shall be computed as if
each Lender had actually funded such Lender's Percentage Interest in
such portion of the Loan through the purchase of deposits in such
amount of the type by which the LIBOR Base Rate was determined with a
maturity the same as the applicable LIBOR Interest Period relating
thereto and through the transfer of such deposits from an office of the
Lender having the same location as the applicable LIBOR Office to one
of such Lender's offices in the United States of America.
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3.3. COMMITMENT FEES. In consideration of the Lenders' commitments to
make the extensions of credit provided for in Section 2.1, while such
commitments are outstanding, the Borrower will pay to the Agent for the account
of the Lenders in accordance with the Lenders' respective Percentage Interests
in the Revolving Loan, on the first Banking Day of each fiscal quarter, an
amount equal to interest at the rate of 0.250% per annum on the amount by which
(a) the average daily Maximum Amount of Revolving Credit during the fiscal
quarter or portion thereof most recently ended exceeded (b) the sum of (i) the
average daily Revolving Loan during such period or portion thereof PLUS (ii) the
average daily Letter of Credit Exposure during such period or portion thereof;
PROVIDED, HOWEVER, that the first such payment shall be for the period beginning
on the Initial Closing Date and ending on June 30, 1998.
3.4. LETTER OF CREDIT FEES. The Borrower will pay to the Agent for the
account of each of the Lenders, in accordance with the Lenders' respective
Percentage Interests in the Revolving Loan, on the date any Letter of Credit is
issued by the Letter of Credit Issuer, a Letter of Credit fee equal to interest
at the rate of 1.50% per annum on the face amount of such Letter of Credit for
the term of such Letter of Credit. The Company will pay to the Letter of Credit
Issuer customary service charges and expenses for its services in connection
with the Letters of Credit at the times and in the amounts from time to time in
effect in accordance with its general rate structure, including fees and
expenses relating to issuance, amendment, negotiation, cancellation and similar
operations.
3.5. CHANGES IN CIRCUMSTANCES; YIELD PROTECTION.
3.5.1. RESERVE REQUIREMENTS, ETC. If any Legal Requirement
shall (a) impose, modify, increase or deem applicable any insurance
assessment, reserve, special deposit or similar requirement against any
Funding Liability or the Letters of Credit, (b) impose, modify,
increase or deem applicable any other requirement or condition with
respect to any Funding Liability or the Letters of Credit, or (c)
change the basis of taxation of Funding Liabilities or payments in
respect of any Letter of Credit (other than changes in the rate of
taxes measured by the overall net income of such Lender) and the effect
of any of the foregoing shall be to increase the cost to any Lender of
issuing, making, funding or maintaining its respective Percentage
Interest in any portion of the Loan subject to a LIBOR Pricing Option
or any Letter of Credit, to reduce the amounts received or receivable
by such Lender under this Agreement or to require such Lender to make
any payment or forego any amounts otherwise payable to such Lender
under this Agreement, then, the Lender may claim compensation under
Section 3.5.5; PROVIDED, HOWEVER, that the foregoing provisions shall
not apply to any Tax or to any reserves which are included in computing
the LIBOR Reserve Rate.
3.5.2. TAXES. All payments of the Credit Obligations shall be
made without set-off or counterclaim and free and clear of any
deductions, including deductions for Taxes, unless the Borrower is
required by law to make such deductions. If (a) any
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Lender shall be subject to any Tax with respect to any payment of the
Credit Obligations or its obligations hereunder or (b) the Borrower
shall be required to withhold or deduct any Tax on any payment on the
Credit Obligations, then, the Lender may claim compensation under
Section 3.5.5. Whenever Taxes must be withheld by the Borrower with
respect to any payments of the Credit Obligations, the Borrower shall
promptly furnish to the Agent for the account of the applicable Lender
official receipts (to the extent that the relevant governmental
authority delivers such receipts) evidencing payment of any such Taxes
so withheld. If the Borrower fails to pay any such Taxes when due or
fails to remit to the Agent for the account of the applicable Lender
the required receipts evidencing payment of any such Taxes so withheld
or deducted, the Borrower shall indemnify the affected Lender for any
incremental Taxes and interest or penalties that may become payable by
such Lender as a result of any such failure.
3.5.3. CAPITAL ADEQUACY. If any Lender shall determine that
compliance by such Lender with any Legal Requirement regarding capital
adequacy of banks or bank holding companies has or would have the
effect of reducing the rate of return on the capital of such Lender and
its Affiliates as a consequence of such Lender's commitment to make the
extensions of credit contemplated hereby, or such Lender's maintenance
of the extensions of credit contemplated hereby, to a level below that
which such Lender could have achieved but for such compliance (taking
into consideration the policies of such Lender and its Affiliates with
respect to capital adequacy immediately before such compliance and
assuming that the capital of such Lender and its Affiliates was fully
utilized prior to such compliance) by an amount deemed by such Lender
to be material, then, the Lender may claim compensation under Section
3.5.5.
3.5.4. REGULATORY CHANGES. If any Lender shall determine that
(a) any change in any Legal Requirement (including any new Legal
Requirement) after the date hereof shall directly or indirectly (i)
reduce the amount of any sum received or receivable by such Lender with
respect to the Loan or the Letters of Credit or the return to be earned
by such Lender on the Loan or the Letters of Credit, (ii) impose a cost
on such Lender or any Affiliate of such Lender that is attributable to
the making or maintaining of, or such Lender's commitment to make, its
portion of the Loan or the Letters of Credit, or (iii) require such
Lender or any Affiliate of such Lender to make any payment on, or
calculated by reference to, the gross amount of any amount received by
such Lender under any Credit Document, and (b) such reduction,
increased cost or payment shall not be fully compensated for by an
adjustment in the Applicable Rate or the Letter of Credit fees, then,
the Lender may claim compensation under Section 3.5.5.
3.5.5. COMPENSATION CLAIMS. If a Lender makes a determination
that it will seek compensation pursuant to any of Sections 3.5.1,
3.5.2, 3.5.3 and 3.5.4, such Lender shall promptly thereafter give
notice thereof to the Company. Promptly after the receipt by the
Company of any such notice, the Company and the Lender shall
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attempt to negotiate in good faith an adjustment to the amount payable
by the Borrower to the Lender under the relevant Section, which amount
shall be sufficient to compensate the Lender for such reduced return.
If the Company and the Lender are unable to agree to such adjustment
within thirty days of the date upon which the Company receives such
notice, then the Borrower will, on demand by the Lender, pay to the
Lender such additional amount as shall be sufficient, in the Lender's
reasonable determination, to compensate the Lender for such reduced
return, together with interest at the Overdue Reimbursement Rate from
the 30th day until payment in full thereof. The determination by such
Lender of the amount to be paid to it and the basis for computation
thereof shall, in the absence of manifest error, be conclusive. In
determining such amount, such Lender may use any reasonable averaging,
allocation and attribution methods. The Borrower shall be entitled to
replace any such Lender in accordance with Section 13.3.
3.6. COMPUTATIONS OF INTEREST AND FEES. For purposes of this Agreement,
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a 360-day
year for actual days elapsed. If any payment required by this Agreement becomes
due on any day that is not a Banking Day, such payment shall, except as
otherwise provided in the LIBOR Interest Period, be made on the next succeeding
Banking Day. If the due date for any payment of principal is extended as a
result of the immediately preceding sentence, interest shall be payable for the
time during which payment is extended at the Applicable Rate or the applicable
commitment fee or letter of credit fee rate.
4. PAYMENT.
4.1. PAYMENT AT MATURITY. On the Final Maturity Date or any accelerated
maturity of the Loan, the Borrower will pay to the Agent for the account of the
Lenders an amount equal to the portion of the Loan then due, together with all
accrued and unpaid interest thereon and all other Credit Obligations then
outstanding.
4.2. [Intentionally Omitted]
4.3. CONTINGENT REQUIRED PREPAYMENTS.
4.3.1. EXCESS CREDIT EXPOSURE. If at any time the Revolving
Loan exceeds the limits set forth in Section 2.1, the Borrower shall
within three Banking Days pay the amount of such excess to the Agent
for the account of the Lenders.
4.3.2. LETTER OF CREDIT EXPOSURE. If at any time the Letter of
Credit Exposure exceeds the limits set forth in Section 2.3, the
Borrower shall within three Banking Days pay the amount of such excess
to the Agent for the account of the Lenders to be applied as provided
in Section 4.6.
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4.3.3. NET EQUITY PROCEEDS. Within three Banking Days after
the receipt of Net Equity Proceeds, the Borrower shall pay to the Agent
as a prepayment of the Loan, to be applied as provided in Section 4.6,
the lesser of (a) the amount of Net Equity Proceeds or (b) the amount
of the Loan. The Company shall give the Agent at least five Banking
Days' prior notice of its intention to prepay the Loans, or any portion
thereof, under this Section 4.3.3.
4.4. VOLUNTARY PREPAYMENTS. In addition to the prepayments required by
Sections 4.2 and 4.3, the Borrower may from time to time prepay all or any
portion of the Loan (in a minimum amount of $100,000 and an integral multiple of
$100,000), without premium or penalty of any type (except as provided in Section
3.2.4 with respect to the early termination of LIBOR Pricing Options). The
Borrower shall give the Agent at least one Banking Day prior notice of its
intention to prepay, specifying the date of payment, the total amount of the
Loan to be paid on such date and the amount of interest to be paid with such
prepayment.
4.5. LETTERS OF CREDIT. If on the stated or any accelerated maturity of
the Credit Obligations the Lenders shall be obligated in respect of a Letter of
Credit or a draft accepted under a Letter of Credit, the Borrower will either:
(a) prepay such obligation by depositing with the Agent an
amount of cash, or
(b) deliver to the Agent a standby letter of credit
(designating the Agent as beneficiary and issued by a bank and on terms
reasonably acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Borrower. Any such cash so deposited and
the cash proceeds of any draw under any standby letter of credit so furnished,
including any interest thereon, shall be returned by the Agent to the Borrower
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at a time when no Default exists;
PROVIDED, HOWEVER, that if an Event of Default occurs and the Credit Obligations
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in Section 10.5.6.
4.6. REBORROWING; APPLICATION OF PAYMENTS, ETC. The amounts of the
Revolving Loan prepaid pursuant to Section 4.4 may be reborrowed from time to
time prior to the Final Maturity Date in accordance with Section 2.1, subject to
the limits set forth therein. Any prepayment of a portion of the Loan shall be
applied first to the portion of the Loan not then subject to LIBOR Pricing
Options, then the balance of any such prepayment shall be applied to the portion
of the Loan then subject to LIBOR Pricing Options, in the chronological order of
the respective maturities thereof, together with any payments required by
Section 3.2.4. All payments of principal of a portion of the Loan shall be made
to the Agent for the account of
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the Lenders in accordance with the Lenders' respective Percentage Interests in
such portion of the Loan.
5. CONDITIONS TO EXTENDING CREDIT.
5.1. CONDITIONS ON INITIAL CLOSING DATE. The obligations of the Lenders
to make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the conditions set forth
in this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 and 5.2 are not met on or prior to the
Initial Closing Date, the Lenders shall have no obligation to make any
extensions of credit hereunder.
5.1.1. NOTES. The Borrower shall have duly executed and
delivered to the Agent a Revolving Note for each Lender.
5.1.2. PERFECTION OF SECURITY. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, notices, financing statements and
other instruments as the Agent may have requested in order to perfect
the Liens contemplated pursuant to the Credit Documents to be created
in the Credit Security. To the extent requested by the Agent, each
Obligor shall have duly authorized, executed, acknowledged and
delivered to the Agent a mortgage on each parcel of real property owned
by such Obligor in form and substance satisfactory to the Agent,
together with, for each such parcel of real property: (a) mortgage
title insurance with such insurer, in such amount, in such form and
with such exceptions as are reasonably satisfactory to the Agent and
(b) an environmental site assessment report in such form, with such
conclusions and from such environmental engineering firm as are
reasonably satisfactory to the Agent.
5.1.3. LEGAL OPINIONS. On the Initial Closing Date, the
Lenders shall have received from the following counsel their respective
opinions with respect to the transactions contemplated by the Credit
Documents, which opinions shall be in form and substance satisfactory
to the Required Lenders:
(a) Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A.,
special counsel for the Obligors.
(b) Ropes & Gray, special counsel for the Agent.
The Obligors authorize and direct their counsel to furnish the
foregoing opinions.
5.1.4. PAYMENT OF FEE. The Borrower shall have paid to the
Agent (a) for the Lenders' accounts a facility fee in accordance with
the separate letter agreements with
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the Lenders and (b) the reasonable fees and disbursements of the
Agent's special counsel for which statements have been rendered on or
prior to the Initial Closing Date.
5.1.5. ADVERSE MARKET CHANGE. Since February 12, 1998 no
material adverse change shall have occurred in the syndication markets
for credit facilities similar in nature to this Agreement, and no
material disruption for or material adverse change in the financial,
banking or capital markets that would have an adverse effect on such
syndication market shall have occurred, in each case as determined by
the Agent and the Arranger in their sole discretion.
5.2. CONDITIONS TO EACH EXTENSION OF CREDIT. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. OFFICER'S CERTIFICATE. The representations and
warranties contained in Sections 7 and 10.3 shall be true and correct
on and as of such Closing Date with the same force and effect as though
made on and as of such date (except as to any representation or
warranty which refers to a specific earlier date); no Default shall
exist on such Closing Date prior to or immediately after giving effect
to the requested extension of credit; no Material Adverse Change shall
have occurred since December 31, 1997 or the date of the most recent
audited financial statements provided pursuant to Section 6.4.1; and
the Borrower shall have furnished to the Agent in connection with the
requested extension of credit a certificate to these effects, in
substantially the form of EXHIBIT 5.2.1, signed by a Financial Officer.
5.2.2. LEGALITY, ETC. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Borrower is required to reimburse the
Lenders under Section 3.5.2, (b) be prohibited by any Legal Requirement
or (c) violate any credit restraint program of the executive branch of
the government of the United States of America, the Board of Governors
of the Federal Reserve System or any other governmental or
administrative agency so long as any Lender reasonably believes that
compliance is required by law.
5.2.3. PROPER PROCEEDINGS. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary corporate or other proceedings of
the Obligors. All necessary consents, approvals and authorizations of
any governmental or administrative agency or any other Person of any of
the transactions contemplated hereby or by any other Credit Document
shall have been obtained and shall be in full force and effect.
5.2.4. CONDITIONS TO MAKING EACH PERMITTED ACQUISITION
ADVANCE. In the case of any loan contemplated by Section 2.1 to fund a
Permitted Acquisition, the Borrower
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shall have complied with all of the requirements of either Section 6.21
or 6.22 with respect to the Permitted Acquisition.
5.2.5. GENERAL. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Agent and the Agent shall
have received copies of all documents, including certified copies of
the Charter and By-Laws of the Borrower and the other Obligors, records
of corporate proceedings, certificates as to signatures and incumbency
of officers and opinions of counsel, which the Agent may have
reasonably requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental
authorities.
6. GENERAL COVENANTS. Each of the Borrower and the Guarantors covenants that,
until all of the Credit Obligations shall have been paid in full and until the
Lenders' commitments to extend credit under this Agreement and any other Credit
Document shall have been irrevocably terminated, it will comply, and will cause
its Subsidiaries (including such Subsidiaries as are not Guarantors) to comply,
with the following provisions:
6.1. TAXES AND OTHER CHARGES; ACCOUNTS PAYABLE.
6.1.1. TAXES AND OTHER CHARGES. Each of the Borrower and its
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same become in arrears, all taxes, assessments
and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits
therefrom, as well as all claims for labor, materials or supplies which
if unpaid might by law become a Lien upon any of its property;
PROVIDED, HOWEVER, that any such tax, assessment, charge or claim need
not be paid if the validity or amount thereof shall at the time be
contested in good faith by appropriate proceedings and if such Person
shall, in accordance with GAAP, have set aside on its books adequate
reserves with respect thereto; and PROVIDED, FURTHER, that each of the
Borrower and its Subsidiaries shall pay or bond, or cause to be paid or
bonded, all such taxes, assessments, charges or other governmental
claims immediately upon the commencement of proceedings to foreclose
any Lien which may have attached as security therefor (except to the
extent such proceedings have been dismissed or stayed).
6.1.2. ACCOUNTS PAYABLE. Each of the Borrower and its
Subsidiaries shall promptly pay when due, or in conformity with
customary trade terms, all other Indebtedness, including accounts
payable, incident to the operations of such Person not referred to in
Section 6.1.1; PROVIDED, HOWEVER, that any such Indebtedness need not
be paid if the validity or amount thereof shall at the time be
contested in good faith and if such Person shall, in accordance with
GAAP, have set aside on its books adequate reserves with respect
thereto.
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6.2. CONDUCT OF BUSINESS, ETC.
6.2.1. TYPES OF BUSINESS. The Borrower and its Subsidiaries
shall engage only in the business of (a) providing pathology services,
laboratory services (including full service clinical and anatomical
pathology laboratory services) and (b) other activities and services
related thereto.
6.2.2. MAINTENANCE OF PROPERTIES. Each of the Borrower and its
Subsidiaries:
(a) shall keep its properties in such repair, working order
and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto as are necessary for
the efficient operation of its businesses and shall comply at all times
in all material respects with all franchises, licenses, leases and
other material agreements to which it is party so as to prevent any
loss or forfeiture thereof or thereunder, except where (i) compliance
is at the time being contested in good faith by appropriate proceedings
or (ii) failure to comply with the provisions being contested has not
resulted, or does not create a material risk of resulting, in the
aggregate in any Material Adverse Change; PROVIDED, HOWEVER, that this
Section 6.2.2(a) shall not apply to assets or entities disposed of in
transactions permitted by Section 6.11; and
(b) shall do all things necessary to preserve, renew and keep
in full force and effect and in good standing its legal existence and
authority necessary to continue its business; PROVIDED, HOWEVER, that
this Section 6.2.2(b) shall not prevent the merger, consolidation or
liquidation of Subsidiaries permitted by Section 6.11.
6.2.3. STATUTORY COMPLIANCE. Each of the Borrower and its
Subsidiaries shall comply in all material respects with all valid and
applicable statutes, laws, ordinances, zoning and building codes and
other rules and regulations of the United States of America, of the
states and territories thereof and their counties, municipalities and
other subdivisions and of any foreign country or other jurisdictions
applicable to such Person, except where (a) compliance therewith shall
at the time be contested in good faith by appropriate proceedings or
(b) failure so to comply with the provisions being contested has not
resulted, or does not create a material risk of resulting, in the
aggregate in any Material Adverse Change.
6.2.4. NO SUBSIDIARIES. The Borrower shall not form or suffer
to exist any Subsidiary, except for such Subsidiaries as shall have
executed and delivered to the Agent either (a) this Agreement and each
other applicable Credit Document as of the Initial Closing Date or (b)
a Joinder Agreement in the form of Exhibit 6.21.1(b) pursuant to which
such Subsidiary shall have become a Guarantor hereunder; PROVIDED,
HOWEVER, that in the event that applicable state law or regulation
prohibits any Subsidiary of the Company from guaranteeing the Credit
Obligations, such Subsidiary shall not be required to execute this
Agreement or such a Joinder Agreement.
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6.2.5. COMPLIANCE WITH MATERIAL AGREEMENTS. Each of the
Borrower and its Subsidiaries shall comply in all material respects
with the Material Agreements (to the extent not in violation of the
other provisions of this Agreement or any other Credit Document).
Except with respect to Acquisition Agreements, without the prior
written consent of the Required Lenders, which consent shall not be
unreasonably withheld, no Material Agreement shall be amended,
modified, waived or terminated in any manner that would have in any
material respect an adverse effect on the interests of the Lenders.
6.3. INSURANCE.
6.3.1. PROPERTY INSURANCE. Each of the Borrower and its
Subsidiaries shall keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and
fraud and against loss or damage by fire, explosion and hazards and
such other extended coverage risks insured against by extended coverage
to the extent, in amounts and with deductibles at least as favorable as
those generally maintained by businesses of similar size engaged in
similar activities in similar localities.
6.3.2. LIABILITY INSURANCE. Each of the Borrower and its
Subsidiaries shall maintain with financially sound and reputable
insurers insurance against liability for hazards, risks and liability
to persons (for both death and bodily injury) and property, including
product liability insurance and medical malpractice insurance, to the
extent, in amounts and with deductibles at least as favorable as those
generally maintained by businesses of similar size engaged in similar
activities in similar localities; PROVIDED, HOWEVER, that it may affect
workers' compensation insurance or similar coverage with respect to
operations in any particular state or other jurisdiction through an
insurance fund operated by such state or jurisdiction or by meeting the
self-insurance requirements of such state or jurisdiction.
6.3.3. KEY EXECUTIVE LIFE INSURANCE. The Borrower and its
Subsidiaries shall collaterally assign to the Agent for the benefit of
the Lenders all life insurance policies for which any of the Borrower
and its Subsidiaries are the beneficiary, on each officer or doctor
employed by the Borrower or any of its Subsidiaries.
6.3.4. FLOOD INSURANCE. Each of the Borrower and its
Subsidiaries shall at all times keep each parcel of real property owned
or leased by it which is (a) included in the Credit Security, (b) in an
area determined by the Director of the Federal Emergency Management
Agency to be subject to special flood hazard and (c) in a community
participating in the National Flood Insurance Program, insured against
such special flood hazards in an amount equal to the maximum limit of
coverage available for the particular type of property under the
federal National Flood Insurance Act of 1968.
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6.4. FINANCIAL STATEMENTS AND REPORTS. Each of the Borrower and its
Subsidiaries shall maintain a system of accounting in which correct entries
shall be made of all transactions in relation to their business and affairs in
accordance with generally accepted accounting practice. The fiscal year of the
Borrower and its Subsidiaries shall end on December 31 in each year and the
fiscal quarters of such Persons shall end on March 31, June 30, September 30 and
December 31 in each year.
6.4.1. ANNUAL REPORTS. The Borrower shall furnish to the Agent
as soon as available, and in any event within 95 days after the end of
each fiscal year, the Form 10-K of the Borrower for such year. The
Borrower shall furnish to the Agent as soon as available, and in any
event within 120 days after the end of each fiscal year, the
Consolidated and Consolidating balance sheets of the Obligors as at the
end of such fiscal year, the Consolidated and Consolidating statements
of income and Consolidated statements of changes in shareholders'
equity and of cash flows of the Obligors for such fiscal year (all in
reasonable detail) and together, in the case of Consolidated financial
statements, with comparative figures for the immediately preceding
fiscal year, all accompanied by:
(a) Unqualified reports of independent certified public
accountants of recognized national standing reasonably satisfactory to
the Agent, containing no material uncertainty and without any
Impermissible Reference, to the effect that they have audited the
foregoing Consolidated financial statements in accordance with
generally accepted auditing standards and that such Consolidated
financial statements present fairly, in all material respects, the
financial position of the Obligors covered thereby at the dates thereof
and the results of their operations for the periods covered thereby in
conformity with GAAP.
(b) The statement of such accountants that they have caused
this Agreement to be reviewed and that in the course of their audit of
the Borrower and its Subsidiaries no facts have come to their attention
that cause them to believe that any Default exists and in particular
that they have no knowledge of any Default under Sections 6.5 through
6.23 or, if such is not the case, specifying such Default and the
nature thereof. This statement is furnished by such accountants with
the understanding that the examination of such accountants cannot be
relied upon to give such accountants knowledge of any such Default
except as it relates to accounting or auditing matters within the scope
of their audit.
(c) A certificate of the Borrower signed by a Financial
Officer to the effect that such officer has caused this Agreement to be
reviewed and has no knowledge of any Default, or if such officer has
such knowledge, specifying such Default and the nature thereof, and
what action the Borrower has taken, is taking or proposes to take with
respect thereto.
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(d) Computations by the Borrower comparing the financial
statements referred to above with the most recent budget for such
fiscal year furnished to the Agent in accordance with Section 6.4.4.
(e) Computations by the Borrower demonstrating, as of the end
of such fiscal year, compliance with the Computation Covenants,
certified by a Financial Officer.
(f) Calculations, as at the end of such fiscal year, of (i)
the Accumulated Benefit Obligations for each Plan covered by Title IV
of ERISA (other than Multiemployer Plans) and (ii) the fair market
value of the assets of such Plan allocable to such benefits.
(g) Supplements to Exhibits 7.1, 7.3 and 10.4.2 showing any
changes in the information set forth in such Exhibits not previously
furnished to the Agent in writing, as well as any changes in the
Charter, Bylaws or incumbency of officers of the Obligors from those
previously certified to the Agent.
(h) In the event of a change in GAAP after the Initial Closing
Date, computations by the Borrower, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
6.4.2. QUARTERLY REPORTS. The Borrower shall furnish to the
Agent as soon as available and, in any event, within 45 days after the
end of each of the first three fiscal quarters of the Borrower, the
internally prepared Consolidated and Consolidating balance sheets of
the Obligors as of the end of such fiscal quarter, the Consolidated and
Consolidating statements of income and Consolidated statements of
changes in shareholders' equity and of cash flows of the Obligors for
such fiscal quarter and for the portion of the fiscal year then ended
(all in reasonable detail) and together, in the case of Consolidated
statements, with comparative figures for the same period in the
preceding fiscal year, all accompanied by:
(a) A certificate of the Borrower signed by a Financial
Officer to the effect that such financial statements have been prepared
in accordance with GAAP and present fairly, in all material respects,
the financial position of the Obligors covered thereby at the dates
thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the
addition of footnotes.
(b) A certificate of the Borrower signed by a Financial
Officer to the effect that such officer has caused this Agreement to be
reviewed and has no knowledge of any Default, or if such officer has
such knowledge, specifying such Default and the nature
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thereof and what action the Borrower has taken, is taking or proposes
to take with respect thereto.
(c) Computations by the Borrower comparing the financial
statements referred to above with the most recent budget for the period
covered thereby furnished to the Agent in accordance with Section
6.4.4.
(d) Computations by the Borrower demonstrating, as of the end
of such quarter, compliance with the Computation Covenants, certified
by a Financial Officer.
(e) Supplements to Exhibits 7.1, 7.3 and 10.4.2 showing any
changes in the information set forth in such Exhibits not previously
furnished to the Agent in writing, as well as any changes in the
Charter, Bylaws or incumbency of officers of the Borrower or its
Subsidiaries from those previously certified to the Agent.
(f) In the event of a change in GAAP after the Initial Closing
Date, computations by the Borrower, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
6.4.3. BORROWING BASE REPORTS. The Borrower shall furnish to
the Agent as soon as available and, in any event, within 45 days after
the end of each quarter, a certificate of a Financial Officer of the
Borrower supplying computations of the Borrowing Base at the end of
such quarter and certifying that such computations were based on the
quarterly reports prepared in accordance with GAAP.
6.4.4. OTHER REPORTS. The Borrower shall promptly furnish to
the Agent:
(a) As soon as prepared and in any event prior to the
beginning of each fiscal year, an annual budget and operating
projections for such fiscal year of the Borrower and its Subsidiaries,
prepared in a manner consistent with the manner in which the financial
projections described in Section 7.2.1 were prepared.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Borrower or any of
its Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and
other reports furnished generally to the shareholders of the Borrower.
(e) As soon as practicable but, in any event, within 20
Banking Days after the filing thereof, such registration statements,
proxy statements and reports, including, to
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the extent applicable, Forms S-1, S-2, S-3, S-4, 10-K, 10-Q and 8-K, as
may be filed by the Borrower or any of its Subsidiaries with the
Securities and Exchange Commission.
(f) Any 90-day letter or 30-day letter from the federal
Internal Revenue Service (or the equivalent notice received from state
or other taxing authorities) asserting tax deficiencies against the
Borrower or any of its Subsidiaries.
(g) Any material information relating to a material audit or
investigation of the Borrower or any of its Subsidiaries in its
capacity as a Medicare or Medicaid provider by a governmental or
administrative agency.
(h) The financial and operational projections for the Obligors
on a Consolidated and Consolidating basis.
6.4.5. NOTICE OF LITIGATION, DEFAULTS, ETC. Each of the
Borrower and its Subsidiaries shall promptly furnish to the Agent
notice of any litigation or any administrative or arbitration
proceeding, (a) which creates a material risk of resulting, after
giving effect to any applicable insurance, in the payment by the
Borrower or any of its Subsidiaries of more than $100,000 or (b) which
results, or creates a material risk of resulting, in a Material Adverse
Change. Within five Banking Days after acquiring knowledge thereof, the
Borrower shall notify the Lenders of the existence of any Default or
Material Adverse Change, specifying the nature thereof and what action
the Borrower or such Subsidiary has taken, is taking or proposes to
take with respect thereto.
6.4.6. ERISA REPORTS. Each of the Borrower and its
Subsidiaries shall furnish to the Agent promptly after the same shall
become available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period,
(b) any reportable event (as defined in section 4043 of
ERISA), unless the notice requirement with respect thereto has been
waived by regulation,
(c) any notice received by any ERISA Group Person that the
PBGC has instituted or intends to institute proceedings to terminate
any Plan, or that any Multiemployer Plan is insolvent or in
reorganization,
(d) notice of the possibility of the termination of any Plan
by its administrator pursuant to section 4041 of ERISA, and
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(e) notice of the intention of any ERISA Group Person to
withdraw, in whole or in part, from any Multiemployer Plan.
6.4.7. OTHER INFORMATION; AUDIT. From time to time at
reasonable intervals upon request of any authorized officer of the
Agent or any Lender, each of the Borrower and its Subsidiaries shall
furnish to the Agent or such Lender such other information regarding
the business, assets, financial condition, income or prospects of the
Borrower and its Subsidiaries as such officer may reasonably request,
including copies of all tax returns, licenses, agreements, leases and
instruments to which any of the Borrower and its Subsidiaries is party.
The Agent's, or such Lender's authorized officers and representatives
shall have the right during normal business hours upon reasonable
notice and at reasonable intervals to examine the books and records of
the Borrower and its Subsidiaries, to make copies and notes therefrom
for the purpose of ascertaining compliance with or obtaining
enforcement of this Agreement or any other Credit Document. Any Lender
requesting any such information or examination shall coordinate with
the Agent the frequency and timing of such requests and examinations so
as to reasonably minimize the burden imposed on the Borrower and its
Subsidiaries. The Agent, upon reasonable advance notice, may undertake
to have the Borrower and its Subsidiaries reviewed by the Agent's
commercial financial examiners and fixed asset appraisers. The Borrower
shall bear the reasonable expenses related to one such review annually
unless an Event of Default has occurred and is continuing in which
event the Borrower shall bear all reasonable expenses of any reasonable
number of reviews.
6.5. CERTAIN FINANCIAL TESTS.
6.5.1. CONSOLIDATED TOTAL DEBT COVERAGE. At all times, the
amount of (a) Consolidated Total Debt MINUS (b) that portion of the
outstanding principal amount of any Contingent Notes and Restructured
Seller Notes to the extent that such portion is not required to be
reflected on the financial statements of the Borrower in accordance
with GAAP, shall not exceed 350% Consolidated Adjusted EBITDA for the
period of four consecutive fiscal quarters most recently ended.
6.5.2. CONSOLIDATED INTEREST EXPENSE. On the last day of each
fiscal quarter of the Borrower ending after March 31, 1998,
Consolidated EBITDA for the period of four consecutive fiscal quarters
then ending shall be at least 250% of the Consolidated Interest Expense
for such period.
6.5.3. CONSOLIDATED OPERATING CASH FLOW. On the last day of
each fiscal quarter of the Borrower, Consolidated Operating Cash Flow
for the period of four consecutive fiscal quarters then ending shall be
at least 125% of Consolidated Total Debt Service for such period.
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6.6. INDEBTEDNESS. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume or otherwise become or remain liable with respect to
any Indebtedness except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt,
incurred in the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the
time be required by Section 6.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials and
supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a)
which have been in force for less than the applicable appeal period or
(b) in respect of which the Borrower or any of its Subsidiaries shall
at the time in good faith be prosecuting an appeal or proceedings for
review and, in the case of each of clauses (a) and (b), the Borrower or
such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP and execution of such judgment or award shall not
be levied.
6.6.7. To the extent permitted by Section 6.8.9, Indebtedness
in respect of Capitalized Lease Obligations or secured by purchase
money security interests; PROVIDED, HOWEVER, that the aggregate
principal amount of all Indebtedness permitted by this Section 6.6.7 at
any one time outstanding shall not exceed $1,000,000.
6.6.8. Indebtedness with respect to deferred compensation in
the ordinary course of business and Indebtedness with respect to
employee benefit programs (including liabilities in respect of deferred
compensation, pension or severance benefits, early termination
benefits, disability benefits, vacation benefits and tuition benefits)
incurred in the ordinary course of business so long as the Borrower and
its Subsidiaries is in compliance with Section 6.17.
6.6.9. Indebtedness in respect of customer advances and
deposits, deferred income, deferred taxes and other deferred credits
arising in the ordinary course of business.
6.6.10. Indebtedness relating to deferred gains and deferred
taxes arising in connection with sale of assets permitted under Section
6.11.
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6.6.11. Indebtedness in respect of inter-company loans and
advances among the Borrower and its Subsidiaries which are not
prohibited by Section 6.9.
6.6.12. Contingent Notes and Restructured Seller Notes.
6.6.13. Indebtedness to the extent set forth on EXHIBIT 6.6.
6.7. GUARANTEES; LETTERS OF CREDIT. Neither the Borrower nor any of its
Subsidiaries, shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties, except the
following:
6.7.1. Letters of Credit and Guarantees of the Credit
Obligations.
6.7.2. Guarantees by the Borrower of Indebtedness incurred by
its Subsidiaries and permitted by Section 6.6.
6.7.3. Guarantees by the Borrower of the obligations of its
Subsidiaries under employment agreements between such Subsidiary and
its employees.
6.8. LIENS. Neither the Borrower nor any of its Subsidiaries shall
create, incur or enter into, or suffer to be created or incurred or to exist,
any Lien, except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not at
the time be required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old
age pensions or other social security, (b) in connection with casualty
insurance maintained in accordance with Section 6.3, (c) to secure the
performance of bids, tenders, contracts (other than contracts relating
to Financing Debt) or leases, (d) to secure statutory obligations or
surety or appeal bonds, (e) to secure indemnity, performance or other
similar bonds in the ordinary course of business or (f) in connection
with contested amounts to the extent that payment thereof shall not at
that time be required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent
that such judgments or awards are permitted by Section 6.6.6.
6.8.5. Liens of carriers, warehouses, mechanics and similar
Liens, in each case (a) in existence less than 120 days from the date
of creation thereof or (b) being
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contested in good faith by the Borrower or any Subsidiary in
appropriate proceedings (so long as the Borrower or such Subsidiary
shall, in accordance with GAAP, have set aside on its books adequate
reserves with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions,
(b) easements, (c) restrictions of record on the use of real property,
(d) landlords' and lessors' Liens on rented premises and (e)
restrictions on transfers or assignment of leases, which in each case
do not materially detract from the value of the encumbered property or
impair the use thereof in the business of the Borrower or any
Subsidiary.
6.8.7. Restrictions under federal and state securities laws on
the transfer of securities.
6.8.8. Restrictions under Foreign Trade Regulations on the
transfer or licensing of certain assets of the Borrower and its
Subsidiaries.
6.8.9. Liens constituting (a) purchase money security
interests (including mortgages, conditional sales, Capitalized Leases
and any other title retention or deferred purchase devices) in real
property, interests in leases or tangible personal property (other than
inventory) existing or created on the date on which such property is
acquired, and (b) the renewal, extension or refunding of any security
interest referred to in the foregoing clause (a) in an amount not to
exceed the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding; PROVIDED, HOWEVER, that (i) each such
security interest shall attach solely to the particular item of
property so acquired, and the principal amount of Indebtedness
(including Indebtedness in respect of Capitalized Lease Obligations)
secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property, and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this Section 6.8.9 shall not exceed the
amount permitted by Section 6.6.7.
6.8.10. Other Liens and Capitalized Lease Obligations on the
property secured by such Liens or the subject of such Capitalized Lease
as set forth on EXHIBIT 6.8 and any renewals thereof, but not any
increase in the amount thereof.
6.9. INVESTMENTS AND PERMITTED ACQUISITIONS. Neither the Borrower nor
any of its Subsidiaries shall have outstanding, acquire, commit itself to
acquire or hold any Investment (including any Investment consisting of the
Permitted Acquisition of any business) except for the following:
6.9.1. Cash Investments of the Borrower in its Subsidiaries.
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6.9.2. Intercompany loans and advances from the Borrower and
its Subsidiaries to any Subsidiary but in each case only to the extent
reasonably necessary for Consolidated tax planning and working capital
management.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. Acquisitions permitted by Sections 6.21 and 6.22 (each
a "Permitted Acquisition").
6.9.6. Investments representing Indebtedness of any Person
owing as a result of the sale by the Borrower in the ordinary course of
business to such Person of products, services or tangible property no
longer required in the Borrower's business.
6.10. DISTRIBUTIONS. Neither the Borrower nor any of its Subsidiaries
shall make any Distribution except for the following:
6.10.1. Subsidiaries of the Borrower may make Distributions to
the Borrower or any other Subsidiary of the Borrower.
6.10.2. Distributions consisting of Investments permitted by
Sections 6.9.1 and 6.9.2.
6.10.3. Distributions in respect of the redemption of capital
stock of the Company from employees of the Borrower or any of its
Subsidiaries; PROVIDED, HOWEVER, that the amount of all such
Distributions shall not exceed $50,000 in the aggregate in any fiscal
year.
6.10.4. Distributions on Subordinated Indebtedness to the
extent permitted by a Subordination Agreement or such other
documentation relating to Subordinated Indebtedness that has been
approved by the Agent.
6.11. ASSET DISPOSITIONS AND MERGERS. Except as otherwise set forth in
EXHIBIT 6.11, neither the Borrower nor any of its Subsidiaries shall merge or
enter into a consolidation or sell, lease, sell and lease back, sublease or
otherwise dispose of any of its assets, except the following:
6.11.1. So long as immediately prior to and after giving
effect thereto there shall exist no Default, the Borrower and any of
its Subsidiaries may sell or otherwise dispose of: (a) inventory in the
ordinary course of business; (b) tangible assets to be replaced in the
ordinary course of business within 12 months by other assets of equal
or greater value; and (c) tangible assets no longer used or useful in
the business of the
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Borrower or such Subsidiary; PROVIDED, HOWEVER, that the aggregate fair
market value (or book value, if greater) of the assets sold or disposed
of pursuant to this clause (c) shall not exceed $500,000 in any fiscal
year.
6.11.2. Any Subsidiary may merge or be liquidated into the
Borrower or any other Subsidiary of the Borrower so long as after
giving effect to any such merger to which an Obligor is a party, an
Obligor shall be the surviving or resulting Person.
6.12. LEASE OBLIGATIONS. Neither the Borrower nor any of its
Subsidiaries shall be or become obligated as lessee under any lease except:
6.12.1. Capitalized Leases permitted by Sections 6.6.7 and
6.8.9.
6.12.2. Leases other than Capitalized Leases; PROVIDED,
HOWEVER, that the aggregate fixed rental obligations for any year
(excluding payments required to be made by the lessee in respect of
taxes and insurance whether or not denominated as rent) shall not
exceed $2,000,000.
6.13. ISSUANCE OF STOCK BY SUBSIDIARIES; SUBSIDIARY DISTRIBUTIONS.
6.13.1. ISSUANCE OF STOCK BY SUBSIDIARIES OF THE COMPANY. No
Subsidiary shall issue or sell any shares of its capital stock or other
evidence of beneficial ownership to any Person other than the Borrower
or any other Wholly-Owned Subsidiary of the Borrower, which shares
shall have been pledged to the Agent as part of the Credit Security;
PROVIDED, HOWEVER, that (i) in the event that applicable state law or
regulation prohibits the Company from directly holding the capital
stock of a medical practice that is a Subsidiary of the Company, such
shares may be issued or sold to a trust or similar entity controlled
solely by the Borrower or a Wholly-Owned Subsidiary of the Borrower,
(ii) James E. Dunnington, M.D. may hold one share of AmeriPath
Kentucky, Inc., so long as the Shareholders' Agreement among Dr.
Dunnington, the Company and AmeriPath Kentucky, Inc. remains in full
force and effect and (iii) Alan Levin, M.D. may hold all the issued and
outstanding Shares of AmeriPath Pittsburgh, P.C. so long as the
Shareholder's Agreement among Dr. Levin, the Company and AmeriPath
Pittsburgh, P.C. remains in full force and effect.
6.13.2. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except
for this Agreement and the Credit Documents, neither the Borrower nor
any of its Subsidiaries shall enter into or be bound by any agreement
(including covenants requiring the maintenance of specified amounts of
net worth or working capital) restricting the right of any Subsidiary
to make Distributions or extensions of credit to the Borrower (directly
or indirectly through another Subsidiary).
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6.14. VOLUNTARY PREPAYMENTS OF OTHER INDEBTEDNESS. Neither the Borrower
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Financing Debt (other than the Credit Obligations) or make
any voluntary redemptions or repurchases of Financing Debt (other than the
Credit Obligations) without the prior written consent of the Required Lenders.
6.15. DERIVATIVE CONTRACTS. Neither the Borrower nor any of its
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except (i) to provide hedge protection for an underlying economic transaction in
the ordinary course of business, or (ii) as required by Section 6.19.
6.16. NEGATIVE PLEDGE CLAUSES. Neither the Borrower nor any of its
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of such Person to create, incur, assume or
suffer to exist any Lien upon any of their respective properties, assets or
revenues, whether now owned or hereafter acquired, or which requires the grant
of any collateral for such obligation if collateral is granted for another
obligation, except the following:
6.16.1. This Agreement and the other Credit Documents.
6.16.2. Covenants in documents creating Liens permitted by
Section 6.8 prohibiting further Liens on the assets encumbered thereby.
6.17. ERISA, ETC. Each of the Borrower and its Subsidiaries shall
comply, and shall cause all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan.
Each of the Borrower and its Subsidiaries shall meet, and shall cause all ERISA
Group Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the Code,
without giving effect to any waivers of such requirements or extensions of the
related amortization periods which may be granted. At no time shall the
Accumulated Benefit Obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $250,000. The Borrower and its Subsidiaries shall not
withdraw, and shall cause all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $250,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits,
whether or not provided under a Plan, calculated in a manner consistent with
Statement No. 106 of the Financial Accounting Standards Board, exceed $500,000.
6.18. TRANSACTIONS WITH AFFILIATES. Except with respect to Management
Services Agreements and transactions set forth on EXHIBIT 6.18, neither the
Borrower nor any of its Subsidiaries shall effect any transaction with any of
their respective Affiliates (except for the
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Borrower and its Subsidiaries) on a basis less favorable to the Borrower and its
Subsidiaries than would be the case if such transaction had been effected with a
non-Affiliate.
6.19. INTEREST RATE PROTECTION. The Borrower shall keep in effect the
existing Interest Rate Protection Agreements.
6.20. ENVIRONMENTAL LAWS.
6.20.1. COMPLIANCE WITH LAW AND PERMITS. Each of the Borrower
and its Subsidiaries shall use and operate all of their respective
facilities and properties in material compliance with all Environmental
Laws, keep all necessary permits, approvals, certificates, licenses and
other authorizations relating to environmental matters in effect and
remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Environmental
Laws.
6.20.2. NOTICE OF CLAIMS, ETC. Each of the Borrower and its
Subsidiaries shall immediately notify the Agent, and provide copies
upon receipt, of all written claims, complaints, notices or inquiries
from governmental authorities relating to the condition of its
facilities and properties or compliance with Environmental Laws, and
shall promptly cure and have dismissed with prejudice to the
satisfaction of the Agent any actions and proceedings relating to
compliance with Environmental Laws.
6.21. PERMITTED ACQUISITIONS; GENERAL. Any Obligor may make any
acquisition of all of the capital stock, equity, partnership interests, limited
liability company membership or other beneficial interests in, or a purchase of
substantially all of the assets of any Person if that Person derives
substantially all of its revenues from, a business that the Borrower would be
permitted to engage in under Section 6.2.1; PROVIDED, HOWEVER, that
6.21.1. In the case of any such acquisition for which the
Purchase Price is less than $5,000,000:
(a) SUBORDINATION AGREEMENT. If any Person is being issued a
Contingent Note in connection with the acquisition, no later than the
closing date of such acquisition (the "Acquisition Closing Date"), the
Borrower and any such Person shall execute and deliver to the Agent a
subordination agreement substantially in the form of EXHIBIT 6.21.1(A);
(b) JOINDER AGREEMENT AND CORPORATE DOCUMENTS. Not later than
five days after the Acquisition Closing Date the Borrower and the
Guarantors shall (A) execute and deliver a Joinder Agreement
substantially in the form of EXHIBIT 6.21.1(B), making any new
subsidiary created or acquired in connection with such acquisition a
Guarantor under this Agreement and (B) deliver to the Agent a
certificate of the Secretary of any new Subsidiary with respect to the
incumbency of the officers of the new Subsidiary,
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the Charter and By-laws of such new Subsidiary, and the votes taken by
such Subsidiary to authorize its joinder to this Agreement;
(c) CREDIT SECURITY. Not later than five days after the
Acquisition Closing Date, the Borrower shall (A) deliver to the Agent
such financing statements, mortgages and other documentation as the
Agent shall request to attach a security interest to the assets of such
new Subsidiary and to perfect such security interests and (B) deliver
to the Agent all of the capital stock of such new Subsidiary (or make
other arrangement reasonably satisfactory to the Agent to perfect the
security interest of the Lenders in any equity interest in such new
Subsidiary). The failure of the Borrower to comply with this Section
6.21.1(c) shall constitute an Event of Default; and
(d) NO DEFAULT. Immediately before and after giving effect to
such acquisition, no Default shall exist.
(e) MANAGEMENT SERVICES AGREEMENT. The Management Services
Agreement, if any, executed and delivered in connection with such
acquisition shall provide that 100% of Operating Earnings of a
physician practice be payable to the Borrower or a Guarantor.
(f) ACQUISITION COMPLIANCE CERTIFICATE. The Borrower provides
to the Agent, not later than 5 days after the Acquisition Closing Date,
a certificate in the form of EXHIBIT 6.21.1(F) certifying compliance
with this Section 6.21.1.
6.21.2. In the case of any such acquisition for which the
Purchase Price is greater than or equal to $5,000,000 and the Cash
Purchase Price is less than $20,000,000, the Borrower shall comply with
all the requirements of Section 6.21.1, with the exception of
6.21.1(f), and:
(a) PURCHASE PRICE LIMITATION. The Financing Debt component of
the consideration for such acquisition shall not exceed the sum of 450%
of the Pro Forma EBITDA of the Acquired Party for the most recently
completed period of four consecutive fiscal quarters plus the cash and
Cash Equivalents of the Acquired Party that are being purchased;
(b) ACQUISITION DOCUMENTS. The Borrower shall provide to the
Agent:
(i) not later than five days prior to the Acquisition
Closing Date, a copy of the due diligence report provided to
the board of directors of the Company with respect to such
acquisition;
(ii) not later than three days prior to the
Acquisition Closing Date, a copy of a draft of the Acquisition
Agreement, together with all amendments,
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exhibits and schedules thereto, for such acquisition; and from
such time until the Acquisition Closing Date, the Borrower
shall provide to the Agent all changes and additions to the
foregoing;
(iii) not later than five days after the Acquisition
Closing Date, a final executed copy of the Acquisition
Agreement and all exhibits and schedules thereto.
(c) PRO FORMA COVENANT COMPLIANCE. Not later than five Banking
Days before the Acquisition Closing Date, the Borrower shall provide to
the Agent, a computation, certified by a Financial Officer of the
Borrower, showing pro forma compliance as of the date of such
acquisition with the financial tests set forth in Section 6.5, after
giving effect to any increases in Financing Debt incurred in connection
with such acquisition and adding to the financial statements most
recently delivered to the Agent the Pro Forma EBITDA of the Acquired
Party for the most recently completed period of four consecutive fiscal
quarters;
Each Lender shall be deemed to have approved any non-GAAP adjustments
used in such certified calculation of the Pro Forma EBITDA (as shown in
the due diligence report sent to the Lenders) unless, within five
Banking Days after the Company (via the Agent) gives notice to such
Lender of the proposed Pro Forma EBITDA calculations showing such
non-GAAP adjustments, such Lender has given notice to the Company and
the Agent of its objection to such non-GAAP adjustments.
(d) ACQUISITION COMPLIANCE CERTIFICATE. The Borrower provides
to the Agent, not later than 5 days after the Acquisition Closing Date,
a certificate in the form of EXHIBIT 6.21.2(D) certifying compliance
with Section 6.21.1 and Section 6.21.2 hereof, and further certifying
that (a) the Acquisition has been consummated, (b) the representations
and warranties of the Sellers were true and correct as of the
Acquisition Closing Date and (c) any material consent, authorization,
order or approval of any Person required in connection with the
transactions contemplated by the Acquisition Agreement has been
obtained and is in full force and effect.
6.21.3. In the case of any such acquisition for which the Cash
Purchase Price is equal to or exceeds $20,000,000, in addition to
meeting the requirements of Sections 6.21.1 and 6.21.2 the Borrower
shall receive prior written consent of the Required Lenders and provide
all further documentation and meet all further requirements reasonably
requested by the Agent.
6.22. PERMITTED ACQUISITIONS; EQUITY-MODEL. Any Obligor may make any
acquisition that complies with all requirements of Sections 6.21.1 or 6.21.2 (as
appropriate) except Section 6.21.1(e) (relating to Management Services
Agreements), and Sections 6.21.1(f) and 6.21.2(a) (relating to a Permitted
Acquisition Compliance Certificate); PROVIDED, HOWEVER, that
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(i) aggregate amount of borrowings made under Section 2.1, the proceeds of which
are used to fund the obligations of the Obligors under acquisitions and
purchases made under this Section 6.22, shall not exceed $40,000,000 and (ii)
the Borrower provides to the Agent, not later than five days after the
Acquisition Closing Date, a certificate in the form of either EXHIBIT 6.22(A) or
EXHIBIT 6.22(B), as appropriate.
6.23. YEAR 2000 COMPLIANT. In a timely manner, but not later than June
30, 1999, the Borrower shall certify to the Agent in writing that it and its
Subsidiaries are Year 2000 Compliant.
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to extend
credit to the Borrower hereunder, each of the Obligors jointly and severally
represents and warrants as follows:
7.1. ORGANIZATION AND BUSINESS.
7.1.1. THE BORROWER. The Borrower is a duly organized and
validly existing corporation, in good standing under the laws of
Delaware with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) grant the Agent for the
benefit of the Lenders the security interests in the Credit Security
owned by it to secure the Credit Obligations and (c) own its properties
and carry on the business now conducted or proposed to be conducted by
it. Certified copies of the Charter and By-laws of the Borrower have
been previously delivered to the Agent and are correct and complete.
Exhibit 7.1, as from time to time hereafter supplemented in accordance
with Sections 6.4.1 and 6.4.2, sets forth, as of the later of the date
hereof or as of the end of the most recent fiscal quarter for which
financial statements are required to be furnished in accordance with
such Sections, (i) the jurisdiction of incorporation of the Borrower,
(ii) the address of the Borrower's principal executive office and chief
place of business, (iii) each name, including any trade name, under
which the Borrower conducts its business and (iv) the jurisdictions in
which the Borrower keeps tangible personal property.
7.1.2. SUBSIDIARIES. Each Subsidiary of the Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all power and authority,
corporate or otherwise, necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b)
guarantee the Credit Obligations, (c) grant the Lenders the security
interest in the Credit Security owned by such Subsidiary to secure the
Credit Obligations and (d) own its properties and carry on the business
now conducted or proposed to be conducted by it; PROVIDED, HOWEVER,
that the foregoing clauses (a), (b) and (c) shall not apply to any such
Subsidiary that is not a Guarantor. Certified copies of the Charter and
By-laws of each Subsidiary of the Borrower have been previously
delivered to the Agent and are
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correct and complete. Exhibit 7.1, as from time to time hereafter
supplemented in accordance with Sections 6.4.1 and 6.4.2, sets forth,
as of the later of the date hereof or as of the end of the most recent
fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Borrower, (ii)
the address of the chief executive office and principal place of
business of each such Subsidiary, (iii) each name under which each such
Subsidiary conducts its business; (iv) each jurisdiction in which each
such Subsidiary keeps tangible personal property, and (v) the number of
authorized and issued shares and ownership of each such Subsidiary.
7.1.3. QUALIFICATION. Each of the Borrower and its
Subsidiaries is duly and legally qualified to do business as a foreign
corporation or other entity and is in good standing in each state or
jurisdiction in which such qualification is required and is duly
authorized, qualified and licensed under all laws, regulations,
ordinances or orders of public authorities, or otherwise, to carry on
its business in the places and in the manner in which it is conducted,
except for failures to be so qualified, authorized or licensed which
would not in the aggregate result, or create a material risk of
resulting, in any Material Adverse Change.
7.1.4. CAPITALIZATION. No options, warrants, conversion
rights, preemptive rights or other statutory or contractual rights to
purchase shares of capital stock or other securities of any Subsidiary
now exist, nor has any Subsidiary authorized any such right, nor is any
Subsidiary obligated in any other manner to issue shares of its capital
stock or other securities. Attached as Exhibit 7.1.4. is a list of all
Persons who, together with such Person's Affiliates, hold greater than
5% of the outstanding capital stock of the Borrower, together with the
number of shares held by each such Person.
7.2. FINANCIAL STATEMENTS AND OTHER INFORMATION; MATERIAL AGREEMENTS.
7.2.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Borrower has previously furnished to the Lenders copies of the
following:
(a) The audited Consolidated balance sheets of the Obligors as
of December 31, 1997 and the audited statements of income, of changes
in shareholders' equity and of cash flows of the Obligors for the
fiscal year of the Borrower then ended.
(b) The unaudited balance sheets of the Obligors on a
Consolidated basis as of February 28, 1998 and the unaudited statements
of income, of changes in shareholders' equity and of cash flows of the
Company and its Subsidiaries on a Consolidated basis for the portion of
the fiscal year then ended.
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(c) Calculations demonstrating pro forma compliance with the
Computation Covenants as of the end of the most recent quarter, as
applicable, preceding the date hereof.
(d) The three-year financial and operational projections for
the Borrower and its Subsidiaries provided in the Confidential
Information Memorandum.
The audited financial statements (including the notes thereto)
referred to in clause (a) above were prepared in accordance with GAAP
and fairly present the financial position of the Borrower and its
Subsidiaries on a Consolidated basis at the date thereof and the
results of their operations for the periods covered thereby. The
unaudited financial statements referred to in clause (b) above were
prepared in accordance with GAAP and fairly present the financial
position of the Borrower and its Subsidiaries on a Consolidated basis
at the respective dates thereof and the results of their operations for
the periods covered thereby, subject to normal year-end audit
adjustment and the addition of footnotes in the case of interim
financial statements. Neither the Borrower nor any of its Subsidiaries
has any known contingent liability material to the Borrower and its
Subsidiaries on a Consolidated basis which is not reflected in the
balance sheets referred to in clauses (a) or (b) above (or delivered
pursuant to Sections 6.4.1 or 6.4.2) or in the notes thereto.
In the Borrower's judgment, the financial and operational
projections referred to in clause (d) above constitute a reasonable
basis as of the Initial Closing Date for the assessment of the future
performance of the Borrower and its Subsidiaries during the periods
indicated therein, it being understood that any projected financial
information represents an estimate, based on various assumptions, of
future results of operations which may or may not in fact occur.
7.2.2. MATERIAL AGREEMENTS. The Borrower has previously
furnished to the Lenders correct and complete copies, including all
exhibits, schedules and amendments thereto, of the agreements, each as
in effect on the date hereof, listed in EXHIBIT 7.2.2 (the "MATERIAL
AGREEMENTS").
7.3. AGREEMENTS RELATING TO FINANCING DEBT, INVESTMENTS, ETC. EXHIBIT
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated in
EXHIBIT 7.3, as so supplemented) of all Financing Debt of the Borrower and its
Subsidiaries and all agreements which relate to such Financing Debt, (b) all
Liens and Guarantees with respect to such Financing Debt and (c) all agreements
which directly or indirectly require the Borrower or any Subsidiary to make any
Investment. The Borrower has furnished the Lenders with correct and complete
copies of any agreements described in clauses (a), (b) and (c) above requested
by the Required Lenders.
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7.4. CHANGES IN CONDITION. Since December 31, 1997 no Material Adverse
Change has occurred and between December 31, 1997 and the date hereof, except as
set forth in EXHIBIT 7.4, neither the Borrower nor any of its Subsidiaries has
entered into any material transaction outside the ordinary course of business
except for the transactions contemplated by or otherwise permitted or authorized
pursuant to this Agreement and the Material Agreements.
7.5. TITLE TO ASSETS. The Borrower and its Subsidiaries have good and
marketable title to, or rights to use under lease all assets necessary for or
used in the operations of their business as now conducted by them and reflected
in the most recent balance sheet referred to in Section 7.2.1 (or the balance
sheet most recently furnished to the Lenders pursuant to Sections 6.4.1 or
6.4.2), and to all assets acquired subsequent to the date of such balance sheet,
subject to no Liens except for Liens permitted by Section 6.8 and except for
assets disposed of as permitted by Section 6.11.
7.6. OPERATIONS IN CONFORMITY WITH LAW, ETC. The operations of the
Borrower and its Subsidiaries as now conducted or proposed to be conducted are
not in violation of, nor is the Borrower or any of its Subsidiaries in default
under, any Legal Requirement presently in effect, except for such violations and
defaults as do not and will not, in the aggregate, result, or create a material
risk of resulting, in any Material Adverse Change. Neither the Borrower nor any
of its Subsidiaries has received notice of any such violation or default or has
knowledge of any basis on which the operations of the Borrower or its
Subsidiaries, as now conducted and as currently proposed to be conducted after
the date hereof, would be held so as to violate or to give rise to any such
violation or default.
7.7. LITIGATION. Except as otherwise set forth in EXHIBIT 7.7, no
litigation, at law or in equity, or any proceeding before any court, board or
other governmental or administrative agency or any arbitrator is pending or, to
the knowledge of the Borrower or any of its Subsidiaries, threatened which may
involve any material risk of any final judgment, order or liability which, after
giving effect to any applicable insurance, has resulted, or creates a material
risk of resulting, in any Material Adverse Change or which seeks to enjoin the
consummation, or which questions the validity, of any of the transactions
contemplated by this Agreement or any other Credit Document. No judgment, decree
or order of any court, board or other governmental or administrative agency or
any arbitrator has been issued against or binds the Borrower or any of
Subsidiaries which has resulted, or creates a material risk of resulting, in any
Material Adverse Change.
7.8. AUTHORIZATION AND ENFORCEABILITY. Each of the Obligors has taken
all corporate action required to execute, deliver and perform this Agreement and
each other Credit Document to which it is party. No consent of stockholders of
any Obligor is necessary in order to authorize the execution, delivery or
performance of this Agreement or any other Credit Document to which such Obligor
is party. Each of this Agreement and each other Credit Document constitutes the
legal, valid and binding obligation of each Obligor party thereto and is
enforceable against such Obligor in accordance with its terms.
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7.9. NO LEGAL OBSTACLE TO AGREEMENTS. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making of any
borrowings hereunder, nor the guaranteeing of the Credit Obligations, nor the
securing of the Credit Obligations with the Credit Security, nor the
consummation of any transaction referred to in or contemplated by this Agreement
or any other Credit Document, nor the fulfillment of the terms hereof or thereof
or of any other agreement, instrument, deed or lease contemplated by this
Agreement or any other Credit Document, has constituted or resulted in or will
constitute or result in:
(a) any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Borrower, any of its
Subsidiaries or any other Obligor is a party or by which it is bound,
or of the Charter or By-laws of the Borrower, any of its Subsidiaries
or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Borrower, any
of its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or
lease of any Lien (other than Liens on the Credit Security which secure
the Credit Obligations) upon any of the assets of the Borrower, any of
its Subsidiaries or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation
of the Borrower, any of its Subsidiaries or any other Obligor under any
Charter, By-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Borrower, any of its Subsidiaries or any other
Obligor in connection with the execution, delivery and performance of this
Agreement, the Notes or any other Credit Document, the transactions contemplated
hereby or thereby, the making of any borrowing hereunder, the guaranteeing of
the Credit Obligations or the securing of the Credit Obligations with the Credit
Security.
7.10. DEFAULTS. Neither the Borrower nor any of its Subsidiaries is in
default under any provision of its Charter or By-laws or of this Agreement or
any other Credit Document. Neither the Borrower nor any of its Subsidiaries is
in default under any provision of any agreement, instrument, deed or lease to
which it is party or by which it or its property is bound. Neither the Borrower
nor any of its Subsidiaries has violated any law, judgment, decree or
governmental order, rule or regulation, in each case so as to result, or create
a material risk of resulting, in any Material Adverse Change.
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7.11. LICENSES, ETC. The Borrower and its Subsidiaries have all
patents, patent applications, patent licenses, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, licenses,
franchises, permits, authorizations and other rights as are necessary for the
conduct of the business of the Borrower and its Subsidiaries as now conducted by
them. All of the foregoing are in full force and effect in all material
respects, and each of the Borrower and its Subsidiaries is in substantial
compliance with the foregoing without any known conflict with the valid rights
of others which has resulted, or creates a material risk of resulting, in any
Material Adverse Change. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
license, franchise or other right or which affects the rights of any of the
Borrower and its Subsidiaries thereunder so as to result, or to create a
material risk of resulting, in any Material Adverse Change. No litigation or
other proceeding or dispute exists with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or creates a material risk of resulting, in any Material Adverse
Change.
7.12. TAX RETURNS. Each of the Borrower and its Subsidiaries has filed
all material tax and information returns which are required to be filed by it
and has paid, or made adequate provision for the payment of, all taxes which
have or may become due pursuant to such returns or to any assessment received by
it. Neither the Borrower nor any of its Subsidiaries knows of any material
additional assessments or any basis therefor. Neither the Borrower nor any of
its Subsidiaries reasonably believes that the charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are adequate.
7.13. CERTAIN BUSINESS REPRESENTATIONS.
7.13.1. LABOR RELATIONS. No dispute or controversy between the
Borrower or any of its Subsidiaries and any of their respective
employees has resulted, or is reasonably likely to result, in any
Material Adverse Change, and neither the Borrower nor any of its
Subsidiaries anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result, in any
Material Adverse Change. Each of the Borrower and its Subsidiaries is
in compliance in all material respects with all federal and state laws
with respect to (a) non-discrimination in employment with which the
failure to comply, in the aggregate, has resulted, or creates a
material risk of resulting, in a Material Adverse Change and (b) the
payment of wages.
7.13.2. ANTITRUST. Each of the Borrower and its Subsidiaries
is in compliance in all material respects with all federal and state
antitrust laws relating to its business and the geographic
concentration of its business.
7.13.3. CONSUMER PROTECTION. Neither the Borrower nor any of
its Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending), with
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which the failure to comply, in the aggregate, has resulted, or creates
a material risk of resulting, in a Material Adverse Change.
7.13.4. BURDENSOME OBLIGATIONS. Neither the Borrower nor any
of its Subsidiaries is party to or bound by any agreement, instrument,
deed or lease or is subject to any Charter, By-law or other
restriction, commitment or requirement which, in the opinion of the
management of such Person, is so unusual or burdensome as in the
foreseeable future to result, or create a material risk of resulting,
in a Material Adverse Change.
7.13.5. FUTURE EXPENDITURES. Neither the Borrower nor any of
its Subsidiaries anticipate that the future expenditures, if any, by
the Borrower and its Subsidiaries needed to meet the provisions of any
federal, state or foreign governmental statutes, orders, rules or
regulations will be so burdensome as to result, or create a material
risk of resulting, in any Material Adverse Change.
7.14. ENVIRONMENTAL REGULATIONS.
7.14.1. ENVIRONMENTAL COMPLIANCE. Each of the Borrower and its
Subsidiaries is in compliance in all material respects with the Clean
Air Act, the Federal Water Pollution Control Act, the Marine Protection
Research and Sanctuaries Act, RCRA, CERCLA and any other Environmental
Law in effect in any jurisdiction in which any properties of the
Borrower and its Subsidiaries are located or where any of them conducts
its business, and with all applicable published rules and regulations
(and applicable standards and requirements) of the federal
Environmental Protection Agency and of any similar agencies in states
or foreign countries in which the Borrower and its Subsidiaries conduct
their businesses other than those which in the aggregate have not
resulted, and do not create a material risk of resulting, in a Material
Adverse Change.
7.14.2. ENVIRONMENTAL LITIGATION. No suit, claim, action or
proceeding of which any Obligor has been given notice or otherwise has
knowledge is now pending before any court, governmental agency or board
or other forum, or to the knowledge of any of the Borrower and its
Subsidiaries, threatened by any Person (nor to the knowledge of any of
the Borrower and its Subsidiaries, does any factual basis exist
therefor) for, and none of the Borrower and its Subsidiaries have
received written correspondence from any federal, state or local
governmental authority with respect to:
(a) noncompliance by the Borrower or any Subsidiary thereof
with any Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Borrower or any Subsidiary thereof
(including products made of, containing or
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incorporating asbestos, lead or other hazardous materials, commodities
or toxic substances); or
(c) the release into the environment by the Borrower or any
Subsidiary thereof of any Hazardous Material generated by the Borrower
or any Subsidiary thereof whether or not occurring at or on a site
owned, leased or operated by the Borrower or any Subsidiary thereof.
7.14.3. ENVIRONMENTAL CONDITION OF PROPERTIES. None of the
properties owned or leased by the Borrower or any Subsidiary thereof
has been used as a treatment, storage or disposal site, other than as
disclosed in EXHIBIT 7.14. No Hazardous Material is present in any real
property currently or formerly owned or operated by the Borrower or any
Subsidiary thereof except that which has not resulted, and does not
create a material risk of resulting, in a Material Adverse Change.
7.15. PENSION PLANS. Each Plan (other than a Multiemployer Plan) and,
to the knowledge of each of the Borrower and its Subsidiaries, each
Multiemployer Plan is in material compliance with the applicable provisions of
ERISA and the Code. Each Multiemployer Plan and each Plan that constitutes a
"defined benefit plan" (as defined in ERISA) are set forth in EXHIBIT 7.15. Each
ERISA Group Person has met all of the funding standards applicable to all Plans
that are not Multiemployer Plans, and no condition exists which would permit the
institution of proceedings to terminate any Plan that is not a Multiemployer
Plan under section 4042 of ERISA. To the best knowledge of the Borrower and each
of its Subsidiaries, no Plan that is a Multiemployer Plan is currently insolvent
or in reorganization or has been terminated within the meaning of ERISA.
7.16. ACQUISITION AGREEMENT, ETC. Each Acquisition Agreement is a valid
and binding contract as to the Borrower and each Subsidiary party thereto and,
to the best of the Borrower's knowledge, as to the Sellers party thereto. The
Borrower and its Subsidiaries are not in default in any material respect of its
obligations under any Acquisition Agreement and, to the best of the Borrower's
knowledge, the Sellers party thereto are not in default in any material respect
of any of their obligations thereunder. The representations and warranties of
the Borrower set forth in each Acquisition Agreement are true and correct in all
material respect as of the date hereof with the same force and effect as though
made on and as of the date hereof. To the best of the Borrower's knowledge all
of the representations and warranties of the Sellers set forth in each
Acquisition Agreement are true and correct in all material respects as of the
date hereof with the same force and effect as though made on and as of the date
hereof.
7.17. FOREIGN TRADE REGULATIONS; GOVERNMENT REGULATION; MARGIN STOCK.
7.17.1. FOREIGN TRADE REGULATIONS. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making
by the Borrower of any
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borrowings hereunder, nor the guaranteeing of the Credit Obligations by
any Guarantor, nor the securing of the Credit Obligations with the
Credit Security, has constituted or resulted in or will constitute or
result in the violation of any Foreign Trade Regulation.
7.17.2. GOVERNMENT REGULATION. Neither the Borrower nor any
Subsidiary, nor any Person controlling the Borrower or any of its
Subsidiaries or under common control with the Borrower or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act,
the Interstate Commerce Act or any statute or regulation which
regulates the incurring by the Borrower or any of its Subsidiaries of
Financing Debt as contemplated by this Agreement and the other Credit
Documents.
7.17.3. MARGIN STOCK. Neither the Borrower nor any of its
Subsidiaries owns any Margin Stock.
7.18. DISCLOSURE. Neither this Agreement nor any other Credit Document
to be furnished to the Lenders by or on behalf of the Borrower or any of its
Subsidiaries in connection with the transactions contemplated hereby or by such
Credit Document contains any untrue statement of material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
No fact is actually known to Borrower or any of its Subsidiaries which has
resulted, or in the future (so far as the Borrower or any of its Subsidiaries
can reasonably foresee) will result, or creates a material risk of resulting, in
any Material Adverse Change, except to the extent that present or future general
economic conditions may result in a Material Adverse Change.
7.19. YEAR 2000 COMPLIANCE.
7.19.1. Borrower and its Subsidiaries have (i) undertaken a
detailed inventory, review and assessment of all areas within its
business and operations that could be adversely affected by the failure
of the Borrower or its Subsidiaries to be Year 2000 Compliant on a
timely basis, (ii) developed a detailed plan and timeline for becoming
Year 2000 Compliant on a timely basis, and (iii) implemented that plan
in accordance with that timetable in all material respects.
7.19.2. Borrower and its Subsidiaries have developed a plan
and timeline for making written inquiry of their key suppliers, vendors
and customers as to whether such persons will be Year 2000 Compliant in
all material respects and have materially implemented that plan in
accordance with that timetable. For purposes hereof, "key suppliers,
vendors and customers" refers to those suppliers, vendors and customers
of Borrower and its Subsidiaries whose business failure or significant
disruption would,
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with reasonable probability, result in a material adverse change in the
business, properties or financial condition of the Borrower or its
Subsidiaries.
7.19.3. Based on the foregoing, Borrower reasonably believes
that it and its Subsidiaries will be Year 2000 Compliant on a timely
basis.
8. DEFAULTS.
8.1. EVENTS OF DEFAULT. The following events are referred to as "EVENTS
OF DEFAULT":
8.1.1. PAYMENT. The Borrower shall fail to make any payment in
respect of: (a) any interest or any fee on or in respect of any of the
Credit Obligations owed by it as the same shall become due and payable,
and such failure shall continue for a period of three Banking Days, or
(b) any Credit Obligation with respect to payments made by any Letter
of Credit Issuer under any Letter of Credit or any draft drawn
thereunder within three Banking Days after demand therefor by such
Letter of Credit Issuer or (c) principal of any of the Credit
Obligations owed by it as the same shall become due, whether at
maturity or by acceleration or otherwise.
8.1.2. SPECIFIED COVENANTS. The Borrower or any of its
Subsidiaries shall fail to perform or observe any of the provisions of
Section 6.4.5 or Sections 6.5 through 6.23.
8.1.3. OTHER COVENANTS. The Borrower, any of its Subsidiaries
or any other Obligor shall fail to perform or observe any other
covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Credit Document, and such failure
shall not be rectified or cured to the written satisfaction of the
Required Lenders within 30 days after the earlier of (a) notice thereof
by the Agent to the Borrower or (b) a Financial Officer shall have
actual knowledge thereof.
8.1.4. REPRESENTATIONS AND WARRANTIES. Any representation or
warranty of or with respect to the Borrower or any of its Subsidiaries
or any other Obligor made to the Lenders or the Agent in, pursuant to
or in connection with this Agreement or any other Credit Document shall
be materially false on the date as of which it was made.
8.1.5. CROSS DEFAULT, ETC.
(a) The Borrower or any of Subsidiaries shall fail to make any
payment when due (after giving effect to any applicable grace periods)
in respect of any Capitalized Lease or in respect of any Financing Debt
(other than the Credit Obligations) outstanding in an aggregate amount
of principal (whether or not due) and accrued interest exceeding
$250,000;
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(b) the Borrower or any of its Subsidiaries shall fail to
perform or observe the terms of any agreement or instrument relating to
any Capitalized Lease or any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $250,000, and such failure
shall continue, without having been duly cured, waived or consented to,
beyond the period of grace, if any, specified in such agreement or
instrument, and such failure shall permit the acceleration of such
Financing Debt or Capitalized Lease;
(c) all or any part of any Financing Debt (other than the
Credit Obligations) outstanding in an aggregate amount of principal
(whether or not due) and accrued interest exceeding $250,000 of the
Borrower or any of its Subsidiaries shall be accelerated or shall
become due or payable prior to its stated maturity (except with respect
to voluntary prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Borrower or any of its
Subsidiaries securing any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $250,000 shall be enforced
by foreclosure or similar action; or
(e) any holder of any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $250,000 shall exercise any
right of rescission or put right with respect thereto.
8.1.6. OWNERSHIP; LIQUIDATION; ETC. Except as permitted by
either Section 6.11 or Section 6.13:
(a) the Borrower shall cease to own, directly or indirectly,
all the capital stock or other beneficial interests of each of the
Guarantors;
(b) any transaction or series of transactions shall occur as a
result of which the Persons listed on EXHIBIT 8.1.6 shall sell all or
substantially all of the Company's capital stock for which they are the
beneficial owners to any other single beneficial owner (together with
its affiliates), as such terms are defined in Rule 13d-3 or any other
successor rule or regulation promulgated under the Exchange Act, and
such transactions are exempt from registration under the Securities
Act; or
(c) the Borrower, any of its Subsidiaries or any other Obligor
shall initiate any action to dissolve, liquidate or otherwise terminate
its existence.
8.1.7. ENFORCEABILITY, ETC. Any Credit Document shall cease
for any reason (other than the scheduled termination thereof in
accordance with its terms) to be enforceable in accordance with its
terms or in full force and effect; or the Borrower,
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any of its Subsidiaries or any other Obligor in respect of any Credit
Document shall so assert in a judicial or similar proceeding; or the
security interests created by this Agreement or any other Credit
Documents shall cease to be enforceable and of the same effect and
priority purported to be created hereby.
8.1.8. JUDGMENTS. A final judgment (a) which, with other
outstanding final judgments against the Borrower or any of its
Subsidiaries, exceeds an aggregate of $250,000 in excess of applicable
insurance coverage shall be rendered against the Borrower or any of its
Subsidiaries, or (b) which grants injunctive relief that results, or
creates a material risk of resulting, in a Material Adverse Change and
in either case if, (i) within 60 days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed
pending appeal or (ii) within 60 days after the expiration of any such
stay, such judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section
4043 of ERISA) shall have occurred that reasonably could be expected to
result in termination of a Material Plan or the appointment by the
appropriate United States District Court of a trustee to administer any
Material Plan or the imposition of a Lien in favor of a Material Plan;
or any ERISA Group Person shall fail to pay when due amounts
aggregating in excess of $100,000 which it shall have become liable to
pay to the PBGC or to a Material Plan under Title IV of ERISA; or
notice of intent to terminate a Material Plan shall be filed under
Title IV of ERISA by any ERISA Group Person or administrator; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate
or to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material Plan
against any ERISA Group Person to enforce section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated.
8.1.10. BANKRUPTCY, ETC. The Borrower, any of its Subsidiaries
or any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code that shall not have been
dismissed within 60 days after the date on which such petition is
filed, or (ii) file an answer or other pleading within such 60-day
period admitting or failing to deny the material allegations of such a
petition or seeking, consenting to or acquiescing in the relief therein
provided, or (iii) have entered against it an order for relief in any
involuntary case commenced under the Bankruptcy Code;
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(c) seek relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent to or acquiesce in
such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering
or approving its liquidation or reorganization as a debtor or any
modification or alteration of the rights of its creditors or (iii)
assuming custody of, or appointing a receiver or other custodian for,
all or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the
appointment of, or suffer to exist a receiver or other custodian for,
all or a substantial portion of its property.
8.1.11. ACQUISITIONS. The Borrower shall fail to comply with
the requirements of Section 6.21.1(c) with respect to any Permitted
Acquisition.
8.2. CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT. If any one or more
Events of Default shall occur and be continuing, then in each and every such
case:
8.2.1. TERMINATE OBLIGATION TO EXTEND CREDIT. The Agent on
behalf of the Lenders may (and upon written request of the Lenders
holding at least one-third of the Aggregate Percentage Interests in the
Loan the Agent shall) terminate the obligations of the Lenders to make
any further extensions of credit under the Credit Documents by
furnishing notice of such termination to the Borrower; PROVIDED,
HOWEVER, that if a Bankruptcy Default shall have occurred, the
obligations of the Lenders to make any further extensions of credit
under the Credit Documents shall immediately terminate..
8.2.2. SPECIFIC PERFORMANCE; EXERCISE OF RIGHTS. The Agent on
behalf of the Lenders may (and upon written request of the Lenders
holding at least one-third of the Aggregate Percentage Interests in the
Loan the Agent shall) proceed to protect and enforce the Lenders'
rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant or
condition contained in this Agreement or any other Credit Document or
in any instrument or assignment delivered to the Lenders pursuant to
this Agreement or any other Credit Document, or in aid of the exercise
of any power granted in this Agreement or any other Credit Document or
any such instrument or assignment.
8.2.3. ACCELERATION. The Agent on behalf of the Lenders may
(and upon written request of the Lenders holding at least one-third of
the Aggregate Percentage Interests in the Loan the Agent shall) by
notice in writing to the Borrower (a) declare
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all or any part of the unpaid balance of the Credit Obligations then
outstanding to be immediately due and payable, and (b) require the
Borrower immediately to deposit with the Agent in cash an amount equal
to the then Letter of Credit Exposure (which cash shall be held and
applied as provided in Section 4.5), and thereupon such unpaid balance
or part thereof and such amount equal to the Letter of Credit Exposure
shall become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby expressly
waived; PROVIDED, HOWEVER, that if a Bankruptcy Default shall have
occurred, the unpaid balance of the Credit Obligations shall
automatically become immediately due and payable.
8.2.4. ENFORCEMENT OF PAYMENT; CREDIT SECURITY; SETOFF. The
Agent on behalf of the Lenders may (and upon written request of the
Lenders holding at least one-third of the Aggregate Percentage
Interests in the Loan the Agent shall) proceed to enforce payment of
the Credit Obligations in such manner as it may elect, to cancel, or
instruct other Letter of Credit Issuers to cancel, any outstanding
Letters of Credit which permit the cancellation thereof and to realize
upon any and all rights in the Credit Security. The Lenders may offset
and apply toward the payment of the Credit Obligations (and/or toward
the curing of any Event of Default) any Indebtedness from the Lenders
to the respective Obligors, including any Indebtedness represented by
deposits in any account maintained with the Lenders, regardless of the
adequacy of any security for the Credit Obligations. The Lenders shall
have no duty to determine the adequacy of any such security in
connection with any such offset.
8.2.5. CUMULATIVE REMEDIES. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
8.2.6. EXERCISE OF CALL RIGHT. The Company shall, upon the
reasonable request of the Agent, exercise its rights (i) to purchase
the share of stock of AmeriPath Kentucky, Inc. owned by James E.
Dunnington, M.D. pursuant to Section 3 of the Shareholders' Agreement
among AmeriPath Kentucky, Inc., James E. Dunnington, M.D. and the
Company and (ii) to purchase the shares of stock of AmeriPath
Pittsburgh, P.C. owned by Alan Levin, M.D. pursuant to the Shareholders
Agreement among AmeriPath Pittsburgh, P.C., Dr. Levin and the Company.
8.3. ANNULMENT OF DEFAULTS. Any Default or Event of Default shall be
deemed not to exist or to have occurred for any purpose of the Credit Documents
if the Required Lenders or the Agent (with the consent of the Required Lenders)
shall have waived such Default or Event of Default in writing, stated in writing
that the same has been cured to such Lenders' reasonable satisfaction or entered
into an amendment to this Agreement which by its express terms cures such Event
of Default, at which time such Event of Default shall no longer be deemed to
exist or to have continued. No such action by the Lenders or the Agent shall
extend to or affect any subsequent Event of Default or impair any rights of the
Lenders upon the
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occurrence thereof. The making of any extension of credit during the existence
of any Default or Event of Default shall not constitute a waiver thereof.
8.4. WAIVERS. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Borrower and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of
any Lender in the enforcement of its rights under this Agreement, the
Notes or any other Credit Document;
(c) any and all notices of every kind and description which
may be required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full),
which it may now or hereafter have with respect to its liability under
this Agreement, the Notes or any other Credit Document or with respect
to the Credit Obligations.
9. GUARANTEES.
9.1. GUARANTEES OF CREDIT OBLIGATIONS. Each Guarantor unconditionally
jointly and severally guarantees that the Credit Obligations will be performed
and will be paid in full in immediately available funds when due and payable,
whether at the stated or accelerated maturity thereof or otherwise, this
guarantee being a guarantee of payment and not of collectability and being
absolute and in no way conditional or contingent. In the event any part of the
Credit Obligations shall not have been so paid in full when due and payable,
each Guarantor will, immediately upon notice by the Agent or, without notice,
immediately upon the occurrence of a Bankruptcy Default, pay or cause to be paid
to the Agent for the account of each Lender in accordance with the Lenders'
respective Aggregate Percentage Interests in the Loan the amount of such Credit
Obligations which are then due and payable and unpaid. The obligations of each
Guarantor hereunder shall not be affected by the invalidity, unenforceability or
irrecoverability of any of the Credit Obligations as against any other Obligor,
any other guarantor thereof or any other Person. For purposes hereof, the Credit
Obligations shall be due and payable when and as the same shall be due and
payable under the terms of this Agreement or any other Credit Document
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
9.2. CONTINUING OBLIGATION. Each Guarantor acknowledges that the
Lenders and the Agent have entered into this Agreement (and, to the extent that
the Lenders or the Agent may
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enter into any future Credit Document, will have entered into such agreement) in
reliance on this Section 9 being a continuing irrevocable agreement, and such
Guarantor agrees that its guarantee may not be revoked in whole or in part. The
obligations of the Guarantors hereunder shall terminate when the commitment of
the Lenders to extend credit under this Agreement shall have terminated and all
of the Credit Obligations have been indefeasibly paid in full in immediately
available funds and discharged; PROVIDED, HOWEVER, that:
(a) if a claim is made upon the Lenders at any time for
repayment or recovery of any amounts or any property received by the
Lenders from any source on account of any of the Credit Obligations and
the Lenders repay or return any amounts or property so received
(including interest thereon to the extent required to be paid by the
Lenders) or
(b) if the Lenders become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantors shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Lenders become
liable (such amounts being deemed part of the Credit Obligations) to the same
extent as if such amounts or property had never been received by the Lenders,
notwithstanding any termination hereof or the cancellation of any instrument or
agreement evidencing any of the Credit Obligations. Not later than five days
after receipt of notice from the Agent, the Guarantors shall jointly and
severally pay to the Agent an amount equal to the amount of such repayment or
return for which the Lenders have so become liable. Payments hereunder by a
Guarantor may be required by the Agent on any number of occasions.
9.3. WAIVERS WITH RESPECT TO CREDIT OBLIGATIONS. Except to the extent
expressly required by this Agreement or any other Credit Document, each
Guarantor waives, to the fullest extent permitted by the provisions of
applicable law, all of the following (including all defenses, counterclaims and
other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment
of any of the Credit Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that
credit has been extended in reliance on the Guarantor's guarantee of
the Credit Obligations;
(c) notice of any Default or of any inability to enforce
performance of the obligations of the Company or any other Person with
respect to any Credit Document, or notice of any acceleration of
maturity of any Credit Obligations;
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(d) demand for performance or observance of, and any
enforcement of any provision of, the Credit Obligations, this Agreement
or any other Credit Document or any pursuit or exhaustion of rights or
remedies with respect to any Credit Security or against the Company or
any other Person in respect of the Credit Obligations or any
requirement of diligence or promptness on the part of the Agent or the
Lenders in connection with any of the foregoing;
(e) any act or omission on the part of the Agent or the
Lenders which may impair or prejudice the rights of the Guarantor,
including rights to obtain subrogation, exoneration, contribution,
indemnification or any other reimbursement from the Company or any
other Person, or otherwise operate as a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of
any security interest in any Credit Security or any other action which
harms or impairs the value of, or any failure to preserve or protect
the value of, any Credit Security;
(g) any statute of limitations or any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than the obligation of
the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Lenders from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Agent's or the Lenders' commencement or completion of any foreclosure
action, whether judicially, by exercise of power of sale or otherwise,
or any other law which would otherwise require any election of remedies
by the Agent or the Lenders;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other
than payment) which the Company may now or hereafter have to the
payment of the Credit Obligations, together with all suretyship
defenses, which could otherwise be asserted by such Guarantor.
Each Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 9.3.
No delay or omission on the part of the Agent or the Lenders in
exercising any right under this Agreement or any other Credit Document or under
any guarantee of the Credit Obligations or with respect to the Credit Security
shall operate as a waiver or relinquishment of such right. No action which the
Agent or the Lenders or the Company may take or refrain from taking with respect
to the Credit Obligations, including any amendments thereto or
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modifications thereof or waivers with respect thereto, shall affect the
provisions of this Agreement or the obligations of the Guarantor hereunder. None
of the Lenders' or the Agent's rights shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of any Obligor, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof which the Agent or the Lenders
may have or otherwise be charged with.
9.4. LENDERS' POWER TO WAIVE, ETC. Each Guarantor grants to the Lenders
full power in their discretion, without notice to or consent of such Guarantor,
such notice and consent being expressly waived to the fullest extent permitted
by applicable law, and without in any way affecting the liability of the
Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to
consent to any amendment to or modification or termination of any terms
or provisions of, or to give any waiver in respect of, this Agreement,
any other Credit Document, the Credit Security, the Credit Obligations
or any guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Credit Obligations (for any
duration), and any other indulgence with respect thereto, and to effect
any total or partial release (by operation of law or otherwise),
discharge, compromise or settlement with respect to the obligations of
the Obligors or any other Person in respect of the Credit Obligations,
whether or not rights against the Guarantor under this Agreement are
reserved in connection therewith;
(c) To take security in any form for the Credit Obligations,
and to consent to the addition to or the substitution, exchange,
release or other disposition of, or to deal in any other manner with,
any part of any property contained in the Credit Security whether or
not the property, if any, received upon the exercise of such power
shall be of a character or value the same as or different from the
character or value of any property disposed of, and to obtain, modify
or release any present or future guarantees of the Credit Obligations
and to proceed against any of the Credit Security or such guarantees in
any order;
(d) To collect or liquidate or realize upon any of the Credit
Obligations or the Credit Security in any manner or to refrain from
collecting or liquidating or realizing upon any of the Credit
Obligations or the Credit Security; and
(e) To extend credit under this Agreement, any other Credit
Document or otherwise in such amount as the Lenders may determine,
including increasing the amount of credit and the interest rate and
fees with respect thereto, even though the condition of the Obligors
(financial or otherwise on an individual or Consolidated basis) may
have deteriorated since the date hereof.
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9.5. INFORMATION REGARDING THE BORROWER, ETC. Each Guarantor has made
such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement and is fully satisfied that it understands all such
risks. Each Guarantor waives any obligation which may now or hereafter exist on
the part of the Agent or the Lenders to inform it of the risks being undertaken
by entering into this Agreement or of any changes in such risks and, from and
after the date hereof, each Guarantor undertakes to keep itself informed of such
risks and any changes therein. Each Guarantor expressly waives any duty which
may now or hereafter exist on the part of the Agent or the Lenders to disclose
to the Guarantor any matter related to the business, operations, character,
collateral, credit, condition (financial or otherwise), income or prospects of
the Borrower or its Affiliates or their properties or management, whether now or
hereafter known by the Agent or the Lenders. Each Guarantor represents, warrants
and agrees that it assumes sole responsibility for obtaining from the Borrower
all information concerning this Agreement and all other Credit Documents and all
other information as to the Borrower and its Affiliates or their properties or
management as such Guarantor deems necessary or desirable.
9.6. CERTAIN GUARANTOR REPRESENTATIONS. Each Guarantor represents
that:
(a) it is in its best interest and in pursuit of the purposes
for which it was organized as an integral part of the business
conducted and proposed to be conducted by the Borrower and its
Subsidiaries, and reasonably necessary and convenient in connection
with the conduct of the business conducted and proposed to be conducted
by them, to induce the Lenders to enter into this Agreement and to
extend credit to the Borrower by making the Guarantees contemplated by
this Section 9,
(b) the credit available hereunder will directly or indirectly
inure to its benefit,
(c) by virtue of the foregoing it is receiving at least
reasonably equivalent value from the Lenders for its Guarantee,
(d) it will not be rendered insolvent as a result of entering
into this Agreement,
(e) after giving effect to the transactions contemplated by
this Agreement, it will have assets having a fair saleable value in
excess of the amount required to pay its probable liability on its
existing debts as they become absolute and matured,
(f) it has, and will have, access to adequate capital for the
conduct of its business,
(g) it has the ability to pay its debts from time to time
incurred in connection with its business as such debts mature, and
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(h) it has been advised by the Agent that the Lenders are
unwilling to enter into this Agreement unless the Guarantees
contemplated by this Section 9 are given by it.
9.7. SUBROGATION. Each Guarantor agrees that, until the Credit
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against the other Obligors
arising by contract or operation of law in connection with any payment made or
required to be made by such Guarantor under this Agreement. After the payment in
full of the Credit Obligations, each Guarantor shall be entitled to exercise
against the Borrower and the other Obligors all such rights of reimbursement,
subrogation, contribution and offset, and all such other claims, to the fullest
extent permitted by law.
9.8. SUBORDINATION. Each Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by the Borrower or any other Obligor to such Guarantor
whether arising hereunder or otherwise are subordinated to the prior payment in
full of the Credit Obligations and are so subordinated as a claim against such
Obligor or any of its assets, whether such claim be in the ordinary course of
business or in the event of voluntary or involuntary liquidation, dissolution,
insolvency or bankruptcy, so that no payment with respect to any such
Indebtedness, claim or liability will be made or received while any Event of
Default exists.
9.9. FURTHER ASSURANCES. Each Guarantor will, promptly upon the request
of the Agent from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Agent deems
necessary or advisable to carry out the intent and purposes of this Section 9.
10. SECURITY.
10.1. CREDIT SECURITY. As security for the payment and performance of
the Credit Obligations, each Obligor mortgages, pledges and collaterally grants
and assigns to the Agent for the benefit of the Lenders and the holders from
time to time of any Credit Obligation, and creates a security interest in favor
of the Agent for the benefit of the Lenders and such holders in, all of such
Obligor's right, title and interest in and to (but none of its obligations or
liabilities with respect to) the items and types of present and future property
described in Sections 10.1.1 through 10.1.15 (subject, however, to Section
10.1.16), whether now owned or hereafter acquired, all of which shall be
included in the term "CREDIT SECURITY":
10.1.1. TANGIBLE PERSONAL PROPERTY. All goods, machinery,
equipment, inventory and all other tangible personal property of any
nature whatsoever, wherever located, including raw materials, work in
process, finished parts and products, supplies, spare parts,
replacement parts, merchandise for resale, computers, tapes, disks and
computer equipment.
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10.1.2. RIGHTS TO PAYMENT OF MONEY. All rights to receive the
payment of money, including accounts (as defined in the UCC) and
receivables, rights to receive the payment of money under contracts,
franchises, licenses, permits, subscriptions or other agreements
(whether or not earned by performance), and rights to receive payments
from any other source (all such rights, other than Financing Debt,
being referred to herein as "ACCOUNTS").
10.1.3. INTANGIBLES. All of the following (to the extent not
included in Section 10.1.2): (a) contracts (including the Management
Services Agreements), franchises, licenses, permits, subscriptions and
other agreements and all rights thereunder; (b) rights granted by
others which permit the Obligor to sell or market items of personal
property; (c) United States and foreign common law and statutory
copyrights and rights in literary property and rights and licenses
thereunder; (d) trade names, United States and foreign trademarks,
service marks, any registrations thereof and any related good will; (e)
United States and foreign patents and patent applications; (f) computer
software, designs, models, know-how, trade secrets, rights in
proprietary information, formulae, customer lists, backlog, orders,
subscriptions, royalties, catalogues, sales material, documents, good
will, inventions and processes; (g) judgments, causes in action and
claims, whether or not inchoate, and (h) all other general intangibles
(as defined in the UCC) and intangible property and all rights
thereunder.
10.1.4. PLEDGED STOCK. (a) All shares of capital stock or
other evidence of beneficial interest in any corporation, business
trust or limited liability company, (b) all limited partnership
interests in any limited partnership, (c) all general partnership
interests in any general partnership, (d) all joint venture interests
in any joint venture and (e) all options, warrants and similar rights
to acquire such capital stock or such interests. All such capital
stock, interests, options, warrants and other rights are collectively
referred to as the "PLEDGED STOCK".
10.1.5. PLEDGED RIGHTS. All rights to receive profits or
surplus of, or other Distributions (including income, return of capital
and liquidating distributions) from, any partnership, limited liability
company or joint venture, including any distributions by any such
Person to partners or joint venturers. All such rights are collectively
referred to as the "PLEDGED RIGHTS".
10.1.6. PLEDGED INDEBTEDNESS. All Financing Debt from time to
time owing to such Obligor from any Person (all such Financing Debt
being referred to as the "PLEDGED INDEBTEDNESS").
10.1.7. CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS. All chattel
paper (as defined in the UCC), non-negotiable instruments, negotiable
instruments (as defined in the UCC) and documents (as defined in the
UCC).
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10.1.8. LEASES. All leases of personal property, whether the
Obligor is the lessor or the lessee thereunder.
10.1.9. DEPOSIT ACCOUNTS. All general or special deposit
accounts, including any demand, time, savings, passbook or similar
account maintained by the Obligor with any bank, trust company, savings
and loan association, credit union or similar organization, and all
money, cash and cash equivalents of the Obligor, whether or not
deposited in any such deposit account.
10.1.10. COLLATERAL. All collateral granted by third party
obligors to, or held by, the Obligor with respect to the Accounts,
Pledged Securities, chattel paper, instruments, leases and other items
of Credit Security.
10.1.11. BOOKS AND RECORDS. All books and records, including
books of account and ledgers of every kind and nature, all
electronically recorded data (including all computer programs, disks,
tapes, electronic data processing media and software used in connection
with maintaining the Obligor's books and records), all files and
correspondence and all receptacles and containers for the foregoing.
10.1.12. INSURANCE. All insurance policies which insure
against any loss or damage to any other Credit Security and any key
executive life insurance policies.
10.1.13. INVESTMENT PROPERTY. All of the following (to the
extent not included in Sections 10.1.1 through 10.1.12): (i)
securities, whether certificated or uncertificated; (ii) security
entitlements; (iii) securities accounts; (iv) commodities contracts;
and (v) commodities accounts.
10.1.14. ALL OTHER PROPERTY. All other property, assets and
items of value of every kind and nature, tangible, or intangible,
absolute or contingent, legal or equitable, including the rights of any
Obligors under the Material Agreements set forth in Exhibit 7.2.2.
10.1.15. PROCEEDS AND PRODUCTS. All proceeds, including
insurance proceeds, and products of the items of Credit Security
described or referred to in Sections 10.1.1 through 10.1.14 and, to the
extent not included in the foregoing, all Distributions with respect to
the Pledged Securities.
10.1.16. EXCLUDED PROPERTY. Notwithstanding Sections 10.1.1
through 10.1.15, the payment and performance of the Credit Obligations
shall not be secured by:
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(a) any rights arising under, and any property, tangible or
intangible, acquired under, any agreement which validly prohibits the
creation by such Obligor of a security interest in such rights or
property;
(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein;
(c) more than 66% of the outstanding stock or other equity in
any foreign Subsidiary; or
(d) the items described in Section 10.2 (but only in the event
and to the extent the Agent has not specified that such items be
included in the Credit Security pursuant thereto).
In addition, in the event an Obligor disposes of assets to third
parties in a transaction permitted by Section 6.11, such assets, but not the
proceeds or products thereof, shall automatically be released from the Lien of
the Credit Security.
10.2. ADDITIONAL CREDIT SECURITY. As additional Credit Security, each
Obligor covenants that it will mortgage, pledge and collaterally grant and
assign to the Agent for the benefit of the Lenders and the holders from time to
time of any Credit Obligation, and will create a security interest in favor of
the Agent for the benefit of the Lenders and such holders in, all of its right,
title and interest in and to (but none of its obligations with respect to) such
of the following present or future items as the Agent may from time to time
specify by notice to the Borrower, whether now owned or hereafter acquired, and
the proceeds and products thereof, except to the extent consisting of rights or
property of the types referred to in Section 10.1.16(a) through (d), subject
only to Liens permitted by Section 10.3.4, all of which shall thereupon be
included in the term "CREDIT SECURITY".
10.2.1. REAL PROPERTY. All real property and immovable
property and fixtures, leasehold interests and easements, owned by any
Obligor, wherever located, together with any and all estates and
interests of the Obligor therein, including lands, buildings, stores,
manufacturing facilities and other structures erected on such property,
fixed plant, fixed equipment and all permits, rights, licenses,
benefits and other interests of any kind or nature whatsoever in
respect of such real and immovable property.
10.2.2. MOTOR VEHICLES AND AIRCRAFT. All motor vehicles and
aircraft.
10.3. REPRESENTATIONS, WARRANTIES AND COVENANTS WITH RESPECT TO CREDIT
SECURITY. Each Obligor represents, warrants and covenants that:
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10.3.1. PLEDGED STOCK. All shares of capital stock, limited
partnership interests and similar securities included in the Pledged
Stock are and shall be at all times duly authorized, validly issued,
fully paid and (in the case of capital stock and limited partnership
interests) nonassessable. Each Obligor will deliver to the Agent
certificates representing the Pledged Stock, registered, if the Agent
so requests, in the name of the Agent or its nominee, as pledgee, or
accompanied by a stock transfer power executed in blank and, if the
Agent so requests, with the signature guaranteed, all in form and
manner satisfactory to the Agent. Pledged Stock that is not evidenced
by a certificate will be registered in the Agent's name as pledgee on
the issuer's records, all in form and substance satisfactory to the
Agent. The Agent may at any time following and during the continuation
of the occurrence of an Event of Default transfer into its name or the
name of its nominee, as pledgee, any Pledged Securities. In the event
the Pledged Stock includes any Margin Stock, the Obligors will furnish
to the Lenders Federal Reserve Form U-1 and take such other action as
the Agent may request to ensure compliance with applicable laws.
10.3.2. ACCOUNTS AND PLEDGED INDEBTEDNESS. All Accounts and
Pledged Indebtedness owed by any Affiliate of the Obligors shall be on
open account and shall not be evidenced by any note or other
instrument; PROVIDED, HOWEVER, that all Pledged Indebtedness owed by
any Affiliate of any Obligor shall, if the Agent requests, be evidenced
by a promissory note, which note shall be delivered to the Agent after
having been endorsed in blank. Each Obligor will, immediately upon the
receipt thereof, deliver to the Agent any promissory note or similar
instrument representing any Pledged Indebtedness, after having endorsed
such promissory note or instrument in blank.
10.3.3. NO LIENS OR RESTRICTIONS ON TRANSFER OR CHANGE OF
CONTROL. All Credit Security shall be free and clear of any Liens and
restrictions on the transfer thereof, including contractual provisions
which prohibit the assignment of rights under contracts, except for
Liens permitted by Section 6.8 and except for restrictions on transfer
under the Securities Act and under applicable state securities laws.
Without limiting the generality of the foregoing, each Obligor will
exclude from contracts to which it becomes a party after the date
hereof provisions that would prevent such Obligor from creating a
security interest in such contract or any property acquired thereunder
as contemplated hereby. None of the Pledged Stock is subject to any
option to purchase or similar rights of any Person. Except with the
written consent of the Agent, no Obligor is, and none of them will be,
party to or bound by any agreement, instrument, deed or lease that
restricts the change of control or ownership, or the creation of a
security interest in the ownership, of the Company or any of its
Subsidiaries.
10.3.4. LOCATION OF CREDIT SECURITY. Each Obligor shall at all
times keep its records concerning the Accounts at its chief executive
office and principal place of
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business, which office and place of business shall be set forth in
Exhibit 7.1, or, so long as such Obligor shall have taken all steps
reasonably necessary to perfect the Lenders' security interest in the
Credit Security with respect to such new address, at such other address
as such Obligor may specify by notice actually received by the Agent
not less than 10 Banking Days prior to such change of address. No
Obligor shall at any time keep tangible personal property of the type
referred to in Section 10.1.1 in any jurisdiction other than the
jurisdictions specified in Exhibit 7.1, or, so long as such Obligor
shall have taken all steps reasonably necessary to perfect the Lenders'
security interest in the Credit Security with respect to such other
jurisdiction, other jurisdictions as such Obligor may specify by notice
actually received by the Agent not less than 10 days prior to moving
such tangible personal property into such other jurisdiction.
10.3.5. TRADE NAMES. No Obligor will adopt or do business
under any name other than its name or names designated in Exhibit 7.1
or any other name specified by notice actually received by the Agent
not less than 10 days prior to the conduct of business under such
additional name. Since its incorporation, no Obligor has changed its
corporate name or adopted or conducted business under any trade name
other than a name specified on Exhibit 7.1.
10.3.6. INSURANCE. Each insurance policy included in, or
insuring against loss or damage to, the Credit Security shall name the
Agent as additional insured party or as loss payee. No such insurance
policy shall be cancelable or subject to termination or reduction in
amount or scope of coverage until after at least 30 days' prior written
notice from the insurer to the Agent. At least 10 days prior to the
expiration of any such insurance policy for any reason, each Obligor
shall furnish the Agent with a renewal or replacement policy and
evidence of payment of the premiums therefor when due. Each Obligor
grants to the Agent full power and authority as its attorney-in-fact,
effective upon notice to such Obligor after the occurrence of an Event
of Default to obtain, cancel, transfer, adjust and settle any such
insurance policy and to endorse any drafts thereon. Any amounts that
the Agent receives under any such policy (including return of unearned
premiums) insuring against loss or damage to the Credit Security prior
to the occurrence of an Event of Default shall be delivered to the
Obligors for the replacement, restoration and maintenance of the Credit
Security. Any such amounts that the Agent receives after the occurrence
of an Event of Default shall, at the Agent's option, be applied to
payment of the Credit Obligations or to the replacement, restoration
and maintenance of the Credit Security. If any Obligor fails to provide
insurance as required by this Agreement, the Agent may, at its option,
purchase such insurance, and such Obligor will on demand pay to the
Agent the amount of any payments made by the Agent or the Lenders for
such purpose, together with interest on the amounts so disbursed from
five Banking Days after the date demanded until payment in full thereof
at the Overdue Reimbursement Rate.
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10.3.7. MODIFICATIONS TO CREDIT SECURITY. Except with the
prior written consent of the Required Lenders, no Obligor shall amend
or modify, or waive any of its rights under or with respect to, any
material Accounts, general intangibles, Pledged Securities or leases if
the effect of such amendment, modification or waiver would be to reduce
the amount of any such items or to extend the time of payment thereof,
to waive any default by any other party thereto, or to waive or impair
any remedies of the Obligors or the Lenders under or with respect to
any such Accounts, general intangibles, Pledged Securities or leases,
in each case other than consistent with past practice in the ordinary
course of business and on an arm's-length basis. Each Obligor will
promptly give the Agent written notice of any request by any Person for
any material credit or adjustment with respect to any Account, general
intangible, Pledged Securities or leases.
10.3.8. DELIVERY OF DOCUMENTS. At the Agent's request, each
Obligor shall deliver to the Agent, promptly upon such Obligor's
receipt thereof, copies of any agreements, instruments, documents or
invoices comprising or relating to the Credit Security. Pending such
request, such Obligor shall keep such items at its chief executive
office and principal place of business (as specified pursuant to
Section 10.3.5).
10.3.9. PERFECTION OF CREDIT SECURITY. Upon the Agent's
request from time to time, the Obligors will execute and deliver, and
file and record in the proper filing and recording places, all such
instruments, including financing statements, collateral assignments of
copyrights, trademarks and patents, mortgages or deeds of trust, and
notations on certificates of title and will take all such other action,
as the Agent deems advisable for confirming to it the Credit Security
or to carry out any other purposes of this Agreement or any other
Credit Document.
10.4. ADMINISTRATION OF CREDIT SECURITY. The Credit Security shall be
administered as follows, and if an Event of Default shall have occurred, Section
10.5 shall also apply.
10.4.1. USE OF CREDIT SECURITY. Until the Agent provides
written notice to the contrary, each Obligor may use, commingle and
dispose of any part of the Credit Security in the ordinary course of
its business, all subject to Section 6.11.
10.4.2. DEPOSITS; ACCOUNTS.
(a) Unless the Agent shall otherwise consent in
writing, which consent shall not be unreasonably withheld,
each Obligor shall keep all its bank and deposit accounts only
with the Agent, other Lenders, financial institutions
designated on EXHIBIT 10.4.2 or any financial institution
approved by the Agent.
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(b) To the extent specified by prior written notice
from the Agent, whether prior to or after the occurrence of an
Event of Default, all sums collected or received and all
property recovered or possessed by any Obligor in connection
with any Credit Security shall be received and held by such
Obligor in trust for and on the Lenders' behalf, shall be
segregated from the assets and funds of such Obligor, and
shall be delivered to the Agent for the benefit of the
Lenders.
(c) In addition, the Obligors shall direct that all
Accounts payable by Medicare or Medicaid and all Accounts
payable in an amount greater than $50 be paid directly into a
locked box account maintained with any financial institution
designated on Exhibit 10.4.2 or such other financial
institution as approved by the Agent (which, in the event such
financial institution is not a Lender, must be party to an
Assignment Agreement in form and substance satisfactory to the
Agent).
10.4.3. PLEDGED SECURITIES.
(a) DISTRIBUTIONS. (i) Until an Event of Default shall occur,
and thereafter once such Event of Default has ceased to exist,
the respective Obligors shall be entitled, to the extent
permitted by the Credit Documents, to receive all
Distributions on or with respect to the Pledged Securities
(other than Distributions constituting additional Pledged
Securities). All Distributions constituting additional Pledged
Securities will be retained by the Agent (or if received by
any Obligor shall be held by such Person in trust and shall be
immediately delivered by such Person to the Agent in the
original form received, endorsed in blank) and held by the
Agent as part of the Credit Security.
(ii) If an Event of Default shall have occurred and
be continuing, all Distributions on or with respect to the
Pledged Securities shall be retained by the Agent (or if
received by any Obligor shall be held by such Person in trust
and shall be immediately delivered by it to the Agent in the
original form received, endorsed in blank) and held by the
Agent as part of the Credit Security or applied by the Agent
to the payment of the Credit Obligations in accordance with
Section 10.5.6.
(b) VOTING. (i) Until an Event of Default shall occur, the
respective Obligors shall be entitled to vote or consent with
respect to the Pledged Securities in any manner not
inconsistent with the terms of any Credit Document, and the
Agent will, if so requested, execute appropriate revocable
proxies therefor.
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(ii) If an Event of Default shall have occurred, if
and to the extent that the Agent shall so notify in writing
the Obligor pledging the Pledged Securities in question, only
the Agent shall be entitled to vote or consent or take any
other action with respect to the Pledged Securities (and any
Obligor will, if so requested, execute or cause to be executed
appropriate proxies therefor).
10.5. RIGHT TO REALIZE UPON CREDIT SECURITY. Except to the extent
prohibited by applicable law that cannot be waived, this Section 10.5 shall
govern the Lenders' right to realize upon the Credit Security if any Event of
Default shall have occurred and be continuing. The provisions of this Section
10.5 are in addition to any rights and remedies available at law or in equity
and in addition to the provisions of any other Credit Document. In the case of a
conflict between this Section 10.5 and any other Credit Document, this Section
10.5 shall govern. If any Event of Default shall have occurred and be
continuing:
10.5.1. ASSEMBLY OF CREDIT SECURITY; RECEIVER. Each of the
Obligors shall, upon the Agent's request, assemble the Credit Security
and otherwise make it available to the Agent. The Agent may have a
receiver appointed for all or any portion of the Obligor's assets or
business which constitutes the Credit Security in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion of
the Credit Security in accordance with the terms of the Credit
Documents, to continue the operations of the Obligors and to collect
all revenues and profits therefrom to be applied to the payment of the
Credit Obligations, including the compensation and expenses of such
receiver.
10.5.2. GENERAL AUTHORITY. To the extent specified in written
notice from the Agent to the Obligor in question, each Obligor grants
the Agent full and exclusive power and authority, subject to the other
terms hereof and applicable law, to take any of the following actions
(for the sole benefit of the Agent on behalf of the Lenders and the
holders from time to time of any Credit Obligations, but at the
Obligor's expense):
(a) To ask for, demand, take, collect, sue for and receive all
payments in respect of any Accounts, general intangibles, Pledged
Securities or leases which the Obligor could otherwise ask for, demand,
take, collect, sue for and receive for its own use.
(b) To extend the time of payment of any Accounts, general
intangibles, Pledged Securities or leases and to make any allowance or
other adjustment with respect thereto.
(c) To settle, compromise, prosecute or defend any action or
proceeding with respect to any Accounts, general intangibles, Pledged
Securities or leases and to enforce all rights and remedies thereunder
which the Obligor could otherwise enforce.
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(d) To enforce the payment of any Accounts, general
intangibles, Pledged Securities or leases, either in the name of the
Obligor or in its own name, and to endorse the name of the Obligor on
all checks, drafts, money orders and other instruments tendered to or
received in payment of any Credit Security.
(e) To notify the third party payor with respect to any
Accounts, general intangibles, Pledged Securities or leases of the
existence of the security interest created hereby and to cause all
payments in respect thereof thereafter to be made directly to the
Agent; PROVIDED, HOWEVER, that whether or not the Agent shall have so
notified such payor, the Obligors will at their expense render all
reasonable assistance to the Agent in collecting such items and in
enforcing claims thereon.
(f) To sell, transfer, assign or otherwise deal in or with any
Credit Security or the proceeds thereof, as fully as any Obligor
otherwise could do.
10.5.3. MARSHALING, ETC. Neither the Agent nor the Lenders
shall be required to make any demand upon, or pursue or exhaust any of
their rights or remedies against, any Obligor or any other guarantor,
pledgor or any other Person with respect to the payment of the Credit
Obligations or to pursue or exhaust any of their rights or remedies
with respect to any collateral therefor or any direct or indirect
guarantee thereof. Neither the Agent nor the Lenders shall be required
to marshal the Credit Security or any guarantee of the Credit
Obligations or to resort to the Credit Security or any such guarantee
in any particular order, and all of its and their rights hereunder or
under any other Credit Document shall be cumulative. To the extent it
may lawfully do so, each of the Obligors absolutely and irrevocably
waives and relinquishes the benefit and advantage of, and covenants not
to assert against the Agent or the Lenders, any valuation, stay,
appraisement, extension, redemption or similar laws now or hereafter
existing which, but for this provision, might be applicable to the sale
of any Credit Security made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise. Without limiting the generality of the
foregoing, each of the Obligors (a) agrees that it will not invoke or
utilize any law which might prevent, cause a delay in or otherwise
impede the enforcement of the rights of the Agent or any Lender in the
Credit Security, (b) waives all such laws, and (c) agrees that it will
not invoke or raise as a defense to any enforcement by the Agent or any
Lender of any rights and remedies relating to the Credit Security or
the Credit Obligations any legal or contractual requirement with which
the Agent or any Lender may have in good faith failed to comply. In
addition, each of the Obligors waives any right to prior notice (except
to the extent expressly required by this Agreement) or judicial hearing
in connection with foreclosure on or disposition of any Credit
Security, including any such right which such Obligor would otherwise
have under the Constitution of the United States of America, any state
or territory thereof or any other jurisdiction.
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10.5.4. SALES OF CREDIT SECURITY. All or any part of the
Credit Security may be sold for cash or other value in any number of
lots at public or private sale, without demand, advertisement or
notice; PROVIDED, HOWEVER, that unless the Credit Security to be sold
threatens to decline speedily in value or is of a type customarily sold
on a recognized market, the Agent shall give the Obligor granting the
security interest in such Credit Security 10 days' prior written notice
of the time and place of any public sale, or the time after which a
private sale may be made, which notice each of the Obligors and the
Lenders hereby agrees to be reasonable. At any sale or sales of Credit
Security, any Lender or any of its respective officers acting on its
behalf, or such Lender's assigns, may bid for and purchase all or any
part of the property and rights so sold, may use all or any portion of
the Credit Obligations owed to such Lender as payment for the property
or rights so purchased, and upon compliance with the terms of such sale
may hold and dispose of such property and rights without further
accountability to the respective Obligor, except for the proceeds of
such sale or sales pursuant to Section 10.5.6. The Obligors acknowledge
that any such sale will be made by the Agent on an "as is" basis with
disclaimers of all warranties, whether express or implied. The
respective Obligors will execute and deliver or cause to be executed
and delivered such instruments, documents, assignments, waivers,
certificates and affidavits, will supply or cause to be supplied such
further information and will take such further action as the Agent
shall request in connection with any such sale.
10.5.5. SALE WITHOUT REGISTRATION. If, at any time when the
Agent shall determine to exercise its rights hereunder to sell all or
part of the securities included in the Credit Security, the securities
in question shall not be effectively registered under the Securities
Act (or other applicable law), the Agent may, in its sole discretion,
sell such securities by private or other sale not requiring such
registration in such manner and in such circumstances as the Agent may
deem necessary or advisable in order that such sale may be effected in
accordance with applicable securities laws without such registration
and the related delays, uncertainty and expense. Without limiting the
generality of the foregoing, in any event the Agent may, in its sole
discretion, (a) approach and negotiate with a single purchaser or one
or more possible purchasers to effect such sale, (b) restrict such sale
to one or more purchasers each of whom will represent and agree that
such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such securities and (c)
cause to be placed on certificates representing the securities in
question a legend to the effect that such securities have not been
registered under the Securities Act (or other applicable law) and may
not be disposed of in violation of the provisions thereof. Each of the
Obligors agrees that such manner of disposition is commercially
reasonable, that it will upon the Agent's request give any such
purchaser access to such information regarding the issuer of the
securities in question as the Agent may reasonably request and that the
Agent and the Lenders shall not incur any responsibility for selling
all or part of the securities included in the Credit Security at any
private or other sale not requiring such registration, notwithstanding
the possibility that a substantially higher
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price might be realized if the sale were deferred until after
registration under the Securities Act (or other applicable law) or
until made in compliance with certain other rules or exemptions from
the registration provisions under the Securities Act (or other
applicable law). Each of the Obligors acknowledges that no adequate
remedy at law exists for breach by it of this Section 10.5.5 and that
such breach would not be adequately compensable in damages and
therefore agrees that this Section 10.5.5 may be specifically enforced.
10.5.6. APPLICATION OF PROCEEDS. The proceeds of all sales and
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained
in the Credit Security, the application of which is not otherwise
specifically provided for herein, shall be applied as follows:
First, to the payment of the costs and expenses of such sales
and collections, the reasonable expenses of the Agent and the
reasonable fees and expenses of its special counsel;
Second, any surplus then remaining to the payment of the
Credit Obligations in such order and manner as the Agent may in its
sole discretion determine; PROVIDED, HOWEVER, that any such payment of
Credit Obligations owed to all Lenders shall be pro rata in accordance
with the respective Aggregate Percentage Interests of the Lenders in
the Loan;
Third, any surplus then remaining shall be paid to the
Obligors, subject, however, to the rights of the holder of any then
existing Lien of which the Agent has actual notice.
10.6. CUSTODY OF CREDIT SECURITY. Except as provided by applicable law
that cannot be waived, the Agent will have no duty as to the custody and
protection of the Credit Security, the collection of any part thereof or of any
income thereon or the preservation or exercise of any rights pertaining thereto,
including rights against prior parties, except for the use of reasonable care in
the custody and physical preservation of any Credit Security in its possession.
The Lenders will not be liable or responsible for any loss or damage to any
Credit Security, or for any diminution in the value thereof, by reason of the
act or omission of any agent selected by the Agent acting in good faith.
11. EXPENSES; INDEMNITY.
11.1. EXPENSES. Whether or not the transactions contemplated hereby
shall be consummated, the Borrower will pay:
(a) all reasonable expenses of the Agent (including the
out-of-pocket expenses related to forming the group of Lenders and
reasonable fees and disbursements of the
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counsel to the Agent) in connection with the preparation and
duplication of this Agreement, each other Credit Document, examinations
by, and reports of, the Agent's commercial financial examiners,
environmental surveys, the transactions contemplated hereby and thereby
and amendments, waivers, consents and other operations hereunder and
thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this
Agreement, any other Credit Document, any Credit Security or the
incurrence of the Credit Obligations; and
(c) to the extent not prohibited by applicable law that cannot
be waived, after the occurrence and during the continuance of any
Default or Event of Default, all other reasonable expenses incurred by
the Lenders or the holder of any Credit Obligation in connection with
the enforcement of any rights hereunder or under any other Credit
Document, including costs of collection and reasonable attorneys' fees
(including a reasonable allowance for the hourly cost of attorneys
employed by the Lenders on a salaried basis) and expenses.
11.2. GENERAL INDEMNITY. The Borrower shall indemnify the Lenders and
the Agent and hold them harmless from any liability, loss or damage resulting
from the violation by the Company of Section 2.3. In addition, the Borrower
shall indemnify each Lender, the Agent, each of the Lenders' or the Agent's
directors, officers and employees, and each Person, if any, who controls any
Lender or the Agent (each Lender, the Agent and each of such directors,
officers, employees and control Persons is referred to as an "INDEMNIFIED
PARTY") and hold each of them harmless from and against any and all claims,
damages, liabilities and reasonable expenses (including reasonable fees and
disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with (a) the Indemnified Party's compliance
with or contest of any subpoena or other process issued against it in any
proceeding involving any of the Obligors or their Affiliates, (b) any litigation
or investigation involving the Obligors or their Affiliates, or any officer,
director or employee thereof, (c) the existence or exercise of any security
rights with respect to the Credit Security in accordance with the Credit
Documents, (d) this Agreement, any other Credit Document or any transaction
contemplated hereby or thereby or (e) the use of or proposed use of proceeds
from this Credit Agreement; PROVIDED, HOWEVER, that the foregoing indemnity
shall not apply to (i) to the extent such loss resulted from the gross
negligence or willful misconduct of the Indemnified Party; or (ii) to litigation
commenced by the Borrower or any Obligor against the Lenders or the Agent which
seeks enforcement of any of the rights of the Borrower or such Obligor hereunder
or under any other Credit Document and is determined adversely to the Lenders or
the Agent in a final nonappealable judgment or to the extent such claims,
damages, liabilities and expenses result from a Lender's or the Agent's gross
negligence or willful misconduct.
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11.3. INDEMNITY WITH RESPECT TO LETTERS OF CREDIT. The Borrower shall
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys' fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by the Agent, any other Letter of Credit Issuer
or held for their respective accounts by any of their correspondents, in
connection with any Letter of Credit, except to the extent such claims, losses,
liabilities, damages and expenses result from gross negligence or willful
misconduct on the part of the Agent or any other Letter of Credit Issuer.
12. OPERATIONS; AGENT.
12.1. INTERESTS IN CREDITS. The Percentage Interest of each Lender in
the Loan, and the related Commitments, shall be computed based on the maximum
principal amount for each Lender as set forth on EXHIBIT 12.1. Upon the
consummation of any assignment pursuant to Section 13.1 or 13.3, the Agent shall
modify Exhibit 12.1 to reflect such assignment.
12.2. AGENT'S AUTHORITY TO ACT, ETC. Each of the Lenders appoints and
authorizes BankBoston to act for the Lenders as the Lenders' Agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents on the terms set forth herein. In acting hereunder, the Agent is
acting for the account of BankBoston to the extent of its Aggregate Percentage
Interest in the Loan and for the account of each other Lender to the extent of
the Lenders' respective Aggregate Percentage Interests in the Loan, and all
action in connection with the enforcement of, or the exercise of any remedies
(other than the Lenders' rights of set-off as provided in Section 8.2.4 or in
any Credit Document) in respect of the Credit Obligations and Credit Documents
shall be taken by the Agent.
12.3. BORROWER TO PAY AGENT, ETC. The Borrower and each Guarantor shall
be fully protected in making all payments in respect of the Credit Obligations
to the Agent, in relying upon consents, modifications and amendments executed by
the Agent purportedly on the Lenders' behalf, and in dealing with the Agent as
herein provided. The Agent may charge the account of the Borrower, on the dates
when the amounts thereof become due and payable, with the amounts of the
principal of and interest on the Loan, any amounts paid by the Letter of Credit
Issuers to third parties under Letters of Credit or drafts presented thereunder,
commitment fees, Letter of Credit fees and all other fees and amounts owing
under any Credit Document.
12.4. LENDER OPERATIONS FOR ADVANCES, LETTERS OF CREDIT, ETC.
12.4.1. ADVANCES. On each Closing Date, each Lender shall
advance to the Agent in immediately available funds such Lender's
Percentage Interest in the portion of the Loan advanced on such Closing
Date prior to 12:00 noon (Boston time). If such
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funds are not received at such time, but all applicable conditions set
forth in Section 5 have been satisfied, each Lender authorizes and
requests the Agent to advance for the Lender's account, pursuant to the
terms hereof, the Lender's respective Percentage Interest in such
portion of the Loan and agrees to reimburse the Agent in immediately
available funds for the amount thereof prior to 3:00 p.m. (Boston time)
on the day any portion of the Loan is advanced hereunder; PROVIDED,
HOWEVER, that the Agent is not authorized to make any such advance for
the account of any Lender who has previously notified the Agent in
writing that such Lender will not be performing its obligations to make
further advances hereunder; and PROVIDED, FURTHER, that the Agent shall
be under no obligation to make any such advance.
12.4.2. LETTERS OF CREDIT. Each of the Lenders authorizes and
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.2 and to grant each Lender a participation in
each of such Letters of Credit in an amount equal to its Percentage
Interest in the amount of each such Letter of Credit. Promptly upon the
request of the Letter of Credit Issuer, each Lender shall reimburse the
Letter of Credit Issuer in immediately available funds for such
Lender's Percentage Interest in the amount of all obligations to third
parties incurred by the Letter of Credit Issuer in respect of each
Letter of Credit and each draft accepted under a Letter of Credit to
the extent not reimbursed by the Borrower. The Letter of Credit Issuer
will notify each Lender of the issuance of any Letter of Credit, the
amount and date of payment of any draft drawn or accepted under a
Letter of Credit and whether in connection with the payment of any such
draft the amount thereof was added to the Revolving Loan or was
reimbursed by the Borrower.
12.4.3. AGENT TO ALLOCATE PAYMENTS, ETC. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, reimbursement of amounts paid by any Letter
of Credit Issuer to third parties under Letters of Credit or drafts
presented thereunder, commitment fees, Letter of Credit fees and other
fees under this Agreement shall, as a matter of convenience, be made by
the Borrower and the Guarantors to the Agent in immediately available
funds. The share of each Lender shall be credited to such Lender by the
Agent in immediately available funds in such manner that the principal
amount of the Credit Obligations to be paid shall be paid
proportionately in accordance with the Lenders' respective Percentage
Interests in such Credit Obligations or portion of the Loan to which
such Credit Obligation relates, except as otherwise provided in this
Agreement. Under no circumstances shall any Lender be required to
produce or present its Notes as evidence of its interests in the Credit
Obligations in any action or proceeding relating to the Credit
Obligations.
12.4.4. DELINQUENT LENDERS; NONPERFORMING LENDERS. In the
event that any Lender fails to reimburse the Agent pursuant to Section
12.4.1 for the Percentage Interest of such lender (a "DELINQUENT
LENDER") in any credit advanced by the Agent
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pursuant hereto, overdue amounts (the "DELINQUENT PAYMENT") due from
the Delinquent Lender to the Agent shall bear interest, payable by the
Delinquent Lender on demand, at a per annum rate equal to (a) the
Federal Funds Rate for the first three days overdue and (b) the sum of
2% PLUS the Federal Funds Rate for any longer period. Such interest
shall be payable to the Agent for its own account for the period
commencing on the date of the Delinquent Payment and ending on the date
the Delinquent Lender reimburses the Agent on account of the Delinquent
Payment (to the extent not paid by the Company as provided below) and
the accrued interest thereon (the "DELINQUENCY PERIOD"), whether
pursuant to the assignments referred to below or otherwise. Upon notice
by the Agent, the Borrower will pay to the Agent the principal (but not
the interest) portion of the Delinquent Payment. During the Delinquency
Period, in order to make reimbursements for the Delinquent Payment and
accrued interest thereon, the Delinquent Lender shall be deemed to have
assigned to the Agent all interest, commitment fees and other payments
made by the Borrower under Section 3 that would have thereafter
otherwise been payable under the Credit Documents to the Delinquent
Lender. During any other period in which any Lender is not performing
its obligations to extend credit under Section 2 (a "NONPERFORMING
LENDER"), the Nonperforming Lender shall be deemed to have assigned to
each Lender that is not a Nonperforming Lender (a "PERFORMING LENDER")
all principal and other payments made by the Borrower under Section 4
that would have thereafter otherwise been payable under the Credit
Documents to the Nonperforming Lender. The Agent shall credit a portion
of such payments to each Performing Lender in an amount equal to the
Percentage Interest of such Performing Lender in the portion of the
Loan with respect to which there is such nonperformance, in an amount
equal to such Percentage Interest of such Performing Lender divided by
one MINUS the Percentage Interest of the Nonperforming Lender in the
portion of the Loan with respect to which there is such nonperformance,
until the respective portions of such portion of the Loan owed to all
the Lenders are the same as the Percentage Interests of the Lenders in
such portion of the Loan immediately prior to the failure of the
Nonperforming Lender to perform its obligations under Section 2. The
foregoing provisions shall be in addition to any other remedies the
Agent, the Performing Lenders or the Borrower may have under law or
equity against the Delinquent Lender as a result of the Delinquent
Payment or against the Nonperforming Lender as a result of its failure
to perform its obligations under Section 2.
12.5. SHARING OF PAYMENTS, ETC. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in a portion of the Loan and Letter of Credit Exposure which
is greater than (ii) the proportion received by any other Lender in respect of
the aggregate amount due with respect to such other Lender's Percentage Interest
in such portion of the Loan and Letter of Credit Exposure and (b) if such
inequality shall continue for more than 10 days, the Lender receiving such
proportionately greater payment shall purchase participations in the Percentage
Interests in the portions of the Loan and Letter of
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Credit Exposure held by the other Lenders, and such other adjustments shall be
made from time to time (including rescission of such purchases of participations
in the event the unequal payment originally received is recovered from such
Lender through bankruptcy proceedings or otherwise), as may be required so that
all such payments of principal and interest with respect to the portion of the
Loan and Letter of Credit Exposure held by the Lenders shall be shared by the
Lenders pro rata in accordance with their respective Percentage Interests in the
relevant portion of the Loan; PROVIDED, HOWEVER, that this Section 12.5 shall
not impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of Indebtedness of any Obligor other than such Obligor's Indebtedness
with respect to the Loan and Letter of Credit Exposure. Each Lender that grants
a participation in the Credit Obligations to a Credit Participant shall require
as a condition to the granting of such participation that such Credit
Participant agree to share payments received in respect of the Credit
Obligations as provided in this Section 12.5. The provisions of this Section
12.5 are for the sole and exclusive benefit of the Lenders and no failure of any
Lender to comply with the terms hereof shall be available to any Obligor as a
defense to the payment of the Credit Obligations.
12.6. ACTIONS BY AGENT, AMENDMENTS, CONSENTS, WAIVERS, ETC. Except as
otherwise set forth in this Section 12.6, the Agent may (and upon the written
request of the Required Lenders the Agent shall) take or refrain from taking any
action under this Agreement or any other Credit Document, including giving its
written consent to any modification of or amendment to and waiving in writing
compliance with any covenant or condition in this Agreement or any other Credit
Document or any Default or Event of Default, all of which actions shall be
binding upon all of the Lenders; PROVIDED, HOWEVER, that:
12.6.1. Without the written consent of the Required Lenders
(other than Delinquent Lenders during the existence of a Delinquency
Period so long as such Delinquent Lender is treated the same as the
other Lenders with respect to any actions enumerated below), no written
modification of, amendment to, consent with respect to, waiver of
compliance with or waiver of a Default under any of the Credit
Documents (other than Interest Rate Protection Agreements) shall be
made.
12.6.2. Without the written consent of such Lenders as own
100% of the Aggregate Percentage Interests in the Loan (other than
Delinquent Lenders during the existence of a Delinquency Period so long
as such Delinquent Lender is treated the same as the other Lenders with
respect to any actions enumerated below):
(a) No reduction shall be made in (i) the amount of
principal of the Loan or reimbursement obligations for
payments made under Letters of Credit, (ii) the interest rate
on the Loan or (iii) the Letter of Credit fees or commitment
fees.
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(b) No change shall be made in the stated time of
payment of all or any portion of the Loan or interest thereon
or reimbursement of payments made under Letters of Credit or
fees relating to any of the foregoing payable to all of the
Lenders and no waiver shall be made of any Default under
Section 8.1.1.
(c) No increase shall be made in the amount, or
extension of the term, of the Commitments beyond that provided
for under Section 2.
(d) No alteration shall be made of the Lenders'
rights of set-off contained in Section 8.2.4.
(e) No release of any Credit Security or of any
Guarantor shall be made (except that the Agent may release
particular items of Credit Security or particular Guarantors
in dispositions permitted by Section 6.11 and may release all
Credit Security pursuant to Section 18 upon payment in full of
the Credit Obligations and termination of the Commitments
without the written consent of the Lenders).
(f) No amendment to or modification of this Section
12.6.2(f) or of the definition of Required Lenders shall be
made.
12.7. AGENT'S RESIGNATION. The Agent may resign at any time by giving
at least 60 days' prior written notice of its intention to do so to each other
of the Lenders and the Borrower and upon the appointment by the Required Lenders
of a successor Agent satisfactory to the Borrower. If no successor Agent shall
have been so appointed and shall have accepted such appointment within 45 days
after the retiring Agent's giving of such notice of resignation, then the
retiring Agent may with the consent of the Borrower, which shall not be
unreasonably withheld, appoint a successor Agent which shall be a bank or a
trust company organized under the laws of the United States of America or any
state thereof and having a combined capital, surplus and undivided profit of at
least $100,000,000; PROVIDED, HOWEVER, that any successor Agent appointed under
this sentence may be removed upon the written request of the Required Lenders,
which request shall also appoint a successor Agent satisfactory to the Borrower.
Upon the appointment of a new Agent hereunder, the term "Agent" shall for all
purposes of this Agreement thereafter mean such successor. After any retiring
Agent's resignation hereunder as Agent, or the removal hereunder of any
successor Agent, the provisions of this Agreement shall continue to inure to the
benefit of such Agent as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
12.8. CONCERNING THE AGENT.
12.8.1. ACTION IN GOOD FAITH, ETC. The Agent and its officers,
directors, employees and agents shall be under no liability to any of
the Lenders or to any future holder of any interest in the Credit
Obligations for any action or failure to act taken or
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suffered in good faith, and any action or failure to act in accordance
with an opinion of its counsel shall conclusively be deemed to be in
good faith. The Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, on instructions given to the Agent by
the required holders of Credit Obligations as provided in this
Agreement.
12.8.2. NO IMPLIED DUTIES, ETC. The Agent shall have and may
exercise such powers as are specifically delegated to the Agent under
this Agreement or any other Credit Document together with all other
powers incidental thereto. The Agent shall have no implied duties to
any Person or any obligation to take any action under this Agreement or
any other Credit Document except for action specifically provided for
in this Agreement or any other Credit Document to be taken by the
Agent. Before taking any action under this Agreement or any other
Credit Document, the Agent may request an appropriate specific
indemnity satisfactory to it from each Lender in addition to the
general indemnity provided for in Section 12.11. Until the Agent has
received such specific indemnity, the Agent shall not be obligated to
take (although it may in its sole discretion take) any such action
under this Agreement or any other Credit Document. Each Lender confirms
that the Agent does not have a fiduciary relationship to it under the
Credit Documents. Each of the Obligors party hereto confirms that
neither the Agent nor any other Lender has a fiduciary relationship to
it under the Credit Documents.
12.8.3. VALIDITY, ETC. The Agent shall not be responsible to
any Lender or any future holder of any interest in the Credit
Obligations (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Credit Document, (b) for
any recitals, reports, representations, warranties or statements
contained in or made in connection with this Agreement or any other
Credit Document, (c) for the existence or value of any assets included
in any security for the Credit Obligations, (d) for the effectiveness
of any Lien purported to be included in the Credit Security, (e) for
the specification or failure to specify any particular assets to be
included in the Credit Security, or (f) unless the Agent shall have
failed to comply with Section 12.8.1, for either the perfection of the
security interests in the Credit Security or for failure of the Agent
to its obligations under Section 12.8.8.
12.8.4. COMPLIANCE. The Agent shall not be obligated to
ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Credit Document; and in connection
with any extension of credit under this Agreement or any other Credit
Document, the Agent shall be fully protected in relying on a
certificate of the Borrower as to the fulfillment by the Borrower of
any conditions to such extension of credit.
12.8.5. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may
execute any of its duties as Agent under this Agreement or any other
Credit Document by or through employees, agents and attorneys-in-fact
and shall not be responsible to any of the
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Lenders, the Borrower or any other Obligor for the default or
misconduct of any such agents or attorneys-in-fact selected by the
Agent acting in good faith. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created
and its duties hereunder or under any other Credit Document.
12.8.6. RELIANCE ON DOCUMENTS AND COUNSEL. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype
message or writing reasonably believed in good faith by the Agent to be
genuine and correct and to have been signed, sent or made by the Person
in question, including any telephonic or oral statement made by such
Person, and, with respect to legal matters, upon an opinion or the
advice of counsel selected by the Agent.
12.8.7. AGENT'S REIMBURSEMENT. Each of the Lenders severally
agrees to reimburse the Agent, in the amount of such Lender's Aggregate
Percentage Interest in the Loan, for any reasonable expenses not
reimbursed by the Borrower or the Guarantors (without limiting the
obligation of the Borrower or the Guarantors to make such
reimbursement): (a) for which the Agent is entitled to reimbursement by
the Borrower or the Guarantors under this Agreement or any other Credit
Document, and (b) after the occurrence of a Default, for any other
reasonable expenses incurred by the Agent on the Lenders' behalf in
connection with the enforcement of the Lenders' rights under this
Agreement or any other Credit Document.
12.8.8. CONVEYING REPORTS TO LENDERS. The Agent shall provide
to each of the Lenders, in any reasonable form and reasonably promptly,
a copy of those communications received from the Company pursuant to
Sections 4.3.3, 5.2, 6.4, 6.21 and 6.22.
12.9. RIGHTS AS A LENDER. With respect to any credit extended by it
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it were not the Agent
hereunder. Without limiting the generality of the foregoing, the Percentage
Interest in any portion of the Loan, and the Aggregate Percentage Interest in
the Loan, of BankBoston shall be included in any computations of Percentage
Interests and Aggregate Percentage Interests in the Loan, respectively.
BankBoston and its Affiliates may accept deposits from, lend money to, act as
trustee for and generally engage in any kind of banking or trust business with
the Borrower, any of its Subsidiaries or any Affiliate of any of them and any
Person who may do business with or own an equity interest in the Borrower, any
of its Subsidiaries or any Affiliate of any of them, all as if BankBoston were
not the Agent and without any duty to account therefor to the other Lenders.
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12.10. INDEPENDENT CREDIT DECISION. Each of the Lenders acknowledges
that it has independently and without reliance upon the Agent, based on the
financial statements and other documents referred to in Section 7.2, on the
other representations and warranties contained herein and on such other
information with respect to the Obligors as such Lender deemed appropriate, made
such Lender's own credit analysis and decision to enter into this Agreement and
to make the extensions of credit provided for hereunder. Each Lender represents
to the Agent that such Lender will continue to make its own independent credit
and other decisions in taking or not taking action under this Agreement or any
other Credit Document. Each Lender expressly acknowledges that neither the Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to such Lender, and no act
by the Agent taken under this Agreement or any other Credit Document, including
any review of the affairs of the Obligors, shall be deemed to constitute any
representation or warranty by the Agent. Except for notices, reports and other
documents expressly required to be furnished to each Lender by the Agent under
this Agreement or any other Credit Document, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition, financial or
otherwise, or creditworthiness of any Obligor which may come into the possession
of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
12.11. INDEMNIFICATION. The holders of the Credit Obligations shall
indemnify the Agent and its officers, directors, employees and agents (to the
extent not reimbursed by the Obligors and without limiting the obligation of any
of the Obligors to do so), pro rata in accordance with their respective
Aggregate Percentage Interests in the Loan, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Agent or such Persons relating
to or arising out of this Agreement, any other Credit Document, the transactions
contemplated hereby or thereby, or any action taken or omitted by the Agent in
connection with any of the foregoing; PROVIDED, HOWEVER, that the foregoing
shall not extend to actions or omissions which are taken by the Agent with gross
negligence or willful misconduct.
13. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS AND PARTICIPATIONS. Any reference
in this Agreement to any of the parties hereto shall be deemed to include the
successors and assigns of such party, and all covenants and agreements by or on
behalf of the Obligors, the Guarantors, the Agent or the Lenders that are
contained in this Agreement or any other Credit Documents shall bind and inure
to the benefit of their respective successors and assigns; PROVIDED, HOWEVER,
that (a) the Obligors may not assign their rights or obligations under this
Agreement except for mergers or liquidations permitted by Section 6.11, and (b)
the Lenders shall be not entitled to assign their respective Percentage
Interests in portions of the Loan hereunder except as set forth below in this
Section 13.
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13.1. ASSIGNMENTS BY LENDERS.
13.1.1. ASSIGNEES AND ASSIGNMENT PROCEDURES. Each Lender may
(a) without the consent of the Agent or the Borrower if the proposed
assignee is already a Lender hereunder or a Wholly Owned Subsidiary of
the same corporate parent of which the assigning Lender is a
Subsidiary, or (b) otherwise with the consents of the Agent and (so
long as no Event of Default has occurred and is continuing) the
Borrower (which consents will not be unreasonably withheld), in
compliance with applicable laws in connection with such assignment,
assign to one or more commercial banks or other financial institutions
(each, an "ASSIGNEE") all or a portion of its interests, rights and
obligations under this Agreement and the other Credit Documents,
including all or a portion, which need not be pro rata between the Loan
and the Letter of Credit Exposure, of its Commitment, the portion of
the Loan and Letter of Credit Exposure at the time owing to it and the
Notes held by it, but excluding its rights and obligations as a Letter
of Credit Issuer; PROVIDED, HOWEVER, that:
(i) the aggregate amount of the Commitment of the
assigning Lender subject to each such assignment to any
Assignee other than another Lender (determined as of the date
the Assignment and Acceptance with respect to such assignment
is delivered to the Agent) shall be not less than $5,000,000
and in increments of $1,000,000; and
(ii) the parties to each such assignment shall
execute and deliver to the Agent an Assignment and Acceptance
(the "ASSIGNMENT AND ACCEPTANCE") substantially in the form of
EXHIBIT 13.1.1, together with the Note subject to such
assignment and a processing and recordation fee of $2,500
payable to the Agent by the assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 13.1.4, from and
after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five Banking Days after the
execution thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the
extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender under
this Agreement and
(B) the assigning Lender shall, to the extent provided in
such assignment, be released from its obligations
under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 3.2.4, 3.5 and
11, as well as to any fees accrued for its account
hereunder and not yet paid).
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13.1.2. TERMS OF ASSIGNMENT AND ACCEPTANCE. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
Assignee shall be deemed to confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Credit Document or any other instrument or document furnished
pursuant hereto;
(b) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Obligors or the performance or observance by any Obligor of any
of its obligations under this Agreement, any other Credit Document or
any other instrument or document furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such Assignee will independently and without reliance upon
the Agent, such assigning 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 taking or not taking
action under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance
with the terms of this Agreement all the obligations which are required
to be performed by it as a Lender.
13.1.3. REGISTER. The Agent shall maintain at the Boston
Office a register (the "REGISTER") for the recordation of (a) the names
and addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 13.1.1, (b) the
Percentage Interests of each such Lender in the Revolving Loan as set
forth in Section 12.1 and (c) the amount of the Loan and Letter of
Credit Exposure owing to each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and
the Borrower, the Agent and the
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Lenders may treat each Person whose name is registered therein for all
purposes as a party to this 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.
13.1.4. ACCEPTANCE OF ASSIGNMENT AND ASSUMPTION. Upon its
receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an Assignee together with the Note or Notes
subject to such assignment, and the processing and recordation fee
referred to in Section 13.1.1, the Agent shall (a) accept such
Assignment and Acceptance, (b) record the information contained therein
in the Register and (c) give prompt notice thereof to the Borrower.
Within five Banking Days after receipt of notice, the Borrower, at
their own expense, shall execute and deliver to the Agent, in exchange
for the surrendered Note or Notes, a new Note or Notes to the order of
such Assignee in a principal amount equal to the applicable Commitment
and Loan assumed by it pursuant to such Assignment and Acceptance and,
if the assigning Lender has retained a Commitment and Loan, a new Note
or Notes to the order of such assigning Lender in a principal amount
equal to the applicable Commitment and Loan retained by it. Such new
Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes,
respectively, and shall be dated the date of the surrendered Notes
which they replace.
13.1.5. FEDERAL RESERVE BANK. Notwithstanding the foregoing
provisions of this Section 13, any Lender may at any time pledge or
assign all or any portion of such Lender's rights under this Agreement
and the other Credit Documents to a Federal Reserve Bank; PROVIDED,
HOWEVER, that no such pledge or assignment shall release such Lender
from such Lender's obligations hereunder or under any other Credit
Document.
13.1.6. FURTHER ASSURANCES. The Obligors shall sign such
documents and take such other actions from time to time reasonably
requested by an Assignee to enable it to share in the benefits of the
rights created by the Credit Documents.
13.2. CREDIT PARTICIPANTS. Each Lender may, without the consent of the
Borrower or the Agent, in compliance with applicable laws in connection with
such participation, sell to one or more commercial banks or other financial
institutions (each a "CREDIT PARTICIPANT") participations, in all or a portion
of its interests, rights and obligations under this Agreement and the other
Credit Documents (including all or a portion of its Commitment, the Loan and
Letter of Credit Exposure owing to it and the Notes held by it); PROVIDED,
HOWEVER, that:
(a) such Lender's obligations under this Agreement shall
remain unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
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<PAGE> 99
(c) the Credit Participant shall be entitled to the benefit of
the cost protection provisions contained in Sections 3.2.4, 3.5 and 11,
but shall not be entitled to receive any greater payment thereunder
than the selling Lender would have been entitled to receive with
respect to the interest so sold if such interest had not been sold; and
(d) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right as one of the Lenders to vote
with respect to the enforcement of the obligations of the Borrower
relating to the Loan and Letter of Credit Exposure and the approval of
any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications, consents or waivers
described in clause (c) of the proviso to Section 12.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 12.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
13.3. REPLACEMENT OF LENDER. In the event that any Lender or, to the
extent applicable, any Credit Participant (the "AFFECTED LENDER"):
(a) fails to perform its obligations to fund any portion of
the Loan or to issue any Letter of Credit on any Closing Date when
required to do so by the terms of the Credit Documents, or fails to
provide its portion of any LIBOR Pricing Option pursuant to Section
3.2.1 or on account of a Legal Requirement as contemplated by Section
3.2.5;
(b) demands payment under the Reserve provisions of Section
3.5.1, the Tax provisions of Section 3.5.2, the capital adequacy
provisions of Section 3.5.3 or the regulatory change provisions in
Section 3.5.4 in an amount the Company deems materially in excess of
the amounts with respect thereto demanded by the other Lenders; or
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Aggregate Percentage Interests in the Loan under Section 12.6.1(c) that
is consented to by the other Lenders;
then, so long as no Event of Default exists and is continuing, the Borrower
shall have the right to seek a replacement lender which is reasonably
satisfactory to the Agent (the "REPLACEMENT LENDER"). The Replacement Lender
shall purchase the interests of the Affected Lender in the Loan, Letters of
Credit and its Commitment and shall assume the obligations of the Affected
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<PAGE> 100
Lender hereunder and under the other Credit Documents upon execution by the
Replacement Lender of an Assignment and Acceptance and the tender by it to the
Affected Lender of a purchase price agreed between it and the Affected Lender
(or, if they are unable to agree, a purchase price in the aggregate amount of
the Affected Lender's Percentage Interests in each portion of the Loan and
Letter of Credit Exposure, or appropriate credit support for contingent amounts
included therein, and all other outstanding Credit Obligations then owed to the
Affected Lender). Such assignment by the Affected Lender shall be deemed an
early termination of any LIBOR Pricing Option to the extent of the Affected
Lender's portion thereof, and the Borrower will pay to the Affected Lender any
resulting amounts due under Section 3.2.4. Upon consummation of such assignment,
the Replacement Lender shall become party to this Agreement as a signatory
hereto and shall have all the rights and obligations of the Affected Lender
under this Agreement and the other Credit Documents with a Percentage Interest
in each portion of the Loan equal to the Percentage Interest in such portion of
the Loan of the Affected Lender, the Affected Lender shall be released from its
obligations hereunder and under the other Credit Documents, and no further
consent or action by any party shall be required. Upon the consummation of such
assignment, the Borrower, the Agent and the Affected Lender shall make
appropriate arrangements so that a new Note is issued to the Replacement Lender
if it has acquired a portion of the Loan. The Borrower and the Guarantors shall
sign such documents and take such other actions reasonably requested by the
Replacement Lender to enable it to share in the benefits of the rights created
by the Credit Documents. Until the consummation of an assignment in accordance
with the foregoing provisions of this Section 13.3, the Borrower shall continue
to pay to the Affected Lender any Credit Obligations as they become due and
payable.
13.4. FOREIGN LENDERS. If any Lender is not incorporated or organized
under the laws of the United States of America or a state thereof, such Lender
shall deliver to the Borrower and the Agent the following:
(a) Two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may
be, certifying in each case that such Person is entitled to receive
payments under this Agreement, the Notes and reimbursement obligations
under Letters of Credit payable to it, without deduction or withholding
of any United States federal income taxes; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9
or successor form, as the case may be, to establish an exemption from
United States backup withholding tax.
Each such Lender that delivers to the Borrower and the Agent a Form
1001 or 4224 and Form W-8 or W-9 pursuant to this Section 13 further undertakes
to deliver to the Borrower and the Agent two further copies of Form 1001 or 4224
and Form W-8 or W-9, or successor applicable form, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event
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<PAGE> 101
requiring a change in the most recent form previously delivered by it to the
Borrower and the Agent. Such Forms 1001 or 4224 shall certify that such Lender
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes. The foregoing documents
need not be delivered in the event any change in treaty, law or regulation or
official interpretation thereof has occurred which renders all such forms
inapplicable or which would prevent such Lender from delivering any such form
with respect to it, or such Lender advises the Borrower that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax. Until such time as the
Borrower and the Agent have received such forms indicating that payments
hereunder are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Borrower shall
withhold taxes from such payments at the applicable statutory rate without
regard to Section 3.5.2.
14. CONFIDENTIALITY. Each Lender will make no disclosure of confidential
information furnished to it by any Obligor unless such information shall have
become public, except:
(a) in connection with operations under or the enforcement of
this Agreement or any other Credit Document;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to
any Credit Participant, proposed Credit Participant or proposed
Assignee; PROVIDED, HOWEVER, that any such Person shall agree to comply
with the restrictions set forth in this Section 14 with respect to such
information;
(d) to its independent counsel, auditors and other
professional advisors with an instruction to such Person to keep such
information confidential; and
(e) with the prior written consent of the Borrower, to any
other Person.
15. ACKNOWLEDGMENTS AND CONSENTS. The Borrower and each of its Subsidiaries, in
their capacities as Borrower, as guarantors of the Credit Obligations, grantors
of security interests to secure the Credit Obligations and/or holders of
Subordinated Indebtedness, as the case may be, pursuant to the Credit Agreement
dated as of May 29, 1996, as amended and in effect on the date hereof, hereby
acknowledge and agree that, as of the Initial Closing Date, (i) the Uniform
Commercial Code Financing Statements and other instruments previously filed in
connection with the perfection of the Liens created in the Credit Security
pursuant to such Credit Agreement shall be deemed to refer to the Credit
Agreement as amended and restated hereby and that the term "Credit Obligations"
as used in such financing statements and other instruments, shall be deemed to
refer to the Credit Obligations under the Credit Agreement as
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<PAGE> 102
amended and restated hereby; and (ii) such financing statements and other
instruments are confirmed and ratified as being in full force and effect.
16. NOTICES. Except as otherwise specified in this Agreement, any notice
required to be given pursuant to this Agreement shall be given in writing. Any
notice, consent, approval, demand or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, unless actual receipt
of the notice is required by any Credit Document five days shall have elapsed
after the same shall have been deposited in the United States mails, with
first-class postage prepaid and registered or certified.
If to the Borrower or its Subsidiaries, to it at its address set forth
in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to the
attention of the chief financial officer, with a copy to:
Summit Partners, L.P.
600 Atlantic Avenue, Suite 2800
Boston, MA 02110
Attn: Thomas S. Roberts
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent,
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: David A. McKay
17. COURSE OF DEALING; AMENDMENTS AND WAIVERS. No course of dealing between any
Lender or the Agent, on one hand, and the Borrower or any other Obligor, on the
other hand, shall operate as a waiver of any of the Lenders' or the Agent's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. Each of the Borrower and the Guarantors acknowledges that if
the Lenders or the Agent, without being required to do so by this Agreement or
any other Credit Document, give any notice or information to, or obtain any
consent from, the Borrower or any other Obligor, the Lenders and the Agent shall
not by implication have amended, waived or modified any provision of this
Agreement or any other Credit Document, or created any duty to give any such
notice or information or to obtain any such consent on any future occasion. No
delay or omission on the part of any Lender of the Agent in exercising any right
under this Agreement or any other Credit Document or with respect to the Credit
Obligations shall operate as a waiver of such right or any other right
-102-
<PAGE> 103
hereunder or thereunder. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. No waiver,
consent or amendment with respect to this Agreement or any other Credit Document
shall be binding unless it is in writing and signed by the Agent and the
Required Lenders.
18. DEFEASANCE. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Borrower hereunder or under any other Credit Document, this
Agreement shall terminate and, at the Borrower's written request, accompanied by
such certificates and other items as the Agent shall reasonably deem necessary,
the Credit Security shall revert to the Obligors and the right, title and
interest of the Lenders therein shall terminate. Thereupon, on the Obligor's
demand and at their cost and expense, the Agent shall execute proper
instruments, acknowledging satisfaction of and discharging this Agreement, and
shall redeliver to the Obligors any Credit Security then in its possession;
PROVIDED, HOWEVER, that Sections 3.2.4, 3.5, 11, 12.8.7, 12.11, 14, 19 and 20
shall survive the termination of this Agreement.
19. VENUE; SERVICE OF PROCESS. Each of the Borrower and the other Obligors:
(a) Irrevocably submits to the nonexclusive jurisdiction of
the state courts of The Commonwealth of Massachusetts and to the
nonexclusive jurisdiction of the United States District Court for the
District of Massachusetts for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement or any other
Credit Document or the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding brought in any of the
above-named courts, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this Agreement or any other Credit Document, or the subject matter
hereof or thereof, may not be enforced in or by such court.
Each of the Borrower and the other Obligors consents to service of process in
any such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 16 is reasonably calculated to give
actual notice.
20. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE BORROWER, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS
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<PAGE> 104
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING
ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER
HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN ANY WAY CONNECTED WITH THE
DEALINGS OF THE LENDERS, THE AGENT, THE BORROWER OR ANY OTHER OBLIGOR IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each of the Borrower and the
other Obligors acknowledges that it has been informed by the Agent that the
provisions of this Section 20 constitute a material inducement upon which each
of the Lenders has relied and will rely in entering into this Agreement and any
other Credit Document, and that it has reviewed the provisions of this Section
20 with its counsel. Any Lender, the Agent, the Borrower or any other Obligor
may file an original counterpart or a copy of this Section 20 with any court as
written evidence of the consent of the Borrower, the other Obligors, the Agent
and the Lenders to the waiver of their rights to trial by jury.
21. NO STRICT CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
22. GENERAL. All covenants, agreements, representations and warranties made in
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by any Lender on its behalf, and
shall survive the execution and delivery to the Lenders hereof and thereof. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement and the other Credit Documents
(including any related fee agreements with the Agent or the Lenders) constitute
the entire understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior and contemporaneous understandings
and agreements, whether written or oral. This Agreement may be executed in any
number of counterparts which together shall constitute one instrument. This
Agreement shall be governed by and construed in accordance with the laws (other
than the conflict of laws rules) of The Commonwealth of Massachusetts, except as
may be required by the UCC with respect to matters involving the perfection of
the Agent's Lien on the Credit Security.
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<PAGE> 105
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
AMERIPATH, INC.
By /s/ Robert P. Wynn
---------------------------------
Title: Executive Vice President
AMERICAN LABORATORY ASSOCIATES, INC.
AMERIPATH FLORIDA, INC.
AMERIPATH ALABAMA, INC.
AMERIPATH KENTUCKY, INC.
AMERIPATH TEXAS, INC.
AMERIPATH OHIO, INC.
AMERIPATH CINCINNATI, INC.
AMERIPATH CLEVELAND, INC.
AMERIPATH INDIANA, INC.
AMERIPATH MISSISSIPPI, INC.
AMERIPATH 5.01(a) CORPORATION
DFW 5.01(a) CORPORATION
AMERIPATH PENNSYLVANIA, INC.
AMERIPATH PITTSBURGH, P.C.
MEDICAL SERVICES AND SUPPORT, INC.
AMERIPATH N.Y. LABS, INC.
LABORATORY PHYSICIANS, JACKSONVILLE, INC.
By /s/ Robert P. Wynn
--------------------------------
Authorized officer of each of the foregoing
corporations
BANKBOSTON, N.A., as Agent.
By /s/ Gregory G. O'Brien
--------------------------------
Title: Managing Director
BANKBOSTON, N.A., as Lender
By /s/ Gregory G. O'Brien
--------------------------------
Title: Managing Director
[Ameripath Credit Agreement #1]
<PAGE> 106
NATIONSBANK, N.A.
By /s/ Steven Meyer
--------------------------------
Title: VICE PRESIDENT
[Ameripath Credit Agreement #2]
<PAGE> 107
BANQUE PARIBAS, NEW YORK BRANCH
By /s/ Brett I. Mehlman
--------------------------------
Title: Vice President
By /s/ David R. Laffey
--------------------------------
Title: Director
[Ameripath Credit Agreement #3]
<PAGE> 108
IMPERIAL BANK
By /s/ Diane H. Russell
--------------------------------
Title: Senior Vice President
[Ameripath Credit Agreement #4]
<PAGE> 109
SILICON VALLEY BANK
By /s/ Phillip Ernst
--------------------------------
Title: Vice President
[Ameripath Credit Agreement #5]
<PAGE> 110
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By /s/ Janet P. Sammons
--------------------------------
Title: Vice President
[Ameripath Credit Agreement #6]
<PAGE> 111
BANK ONE TEXAS, N.A.
By /s/ James B. Lukowitz
--------------------------------
Title: Vice President
[Ameripath Credit Agreement #7]
<PAGE> 112
CREDITANSTALT CORPORATE FINANCE, INC.
By /s/ Scott Kray
--------------------------------
Title: Vice President
By /s/ Stephen Hipp
--------------------------------
Title: Associate
[Ameripath Credit Agreement #8]
<PAGE> 113
USTRUST
By /s/ Errin Siagel
--------------------------------
Title: Vice President
[Ameripath Credit Agreement #9]
<PAGE> 114
AMSOUTH BANK
By /s/ Liza Hoover
--------------------------------
Title: Assistant Vice President
[Ameripath Credit Agreement #10]
<PAGE> 115
AMENDMENT NO. 1
TO CREDIT AGREEMENT
AS AMENDED AND RESTATED
As of June 29, 1998
Each of Ameripath, Inc., a Delaware corporation (the "Borrower"), the
undersigned Subsidiaries of the Borrower and BankBoston, N.A., a national
banking association (together with its successors and assigns, "BankBoston"),
certain Lenders (constituting the Required Lenders) party to the Credit
Agreement (defined below), and BankBoston, as agent for itself and the other
Lenders (the "Agent") hereby agree as follows:
1. Reference to Credit Agreement and Definitions. Reference is made to the
Credit Agreement dated as of May 29, 1996, as amended and restated as of April
28, 1998 (the "Credit Agreement"), among the Borrower, certain Subsidiaries
named therein, BankBoston and the Agent. Capitalized terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings
given to them in the Credit Agreement.
2. Amendments. On the basis of the representations and warranties of the
Borrower and the Guarantors set forth herein, the Credit Agreement is hereby
further amended as follows:
2.1. Section 1.2.46 of the Credit Agreement is amended to read in its
entirety as follows:
"1.2.46 Consolidated Total Debt Service" means, for any period, the sum
of (i) Consolidated Interest Expense plus (ii) the aggregate amount of
all mandatory scheduled payments, prepayments and sinking fund payments
paid or accrued by the Company and its Subsidiaries during such period
with respect to Financing Debt, including contingent obligations under
agreements relating to Permitted Acquisitions (made before or after the
date of this Agreement) or with respect to principal paid or accrued by
the Company in respect of Subordinated Indebtedness and Contingent
Notes."
2.2. Section 6.5.3 of the Credit Agreement is amended to read in its
entirety as follows:
"6.5.3 Consolidated Operating Cash Flow. On the last day of each fiscal
quarter of the Borrower, Consolidated Operating Cash Flow for the
period of four consecutive fiscal quarters then ending shall be at
least 125% of (i) Consolidated Total Debt Service for such period minus
(ii) voluntary prepayments of the Loan and the payments made on or
about October 21, 1997 in respect of the outstanding principal amounts
of the 8% Non-Negotiable Senior Subordinated Notes due December 31,
1998 issued pursuant to the Asset Purchase Agreement dated January 1,
1994 and the 10% Junior
<PAGE> 116
Subordinated Notes due December 31, 2001 issued pursuant to the Series
A Preferred Stock, Common Stock and Junior Subordinated Note Purchase
Agreement dated January 1, 1994."
3. Representations and Warranties. In order to induce the Lenders to enter into
this Amendment, each of the Borrower and the Guarantors hereby represents and
warrants that (i) each of the representations and warranties contained in
Section 7 of the Credit Agreement will be true and correct on the date hereof
and (ii) no Default or Event of Default will exist.
4. Miscellaneous. This Amendment may be executed in any number of counterparts,
which together shall constitute one instrument, shall be a Credit Document,
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts (without giving effect to the conflict of laws
rules of any jurisdiction) and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, including as such
successors and assigns all holders of any Credit Obligation.
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<PAGE> 117
Each of the undersigned has caused this Amendment to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
AMERIPATH, INC.
By: /s/ Robert P. Wynn
---------------------------------------------
Title: Executive Vice President
AMERICAN LABORATORY ASSOCIATES, INC.
AMERIPATH FLORIDA, INC.
AMERIPATH ALABAMA, INC.
AMERIPATH KENTUCKY, INC.
AMERIPATH TEXAS, INC.
AMERIPATH OHIO, INC.
AMERIPATH CINCINNATI, INC.
AMERIPATH CLEVELAND, INC.
AMERIPATH INDIANA, INC.
AMERIPATH MISSISSIPPI, INC.
AMERIPATH 5.01(a) CORPORATION
DFW 5.01(a) CORPORATION
AMERIPATH TEXAS LABS, INC.
AMERIPATH PENNSYLVANIA, INC.
AMERIPATH PITTSBURGH, P.C.
MEDICAL SERVICES AND SUPPORT, INC.
AMERIPATH N.Y. LABS, INC.
LABORATORY PHYSICIANS, JACKSONVILLE,INC.
AMERIPATH YOUNGSTOWN, P.C.
AMERIPATH NORTH CAROLINA, INC.
AMERIPATH LUBBOCK 5.01(a) CORPORATION
AMERIPATH SAN ANTONIO 5.01(a) CORPORATION
DRS. ROGERS, WHITE & SMITH, M.D., INC.
PASADENA PATHOLOGY
RMC PATHOLOGY ASSOCIATES
By: /s/ Robert P. Wynn
---------------------------------------------
Authorized officer of each of the foregoing
corporations
-3-
<PAGE> 118
BANKBOSTON, N.A.,
for Itself and as Agent
By: /s/ Gregory G. O'Brien
---------------------------------------
Authorized Officer
NATIONSBANK, N.A.
By: /s/ Alexander L. Rody
---------------------------------------
Title: Vice President
BANQUE PARIBAS, NEW YORK BRANCH
By
---------------------------------------
Title:
By
---------------------------------------
Title:
IMPERIAL BANK
By
---------------------------------------
Title:
SILICON VALLEY BANK
By
---------------------------------------
Title:
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By
---------------------------------------
Title:
-4-
<PAGE> 119
BANK ONE TEXAS, N.A.
By: /s/ James B. Lukowitz
---------------------------------------
Title: Vice President
CREDITANSTALT CORPORATE FINANCE, INC.
By
---------------------------------------
Title:
By
---------------------------------------
Title:
USTRUST
By
---------------------------------------
Title:
AMSOUTH BANK
By
---------------------------------------
Title:
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
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0 0
0 0
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<EPS-PRIMARY> .23 .42
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