<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X
----- Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
or
- ----- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------- ---------
Commission File No.: 0-19897
SMT HEALTH SERVICES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1672183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10521 PERRY HIGHWAY, WEXFORD, PENNSYLVANIA 15090
(Address of principal executive offices)
412-933-3300
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
At June 30, 1997, 5,746,300 shares of Common Stock, $0.01 par value, of the
registrant were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SMT Health Services Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
ASSETS (unaudited)
- ------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents - unrestricted $13,513,262 $ 4,643,158
Cash and cash equivalents - restricted 400,000 400,000
Accounts receivable - no allowance for doubtful
accounts 2,127,781 1,726,442
Notes receivable - current portion 26,706 52,240
Receivable from the sale of leases secured by equipment
- current portion (Note 4) 284,640 387,999
Other current assets 367,244 615,257
----------- -----------
Total current assets 16,719,633 7,825,096
----------- -----------
PROPERTY AND EQUIPMENT:
Equipment 203,779 200,709
Furniture and fixtures 53,217 43,055
Vehicles 223,611 162,915
Leasehold improvements 32,995 28,495
Mobile MRI equipment 41,773,266 35,932,207
----------- -----------
Total property and equipment 42,286,868 36,367,381
Less accumulated depreciation and amortization ( 9,798,183) ( 6,734,353)
----------- -----------
Property and equipment, net 32,488,685 29,633,028
----------- -----------
OTHER ASSETS:
Receivable from the sale of leases secured by equipment
- noncurrent (Note 4) 385,403 490,591
Contract and license acquisition costs, net of
accumulated amortization of $129,000 and
$15,000, respectively 590,353 631,933
Deposits and other assets 552,241 594,915
Deferred income taxes -- 322,000
----------- -----------
Total other assets 1,527,997 2,039,439
----------- ----------
TOTAL ASSETS $50,736,315 $39,497,563
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- -------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 887,543 $ 363,682
Accrued wages and related taxes 117,498 111,664
Current portion of long-term debt and capital
lease obligations 5,927,827 6,349,962
Other current liabilities 1,103,576 412,748
----------- -----------
Total current liabilities 8,036,444 7,238,056
----------- -----------
Deferred tax liability 173,000 --
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS -
less current portion 17,152,347 20,859,964
----------- -----------
Total liabilities 25,361,791 28,098,020
----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value; authorized
10,000,000 shares; issued and outstanding 5,746,300
and 3,695,030, respectively 57,463 36,950
Cumulative Convertible Preferred Stock; $0.01 par value;
authorized 994,600 shares; no shares issued and
outstanding -- --
Additional paid-in capital (Note 5) 24,576,612 12,081,614
Retained earnings (accumulated deficit) 740,449 (719,021)
----------- -----------
Total stockholders' equity 25,374,524 11,399,543
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $50,736,315 $39,497,563
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Earnings (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
REVENUES:
Service revenue $6,774,955 $4,596,571
Interest income 172,535 31,104
---------- ----------
Total revenues 6,947,490 4,627,675
---------- ----------
COSTS AND EXPENSES:
Operating expenses 2,167,459 1,524,754
Depreciation and amortization 1,633,880 1,119,823
Selling, general and administrative 965,461 690,967
Professional fees related to acquisition (Note 11) 220,000 --
Interest - third parties 444,289 489,136
Interest - related parties 32,699 --
---------- ----------
Total costs and expenses 5,463,788 3,824,680
---------- ----------
Income before income taxes 1,483,702 802,995
Income taxes (Note 5) 605,000 240,000
---------- ----------
Net income $ 878,702 $ 562,995
========== ==========
Earnings Per Common Share $.15 $.14
========== ==========
Weighted Average Shares outstanding (Note 2) 5,718,000 2,998,000
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Earnings (unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
REVENUES:
Service revenue $13,014,262 $8,724,606
Interest income 274,603 84,270
----------- ----------
Total revenues 13,288,865 8,808,876
----------- ----------
COSTS AND EXPENSES:
Operating expenses 4,152,758 2,890,727
Depreciation and amortization 3,193,672 2,108,997
Selling, general and administrative 1,907,332 1,373,233
Professional fees related to acquisition (Note 11) 220,000 --
Interest - third parties 1,012,762 946,443
Interest - related parties 66,871 --
----------- ----------
Total costs and expenses 10,553,395 7,319,400
----------- ----------
Income before income taxes and extraordinary item 2,735,470 1,489,476
Income taxes (Note 5) 1,095,000 469,000
----------- ----------
Net income before extraordinary item 1,640,470 1,020,476
Extraordinary loss on early extinguishment of
debt (net of income tax benefit of $115,000)
(Note 10) 181,000 --
----------- ----------
Net income $ 1,459,470 $1,020,476
=========== ==========
Earnings Per Common Share:
Earnings before extraordinary item $.30 $.27
Extraordinary loss per share (Note 10) (.03) --
----------- ----------
Net earnings per Common Share $ .27 $.27
=========== ==========
Weighted Average Shares outstanding (Note 2) 5,081,000 2,919,000
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Ended Ended
June 30, 1997 June 30, 1996
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,459,470 $ 1,020,476
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss on early extinguishment of debt 296,000 --
Depreciation and amortization 3,193,672 2,108,997
Deferred income taxes 740,000 359,000
Changes in assets and liabilities:
Accounts and notes receivable (375,805) (244,708)
Other current assets 248,013 (179,106)
Accounts payable and other 1,214,689 (53,075)
Accrued wages and related taxes 5,834 12,866
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,781,873 3,024,450
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (2,983,426) (1,389,258)
Construction of leasehold improvements (4,500) (1,330)
Payment for purchase of acquired entity -- (642,840)
Net change in cash restricted for equipment financing purposes -- 330,000
Other 12,036 66,450
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,975,890) (1,636,978)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt and capital leases:
Third parties (2,569,987) (2,113,318)
Related parties (124,153) --
Principal pay-off of capital leases (4,236,435) --
Extraordinary loss on early extinguishment of debt ( 296,000) --
Issuance of Common Stock from exercise of warrants and stock options 12,270,511 944,822
Other 20,185 --
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 5,064,121 ( 1,168,496)
------------ ------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS - (unrestricted) 8,870,104 218,976
CASH AND CASH EQUIVALENTS - (unrestricted) -
Beginning of period 4,643,158 2,341,519
------------ ------------
CASH AND CASH EQUIVALENTS - (unrestricted) -
End of period $ 13,513,262 $ 2,560,495
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
For The Six Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Retained
Common Stock Preferred Stock Additional Earnings/ Total
--------------------- ------------------ Paid-In (Accumulated Stockholders
Shares Amount Shares Amount Capital Deficit) Equity
------ ------ ------ ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES - December 31, 1996 3,695,030 $36,950 -- -- $12,081,614 $ (719,021) $11,399,543
Exercise of Warrants and Stock
Options (Note 8) 2,051,270 20,513 -- -- 12,249,998 -- 12,270,511
Tax Adjustment Resulting From
Stock
Option and Warrant Exercises
(Note 5) -- -- -- -- 245,000 -- 245,000
Net Income -- -- -- -- -- 1,459,470 1,459,470
--------- ------- ----- ---- ----------- ---------- ----------
BALANCES - June 30, 1997 5,746,300 $57,463 -- $ -- $24,576,612 $ 740,449 $25,374,524
========= ======= ===== ====== =========== ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-7-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1 - BASIS OF PRESENTATION
SMT Health Services Inc. and its wholly owned subsidiaries (the "Company") are
engaged primarily in providing medical diagnostic imaging services to
hospitals, physicians and patients. The Company, through its subsidiaries,
currently operates twenty (including new MRI units acquired in April and June
1997, respectively) mobile Magnetic Resonance Imaging (MRI) Units ("MRI
Units") in Pennsylvania, West Virginia, North Carolina, South Carolina,
Virginia, Kentucky and Ohio.
The Company's Common Stock currently trade on the National Association of
Securities Dealers, Inc. Automated Quotations Systems (NASDAQ) National Market
System under the symbol "SHED".
The unaudited consolidated financial statements as of and for the three and
six month periods ended June 30, 1997 and 1996 include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements included herein have been
prepared by management in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures which are normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted in accordance with SEC informational requirements.
The financial statements reflect normal recurring accounting adjustments
which, in the opinion of management, are necessary for a fair presentation of
the financial position and results of operations for the interim period. The
results of operations for the three and six month periods ended June 30, 1997
are not necessarily indicative of the results for the entire current fiscal
year ending December 31, 1997. The consolidated financial statements included
herein should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Form 10-K for the year
ended December 31, 1996 which is on file at the Securities and Exchange
Commission.
Certain amounts in the June 30, 1996 Statements of Earnings and Cash Flows
have been reclassified to conform with the June 30, 1997 presentation.
NOTE 2 - NET EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT
The net earnings per common and common share equivalent are calculated using
the weighted average common and common share equivalents outstanding during
the year, except where anti-dilutive. Common share equivalents include shares
issuable upon the exercise of stock options, rights and warrants less the
number of shares assumed purchased with the proceeds available from the
assumed exercise of the options, rights and warrants.
-8-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 2 - NET EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT
(Continued)
The Treasury Stock Method of reflecting use of proceeds from options and
warrants may not adequately reflect potential dilution if options and warrants
to acquire a substantial number of Common Shares (greater than 20% of the
number of Common Shares outstanding for the period for which the computation
is being made) are outstanding. In such instances, the Modified Treasury
Stock Method must be utilized.
The Company's options and warrants to acquire Common Shares exceeded 20% of
the number of Common Shares outstanding for the three and six month periods
ended June 30, 1997 and 1996 and accordingly, the Treasury Stock Method has
been modified in determining the dilutive effect of the options and warrants
on earnings per share data for those periods.
Fully diluted earnings per common share are anti-dilutive and, accordingly,
are not presented.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share. This
Statement is effective for financial statements issued for periods ending
after December 15, 1997 including "interim" periods and earlier application is
not permitted. In summary, the Statement simplifies the standards for
computing earnings per share primarily found in APB Opinion No. 15, Earnings
Per Share and makes them comparable to international standards. The standard
replaces the presentation of Primary Earnings Per Share with a presentation of
Basic Earnings Per Share. It also requires dual presentation of basic and
diluted earnings per share on the income statement of all entities with
complex capital structures.
Basic EPS excludes dilution and is computed by dividing income available to
Common Stockholders by the weighted average number of Common Shares
outstanding for the period. Diluted EPS reflects 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. Diluted EPS is computed
similarly to fully diluted EPS pursuant to Opinion 15.
-9-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 2 - NET EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT
(Continued)
Had the Company been permitted to adopt the Statement as of January 1, 1997,
the second quarter and six months ended June 30, 1997 pro forma Basic and
Diluted EPS would have been:
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Basic:
Earnings before extraordinary item $ .16 $ .19 $ .32 $ .35
Extraordinary loss per share -- -- (.03) --
---------- ---------- ---------- ----------
Net Basic Earnings per share $ .16 $ .19 $ .29 $ .35
========== ========== ========== ==========
Diluted:
Earnings before extraordinary item $ .15 $ .14 $ .30 $ .27
Extraordinary loss per share -- -- (.03) --
---------- ---------- ---------- ----------
Net Diluted Earnings per share $ .15 $ .14 $ .27 $ .27
========== ========== ========== ==========
Weighted Average Shares Outstanding 5,718,000 2,998,000 5,081,000 2,919,000
========== ========== ========== ==========
</TABLE>
NOTE 3 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
The Company is engaged primarily in providing mobile MRI services to small-to-
medium-sized hospitals in Pennsylvania, West Virginia, North Carolina, South
Carolina, Virginia, Kentucky and Ohio.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain Significant Estimates: The Company operates mobile MRI Units which
are capital intensive and subject to changes in technology. The Company
primarily leases or finances such equipment over a 60 month period and
depreciates the equipment over the respective finance period to an estimated
residual value which typically approximates 20% of the original cost of the
equipment. The useful lives and residual values estimated by management are
considered significant estimates. Management does not currently anticipate
significant technological advances which could significantly affect its
estimates.
-10-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 3 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES (Continued)
The Company is not dependent on any one customer or geographic region as a
source of its revenues. However, the Company utilizes the services of Hospital
Shared Services to process approximately 29% of its billings and collections.
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Capital lease and loan obligations $23,080,174 $27,209,926
Less current portion 5,927,827 6,349,962
----------- ------------
$17,152,347 $20,859,964
=========== ============
</TABLE>
The total cost and accumulated amortization of property securing capital lease
and loan obligations at June 30, 1997 were approximately $33,999,000 and
$7,600,000, respectively. Interest rates related to such long-term debt and
capital leases range from approximately 8.0% to 10.5%.
During March 1997, the Company paid-off the remaining principal balance of
three capital lease obligations totaling $4,236,000. The interest rates under
these capital leases ranged from 10.6% to 13.5% and the monthly cashflow savings
approximates $128,000 (Note 10).
The long-term debt and capital lease obligations balance includes approximately
$690,000 of capital lease obligations due to third parties related to the
equipment at the Auburn Regional Center for Cancer Care and Airport Regional
Imaging Center, which the Company had treated as discontinued operations and
sold in October 1994 and June 1995, respectively. Accordingly, the Company has
recorded an offsetting receivable for the lease receivables due from the
purchasers of the centers. Such lease receivables are secured by the equipment
and accounts receivable of the centers.
-11-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Continued)
On April 12, 1997 the Company took delivery of and began operation of a new 1.0
Tesla mobile MRI unit. This unit cost approximately $1.9 million and the Company
financed approximately $1.5 million over a 60 month period requiring monthly
payments of approximately $30,000. This unit experienced mechanical problems
and in July 1997 was returned for a full refund. The Company replaced this unit
in July 1997 with a new unit which cost approximately $1.8 million and was
purchased for cash.
On June 26, 1997 the Company purchased a new 1.0 Tesla mobile MRI unit. This
unit cost $1.8 million and the Company paid $1.3 million in cash, net of an
approximate $525,000 trade-in value for an older .5 Tesla unit. The Company is
leasing this unit to GE Medical Systems for three months and will take delivery
of the new unit and complete the .5 Tesla unit trade-in during October 1997.
On June 30, 1997 the Company took delivery of and began operation of a new 1.0
Tesla mobile MRI unit. The unit cost $1.7 million and the Company financed
approximately $1.3 million over a 60 month period requiring payments of
approximately $29,000 (Note 11).
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109). Deferred income taxes are provided to
account for temporary differences between financial statement accounting and
income tax reporting and relate principally to differences in reporting for
diagnostic medical equipment, depreciation, accrued expenses and net operating
loss carryforwards.
As a result of the exercise of stock options and warrants pursuant to the
Company's 1991 Employee Stock Option Plan and the 1995 Director Warrant Plan,
respectively, during the six month period ended June 30, 1997, the Company is
entitled to a tax deduction of approximately $927,000. The deduction relates to
the difference between the option exercise price and the fair market value of
the Common Stock at the time of such exercises. In accordance with SFAS 109,
the Company recorded a deferred tax asset of approximately $245,000 related to
this deduction and in accordance with Accounting Principles Board Opinion 25
(APB 25) a corresponding credit was made to additional paid-in capital.
Management believes no deferred tax asset valuation allowance is necessary as of
June 30, 1997.
At June 30, 1997, the Company had net operating loss carryforwards for federal
and state income tax purposes of approximately $4.6 million and $7.2 million,
respectively, which are available to offset future federal and state taxable
income through 2010 and 1999, respectively.
-12-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
The Company entered into various capital leases or financing arrangements
(including new units and unit upgrades) aggregating approximately $3,000,000 and
$5,715,000 during the six months ended June 30, 1997 and 1996, respectively.
These amounts were recorded as long-term debt and obligations under capital
leases and as mobile MRI equipment.
The total amount of interest payments during the six months ended June 30, 1997
and 1996 were approximately $1,100,000 and $960,000, respectively. In addition,
income tax payments for the six months ended June 30, 1997 and 1996 were
approximately $19,000 and $196,000, respectively.
NOTE 7 - ACQUISITION
On March 21, 1996, the Company purchased certain assets of a mobile provider
which operated mobile units in the state of North Carolina (the "Seller"). The
purchase price approximated $600,000 in cash [net of negotiated trade-in value
of approximately $500,000 (which approximated the purchase price of the units
acquired) for two of the Seller's mobile MRI units] in exchange for MRI Programs
including Certificate of Need licenses or exemptions and certain customer
service contracts. The Company traded-in and upgraded one of the purchased
units to newer technology in April 1996 and traded-in and upgraded the second
unit during July 1996.
NOTE 8 - STOCK OPTIONS AND WARRANTS
During the six months ended June 30, 1997, stock options and Warrants covering
82,367 and 80,250 shares of Common Stock, respectively, were exercised pursuant
to the Company's 1991 and 1996 Employee Stock Option Plans and the 1995 Director
Warrant Plan. The Company received approximately $312,000 and $291,000 as a
result of such stock option and Warrant exercises, respectively. At June 30,
1997 options to purchase 557,789 shares and Warrants to purchase 454,750 shares
were exercisable pursuant to the employee stock option plans and director
warrant plan, respectively.
During January through March 4, 1997 (the publicly traded Warrants expired at
5:00 p.m. on March 4, 1997) 1,677,000 Warrants were exercised and the Company
issued 1,882,000 shares of Common Stock of the Company. The Company received
net cash proceeds of approximately $11.7 million as a result of such Warrant
exercises. The Warrants ceased trading on March 5, 1997.
-13-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 9 - COMMON STOCK DIVIDEND
On January 14, 1997, the Company issued 247,130 Common Shares in accordance
with a 7% Common Stock dividend for all shareholders of record on January 10,
1997. The December 31, 1996 financial statements have been adjusted to reflect
this post balance sheet equity activity. Further, in accordance with APB 15,
the Company has reflected the 7% Common Stock dividend in calculating earnings
per share for both periods presented.
NOTE 10 - EXTINGUISHMENT OF DEBT
During March 1997 the Company paid-off the remaining principal balance of three
capital lease obligations totaling $4,236,000. The total amount paid to
extinguish the capital leases totaled $4,532,000. The difference between the
amount paid to extinguish the capital leases and the net carrying amount of the
debt totaled $296,000, relating primarily to pre-payment penalties, and has been
recorded as an extraordinary loss, net of income taxes, in accordance with
Accounting Principles Board Opinion No. 26 Early Extinguishment of Debt (APB
26). The interest rates under the capital leases ranged from 10.6% to 13.5%.
The monthly cashflow savings approximates $128,000 and the interest expense
savings for 1997 approximates $400,000 before income taxes.
NOTE 11 - SUBSEQUENT EVENT: TENDER OFFER AND MERGER
On June 23, 1997, the Company signed a definitive agreement with Three Rivers
Acquisition Corp. ("Three Rivers"), an affiliate of Apollo Management, L.P.
("Apollo"), whereby Three Rivers agreed to commence a cash tender offer to
acquire all of the outstanding shares of the Company for $11.75 per share,
to be followed by a merger. The tender offer commenced on June 30, 1997. The
total transaction is valued at approximately $100 million including outstanding
stock options and warrants and the assumption of debt.
On August 5, 1997, Three Rivers successfully completed its $11.75 per share
cash tender offer. The depository for the offer informed Three Rivers that
5,280,297 shares (91.9% of the outstanding shares) were validly tendered and not
withdrawn prior to the expiration of the offer, including 2,841 shares tendered
pursuant to notice of guaranteed delivery procedures. All shares validly
tendered and not withdrawn were accepted for payment of $11.75 per share in
cash. The remaining shares of the Company will be converted into the right to
receive $11.75 per share in cash in a merger between the Company and Three
Rivers. The merger is expected to be consummated in September 1997.
-14-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
JUNE 30, 1997
NOTE 11 - SUBSEQUENT EVENT: TENDER OFFER AND MERGER (Continued)
On August 5, 1997, Three Rivers Holding Corp., Three Rivers, the Company and
various lenders entered into an $80 million credit facility that was used to
fund a portion of the cash tender and to refinance approximately $19 million of
Company indebtedness. The remainder of the credit facility will be used for
working capital requirements and general corporate purposes of the Company. The
remainder of the cash tender was funded with an approximate $35 million
investment by Three Rivers.
The Company accrued $220,000 as of June 30, 1997 for professional fees related
to the aforementioned merger and tender offer. The fees were primarily related
to legal and accounting services.
On July 23, 1997, Alliance Imaging, Inc. ("Alliance") entered into an Agreement
and Plan of Merger (the "Recapitalization Merger Agreement") with Newport
Investment LLC (the "Investor"), a Delaware limited liability company and an
affiliate of Apollo. In connection with the Recapitalization Merger contemplated
by the Recapitalization Merger Agreement and subject to certain conditions
Alliance will acquire all the shares of common stock of a new holding company
formed by Apollo to acquire the Company (the "Acquisition"). After the
Recapitalization Merger and the Acquisition, affiliates of Apollo will own
approximately 90% of the outstanding common stock of Alliance, and Alliance's
existing shareholders will own approximately 10% of the outstanding common stock
of Alliance.
-15-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Any statements released by the Company that are forward-looking are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that forward-looking statements
involve risks and uncertainties which may affect the Company's business and
prospects, including economic, competitive, governmental, technological and
other factors discussed in the Company's filings with the Securities and
Exchange Commission.
The discussion that follows should be read in conjunction with the accompanying
unaudited Consolidated Financial Statements and Notes thereto of SMT Health
Services Inc. and Subsidiaries.
Results of Operations
The following table sets forth for the periods indicated the percentages which
the items in the Statement of Earnings bear to revenues and the dollar increase
(decrease) of such items as compared to the corresponding period in the prior
year.
<TABLE>
<CAPTION>
Percentage of Revenue Increase (Decrease) Prior Year
- -------------------------------------------------------------------------------------------------------------------
Three Six Months Three Six Months
Months Ended Ended Months Ended Ended
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6/30/97 6/30/96 6/30/97 6/30/96 6/30/97 6/30/97
- -------------------------------------------------------------------------------------------------------------------
Revenues 100% 100% 100% 100% $2,320,000 $4,480,000
- -------------------------------------------------------------------------------------------------------------------
Cost & Expenses:
- -------------------------------------------------------------------------------------------------------------------
Operating 31% 33% 31% 33% 643,000 1,262,000
- -------------------------------------------------------------------------------------------------------------------
Depreciation & Amortization 24% 24% 24% 24% 514,000 1,085,000
- -------------------------------------------------------------------------------------------------------------------
S, G & A 14% 15% 14% 16% 274,000 534,000
- -------------------------------------------------------------------------------------------------------------------
Interest 7% 11% 8% 11% (12,000) 133,000
- -------------------------------------------------------------------------------------------------------------------
Other 3% -- 2% -- 220,000 220,000
- -------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 79% 83% 79% 84% 1,639,000 3,234,000
- -------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes
and Extraordinary Item 21% 17% 21% 16% 681,000 1,246,000
- -------------------------------------------------------------------------------------------------------------------
Income Taxes 9% 5% 9% 5% 365,000 626,000
- -------------------------------------------------------------------------------------------------------------------
Net Income Before Extraordinary Item 12% 12% 12% 11% 316,000 620,000
- -------------------------------------------------------------------------------------------------------------------
Extraordinary Loss on Early -- -- 1% -- -- 181,000
Extinguishment of Debt
- -------------------------------------------------------------------------------------------------------------------
Net Income 12% 12% 11% 11% $ 316,000 $ 439,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Three Months Ended June 30, 1997 Compared To
The Three Months Ended June 30, 1996
Revenues for the second quarter of 1997 increased $2,320,000, or 50%, to
$6,947,000 compared to $4,628,000 for the second quarter of 1996. The increase
in revenue is principally due to four new units placed into service during late
1996 and a new unit placed into service during mid-April 1997. In addition, the
upgrade of three units to newer technology during 1996 and increased utilization
of the Company's mobile MRI units also contributed to the increased revenue.
Revenues derived from hospitals which the Company serviced in both comparable
periods increased approximately 21% during the second quarter of 1997 compared
to the second quarter of 1996 primarily as a result of increased MRI procedures.
The Company operated an average of approximately 19 units during the second
quarter of 1997 compared to approximately 13 units during the 1996 second
quarter. During the second quarter of 1997, the Company performed 16,763 MRI
scans representing an increase of 5,628, or 51%, over the 11,135 MRI scans
during the second quarter of 1996. Average scans per day per unit increased .7
to 11.5 scans per day during the second quarter 1997 compared to 10.8 during the
second quarter 1996. The average fee per scan approximated $394 for the second
quarter of 1997 versus $408 for the second quarter of 1996. The $14, or 3%,
decrease in average fee per scan primarily related to discounted fees provided
to customers based upon higher scan volumes.
Operating expenses increased $643,000, or 42%, to $2,168,000 during the second
quarter of 1997 compared to $1,525,000 during the second quarter of 1996.
Approximately $491,000, or 76% of the increase, is due to operating expenses
associated with four new units purchased during late 1996 and the new unit
placed into service during April 1997. The remaining increase of $152,000, or
24%, is primarily due to higher payroll costs for operational personnel.
Operating expenses per scan decreased $8, or 6%, to approximately $129 compared
to $137 per scan during the second quarter of 1996 primarily due to higher scan
volumes.
Depreciation and amortization expenses increased $514,000, or 46%, in the
second quarter of 1997 to $1,634,000 from $1,120,000 during the second quarter
of 1996. This increase was primarily due to depreciation expense associated
with the four new units purchased during late 1996, the new unit purchased
during April 1997, as well as the upgrade of three units to newer technology
during 1996.
Selling, general and administrative costs in the second quarter of 1997
increased $274,000 to $965,000, or 14% of revenues, compared to $691,000, or 15%
of revenues during the second quarter of 1996. The increase is primarily due to
an approximate $170,000 increase in executive compensation and costs related to
the Company's management bonus plan, $26,000 increase in marketing expenses,
$23,000 increase in miscellaneous taxes, $19,000 increase in travel and
entertainment, and an increase of approximately $17,000 in directors fees and
expenses.
-17-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Three Months Ended June 30, 1997 Compared To
The Three Months Ended June 30, 1996
(Continued)
Interest expense for the second quarter of 1997 decreased $12,000 to $477,000
from $489,000 in the second quarter of 1996, primarily as a result of the three
leases paid off in March 1997, partially offset by interest expenses related to
the financing of the four new units purchased during late 1996, the new unit
purchased in April 1997, as well as the upgrade of three units to newer
technology during 1996. Interest expense decreased as a percentage of revenue
to 7% in the second quarter of 1997 compared to 11% of revenue in the second
quarter of 1996.
The Company recorded $220,000 of the expenses regarding professional fees
incurred related to the tender offer and merger of the Company (See Liquidity
and Capital Resources.)
The Company reported net income of $879,000, or $.15 per share, during the
second quarter of 1997 versus $563,000, or $.14 per share, during the second
quarter of 1996. Excluding the $220,000 (approximately $132,000, net of tax
effect) recorded for expenses regarding professional fees incurred related to
the tender offer and merger of the Company, net income would have approximated
$1,011,000, or $.17 per share, during the second quarter of 1997. Income tax
expense for the second quarter of 1997 was $605,000, an effective tax rate of
approximately 40%, as compared to income tax expense of $240,000, an effective
tax rate of approximately 30%, for the second quarter of 1996.
Six Months Ended June 30, 1997 Compared To The Six Months Ended June 30, 1996
Revenues for the six months ended June 30, 1997 increased $4,480,000, or 51%,
to $13,289,000 compared to $8,809,000 for the six months ended June 30, 1996.
The increase in revenue is principally due to three new units placed into
service during the latter part of the 1996 first quarter, four additional units
subsequently placed into service during 1996, and a new unit placed into
service during mid-April 1997. In addition, the upgrade of three units to newer
technology during 1996 and increased utilization of the Company's mobile MRI
units also contributed to the increased revenue. Revenues derived from
hospitals which the Company serviced in both comparable periods increased
approximately 22% during the six months ended June 30, 1997 compared to the six
months ended June 30, 1996, primarily as a result of increased MRI procedures.
The Company operated an average of approximately 18.5 units during the six
months ended June 30, 1997 compared to approximately 13 units during the six
months ended June 30, 1996. During the six months ended June 30, 1997, the
Company performed 31,900 MRI scans representing an increase of 11,273, or 55%,
over the 20,627 MRI scans during the six months ended June 30, 1996. Average
scans per day per unit increased .6 to 11.5 scans per day during the six months
ended June 30, 1997 compared to 10.9 during the six months ended June 30, 1996.
The average fee per scan approximated $396 for the six months ended June 30,
1997 versus $414 for the six months ended June 30, 1996. The $18, or 4%,
decrease in average fee per scan primarily related to discounted fees provided
to customers based upon higher scan volumes.
-18-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Six Months Ended June 30, 1997 Compared To The Six Months Ended June 30, 1996
(Continued)
Operating expenses increased $1,262,000, or 44%, to $4,153,000 during the six
months ended June 30, 1997 compared to $2,891,000 during the six months ended
June 30, 1996. Approximately $970,000, or 77% of the increase, is due to
operating expenses associated with three new units purchased between February
and March of the 1996 first quarter, the four additional units subsequently
purchased during 1996, and the new unit placed into service during April 1997.
The remaining increase of $292,000, or 23%, is primarily due to higher payroll
costs for operational personnel. Operating expenses per scan decreased $10, or
7%, to approximately $130 compared to $140 per scan during the six months ended
June 30, 1996 primarily due to higher scan volumes.
Depreciation and amortization expenses increased $1,085,000, or 52%, for the
six months ended June 30, 1997 to $3,194,000 from $2,109,000 during the six
months ended June 30, 1996. This increase was primarily due to depreciation
expense associated with the three new units purchased between February and March
of the 1996 first quarter, the four additional units subsequently purchased
during 1996, the new unit placed into service in April 1997, as well as the
upgrade of three units to newer technology during 1996.
Selling, general and administrative costs for the six months ended June 30,
1997 increased $534,000 to $1,907,000, or 14% of revenues, compared to
$1,373,000, or 16% of revenues during the six months ended June 30, 1996. The
increase is primarily due to an approximate $308,000 increase in executive
compensation and costs related to the Company's management bonus plan, an
approximate $94,000 increase in marketing expenses, $41,000 increase in
miscellaneous taxes, $35,000 increase in travel and entertainment, $26,000
increase in director fees and expenses, and $16,000 increase in insurance costs,
partially offset by a reduction in consulting expenses.
Interest expense for the six months ended June 30, 1997 increased $133,000 to
$1,080,000 from $946,000 during the six months ended June 30, 1996, primarily as
a result of the three new units purchased between February and March of the 1996
first quarter, the four additional units subsequently purchased during 1996, the
new unit purchased in April 1997, as well as the upgrade of three units to newer
technology during 1996. This increase was partially offset by interest savings
of approximately $114,000 related to the payoff of three leases in March 1997.
Interest expense decreased as a percentage of revenue to 8% in the six months
ended June 30,1997 compared to 11% of revenue during the six months ended June
30, 1996.
The Company recorded $220,000 of the expenses regarding professional fees
incurred related to the tender offer and merger of the Company (See Liquidity
and Capital Resources.)
-19-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Six Months Ended June 30, 1997 Compared To The Six Months Ended June 30, 1996
(Continued)
The Company reported net income before an extraordinary loss of $1,640,000, or
$.30 per share, during the six months ended June 30, 1997 versus $1,020,000, or
$.27 per share during the six months ended June 30, 1996. Excluding the
$220,000 (approximately $132,000, net of tax effect) recorded for expenses
regarding professional fees incurred related to the tender offer and merger of
the Company, net income before extraordinary loss would have approximated
$1,772,000 or $.33 per share, during the six months ended June 30, 1997. Income
tax expense for the six months ended June 30, 1997 was $1,095,000, an effective
tax rate of approximately 40%, as compared to income tax expense of $469,000, an
effective tax rate of approximately 32%, for the six months ended June 30, 1996.
The Company reported an extraordinary loss on early extinguishment of debt (see
Note 10 to the Company's Unaudited Consolidated Financial Statements included in
Item 1 and incorporated herein by reference) of $181,000, or $.03 per share, net
of an income tax benefit of $115,000, primarily as a result of pre-payment
penalties related to the debt pay-off.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, the Company's cash provided by
operations was $6,782,000 as compared to $3,024,000 during the six months ended
June 30, 1996. This increase of $3,758,000 is principally due to an increase in
revenues during the six months ended June 30, 1997 compared to the comparable
prior year period. The Company operated an average of approximately 18.5 units
during the six months ended June 30, 1997 compared to approximately 13 units
during the six months ended June 30, 1996. In addition, revenues derived from
hospitals which the Company serviced in both comparable periods increased
approximately 22% during the six months ended June 30, 1997.
The Company used cash in investing activities during the six months ended June
30, 1997 of $2,976,000 primarily related to the down payment on the purchase of
a new MRI unit in April 1997, the cash purchase of a new MRI unit in June 1997
and the down payment on a new unit purchased on June 30, 1997, as well as the
purchase of laser cameras and other upgrade equipment for several of the
Company's existing units.
The Company obtained cash from financing activities during the six months ended
June 30, 1997 of approximately $5,064,000 primarily related to the $12,271,000
received upon the exercise of warrants and stock options , including the
conversion of 1,677,000 publicly traded warrants which resulted in the issuance
of 1,882,000 shares of Common Stock and proceeds of approximately $11,700,000
(see Note 8 to the Company's Unaudited Consolidated Financial Statements
included in Item 1 and incorporated herein by reference). This increase was
offset by $2,694,000 of principal payments under long-term debt and capital
leases as well as the principal pay-off of three capital leases totaling
$4,532,000. The interest rates under
-20-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
these capital leases ranged from 10.6% to 13.5% and will result in monthly
cashflow savings of approximately $128,000 (see Note 10 to the Company's
Unaudited Consolidated Financial Statements included in Item 1 and incorporated
herein by reference). The Company experienced a net increase in unrestricted
cash and cash equivalents of approximately $8,870,000 during the six months
ended June 30, 1997 and maintained an unrestricted cash balance at June 30, 1997
of approximately $13,513,000. The Company also maintained a restricted cash
balance of $400,000 at June 30, 1997.
The Company's trade accounts receivable balance increased by $402,000 to
$2,128,000 at June 30, 1997, primarily due to higher service revenues during the
quarter ended June 30, 1997. In the experience of the Company, average accounts
receivable collections typically do not exceed 40 days, as there are no billings
subject to traditional third-party payors, and the accounts receivable balance
turned over approximately seven times during the six months ended June 30, 1997.
Approximately 29% of the Company's billings and collections are processed
through Hospital Shared Services ("HSS"), a representative of certain hospitals.
As a fee for these services, HSS retains approximately 2.5% of gross billings to
these hospitals and the Company records the service revenues and related
receivables net of such fees.
At June 30, 1997, the Company had working capital of $8,704,000. In addition,
the Company's cash flow from operations totaled $6,782,000 for the six months
ended June 30, 1997 and the Company continues to generate a positive cash flow.
The Company has been able to meet all past debt service obligations, currently
is able to meet all such obligations, and anticipates it will continue to meet
such obligations. As in the past, management anticipates that such obligations
will be funded by the revenues generated by the Mobile Units.
To date, the Company has financed its equipment acquisitions and working
capital requirements with loans and leases, from internal cash flow and capital
contributions. During June 1997 the Company purchased a new unit for
approximately $1.3 million in cash . Accordingly, as of June 30, 1997, the
Company was a party to leases and loans covering all but four of its mobile MRI
units. The aggregate outstanding principal balance of all such leases and loans
was approximately $23,080,000 at June 30, 1997.
The Company has outstanding a letter-of-credit totaling $400,000 related to
equipment financing at a freestanding diagnostic imaging center which it sold in
June 1995 and on which it remains obligated (see Note 4 of the Company's
Unaudited Consolidated Financial Statements included in Item 1, which is
incorporated herein by reference).
During the six months ended June 30, 1997, the Company signed long-term
contracts with 10 new customers and extended for an additional two to three
years 7 existing customer contracts. As of June 30, 1997, the Company serviced
approximately 82 total customers.
-21-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
At June 30, 1997, the Company had net operating loss carryforwards for federal
and state income tax purposes of approximately $4.6 million and $7.2 million,
respectively, which are available to offset future federal and state taxable
income through 2010 and 1999, respectively (See Note 5 of the Company's
Unaudited Consolidated Financial Statements included in Item 1 and incorporated
herein by reference).
On January 14, 1997, the Company paid a 7% Common Stock dividend to all
shareholders of record on January 10, 1997 (See Note 9 of the Company's
Unaudited Consolidated Financial Statements included in Item 1 and incorporated
herein by reference).
The Company received Accreditation with Commendation from the Joint Commission
for the Accreditation of Healthcare Organizations ("JCAHO") in January 1997.
During January through March 4, 1997, approximately 1,677,000 Warrants were
exercised and the Company issued approximately 1,882,000 shares of its Common
Stock. The Company received net cash proceeds of approximately $11.7 million as
a result of such Warrant exercises (See Note 8 of the Company's Unaudited
Consolidated Financial Statements included in Item 1, which is incorporated
herein by reference).
On April 12, 1997 the Company took delivery of and began operation of a new 1.0
Tesla mobile MRI unit. This unit cost approximately $1.9 million and the Company
financed approximately $1.5 million over a 60 month period requiring monthly
payments of approximately $30,000. The unit experienced mechanical problems and
in July 1997 was returned for a full refund. The Company replaced this unit in
July 1997 with a new unit which cost approximately $1.8 million and was
purchased for cash.
On June 26, 1997 the Company purchased a new 1.0 Tesla mobile MRI unit. This
unit cost $1.8 million and the Company paid $1.3 million in cash, net of an
approximate $525,000 trade-in value for an older .5 Tesla unit. The Company is
leasing this unit to GE Medical Systems for three months and will take delivery
of the new unit and complete the .5 Tesla unit trade-in during October 1997.
On June 30, 1997 the Company took delivery of and began operation of a new 1.0
Tesla mobile MRI unit. The unit cost $1.7 million and the Company financed
approximately $1.3 million over a 60 month period requiring payments of
approximately $29,000. This unit was subsequently paid-off (see Note 11 of the
Company's Unaudited Consolidated Financial Statements included in Item 1, which
is incorporated herein by reference).
-22-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share. This
Statement is effective for financial statements issued for periods ending after
December 15, 1997 including "interim" periods and earlier application is not
permitted. In summary, the Statement simplifies the standards for computing
earnings per share primarily found in APB Opinion No. 15, Earnings Per Share and
makes them comparable to international standards. The standard replaces the
presentation of Primary Earnings Per Share with a presentation of Basic Earnings
Per Share. It also requires dual presentation of basic and diluted earnings per
share on the income statement of all entities with complex capital structures.
Basic EPS excludes dilution and is computed by dividing income available to
Common Stockholders by the weighted average number of Common Shares outstanding
for the period. Diluted EPS reflects 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. Diluted EPS is computed similarly to fully
diluted EPS pursuant to Opinion 15.
Had the Company been permitted to adopt the Statement as of January 1, 1997,
the second quarter and six months ended June 30, 1997 pro forma Basic and
Diluted EPS would have been:
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Basic:
Earnings before extraordinary item $ .16 $ .19 $ .32 $ .35
Extraordinary loss per share -- -- (.03) --
---------- ---------- ---------- ----------
Net Basic Earnings per share $ .16 $ .19 $ .29 $ .35
========== ========== ========== ==========
Diluted:
Earnings before extraordinary item $ .15 $ .14 $ .30 $ .27
Extraordinary loss per share -- -- (.03) --
---------- ---------- ---------- ----------
Net Diluted Earnings per share $ .15 $ .14 $ .27 $ .27
========== ========== ========== ==========
Weighted Average Shares Outstanding 5,718,000 2,998,000 5,081,000 2,919,000
========== ========== ========== ==========
</TABLE>
On June 23, 1997, the Company signed a definitive agreement with Three Rivers
Acquisition Corp. ("Three Rivers"), an affiliate of Apollo Management, L.P.
("Apollo"), whereby Three Rivers agreed to commence a cash tender offer to
acquire all of the outstanding shares of the Company for $11.75 per share,
to be followed by a merger. The tender offer commenced on June 30, 1997.
The total transaction is valued at approximately $100 million including
outstanding stock options and warrants and the assumption of debt.
-23-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
On August 5, 1997, Three Rivers successfully completed its $11.75 per share
cash tender offer. The depository for the offer has informed Three Rivers that
5,280,297 shares (91.9% of the outstanding shares) have been validly tendered
and not withdrawn prior to the expiration of the offer, including 2,841 shares
tendered pursuant to notice of guaranteed delivery procedures. All shares
validly tendered and not withdrawn have been accepted for payment of $11.75 per
share in cash. The remaining shares of the Company will be converted into the
right to receive $11.75 per share in cash in a merger between the Company and
Three Rivers. The merger is expected to be consummated in September 1997.
On August 5, 1997, Three Rivers Holding Corp., Three Rivers, the Company and
various lenders entered into an $80 million credit facility that was used to
fund a portion of the cash tender and to refinance approximately $19 million of
Company indebtedness. The remainder of the credit facility will be used to fund
acquisitions and for working capital purposes. The remainder of the cash tender
was funded with an approximate $35 million investment by Three Rivers.
The Company accrued $220,000 as of June 30, 1997 for professional fees related
to the aforementioned merger and tender offer. The fees were primarily related
to legal and accounting services.
On July 23, 1997, Alliance Imaging, Inc. ("Alliance") entered into an Agreement
and Plan of Merger (the "Recapitalization Merger Agreement") with Newport
Investment LLC (the "Investor"), a Delaware limited liability company and an
affiliate of Apollo. In connection with the Recapitalization Merger contemplated
by the Recapitalization Merger Agreement and subject to certain conditions
Alliance will acquire all the shares of common stock of a new holding company
formed by Apollo to acquire the Company (the "Acquisition"). After the
Recapitalization Merger and the Acquisition, affiliates of Apollo will own
approximately 90% of the outstanding common stock of Alliance, and Alliance's
existing shareholders will own approximately 10% of the outstanding common stock
of Alliance. for all of the outstanding shares of common stock of the Company
-24-
<PAGE>
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
<S> <C> <C>
10.01 Agreement and Plan of Merger............. Incorporated herein by reference
among Three Rivers Holding Corp., is Exhibit 99.(c)(1) to SMT's Solicitation/
Three Rivers Acquisition Corp. and Recommendation Statement on
SMT Health Services Inc. dated as Schedule 14D-9 dated June 30, 1997
of June 24, 1997
10.02 Stockholder Agreement dated as of........ Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(2) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on
Corp., Jeff D. Bergman, Daniel Schedule 14D-9 dated June 30, 1997
Dickman, David Spindler and David Zynn
10.03* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(3) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
Jeff D. Bergman
10.04* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(4) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
Daniel Dickman
10.05* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(5) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
David Spindler
10.06* Employment Agreement dated as of.......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(6) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
David Zynn
</TABLE>
-25-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (Continued)
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<S> <C> <C>
10.07 Credit Agreement among Three Rivers..... Filed herewith.
Holding Corp., Three Rivers Acquisition
Corp., SMT Health Services Inc., Various
Lending Institutions, and Bankers Trust
Company, as Agent dated as of August 5,
1997
10.08 First Amendment to Credit Agreement..... Filed herewith.
among Three Rivers Holding Corp.,
Three Rivers Acquisition Corp., SMT
Health Services Inc., Various Lending
Institutions, and Bankers Trust
Company, as Agent dated as of
August 12, 1997
11.01 Earnings Per Share Computation.......... Filed herewith.
27.01 Financial Data Schedule................. Filed herewith.
99.01 Press release dated June 24, 1997....... Incorporated herein by reference is
Exhibit (a)(8) to SMT's Solicitation/
Recommendation Statement on
Schedule 14D-9 dated June 30, 1997
99.02 Press release dated July 24, 1997....... Incorporated herein by reference is
Exhibit 99.D1 to SMT's Solicitation/
Recommendation Statement on
Schedule 14D-9 (Amendment No. 1)
dated July 24, 1997
99.03 Press release dated August 6, 1997...... Incorporated herein by reference is
Exhibit (a)(15) to SMT's Tender
Offer Statement on
Schedule 14D-1 (Amendment No. 4 -
Final Amendment) dated August 6, 1997
</TABLE>
(b) Report on Form 8-K
During the quarter ended June 30, 1997, the Company filed one
report on Form 8-K for the press release dated June 24, 1997
regarding the tender offer and merger of the Company by an
affiliate of Apollo Management L.P .
_________________________
*Denotes management agreement or compensatory plan or arrangement.
-26-
<PAGE>
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
understanding thereunto duly authorized.
SMT Health Services Inc.
(Registrant)
Date: August 12, 1997 By: /s/ Jeff D. Bergman
------------------------------------------
Jeff D. Bergman
Chairman and Chief Executive Officer
Date: August 12, 1997 By: /s/ David A. Zynn
------------------------------------------
David A. Zynn
Chief Financial Officer, Treasurer
and Principal Accounting Officer
-27-
<PAGE>
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<S> <C> <C>
10.01 Agreement and Plan of Merger............. Incorporated herein by reference
among Three Rivers Holding Corp., is Exhibit 99.(c)(1) to SMT's Solicitation/
Three Rivers Acquisition Corp. and Recommendation Statement on
SMT Health Services Inc. dated as Schedule 14D-9 dated June 30, 1997
of June 24, 1997
10.02 Stockholder Agreement dated as of........ Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(2) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on
Corp., Jeff D. Bergman, Daniel Schedule 14D-9 dated June 30, 1997
Dickman, David Spindler and David Zynn
10.03* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(3) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
Jeff D. Bergman
10.04* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(4) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
Daniel Dickman
10.05* Employment Agreement dated as of......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(5) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
David Spindler
10.06* Employment Agreement dated as of.......... Incorporated herein by reference is
June 24, 1997, among Three Rivers Exhibit 99.(c)(6) to SMT's Solicitation/
Holding Corp., Three Rivers Acquisition Recommendation Statement on Schedule
Corp., SMT Health Services Inc. and 14D-9 dated June 30, 1997
David Zynn
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<S> <C> <C>
10.07 Credit Agreement among Three Rivers..... Filed herewith.
Holding Corp., Three Rivers Acquisition
Corp., SMT Health Services Inc., Various
Lending Institutions, and Bankers Trust
Company, as Agent dated as of August 5,
1997
10.08 First Amendment to Credit Agreement..... Filed herewith.
among Three Rivers Holding Corp.,
Three Rivers Acquisition Corp., SMT
Health Services Inc., Various Lending
Institutions, and Bankers Trust
Company, as Agent dated as of
August 12, 1997
11.01 Earnings Per Share Computation.......... Filed herewith.
27.01 Financial Data Schedule................. Filed herewith.
99.01 Press release dated June 24, 1997....... Incorporated herein by reference is
Exhibit (a)(8) to SMT's Solicitation/
Recommendation Statement on
Schedule 14D-9 dated June 30, 1997
99.02 Press release dated July 24, 1997....... Incorporated herein by reference is
Exhibit 99.D1 to SMT's Solicitation/
Recommendation Statement on
Schedule 14D-9 (Amendment No. 1)
dated July 24, 1997
99.03 Press release dated August 6, 1997...... Incorporated herein by reference is
Exhibit (a)(15) to SMT's Tender
Offer Statement on Schedule 14D-1
(Amendment No. 4 - Final Amendment)
dated August 6, 1997
</TABLE>
_________________________
*Denotes management agreement or compensatory plan or arrangement.
<PAGE>
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
THREE RIVERS HOLDING CORP.,
THREE RIVERS ACQUISITION CORP.,
SMT HEALTH SERVICES INC.,
VARIOUS LENDING INSTITUTIONS,
and
BANKERS TRUST COMPANY,
AS AGENT
________________________________
Dated as of August 5, 1997
________________________________
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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<S> <C>
SECTION 1. Amount and Terms of Credit............................. 1
1.01 Commitments............................................. 1
1.02 Minimum Borrowing Amounts, etc.......................... 5
1.03 Notice of Borrowing..................................... 6
1.04 Disbursement of Funds................................... 7
1.05 Notes................................................... 8
1.06 Conversions............................................. 9
1.07 Pro Rata Borrowings..................................... 9
1.08 Interest................................................ 10
1.09 Interest Periods........................................ 11
1.10 Increased Costs; Illegality; etc........................ 12
1.11 Compensation............................................ 15
1.12 Change of Lending Office................................ 15
1.13 Replacement of Banks.................................... 16
SECTION 2. Letters of Credit...................................... 17
2.01 Letters of Credit....................................... 17
2.02 Letter of Credit Requests............................... 19
2.03 Letter of Credit Participations......................... 20
2.04 Agreement to Repay Letter of Credit Drawings............ 22
2.05 Increased Costs......................................... 23
SECTION 3. Fees; Commitments...................................... 24
3.01 Fees.................................................... 24
3.02 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment............................... 26
3.03 Mandatory Reduction of Commitments...................... 27
SECTION 4. Payments............................................... 28
4.01 Voluntary Prepayments................................... 28
4.02 Mandatory Repayments and Commitment Reductions.......... 29
4.03 Method and Place of Payment............................. 36
4.04 Net Payments............................................ 36
SECTION 5A. Conditions Precedent to Initial Credit Events.......... 39
5A.01 Execution of Agreement; Notes........................... 39
</TABLE>
(i)
<PAGE>
<TABLE>
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<S> <C>
5A.02 Officer's Certificate................................... 39
5A.03 Opinions of Counsel..................................... 39
5A.04 Corporate Documents; Proceedings........................ 40
5A.05 Adverse Change, etc..................................... 40
5A.06 Litigation.............................................. 41
5A.07 Approvals............................................... 41
5A.08 Capitalization.......................................... 41
5A.09 Tender Offer; etc....................................... 42
5A.10 Initial Refinancing..................................... 43
5A.11 Security Documents; etc................................. 44
5A.12 Subsidiaries Guaranty................................... 45
5A.13 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Employment Agreements;
Collective Bargaining Agreements; Existing
Indebtedness Agreements; Material Contracts;
Tax Allocation Agreements.............................. 45
5A.14 Consent Letter.......................................... 47
5A.15 Solvency Certificate; Insurance Certificates............ 47
5A.16 Financial Statements; Pro Forma Balance Sheet;
Projections........................................... 47
5A.17 Regulations U and G..................................... 48
5A.18 Payment of Fees......................................... 48
SECTION 5B. Conditions Precedent to Revolving Loans on each
Interim Refinancing Date.............................. 48
5B.01 Interim Refinancings.................................... 48
SECTION 5C. Conditions Precedent to Credit Events on
and after the Merger Date............................. 49
5C.01 Execution of Notes...................................... 49
5C.02 Officer's Certificate................................... 49
5C.03 Corporate Documents; Proceedings........................ 49
5C.04 Approvals............................................... 50
5C.05 Merger Documents........................................ 50
5C.06 Merger Date Refinancing................................. 50
5C.07 Payment of Fees......................................... 51
SECTION 6. Conditions Precedent to All Credit Events.............. 51
6.01 No Default; Representations and Warranties.............. 51
6.02 Notice of Borrowing; Letter of Credit Request........... 51
6.03 Merger Conditions....................................... 51
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
SECTION 7. Representations and Warranties 52
7.01 Corporate Status........................................ 52
7.02 Corporate Power and Authority........................... 52
7.03 No Violation............................................ 53
7.04 Litigation.............................................. 53
7.05 Use of Proceeds; Margin Regulations..................... 53
7.06 Governmental Approvals.................................. 54
7.07 Investment Company Act.................................. 55
7.08 Public Utility Holding Company Act...................... 55
7.09 True and Complete Disclosure............................ 55
7.10 Financial Condition; Financial Statements............... 55
7.11 Security Interests...................................... 57
7.12 Compliance with ERISA................................... 57
7.13 Capitalization.......................................... 58
7.14 Subsidiaries............................................ 59
7.15 Intellectual Property, etc.............................. 60
7.16 Compliance with Statutes, etc........................... 60
7.17 Environmental Matters................................... 60
7.18 Properties.............................................. 61
7.19 Labor Relations......................................... 61
7.20 Tax Returns and Payments................................ 61
7.21 Existing Indebtedness................................... 62
7.22 Insurance............................................... 62
7.23 Representations and Warranties in Other Documents....... 62
7.24 Offer to Purchase....................................... 62
7.25 Tender Offer............................................ 62
7.26 Merger.................................................. 63
7.27 Special Purpose Corporations............................ 63
SECTION 8. Affirmative Covenants.................................. 64
8.01 Information Covenants................................... 64
8.02 Books, Records and Inspections.......................... 68
8.03 Insurance............................................... 68
8.04 Payment of Taxes........................................ 69
8.05 Corporate Franchises.................................... 69
8.06 Compliance with Statutes; etc........................... 70
8.07 Compliance with Environmental Laws...................... 70
8.08 ERISA................................................... 71
8.09 Good Repair............................................. 72
8.10 End of Fiscal Years; Fiscal Quarters.................... 72
8.11 Additional Security; Further Assurances................. 72
(iii)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
8.12 Foreign Subsidiaries Security........................... 73
8.13 Ownership of Subsidiaries............................... 74
8.14 Permitted Acquisitions.................................. 74
8.15 Maintenance of Corporate Separateness................... 76
8.16 Performance of Obligations.............................. 76
8.17 Use of Proceeds......................................... 76
8.18 Interest Rate Protection................................ 76
8.19 Contributions; Payments; etc............................ 77
8.20 Consummation of the Merger.............................. 77
8.21 Margin Stock............................................ 77
SECTION 9. Negative Covenants..................................... 78
9.01 Changes in Business..................................... 78
9.02 Consolidation; Merger; Sale or Purchase
of Assets; etc......................................... 78
9.04 Indebtedness............................................ 84
9.05 Advances; Investments; Loans............................ 86
9.06 Dividends; etc.......................................... 88
9.07 Transactions with Affiliates............................ 90
9.08 Consolidated Fixed Charge Coverage Ratio................ 90
9.09 Minimum Consolidated EBITDA............................. 91
9.10 Consolidated Interest Coverage Ratio.................... 92
9.11 Adjusted Leverage Ratio................................. 93
9.12 Limitation on Voluntary Payments and Modifications
of Indebtedness; Modifications of Certificate
of Incorporation, By-Laws and Certain Other
Agreements; Issuances of Capital Stock; etc............ 94
9.13 Limitation on Issuance of Capital Stock................. 95
9.14 Limitation on Certain Restrictions on Subsidiaries...... 96
9.15 Limitation on the Creation of Subsidiaries
and Joint Ventures..................................... 97
SECTION 10. Events of Default..................................... 97
10.01 Payments............................................... 97
10.02 Representations, etc................................... 98
10.03 Covenants.............................................. 98
10.04 Default Under Other Agreements......................... 98
10.05 Bankruptcy, etc........................................ 98
10.06 ERISA.................................................. 99
10.07 Security Documents..................................... 99
10.08 Guaranties............................................. 100
</TABLE>
(iv)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
10.09 Judgments.............................................. 100
10.10 Ownership.............................................. 100
SECTION 11. Definitions........................................... 101
SECTION 12. The Agent............................................. 141
12.01 Appointment............................................ 141
12.02 Delegation of Duties................................... 141
12.03 Exculpatory Provisions................................. 141
12.04 Reliance by Agent...................................... 142
12.05 Notice of Default...................................... 142
12.06 Nonreliance on Agent and Other Banks................... 143
12.07 Indemnification........................................ 143
12.08 Agent in its Individual Capacity....................... 144
12.09 Holders................................................ 144
12.10 Resignation of the Agent............................... 144
SECTION 13. Miscellaneous......................................... 145
13.01 Payment of Expenses, etc............................... 145
13.02 Right of Setoff........................................ 146
13.03 Notices................................................ 146
13.04 Benefit of Agreement................................... 146
13.05 No Waiver; Remedies Cumulative......................... 148
13.06 Payments Pro Rata...................................... 149
13.07 Calculations; Computations............................. 149
13.08 Governing Law; Submission to Jurisdiction; Venue....... 150
13.09 Counterparts........................................... 151
13.10 Effectiveness.......................................... 151
13.11 Headings Descriptive................................... 151
13.12 Amendment or Waiver; etc............................... 151
13.13 Survival............................................... 153
13.14 Domicile of Loans and Commitments...................... 153
13.15 Confidentiality........................................ 153
13.16 Waiver of Jury Trial................................... 154
13.17 Register............................................... 154
13.18 Limitation on Additional Amounts, etc.................. 154
13.19 Post-Closing Actions................................... 155
SECTION 14. Holdings Guaranty..................................... 156
14.01 The Holdings Guaranty.................................. 156
14.02 Bankruptcy............................................. 157
</TABLE>
(v)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
14.03 Nature of Liability.................................... 157
14.04 Independent Obligation................................. 157
14.05 Authorization.......................................... 158
14.06 Reliance.............................................. 159
14.07 Subordination.......................................... 159
14.08 Waiver................................................. 159
14.09 Nature of Liability.................................... 160
SECTION 15. Acquisition Corp. Guaranty............................ 160
15.01 The Acquisition Corp. Guaranty......................... 160
15.02 Bankruptcy............................................. 161
15.03 Nature of Liability.................................... 161
15.04 Independent Obligation................................. 161
15.05 Authorization.......................................... 162
15.06 Reliance............................................... 163
15.07 Subordination.......................................... 163
15.08 Waiver................................................. 163
15.09 Nature of Liability.................................... 164
</TABLE>
(vi)
<PAGE>
SCHEDULE I List of Banks and Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Properties
SCHEDULE IV Existing Indebtedness
SCHEDULE V Plans
SCHEDULE VI Existing Investments
SCHEDULE VII Subsidiaries
SCHEDULE VIII Insurance
SCHEDULE IX Existing Liens
SCHEDULE X Capitalization
SCHEDULE XI Litigation
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of Term Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT B-3 -- Form of Swingline Note
EXHIBIT C -- Form of Letter of Credit Request
EXHIBIT D -- Form of Section 4.04(b)(ii) Certificate
EXHIBIT E -- Form of Opinion of O'Sullivan Graev & Karabell, LLP,
special counsel to the Credit Parties
EXHIBIT F -- Form of Officers' Certificate
EXHIBIT G -- Form of Pledge Agreement
EXHIBIT H -- Form of Security Agreement
EXHIBIT I -- Form of Subsidiaries Guaranty
EXHIBIT J -- Form of Consent Letter
EXHIBIT K -- Form of Solvency Certificate
EXHIBIT L -- Form of Assignment and Assumption Agreement
EXHIBIT M -- Form of Intercompany Note
EXHIBIT N -- Form of Shareholder Subordinated Note
EXHIBIT O -- Form of Acknowledgment Agreement
(vii)
<PAGE>
CREDIT AGREEMENT, dated as of August 5, 1997, among THREE RIVERS
HOLDING CORP., a Delaware corporation ("Holdings"), THREE RIVERS ACQUISITION
CORP., a Delaware corporation ("Acquisition Corp."), SMT HEALTH SERVICES INC., a
Delaware corporation ("SMT"), the lenders from time to time party hereto (each,
a "Bank" and, collectively, the "Banks"), and BANKERS TRUST COMPANY, as Agent
(in such capacity, the "Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 11 are used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrowers the credit
facilities provided for herein; and
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (a) Subject to and upon the terms and conditions
-----------
set forth herein, each Bank with a Term Loan Commitment severally agrees to make
a term loan or term loans (each, a "Term Loan" and, collectively, the "Term
Loans"), which Term Loans:
(i) shall be incurred (x) by Acquisition Corp. pursuant to a
single drawing on the Initial Borrowing Date for the purposes described in
Section 7.05(a)(i), (y) by Acquisition Corp. pursuant to one or more
drawings after the Initial Borrowing Date and prior to the Merger Date for
the purposes described in Section 7.05(a)(ii) and (z) by SMT pursuant to a
single drawing on the Merger Date for the purposes described in Section
7.05(a)(iii);
(ii) shall be denominated in U.S. Dollars;
(iii) except as hereafter provided, shall, at the option of the
Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided, that (x) except as otherwise
--------
specifically provided in Section 1.10(b), all Term Loans made as part of
the same Borrowing shall at all times consist of Term Loans of the same
Type and (y) unless the Agent has determined that the Syndication Date
has occurred (at which time this clause (y) shall no longer be applicable),
no more
<PAGE>
than three Borrowings of Term Loans to be maintained as Eurodollar Loans
may be incurred prior to the 90th day after the Initial Borrowing Date (or,
if later, the last day of the Interest Period applicable to the third
Borrowing of Eurodollar Loans referred to below), each of which Borrowings
of Eurodollar Loans may only have an Interest Period of one month, and the
first of which Borrowings may only be made on, or within five Business Days
after, the Initial Borrowing Date, the second of which Borrowings may only
be made on the last day of the Interest Period of the first such Borrowing
and the third of which Borrowings may only be made on the last day of the
Interest Period of the second such Borrowing;
(iv) shall not exceed for any Bank, in initial principal amount
for the Term Loans being made by such Bank on the Initial Borrowing Date,
that amount which equals the remainder of (x) the Term Loan Commitment of
such Bank as in effect on the Initial Borrowing Date (before giving effect
to any reductions thereto on such date pursuant to Section 3.03(b)(i) but
after giving effect to any reductions thereto on or prior to such date
pursuant to Section 3.03(b)(iii)) less (y) the Interest Holdback Amount of
----
such Bank at such time;
(v) in the event the 90% Requirement is not satisfied on the Initial
Borrowing Date, shall not exceed for any Bank, in initial principal amount
for the Term Loans being made by such Bank on the Initial Borrowing Date,
that amount which equals the remainder of (x) such Bank's TL Percentage of
the loan value (determined in accordance with Regulation U) of the Shares
owned by Acquisition Corp. and pledged pursuant to the Pledge Agreement
less (y) the Interest Holdback Amount of such Bank at such time;
----
(vi) shall not exceed for any Bank, in initial principal amount for
the Term Loans being made by such Bank on the Merger Date, that amount
which equals the Term Loan Commitment of such Bank as in effect on the
Merger Date (before giving effect to any reductions thereto on such date
pursuant to Section 3.03(b)(i) or (ii) but after giving effect to any
reductions thereto on or prior to such date pursuant to Section
3.03(b)(iii)); and
(vii) shall not exceed for any Bank, in initial principal amount for
the Term Loans being made by such Bank on any Interim Term Loan Borrowing
Date, that amount which equals the lesser of (x) the Term Loan Commitment
of such Bank as in effect on such Interim Term Loan Borrowing Date (before
giving effect to any reductions thereto on such date pursuant to Section
3.03(b)(i) but after giving effect to any reductions thereto on or prior to
such date pursuant to Section 3.03(b)(iii)) and (y) the Interest Holdback
Amount of such Bank at such time;
Once repaid, Term Loans incurred hereunder may not be reborrowed.
-2-
<PAGE>
(b) Subject to and upon the terms and conditions herein set forth,
each RL Bank severally agrees, at any time and from time to time on and after
the Initial Borrowing Date and prior to the Revolving Loan Maturity Date, to
make a revolving loan or revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to SMT, which Revolving Loans:
(i) shall be denominated in U.S. Dollars;
(ii) shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) except as otherwise specifically provided in Section
--------
1.10(b), all Revolving Loans made as part of the same Borrowing shall at
all times be of the same Type and (y) unless the Agent has determined that
the Syndication Date has occurred, no more than three Borrowings of
Revolving Loans to be maintained as Eurodollar Loans may be incurred prior
to the 90th day after the Initial Borrowing Date (or, if later, the last
day of the Interest Period applicable to the third Borrowing of Eurodollar
Loans referred to below), each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which
Borrowings may only be made on the same date as the initial Borrowing of
Term Loans that are maintained as Eurodollar Loans, the second of which
Borrowings may only be made on the last day of the Interest Period of the
first such Borrowing and the third of which Borrowings may only be made on
the last day of the Interest Period of the second such Borrowing;
(iii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iv) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such
Bank's Adjusted RL Percentage and (y) the sum of (I) the amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time and (II) the
aggregate principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Available Revolving Loan Commitment of such Bank at
such time; and
(v) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to (x) the amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time and (y) the
aggregate principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding, exceeds an amount equal to the Total Available Revolving Loan
Commitment then in effect.
-3-
<PAGE>
(c) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to time
on and after the Merger Date and prior to the Swingline Expiry Date, a loan or
loans to the Borrower (each, a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans:
(i) shall be denominated in U.S. Dollars;
(ii) shall be made and maintained as Base Rate Loans;
(iii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iv) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of (x) all
Revolving Loans made by Non-Defaulting Banks then outstanding and (y) the
Letter of Credit Outstandings at such time, an amount equal to the Adjusted
Total Available Revolving Loan Commitment at such time (after giving effect
to any changes thereto on such date); and
(v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
BTCo shall not be obligated to make any Swingline Loans at a time when a Bank
Default exists unless BTCo has entered into arrangements satisfactory to it and
the Borrower to eliminate BTCo's risk with respect to the Defaulting Bank's or
Banks' participation in such Swingline Loans, including by cash collateralizing
such Defaulting Bank's or Banks' RL Percentage of the outstanding Swingline
Loans. BTCo will not make a Swingline Loan after it has received written notice
from the Borrower or the Required Banks stating that a Default or an Event of
Default exists until such time as BTCo shall have received a written notice of
(i) rescission of such notice from the party or parties originally delivering
the same or (ii) a waiver of such Default or Event of Default from the Required
Banks.
(d) On any Business Day, BTCo may, in its sole discretion, give
notice to the RL Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Revolving Loans (provided that each such notice shall be deemed
--------
to have been automatic ally given upon the occurrence of a Default or an Event
of Default under Section 10.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 10), in which case a Borrowing of
Revolving Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all RL
Banks pro rata based on each RL Bank's Adjusted RL Percentage, and the proceeds
--- ----
thereof shall be applied directly to repay BTCo for such outstanding Swingline
Loans. Each RL Bank hereby irrevocably agrees to make Base Rate Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the date specified in
writing by BTCo notwithstanding (i) that the amount of the Mandatory
-4-
<PAGE>
Borrowing may not comply with the Minimum Borrowing Amount otherwise required
hereunder, (ii) whether any conditions specified in Section 5 or 6 are then
satisfied, (iii) whether a Default or an Event of Default has occurred and is
continuing, (iv) the date of such Mandatory Borrowing and (v) the amount of the
Total Available Revolving Loan Commitment or the Adjusted Total Available
Revolving Loan Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code in respect of the Borrower), each RL Bank (other than
BTCo) hereby agrees that it shall forth with purchase from BTCo (without
recourse or warranty) such assignment of the outstanding Swingline Loans as
shall be necessary to cause the RL Banks to share in such Swingline Loans
ratably based upon their respective Adjusted RL Percentages (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10), provided that (x) all interest payable on
--------
the Swingline Loans shall be for the account of BTCo until the date the
respective assignment is purchased and, to the extent attributable to the
purchased assignment, shall be payable to the RL Bank purchasing same from and
after such date of purchase and (y) at the time any purchase of assignments
pursuant to this sentence is actually made, the purchasing RL Bank shall be
required to pay BTCo interest on the principal amount of assignment purchased
for each day from and including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for such
assignment, at the rate otherwise applicable to Revolving Loans maintained as
Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
------------------------------
of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount
applicable to such Loans, provided that (x) Mandatory Borrowings shall be made
--------
in the amounts required by Section 1.01(d) and (y) any Borrowing of Term Loans
to be maintained as Base Rate Loans, incurred pursuant to Section 1.01(a)(vii),
shall not be required to comply with the Minimum Borrowing Amount requirements
otherwise provided herein. More than one Borrowing may be incurred on any day,
provided, that at no time shall there be outstanding more than five Borrowings
- --------
of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever a Borrower desires to make
-------------------
a Borrowing hereunder (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), it shall give the Agent at its Notice Office, prior to 12:00 Noon
(New York time), at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Eurodollar
Loans and at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Base Rate Loans to be made
hereunder. Each such notice (each, a "Notice of Borrowing") shall, except as
otherwise expressly provided in Section 1.10, be irrevocable, and, in the case
of each written notice and each confirmation of telephonic notice, shall be in
the form of Exhibit A, appropriately completed to specify: (i) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing, (ii) the
date of such Borrowing (which shall be a Business Day), (iii) whether the
respective Borrowing shall consist of Term Loans or Revolving Loans, (iv)
whether the
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<PAGE>
respective Borrowing shall consist of Base Rate Loans or, to the extent
permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto and (v) in the case of a Borrowing of
Revolving Loans the proceeds of which are to be utilized to finance, in whole or
in part, the purchase price of a Permitted Acquisition, (x) a reference to the
officer's certificate, if any, delivered in accordance with Section 8.14, (y)
the aggregate principal amount of such Revolving Loans to be utilized in
connection with such Permitted Acquisition and (z) the Total Unutilized
Revolving Loan Commitment then in effect after giving effect to the respective
Permitted Acquisition (and all payments to be made in connection therewith). The
Agent shall promptly give each Bank which is required to make Loans of the
Tranche specified in the respective Notice of Borrowing, written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give BTCo not later than 12:00 Noon (New York time) on the
day such Swingline Loan is to be made, written notice (or telephonic notice
promptly confirmed in writing) of each Swingline Loan to be made hereunder.
Each such notice shall be irrevocable and shall specify in each case (x) the
date of such Borrowing (which shall be a Business Day) and (y) the aggregate
principal amount of the Swingline Loan to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(d).
(c) Without in any way limiting the obligation of a Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the Letter of
Credit Issuer (in the case of the issuance of Letters of Credit), as the case
may be, may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent, BTCo or the Letter
of Credit Issuer, as the case may be, in good faith to be from an Authorized
Officer of the respective Borrower. In each such case, the Agent's, BTCo's or
the respective Letter of Credit Issuer's, as the case may be, record of the
terms of such telephonic notice shall be conclusive evidence of the contents of
such notice, absent manifest error.
1.04 Disbursement of Funds. (a) Not later than 1:00 P.M. (New York
---------------------
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section 1.01(d)), each Bank
with a Commitment of the respective Tranche will make available its pro rata
--- ----
share (determined in accordance with Section 1.07), if any, of each Borrowing
requested to be made on such date (or in the case of Swingline Loans, BTCo shall
make available the full amount thereof) in the manner provided below. All
amounts shall be
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<PAGE>
made available to the Agent in U.S. Dollars and in immediately available funds
at the Payment Office and the Agent promptly will make available to the
respective Borrower by depositing to its account at the Payment Office the
aggregate of the amounts so made available in the type of funds received. Unless
the Agent shall have been notified by any Bank prior to the date of Borrowing
that such Bank does not intend to make available to the Agent its portion of the
Borrowing or Borrowings to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the respective Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank and the Agent has made available same to such
Borrower, the Agent shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
relevant Borrower, and such Borrower shall immediately pay such corresponding
amount to the Agent. The Agent shall also be entitled to recover on demand from
such Bank or either Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Agent to the respective Borrower to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to (x) if paid by
such Bank, the overnight Federal Funds Rate or (y) if paid by a Borrower, the
then applicable rate of interest, calculated in accordance with Section 1.08.
(b) Nothing in this Agreement shall be deemed to relieve any Bank from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which a Borrower may have against any Bank as a result of any default by such
Bank hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the principal
-----
of, and interest on, all the Loans made to it by each Bank shall be evidenced
(i) if Term Loans, by a promissory note substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each, a "Term Note"
and, collectively, the "Term Notes"), (ii) if Revolving Loans, by a promissory
note substantially in the form of Exhibit B-2 with blanks appropriately
completed in conformity herewith (each, a "Revolving Note" and, collectively,
the "Revolving Notes") and (iii) if Swingline Loans, by a promissory note
substantially in the form of Exhibit B-3 with blanks appropriately completed in
conformity herewith (the "Swingline Note").
(b) The Term Note issued to each Bank with a Term Loan Commitment
shall (i) be executed by the relevant Borrower, (ii) be payable to such Bank or
its registered assigns and be dated the date of issuance thereof, (iii) be in a
stated principal amount equal to the Term Loans made by such Bank and be payable
in the principal amount of Term Loans evidenced thereby, (iv) mature on the
Final Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary repayment as provided in
Section 4.01 and
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<PAGE>
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) The Revolving Note issued to each RL Bank shall (i) be executed
by SMT, (ii) be payable to such RL Bank or its registered assigns and be dated
the date of issuance thereof, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such RL Bank and be payable in the principal amount
of the outstanding Revolving Loans evidenced thereby, (iv) mature on the
Revolving Loan Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to voluntary prepayment
as provided in Section 4.01 and mandatory repayment as provided in Section 4.02
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(d) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to BTCo or its registered assigns and be dated the
Merger Date, (iii) be in a stated principal amount equal to the Maximum
Swingline Amount and be payable in the principal amount of the outstanding
Swingline Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v)
bear interest as provided in Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in such notation shall not affect either Borrower's obligations in
respect of such Loans.
1.06 Conversions. Each Borrower shall have the option to convert on
-----------
any Business Day occurring on or after the Initial Borrowing Date, all or a
portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of Loans (other than Swingline Loans which shall at
all times be maintained as Base Rate Loans) made pursuant to one or more
Borrowings of one or more Types of Loans under a single Tranche into a Borrowing
or Borrowings of another Type of Loan under such Tranche; provided, that (i)
--------
except as otherwise provided in Section 1.10(b) or unless the respective
Borrower pays all breakage costs and other amounts owing to each Bank pursuant
to Section 1.11 concurrently with any such conversion, Eurodollar Loans may be
converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted, and no partial conversion of a
Borrowing of Eurodollar Loans shall reduce the outstanding principal amount of
the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion, (iii) unless the Agent has determined that the
Syndication Date has occurred (at which time this clause (iii)
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<PAGE>
shall no longer be applicable), prior to the 90th day after the Initial
Borrowing Date, conversions of Base Rate Loans into Eurodollar Loans may only be
made if any such conversion is effective on the first day of the first, second
or third Interest Period referred to in clause (y) of each of Sections
1.01(a)(iii) and 1.01(b)(ii) and so long as such conversion does not result in a
greater number of Borrowings of Eurodollar Loans prior to the 90th day after the
Initial Borrowing Date as are permitted under Sections 1.01(a)(iii) and
1.01(b)(ii) and (iv) Borrowings of Eurodollar Loans resulting from this Section
1.06 shall be limited in number as provided in Section 1.02. Each such
conversion shall be effected by the respective Borrower by giving the Agent at
its Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' (or one Business Day's in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each,
a "Notice of Conversion") specifying the Loans to be so converted, the
Borrowing(s) pursuant to which the Loans were made and, if to be converted into
a Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans. Upon any such conversion, the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans and Revolving
-------------------
Loans under this Agreement shall be incurred by each Borrower from the Banks pro
---
rata on the basis of such Banks' Term Loan Commitments or Revolving Loan
- ----
Commitments, as the case may be; provided that all Borrowings of Revolving Loans
--------
made pursuant to a Mandatory Borrowing shall be incurred from the RL Banks
pro rata on the basis on their Adjusted RL Percentages. It is understood that no
- --- ----
Bank shall be responsible for any default by any other Bank of its obligation to
make Loans hereunder and that each Bank shall be obligated to make the Loans to
be made by it hereunder, regardless of the failure of any other Bank to fulfill
its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum which shall at all times be the
relevant Applicable Margin plus the Base Rate in effect from time to time.
----
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii)
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section
1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all
times be the relevant Applicable Margin plus the Eurodollar Rate for such
----
Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest at a rate per annum equal
to the greater of (x) the rate
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<PAGE>
which is 2% in excess of the rate borne by the respective such Loans immediately
prior to the respective payment default and (y) the rate which is 2% in excess
of the rate otherwise applicable to Base Rate Loans from time to time. Interest
which accrues under this Section 1.08(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any prepayment or repayment thereof (on the amount prepaid or repaid), (y)
the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09
or 1.10(b), as applicable (on the amount converted) and (z) the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 13.07(b).
(f) Upon each Interest Determination Date, the Agent shall determine
the Eurodollar Rate for the respective Interest Period or Interest Periods and
shall promptly notify the relevant Borrower and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
1.09 Interest Periods. At the time a Borrower gives a Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans (in the case of any subsequent Interest Period),
such Borrower shall have the right to elect by giving the Agent written notice
(or telephonic notice promptly confirmed in writing) of the Interest Period
applicable to such Borrowing, which Interest Period shall, at the option of such
Borrower (but otherwise subject to clause (y) of the proviso to Sections
1.01(a)(iii) and 1.01(b)(ii) and to clause (iii) of the proviso to Section
1.06), be a one, two, three or six month period. Notwithstanding anything to
the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in
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<PAGE>
respect of such Borrowing shall commence on the day on which the next
preceding Interest Period applicable thereto expires;
(iii) if any Interest Period for any Borrowing of Eurodollar Loans
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided, that if any Interest Period for any
--------
Borrowing of Eurodollar Loans would otherwise expire on a day which is not
a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(v) no Interest Period for a Borrowing under a Tranche shall be
selected which would extend beyond the respective Maturity Date for such
Tranche;
(vi) no Interest Period may be elected at any time when a Default or
an Event of Default is then in existence;
(vii) no Interest Period in respect of any Borrowing of Revolving
Loans shall be elected which extends beyond any date upon which a Scheduled
Commitment Reduction will be required to be made under Section 3.03(c) if
the aggregate principal amount of such Revolving Loans which have Interest
Periods which will expire after such date, when added to the Stated Amount
of all Letters of Credit which by their terms expire after such date, will
be in excess of the Total Revolving Loan Commitment as the same will be in
effect after giving effect to the respective Scheduled Commitment
Reduction; and
(viii) no Interest Period in respect of any Borrowing of Term Loans
shall be elected which extends beyond any date upon which a Scheduled
Repayment will be required to be made under Section 4.02(b) if, after
giving effect to the election of such Interest Period, the aggregate
principal amount of such Term Loans which have Interest Periods which will
expire after such date will be in excess of the aggregate principal amount
of such Term Loans then outstanding less the aggregate amount of such
required Scheduled Repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, a Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, such Borrower shall be deemed
to have elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
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<PAGE>
1.10 Increased Costs; Illegality; etc. (a) In the event that (x) in
---------------------------------
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank, shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any Interest Determination Date, that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans because of (x) any change since the date of this
Agreement in any applicable law, governmental rule, regulation, guideline,
order or request (whether or not having the force of law), or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, guideline, order or request,
such as, for example, but not limited to, (A) a change in the basis of
taxation of payment to any Bank of the principal of or interest on such
Eurodollar Loans or any other amounts payable hereunder (except for changes
with respect to any tax imposed on, or determined by reference to, the net
income, net profits or capital (including branch profits tax) of such Bank
pursuant to the laws of the jurisdiction in which such Bank is organized,
or in which such Bank's principal office or applicable lending office is
located or any subdivision thereof or therein), or (B) a change in official
reserve requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurodollar
Rate and/or (y) other circumstances affecting such Bank, the inter bank
Eurodollar market or the position of such Bank in such market; or
(iii) at any time since the date of this Agreement, that the making
or continuance of any Eurodollar Loan has become unlawful by compliance by
such Bank with any law, governmental rule, regulation, guideline or order
(or would conflict with any governmental rule, regulation, guideline,
request or order not having the force of law but with which such Bank
customarily complies even though the failure to comply therewith would not
be unlawful), or has become impracticable as a result of a contingency
occurring after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall promptly give notice (by telephone confirmed in writing) to the
Borrowers and (except in the case of clause (i)) to the Agent of such
determination (which notice the Agent shall promptly transmit to each of the
other Banks). Thereafter, (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Agent notifies the Borrowers
and the Banks that the circumstances giving rise to such notice by the Agent no
longer exist, and any
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<PAGE>
Notice of Borrowing or Notice of Conversion given by a Borrower with respect to
Eurodollar Loans which have not yet been incurred (including by way of
conversion) shall be deemed rescinded by such Borrower, (y) in the case of
clause (ii) above, each Borrower agrees, subject to the provisions of Section
13.18 (to the extent applicable), to pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine) as shall be required to compensate such Bank for
such increased costs or reductions in amounts received or receivable hereunder
but without duplication of any payments due under Section 4.04 (a written notice
as to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the respective Borrower by such Bank shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto, although the failure to give any such notice shall not release or
diminish any of such Borrower's obligations to pay additional amounts pursuant
to this Section 1.10(a) upon the subsequent receipt of such notice) and (z) in
the case of clause (iii) above, the respective Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), a Borrower may (and in
the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) such
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that such
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii)), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstance described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan or such
earlier day as shall be required by applicable law); provided, that if more than
--------
one Bank is affected at any time, then all affected Banks must be treated the
same pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the date hereof, the
adoption or effectiveness of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank or any corporation controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's or such other corporation's
capital or assets as a consequence of such Bank's Commitment or Commitments
hereunder or its obligations hereunder to a level below that which such Bank or
such other corporation could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Bank's or such other
corporation's policies with respect to capital adequacy), then from time to
time, upon written demand by such Bank (with a copy to the Agent), accompanied
by the notice referred
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<PAGE>
to in the last sentence of this clause (c), the relevant Borrower agrees,
subject to the provisions of Section 13.18 (to the extent applicable), to pay to
such Bank such additional amount or amounts as will compensate such Bank or such
other corporation for such reduction in the rate of return to such Bank or such
other corporation. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the relevant Borrower (a copy of which shall be sent
by such Bank to the Agent), which notice shall set forth in reasonable detail
the basis of the calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish any Borrower's obligations to
pay additional amounts pursuant to this Section 1.10(c) upon the subsequent
receipt of such notice. A Bank's reasonable good faith determination of
compensation owing under this Section 1.10(c) shall, absent manifest error, be
final and conclusive and binding on all the parties hereto.
1.11 Compensation. Each Borrower agrees, subject to the provisions
------------
of Section 13.18 (to the extent applicable), to compensate each Bank, promptly
upon its writ ten request (which request shall set forth in reasonable detail
the basis for requesting such compensation), for all losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans) which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a
date specified there for in a Notice of Borrowing or Notice of Conversion given
by such Borrower (whether or not withdrawn by such Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the
Loans pursuant to Section 10 or as a result of the replacement of a Bank
pursuant to Section 1.13 or 13.12(b)) or conversion of any Euro dollar Loans of
such Borrower occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any Eurodollar Loans is not made
on any date specified in a notice of prepayment given by such Borrower; or (iv)
as a consequence of (x) any other default by such Borrower to repay its
Eurodollar Loans when required by the terms of this Agreement or (y) an election
made by such Borrower pursuant to Section 1.10(b). Each Bank's calculation of
the amount of compensation owing pursuant to this Section 1.11 shall be made in
good faith. A Bank's basis for requesting compensation pursuant to this Section
1.11 and a Bank's calculation of the amount thereof, shall, absent manifest
error, be final and conclusive and binding on all parties hereto.
1.12 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Bank, it will, if requested by
a Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans or Letters of
Credit affected by such event; provided, that such designation is made on such
--------
terms that, in the sole judgment of such Bank, such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequences of the event giving rise to the operation of any such
Section. Nothing in this Section 1.12 shall affect
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<PAGE>
or postpone any of the obligations of either Borrower or the right of any Bank
provided in Section 1.10, 2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to a Borrower increased
costs in a material amount in excess of those being generally charged by the
other Banks or (z) in the case of a refusal by a Bank to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
has been approved by the Required Banks as provided in Section 13.12(b), the
Borrowers shall have the right, in accordance with Section 13.04(b), if no
Default or Event of Default then exists or would exist after giving effect to
such replacement, to replace such Bank (the "Replaced Bank") with one or more
other Eligible Transferee or Transferees, none of whom shall constitute a
Defaulting Bank at the time of such replacement (collectively, the "Replacement
Bank") and each of whom shall be reasonably acceptable to the Agent or, at the
option of the Borrowers, to replace only (a) the Revolving Loan Commitment (and
outstandings pursuant thereto) of the Replaced Bank with an identical Revolving
Loan Commitment provided by the Replacement Bank or (b) in the case of a
replacement as provided in Section 13.12(b) where the consent of the respective
Bank is required with respect to less than all Tranches of its Loans or
Commitments, the Commitments and/or outstanding Loans of such Bank in respect of
each Tranche where the consent of such Bank would otherwise be individually
required, with identical Commitments and/or Loans of the respective Tranche
provided by the Replacement Bank; provided that:
--------
(i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant
to said Section 13.04(b) to be paid by the Replacement Bank) pursuant to
which the Replacement Bank shall acquire all of the Commitments and
outstanding Loans (or, in the case of the replacement of only (a) the
Revolving Loan Commitment, the Revolving Loan Commitment and outstanding
Revolving Loans and participations in Letter of Credit Outstandings and/or
(b) the Term Loan Commitment and/or Term Loans, the Term Loan Commitment
and outstanding Term Loans) of, and in each case (except for the
replacement of only the outstanding Term Loans of the respective Bank)
participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect thereof
an amount equal to the sum of (A) an amount equal to the principal of, and
all accrued interest on, all outstanding Loans (or of the Loans of the
respective Tranche or Tranches being replaced) of the Replaced Bank, (B) an
amount equal to all Unpaid Drawings (unless there are no Unpaid Drawings
with respect to the Tranche being replaced) that have been funded by (and
not reimbursed to) such Replaced Bank, together with all then unpaid
interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank (but only
with respect to the relevant Tranche,
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in the case of the replacement of less than all Tranches of Loans then held
by the respective Replaced Bank) pursuant to Section 3.01, (y) except in
the case of the replacement of only the Term Loan Commitment and/or the
outstanding Term Loans of a Replaced Bank, each Letter of Credit Issuer an
amount equal to such Replaced Bank's Adjusted RL Percentage of any Unpaid
Drawing relating to Letters of Credit issued by such Letter of Credit
Issuer (which at such time remains an Unpaid Drawing) to the extent such
amount was not theretofore funded by such Replaced Bank and (z) in the case
of any replacement of Revolving Loan Commitments, BTCo an amount equal to
such Replaced Bank's Adjusted RL Percentage of any Mandatory Borrowing to
the extent such amount was not theretofore funded by such Replaced Bank;
and
(ii) all obligations of the Borrower then owing to the Replaced
Bank (other than those (a) specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid, but including all amounts, if any, owing under Section 1.11 or
(b) relating to any Tranche of Loans and/or Commitments of the respective
Replaced Bank which will remain outstanding after giving effect to the
respective replacement) shall be paid in full to such Replaced Bank
concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Register by the Agent pursuant to Section 13.17 and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the relevant Borrower, (x) the Replacement
Bank shall become a Bank hereunder and, unless the respective Replaced Bank
continues to have outstanding Term Loans, a Term Loan Commitment or a Revolving
Loan Commitment hereunder, the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01
and 13.06), which shall survive as to such Replaced Bank and (y) except in the
case of the replacement of only outstanding Term Loans (or Term Loan
Commitments), the Adjusted RL Percentages of the Banks shall be automatically
adjusted at such time to give effect to such replacement.
SECTION 2. Letters of Credit.
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2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Merger Date and prior to the
tenth Business Day (or the 30th day in the case of Trade Letters of Credit)
preceding the Revolving Loan Maturity Date to issue, (x) for the account of the
Borrower and for the benefit of any holder (or any trustee, agent or other
similar representative for any such holders) of L/C Supportable Indebtedness,
irrevocable standby letters of credit in a form customarily used by such Letter
of Credit Issuer or in such other form as has been approved by such Letter of
Credit Issuer (each such standby letter of credit, a
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"Standby Letter of Credit") in support of such L/C Supportable Indebtedness and
(y) for the account of the Borrower and for the benefit of sellers of goods to
the Borrower or any Subsidiary Guarantor in the ordinary course of business,
irrevocable sight trade letters of credit in a form customarily used by such
Letter of Credit Issuer or in such other form as has been approved by such
Letter of Credit Issuer (each such trade letter of credit, a "Trade Letter of
Credit", and each such Standby Letter of Credit and Trade Letter of Credit, a
"Letter of Credit" and, collectively, the "Letters of Credit").
(b) Subject to and upon the terms and conditions set forth herein,
each Letter of Credit Issuer hereby agrees that it will, at any time and from
time to time on and after the Merger Date and prior to the third Business Day
(or the 30th day in the case of Trade Letters of Credit) preceding the Revolving
Loan Maturity Date, following its receipt of the respective Letter of Credit
Request, issue for the account of the Borrower one or more Letters of Credit,
(x) in the case of Trade Letters of Credit, in support of trade obligations of
the Borrower or any Subsidiary Guarantor that arise in the ordinary course of
business or (y) in the case of Standby Letters of Credit, in support of such L/C
Support able Indebtedness as is permitted to remain outstanding hereunder.
Notwithstanding the foregoing, no Letter of Credit Issuer shall be under any
obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer is not otherwise compensated) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Letter of Credit Issuer as of the
date hereof and which such Letter of Credit Issuer in good faith deems
material to it; or
(ii) such Letter of Credit Issuer shall have received written notice
from the Borrower or the Required Banks prior to the issuance of such
Letter of Credit of the type described in clause (vi) of Section 2.01(c) or
the last sentence of Section 2.02(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $10,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans made by the Non-Defaulting Banks and then
outstanding and all Swingline Loans then outstanding, the Adjusted Total
Available Revolving Loan Commitment at such time; (ii) (x) each Standby Letter
of Credit shall have an expiry date
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occurring not later than one year after such Standby Letter of Credit's date of
issuance, provided, that any such Standby Letter of Credit may be extendable for
--------
successive periods of up to one year, but not beyond the tenth Business Day
preceding the Revolving Loan Maturity Date, on terms acceptable to the Letter of
Credit Issuer and (y) each Trade Letter of Credit shall have an expiry date
occurring not later than 180 days after such Trade Letter of Credit's date of
issuance; (iii) (x) no Standby Letter of Credit shall have an expiry date
occurring later than the tenth Business Day preceding the Revolving Loan
Maturity Date and (y) no Trade Letter of Credit shall have an expiry date
occurring later than 30 days prior to the Revolving Loan Maturity Date; (iv)
each Letter of Credit shall be denominated in U.S. Dollars; (v) the Stated
Amount of each Letter of Credit shall not be less than $100,000 or such lesser
amount as is acceptable to the respective Letter of Credit Issuer; and (vi) no
Letter of Credit Issuer will issue any Letter of Credit after it has received
written notice from the Borrower or the Required Banks stating that a Default or
an Event of Default exists until such time as such Letter of Credit Issuer shall
have received a written notice of (x) rescission of such notice from the party
or parties originally delivering the same or (y) a waiver of such Default or
Event of Default by the Required Banks.
(d) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' Adjusted RL Percentage of the Letter of Credit Outstandings, as
the case may be.
2.02 Letter of Credit Requests. (a) Whenever the Borrower desires
-------------------------
that a Letter of Credit be issued, the Borrower shall give the Agent and the
respective Letter of Credit Issuer written notice thereof prior to 12:00 Noon
(New York time) at least five Business Days (or such shorter period as may be
acceptable to the respective Letter of Credit Issuer) prior to the proposed date
of issuance (which shall be a Business Day) which written notice shall be in the
form of Exhibit C (each, a "Letter of Credit Request"). Each Letter of Credit
Request shall include any other documents as such Letter of Credit Issuer
customarily requires in connection therewith.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and it will not violate the requirements of, Section
2.01(c). Unless the respective Letter of Credit Issuer has received notice from
the Required Banks before it issues a Letter of Credit that one or more of the
applicable conditions specified in Section 5 or 6, as the case may be, are not
then satisfied, or that the issuance of such Letter of Credit would violate
Section 2.01(c), then such Letter of Credit Issuer may issue the requested
Letter of Credit for the account of the Borrower in accordance with such Letter
of Credit Issuer's usual and customary practice.
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2.03 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RL
Bank, and each such RL Bank (each, a "Participant") shall be deemed irrevocably
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Participant's Adjusted RL Percentage, in such Letter of
Credit, each substitute Letter of Credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
Letter of Credit Fees shall be payable directly to the Agent for the account of
the RL Banks as provided in Section 3.01(b) and the Participants shall have no
right to receive any portion of any Facing Fees with respect to such Letters of
Credit) and any security therefor or guaranty pertaining thereto. Upon any
change in the Revolving Loan Commitments or the Adjusted RL Percentages of the
RL Banks pursuant to Section 1.13 or 13.04(b) or as a result of a Bank Default,
it is hereby agreed that, with respect to all outstanding Letters of Credit and
Unpaid Drawings with respect thereto, there shall be an automatic adjustment to
the participations pursuant to this Section 2.03 to reflect the new Adjusted RL
Percentages of the assigning and assignee Bank or of all RL Banks, as the case
may be.
(b) In determining whether to pay under any Letter of Credit, no
Letter of Credit Issuer shall have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Letter of Credit Issuer under or in
connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the Agent,
and the Agent shall promptly notify each Participant of such failure, and each
such Participant shall promptly and unconditionally pay to the Agent for the
account of such Letter of Credit Issuer, the amount of such Participant's
Adjusted RL Percentage of such payment in U.S. Dollars and in same day funds. If
the Agent so notifies any Participant required to fund a payment under a Letter
of Credit prior to 11:00 A.M. (New York time) on any Business Day, such
Participant shall make available to the Agent at the Payment Office for the
account of the respective Letter of Credit Issuer such Participant's Adjusted RL
Percentage of the amount of such payment on such Business Day in same day funds
(and, to the extent such notice is given after 11:00 A.M. (New York time) on any
Business Day, such Participant shall make such payment on the immediately
following Business Day). If and to the extent such Participant shall not have so
made its Adjusted RL Percentage of the amount of such payment available to the
Agent for the account of the respective Letter of Credit Issuer, such
Participant agrees to pay to the Agent for the account of such Letter of Credit
Issuer, forthwith on demand such amount, together with interest thereon, for
each day from such date until the date such
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<PAGE>
amount is paid to the Agent for the account of the Letter of Credit Issuer at
the overnight Federal Funds Rate. The failure of any Participant to make
available to the Agent for the account of the respective Letter of Credit Issuer
its Adjusted RL Percentage of any payment under any Letter of Credit issued by
it shall not relieve any other Participant of its obligation hereunder to make
available to the Agent for the account of such Letter of Credit Issuer its
applicable Adjusted RL Percentage of any payment under any such Letter of Credit
on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Agent for the account of such Letter of Credit Issuer such other Participant's
Adjusted RL Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
such Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, such Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted RL
Percentage thereof, in U.S. Dollars and in same day funds, an amount equal to
such Participant's Adjusted RL Percentage of the principal amount thereof and
interest thereon accruing after the purchase of the respective participations.
(e) Each Letter of Credit Issuer shall, promptly after each issuance
of, or amendment or modification to, a Standby Letter of Credit issued by it,
give the Agent, each Participant and the Borrower written notice of the issuance
of, or amendment or modification to, such Standby Letter of Credit, which notice
shall be accompanied by a copy of the Standby Letter of Credit or Standby
Letters of Credit issued by it and each such amendment or modification thereto.
(f) Each Letter of Credit Issuer (other than BTCo) shall deliver to
the Agent, promptly on the first Business Day of each week, by facsimile
transmission, the aggregate daily Stated Amount available to be drawn under the
outstanding Trade Letters of Credit issued by such Letter of Credit Issuer for
the previous week. The Agent shall, within 10 days after the last Business Day
of each calendar month, deliver to each Participant a report setting forth for
such preceding calendar month the aggregate daily Stated Amount available to be
drawn under all outstanding Trade Letters of Credit during such calendar month.
(g) The obligations of the Participants to make payments to the Agent
for the account of the respective Letter of Credit Issuer with respect to
Letters of Credit issued by it shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
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(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Letter of Credit Issuer, any Bank, or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Borrower or any of its Subsidiaries and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse each Letter of Credit Issuer, by making payment to
the Agent in immediately available funds at the Payment Office, for any payment
or disbursement made by such Letter of Credit Issuer under any Letter of Credit
issued by it (each such amount so paid or disbursed until reimbursed, an "Unpaid
Drawing") immediately after, and in any event on the date of such payment or
disbursement, with interest on the amount so paid or disbursed by such Letter of
Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York time)
on the date of such payment or disbursement, from and including the date paid or
disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the Applicable Margin for
Revolving Loans maintained as Base Rate Loans as in effect from time to time
(plus an additional 2% per annum if not reimbursed by the third Business Day
after the date of such payment or disbursement), such interest also to be
payable on demand; provided, that it is understood and agreed, however, that the
--------
notices referred to above in this clause (a) shall not be required to be given
if a Default or an Event of Default under such Section 10.05 shall have occurred
and be continuing (in which case the Unpaid Drawings shall be due and payable
immediately without presentment, demand, protest or notice of any kind (all of
which are hereby waived by each Credit Party) and shall bear interest at a rate
per annum which shall be Applicable Margin for Revolving Loans maintained as
Base Rate Loans plus 2% on and after the third Business Day following the
respective Drawing). Each Letter of Credit Issuer shall provide the Borrower
prompt notice of any payment or disbursement made by it under any Letter of
Credit issued by it, although the failure of, or delay in, giving any such
notice shall not release or diminish the obligations of the Borrower under this
Section 2.04(a) or under any other Section of this Agreement.
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(b) The Borrower's obligation under this Section 2.04 to reimburse
the respective Letter of Credit Issuer with respect to drawings on Letters of
Credit (including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower or any of its Subsidiaries
may have or have had against such Letter of Credit Issuer, the Agent or any
Bank, including, without limitation, any defense based upon the failure of any
drawing under a Letter of Credit issued by it to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such drawing; provided, however, that the Borrower shall not be
-------- -------
obligated to reimburse such Letter of Credit Issuer for any wrongful payment
made by such Letter of Credit Issuer under a Letter of Credit issued by it as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of such Letter of Credit Issuer as determined by a court of
competent jurisdiction.
2.05 Increased Costs. If after the Effective Date, any Letter of
---------------
Credit Issuer or any Participant determines that the adoption or effectiveness
of any applicable law, rule or regulation, order, guideline or request or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such Letter
of Credit Issuer or such Participant's participation therein (except as
contemplated by Section 4.04), or (ii) impose on any Letter of Credit Issuer or
any Participant any other conditions directly or indirectly affecting this
Agreement, any Letter of Credit or such Participant's participation therein; and
the result of any of the foregoing is to increase the cost to such Letter of
Credit Issuer or such Participant of issuing, maintaining or participating in
any Letter of Credit, or to reduce the amount of any sum received or receivable
by such Letter of Credit Issuer or such Participant hereunder or reduce the rate
of return on its capital with respect to Letters of Credit, then, upon written
demand to the Borrower by such Letter of Credit Issuer or such Participant (a
copy of which notice shall be sent by such Letter of Credit Issuer or such
Participant to the Agent), accompanied by the certificate described in the last
sentence of this Section 2.05, the Borrower agrees, subject to the provisions of
Section 13.18 (to the extent applicable), to pay to such Letter of Credit Issuer
or such Participant such additional amount or amounts as will compensate such
Letter of Credit Issuer or such Participant for such increased cost or
reduction. A certificate submitted to the Borrower by such Letter of Credit
Issuer or such Participant, as the case may be (a copy of which certificate
shall be sent by such Letter of Credit Issuer or such Participant to the Agent),
setting forth in reasonable detail the basis for the determination of such
additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such Participant as aforesaid shall be final and conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish the Borrower's obligations
to pay additional amounts pursuant to this Section 2.05 upon subsequent receipt
of such certificate.
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SECTION 3. Fees; Commitments.
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3.01 Fees. (a) Acquisition Corp. shall pay to the Agent for
----
distribution to each Non-Defaulting Bank a commitment fee (the "TL Commitment
Fee") for the period from the Effective Date to but not including the Final
Maturity Date (or such earlier date as the Total Term Loan Commitment shall have
been terminated), computed at a rate of 1/2 of 1% per annum on the daily average
Term Loan Commitment of such Non-Defaulting Bank. Accrued Commitment Fees shall
be due and payable quarterly in arrears on each Quarterly Payment Date and on
the Final Maturity Date (or such earlier date upon which the Total Term Loan
Commitment is terminated).
(b) SMT shall pay to the Agent for distribution to each Non-
Defaulting Bank a commitment fee (the "RL Commitment Fee") for the period from
the Effective Date to but not including the Revolving Loan Maturity Date (or
such earlier date as the Total Revolving Loan Commitment shall have been
terminated), computed at a rate for each day equal to the Applicable RL
Commitment Fee Percentage on the daily average Unutilized Revolving Loan
Commitment of such Non-Defaulting Bank. Accrued RL Commitment Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and on the
Revolving Loan Maturity Date (or such earlier date upon which the Total
Revolving Loan Commitment is terminated).
(c) The Borrower shall pay to the Agent for pro rata distribution to
--- ----
each Non-Defaulting Bank with a Revolving Loan Commitment (based on their
respective Adjusted RL Percentages), a fee in respect of each Letter of Credit
(the "Letter of Credit Fee") computed at a rate per annum equal to the
Applicable Margin for Revolving Loans maintained as Eurodollar Loans then in
effect on the daily Stated Amount of such Letter of Credit. Accrued Letter of
Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the first day on or after the termination of the Total
Revolving Loan Commitment upon which no Letters of Credit remain outstanding.
(d) The Borrower shall pay to each Letter of Credit Issuer a fee in
respect of each Letter of Credit issued by such Letter of Credit Issuer (the
"Facing Fee") computed at the rate of 1/4 of 1% per annum on the daily Stated
Amount of such Letter of Credit; provided, that in no event shall the annual
--------
Facing Fee with respect to each Letter of Credit be less than $500; it being
agreed that (x) on the date of issuance of any Letter of Credit and on each
anniversary thereof prior to the termination of such Letter of Credit, if $500
will exceed the amount of Facing Fees that will accrue with respect to such
Letter of Credit for the immediately succeeding 12-month period, the full $500
shall be payable on the date of issuance of such Letter of Credit and on each
such anniversary thereof prior to the termination of such Letter of Credit and
(y) if on the date of the termination of any Letter of Credit, $500 actually
exceeds the amount of Facing Fees paid or payable with respect to such Letter of
Credit for the period beginning on the date of the issuance thereof (or if the
respective Letter of Credit has been outstanding for more than one year, the
date of the last anniversary of the issuance thereof occurring prior to
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the termination of such Letter of Credit) and ending on the date of the
termination thereof, an amount equal to such excess shall be paid as additional
Facing Fees with respect to such Letter of Credit on the next date upon which
Facing Fees are payable in accordance with the immediately succeeding sentence.
Except as provided in the immediately preceding sentence, accrued Facing Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
upon the first day on or after the termination of the Total Revolving Loan
Commitment upon which no Letters of Credit remain outstanding.
(e) The Borrower shall pay directly to each Letter of Credit Issuer
upon each issuance of, payment under, and/or amendment of, a Letter of Credit
issued by such Letter of Credit Issuer such amount as shall at the time of such
issuance, payment or amendment be the administrative charge which such Letter of
Credit Issuer is customarily charging for issuances of, payments under or
amendments of, letters of credit issued by it.
(f) Each Borrower shall pay to the Agent, for its own account, such
other fees as may be agreed to in writing from time to time between such
Borrower and the Agent, when and as due.
(g) All computations of Fees shall be made in accordance with
Section 13.07(b).
3.02 Voluntary Termination or Reduction of Total Unutilized Revolving
----------------------------------------------------------------
Loan Commitment. (a) Upon at least three Business Days' prior notice to the
- ---------------
Agent at its Notice Office (which notice the Agent shall promptly transmit to
each of the Banks), SMT shall have the right, without premium or penalty, to
terminate or partially reduce the Total Unutilized Revolving Loan Commitment,
provided that (v) any such termination or partial reduction shall apply to
- --------
proportionately and permanently reduce the Revolving Loan Commitment of each of
the RL Banks, (w) any reduction to the Total Unutilized Revolving Loan
Commitment prior to the Initial Borrowing Date may only be made in connection
with a termination in full of the Total Commitment, (x) any partial reduction
pursuant to this Section 3.02(a) shall be in integral multiples of $1,000,000,
(y) the reduction to the Total Unutilized Revolving Loan Commitment shall in no
case be in an amount which would cause the Revolving Loan Commitment of any RL
Bank to be reduced (as required by the preceding clause (v)) by an amount which
exceeds the remainder of (A) the Unutilized Revolving Loan Commitment of such RL
Bank as in effect immediately before giving effect to such reduction minus (B)
such RL Bank's Adjusted RL Percentage of the aggregate principal amount of
Swingline Loans then outstanding and (z) any partial reduction to Total
Revolving Loan Commitment pursuant to this Section 3.02 (a) shall apply to
reduce the remaining Scheduled Commitment Reductions in direct order of
maturity. No Borrower shall have the right to voluntarily terminate or reduce
the Total Term Loan Commitment.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been
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approved by the Required Banks as provided in Section 13.12(b), the Borrowers
shall have the right, subject to obtaining the consents required by Section
13.12(b), upon five Business Days' prior written notice to the Agent at its
Notice Office (which notice the Agent shall promptly transmit to each of the
Banks), to terminate the entire Revolving Loan Commitment and/or, if prior to
the Merger Date, the Term Loan Commitment of such Bank, so long as all Loans,
together with accrued and unpaid interest, Fees and all other amounts, owing to
such Bank (including all amounts, if any, owing pursuant to Section 1.11 but
excluding amounts owing in respect of Term Loans maintained by such Bank, if
such Term Loans are not being repaid pursuant to Section 13.12(b)) are repaid
concurrently with the effectiveness of such termination (at which time Schedule
I shall be deemed modified to reflect such changed amounts) and at such time,
unless the respective Bank continues to have outstanding Term Loans hereunder,
such Bank shall no longer constitute a "Bank" for purposes of this Agreement,
except with respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06), which shall
survive as to such repaid Bank. Unless otherwise specifically agreed in writing
by the Required Banks, any reduction to the Total Revolving Loan Commitment
pursuant to this Section 3.02(b) shall apply to reduce the remaining Scheduled
Commitment Reductions on a pro rata basis (based upon the then remaining amount
--- ----
of each such Scheduled Commitment Reduction after giving effect to all prior
reductions thereto).
3.03 Mandatory Reduction of Commitments. (a) The Total Commitment
----------------------------------
(and the Term Loan Commitment and the Revolving Loan Commitment of each Bank)
shall terminate in its entirety on (x) September 30, 1997 unless the Initial
Borrowing Date has occurred on or before such date, (y) October 15, 1997, in the
event the 90% Requirement has been satisfied and the Merger Date has not
occurred on or prior to such date and (z) the 120th day following the Initial
Borrowing Date, in the event the 90% Requirement has not been satisfied and the
Merger Date has not occurred on or prior to such 120th day following the Initial
Borrowing Date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Term Loan Commitment (and the Term Loan
Commitment of each Bank) shall (i) be reduced on each date on which Term Loans
are incurred (after giving effect to the making of Term Loans on such date) in
an amount equal to the aggregate principal amount of Term Loans incurred on such
date, (ii) terminate in its entirety on the Merger Date (after giving effect to
the incurrence of Term Loans on such date) and (iii) prior to the termination of
the Total Term Loan Commitment as provided in clauses (i) and (ii) above, be
reduced from time to time to the extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date set forth below (each, a "Scheduled
Commitment Reduction Date"), the Total Revolving Loan Commitment shall be
permanently reduced by the amount set forth opposite such Scheduled Commitment
Reduction Date below (each such reduction, as the same
-25-
<PAGE>
may be reduced as provided in Sections 3.02, 3.03(f) and 4.02(h), a "Scheduled
Commitment Reduction"):
<TABLE>
<CAPTION>
Scheduled Commitment
Reduction Date Amount
------------------------ ------
<S> <C>
August 31, 2002 $15 million
August 31, 2003 $15 million
</TABLE>
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each RL Bank) shall terminate in its entirety on the
Revolving Loan Maturity Date.
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment shall be reduced from
time to time to the extent required by Section 4.02.
(f) Any amount required to be applied to reduce the Total Revolving
Loan Commitment pursuant to this Section 3.03 (or pursuant to Section 4.02)
shall be applied to reduce the then remaining Scheduled Commitment Reductions
pro rata based upon the then remaining amount of such Scheduled Commitment
- --- ----
Reductions after giving effect to all prior reductions thereto.
(g) Each reduction to the Total Term Loan Commitment or Total
Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to Section
4.02) shall be applied proportionately to reduce the Term Loan Commitment or the
Revolving Loan Commitment, as the case may be, of each Bank with such a
Commitment.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. (a) Each Borrower shall have the right
---------------------
to prepay the Loans, and the right to allocate such prepayments to Revolving
Loans and/or Term Loans as such Borrower elects, in whole or in part, without
premium or penalty except as otherwise provided in this Agreement, from time to
time on the following terms and conditions:
(i) such Borrower shall give the Agent at its Notice Office written
notice (or telephonic notice promptly confirmed in writing) of its intent
to prepay the Loans, whether such Loans are Term Loans, Revolving Loans or
Swingline Loans, the amount of such prepayment, the Types of Loans to be
repaid and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice (I) shall be given by such Borrower
prior to 12:00 Noon (New York time) (x) at least one Business Day prior to
the date of such prepayment in the case of Base Rate Loans, (y) on the date
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<PAGE>
of such prepayment in the case of Swingline Loans and (z) at least three
Business Days prior to the date of such prepayment in the case of
Eurodollar Loans and (II) shall, except in the case of Swingline Loans,
promptly be transmitted by the Agent to each of the Banks;
(ii) each prepayment (other than prepayments in full of (x) all
outstanding Base Rate Loans or (y) any outstanding Borrowing of Eurodollar
Loans) shall be in an aggregate principal amount of at least (x)
$1,000,000, in the case of Eurodollar Loans, (y) $500,000, in the case of
Revolving Loans and Term Loans maintained as Base Rate Loans and (z)
$100,000, in the case of Swingline Loans and, in each case, if greater, in
integral multiples of $100,000, provided, that no partial prepayment of
--------
Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Eurodollar Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto;
(iii) at the time of any prepayment of Eurodollar Loans pursuant to this
Section 4.01 on any date other than the last day of the Interest Period
applicable thereto, such Borrower shall pay the amounts required pursuant
to Section 1.11;
(iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided, that at
--- ---- --------
such Borrower's election in connection with any prepayment of Revolving
Loans pursuant to this Section 4.01(a), such prepayment shall not be
applied to any Revolving Loans of a Defaulting Bank; and
(v) each prepayment of principal of Term Loans pursuant to this
Section 4.01(a) shall be applied to reduce the then remaining Scheduled
Repayments in direct order of maturity.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
13.12(b), the Borrowers shall have the right, upon five Business Days' prior
written notice to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks), to repay all Loans of such Bank
(including all amounts, if any, owing pursuant to Section 1.11), together with
accrued and unpaid interest, Fees and all other amounts then owing to such Bank
(or owing to such Bank with respect to each Tranche which gave rise to the need
to obtain such Bank's individual consent) in accordance with said Section
13.12(b), so long as (A) in the case of the repayment of Revolving Loans of any
Bank pursuant to this clause (b), the Revolving Loan Commitment of such Bank is
terminated concurrently with such repayment (at which time Schedule I shall be
deemed modified to reflect the changed Revolving Loan Commitments), (B) in the
case of the repayment of Term Loans of any Bank pursuant to this clause (b), the
Term Loan Commitment of such Bank (to the extent not theretofore terminated) is
terminated concurrently with such repayment (at which time Schedule I shall be
deemed modified to reflect the changed
-27-
<PAGE>
Term Loan Commitments) and (C) the consents required by Section 13.12(b) in
connection with the repayment pursuant to this clause (b) shall have been
obtained.
4.02 Mandatory Repayments and Commitment Reductions. (a) (i) If on
----------------------------------------------
any date the sum of (x) the aggregate outstanding principal amount of Revolving
Loans made by Non-Defaulting Banks and Swingline Loans (after giving effect to
all other repayments thereof on such date) and (y) the Letter of Credit
Outstandings on such date exceeds the Adjusted Total Available Revolving Loan
Commitment as then in effect, SMT shall repay on such date the principal of
Swingline Loans, and if no Swingline Loans are or remain outstanding, Revolving
Loans of Non-Defaulting Banks in an aggregate amount equal to such excess. If,
after giving effect to the prepayment of all outstanding Swingline Loans and all
outstanding Revolving Loans of Non-Defaulting Banks, the aggregate amount of
Letter of Credit Outstandings exceeds the Adjusted Total Available Revolving
Loan Commitment as then in effect, SMT shall pay to the Agent at the Payment
Office on such date an amount in cash and/or Cash Equivalents equal to such
excess (up to the aggregate amount of Letter of Credit Outstandings at such
time) and the Agent shall hold such payment as security for the obligations of
SMT to Non-Defaulting Banks hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent.
(ii) On any date on which the aggregate outstanding principal amount
of the Revolving Loans made by any Defaulting Bank exceeds the Available
Revolving Loan Commitment of such Defaulting Bank, SMT shall prepay on such date
principal of Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Term Loans, to the
extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and 4.02(h),
a "Scheduled Repayment"):
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
December 31, 1997 $125,000
March 31, 1998 $125,000
June 30, 1998 $125,000
September 30, 1998 $125,000
December 31, 1998 $125,000
March 31, 1999 $125,000
June 30, 1999 $125,000
September 30, 1999 $125,000
</TABLE>
-28-
<PAGE>
<TABLE>
<S> <C>
December 31, 1999 $125,000
March 31, 2000 $125,000
June 30, 2000 $125,000
September 30, 2000 $125,000
December 31, 2000 $125,000
March 31, 2001 $125,000
June 30, 2001 $125,000
September 30, 2001 $125,000
December 31, 2001 $125,000
March 31, 2002 $125,000
June 30, 2002 $125,000
September 30, 2002 $125,000
December 31, 2002 $125,000
March 31, 2003 $125,000
June 30, 2003 $125,000
Final Maturity Date $47,125,000
</TABLE>
In the event that less than the Total Term Loan Commitment is utilized to
finance the Acquisition and to pay the fees and expenses incurred in connection
with the Transaction, the amount not so utilized shall result in each of the
Scheduled Repayments being reduced on a pro rata basis (based upon the then
--- ----
remaining principal amount of such Scheduled Repayments after giving effect to
all prior reductions thereto).
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date upon which Holdings or any of its Subsidiaries receives Net Sale Proceeds
from any Asset Sale, an amount equal to the Applicable Prepayment Percentage of
the Net Sale Proceeds from such Asset Sale shall be applied as a mandatory
repayment and/or commitment reduction in accordance with the requirements of
Sections 4.02(j) and (k); provided that (I)(x) with respect to any such Net Sale
--------
Proceeds received by Holdings or any of its Subsidiaries in connection with an
MRI Replacement, such Net Sale Proceeds shall not give rise to a mandatory
repayment (and/or commitment reduction, as the case may be) on such date to the
extent that no Default or Event of Default then exists and SMT delivers a
certificate to the Agent on or prior to such date stating that (i) an amount
equal to such Net Sale Proceeds has been used to purchase a replacement MRI Unit
within 135 days prior to the date of receipt of such Net Sale Proceeds or (ii)
such Net Sale Proceeds shall be used to purchase a replacement MRI Unit within
135 days following the date of receipt of such Net Sale Proceeds (which
certificate shall set forth the amount of the proceeds so expended or the
estimates of the proceeds to be so expended, as the case may be) and (y) in the
case of any MRI Replacement for which no replacement MRI Unit has been
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<PAGE>
purchased prior to the disposition of the MRI Unit to be replaced pursuant to
such MRI Unit Replacement, if all or any portion of such Net Sale Proceeds
referred to in preceding clause (x) (ii) are not so used within such 135-day
period, such remaining portion shall be applied on the last day of such period
as a mandatory repayment and/or commitment reduction as provided above and
(II)(x) with respect to no more than $1,500,000 in the aggregate of such Net
Sale Proceeds received by Holdings or its Subsidiaries in any fiscal year of
Holdings, such Net Sale Proceeds shall not give rise to a mandatory repayment
(and/or commitment reduction, as the case may be) on such date to the extent
that no Default or Event of Default then exists and SMT delivers a certificate
to the Agent on or prior to such date stating that such Net Sale Proceeds shall
be used or contractually committed to be used to purchase assets used or to be
used in the businesses permitted pursuant to Section 9.01 (including, without
limitation (but only to the extent permitted by Section 9.02), the purchase of
the capital stock of a Person engaged in such businesses) within 270 days
following the date of receipt of such Net Sale Proceeds from such Asset Sale
(which certificate shall set forth the estimates of the proceeds to be so
expended) and (y)(i) if all or any portion of such Net Sale Proceeds are not so
used (or contractually committed to be used) within such 270-day period, such
remaining portion shall be applied on the last day of such period as a mandatory
repayment and/or commitment reduction as provided above and (ii) if all or any
portion of such Net Sale Proceeds are not so used within such 270-day period
referred to in clause (i) of this clause (II)(y) because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, such remaining portion
shall be applied on the date of such termination or expiration as a mandatory
repayment and/or commitment reduction as provided above.
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date on which Holdings or any of its Subsidiaries receives any cash proceeds
from any incurrence of Indebtedness (other than Indebtedness permitted to be
incurred pursuant to Section 9.04 as in effect on the Effective Date) or
issuance of Preferred Stock (other than (x) Disqualified Preferred Stock to the
extent the proceeds therefrom are used to effect Permitted Acquisitions and (y)
Qualified Preferred Stock) by Holdings or any of its Subsidiaries, an amount
equal to the Applicable Prepayment Percentage of the Net Cash Proceeds of the
respective incurrence of Indebtedness shall be applied as a mandatory repayment
and/or commitment reduction in accordance with the requirements of Sections
4.02(j) and (k).
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date on which Holdings or any of its Subsidiaries receives any cash proceeds
from any sale or issuance of Qualified Preferred Stock or common equity of (or
cash capital contributions to) Holdings or any of its Subsidiaries (other than
proceeds received from (v) the Equity Financing, (w) issuances of Holdings
Common Stock to management of Holdings and its Subsidiaries (including as a
result of the exercise of any options with respect thereto) in an aggregate
amount not to exceed $1,000,000 in any fiscal year of Holdings, (x) equity
contributions to any Subsidiary of Holdings made by Holdings or any other
Subsidiary of Holdings, (y) any issuance of Qualified
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<PAGE>
Preferred Stock or Holdings Common Stock to the extent the proceeds therefrom
are used to effect Permitted Acquisitions and (z) additional issuances of
Holdings Common Stock and Qualified Preferred Stock, to the extent that the
aggregate proceeds excluded pursuant to this clause (z) after the Effective Date
do not exceed $1,000,000), an amount equal to the Applicable Prepayment
Percentage of the Net Cash Proceeds of the respective equity issuance or capital
contribution shall be applied as a mandatory repayment and/or commitment
reduction in accordance with the requirements of Sections 4.02(j) and (k);
provided that on and after the Merger Date, Net Cash Proceeds received by
- --------
Holdings from additional sales or issuances of Holdings Common Stock or
Qualified Preferred Stock shall not be required to be applied as a mandatory
repayment (and/or commitment reduction, as the case may be) on the date of
receipt thereof, to the extent that (x) no Default or Event of Default then
exists, and (y) the Borrower delivers a certificate to the Agent on or prior to
such date stating that such Net Cash Proceeds shall be used or contractually
committed to be used to make Capital Expenditures (including, without
limitation, Permitted Acquisitions) within 270 days following the date of
receipt of such Net Cash Proceeds (which certificate shall set forth the
estimates of the proceeds to be so expended), and provided further, that (i) if
----------------
all or any portion of such Net Cash Proceeds are not so used (or contractually
committed to be used) within such 270-day period, such remaining portion shall
be applied on the last day of such period as a mandatory repayment and/or
commitment reduction as provided above and (ii) if all or any portion of such
Net Cash Proceeds are not so used within such 270-day period referred to in
clause (i) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, such remaining portion shall be applied on the date of
such termination or expiration as a mandatory repayment and/or commitment
reduction as provided above.
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, within 10 days following each date on
or after the Effective Date on which Holdings or any of its Subsidiaries
receives any proceeds from any Recovery Event (other than proceeds from Recovery
Events in an amount less than $250,000 per Recovery Event), an amount equal to
100% of the proceeds of such Recovery Event (net of reasonable costs (including,
without limitation, legal costs and expenses) and taxes incurred in connection
with such Recovery Event and the amount of such proceeds required to be used to
repay any Indebtedness (other than Indebtedness of the Banks pursuant to this
Agreement) which is secured by the respective assets subject to such Recovery
Event) shall be applied as a mandatory repayment and/or commitment reduction in
accordance with the requirements of Sections 4.02(j) and (k); provided that (x)
--------
so long as no Default or Event of Default then exists and such proceeds do not
exceed $2,500,000, such proceeds shall not be required to be so applied on such
date to the extent that an Authorized Officer of SMT has delivered a certificate
to the Agent on or prior to such date stating that such proceeds shall be used
or shall be committed to be used to replace or restore any properties or assets
in respect of which such proceeds were paid within 360 days following the date
of such Recovery Event (which certificate shall set forth the estimates of the
proceeds to be so expended) and (y) so long as no Default or Event of Default
then exists and to the extent that (a) the amount of such proceeds exceeds
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<PAGE>
$2,500,000, (b) the amount of such proceeds, together with other cash available
to SMT and its Subsidiaries and permitted to be spent by them on Capital
Expenditures during the relevant period, equals at least 100% of the cost of
replacement or restoration of the properties or assets in respect of which such
proceeds were paid as determined by SMT and as supported by such estimates or
bids from contractors or subcontractors or such other supporting information
as the Agent may reasonably accept, (c) an Authorized Officer of SMT has
delivered to the Agent a certificate on or prior to the date the application
would otherwise be required pursuant to this Section 4.02(f) in the form
described in clause (x) above and also certifying its determination as required
by preceding clause (b) and certifying the sufficiency of business interruption
insurance as required by succeeding clause (d), and (d) an Authorized Officer of
SMT has delivered to the Agent such evidence as the Agent may reasonably re
quest in form and substance reasonably satisfactory to the Agent establishing
that SMT has sufficient business interruption insurance and that SMT will
receive payment thereunder in such amounts and at such times as are necessary to
satisfy all obligations and expenses of SMT (including, without limitation, all
debt service requirements, including pursuant to this Agreement), without any
delay or extension thereof, for the period from the date of the respective
casualty, condemnation or other event giving rise to the Recovery Event and
continuing through the completion of the replacement or restoration of
respective properties or assets, then the entire amount of the proceeds of such
Recovery Event and not just the portion in excess of $2,500,000 shall be
deposited with the Agent pursuant to a cash collateral arrangement reasonably
satisfactory to the Agent whereby such proceeds shall be disbursed to SMT from
time to time as needed to pay or reimburse SMT or such Subsidiary actual costs
incurred by it in connection with the replacement or restoration of the
respective properties or assets (pursuant to such certification requirements as
may be established by the Agent), provided further that at any time while an
----------------
Event of Default has occurred and is continuing, the Required Banks may direct
the Agent (in which case the Agent shall, and is hereby authorized by SMT to,
follow said directions) to apply any or all proceeds then on deposit in such
collateral account to the repayment of Obligations hereunder in the same manner
as proceeds would be applied pursuant to the Security Agreement, and provided
--------
further, that if all or any portion of such proceeds not required to be applied
- -------
as a mandatory repayment and/or commitment reduction pursuant to the second
preceding proviso (whether pursuant to clause (x) or (y) thereof) are either (A)
not so used or committed to be so used within 360 days after the date of the
respective Recovery Event or (B) if committed to be used within 360 days after
the date of receipt of such net proceeds and not so used within 18 months after
the date of respective Recovery Event then, in either such case, such remaining
portion not used or committed to be used in the case of preceding clause (A) and
not used in the case of preceding clause (B) shall be applied on the date
occurring 360 days after the date of the respective Recovery Event in the case
of clause (A) above or the date occurring 18 months after the date of the respec
tive Recovery Event in the case of clause (B) above as a mandatory repayment
and/or commitment reduction in accordance with the requirements of Sections
4.02(j) and (k).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each Excess Cash Flow Payment Date,
an amount equal to the
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<PAGE>
Applicable Excess Cash Flow Percentage of the Excess Cash Flow for the relevant
Excess Cash Flow Payment Period shall be applied as a mandatory repayment and/or
commitment reduction in accordance with the requirements of Sections 4.02(j)
and (k).
(h) (i) In the event the 90% Requirement has been satisfied on the
Initial Borrowing Date and the Merger Date shall not have occurred on or prior
to October 15, 1997, the Borrowers shall be required to repay all outstanding
Loans on such date and (ii) in the event the 90% Requirement has not been
satisfied on the Initial Borrowing Date and the Merger Date shall not have
occurred on or prior to the 120th day following the Initial Borrowing Date, the
Borrowers shall be required to repay all outstanding Loans on such 120th day.
(i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date and prior to the Merger Date upon which Holdings or any of its Subsidiaries
receives Net Sale Proceeds from any sale of Margin Stock (including the Shares
acquired pursuant to the Tender Offer), an amount equal to 100% of the Net Sale
Proceeds from such sale shall be applied as a mandatory repayment and/or
commitment reduction in accordance with the requirements of Sections 4.02(j)
and (k).
(j) Each amount required to be applied pursuant to Sections 4.02(c),
(d), (e), (f), (g) and (i) in accordance with this Section 4.02(j) shall be
applied (i) first, to repay the outstanding principal amount of Term Loans, (ii)
second, to the extent in excess of the amounts required to be applied pursuant
to preceding clause (i), to reduce the Total Term Loan Commitment and (iii)
third, to the extent in excess of the amounts required to be applied pursuant to
preceding clauses (i) and (ii), to reduce the Total Revolving Loan Commitment
(it being understood and agreed that (x) the amount of any reduction to the
Total Term Loan Commitment and/or the Total Revolving Loan Commitment as
provided in immediately preceding clauses (ii) and (iii) shall be deemed to be
an application of proceeds for purposes of this Section 4.02(j) even though cash
is not actually applied and (y) any cash received by Holdings or such Subsidiary
will be retained by such Person except to the extent that such cash is otherwise
required to be applied as provided in Section 4.02(a) as a result of any
reduction to the Total Revolving Loan Commitment). All repayments or commitment
reductions, as the case may be, of (x) outstanding Term Loans and Term Loan
Commitments, on the one hand and (y) Revolving Loan Commitments, on the other
hand, pursuant to Sections 4.02(c), (d), (e), (f), (g) or (i) shall be applied
to reduce the then remaining Scheduled Repayments (in the case of preceding
clause (x)) or Scheduled Commitment Reductions (in the case of preceding clause
(y)), on a pro rata basis (based upon the then remaining Scheduled Repayments or
--- ----
Scheduled Commitment Reductions, as the case may be, after giving effect to all
prior reductions thereto).
(k) With respect to each repayment of Loans required by this Section
4.02, the Borrowers may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made,
provided that: (i) repayments of Euro dollar Loans pursuant to this Section
- --------
4.02 may only be made on the last day of an Interest Period applicable thereto
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<PAGE>
unless (x) all Eurodollar Loans of the respective Tranche with Interest Periods
ending on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full and/or (y) concurrently with such
repayment, the respective Borrower pays all breakage costs and other amounts
owing to each Bank pursuant to Section 1.11; (ii) if any repayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto, such Borrowing shall be
converted at the end of the then current Interest Period into a Borrowing of
Base Rate Loans; and (iii) each repayment of any Tranche of Loans made pursuant
to a Borrowing shall be applied pro rata among such Tranche of Loans. In the
--- ----
absence of a designation by the respective Borrower as described in the
preceding sentence, the Agent shall, subject to the above, make such designation
in its sole discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.11.
(l) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the respective Maturity Date for such Loans.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Agent for the ratable account of the Bank or Banks entitled thereto not
later than 12:00 Noon (New York time) on the date when due and shall be made in
immediately available funds and in U.S. Dollars at the Payment Office. Any
payments under this Agreement or under any Note which are made later than 12:00
Noon (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made here under or under any Note
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrowers hereunder
------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income, net profits or capital (including branch
profits tax) of a Bank pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office or applicable
lending office of such Bank is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect to such non
excluded taxes, levies, imposts, duties, fees, assessments or other charges (all
such nonexcluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are
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so levied or imposed, the Borrowers agree to pay on a joint and several basis
the full amount of such Taxes, and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Borrowers agree to
reimburse on a joint and several basis each Bank, upon the written request of
such Bank, for taxes imposed on or measured by the net income, net profits or
capital (including branch profits tax) of such Bank pursuant to the laws of the
jurisdiction in which such Bank is organized or in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which such
Bank is organized or in which the principal office or applicable lending office
of such Bank is located and for any withholding of taxes as such Bank shall
determine are payable by, or withheld from, such Bank in respect of such amounts
so paid to or on behalf of such Bank pursuant to the preceding sentence and in
respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. Each Borrower will furnish to the Agent within 45 days after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by such Borrower. The Borrowers agree to
indemnify on a joint and several basis and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank party to this Agreement on the Effective Date hereby
represents that, as of the Effective Date, all payments of principal, interest,
and fees to be made to it by the Borrowers pursuant to this Agreement will be
totally exempt from withholding of United States federal tax. Each Bank that is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes agrees to deliver to each
Borrower and the Agent on or prior to the Effective Date, or in the case of a
Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 13.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, and that
upon a Borrower's reasonable request after the occurrence of any other event
requiring the delivery of a Form 1001 and Form 4224 in addition to or in
replacement of the forms previously delivered, it will deliver
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to each Borrower and the Agent two new accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
4.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify each Borrower and the Agent of its inability to deliver any such Form or
Certificate in which case such Bank shall not be required to deliver any such
Form or Certificate pursuant to this Section 4.04(b). Notwithstanding anything
to the contrary contained in Section 4.04(a), but subject to Section 13.04(b)
and the immediately succeeding sentence, (x) the Borrowers shall be entitled, to
the extent they are required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder for the account of any Bank which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for U.S.
Federal income tax purposes to the extent that such Bank has not provided to the
Borrowers U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrowers shall not be
obligated pursuant to Section 4.04(a) hereof to gross-up payments to be made to
a Bank in respect of income or similar taxes imposed by the United States if (I)
such Bank has not provided to the Borrowers the Internal Revenue Service Forms
required to be provided to the Borrowers pursuant to this Section 4.04(b) or
(II) in the case of a payment, other than interest, to a Bank described in
clause (ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 4.04
and except as set forth in Section 13.04(b), the Borrowers agree to pay
additional amounts and to indemnify each Bank on a joint and several basis in
the manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or with holding) in respect of any Taxes
deducted or withheld by them as described in the immediately preceding sentence
as a result of any changes after the Effective Date in any applicable law,
treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of such Taxes
(or, if later, the date such Bank became party to this Agreement). The Borrower
shall not be required to pay any additional amounts or indemnification under
Section 4.04(a) to any Bank to the extent that the obligation to pay such
additional amounts or indemnification would not have arisen but for the
representation set forth in the first sentence of Section 4.04(b) above made by
the Bank not being true.
(c) If a Borrower pays any additional amount under this Section 4.04
to a Bank and such Bank determines in its sole discretion that it has actually
received or realized in connection therewith any refund or any reduction of, or
credit against, its Tax liabilities in or with respect to the taxable year in
which the additional amount is paid, such Bank shall pay to such Borrower an
amount that the Bank shall, in its sole discretion, determine is equal to the
net benefit, after tax, which was obtained by the Bank in such year as a
consequence of such refund, reduction or credit.
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<PAGE>
(d) Each Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions and subject to overall policy considerations of such
Bank) (i) to file any certificate or document or to furnish any information as
reasonably requested by a Borrower pursuant to any applicable treaty, law or
regulation or (ii) to designate a different applicable lending office of such
Bank, if the making of such filing or the furnishing of such information or the
designation of such other lending office would avoid the need for or reduce the
amount of any additional amounts payable to such Borrower and would not, in the
sole discretion of such Bank, be disadvantageous to such Bank.
(e) The provisions of this Section 4.04 are subject to the provisions
of Section 13.18 (to the extent applicable).
SECTION 5A. Conditions Precedent to Initial Credit Events. The
---------------------------------------------
obligation of each Bank to make each Loan hereunder on the Initial Borrowing
Date to the Borrowers, is subject, at the time of the making of such Loans to
the satisfaction of the following conditions:
5A.01 Execution of Agreement; Notes. On or prior to the Initial
-----------------------------
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agent for the account of each Bank the appropriate
Term Note executed by Acquisition Corp. and/or the appropriate Revolving Note
executed by SMT, in each case in the amount, maturity and as otherwise provided
herein.
5A.02 Officer's Certificate. On the Initial Borrowing Date, the
---------------------
Agent shall have received a certificate dated such date signed by an appropriate
officer of the Borrower stating that all of the applicable conditions set forth
in Sections 5A.05 through 5A.10 and 6.01 (other than such conditions that are
subject to the satisfaction of the Agent and/or the Required Banks) have been
satisfied on such date.
5A.03 Opinions of Counsel. On the Initial Borrowing Date, the Agent
-------------------
shall have received opinions, addressed to the Agent, the Collateral Agent and
each of the Banks and dated the Initial Borrowing Date, from (i) O'Sullivan
Graev & Karabell, LLP, special counsel to the Credit Parties, which opinion
shall cover the matters contained in Exhibit E and such other matters incident
to the transactions contemplated herein as the Agent may reasonably request and
(ii) Buchanan Ingersoll Professional Corporation, special Pennsylvania counsel
to the Credit Parties, which opinion shall cover such matters incident to the
transactions contemplated herein and in the other Credit Documents as the Agent
may reasonably request and shall be in form and substance satisfactory to the
Agent.
5A.04 Corporate Documents; Proceedings. (a) On the Initial
--------------------------------
Borrowing Date, the Agent shall have received from each Credit Party a
certificate, dated the Initial Borrowing Date, signed by the chairman, a
vice-chairman, the president or any vice-president of such Credit Party, and
attested to by the secretary or any assistant secretary of such Credit Party,
in
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the form of Exhibit F with appropriate insertions, together with copies of
the Certificate of Incorporation and By-Laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate and all of the
foregoing (including each such Certificate of Incorporation and By-Laws) shall
be reasonably satisfactory to the Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the Agent, and the Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates, bring-down certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested in connection therewith, such documents
and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
(c) On the Initial Borrowing Date and after giving effect to those
elements of the Transaction to be consummated on such date, the capital
structure (including, without limitation, the terms of any capital stock,
options, warrants or other securities issued by Holdings or any of its
Subsidiaries), and management of Holdings and its Subsidiaries shall be in form
and substance satisfactory to the Agent.
5A.05 Adverse Change, etc. (a) On or prior to the Initial Borrowing
--------------------
Date, since December 31, 1996, nothing shall have occurred which (i) the
Required Banks or the Agent shall reasonably determine has had, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of any Credit Party to
perform its obligations to them hereunder or under any other Credit Document or
(ii) has had a material adverse effect on the Transaction or a Material Adverse
Effect.
(b) On the Initial Borrowing Date, there shall not have occurred and
be continuing any material adverse change to the syndication market for credit
facilities similar in nature to this Agreement and there shall not have occurred
and be continuing a material disruption or a material adverse change in
financial, banking or capital markets that would have a material adverse effect
on the syndication, in each case as determined by the Agent in its reasonable
discretion.
5A.06 Litigation. On the Initial Borrowing Date, there shall be no
----------
actions, suits, proceedings or investigations pending or threatened (a) with
respect to this Agreement or, except as set forth on Schedule XI hereto, any
other Document or the Transaction, (b) with respect to any Existing Indebtedness
or (c) which the Agent or the Required Banks shall determine could reasonably be
expected to (i) have a Material Adverse Effect or (ii) have a material adverse
effect on the Transaction, the rights or remedies of the Banks or the Agent
hereunder or under any other Credit Document or on the ability of any Credit
Party to perform its respective obligations to the Banks or the Agent hereunder
or under any other Credit Document.
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<PAGE>
5A.07 Approvals. On or prior to the Initial Borrowing Date, (i) all
---------
necessary governmental (domestic and foreign), regulatory and third party
approvals in connection with any Existing Indebtedness, the Transaction, the
transactions contemplated by the Documents and otherwise referred to herein or
therein shall have been obtained and remain in full force and effect and
evidence thereof shall have been provided to the Agent, and (ii) all applicable
waiting periods shall have expired without any action being taken by any com-
petent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the Transaction, the making of the Loans and
the transactions contemplated by the Documents or otherwise referred to herein
or therein. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
purchase of the Shares pursuant to the Tender Offer, the consummation of the
Transaction or the making of the Loans.
5A.08 Capitalization. (a) On the Initial Borrowing Date, (i)
--------------
Holdings shall have received in connection with the Equity Financing gross cash
proceeds of at least $35,000,000 less the value of any options or warrants with
respect to the common stock of SMT which are being exchanged for new stock
options of Holdings in connection with the Transaction, (ii) Holdings shall have
contributed the full amount of the gross cash proceeds received by it from the
Equity Financing to the capital of the Borrower as a common equity contribution
in exchange for common stock of the Borrower and (iii) the Borrower shall have
utilized the full amount of such cash contribution to make payments owing in
connection with the Transaction prior to utilizing any proceeds of Loans for
such purpose.
(b) On the Initial Borrowing Date and concurrently with the
incurrence of Loans on such date, in the event the 90% Requirement has not been
satisfied and the proceeds of the Equity Financing and the Term Loans incurred
on such date (collectively, the "Available Proceeds") are insufficient to pay
all amounts required to acquire the Shares tendered pursuant to the Tender Offer
and the directors' Warrants and to pay fees and expenses payable by Holdings or
Acquisition Corp. on the Initial Borrowing Date in connection with the
Transaction (such amounts, collectively, the "Required Tender Offer Amount"),
Holdings shall have (i) incurred Merger Bridge Loans in an aggregate principal
amount equal to the remainder of (x) the Required Tender Offer Amount less (y)
----
the Available Proceeds and (ii) utilized the proceeds of such Merger Bridge
Loans to pay the remainder of the Required Tender Offer Amount.
(c) All of the terms and conditions of the Equity Financing Documents
and the Merger Bridge Loan Documents shall be reasonably satisfactory to the
Agent, and all conditions precedent to the consummation of the Equity Financing
and the incurrence of Merger Bridge Loans as set forth in the Equity Financing
Documents and the Merger Bridge Loan Documents shall have been satisfied, and
not waived unless consented to by the Agent, to the reasonable satisfaction of
the Agent. The Equity Financing shall have been consummated and, to the extent
the Available Proceeds are insufficient to pay the Required Tender Offer Amount,
the Merger
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<PAGE>
Bridge Loans shall have been incurred, in each case in accordance with the terms
and conditions of the applicable Documents and all applicable law.
5A.09 Tender Offer; etc. (a) On or prior to the Initial Borrowing
------------------
Date, there shall have been delivered to the Agent true and correct copies of
the Tender Offer Documents, which Tender Offer Documents shall be required to be
in form and substance satisfactory to the Agent and the Required Banks
(including, without limitation, as to the price per share paid in the Tender
Offer and in the Merger, minimum share tender condition, revocation (or action
equivalent thereto) of SMT's shareholders' rights program and any other
conditions contained in the Offer to Purchase) and shall be in full force and
effect. All material conditions precedent to the consummation of the Tender
Offer as contained in the Offer to Purchase (other than the condition set forth
in clause (c) of the conditions precedent section of the Offer to Purchase)
shall have been satisfied (and not waived without the consent of the Agent and
the Required Banks), and any amendment to the Tender Offer Documents shall be
required to be reasonably satisfactory in form and substance to the Agent and
the Required Banks, it being understood and agreed that, for purposes of this
Section 5A.09, the reference in the condition precedent section of the Offer to
Purchase to the "judgment" of "Purchaser" shall instead be a reference to the
"judgment" of the Agent or the Required Banks.
(b) On the Initial Borrowing Date (and concurrently with the
incurrence of Loans on such date), (i) the Tender Offer shall have been
consummated, (ii) all Shares that have been tendered to Acquisition Corp. shall
have been validly tendered and not with drawn and shall be available for
purchase by Acquisition Corp. in accordance with the terms and conditions set
forth in the Offer to Purchase and (iii) such tendered Shares shall be free and
clear of all Liens and restrictions to purchase imposed by applicable law or
otherwise. After giving effect to the consummation of the purchase of the Shares
pursuant to the Tender Offer, Acquisition Corp. shall own and control that
number of Shares as shall be necessary to permit Acquisition Corp. to approve
the Merger without the affirmative vote or approval of any other Person, and
there shall be no applicable statute or other restriction which would prohibit,
materially restrict or materially delay the consummation of the Merger or would
be reasonably likely to make the consummation of the Merger economically
unfeasible. In addition, any state anti-takeover law, if any, regulating the
Acquisition shall have been complied with or shall have been determined by the
Agent and the Required Banks to be invalid or inapplicable to the Tender Offer
and the Merger. At the time of the consummation of the Tender Offer, neither the
fair price provisions under applicable law nor the fair price provisions of
SMT's articles of incorporation shall require a higher price be paid for Shares
in the Merger than that paid in the Tender Offer, which price, in any event,
shall not exceed that amount set forth in the Offer to Purchase and the Merger
Agreement as in effect on the Effective Date.
(c) On or prior to the Initial Borrowing Date, the Agent shall have
received true and correct copies of the signed Merger Agreement and any other
Merger Documents that have been entered into on or before such date, all of
which Merger Documents shall be required to
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be in form and substance satisfactory to the Agent and the Required Banks and in
full force and effect.
(d) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Agent true and correct copies of all Proxy Materials, if any,
and such Proxy Materials shall be required to be in form and substance
satisfactory to the Agent and the Required Banks.
5A.10 Initial Refinancing. (a) (i) On the Initial Borrowing Date and
-------------------
concurrently with the incurrence of Loans on such date, (x) all Indebtedness of
SMT and its Subsidiaries pursuant to existing lease and debt financings and
designated by Acquisition Corp. and/or SMT to be repaid or retired on the
Initial Borrowing Date (the "Designated Indebtedness") shall have been repaid in
full, together with all fees and other amounts then owing pursuant to the master
leases or loans governing the Designated Indebtedness, (y) no more than $24
million shall have been paid to effect the Initial Refinancing and (z) the Agent
shall have received evidence in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 5A.10(a)(i) have
been satisfied at such time.
(ii) On the Initial Borrowing Date and concurrently with the
incurrence of Loans on such date then occurring, all security interests in
respect of, and Liens securing, Designated Indebtedness shall have been
terminated and released, and the Agent shall have received all such releases as
may have been requested by the Agent, which releases shall be in form and
substance reasonably satisfactory to the Agent. Without limiting the
foregoing, there shall have been delivered proper termination statements (Form
UCC-3 or the appropriate equivalent) for filing under the UCC of each
jurisdiction where a financing statement Form UCC-1 or the appropriate
equivalent was filed with respect to SMT and its Subsidiaries in connection with
the security interests created with respect to the Designated Indebtedness and
the documentation related thereto, all of which shall be in form and substance
satisfactory to the Agent and the Required Banks.
(b) On the Initial Borrowing Date and after giving effect to the
Tender Offer, the Initial Refinancing and the Loans incurred on the Initial
Borrowing Date, (x) neither Holdings nor any of its Subsidiaries shall have any
Preferred Stock or Indebtedness outstanding except for (i) the Loans, (ii) to
the extent the Required Tender Offer Amount exceeds the Available Proceeds, the
Merger Bridge Loans and (iii) certain other indebted ness pursuant to existing
lease financings as is listed on Schedule IV (with the Indebtedness described in
this clause (iii) being herein called "Existing Indebtedness") and (y) the
aggregate outstanding principal amount of Existing Indebtedness (excluding
Subleased Existing Indebtedness in an aggregate amount of approximately $1.0
million) shall not exceed $3.0 million. On and as of the Initial Borrowing
Date, all of the Existing Indebted ness shall remain outstanding after giving
effect to the Transaction and the other trans actions contemplated hereby
without any default or events of default existing thereunder or arising as a
result of the Transaction and the other transactions contemplated hereby, and
there shall not be any amendments or modifications to
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the Existing Indebtedness Agreements other than as requested or approved by the
Agent or the Required Banks.
5A.11 Security Documents; etc. (a) On the Initial Borrowing Date,
------------------------
each of the Credit Parties shall have duly authorized, executed and delivered a
Pledge Agreement in the form of Exhibit G (as amended, modified or supplemented
from time to time in accordance with the terms thereof and hereof, the "Pledge
Agreement") and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the Pledged Securities referred to therein then owned by such
Credit Parties and required to be pledged pursuant to the terms thereof,
endorsed in blank in the case of promissory notes or accompanied by executed and
undated stock powers in the case of capital stock, along with evidence that all
other actions necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to perfect the security interests purported to be created by the
Pledge Agreement have been taken, and the Pledge Agreement shall be in full
force and effect.
(b) On the Initial Borrowing Date, each of the Credit Parties shall
have duly authorized, executed and delivered a Security Agreement in the form of
Exhibit H (as amended, modified or supplemented from time to time in accordance
with the terms thereof and hereof, the "Security Agreement") covering all of the
Security Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the UCC
or appropriate local equivalent of each jurisdiction as may be necessary
or, in the reasonable opinion of the Collateral Agent, desirable to perfect
the security interests purported to be created by the Security Agreement;
(B) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, each of a recent date listing all effective
financing statements that name Holdings, the Borrowers or any of their
respective Subsidiaries as debtor and that are filed in the jurisdictions
referred to in clause (A) above, together with copies of such financing
statements (none of which shall cover the Collateral except (x) those with
respect to which appropriate termination statements executed by the secured
lender thereunder have been delivered to the Agent and (y) to the extent
evidencing Permitted Liens);
(C) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests purported to be created by the Security Agreement; and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable, to perfect the security
interests purported to be created by the Security Agreement have been
taken;
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and the Security Agreement shall be in full force and effect.
5A.12 Subsidiaries Guaranty. On the Initial Borrowing Date, each
---------------------
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiaries Guaranty in the form of Exhibit I (as amended, modified or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall be in full
force and effect.
5A.13 Employee Benefit Plans; Shareholders' Agreements; Management
------------------------------------------------------------
Agreements; Employment Agreements; Collective Bargaining Agreements; Existing
- -----------------------------------------------------------------------------
Indebtedness Agreements; Material Contracts; Tax Allocation Agreements. On or
- ----------------------------------------------------------------------
prior to the Initial Borrowing Date, there shall have been delivered to the
Agent true and correct copies, certified as true and complete by an appropriate
officer of SMT of:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation there for) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of Holdings or any of its
Subsidiaries or any ERISA Affiliate (provided that the foregoing shall
apply in the case of any multiemployer plan, as defined in 4001(a)(3) of
ERISA, only to the extent that any document described therein is in the
possession of Holdings or any Subsidiary of Holdings or any ERISA Affiliate
or reasonably available thereto from the sponsor or trustee of any such
plan) (collectively, the "Employee Benefit Plans");
(ii) all agreements (including, without limitation, shareholders'
agreements, subscription agreements and registration rights agreements)
entered into by Holdings or any of its Subsidiaries governing the terms and
relative rights of its capital stock and any agreements entered into by
shareholders relating to any such entity with respect to its capital stock,
in each case, that are to remain in effect after giving effect to the
consummation of the Tender Offer (collectively, the "Share holders'
Agreements");
(iii) all material agreements with members of, or with respect to,
the management of Holdings or any of its Subsidiaries that are to remain in
effect after giving effect to the consummation of the Tender Offer
(collectively, the "Management Agreements");
(iv) any material employment agreements entered into by Holdings or
any of its Subsidiaries (collectively, the "Employment Agreements");
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(v) all collective bargaining agreements applying or relating to any
employee of Holdings or any of its Subsidiaries that are to remain in
effect after giving effect to the consummation of the Tender Offer
(collectively, the "Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Existing Indebtedness
of Holdings or any of its Subsidiaries that are to remain in effect after
giving effect to the consummation of the Tender Offer and the Initial
Refinancing (collectively, the "Existing Indebtedness Agreements");
(vii) all other material contracts and licenses of Holdings and any
of its Subsidiaries that are to remain in effect after giving effect to the
consummation of the Tender Offer (collectively, the "Material Contracts");
and
(viii) any tax sharing or tax allocation agreements entered into by
Holdings or any of its Subsidiaries (collectively, the "Tax Allocation
Agreements");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Existing
Indebtedness Agreements, Material Contracts and Tax Allocation Agreements shall
be in form and substance satisfactory to the Agent and the Required Banks and
shall be in full force and effect on the Initial Borrowing Date.
5A.14 Consent Letter. On the Initial Borrowing Date, the Agent shall
--------------
have received a letter from CT Corporation System, presently located at 1633
Broadway, New York, New York 10019, substantially in the form of Exhibit J,
indicating its consent to its appointment by each Credit Party as its agent to
receive service of process as specified in Section 13.08 or the Subsidiaries
Guaranty, as the case may be.
5A.15 Solvency Certificate; Insurance Certificates. On or before the
--------------------------------------------
Initial Borrowing Date, the Agent shall have received:
(a) a solvency certificate in the form of Exhibit K from the chief
financial officer of SMT and dated the Initial Borrowing Date and
supporting the conclusions, that (x) after giving effect to the Tender
Offer, the Initial Refinancing and the incurrence of all financings
contemplated herein, each Borrower (on a stand-alone basis), Holdings and
its Subsidiaries (on a consolidated basis) and each Borrower and its
Subsidiaries (on a consolidated basis) and (y) after giving effect to the
Transaction (including the Merger) and the incurrence of all financings
contemplated herein, SMT (on a stand-alone basis), Holdings and its
Subsidiaries (on a consolidated basis), and SMT and its Subsidiaries (on a
consolidated basis), in each case, are not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith,
will not be left with unreasonably small capital with which to engage in
its or their
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respective businesses and will not have incurred debts beyond its or their
ability to pay such debts as they mature and become due; and
(b) evidence of insurance complying with the requirements of Section
8.03 for the business and properties of SMT and its Subsidiaries, in scope,
form and substance reasonably satisfactory to the Agent and the Required
Banks and naming the Collateral Agent as an additional insured and/or loss
payee, and stating that such insurance shall not be cancelled or revised
without at least 30 days' prior written notice by the insurer to the
Collateral Agent.
5A.16 Financial Statements; Pro Forma Balance Sheet; Projections.
----------------------------------------------------------
(a) On or prior to the Initial Borrowing Date, there shall have been delivered
to the Agent (i) true and correct copies of the financial statements referred to
in Section 7.10(b) and (ii) an unaudited pro forma consolidated balance sheet of
--- -----
SMT and its Subsidiaries as of June 30, 1997 and, after giving effect to the
Transaction and the incurrence of all Indebtedness (including the Loans and, if
incurred, the Merger Bridge Loans) contemplated herein and prepared in
accordance with GAAP (the "Pro Forma Balance Sheet"), together with a related
--- -----
funds flow statement, which financial statements, Pro Forma Balance Sheet and
--- -----
funds flow statement shall be reasonably satisfactory to the Agent and the
Required Banks.
(b) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Agent detailed projected consolidated financial statements of
Holdings and its Subsidiaries certified by the chief financial officer or
treasurer of Holdings for the six fiscal years ended after the Initial Borrowing
Date (the "Projections"), which Projections (x) shall reflect the forecasted
consolidated financial conditions and income and expenses of Holdings and its
Subsidiaries after giving affect to the Transaction and the related financing
thereof and the other transactions contemplated hereby and (y) shall be
satisfactory in form and substance to the Agent and the Required Banks.
5A.17 Regulations U and G. On the Initial Borrowing Date, (i)
-------------------
Acquisition Corp. shall have delivered to each Bank a duly completed Form U-1 or
G-3, as appropriate, referred to in Regulations U and G and (ii) each Bank shall
be able in good faith to complete said Form U-1 or G-3, as the case may be,
showing that Term Loans to be extended by the Banks on the Initial Borrowing
Date comply with the requirements of Regulations U and G.
5A.18 Payment of Fees. On the Initial Borrowing Date, all costs,
---------------
fees and expenses, and all other compensation due to the Agent or the Banks
(including, without limitation, legal fees and expenses) shall have been paid to
the extent due.
SECTION 5B. Conditions Precedent to Revolving Loans on each Interim
-------------------------------------------------------
Refinancing Date. The obligation of each Bank to make each Revolving Loan to
- ----------------
SMT
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hereunder on each Interim Refinancing Date, is subject, at the time of the
making of such Revolving Loans to the satisfaction of the following conditions:
5B.01 Interim Refinancings. (a) On each Interim Refinancing Date
--------------------
and concurrently with the incurrence of Revolving Loans on such date, (x) all
Existing Indebtedness designated by SMT in writing to the Agent to be repaid or
retired ("Designated Existing Indebtedness") on such Interim Refinancing Date
shall have been repaid in full, together with all fees thereon and other amounts
then owing pursuant to the master lease governing such Designated Existing
Indebtedness and (y) the Agent shall have received evidence in form, scope and
substance reasonably satisfactory to it that the matters set forth in this
Section 5B.01 have been satisfied at such time.
(b) On each Interim Refinancing Date and concurrently with the
incurrence of Revolving Loans on such date, all security interests in respect
of, and Liens securing, the Designated Existing Indebtedness referred to in
clause (a) above shall have been terminated and released, and the Agent shall
have received all such releases as may have been requested by the Agent, which
releases shall be in form and substance reasonably satisfactory to the Agent.
Without limiting the foregoing, there shall have been delivered proper
termination statements (Form UCC-3 or the appropriate equivalent) for filing
under the UCC of each jurisdiction where a financing statement Form UCC-1 or the
appropriate equivalent was filed with respect to SMT and its Subsidiaries in
connection with the security interests created with respect to such Designated
Existing Indebtedness and the documentation related thereto, all of which shall
be in form and substance satisfactory to the Agent and the Required Banks.
SECTION 5C. Conditions Precedent to Credit Events on and after the
------------------------------------------------------
Merger Date. The obligation of each Bank to make each Loan to the Borrower
- -----------
hereunder, and the obligation of the Letter of Credit Issuer to issue each
Letter of Credit hereunder, on and after the Merger Date, is subject, at the
time of the making of such Loans or the issuance of such Letters of Credit to
the satisfaction of the following conditions:
5C.01 Execution of Notes. On or prior to the Merger Date, there
------------------
shall have been delivered to the Agent for the account of each Bank the
appropriate replacement Term Note and to BTCo the Swingline Note, in each case
executed by the Borrower and in the amount, maturity and as otherwise provided
herein.
5C.02 Officer's Certificate. On the Merger Date, the Agent shall
---------------------
have received a certificate dated such date signed by an appropriate officer of
the Borrower stating that all of the applicable conditions set forth in
Sections 5C.05, 5C.06 and 6.01 (other than such conditions that are subject to
the satisfaction of the Agent and/or the Required Banks) have been satisfied on
such date.
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<PAGE>
5C.03 Corporate Documents; Proceedings. (a) On the Merger Date, the
--------------------------------
Agent shall have received from the Borrower a certificate, dated the Merger
Date, signed by the chairman, a vice-chairman, the president or any vice-
president of the Borrower, and attested to by the secretary or any assistant
secretary of the Borrower, in the form of Exhibit F with appropriate insertions,
together with copies of the resolutions of the Borrower referred to in such
certificate, and all of the foregoing shall be reasonably satisfactory to the
Agent.
(b) On the Merger Date, all corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
this Agreement and the other Documents shall be reasonably satisfactory in form
and substance to the Agent, and the Agent shall have received all information
and copies of all certificates, documents and papers, including good standing
certificates, bring-down certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent reasonably may
have requested in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental authorities.
5C.04 Approvals. On or prior to the Merger Date, (i) all necessary
---------
governmental (domestic and foreign), regulatory and third party approvals in
connection with the Merger, the Merger Date Refinancing, the transactions
contemplated by the Documents and otherwise referred to herein or therein shall
have been obtained and remain in full force and effect and evidence thereof
shall have been provided to the Agent, and (ii) all applicable waiting periods
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon the
consummation of the Transaction, the making of the Loans, the issuance of
Letters of Credit and the transactions contemplated by the Documents or
otherwise referred to herein or therein.
5C.05 Merger Documents. On or prior to the Merger Date, there shall
----------------
have been delivered to the Agent true and correct copies of all Merger Documents
not delivered to the Agent on or prior to the Initial Borrowing Date, which
Merger Documents shall be required to be in form and substance satisfactory to
the Agent and the Required Banks. All material conditions precedent to the
consummation of the Merger shall have been satisfied (and not waived without the
consent of the Agent and the Required Banks).
5C.06 Merger Date Refinancing. (a) On the Merger Date and
-----------------------
concurrently with the Credit Events then occurring, (x) all Designated Existing
Indebtedness to be repaid or retired on the Merger Date shall have been repaid
in full, together with all fees thereon and other amounts then owing pursuant to
the master leases governing such Designated Existing Indebtedness, (y) all
outstanding Merger Bridge Loans, if any, shall have been re paid in full,
together with all accrued but unpaid interest thereon and all other amounts
owing pursuant to the Merger Bridge Loan Documents and (z) the Agent shall have
received evidence in form, scope and substance reasonably satisfactory to it
that the matters set forth in this Section 5C.06 have been satisfied at such
time.
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<PAGE>
(b) On the Merger Date and concurrently with the Credit Events then
occurring, all security interests in respect of, and Liens securing, the
Designated Existing Indebtedness referred to in clause (a) above shall have been
terminated and released, and the Agent shall have received all such releases as
may have been requested by the Agent, which releases shall be in form and
substance reasonably satisfactory to the Agent. Without limiting the foregoing,
there shall have been delivered proper termination statements (Form UCC-3 or the
appropriate equivalent) for filing under the UCC of each jurisdiction where a
financing statement Form UCC-1 or the appropriate equivalent was filed with
respect to SMT and its Subsidiaries in connection with the security interests
created with respect to such Designated Existing Indebtedness and the
documentation related thereto, all of which shall be in form and substance
satisfactory to the Agent and the Required Banks.
5C.07 Payment of Fees. On the Merger Date, all costs, fees and
---------------
expenses, and all other compensation due to the Agent or the Banks (including,
without limitation, legal fees and expenses) shall have been paid to the extent
due.
SECTION 6. Conditions Precedent to All Credit Events. The obligation
-----------------------------------------
of each Bank to make Loans (including Loans made on the Initial Borrowing Date
and on the Merger Date but excluding Mandatory Borrowings made thereafter, which
shall be made as provided in Section 1.01(d)), and the obligation of a Letter of
Credit Issuer to issue any Letter of Credit, is subject, at the time of each
such Credit Event (except as hereinafter indicated), to the satisfaction of the
following conditions:
6.01 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in any other Credit Document shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Loan (excluding Swingline Loans and Mandatory Borrowings),
the Agent shall have received a Notice of Borrowing meeting the requirements of
Section 1.03(a). Prior to the making of any Swingline Loan, BTCo shall have
received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the Agent and the
respective Letter of Credit Issuer shall have received a Letter of Credit
Request meeting the requirements of Section 2.02(a).
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6.03 Merger Conditions. At the time of any Credit Event occurring
-----------------
after the consummation of the Merger, all conditions precedent set forth in
Section 5C shall have been satisfied (or waived with the consent of the Agent
and the Required Banks) on the Merger Date.
Notwithstanding anything to the contrary contained in this Section 6,
the obligation of each Bank to make Term Loans after the Initial Borrowing Date
and on or prior to the Merger Date shall not be subject to the satisfaction of
the conditions precedent contained in Section 6.01(ii), to the extent that
Section 6.01(ii) requires the Excluded Representations to be true and correct in
all material respects on and as of the date of the making of such Term Loans (or
if stated to relate to a specific earlier date, as of such earlier date).
Subject to the limitations contained in the immediately preceding
paragraph, the occurrence of the Initial Borrowing Date, each Interim
Refinancing Date and the Merger Date and the acceptance of the benefits or
proceeds of each Credit Event shall constitute a representation and warranty by
each of Holdings and each Borrower to the Agent and each of the Banks that all
the conditions specified in Sections 5A, 5B and 5C and in this Section 6 and
applicable to such Credit Event (other than such conditions that are subject to
the satisfaction of the Agent and/or the Required Banks) exist as of that time.
All of the Notes, certificates, legal opinions and other documents and papers
referred to in Sections 5A, 5B and 5C and in this Section 6, unless otherwise
specified, shall be delivered to the Agent at the Notice Office for the account
of each of the Banks and, except for the Notes, in sufficient counterparts or
copies for each of the Banks and shall be in form and substance satisfactory to
the Banks.
SECTION 7. Representations and Warranties. In order to induce the
------------------------------
Banks to enter into this Agreement and to make the Loans and issue and/or
participate in the Letters of Credit provided for herein, each of Holdings and
each Borrower makes the following representations and warranties with the Banks,
all of which shall survive the execution and delivery of this Agreement, the
making of the Loans and the issuance of the Letters of Credit (with the
occurrence of each Credit Event being deemed, subject to the last paragraph of
this Section 7, to constitute a representation and warranty that the matters
specified in this Section 7 are true and correct in all material respects on and
as of the date of each such Credit Event, unless stated to relate to a specific
earlier date in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date):
7.01 Corporate Status. Each of Holdings and each of its Subsidiaries
----------------
(i) is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its incorporation, (ii) has the corporate power
and authority to own its property and assets and to transact the business in
which it is engaged and presently pro poses to engage and (iii) is duly
qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
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<PAGE>
7.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Credit Party has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Credit Party enforce
able in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).
7.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party, nor compliance by any
Credit Party with the terms and provisions thereof, nor the consummation of the
transactions contemplated herein or therein, (i) will contravene any material
provision of any applicable law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
(other than pursuant to the Security Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of Holdings or any of its Subsidiaries pursuant to the terms
of any indenture, mortgage, deed of trust, loan agreement, credit agreement or
any other material agreement or instrument to which Holdings or any of its
Subsidiaries is a party or by which it or any of its property or assets are
bound or to which it may be subject (including, without limitation, the Existing
Indebtedness) or (iii) will violate any provision of the Certificate of
Incorporation or By-Laws of Holdings or any of its Subsidiaries.
7.04 Litigation. There are no actions, suits, proceedings or
----------
investigations pending or threatened (i) with respect to any Credit Document,
(ii) with respect to the Transaction or any other Document that could reasonably
be expected to have a Material Adverse Effect, or (iii) with respect to Holdings
or any of its Subsidiaries (x) that are likely to have a Material Adverse Effect
or (y) that could reasonably be expected to have a material adverse effect on
the rights or remedies of the Agent or the Banks or on the ability of any Credit
Party to perform its respective obligations to the Agent or the Banks hereunder
and under the other Credit Documents to which it is, or will be, a party. Addi-
tionally, there does not exist any judgment, order or injunction prohibiting or
imposing material adverse conditions upon the occurrence of any Credit Event.
7.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Term Loans incurred (i) on the Initial Borrowing Date, shall be utilized by
Acquisition Corp. to finance the acquisition of Shares pursuant to the Tender
Offer and directors' Warrants in connection therewith and to pay the fees and
expenses incurred in connection therewith, provided that not more than $3.0
million of proceeds of such Term Loans may be utilized on the Initial Borrowing
Date by Acquisition Corp. to make loans to, or investments in, SMT, so
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<PAGE>
long as SMT uses all proceeds thereof to purchase and retire options to
purchase Shares, (ii) after the Initial Borrowing Date and prior to the Merger
Date, shall be used to pay interest on all then outstanding Term Loans and all
TL Commitment Fees as and when due and payable and (iii) on the Merger Date,
shall be used to pay consideration in connection with the Merger and repay any
outstanding Merger Bridge Loans and to pay fees and expenses incurred in
connection therewith (including, without limitation, fees or expenses of the
Apollo Group payable in accordance with provisions of this Agreement) and, to
the extent in excess thereof, for the general corporate purposes of the Borrower
and its Subsidiaries.
(b) The proceeds of all Revolving Loans and Swingline Loans shall be
utilized for the general corporate and working capital purposes of the Borrower
and its Subsidiaries, including, but not limited to, Permitted Acquisitions and
refinancing Existing Indebtedness.
(c) Neither the making of any Loan, nor the use of the proceeds
thereof, nor the occurrence of any other Credit Event, will violate or be
inconsistent with the pro visions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System and no part of any Credit Event (or the
proceeds thereof) will be used to purchase or carry any Margin Stock or to
extend credit for the purpose of purchasing or carrying any Margin Stock, in
either case, in violation of Regulation G, T, U or X.
7.06 Governmental Approvals. (a) Except as may have been obtained or
----------------------
made on or prior to the Initial Borrowing Date (and which remain in full force
and effect on the Initial Borrowing Date), no order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document.
(b) Except (w) as may have been obtained or made on or prior to the
Initial Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date), (x) for the filing of the merger certificate in connection with
the Merger (which filing, if this representation or warranty is made on the
Merger Date, has been made), (y) notice filings with respect to an outstanding
certificate of need application in the State of Virginia and (z) for filings and
consents required under applicable state and federal securities laws (which
filings and consents, if this representation and warranty is made on the Merger
Date, have been made and obtained), no material order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
in connection with (i) the execution, delivery and performance of any Document
(other than any Credit Document) or (ii) the legality, validity, binding effect
or enforceability of any Document (other than any Credit Document).
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7.07 Investment Company Act. Neither Holdings nor any of its Subsidi
----------------------
aries is an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
7.08 Public Utility Holding Company Act. Neither Holdings nor any of
----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7.09 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings
or any of its Subsidiaries in writing to the Agent or any Bank (including,
without limitation, all information contained in the Documents) for purposes of
or in connection with this Agreement or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Persons in writing to the Agent or any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided.
7.10 Financial Condition; Financial Statements. (a) (i) On and as
-----------------------------------------
of the Initial Borrowing Date, on a pro forma basis after giving effect to the
--- -----
Tender Offer, the Equity Financing and the Initial Refinancing and to all
Indebtedness (including the Loans and, if incurred, the Merger Bridge Loans)
incurred, and to be incurred, and Liens created, and to be created, by each
Credit Party in connection therewith, with respect to each Borrower (on a stand-
alone basis), Holdings and its Subsidiaries (on a consolidated basis) and each
Borrower and its Subsidiaries (on a consolidated basis) (x) the sum of the
assets, at a fair valuation, of each Borrower (on a stand-alone basis), Holdings
and its Subsidiaries (on a consolidated basis) and each Borrower and its
Subsidiaries (on a consolidated basis) will exceed its or their debts, (y) it
has or they have not incurred nor intended to, nor believes or believe that it
or they will, incur debts beyond its or their ability to pay such debts as such
debts mature and (z) it or they will have sufficient capital with which to con
duct its or their business.
(ii) On and as of each of the Initial Borrowing Date and the Merger
Date, on a pro forma basis after giving effect to the Transaction and all other
--- -----
transactions contemplated by the Documents and to all Indebtedness (including
the Loans and, if incurred, the Merger Bridge Loans) incurred, and to be
incurred, and Liens created, and to be created, by each Credit Party in
connection therewith, with respect to the Borrower (on a stand-alone basis),
Holdings and its Subsidiaries (on a consolidated basis) and the Borrower and its
Subsidiaries (on a consolidated basis), (x) the sum of the assets, at a fair
valuation, of the Borrower (on a stand-alone basis), Holdings and its
Subsidiaries (on a consolidated basis) and the Borrower and its Subsidiaries (on
a consolidated basis) will exceed its or their debts, (y) it has or they have
not incurred nor intended to, nor believes or believe that it or they will,
incur debts beyond its or
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their ability to pay such debts as such debts mature and (z) it or they will
have sufficient capital with which to conduct its or their business.
(iii) For purposes of this Section 7.10, "debt" means any liability
on a claim, and "claim" means (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheets of SMT at December 31, 1995,
December 31, 1996 and March 31, 1997, and the related statements of income and
cash flows and changes in shareholders' equity of SMT for the fiscal years or
three-month period, as the case may be, ended as of said dates, and (ii) the
Pro-Forma Balance Sheet, copies of which have heretofore been furnished to each
Bank, present fairly in all material respects the respective consolidated
financial condition of SMT at the dates of said financial statements and the
results for the periods covered thereby (or, in the case of the Pro Forma
--- -----
Balance Sheet, presents a good faith estimate of the consolidated pro forma
--- -----
financial condition of SMT (after giving effect to the Transaction at the date
thereof), subject, in the case of unaudited financial statements, to normal
year-end adjustments. All such financial statements (other than the aforesaid
Pro Forma Balance Sheet) have been prepared in accordance with GAAP
- --- -----
consistently applied except to the extent provided in the notes to said
financial statements and subject, in the case of the three-month statements, to
normal year-end audit adjustments (all of which are of a recurring nature and
none of which, individually or in the aggregate, would be material) and the
absence of footnotes.
(c) Since December 31, 1996 (but after giving effect to the
Transaction as if same had occurred prior thereto), nothing has occurred that
has had or could reasonably be expected to have a Material Adverse Effect.
(d) Except as fully reflected in the financial statements described
in Section 7.10(b) and the Indebtedness incurred under this Agreement, (i) there
were as of the Initial Borrowing Date (and after giving effect to any Loans made
on such date), no liabilities or obligations (excluding current obligations
incurred in the ordinary course of business and obligations arising under the
Merger Documents and commitments to purchase MRI Units) with respect to Holdings
or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
the aggregate, could reasonably be expected to be material to Holdings and its
Subsidiaries taken as a whole, the Borrower and its Subsidiaries taken as a
whole or the Borrower and (ii) neither Holdings nor any Borrower knows of any
basis for the assertion against Holdings or any of its Subsidiaries of any such
liability or obligation which, either individually or in the aggregate, are or
would be reasonably likely to have, a Material Adverse Effect.
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(e) The Projections have been prepared on a basis consistent with the
financial statements referred to in Section 7.10(b), and are based on good
faith estimates and assumptions made by the management of Holdings. On the
Initial Borrowing Date, such management believed that the Projections were
reasonable and attainable. There is no fact known to Holdings or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect, which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Banks for use in connection with
the transactions contemplated hereby.
7.11 Security Interests. On and after the Initial Borrowing Date,
------------------
each of the Security Documents creates (or after the execution and delivery
thereof will create), as security for the Obligations, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, superior to and prior to the rights of all third Persons, and subject
to no other Liens (except that (i) the Security Agreement Collateral may be
subject to Permitted Liens relating thereto and (ii) the Pledge Agreement
Collateral may be subject to the Liens described in clauses (a) and (e) of
Section 9.03), in favor of the Collateral Agent. No filings or recordings are
required in order to perfect the security interests created under any Security
Document except for filings or recordings required in connection with any such
Security Document which shall have been made on or prior to the Initial
Borrowing Date as contemplated by Section 5A.11 or on or prior to the execution
and delivery thereof as contemplated by Sections 8.11, 8.12 and 9.15.
7.12 Compliance with ERISA. Schedule V sets forth each Plan; each
---------------------
Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable
Event has occurred; no Plan which is a multiemployer plan (as defined in Sec
tion 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan which is subject to Section 412 of the Code
or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; all contributions required to be made with respect to a Plan have been
timely made; neither Holdings nor any Subsidiary of Holdings nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any
such liability under any of the foregoing sections with respect to any Plan; no
condition exists which presents a material risk to Holdings or any Subsidiary of
Holdings or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan
which
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is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending, expected
or threatened; using actuarial assumptions and computation methods consistent
with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of
Holdings and its Subsidiaries and its ERISA Affiliates to all Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the date of the most recent Credit Event, would
not exceed $50,000; each group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees
or former employees of Holdings, any Subsidiary of Holdings or any ERISA
Affiliate has at all times been operated in compliance with the provisions of
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien
imposed under the Code or ERISA on the assets of Holdings or any Subsidiary of
Holdings or any ERISA Affiliate exists or is likely to arise on account of any
Plan; and Holdings and its Subsidiaries may cease contributions to or terminate
any employee benefit plan maintained by any of them without incurring any
material liability.
7.13 Capitalization. (a) On the Initial Borrowing Date and after
--------------
giving effect to the Tender Offer and the Equity Financing, the authorized
capital stock of Holdings shall consist of 1000 shares of common stock, $.01 par
value per share (the "Holdings Common Stock"), of which 100 shares shall be
issued and outstanding and owned by the Equity Investors. All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable and
have been issued free of preemptive rights. Except as set forth on Schedule X
hereto, on the Initial Borrowing Date Holdings does not have outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
(b) On the Initial Borrowing Date and after giving effect to the
Tender Offer and the Equity Financing, the authorized capital stock of
Acquisition Corp. shall consist of 1,000 shares of common stock, $.01 par value
per share, 100 of which shares shall be issued and outstanding and owned by
Holdings. All such outstanding shares have been duly and validly issued, are
fully paid and nonassessable and have been issued free of preemptive rights. On
the Initial Borrowing Date, Acquisition Corp. does not have outstanding any
securities convertible into or exchangeable for its capital stock or outstand-
ing any rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to, its capital
stock.
(c) On the Initial Borrowing Date and after giving effect to the
Tender Offer and the Equity Financing, the authorized capital stock of SMT shall
consist of (i) 20,000,000 shares of common stock, $.01 par value per share,
5,746,259 of which shares shall be issued and outstanding and (ii) 1,000,000
shares of Preferred Stock, $.01 par value per share, none of which shares shall
be issued
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and outstanding. All such outstanding shares have been duly and validly issued,
are fully paid and nonassessable and have been issued free of preemptive rights.
Except as set forth on Schedule X hereto, on the Initial Borrowing Date SMT does
not have outstanding any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
7.14 Subsidiaries. (a) Prior to the consummation of the Tender
------------
Offer, (i) Holdings has no Subsidiaries other than Acquisition Corp. and (ii)
Acquisition Corp. has no Subsidiaries.
(b) On and as of the Initial Borrowing Date and after giving effect
to the consummation of the Tender Offer, Holdings has no Subsidiaries other than
Acquisition Corp. and its Subsidiaries, Acquisition Corp. has no Subsidiaries
other than SMT and its Subsidiaries, and SMT has no Subsidiaries other than
those Subsidiaries listed on Schedule VII. Schedule VII correctly sets forth,
as of the Initial Borrowing Date and after giving effect to the Tender Offer,
the percentage ownership (direct and indirect) of SMT in each class of capital
stock of each of its Subsidiaries and also identifies the direct owner thereof.
All outstanding shares of capital stock of each Subsidiary of SMT have been duly
and validly issued, are fully paid and non-assessable and have been issued free
of preemptive rights. On the Initial Borrowing Date, no Subsidiary of SMT has
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any right to subscribe for or to purchase, or any options
or warrants for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its capital stock or any stock appreciation or similar
rights.
7.15 Intellectual Property, etc. Each of Holdings and each of its
---------------------------
Subsidiaries owns all patents, trademarks, permits, service marks, trade names,
technology copy rights, licenses, franchises and formulas, or other rights with
respect to the foregoing, and has obtained assignments of all leases and other
rights of whatever nature, and has in full force and effect all accreditations
and certifications, reasonably necessary for the conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, would result in a Material Adverse Effect.
7.16 Compliance with Statutes, etc. Each of Holdings and each of its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations, rules
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except such non-compliance as is not likely to,
individually or in the aggregate, have a Material Adverse Effect.
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7.17 Environmental Matters. (a) Each of Holdings and each of its
---------------------
Subsidiaries has complied with, and on the date of each Credit Event is in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws and neither Holdings nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing. There are no pending or past or,
to the best knowledge of Holdings and the Borrower after due inquiry, threatened
Environmental Claims against Holdings or any of its Subsidiaries or any Real
Property owned or operated by Holdings or any of its Subsidiaries. There are no
facts, circumstances, conditions or occurrences on any Real Property owned or
operated by Holdings or any of its Subsidiaries or on any property adjoining or
in the vicinity of any such Real Property that would reasonably be expected (i)
to form the basis of an Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property or (ii) to cause any such Real Property
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by Holdings or any of its Subsidiaries
under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Holdings or any of its Subsidiaries except in compliance with all
applicable Environmental Laws and reasonably required in connection with the
operation, use and maintenance of such Real Property by Holdings' or such
Subsidiary's business. Hazardous Materials have not at any time been Released
on or from any Real Property owned or operated by Holdings or any of its
Subsidiaries. There are not now any underground storage tanks located on any
Real Property owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 7.17,
the representations made in this Section 7.17 shall only be untrue if the
aggregate effect of all conditions, failures, noncompliances, Environmental
Claims, Releases and presence of underground storage tanks, in each case of the
types described above, would reasonably be expected to have a Material Adverse
Effect.
7.18 Properties. All Real Property owned by Holdings or any of its
----------
Subsidiaries and all material Leaseholds leased by Holdings or any of its
Subsidiaries, in each case as of the Initial Borrowing Date and after giving
effect to the Transaction, and the nature of the interest therein, is correctly
set forth in Schedule III. Each of Holdings and each of its Subsidiaries has
good and marketable title to, or a validly subsisting lease hold interest in,
all material properties owned or leased by it, including all Real Property
reflected in Schedule III or in the financial statements referred to in Section
7.10(b) (including the Pro Forma Balance Sheet), free and clear of all Liens,
--- -----
other than Permitted Liens.
7.19 Labor Relations. Neither Holdings nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a Material Adverse Effect. There is (i) no unfair labor practice complaint
pending against Holdings or any of its Subsidiaries or threatened against any of
them, before the National Labor Relations Board, and
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no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against Holdings or any of its Subsidiaries
or threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or threatened
against Holdings or any of its Subsidiaries and (iii) no union representation
question existing with respect to the employees of Holdings or any of its
Subsidiaries and no union organizing activities are taking place, except (with
respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect.
7.20 Tax Returns and Payments. Each of Holdings and each of its
------------------------
Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, except for
those contested in good faith and adequately dis closed and fully provided for
on the financial statements of Holdings and its Subsidiaries in accordance with
generally accepted accounting principles. Each of Holdings and each of its
Subsidiaries has at all times paid, or have provided adequate reserves (in the
good faith judgment of the management of Holdings) for the payment of, all
federal, state and foreign income taxes applicable for all prior fiscal years
and for the current fiscal year to date. There is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
Holdings or any of its Subsidiaries, threatened by any authority regarding any
taxes relating to Holdings or any of its Subsidiaries. Neither Holdings nor any
of its Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations relating
to the payment or collection of taxes of Holdings or any of its Subsidiaries, or
is aware of any circumstances that would cause the taxable years or other
taxable periods of Holdings or any of its Subsidiaries not to be subject to the
normally applicable statute of limitations.
7.21 Existing Indebtedness. Schedule IV sets forth a true and
---------------------
complete list of all Existing Indebtedness of Holdings and its Subsidiaries as
of the Initial Borrowing Date after giving effect to the repayment of Designated
Indebtedness on such Initial Borrowing Date, in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt.
7.22 Insurance. Set forth on Schedule VIII hereto is a true, correct
---------
and complete summary of all insurance carried by each Credit Party on and as of
the Initial Borrowing Date, with the amounts insured set forth therein.
7.23 Representations and Warranties in Other Documents. All
-------------------------------------------------
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made) and shall be true and correct in all
material respects as of the Initial Borrowing Date as if such representations or
warranties were made on and as of such date, unless stated to relate to a
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specific earlier date, in which case such representations or warranties shall be
true and correct in all material respects as of such earlier date.
7.24 Offer to Purchase. At the time of their dissemination to the
-----------------
public, the Offer to Purchase and any amendments or supplements thereto and all
documents required to be filed by Holdings or Acquisition Corp., pursuant to the
Securities Exchange Act of 1934, as amended, copies of which documents have been
or will be delivered to each Bank (other than exhibits to such filings, which
have been made available to each Bank upon request therefor), do not and will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which made, not misleading.
7.25 Tender Offer. At the time of consummation thereof, the Tender
------------
Offer shall have been consummated in accordance with the terms of the Tender
Offer Documents and all applicable laws. At the time of consummation of the
Tender Offer, all third party approvals and all consents and approvals of, and
filings and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required in order to
make or consummate the Tender Offer (or otherwise referred to in the Offer to
Purchase) will have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained). All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Tender Offer. Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the Tender Offer, or the occurrence of any
Credit Event or the performance by Holdings or any of its Subsidiaries of their
respective obligations under the respective Documents. All actions taken by
Holdings or any of its Subsidiaries pursuant to or in furtherance of the Tender
Offer have been taken in compliance with the Tender Offer Documents and all
applicable laws. On the Initial Borrowing Date, a sufficient number of Shares
have been tendered and purchased by Acquisition Corp. pursuant to the Offer to
Purchase to permit Acquisition Corp. to consummate the Merger with only the vote
of the Shares owned by it, and no other vote (including, without limitation, of
any other shareholder of SMT) shall be required in order to consummate the
Merger. There is no applicable state shareholder protection, anti-takeover or
other legislation which would delay, or prevent, the consummation of the
Acquisition.
7.26 Merger. At the time of consummation thereof, the Merger shall
------
have been consummated in accordance with the terms of the Merger Documents and
all applicable laws. At the time of consummation of the Merger, all consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate the Merger will have been obtained, given, filed
or taken and are or will be in full force and effect (or effective judicial
relief with respect thereto has been obtained). All applicable waiting periods
with respect thereto have or, prior to the time when required, will have,
expired without, in all such cases, any action being
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taken by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the Merger. Additionally, there does not exist any
judgment, order or injunction prohibiting the Merger, or the occurrence of any
Credit Event or the performance by Holdings or any of its Subsidiaries of their
respective obligations under the respective Documents. All actions taken by
Holdings or any of its Subsidiaries pursuant to or in furtherance of the Merger
have been taken in compliance with the Merger Documents and all applicable laws.
7.27 Special Purpose Corporations. (a) Holdings and Acquisition
----------------------------
Corp. were formed to effect the Transaction. Prior to the consummation of the
Tender Offer, (i) Holdings had no significant assets (other than the capital
stock of Acquisition Corp.) or liabilities (other than those liabilities under
the Acquisition Documents and, on and after the execution and delivery thereof,
the Merger Bridge Loan Documents and such other liabilities arising in
connection with the Transaction) and (ii) Acquisition Corp. had no significant
assets or liabilities (other than those liabilities under the Acquisition
Documents and such other liabilities arising in connection with the
Transaction).
(b) After the consummation of each of the Tender Offer and the
Merger, Holdings has no significant assets (other than the capital stock of
Acquisition Corp. (in the case of the Tender Offer) or SMT (in the case of the
Merger) and immaterial assets used for the performance of those activities
permitted to be performed by Holdings pursuant to Section 9.01(b)) or
liabilities (other than under this Agreement and the other Documents to which it
is a party, those liabilities permitted to be incurred by Holdings pursuant to
Section 9.01(b) and such other liabilities arising in connection with the
Transaction).
Notwithstanding anything to the contrary contained in this Section 7,
each incurrence of Term Loans after the Initial Borrowing Date and on or prior
to the Merger Date shall not be deemed to constitute a representation or
warranty that the matters specified in the Excluded Representations are true and
correct in all material respects on and as of the date of such incurrence of
Term Loans (or if same are stated to relate to a specific earlier date, on and
as of such earlier date).
SECTION 8. Affirmative Covenants. Holdings and the Borrowers hereby
---------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitment has terminated, no
Letters of Credit or Notes are outstanding and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations (other than any
indemnities described in Section 13.13 which are not then due and payable)
incurred hereunder, are paid in full:
8.01 Information Covenants. Holdings will furnish to each Bank:
---------------------
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(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such fiscal month and the related
consolidated statements of income and retained earnings and cash flows for
such fiscal month and for the elapsed portion of the fiscal year ended with
the last day of such fiscal month, in each case setting forth comparative
figures for the corresponding fiscal month in the prior fiscal year and
comparable budgeted figures for such fiscal month as set forth in the
respective budget delivered pursuant to Section 8.01(d), all of which shall
be certified by the chief financial officer or other Authorized Officer of
Holdings, subject to normal year-end audit adjustments and the absence of
footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
------------------------------
of the first three quarterly accounting periods in each fiscal year of
Holdings, (i) the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and of
cash flows for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly accounting
period and the budgeted figures for such quarterly period as set forth in
the respective budget delivered pursuant to Section 8.01(d) and (ii)
management's discussion and analysis of the most important operational and
financial developments during such quarterly period, all of which shall be
in reasonable detail and certified by the chief financial officer or other
Authorized Officer of Holdings that they fairly present in all material
respects the financial condition of Holdings and its Subsidiaries as of
the dates indicated and the results of their operations and changes in
their cash flows for the periods indicated, subject to normal year-end
audit adjustments and the absence of footnotes.
(c) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of Holdings, the consolidated balance sheet of Holdings
and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows
for such fiscal year and setting forth comparative consolidated figures
for the preceding fiscal year and comparable budgeted figures for such
fiscal year as set forth in the respective budget delivered pursuant to
Section 8.01(d) and (except for such comparable budgeted figures) certified
by KPMG Peat Marwick LLP or such other independent certified public
accountants of recognized national standing as shall be reasonably
acceptable to the Agent, in each case to the effect that such statements
fairly present in all material respects the financial condition of Holdings
and its Subsidiaries as of the dates indicated and the results of their
operations and changes in its financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years,
together with a certificate of such accounting firm stating that in the
course of its regular audit of the business of Holdings and its
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, no Default or Event of Default which has
occurred and is
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continuing has come to their attention or, if such a Default or an Event of
Default has come to their attention, a statement as to the nature thereof.
(d) Budgets, etc. Not more than 60 days after the commencement of
-------------
each fiscal year of Holdings, budgets of Holdings and its Subsidiaries (x)
in reasonable detail for each of the twelve months of such fiscal year and
(y) in summary form for each of the five fiscal years immediately following
such fiscal year, in each case as customarily prepared by management for
its internal use setting forth, with appropriate discussion, the principal
assumptions upon which such budgets are based. Together with each delivery
of financial statements pursuant to Sections 8.01(a), (b) and (c), a
comparison of the current year to date financial results against the
budgets required to be submitted pursuant to this clause (d) shall be
presented.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 8.01(a), (b) and (c), a
certificate of the chief financial officer or other Authorized Officer of
Holdings to the effect that no Default or Event of Default exists or, if
any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate shall, if delivered in connection with
the financial statements in respect of a period ending on the last day of a
fiscal quarter or fiscal year of Holdings, set forth (x) the calculations
required to establish whether Holdings and its Subsidiaries were in
compliance with the provisions of Sections 3.03, 9.02, 9.04(d), (f) and (g)
and 9.05(a), (g), (l) and (m) and 9.08 through and including 9.11 as at the
end of such fiscal quarter or year, as the case may be, and (y) the
calculation of the Leverage Ratio as at the last day of the respective
fiscal quarter or fiscal year of Holdings, as the case may be. In addi-
tion, at the time of the delivery of the financial statements provided for
in Section 8.01(c), a certificate of the chief financial officer or other
Authorized Officer of Holdings setting forth (in reasonable detail) (i) the
amount of, and calculations required to establish the amount of, Excess
Cash Flow for the Excess Cash Flow Period ending on the last day of the
respective fiscal year and (ii) the calculations required to establish
whether the Borrower was in compliance with Section 4.02(c) for the
respective fiscal year.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after an officer of Holdings or any of its
Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence
of any event which constitutes a Default or an Event of Default, which
notice shall specify the nature and period of existence thereof and what
action Holdings or the respective Borrower proposes to take with respect
thereto, (ii) any litigation or proceeding pending or threatened (x)
against Holdings or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect, (y) with respect to any
Indebtedness of Holdings or any of its Subsidiaries in an aggregate
principal amount in excess of $500,000 or (z) with respect to any Document
(other than such Documents referred to in clause (vii) of the definition
thereof), (iii) any governmental investigation pending or threatened
against Holdings
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or any of its Subsidiaries and (iv) any other event which could reasonably
be expected to have a Material Adverse Effect.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
report or "management letter" submitted to Holdings or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of Holdings or any of
its Subsidiaries and the management's non-privileged responses thereto.
(h) Environmental Matters. Promptly after an officer of Holdings or
---------------------
any of its Subsidiaries obtains actual knowledge of any of the following
(but only to the extent that any of the following, either individually or
in the aggregate, could reasonably be expected to (x) have a Material
Adverse Effect or (y) result in a remedial cost to Holdings or any of its
Subsidiaries in excess of $200,000), written notice of:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that (x) results in
noncompliance by Holdings or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to
form the basis of an Environmental Claim against Holdings or any of
its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by Holdings or any of its Subsidiaries that could
reasonably be anticipated to cause such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability
by Holdings or its Subsidiary, as the case may be, of its interest in
such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by Holdings or any of its
Subsidiaries.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and Holdings' or the respective Borrower's response or proposed response
thereto. In addition, Holdings agrees to provide the Banks with copies of
all material communications by Holdings or any of its Subsidiaries with any
Person, government or governmental agency relating to Environmental Laws or
to any of the matters set forth in clauses (i)-(iv) above, and such
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detailed reports relating to any of the matters set forth in clauses
(i)-(iv) above as may reasonably be requested by the Agent or the
Required Banks.
(i) Annual Meetings with Banks. At the request of the Agent,
--------------------------
Holdings shall within 120 days after the close of each of its fiscal years,
hold a meeting (at a mutually agreeable location and time) open to all of
the Banks at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of Holdings and its
Subsidiaries and the budgets presented for the current fiscal year of
Holdings and its Subsidiaries.
(j) Notice of Commitment Reductions and Mandatory Repayments. On or
--------------------------------------------------------
prior to the date of any reduction to the Total Commitment or any mandatory
repayment of outstanding Term Loans pursuant to any of Sections 4.02(c)
through (g), inclusive, the respective Borrower shall provide written
notice of the amount of the respective reduction or repayment, as the case
may be, to each of the Total Term Loan Commitment, the Total Revolving Loan
Commitment or the outstanding Term Loans, as applicable, and the
calculation thereof (in reasonable detail).
(k) Other Information. Promptly upon transmission thereof, copies of
-----------------
any filings and registrations with, and reports to, the SEC by Holdings or
any of its Subsidiaries and copies of all financial statements, proxy
statements, notices and reports as Holdings or any of its Subsidiaries
shall send generally to analysts and the holders of their capital stock in
their capacity as such holders (to the extent not theretofore delivered to
the Banks pursuant to this Agreement) and, with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its
own behalf or on behalf of the Required Banks may reasonably request from
time to time.
8.02 Books, Records and Inspections. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of
law shall be made of all dealings and transactions in relation to its business
and activities. Holdings will, and will cause each of its Subsidiaries to,
permit, upon notice to the chief financial officer or other Authorized Officer
of the Borrowers, officers and designated representatives of the Agent or the
Required Banks to visit and inspect any of the properties or assets of Holdings
and any of its Subsidiaries in whomsoever's possession, and to examine the books
of account of Holdings and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings and of any of its Subsidiaries with, and be
advised as to the same by, their officers and independent accountants, all at
such reasonable times and intervals and to such reasonable extent as the Agent
or the Required Banks may desire.
8.03 Insurance. (a) Holdings will, and will cause each of its
---------
Subsidiaries to (i) maintain, with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against at
least such risks as is consistent and in accor-
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dance with industry practice and (ii) furnish to the Agent and each of the
Banks, upon request, full information as to the insurance carried. In addition
to the requirements of the immediately preceding sentence, Holdings will at all
times cause insurance of the types described in Schedule VIII to be maintained
(with the same scope of coverage as that described in Schedule VIII) at levels
which are consistent with its practices immediately before the Initial Borrowing
Date, taking into account the age and fair market value of equipment. Such
insurance shall include physical damage insurance on all real and personal
property (whether now owned or hereafter acquired) on an all risk basis,
covering the full repair and replacement costs of all such property and business
interruption insurance for the actual loss sustained. The provisions of this
Section 8.03 shall be deemed supplemental to, but not duplicative of, the
provisions of any Security Documents that require the maintenance of insurance.
(b) Holdings will, and will cause each of its Subsidiaries to, at all
times keep the respective property of Holdings and its Subsidiaries (except real
or personal property leased or financed through third parties in accordance
with this Agreement) insured in favor of the Collateral Agent, and all policies
or certificates with respect to such insurance (and any other insurance
maintained by, or on behalf of, Holdings or any Subsidiary of Holdings) (i)
shall be endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as certificate holder, mortgagee and loss payee with respect to real property,
certificate holder and loss payee with respect to personal property, additional
insured with respect to general liability and umbrella liability coverage and
certificate holder with respect to workers' compensation insurance), (ii) shall
state that such insurance policies shall not be cancelled or materially changed
without at least 30 days' prior written notice thereof by the respective insurer
to the Collateral Agent and (iii) shall be deposited with the Collateral Agent.
(c) If Holdings or any of its Subsidiaries shall fail to maintain all
insurance in accordance with this Section 8.03, or if Holdings or any of its
Subsidiaries shall fail to so name the Collateral Agent as an additional
insured, mortgagee or loss payee, as the case may be, or so deposit all
certificates with respect thereto, the Agent and/or the Collateral Agent shall
have the right (but shall be under no obligation) to procure such insurance, and
the Credit Parties agree to jointly and severally reimburse the Agent or the
Collateral Agent, as the case may be, for all costs and expenses of procuring
such insurance.
8.04 Payment of Taxes. Holdings will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims for sums that have become due and payable which,
if unpaid, might become a Lien not other wise permitted under Section 9.03(a);
provided, that neither Holdings nor any of its Subsidiaries shall be required
- --------
to pay any such tax, assessment, charge, levy or claim which is being contested
in good faith and by proper proceedings if it has maintained adequate re serves
with respect thereto in accordance with GAAP.
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8.05 Corporate Franchises. Holdings will do, and will cause each of
--------------------
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, authority to do business, licenses, certifications, accreditations
and patents, except for rights, franchises, authority to do business, licenses,
certifications, accreditations and patents the loss of which (individually and
in the aggregate) could not reasonably be expected to have a Material
Adverse Effect; provided, however, that any transaction permitted by Section
-------- -------
9.02 will not constitute a breach of this Section 8.05.
8.06 Compliance with Statutes; etc. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except for such noncompliance as would not have a
Material Adverse Effect or a material adverse effect on the ability of any
Credit Party to perform its obligations under any Credit Document to which it is
a party.
8.07 Compliance with Environmental Laws. (a) (i) Holdings will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws applicable to the ownership or use of its
Real Property now or here after owned or operated by Holdings or any of its
Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither Holdings nor any of its Subsidiaries will
generate, use, treat, store, Release or dispose of, or permit the generation,
use, treatment, storage, release or disposal of, Hazardous Materials on any Real
Property owned or operated by Holdings or any of its Subsidiaries, or transport
or permit the transportation of Hazardous Materials to or from any such Real
Property, unless the failure to comply with the requirements specified in clause
(i) or (ii) above, either individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. If Holdings or any of its
Subsidiaries, or any tenant or occupant of any Real Property owned or operated
by Holdings or any of its Subsidiaries, cause or permit any intentional or unin-
tentional act or omission resulting in the presence or Release of any Hazardous
Material (except in compliance with applicable Environmental Laws), Holdings
agrees to undertake, and/or to cause any of its Subsidiaries, tenants or
occupants to undertake, at their sole expense, any clean up, removal, remedial
or other action required pursuant to Environmental Laws to remove and clean up
any Hazardous Materials from any Real Property except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect; provided
--------
that neither Holdings nor any of its Subsidiaries shall be required to comply
with any such order or directive which is being contested in good faith and by
proper proceedings so long as it has maintained adequate reserves with respect
to such compliance to the extent required in accordance with GAAP.
(b) At the written request of the Agent or the Required Banks, which
request shall specify in reasonable detail the basis therefor, at any time and
from time to time, Holdings
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will provide, at its sole cost and expense, an environmental site assessment
report concerning any Real Property now or hereafter owned or operated by
Holdings or any of its Subsidiaries, prepared by an environmental consulting
firm approved by the Agent, addressing the matters in clause (i), (ii) or (iii)
below which gives rise to such request (or, in the case of a request pursuant to
following clause (i), addressing such matter as may be requested by the Agent or
the Required Banks) and estimating the range of the potential costs of any
removal, remedial or other corrective action in connection with any such matter,
provided that in no event shall such request be made unless (i) an Event of
Default has occurred and is continuing, (ii) the Banks receive notice under
Section 8.01(h) for any event for which notice is required to be delivered for
any such Real Property or (iii) the Agent or the Required Banks reasonably
believe that there was a breach of any representation, warranty or covenant
contained in Section 7.17 or 8.07(a). If Holdings fails to provide the same
within 60 days after such request was made, the Agent may order the same, and
Holdings shall grant and hereby grants, to the Agent and the Banks and their
agents access to such Real Property and specifically grants, the Agent and the
Banks and their agents an irrevocable non-exclusive license, subject to the
rights of tenants, to undertake such an assessment, all at Holdings' expense.
8.08 ERISA. As soon as possible and, in any event, within ten days
-----
after Holdings, any Subsidiary of Holdings or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, Holdings will deliver
to each of the Banks a certificate of the chief financial officer of Holdings
setting forth the full details as to such occurrence and the action, if any,
that Holdings, such Subsidiary or such ERISA Affiliate is required or proposes
to take, together with any notices required or proposed to be given to or filed
with or by Holdings, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred (except to the extent that Holdings has previously delivered
to the Banks a certificate and notices (if any) concerning such event pursuant
to the next clause hereof); that a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the
advance reporting requirement of PBGC Regulation Section 4043.61 (without regard
to subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur within the following 30 days; that an accumulated funding deficiency,
within the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application may be or has been made for a waiver or modification
of the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan; that any contribution required to be
made with respect to a Plan has not been timely made; that a Plan has been or
may be terminated, reorganized, partitioned or declared insolvent under Title IV
of ERISA; that a Plan has an Unfunded Current Liability; that proceedings may be
or have been instituted to terminate or appoint a trustee to administer a Plan
which is subject to Title IV of ERISA; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
that Holdings, any Subsidiary of Holdings or any ERISA Affiliate will or may
incur any liability (including any indirect, contingent, or secondary liability)
to or on account of the termination of or
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withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980
of the Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a
group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) under Section 4980B of the Code; or that Holdings or any Subsidiary
of Holdings may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any Plan. Holdings will deliver to each of the Banks (i) a
complete copy of the annual report (on Internal Revenue Service Form 5500-
series) of each Plan (including, to the extent required, the related financial
and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service and (ii) copies of any records, documents or other
information that must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any records, documents or other information required to be furnished to the
PBGC, and any material notices received by Holdings, any Subsidiary of Holdings
or any ERISA Affiliate with respect to any Plan shall be delivered to the Banks
no later than ten days after the date such report has been filed with the
Internal Revenue Service or such records, documents and/or information has been
furnished to the PBGC or such notice has been received by Holdings, such
Subsidiary or such ERISA Affiliate, as applicable.
8.09 Good Repair. Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, ordinary wear and
tear excepted, and that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
useful or customary for companies in similar businesses.
8.10 End of Fiscal Years; Fiscal Quarters. Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
8.11 Additional Security; Further Assurances. (a) Holdings will,
---------------------------------------
and will cause each of its Domestic Subsidiaries (and to the extent Section 8.12
is operative, each of its Foreign Subsidiaries) to, grant to the Collateral
Agent security interests and mortgages in such assets and real property of
Holdings and its Subsidiaries as are not covered by the original Security
Documents, and as may be requested from time to time by the Agent or the
Required Banks (collectively, the "Additional Security Documents"). All such
security interests and mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agent and shall constitute
valid and enforceable perfected security interests and mortgages superior to and
prior to the rights of all third Persons and subject to no other Liens except
for Permitted Liens. The Additional Security Documents or instruments related
thereto
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shall have been duly recorded or filed in such manner and in such places
as are required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Agent required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other charges payable in connection
therewith shall have been paid in full.
(b) Holdings will, and will cause each of its Subsidiaries to, at the
expense of the Borrowers, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, real property surveys,
reports and other assurances or instruments and take such further steps relating
to the Collateral covered by any of the Security Documents as the Collateral
Agent may reasonably require (including, without limitation, reregistering the
certificate of title of any MRI Unit in any state in which such MRI Unit
operates, to the extent the Collateral Agent determines, in its reasonable
discretion, that such action is required to ensure the perfection of its
security interest in such Collateral). Furthermore, Holdings shall cause to be
delivered to the Collateral Agent such opinions of counsel, title insurance and
other related documents as may be reasonably requested by the Agent to assure
themselves that this Section 8.11 has been complied with.
(c) Each of the Credit Parties agrees that each action required above
by this Section 8.11 shall be completed as soon as possible, but in no event
later than 90 days after such action is either requested to be taken by the
Agent or the Required Banks or required to be taken by Holdings and its
Subsidiaries pursuant to the terms of this Section 8.11.
8.12 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for SMT
reasonably acceptable to the Agent does not within 30 days after a request from
the Agent or the Required Banks deliver evidence, in form and substance mutually
satisfactory to the Agent and SMT, with respect to any Foreign Subsidiary of
Holdings which has not already had all of its stock pledged pursuant to the
Pledge Agreement that (i) a pledge of 66-2/3% or more of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary entitled
to vote, (ii) the entering into by such Foreign Subsidiary of a security
agreement in substantially the form of the Security Agreement and (iii) the
entering into by such Foreign Subsidiary of a guaranty in substantially the form
of the Subsidiaries Guaranty, in any such case could reasonably be expected to
cause (I) the undistributed earnings of such Foreign Subsidiary as determined
for Federal income tax purposes to be treated as a deemed dividend to such
Foreign Subsidiary's United States parent for Federal income tax purposes
or (II) other material adverse Federal income tax consequences to the Credit
Parties, then in the case of a failure to deliver the evidence described in
clause (i) above, that portion of such Foreign Subsidiary's outstanding capital
stock so issued by such Foreign Subsidiary, in each case not theretofore pledged
pursuant to the Pledge Agreement shall be pledged to the Collateral Agent for
the benefit of the Secured Creditors pursuant to the Pledge Agreement (or
another pledge agreement in substantially similar form, if needed), and in the
case of a failure to deliver the evidence described in clause (ii) above, such
Foreign
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<PAGE>
Subsidiary shall execute and deliver the Security Agreement (or another
security agreement in substantially similar form, if needed), granting the
Secured Creditors a security interest in all of such Foreign Subsidiary's assets
and securing the Obligations of the Borrower under the Credit Documents and
under any Interest Rate Protection Agreement or Other Hedging Agreement and, in
the event the Subsidiaries Guaranty shall have been executed by such Foreign
Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the
case of a failure to deliver the evidence described in clause (iii) above, such
Foreign Subsidiary shall execute and deliver the Subsidiaries Guaranty (or
another guaranty in substantially similar form, if needed), guaranteeing the
Obligations of SMT under the Credit Documents and under any Interest Rate
Protection Agreement or Other Hedging Agreement, in each case to the extent that
the entering into of such Security Agreement or Subsidiaries Guaranty is
permitted by the laws of the respective foreign jurisdiction and with all
documents delivered pursuant to this Section 8.12 to be in form and substance
reasonably satisfactory to the Agent.
8.13 Ownership of Subsidiaries. Except to the extent expressly
-------------------------
permitted herein or as otherwise expressly consented in writing by the Required
Banks, each Credit Party shall directly or indirectly own 100% of the capital
stock or other equity interests of each of their respective Subsidiaries.
8.14 Permitted Acquisitions. (a) Subject to the provisions of this
----------------------
Section 8.14 and the requirements contained in the definition of Permitted
Acquisition, SMT may from time to time effect Permitted Acquisitions, so long as
(in each case except to the extent the Required Banks otherwise specifically
agree in writing in the case of a specific Permitted Acquisition): (i) no
Default or Event of Default shall be in existence at the time of the
consummation of the proposed Permitted Acquisition or immediately after giving
effect thereto; (ii) the Borrower shall have given the Agent and the Banks at
least 10 Business Days' prior written notice of any Permitted Acquisition; (iii)
calculations are made by the Borrower of compliance with the covenants contained
in Sections 9.08, 9.09, 9.10 and 9.11 (in the case of Section 9.11, giving
effect to the last sentence appearing therein) for the period of four (except
Section 9.11, which is measured on a two quarter-annualized basis as provided in
the relevant defined terms as used therein) consecutive fiscal quarters (taken
as one accounting period) most recently ended prior to the date of such
Permitted Acquisition (each, a "Calculation Period"), on a Pro Forma Basis as if
--- -----
the respective Permitted Acquisition (as well as all other Permitted
Acquisitions theretofore consummated after the first day of such Calculation
Period) had occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have been complied
with if the Permitted Acquisition had occurred on the first day of such
Calculation Period (for this purpose, if the first day of the respective
Calculation Period occurs prior to the Initial Borrowing Date, calculated as if
the covenants contained in said Sections 9.08, 9.09, 9.10 and 9.11 (in the case
of Section 9.11, giving effect to the last sentence appearing therein) had been
applicable from the first day of the Calculation Period); (iv) based on good
faith projections prepared by the Borrower for the period from the date of the
consummation of the Permitted Acquisition to the date which is one year
thereafter, the level of financial performance measured by the covenants set
forth in Sections 9.08, 9.09, 9.10 and
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9.11 (in the case of Section 9.11, giving effect to the last sentence appearing
therein) shall be better than or equal to such level as would be required to
provide that no Default or Event of Default would exist under the financial
covenants contained in Sections 9.08, 9.09, 9.10 and 9.11 (in the case of
Section 9.11, giving effect to the last sentence appearing therein) of this
Agreement as compliance with such covenants would be required through the date
which is one year from the date of the consummation of the respective Permitted
Acquisition; (v) all representations and warranties contained herein and in the
other Credit Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of the date of such Permitted Acquisition (both before and after giving
effect thereto), unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date; (vi) the Borrower provides to the
Agent and the Banks as soon as available but not later than 5 Business Days
after the execution thereof, a copy of any executed purchase agreement or
similar agreement with respect to such Permitted Acquisition; (vii) the
estimated probable amount of the net present value of contingent tax (other than
taxes on future net income), ERISA, environmental or other contingent
liabilities arising out of the proposed Permitted Acquisition does not exceed
$5,000,000, (viii) after giving effect to each Permitted Acquisition (and the
payment of all post-closing purchase price adjustments required (in the good
faith determination of the Borrower) in connection therewith and all capital
expenditures (and the financing thereof) reasonably anticipated by the Borrower
to be made in the business acquired pursuant to such Permitted Acquisition
within 90 days following such Permitted Acquisition), the Total Unutilized
Revolving Loan Commitment shall equal or exceed $5,000,000 and (ix) the Borrower
shall have delivered to the Agent an officer's certificate executed by an
Authorized Officer of the Borrower, certifying to the best of his knowledge,
compliance with the requirements of preceding clauses (i) through (v),
inclusive, (vii) and (viii) and containing the calculations required by the
preceding clauses (iii), (iv), (vii) and (viii).
(b) At the time of each Permitted Acquisition involving the creation
or acquisition of a Subsidiary, or the acquisition of capital stock or other
equity interest of any Person, all capital stock or other equity interests
thereof created or acquired in connection with such Permitted Acquisition shall
be pledged for the benefit of the Secured Creditors pursuant to the Pledge
Agreement.
(c) Holdings shall cause each Subsidiary which is formed to effect,
or is acquired pursuant to, a Permitted Acquisition to comply with, and to
execute and deliver, all of the documentation required by, Sections 8.11 and
9.15, to the satisfaction of the Agent.
(d) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by Holdings and the Borrower that the
certifications by the Borrower (or by one or more of its Authorized Officers)
pursuant to Section 8.14(a) are true and correct and that all conditions thereto
have been satisfied and that same is permitted in accordance with the terms of
this Agreement, which representation and warranty shall be
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deemed to be a representation and warranty for all purposes hereunder,
including, without limitation, Sections 6 and 10.
8.15 Maintenance of Corporate Separateness. Holdings will, and will
-------------------------------------
cause each of its Subsidiaries to, satisfy customary corporate formalities,
including the holding of regular board of directors' and shareholders' meetings
or action by directors or shareholders without a meeting and the maintenance of
corporate offices and records. Neither Holdings nor any of its Subsidiaries
shall take any action, or conduct its affairs in a manner, which is likely to
result in the corporate existence of Holdings or any of its Subsidiaries being
ignored, or in the assets and liabilities of Holdings or any of its Subsidiaries
being substantively consolidated with those of any other such Person in a
bankruptcy, reorganization or other insolvency proceeding.
8.16 Performance of Obligations. Holdings will, and will cause each
--------------------------
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, deed of trust, indenture, loan agreement or credit agreement and each
other material agreement, contract or instrument by which it is bound, except
such non-performances as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
8.17 Use of Proceeds. All proceeds of the Loans shall be used as
---------------
provided in Section 7.05.
8.18 Interest Rate Protection. No later than 150 days following the
------------------------
Initial Borrowing Date, Acquisition Corp. shall enter into Interest Rate
Protection Agreements, satisfactory to the Agent, with a term of at least three
years, establishing a fixed or maximum interest rate acceptable to the Agent in
respect of at least $15,000,000 of outstanding Term Loans.
8.19 Contributions; Payments; etc. (a) Holdings will contribute as
-----------------------------
an equity contribution to the capital of Acquisition Corp. (or SMT, as its
successor by merger) upon its receipt thereof, any cash proceeds received by
Holdings from any asset sale, any incurrence of Indebtedness (other than, to the
extent incurred, the Merger Bridge Loans), any Recovery Event, any sale or
issuance of its preferred or common equity or any cash capital contributions
received by Holdings.
(b) Acquisition Corp. (or SMT, as its successor by merger) will use
the proceeds of all equity contributions received by it from Holdings as
provided in clause (a) above toward the repayment of Term Loans to the extent
required by Section 4.02.
8.20 Consummation of the Merger. (a) Holdings will, and will cause
--------------------------
each of its Subsidiaries to, consummate the Merger (x) by October 15, 1997 in
the event the 90% Requirement is met or (y) within 120 days following the
Initial Borrowing Date in the event the 90% Requirement is not met. On the
Merger Date (and whether or not any Loans are incurred
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on such date), Holdings will, and will cause each of its Subsidiaries to, take
all actions required to be taken by the respective Credit Parties pursuant to
Section 6.
(b) Promptly following the consummation of the Merger, SMT, as the
surviving corporation of the Merger, shall execute and deliver an Acknowledgment
Agreement in the form of Exhibit O. After giving effect to the Merger, SMT
shall succeed to all rights and obligations of Acquisition Corp. as were
existing immediately prior to the Merger (including, without limitation, all
obligations under this Agreement and the other Credit Documents to which
Acquisition Corp. is a party). Simultaneously with the consummation of the
Merger, all capital stock of SMT, as the surviving corporation of the Merger,
shall be pledged pursuant to the Pledge Agreement, and all stock certificates
evidencing such shares of capital stock of SMT after giving effect to the Merger
shall, to the extent not theretofore so delivered, be delivered to the
Collateral Agent.
8.21 Margin Stock. Holdings will, and will cause each of its
------------
Subsidiaries to, take any and all actions as may be required to ensure that no
capital stock pledged, or required to be pledged, pursuant to the Pledge
Agreement shall constitute Margin Stock; provided that (i) in the event that the
--------
90% Requirement is not satisfied, on and after the Initial Borrowing Date and
prior to the Merger Date, the Shares acquired pursuant to the Tender Offer shall
be pledged pursuant to the Pledge Agreement and (ii) upon the consummation of
the Merger, Holdings will, and will cause its Subsidiaries to, take any and all
actions as may be required to ensure that no Shares acquired pursuant to the
Tender Offer shall continue to, or at any time thereafter, constitute Margin
Stock. Holdings will, and will cause its Subsidiaries to, take any and all
actions as may be required, or as may be reasonably requested by the Agent, to
establish compliance with Regulations G, T, U and X (as applicable).
SECTION 9. Negative Covenants. Holdings and the Borrowers hereby
------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitment has terminated, no
Letters of Credit or Notes are outstanding and the Loans, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 13.13 which are not then due and payable) incurred hereunder, are
paid in full:
9.01 Changes in Business. (a) Holdings and its Subsidiaries will
-------------------
not engage in any business other than a Permitted Business.
(b) Notwithstanding the foregoing, Holdings will not engage in any
business other than its ownership of the capital stock of Acquisition Corp. (or
SMT, as its successor) and those obligations of officers and employees of
Holdings permitted by Section 9.05(h) and other than having those liabilities
which it is responsible for (or permitted to be incurred by it) under this
Agreement and the other Documents to which it is a party, provided that Holdings
--------
may engage in those activities that are incidental to (x) the maintenance of its
corporate existence in
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compliance with applicable law, (y) legal, tax and accounting matters in
connection with any of the foregoing activities and (z) the entering into, and
performing its obligations under, this Agreement and the other Documents to
which it is a party.
(c) Notwithstanding the foregoing, prior to the Merger Date,
Acquisition Corp. will not engage in any business other than its ownership of
the capital stock of SMT and having those liabilities which it is responsible
for (or permitted to incur) under this Agreement and the other Documents to
which it is a party; provided that Acquisition Corp. may engage in those
--------
activities that are incidental to (i) the maintenance of its corporate existence
in compliance with applicable law, (ii) legal, tax and accounting matters in
connection with any of the foregoing activities and (iii) the entering into, and
performance of its obligations under, this Agreement and the other Documents to
which it is a party.
9.02 Consolidation; Merger; Sale or Purchase of Assets; etc. Holdings
-------------------------------------------------------
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of all or any part of its property
or assets (other than inventory in the ordinary course of business), or enter
into any sale-leaseback transactions, or purchase or otherwise acquire (in one
or a series of related transactions) any part of the property or assets (other
than purchases or other acquisitions of inventory, materials, general
intangibles and equipment in the ordinary course of business) of any Person or
agree to do any of the foregoing at any future time, except that the following
shall be permitted:
(a) SMT and its Subsidiaries may, as lessee, enter into operating
leases in the ordinary course of business with respect to real or personal
property;
(b) Capital Expenditures (including payments in respect of Capitalized
Lease Obligations entered into after the Initial Borrowing Date, but
excluding Capital Expenditures which may arise as a result of the purchase
of any capital stock or equity interests in any other Person or by means of
a purchase of assets constituting a business, division or product line of
any Person, which expenditures may only be made pursuant to Permitted
Acquisitions effected in accordance with the relevant provisions of this
Agreement) by SMT and its Subsidiaries shall be permitted so long as same
do not cause a violation of any of the other provisions of this Agreement;
(c) Investments permitted pursuant to Section 9.05 and the
liquidation of Cash Equivalents in the ordinary course of business;
(d) SMT and any of its Subsidiaries may sell or otherwise dispose of
assets (excluding capital stock of, or other equity interests in,
Subsidiaries and MRI Units) which, in the reasonable opinion of such
Person, are obsolete, uneconomic or no longer useful in the conduct of such
Person's business, provided that except with respect to asset dispositions
--------
or transfers arising out of, or in connection with, the events described
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in clauses (i) and (ii) of the definition of Recovery Event, (w) each such
sale or disposition shall be for an amount at least equal to the fair
market value thereof (as determined in good faith by senior management of
SMT), (x) each such sale results in consideration at least 80% of which
(taking the amount of cash, the principal amount of any promissory notes
and the fair market value, as determined by SMT in good faith, of any other
consideration) shall be in the form of cash, (y) the aggregate Net Sale
Proceeds of all assets sold or otherwise disposed of pursuant to this
clause (d) shall not exceed $1,000,000 in the aggregate in any fiscal year
of Holdings and (z) the Net Sale Proceeds therefrom are either applied to
repay Term Loans (or reduce the Total Term Loan Commitment or Total
Revolving Loan Commitment) as provided in Section 4.02(c) or reinvested in
replacement assets or retained to the extent permitted by Section 4.02(c)
and/or the other relevant provisions of this Agreement;
(e) any Subsidiary of SMT may transfer assets to SMT or to any other
Wholly-Owned Subsidiary of SMT, so long as any security interests granted
to the Collateral Agent for the benefit of the Secured Creditors pursuant
to the Security Documents in the assets so transferred shall remain in full
force and effect and perfected (to at least the same extent as in effect
immediately prior to such transfer);
(f) any Subsidiary of SMT may merge with and into, or be dissolved or
liquidated into, SMT, so long as (i) SMT is the surviving corporation of
any such merger, dissolution or liquidation and (ii) any security interests
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Documents in the assets of such Subsidiary shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such merger, dissolution or liquidation);
(g) any Subsidiary of SMT may merge with and into, or be dissolved or
liquidated into, any Wholly-Owned Domestic Subsidiary of SMT, so long as
(i) such Wholly-Owned Domestic Subsidiary is the surviving corporation of
any such merger, dissolution or liquidation and (ii) any security interests
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Documents in the assets of such Subsidiary shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such merger, dissolution or liquidation);
(h) SMT shall be permitted to make Permitted Acquisitions, so long as
such Permitted Acquisitions are effected in accordance with the
requirements of Section 8.14;
(i) the Acquisition shall be permitted in accordance with the
requirements of this Agreement;
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<PAGE>
(j) SMT and its Subsidiaries may, in the ordinary course of business,
license patents, trademarks, copyrights and know-how to or from third
Persons or one another, so long as each such license is permitted to be
assigned pursuant to the Security Agreement (to the extent that a security
interest in such patents, trademarks, copyrights and know-how is granted
thereunder) and does not otherwise prohibit the granting of a Lien by SMT
or any of its Subsidiaries pursuant to the Security Agreement in the
intellectual property covered by such license;
(k) SMT or any of its Subsidiaries may effect Permitted Sale-Leaseback
Transactions in accordance with the definition thereof; provided that (x)
--------
the aggregate amount of all proceeds received by SMT and its Subsidiaries
from all Permitted Sale-Leaseback Transactions in any fiscal year of
Holdings shall not exceed $3,000,000 and (y) the aggregate amount of all
proceeds received by SMT and its Subsidiaries from all Permitted Sale-
Leaseback Transactions consummated on and after the Effective Date shall
not exceed $10,000,000;
(l) SMT and any of its Subsidiaries may sell MRI Units which, in the
reasonable opinion of such Person, are obsolete, uneconomic or no longer
useful in the conduct of such Person's business or otherwise require
upgrading, provided that (i) any such sale shall be for an amount at least
--------
equal to the fair market value thereof (as determined in good faith by
senior management of SMT), (ii) such sale results in consideration at least
80% of which (taking the amount of cash, the principal amount of any
promissory notes and the fair market value, as determined by SMT in good
faith, of any other consideration) shall be in the form of cash, (iii) the
Net Sale Proceeds from any such sale, when added to the aggregate Net Sale
Proceeds of all other MRI Units sold pursuant to this clause (l) after the
Effective Date, shall not exceed $5,000,000 and (iv) the Net Sale Proceeds
from any such sale are applied to repay Term Loans (or reduce the Total
Term Loan Commitment or Total Revolving Loan Commitment) as provided in
Section 4.02(c) or reinvested in replacement assets or retained to the
extent permitted by Section 4.02(c) and/or the other relevant provisions of
this Agreement;
(m) SMT and any of its Subsidiaries may effect MRI Replacements,
provided that (i) any disposition of a MRI Unit pursuant to a MRI
--------
Replacement shall be for an amount (including any credits towards the
purchase of a replacement Mobile MRI Unit) at least equal to the fair
market value thereof (as determined in good faith by senior management of
SMT) and (ii) the Net Sale Proceeds from any such disposition are applied
to repay Term Loans (or reduce the Total Term Loan Commitment or Total
Revolving Loan Commitment) as provided in Section 4.02(c) or reinvested in
replacement MRI Units or retained to the extent permitted by Section
4.02(c); and
(n) in the event the 90% Requirement is satisfied, Holdings and any of
its Subsidiaries may, after the Initial Borrowing Date and prior to the
Merger Date, sell or otherwise dispose of Margin Stock owned by Holdings or
such Subsidiary (including,
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without limitation, the Shares acquired by Acquisition Corp. pursuant to
the Tender Offer) for cash consideration, so long as (i) any such sale or
disposition shall generate proceeds equal to at least the fair market value
of such Margin Stock (as determined in good faith by senior management of
Holdings) and (ii) the Net Sale Proceeds from any such sale or disposition
are applied to repay Term Loans (or reduce the Total Term Loan Commitment
or Total Revolving Loan Commitment) as provided in Section 4.02(i).
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise dis posed of as permitted by this Section 9.02, such
Collateral (unless transferred to SMT or a Subsidiary thereof) shall be sold or
otherwise disposed of free and clear of the Liens created by the Security
Documents and the Agent shall take such actions (including, without limitation,
directing the Collateral Agent to take such actions) as are appropriate in
connection therewith.
9.03 Liens. Holdings will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to Holdings or any of its Subsidiaries) or assign any right to receive
income, except for the following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP;
(b) Liens in respect of property or assets of SMT or any of its
Subsidiaries imposed by law which were incurred in the ordinary course of
business and which have not arisen to secure Indebtedness for borrowed
money, such as carriers', ware housemen's and mechanics' Liens, statutory
landlord's Liens, and other similar Liens arising in the ordinary course of
business, and which either (x) do not in the aggregate materially detract
from the value of such property or assets or materially impair the use
thereof in the operation of the business of SMT or any of its Subsidiaries
or (y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
(d) Liens in existence on the Initial Borrowing Date (i) which are
listed, and the property subject thereto described, in Schedule IX, without
giving effect to any
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extensions or renewals thereof and (ii) which secure Designated
Indebtedness, provided that such Liens are discharged on the Initial
Borrowing Date pursuant to the Initial Refinancing;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 10.09,
provided that the amount of cash and property (determined on a fair market
--------
value basis) deposited or delivered to secure the respective judgment or
decree or subject to attachment shall not exceed $1,000,000 at any time;
(f) Liens (other than any Lien imposed by ERISA) (x) incurred or
deposits made in the ordinary course of business of SMT and its
Subsidiaries in connection with workers' compensation, unemployment
insurance and other types of social security, (y) to secure the performance
by SMT and its Subsidiaries of tenders, statutory obligations (other than
excise taxes), surety, stay, customs and appeal bonds, statutory bonds,
bids, leases, government contracts, trade contracts, performance and return
of money bonds and other similar obligations (exclusive of obligations for
the payment of borrowed money) or (z) to secure the performance by SMT and
its Subsidiaries of leases of Real Property, to the extent incurred or made
in the ordinary course of business consistent with past practices, provided
--------
that the aggregate amount of deposits at any time pursuant to sub-clause
(y) and sub-clause (z) shall not exceed $500,000 in the aggregate;
(g) licenses, sublicenses, leases or subleases granted to third
Persons in the ordinary course of business not interfering in any material
respect with the business of SMT or any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances, in each
case not securing Indebtedness and not interfering in any material respect
with the ordinary conduct of the business of SMT or any of its
Subsidiaries;
(i) Liens arising from precautionary UCC financing statements
regarding operating leases;
(j) Liens created pursuant to Capital Leases permitted pursuant to
Section 9.04(d), provided that (x) such Liens only serve to secure the
--------
payment of Indebtedness arising under such Capitalized Lease Obligation
(and other Indebtedness permitted by Section 9.04(d) and incurred from the
same Person as such Indebtedness) and (y) the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does not encumber any other
asset of SMT or any of its Subsidiaries (other than other assets subject to
Capitalized Lease Obligations and/or Indebtedness incurred pursuant to
Section 9.04(d), in each case owing to the same Person as such Capitalized
Lease Obligation);
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<PAGE>
(k) Permitted Encumbrances;
(l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Initial Borrowing Date, provided
--------
that (i) any such Liens attach only to the assets so purchased (and such
other assets provided by the same financing source), (ii) the Indebtedness
(other than Indebtedness incurred from the same financing source to
purchase other assets and excluding Indebtedness representing obligations
to pay installation and delivery charges for the property so purchased)
secured by any such Lien does not exceed 100%, nor is less than 80%, of the
lesser of the fair market value or the purchase price of the property being
purchased at the time of the incurrence of such Indebtedness and (iii) the
Indebtedness secured thereby is permitted to be incurred pursuant to
Section 9.04(d);
(m) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of SMT in existence
at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, provided that (i) any Indebtedness that is secured by such
--------
Liens is permitted to exist under Section 9.04(f), and (ii) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of SMT or
any of its Subsidiaries; and
(n) if the 90% Requirement is satisfied, for the period commencing on
the Initial Borrowing Date and ending on the Merger Date, Liens on Margin
Stock owned by Holdings and its Subsidiaries (including the Shares acquired
by Acquisition Corp. pursuant to the Tender Offer).
9.04 Indebtedness. Holdings will not, and will not permit any of its
------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) (i) Existing Indebtedness outstanding on the Initial Borrowing
Date and listed on Schedule IV (as reduced by any repayments thereof after
the Initial Borrowing Date), without giving effect to any subsequent
extension, renewal or refinancing thereof and (ii) Designated Indebtedness
existing on the Initial Borrowing Date, provided that such Designated
Indebtedness is discharged on pursuant to the Initial Refinancing;
(c) Indebtedness under Interest Rate Protection Agreements entered
into to protect any Borrower against fluctuations in interest rates in
respect of the Obligations otherwise permitted under this Agreement;
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(d) Capitalized Lease Obligations and Indebtedness of SMT and its
Subsidiaries representing purchase money Indebtedness secured by Liens
permitted pursuant to Section 9.03(l), provided, that the sum of (x) the
--------
aggregate outstanding amount of Capitalized Lease Obligations incurred on
and after the Effective Date (including Indebtedness evidenced by
Capitalized Lease Obligations arising from Permitted Sale-Leaseback
Transactions) plus (y) the aggregate outstanding principal amount of all
----
such purchase money Indebtedness incurred on and after the Effective Date,
when added to the aggregate principal amount of Permitted Acquired Debt
outstanding at such time, shall not exceed $15,000,000;
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 9.05(f);
(f) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition
of an asset securing such Indebtedness) (the "Permitted Acquired Debt");
provided that (i) such Indebtedness was not incurred in connection with, or
--------
in anticipation or contemplation of, such Permitted Acquisition, (ii) such
Indebtedness does not constitute debt for borrowed money, it being
understood and agreed that Capitalized Lease Obligations and purchase money
Indebtedness shall not constitute debt for borrowed money for purposes of
this clause (ii), and (iii) the aggregate principal amount of all Permitted
Acquired Debt at any time outstanding, when added to the sum of the
aggregate outstanding principal amount of all Capitalized Lease Obligations
(including Indebtedness evidenced by Capitalized Lease Obligations arising
from Permitted Sale-Leaseback Transactions) and purchase money Indebtedness
incurred on and after the Effective Date and permitted pursuant to Section
9.04(d), shall not exceed $15,000,000;
(g) Indebtedness constituting Merger Bridge Loans to the extent
incurred by Holdings in accordance with the requirements of Section 5A.08
(as reduced by any principal repayments thereof);
(h) Indebtedness of Holdings or any of its Subsidiaries which may be
deemed to exist in connection with agreements providing for
indemnification, purchase price adjustments and similar obligations in
connection with acquisitions or sales of assets and/or businesses effected
in accordance with the requirements of this Agreement (so long as any such
obligations are those of the Person making the respective acquisition or
sale, and are not guaranteed by any other Person);
(i) Contingent Obligations of (x) Holdings or any of its Subsidiaries
as a guarantor of the lessee under any lease pursuant to which Holdings or
any of its Wholly-Owned Subsidiaries is the lessee so long as such lease is
otherwise permitted hereunder and (y) Holdings or any of its Subsidiaries
as a guarantor of any Capitalized Lease Obligation to which a Joint Venture
is a party or any contract entered into by
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<PAGE>
such Joint Venture in the ordinary course of business; provided that the
maximum liability of Holdings or any of its Subsidiaries in respect of any
obligations as described pursuant to preceding clause (y) is permitted as
an Investment on such date pursuant to the requirements of Section 9.05(l);
and
(j) Permitted Subordinated Indebtedness incurred in accordance with
the requirements of the definition thereof and additional unsecured
Indebtedness of SMT and its Subsidiaries not otherwise permitted hereunder,
so long as the aggregate
principal amount of all Indebtedness permitted by this clause (j), when
added to the aggregate liquidation preference for all Disqualified
Preferred Stock issued after the Effective Date pursuant to Section
9.13(c), does not exceed $15,000,000 at any time outstanding.
9.05 Advances; Investments; Loans. Holdings will not, and will not
----------------------------
permit any of its Subsidiaries to, lend money or extend credit or make advances
to any Person, or purchase or acquire any stock, obligations or securities of,
or any other interest in, or make any capital contribution to, any Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold any cash or Cash Equivalents (any of the foregoing, an
"Investment"), except:
(a) SMT and its Subsidiaries may invest in cash and Cash Equivalents,
provided that during any time that Revolving Loans or Swingline Loans are
--------
outstanding the aggregate amount of cash and Cash Equivalents held by SMT
and its Subsidiaries shall not exceed $2,000,000 for any period of three
consecutive Business Days;
(b) SMT and its Subsidiaries may acquire and hold receivables owing
to it, if created or acquired in the ordinary course of business and
payable or dis chargeable in accordance with customary trade terms
(including the dating of receivables) of SMT or such Subsidiary;
(c) SMT and its Subsidiaries may acquire and own investments
(including debt obligations and equity securities) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into in compliance
with Section 9.04(c) shall be permitted;
(e) advances, loans and investments in existence on the Initial
Borrowing Date and listed on Schedule VI shall be permitted, without giving
effect to any additions thereto or replacements thereof;
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(f) after the Merger Date, the Borrower may make intercompany loans
and advances to any Subsidiary Guarantor, and any Subsidiary Guarantor may
make intercompany loans and advances to the Borrower or any other
Subsidiary Guarantor (collectively, "Intercompany Loans"), provided, that
--------
(x) each Intercompany Loan shall be evidenced by an Intercompany Note and
(y) each such Intercompany Note shall be pledged to the Collateral Agent
pursuant to the Pledge Agreement;
(g) loans and advances by SMT and its Subsidiaries to employees of
Holdings and its Subsidiaries in connection with relocations, purchases by
such employees of Holdings Common Stock or options or similar rights to
purchase Holdings Common Stock and other ordinary course of business
purposes shall be permitted, so long as the aggregate principal amount
thereof at any time outstanding (determined without regard to any write-
downs or write-offs of such loans and advances) shall not exceed
$1,000,000;
(h) after the Merger Date, Holdings may acquire and hold obligations
of one or more officers or other employees of Holdings or its Subsidiaries
in connection with such officers' or employees' acquisition of shares of
Holdings Common Stock, so long as no cash is actually advanced by Holdings
or any of its Subsidiaries to such officers or employees in connection with
the acquisition of any such obligations;
(i) Holdings may make equity contributions to the capital of
Acquisition Corp. (or SMT as its successor by merger) and, on the Initial
Borrowing Date, not more than $3.0 million of proceeds of Term Loans may be
loaned by Acquisition Corp. to, or invested by Acquisition Corp. in, SMT as
contemplated by Section 7.05(a)(i);
(j) after the Merger Date, the Borrower may make Permitted
Acquisitions in accordance with the relevant requirements of Section 8.14
and the component definitions as used therein;
(k) Holdings and its Subsidiaries may own the capital stock of their
respective Subsidiaries created or acquired in accordance with the terms
of this Agreement;
(l) so long as no Default or Event of Default exists or would exist
immediately after giving effect to the respective Investment, SMT shall be
permitted to make Investments in any Joint Venture on any date in an amount
not to exceed the Available JV Basket Amount on such date (after giving
effect to all prior and contemporaneous adjustments thereto, except as a
result of such Investment), it being understood and agreed that (i) any
such Investment may be in the form of a contribution of an MRI Unit or
Units to such Joint Venture and (ii) to the extent SMT or one or more other
Credit Parties (after the respective Investment has been made) receives a
cash return from the respective Joint Venture of amounts previously
invested pursuant to this clause (l) (which cash return may be made by
way of repayment of principal in the case of loans
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and cash equity returns (whether as a distribution, dividend or redemption)
in the case of equity investments), then the amount of such return of
investment shall, upon the Agent's receipt of a certification of the amount
of the return of investment from an Authorized Officer, apply to increase
the Available JV Basket Amount, provided that the aggregate amount of
--------
increases to the Available JV Basket Amount described above shall not
exceed the amount of returned investment and, in no event, shall the amount
of the increases made to the Available JV Basket Amount in respect of
any Investment exceed the amount previously invested pursuant to this
clause (l);
(m) the Acquisition shall be permitted; and
(n) in addition to investments permitted by clauses (a) through (m) of
this Section 9.05, SMT and its Subsidiaries may make additional loans,
advances and investments to or in a Person not an Affiliate in an aggregate
amount for all loans, advances and investments made pursuant to this clause
(n) (determined with out regard to any write-downs or write-offs thereof),
net of cash repayments of principal in the case of loans and cash equity
returns (whether as a distribution, dividend or redemption) in the case of
equity investments, not to exceed $250,000.
9.06 Dividends; etc. Holdings will not, and will not permit any of
---------------
its Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in common stock of Holdings or any such Subsidiary, as the case may be)
or return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock, now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, and Holdings will not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock of Holdings or any other Subsidiary, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of a Borrower may pay Dividends to such
Borrower or any Wholly-Owned Subsidiary of such Borrower;
(ii) after the Merger Date, Holdings may redeem or purchase
shares of Holdings Common Stock or options to purchase Holdings Common
Stock, as the case may be, held by former employees of Holdings or any of
its Subsidiaries following the termination of their employment, provided
that (w) the only consideration paid by Holdings in respect of such
redemptions and/or purchases shall be cash, forgiveness of liabilities
and/or Shareholder Subordinated Notes, (x) the sum of (A) the aggregate
amount paid by Holdings in cash in respect of all such redemptions and/or
purchases plus (B) the aggregate amount of liabilities so forgiven and (C)
the aggregate amount
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of all cash principal and interest payments made on Shareholder
Subordinated Notes shall not exceed $3,000,000, and (y) at the time of any
cash payment or forgiveness of liabilities permitted to be made pursuant to
this Section 9.06(ii), including any cash payment under a Shareholder
Subordinated Note, no Default or Event of Default shall then exist or
result therefrom;
(iii) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may pay cash Dividends to Holdings so
long as the cash proceeds thereof are promptly used by Holdings for the
purposes described in clause (ii) of this Section 9.06;
(iv) Acquisition Corp. (or SMT as its successor by merger) may
pay cash Dividends to Holdings so long as the cash proceeds thereof are
promptly used by Holdings to pay operating expenses in the ordinary course
of business (including, without limitation, directors and professional fees
and expenses) and other similar corporate overhead costs and expenses,
provided, that the aggregate amount of cash Dividends paid pursuant to this
--------
clause (iv) during any fiscal year of the Borrower shall not exceed
$500,000;
(v) after the Merger Date, the Borrower may pay cash Dividends to
Holdings in the amounts and at the times of any payment by Holdings in
respect of taxes, provided, that (x) the amount of cash Dividends paid
--------
pursuant to this clause (v) to enable Holdings to pay federal and state
income taxes at any time shall not exceed the amount of such federal and
state income taxes owing by Holdings at such time for the respective period
and (y) any refunds received by Holdings shall promptly be returned by
Holdings to the Borrower;
(vi) on the Merger Date, the Borrower may pay cash Dividends to
Holdings for the purpose of paying, and so long as Holdings immediately
utilizes the full amount of such cash Dividend to pay, interest on, and
principal of, any outstanding Merger Bridge Loans;
(vii) after the Merger Date, so long as no Default or Event of
Default exists or would result therefrom, the Borrower may pay regularly
accruing cash Dividends on Disqualified Preferred Stock issued after the
Merger Date pursuant to Section 9.13(c), with such Dividends to be paid in
accordance with the terms of the respective certificate of designation
therefor; and
(viii) on, or promptly after, the Initial Borrowing Date, SMT may
redeem options for its common stock, with the aggregate amount expended in
connection with such redemptions not to exceed $4,000,000.
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9.07 Transactions with Affiliates. Holdings will not, and will not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than on terms and conditions substantially
as favorable to Holdings or such Subsidiary as would be reasonably expected to
be obtainable by Holdings or such Subsidiary at the time in a comparable arm's-
length transaction with a Person other than an Affiliate; provided, that the
--------
following shall in any event be permitted: (i) the Transaction; (ii)
intercompany transactions among Holdings and its Subsidiaries to the extent
expressly permitted by Sections 9.02, 9.04, 9.05 and 9.06 shall be permitted;
(iii) so long as no Default or Event of Default is then in existence or would
result therefrom, the payment, on a quarterly basis, of management fees to
Apollo Group in an aggregate amount not to exceed $62,500 in any fiscal quarter
of Holdings pursuant to, and in accordance with the terms of, the Apollo
Management Agreement, provided that if during any fiscal quarter of Holdings, a
--------
Default or Event of Default is in existence and such management fees cannot be
paid as provided above, such fees shall continue to accrue and may be paid at
such time as all Defaults and Events of Default have been cured or waived and so
long as no Default or Event of Default will exist immediately after giving
effect to the payment thereof; (iv) customary fees to non-officer directors of
Holdings and its Subsidiaries; (v) Holdings and its Subsidiaries may enter into
employment arrangements with respect to the procurement of services with their
respective officers and employees in the ordinary course of business; (vi) the
payment on the Merger Date of one time consulting fees to Apollo in an aggregate
amount not to exceed $1,000,000 and (vii) the reimbursement of Apollo for its
reasonable out-of-pocket expenses incurred in connection with performing
management services to Holdings and its Subsidiaries or in connection with the
Transaction. In no event shall any management, consulting or similar fee be
paid or payable by Holdings or any of its Subsidiaries to any Person except as
specifically provided in this Section 9.07.
9.08 Consolidated Fixed Charge Coverage Ratio. Holdings will not
----------------------------------------
permit the Consolidated Fixed Charge Coverage Ratio for any Test Period ending
on the last day of a fiscal quarter of Holdings specified below to be less than
the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
- -------------------- -----
<S> <C>
June 30, 1998 0.85:1.00
September 30, 1998 0.85:1.00
December 31, 1998 0.85:1.00
March 31, 1999 0.90:1.00
June 30, 1999 1.00:1.00
September 30, 1999 1.00:1.00
December 31, 1999 1.00:1.00
March 31, 2000 1.00:1.00
</TABLE>
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<TABLE>
<S> <C>
June 30, 2000 1.00:1.00
September 30, 2000 1.05:1.00
December 31, 2000 1.10:1.00
March 31, 2001 1.20:1.00
June 30, 2001 1.30:1.00
September 30, 2001 1.30:1.00
December 31, 2001 1.30:1.00
March 31, 2002 1.30:1.00
June 30, 2002 1.30:1.00
September 30, 2002 1.30:1.00
December 31, 2002 1.30:1.00
March 31, 2003 1.30:1.00
June 30, 2003 1.30:1.00
</TABLE>
9.09 Minimum Consolidated EBITDA. Holdings will not permit
---------------------------
Consolidated EBITDA for any Test Period ending on the last day of any fiscal
quarter of Holdings specified below to be less than the respective amount set
forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Amount
- -------------------- ------
<S> <C>
December 31, 1997 $14,000,000
March 31, 1998 $14,500,000
June 30, 1998 $15,000,000
September 30, 1998 $15,500,000
December 31, 1998 $16,000,000
March 31, 1999 $16,500,000
June 30, 1999 $17,000,000
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
September 30, 1999 $17,500,000
December 31, 1999 $18,000,000
March 31, 2000 $18,500,000
June 30, 2000 $19,000,000
September 30, 2000 $20,000,000
December 31, 2000 $21,000,000
March 31, 2001 $21,500,000
June 30, 2001 $22,000,000
September 30, 2001 $22,000,000
December 31, 2001 $22,000,000
March 31, 2002 $22,000,000
June 30, 2002 $22,000,000
September 30, 2002 $22,000,000
December 31, 2002 $22,000,000
March 31, 2003 $22,000,000
June 30, 2003 $22,000,000
</TABLE>
9.10 Consolidated Interest Coverage Ratio. Holdings will not permit the
------------------------------------
Consolidated Interest Coverage Ratio for any Test Period ending on the last day
of any fiscal quarter of Holdings specified below to be less than the ratio set
forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
- -------------------- ---------
<S> <C>
March 31, 1998 2.50:1.00
June 30, 1998 2.50:1.00
September 30, 1998 2.50:1.00
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
December 31, 1998 2.75:1.00
March 31, 1999 2.85:1.00
June 30, 1999 2.95:1.00
September 30, 1999 3.05:1.00
December 31, 1999 3.15:1.00
March 31, 2000 3.25:1.00
June 30, 2000 3.35:1.00
September 30, 2000 3.45:1.00
December 31, 2000 3.55:1.00
March 31, 2001 3.65:1.00
June 30, 2001 3.75:1.00
September 30, 2001 3.75:1.00
December 31, 2001 3.75:1.00
March 31, 2002 3.75:1.00
June 30, 2002 3.75:1.00
September 30, 2002 3.75:1.00
December 31, 2002 3.75:1.00
March 31, 2003 3.75:1.00
June 30, 2003 3.75:1.00
</TABLE>
9.11 Adjusted Leverage Ratio. Holdings will not permit the Adjusted
-----------------------
Leverage Ratio on the last day of any fiscal quarter specified below to exceed
the respective ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
- -------------------- ---------
<S> <C>
December 31, 1997 4.25:1.00
March 31, 1998 4.25:1.00
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
June 30, 1998 4.25:1.00
September 30, 1998 4.00:1.00
December 31, 1998 3.75:1.00
March 31, 1999 3.75:1.00
June 30, 1999 3.75:1.00
September 30, 1999 3.50:1.00
December 31, 1999 3.25:1.00
March 31, 2000 3.25:1.00
June 30, 2000 3.25:1.00
September 30, 2000 3.00:1.00
December 31, 2000 2.75:1.00
March 31, 2001 2.75:1.00
June 30, 2001 2.75:1.00
September 30, 2001 2.50:1.00
December 31, 2001 2.25:1.00
March 31, 2002 2.25:1.00
June 30, 2002 2.25:1.00
September 30, 2002 2.25:1.00
December 31, 2002 2.25:1.00
March 31, 2003 2.25:1.00
June 30, 2003 2.25:1.00
</TABLE>
Notwithstanding anything contrary contained above or elsewhere in this
Agreement, (i) all calculations of compliance with this Section 9.11 shall be
made on a Pro Forma Basis and (ii) in no event shall the Adjusted Leverage Ratio
--- -----
be greater than the Maximum Permitted Acquisition Leverage Ratio upon the
consummation of, and after giving effect on a Pro Forma Basis to, any Permitted
--- -----
Acquisition effected after the Merger Date.
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<PAGE>
9.12 Limitation on Voluntary Payments and Modifications of Indebtedness;
-------------------------------------------------------------------
Modifications of Certificate of Incorporation, By-Laws and Certain Other
- ------------------------------------------------------------------------
Agreements; Issuances of Capital Stock; etc. Holdings will not, and will not
- --------------------------------------------
permit any of its Subsidiaries to:
(i) amend or modify, or permit the amendment or modification of,
any provision of any Shareholder Subordinated Note or after the incurrence
or issuance thereof, any Qualified Preferred Stock or Permitted Debt or of
any agreement (including, without limitation, any purchase agreement,
indenture, loan agreement, security agreement or certificate of
designation) relating thereto in a manner that could reasonably be expected
to in any way be adverse to the interests of the Banks;
(ii) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption, repurchase or acquisition
for value of (i) the Permitted Subordinated Indebtedness or (ii) prior to
the Merger Date, the Existing Indebtedness except in accordance with the
provisions of Sections 5B and 5C;
(iii) make (or give any notice in respect of) any principal or
interest payment on, or any redemption or acquisition for value of, any
Shareholder Subordinated Note, except to the extent permitted by Section
9.06(ii); and
(iv) amend, modify or change in any way adverse to the interests
of the Bank in any material respect any Tax Allocation Agreement, any
Management Agreement, any Equity Financing Document, any Acquisition
Document, its Certificate of Incorporation (including, without limitation,
by the filing or modification of any certificate of designation other than
any certificates of designation relating to Qualified Preferred Stock or
Disqualified Preferred Stock issued as permitted here in), By-Laws, or any
agreement entered into by it, with respect to its capital stock (including
any Shareholders' Agreement), or enter into any new Tax Allocation
Agreement, Management Agreement or agreement with respect to its capital
stock which could reasonably be expected to in any way be adverse to the
interests of the Banks; provided that the foregoing clause shall not
restrict the ability of Holdings and its Subsidiaries to amend their
respective certificates of incorporation to authorize the issuance of
capital stock otherwise permitted to be issued pursuant to the terms of
this Agreement.
9.13 Limitation on Issuance of Capital Stock. (a) Holdings will
---------------------------------------
not, and will not permit any of its Subsidiaries to, issue (i) any Preferred
Stock (other than Disqualified Preferred Stock and Qualified Preferred Stock
issued pursuant to clauses (c) and (d) below, respectively) or any options,
warrants or rights to purchase Preferred Stock or (ii) any redeemable common
stock unless, in either case, the issuance thereof is, and all terms thereof
are, satisfactory to the Required Banks in their sole discretion.
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<PAGE>
(b) Holdings shall not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and additional issuances which do not
decrease the percentage ownership of Holdings or any of its Subsidiaries in any
class of the capital stock of such Subsidiaries, (iii) to qualify directors to
the extent required by applicable law and (iv) Subsidiaries formed after the
Effective Date pursuant to Section 9.15 may issue capital stock in accordance
with the requirements of Section 9.15. All capital stock issued in accordance
with this Section 9.13(b) shall, to the extent required by the Pledge Agreement,
be delivered to the Collateral Agent for pledge pursuant to the Pledge
Agreement.
(c) Holdings may issue Disqualified Preferred Stock so long as (i) no
Default or Event of Default then exists or would exist immediately after giving
effect to the respective issuance, (ii) the aggregate liquidation preference for
all Disqualified Preferred Stock issued after the Effective Date pursuant to
this Section 9.13(c) shall not to exceed, when combined with the aggregate
principal amount of all then outstanding Indebtedness permitted by Section
9.04(j), $15,000,000, (iii) with respect to each issue of Disqualified Preferred
Stock, the gross cash proceeds therefrom (or in the case of Disqualified
Preferred Stock directly issued as consideration for a Permitted Acquisition,
the fair market value thereof (as determined in good faith by Holdings) of the
assets received therefor) shall not exceed the liquidation preference thereof at
the time of issuance, (iv) calculations are made by Holdings of compliance with
the covenants contained in Sections 9.08 through 9.11 for the Calculation Period
most recently ended prior to the date of the respective issuance of Disqualified
Preferred Stock, on a Pro Forma Basis after giving effect to the respective
--- -----
issuance of Disqualified Preferred Stock, and such calculations shall show that
such financial covenants would have been complied with if such issuance of
Disqualified Preferred Stock had been consummated on the first day of the
respective Calculation Period, and (v) Holdings shall furnish to the Agent a
certificate by an Authorized Officer of Holdings certifying to the best of his
or her knowledge as to compliance with the requirements of this Section 9.13(c)
and containing the pro forma calculations required by the preceding clause (iv).
--- -----
(d) Holdings may issue Qualified Preferred Stock so long as, with
respect to each issue of Qualified Preferred Stock, Holdings receives reasonably
equivalent consideration (as determined in good faith by Holdings).
9.14 Limitation on Certain Restrictions on Subsidiaries. (a)
--------------------------------------------------
Holdings will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective,
any encumbrance or restriction on the ability of any such Subsidiary to (x) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary of
Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings,
(y) make loans or advances to Holdings or any Subsidiary of Holdings or (z)
transfer any of its properties or assets to Holdings or any of its Subsidiaries,
except for such encumbrances or restrictions existing under
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<PAGE>
or by reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) the provisions contained in the Existing Indebtedness, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of SMT or a Subsidiary of SMT and (v) customary provisions
restricting assignment of any contract entered into by SMT or any Subsidiary of
SMT in the ordinary course of business.
(b) Holdings will not, and will not permit any of its Subsidiaries to,
directly or indirectly agree to any consensual encumbrance or restriction on the
ability of any Non-Subsidiary Joint Venture to (x) pay dividends or make other
distributions on its capital stock or other interests or participations in its
profits owned by Holdings or any Subsidiary of Holdings or (y) make loans or
advances to Holdings or any Subsidiary of Holdings, except for such encumbrances
or restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Non-Subsidiary Joint Venture, (iv) customary provisions restricting assignment
of any contract entered into by such Joint Venture in the ordinary course of
business, (v) normal restrictions (as determined in good faith by SMT)
applicable to any Non-Subsidiary Joint Venture at the time of the establishment
thereof (so long as not in connection with a Permitted Acquisition) and (vi)
restrictions applicable to any Non-Subsidiary Joint Venture existing at the time
of the acquisition thereof as a result of an Investment pursuant to Section 9.05
or Permitted Acquisition effected in accordance with Section 8.14; provided that
the restrictions applicable to the respective Non-Subsidiary Joint Venture are
not made worse, or more burdensome, from the perspective of Holdings and its
Subsidiaries, than those as in effect immediately before giving effect to the
consummation of the respective Investment or Permitted Acquisition.
9.15 Limitation on the Creation of Subsidiaries and Joint Ventures.
-------------------------------------------------------------
(a) Notwithstanding anything to the contrary contained in this Agreement,
Holdings will not, and will not permit any of its Subsidiaries to, establish,
create or acquire after the Effective Date any Subsidiary (other than Joint
Ventures permitted to be established in accordance with the requirements of
Section 9.05(l)); provided that, on and after the Merger Date, the (A) Borrower
--------
and its Wholly-Owned Subsidiaries shall be permitted to establish or create
Wholly-Owned Subsidiaries so long as, in each case, (i) at least 15 days' prior
written notice thereof is given to the Agent (or such shorter period of time as
is acceptable to the Agent), (ii) the capital stock of such new Subsidiary is
promptly pledged pursuant to, and to the extent required by, this Agreement and
the Pledge Agreement and the certificates, if any, representing such stock,
together with stock powers duly executed in blank, are delivered to the
Collateral Agent, (iii) such new Subsidiary (other than a Foreign Subsidiary
except to the extent otherwise required pursuant to Section 8.12) promptly
executes a counterpart of the Subsidiaries Guaranty, the Pledge Agreement and
the Security Agreement, and (iv) to the extent requested by the Agent or the
Required Banks, such new Subsidiary takes all actions required pursuant to
Section 8.11 and (B) Subsidiaries may be acquired pursuant to Permitted
Acquisitions so long as, in each such case (i) with respect to each Wholly-Owned
Subsidiary acquired pursuant to a Permitted Acquisition, the actions specified
in preceding clause (A) shall be taken and (ii) with respect
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<PAGE>
to each Subsidiary which is not a Wholly-Owned Subsidiary and is acquired
pursuant to a Permitted Acquisition, all capital stock thereof owned by any
Credit Party shall be pledged pursuant to the Pledge Agreement. In addition,
each new Subsidiary that is required to execute any Credit Document shall
execute and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Section 5A as such new Subsidiary would
have had to deliver if such new Subsidiary were a Credit Party on the Initial
Borrowing Date.
(b) Holdings will not, and will not permit any of its Subsidiaries
to, enter into any Joint Ventures, except to the extent permitted by Section
9.05(l).
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
10.01 Payments. Any Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any Unpaid
Drawing, any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
10.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
10.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Sections 8.01(f)(i), 8.10, 8.13, 8.14 or 9, or (b) default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in Section 10.01, 10.02 or clause (a) of this Section 10.03)
contained in this Agreement and such default shall continue unremedied for a
period of at least 30 days after notice to the defaulting party by the Agent or
the Required Banks; or
10.04 Default Under Other Agreements. (a) Holdings or any of its
------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which Indebtedness was created or (ii) default in
the observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to whether any notice is
required), any such Indebtedness to become due prior to its stated maturity; or
(b) any Indebtedness (other than the Obligations) of Holdings or any of its
Subsidiaries shall be declared to be due and pay able, or shall be required to
be prepaid other than by a regularly scheduled required prepayment or as a
mandatory prepayment
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<PAGE>
(unless such required prepayment or mandatory prepayment results from a default
thereunder or an event of the type that constitutes an Event of Default), prior
to the stated maturity thereof; provided, that it shall not constitute an Event
--------
of Default pursuant to clause (a) or (b) of this Section 10.04 unless the
principal amount of any one issue of such Indebtedness, or the aggregate amount
of all such Indebtedness referred to in clauses (a) and (b) above, exceeds
$1,000,000 at any one time; or
10.05 Bankruptcy, etc. Holdings or any of its Subsidiaries shall
----------------
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Holdings or any of its Subsidiaries and the petition is not controverted within
20 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Holdings or any of its
Subsidiaries; or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries; or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of the Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
within the following 30 days, any Plan which is subject to Title IV of ERISA
shall have had or is likely to have a trustee appointed to administer such Plan,
any Plan which is subject to Title IV of ERISA is, shall have been or is likely
to be terminated or to be the subject of termination proceedings under ERISA,
any Plan shall have an Unfunded Current Liability, a contribution required to be
made with respect to a Plan has not been timely made, Holdings or any Subsidiary
of Holdings or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section
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<PAGE>
4980B(g)(2) of the Code) under Section 4980B of the Code, or Holdings or any
Subsidiary of Holdings has incurred or is likely to incur liabilities pursuant
to one or more employee welfare benefit plans (as defined in Section 3(1) of
ERISA) that provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or Plans; (b) there shall
result from any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a liability;
and (c) such lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Banks, has had, or could reasonably be
expected to have, a Material Adverse Effect; or
10.07 Security Documents. (a) Any Security Document shall cease to
------------------
be in full force and effect, or shall cease to give the Collateral Agent the
Liens, rights, powers and privileges purported to be created thereby in favor of
the Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 9.03), and subject to no other Liens (except as
permitted by Section 9.03), or (b) any Credit Party shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue beyond any cure or grace period specifically applicable thereto
pursuant to the terms of any such Security Document; or
10.08 Guaranties. The Guaranties or any provision thereof shall
----------
cease to be in full force and effect, or any Guarantor or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under any Guaranty or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
---------
against Holdings or any of its Subsidiaries involving a liability (to the extent
not paid or not fully covered by insurance) in excess of $1,000,000 for all such
judgments and decrees and all such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
10.10 Ownership. A Change of Control Event shall have occurred;
---------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrowers, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against any Guarantor or the Borrowers, except as otherwise
specifically provided for in this Agreement (provided, that if an Event of
--------
Default specified in Section 10.05 shall occur with respect to the Borrowers,
the result which would occur upon the giving of written notice by the Agent as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment terminated,
whereupon the Commitment of each Bank shall forthwith terminate immediately and
any Commitment Fees shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Loans and all Obligations
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<PAGE>
owing hereunder (including Unpaid Drawings) to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers; (iii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms; (v) direct SMT to pay (and SMT hereby agrees upon
receipt of such notice, or upon the occurrence of any Event of Default specified
in Section 10.05, to pay) to the Collateral Agent at the Payment Office such
additional amounts of cash, to be held as security for SMT's reimbursement
obligations in respect of Letters of Credit then outstanding, equal to the
aggregate Stated Amount of all Letters of Credit then outstanding; and (vi)
apply any cash collateral as provided in Section 4.02.
SECTION 11. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acknowledgment Agreement" shall mean the Acknowledgment Agreement to
be executed by SMT immediately after the consummation of the Merger, in the form
of Exhibit O.
"Acquisition" shall mean, collectively, (x) the purchase by
Acquisition Corp. for cash of the outstanding Shares pursuant to the Offer to
Purchase and (y) the Merger.
"Acquisition Corp." shall have the meaning provided in the first
paragraph of this Agreement.
"Acquisition Corp. Guaranty" shall mean the guaranty of Acquisition
Corp. pursuant to Section 15.
"Acquisition Documents" shall mean and include the Tender Offer
Documents and the Merger Documents.
"Additional Security Documents" shall have the meaning provided in
Section 8.11.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate
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<PAGE>
determined by the Agent on the basis of quotations for such certificates
received by it from three certificate of deposit dealers in New York of
recognized standing or, if such quotations are unavailable, then on the basis of
other sources reasonably selected by the Agent, by (y) a percentage equal to
100% minus the stated maximum rate of all reserve requirements as specified in
Regulation D applicable on such day to a three-month certificate of deposit of a
member bank of the Federal Reserve System in excess of $100,000 (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves), plus (2) the then daily net annual assessment rate as estimated by
the Agent for determining the current annual assessment payable by BTCo to the
Federal Deposit Insurance Corporation for insuring three month certificates of
deposit.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at Consolidated Net Income
for such period less all net non-cash gains included in arriving at Consolidated
Net Income for such period; provided that gains or losses from sales of assets
(other than sales of inventory in the ordinary course of business) shall be
excluded to the extent same would otherwise be included in Adjusted Consolidated
Net Income for the respective period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Adjusted Leverage Ratio" shall mean, on any date, the ratio of (i)
Consolidated Debt on such date to (ii) Consolidated EBITDA for the Test Period
most recently ended on or prior to such date (determined after giving effect to
the proviso to the definition of Consolidated EBITDA contained herein). All
calculations of the Adjusted Leverage Ratio shall be made on a Pro Forma Basis,
--- -----
with determinations of Adjusted Leverage Ratio to give effect to all adjustments
(including, without limitation, those specified in clause (v)) contained in the
definition of "Pro Forma Basis" contained herein.
--- -----
"Adjusted RL Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's RL Percentage and (y) at a time when a Bank
Default exists, (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan Commitment at such time by the Adjusted Total
Revolving Loan Commitment at such time, it being understood that all references
herein to Revolving Loan Commitments and the Adjusted Total Revolving Loan
Commitment at a time when the Total Revolving Loan Commitment or Adjusted Total
Revolving Loan Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such
termination, provided that (A) no Bank's Adjusted RL Percentage shall
--------
change upon the occurrence of a Bank Default from that in effect
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<PAGE>
immediately prior to such Bank Default if after giving effect to such Bank
Default, and any repayment of Revolving Loans and Swingline Loans at such time
pursuant to Section 4.02(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks,
plus (ii) the aggregate outstanding principal amount of Swingline Loans, plus
(iii) the Letter of Credit Outstandings, exceed the Adjusted Total Revolving
Loan Commitment; (B) the changes to the Adjusted RL Percentage that would have
become effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks, plus (ii) the aggregate outstanding principal amount of
Swingline Loans, plus (iii) the Letter of Credit Outstandings, is equal to or
less than the Adjusted Total Revolving Loan Commitment; and (C) if (i) a Non-
Defaulting Bank's Adjusted RL Percentage is changed pursuant to the preceding
clause (B) and (ii) any repayment of such Bank's Revolving Loans or of Unpaid
Drawings or of Swingline Loans that were made during the period commencing after
the date of the relevant Bank Default and ending on the date of such change to
its Adjusted RL Percentage must be returned to SMT as a preferential or similar
payment in any bankruptcy or similar proceeding of SMT, then the change to such
Non-Defaulting Bank's Adjusted RL Percentage effected pursuant to said clause
(B) shall be reduced to that positive change, if any, as would have been made to
its Adjusted RL Percentage if (x) such repayments had not been made and (y) the
maximum change to its Adjusted RL Percentage would have resulted in the sum of
the outstanding principal of Revolving Loans made by such Bank plus such Bank's
new Adjusted RL Percentage of the outstanding principal amount of Swingline
Loans and of Letter of Credit Outstandings equalling such Bank's Revolving Loan
Commitment at such time.
"Adjusted Total Available Revolving Loan Commitment" shall mean at any
time the Total Available Revolving Loan Commitment at such time less the
aggregate Available Revolving Loan Commitments of all Defaulting Banks at such
time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person; provided, however, that for purposes of Section 9.07,
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an Affiliate of Holdings shall include any Person that directly or indirectly
owns more than 5% of any class of the capital stock of Holdings and any officer
or director of Holdings or any such Person.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 12.10.
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"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Apollo Group" shall mean Apollo Advisors, L.P., Apollo Investment
Fund, L.P., Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P., Apollo U.K. Partners III, L.P., AIF II, L.P., and Apollo Advisors II,
L.P., all Delaware limited partnerships (except that Apollo U.K. Partners III,
L.P. is a limited partnership organized under the laws of England).
"Apollo Management Agreement" shall mean the consulting agreement,
dated August 6, 1997, between Apollo Advisors, L.P. and Acquisition Corp.
"Applicable Excess Cash Flow Percentage" shall mean, with respect to
any Excess Cash Flow Payment Date 75%; provided if on the last day of the
--------
relevant Excess Cash Flow Payment Period, the Interest Reduction Discount then
in effect is 3/4 of 1% or greater, then the Applicable Excess Cash Flow
Percentage shall instead be 50%.
"Applicable Margin" shall mean a percentage per annum equal to (i) in
the case of Revolving Loans (x) maintained as Base Rate Loans, 2.00% less the
then applicable Interest Reduction Discount and (y) maintained as Eurodollar
Loans, 3.00% less the then applicable Interest Reduction Discount and (ii) in
the case of Term Loans (x) maintained as Base Rate Loans, 2.25% less the then
applicable Interest Reduction Discount and (y) maintained as Eurodollar Loans,
3.25% less the then applicable Interest Reduction Discount.
"Applicable Prepayment Percentage" shall mean, at any time, (i) for
purposes of Sections 4.02(c) and 4.02(d), 100%, provided that if at any time the
Interest Reduction Discount then in effect is 3/4 of 1% or greater, the
Applicable Prepayment Percentage shall instead be 75% and (ii) for purposes of
Section 4.02(e), 50%, provided that if at any time the Interest Reduction
Discount then in effect is 3/4 of 1% or greater, the Applicable Prepayment
Percentage shall instead be 0%.
"Applicable RL Commitment Fee Percentage" shall mean, at any time, a
percentage per annum equal to 1/2 of 1%; provided, that if at any time the
--------
Interest Reduction Discount then in effect is 3/4 of 1% or greater, then the
Applicable RL Commitment Fee Percentage shall instead be 3/8 of 1%.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person other than Holdings or any
Wholly-Owned Subsidiary of Holdings of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding the sale by such Person of its own capital stock) of Holdings or such
Subsidiary other than (i) sales, transfers or other dispositions of inventory
made in the ordinary course of business, (ii) dispositions or transfers arising
out of, or in connection with, the events described in clauses (i) and (ii) of
the definition of Recovery Event, (iii) any sale or other disposition of assets
pursuant to a Permitted Sale-Leaseback Transaction effected in
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accordance with the definition thereof and the requirements of Section 9.02(k),
(iv) other sales and dispositions that generate Net Sale Proceeds of less than
$250,000 in the aggregate in any fiscal year of Holdings and (v) any sale or
other disposition of Margin Stock after the Initial Borrowing Date and prior to
the Merger Date.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit L (appropriately
completed).
"Authorized Officer" shall mean, with respect to (i) delivering
Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and
similar notices, and delivering financial information and officer's certificates
pursuant to this Agreement, any treasurer or other financial officer of the
Borrower and (ii) any other matter in connection with this Agreement or any
other Credit Document, any officer (or a person or persons so designated by any
two officers) of Holdings or either Borrower, in each case to the extent
reasonably acceptable to the Agent.
"Available JV Basket Amount" shall mean, on any date of determination,
an amount equal to the sum of (i) $7,000,000 minus (ii) the aggregate amount of
-----
Investments made (including for such purpose the fair market value of any MRI
Unit contributed to any Joint Venture (as determined in good faith by senior
management of SMT), net of Indebtedness and, without duplication, Capitalized
Lease Obligations assigned to, and assumed by, the respective Joint Venture in
connection therewith) pursuant to Section 9.05(l) after the Effective Date,
minus (iii) the aggregate amount of Indebtedness or other obligations (whether
absolute, accrued, contingent or otherwise and whether or not due) of any Joint
Venture for which Holdings or any of its Subsidiaries (other than the respective
Joint Venture) is liable, minus (iv) all payments made by Holdings or any of its
-----
Subsidiaries (other than the respective Joint Venture) in respect of
Indebtedness or other obligations of the respective Joint Venture (including,
without limitation, payments in respect of obligations described in preceding
clause (iii), plus (v) the amount of any increase to the Available Basket Amount
made after the Effective Date in accordance with the provisions of Section
9.05(l). In connection with the foregoing, it is understood that the
acquisition of an Acquired Person which has ownership interests in one or more
Joint Ventures, pursuant to a Permitted Acquisition effected in accordance with
the relevant requirements of this Agreement shall not be deemed to constitute an
Investment pursuant to Section 9.05(l) and the Available JV Basket Amount shall
not be reduced as a result of the payment of consideration owing to effect the
Permitted Acquisition (although the Available JV Basket Amount would be affected
to the extent preceding clauses (iii) or (iv) apply with respect to the Joint
Venture so acquired or to the extent additional Investments are made in the
respective Joint Venture pursuant to Section 9.05(l)).
"Available Proceeds" shall have the meaning provided in Section 5A.08.
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"Available Revolving Loan Commitment" for any Bank shall mean, at any
time, the Revolving Loan Commitment of such Bank as then in effect less such
Bank's RL Percentage of the amount of the Blocked Commitment, if any, at such
time.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.03 or (ii) a Bank having notified the Agent and/or the Borrower
that it does not intend to comply with the obligations under Section 1.01(b),
1.01(d) or 2.03, in the case of either clause (i) or (ii) above as a result of
the appointment of a receiver or conservator with respect to such Bank at the
direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the highest of (x) the rate which
is 1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate, (y) the rate
which is 1/2 of 1% in excess of the Federal Funds Rate and (z) the Prime Lending
Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Blocked Commitment" shall mean, at any time, the aggregate
outstanding principal amount of Existing Indebtedness (excluding Subleased
Existing Indebtedness) at such time (giving effect to any reduction thereto to
be effected on such date with proceeds of Revolving Loans or cash on hand);
provided further that, to the extent the aggregate principal amount of Existing
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Indebtedness (excluding Subleased Existing Indebtedness) is on any date reduced
to an amount less than $3.0 million (with such date being herein called the
"Blocked Commitment Termination Date"), the Blocked Commitment shall be reduced
to (and shall thereafter be) zero.
"Blocked Commitment Termination Date" shall have the meaning assigned
that term in the definition of Blocked Commitment.
"Borrower" shall mean (x) prior to the Merger Date, each of (i)
Acquisition Corp. in the case of Term Loans and (ii) SMT in the case of
Revolving Loans and (y) at all times thereafter, SMT.
"Borrowing" shall mean and include (i) the borrowing of Swingline
Loans from BTCo on a given date and (ii) the borrowing of one Type of Loan
pursuant to a single
Tranche by a Borrower from all of the Banks having Commitments with respect to
such Tranche on a
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pro rata basis on a given date (or resulting from conversions on a given date),
- --- ----
having in the case of Eurodollar Loans the same Interest Period; provided, that
--------
Base Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of
any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall have the meaning provided in Section 8.14.
"Capital Expenditures" shall mean, with respect to any Person, for any
period, all expenditures by such Person which should be capitalized in
accordance with GAAP during such period, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with GAAP)
and the amount of all Capitalized Lease Obligations incurred by such Person
during such period.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of SMT or any of its Subsidiaries in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
--------
United States is pledged in support thereof) having maturities of not more than
six months from the date of acquisition, (ii) time deposits, certificates of
deposit and bankers' acceptances of any Bank or any commercial bank having, or
which is the principal banking subsidiary of a bank holding company organized
under the laws of the United States, any State thereof, the District of Columbia
or any foreign jurisdiction having capital, surplus and undivided profits
aggregating in excess of $200,000,000 and having a long-term unsecured debt
rating of at least "A" or the equivalent thereof from S&P's or "A2" or the
equivalent thereof from Moody's, with maturities of not more than six months
from the date of acquisition by such Person, (iii) repurchase agreements with a
term of not more than 30
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days, involving securities of the types described in preceding clause (i), and
entered into with commercial banks meeting the requirements of preceding clause
(ii), (iv) commercial paper issued by any Person incorporated in the United
States rated at least A-1 or the equivalent thereof by S&P's or at least P-1 or
the equivalent thereof by Moody's and in each case maturing not more than six
months after the date of acquisition by such Person, (v) investments in money
market funds substantially all of whose assets are comprised of securities of
the types described in clauses (i) through (iv) above and (vi) demand deposit
accounts maintained in the ordinary course of business.
"Change of Control Event" shall mean, (I) at any time prior to the
consummation of a Qualified IPO, (a) Holdings shall cease to own directly 100%
on a fully diluted basis of the economic and voting interest in Acquisition
Corp's (or SMT's, as its successor by merger) capital stock or (b) prior to the
Merger Date, Acquisition Corp. shall cease to own directly at least 51% on a
fully diluted basis of the economic and voting interest in SMT's capital stock,
provided that this clause (b) shall not be applicable if the 90% Requirement is
- --------
satisfied, or (c) Apollo Group and its Affiliates shall cease to own on a fully
diluted basis in the aggregate at least 30% of the economic and voting interest
in Holdings' capital stock or (d) Apollo Group and its Affiliates, together with
the Management Participants and other investors which own shares of Holdings
Common Stock on the Initial Borrowing Date, shall cease to own on a fully
diluted basis in the aggregate at least a majority of the outstanding Voting
Stock of Holdings or (e) any Person or "group" (within the meaning of Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as in effect on the
Effective Date, other than the Permitted Holders, shall (A) have acquired
beneficial ownership of 30% or more on a fully diluted basis of the voting
and/or economic interest in Holdings' capital stock or (B) obtained the power
(whether or not exercised) to elect a majority of Holdings' directors or (e) the
Board of Directors of Holdings shall cease to consist of a majority of
Continuing Directors or (f) a "change of control" or similar event shall occur
as provided in any Existing Indebtedness, Permitted Debt, Disqualified Preferred
Stock or Qualified Preferred Stock, to the extent the outstanding principal
amount or liquidation preference, as the case may be, of such Existing
Indebtedness, Permitted Debt, Disqualified Preferred Stock or Qualified
Preferred Stock exceeds $10,000,000 or (II) at any time after a Qualified IPO,
(a) Holdings shall cease to own directly 100% on a fully diluted basis of the
economic and voting interest in the Borrower's capital stock or (b) any Person
or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as in effect on the Effective Date), other than the
Permitted Holders, shall have acquired beneficial ownership of 25% or more on a
fully diluted basis of the voting and/or economic interest in Holdings' capital
stock and Apollo Group and its Affiliates shall own less than such Person or
"group" on a fully diluted basis of the economic and voting interest in
Holdings' capital stock or (c) the Board of Directors of Holdings shall cease to
consist of a majority of Continuing Directors or (d) a "change of control" or
similar event shall occur as provided in any Existing Indebtedness, Permitted
Debt, Disqualified Preferred Stock or Qualified Preferred Stock, to the extent
the outstanding principal amount or liquidation preference, as the case may be,
of such Existing Indebtedness, Permitted Debt, Disqualified Preferred Stock or
Qualified Preferred Stock exceeds $10,000,000.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of
this Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5A.13.
"Consolidated Current Assets" shall mean, at any time, the current
assets (other than cash, Cash Equivalents and deferred income taxes to the
extent included in current assets) of Holdings and its Subsidiaries at such time
determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of Holdings and its Subsidiaries determined on a
consolidated basis, but excluding deferred income taxes, restructuring costs or
reserves, litigation costs or reserves and the current portion of and accrued
but unpaid interest on any Indebtedness under this Agreement and any other long-
term Indebtedness which would otherwise be included therein.
"Consolidated Debt" shall mean, at any time, the sum of (without
duplication) (i) all Indebtedness of Holdings and its Subsidiaries as would be
required to be reflected on the liability side of a balance sheet of such Person
in accordance with GAAP as determined on a consolidated basis, (ii) all
Indebtedness of Holdings and its Subsidiaries of the type described in clauses
(iii) and (vii) of the definition of Indebtedness and (iii) all Contingent
Obligations of Holdings and its Subsidiaries in respect of Indebtedness of other
Persons of the type referred to in preceding clauses (i) and (ii) of this
definition; provided, that for purposes of this definition, (i) the amount of
--------
Indebtedness in respect of Interest Rate Protection Agreements shall be at any
time the unrealized net loss position, if any, of Holdings and/or its
Subsidiaries thereunder on a marked-to-market basis determined no more than one
month prior to such time and (ii) any Disqualified Preferred Stock of Holdings
and any Preferred Stock of any of its Subsidiaries shall be treated as
Indebtedness, with an amount equal to the greater of the liquidation preference
or the maximum fixed repurchase price of any such outstanding Preferred Stock
deemed to be a component of Consolidated Debt.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income of Holdings and its Subsidiaries, determined on a consolidated basis,
before Consolidated Interest Expense (to the extent deducted in arriving at
Consolidated Net Income) and provision for taxes based on income or gains or
losses from sales of assets other than inventory sold in
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the ordinary course of business, in each case that were included in arriving at
Consolidated Net Income.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of (i) all amortization and depreciation
and other non-cash items and (ii) any management fees and consulting fees paid
pursuant to, and in accordance with the requirements of, clauses (iii) and (vi)
of Section 9.07 during such period, in each case that were deducted in arriving
at Consolidated EBIT for such period; provided that (x) without duplication of
--------
amounts already included in Consolidated EBITDA, Consolidated EBITDA for any
period shall be adjusted by adding thereto the amount of Total Non-Consolidated
Joint Venture EBITDA for the respective period and (y) for purposes of any
determination of the Adjusted Leverage Ratio or the Leverage Ratio in this
Agreement, Consolidated EBITDA for any Test Period shall mean the product of (x)
Consolidated EBITDA for the two most recent fiscal quarters ended during such
Test Period multiplied by (y) 2.
"Consolidated Fixed Charge Coverage Ratio" for any period shall mean
the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" for any period shall mean the sum,
without duplication, of (i) Consolidated Interest Expense for such period, (ii)
the amount of all Capital Expenditures made by Holdings and its Subsidiaries
during such period (other than Capital Expenditures made with the proceeds or
credits from equipment exchanges, asset sales or insurance proceeds from any
Recovery Event to the extent such proceeds are not required to be applied by the
Borrower as a mandatory repayment pursuant to Section 4.02(c) or (f), as the
case may be), and (iii) the scheduled principal amount of all amortization
payments on all Indebtedness (excluding payments pursuant to the Refinancing and
the principal component of any Capitalized Lease Obligation to the extent the
Capital Expenditures financed pursuant to such Capitalized Lease Obligation were
made after the Initial Borrowing Date and were included in the determination of
Consolidated Fixed Charges in a prior period) of Holdings and its Subsidiaries
for such period (as determined on the first day of the respective period).
Notwithstanding anything to the contrary contained above, to the extent
Consolidated Fixed Charges is to be determined for any Test Period which ends
prior to the first anniversary of the Initial Borrowing Date, Consolidated Fixed
Charges for all portions of such period occurring prior to the Initial Borrowing
Date shall be calculated in accordance with the definition of Test Period
contained herein.
"Consolidated Interest Coverage Ratio" for any period shall mean the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Holdings and its Subsidiaries for such period
(calculated without regard to any limitations on the payment thereof) plus,
without duplication, (i) that portion of Capitalized Lease Obligations of
Holdings and its Subsidiaries representing the interest factor
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for such period, and capitalized interest expense, plus (ii) the product of (x)
the amount of all cash Dividend requirements (whether or not declared or paid)
on Disqualified Preferred Stock of Holdings and on any Preferred Stock of any of
its Subsidiaries paid, accrued or scheduled to paid or accrued during such
period multiplied by (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
Federal, state, local and foreign tax rate (expressed as a decimal number
between one and zero) of Holdings as reflected in the audited consolidated
financial statements of Holdings for its most recently completed fiscal year,
which amounts described in preceding clause (ii) shall be treated as interest
expense of Holdings and its Subsidiaries for purposes of this definition
regardless of the treatment of such amounts under GAAP, in each case net of the
total consolidated cash interest income of Holdings and its Subsidiaries for
such period, but excluding the amortization of any deferred financing costs or
of any costs in respect of any Interest Rate Protection Agreement.
Notwithstanding anything to the contrary contained above, to the extent
Consolidated Interest Expense is to be determined for any Test Period which ends
prior to the first anniversary of the Initial Borrowing Date, Consolidated
Interest Expense for all portions of such period occurring prior to the Initial
Borrowing Date shall be calculated in accordance with the definition of Test
Period contained herein.
"Consolidated Net Income" shall mean, for any period, the net after
tax income of Holdings and its Subsidiaries determined on a consolidated basis,
without giving effect to any extraordinary or non-recurring non-cash gains or
non-cash losses to the extent not related to the operations of Holdings and its
Subsidiaries, any other non-cash expenses incurred or payments made in
connection with the Transaction, and without giving effect to gains and losses
from the sale or disposition of assets (other than sales or dispositions of
inventory, equipment, raw materials and supplies) by the Borrower and its
Subsidiaries; provided that the following items shall be excluded in computing
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Consolidated Net Income (without duplication): (i) the net income or net losses
of any Person in which any Person or Persons other than Holdings and its Wholly-
Owned Subsidiaries has an equity interest or interests, to the extent of such
equity interests held by Persons other than Holdings and its Wholly-Owned
Subsidiaries in such Person, (ii) except for determinations expressly required
to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued
--- -----
prior to the date it becomes a Wholly-Owned Subsidiary or all or substantially
all of the property or assets of such Person are acquired by a Wholly-Owned
Subsidiary and (iii) the net income of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
of such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Subsidiary.
"Consolidated Subsidiary" shall mean each Subsidiary of SMT the
financial results of which are consolidated with those of Holdings or SMT, in
accordance with GAAP, for financial reporting purposes.
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"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
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the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection or standard contractual indemnities entered into, in each
case in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director if such director's nomination for the
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean Holdings, the Borrowers and each Subsidiary
Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Existing Indebtedness" shall have the meaning provided in
Section 5B.01.
"Designated Indebtedness" shall have the meaning provided in Section
5A.10.
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"Disqualified Preferred Stock" shall mean any Preferred Stock of
Holdings other than Qualified Preferred Stock.
"Dividend" shall have the meaning provided in Section 9.06.
"Documents" shall mean and include (i) the Credit Documents, (ii) the
Tender Offer Documents, (iii) the Refinancing Documents, (iv) the Equity
Financing Documents, (v) the Merger Documents, (vi) on and after the execution
and delivery thereof, the Merger Bridge Loan Documents and (vii) all other
documents, agreements and instruments executed in connection with the
Transaction.
"Domestic Subsidiary" shall mean each Subsidiary of Holdings
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank, mutual
fund, financial institution, a "qualified institutional buyer" (as defined in
Rule 144A of the Securities Act), any fund that invests in bank loans or any
other "accredited investor" (as defined in Regulation D of the Securities Act)
(other than an individual).
"Employee Benefit Plans" shall have the meaning set forth in Section
5A.13.
"Employment Agreements" shall have the meaning set forth in Section
5A.13.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by Holdings or any of its
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit
issued to Holdings or any of its Subsidiaries under any such law, including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Law" shall mean any federal, state or local policy,
statute, law, rule, regulation, ordinance, code or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
(collectively, "Laws")), relating to the environment, or Hazardous Materials or
health and safety to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
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"Equity Financing" shall mean the issuance by Holdings of Holdings
Common Stock to the Equity Investors on the Initial Borrowing Date.
"Equity Financing Documents" shall mean all of the agreements
governing, or relating to, the Equity Financing.
"Equity Investors" shall mean and include (i) the Apollo Group and
(ii) the Management Participants.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued there under. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or a Subsidiary of the Holdings would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of Holdings or a Subsidiary of
Holdings being or having been a general partner of such person.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of
1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by BTCo for U.S. dollar deposits of amounts in same day funds comparable
to the outstanding principal amount of the Eurodollar Loan of BTCo for which an
interest rate is then being determined with maturities comparable to the
Interest Period to be applicable to such Eurodollar Loan, determined as of 10:00
A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Adjusted Consolidated Net Income for such period, (ii) without
duplication of amounts already included in Adjusted Consolidated Net Income, the
Total Non-Consolidated Joint Venture EBITDA for such period and (iii) the
decrease, if any, in Adjusted Consolidated
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Working Capital from the first day to the last day of such period, minus (b) the
sum of (i) the amount of Capital Expenditures made by SMT and its Subsidiaries
on a consolidated basis during such period, except to the extent financed with
the proceeds of Indebtedness (other than the proceeds of Revolving Loans) or
pursuant to Capitalized Lease Obligations or with proceeds of asset sales or
asset trade-ins, (ii) the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of SMT and its Subsidiaries and the permanent
repayment of the principal component of Capitalized Lease Obligations of SMT and
its Subsidiaries (excluding (1) payments pursuant to the Refinancing, (2)
payments with proceeds of asset sales, (3) payments with the proceeds of
Indebtedness or equity and (4) payments of Loans or other Obligations, provided
--------
that repayments of Loans shall be deducted in determining Excess Cash Flow if
such repayments were (x) required as a result of a Scheduled Commitment
Reduction under Section 3.03 or a Scheduled Repayment under Section 4.02 or (y)
made as a voluntary prepayment pursuant to Section 4.01 with internally
generated funds (but in the case of a voluntary prepayment of Revolving Loans,
only to the extent accompanied by a voluntary reduction to the Total Revolving
Loan Commitment)) during such period and (iii) the increase, if any, in Adjusted
Consolidated Working Capital from the first day to the last day of such period.
"Excess Cash Flow Payment Date" shall mean the date occurring 120 days
after the last day of a fiscal year of Holdings (in either case beginning with
the fiscal year ending on December 31, 1998).
"Excess Cash Flow Payment Period" shall mean, with respect to each
Excess Cash Flow Payment Date, the immediately preceding fiscal year of
Holdings.
"Excluded Representation" shall mean the representations and
warranties contained in Section 7.04, Sections 7.10(a), (c) and (d), the last
sentence of Section 7.10(e), Section 7.12, Section 7.15, Section 7.17(a), the
first and second sentences of Section 7.17(b), Section 7.19 and the second and
third sentences of Section 7.20.
"Existing Indebtedness" shall have the meaning provided in Section
5A.10.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5A.13.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions
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received by the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date" shall mean (i) if the 90% Requirement has been
satisfied and the Merger Date has not occurred on or prior to October 15, 1997,
the Final Maturity Date shall be October 15, 1997, (ii) if the 90% Requirement
has not been satisfied and the Merger Date has not occurred within 120 days
following the Initial Borrowing Date, the date occurring on such 120th day
following the Initial Borrowing Date or (iii) if either (x) the 90% Requirement
has been satisfied and the Merger Date has occurred on or prior to October 15,
1997 or (y) the 90% Requirement has not been satisfied and the Merger Date has
occurred within 120 days following the Initial Borrowing Date, August 31, 2003.
"Foreign Subsidiary" shall mean each Subsidiary of Holdings other than
a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 13.07(a).
"Guaranteed Creditors" shall mean and include each of the Agent, the
Collateral Agent, the Banks and each party (other than any Credit Party) party
to an Interest Rate Protection Agreement or Other Hedging Agreement to the
extent that such party constitutes a Secured Creditor under the Security
Documents.
"Guaranteed Obligations" shall mean (i) the principal and interest on
each Note issued by each Borrower to each Bank, and Loans made, under this
Agreement and all reimbursement obligations and Unpaid Drawings with respect to
Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrowers to such
Bank, the Agent and the Collateral Agent now existing or hereafter incurred
under, arising out of or in connection with this Agreement or any other Credit
Document and the due performance and compliance with all the terms, conditions
and agreements contained in the Credit Documents by the Borrowers and (ii) all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of the
Borrowers or any of their respective Subsidiaries owing under any Interest Rate
Protection Agreement or Other Hedging Agreement entered into by the Borrowers or
any of their respective Subsidiaries with any Bank or any affiliate thereof
(even if such Bank subsequently ceases to be a Bank under this Agreement for any
reason) so long as such Bank or affiliate participate in such
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Interest Rate Protection Agreement or Other Hedging Agreement, and their
subsequent assigns, if any, whether now in existence or hereafter arising, and
the due performance and compliance with all terms, conditions and agreements
contained therein.
"Guarantor" shall mean Holdings, Acquisition Corp. and each Subsidiary
Guarantor.
"Guaranty" shall mean and include each of the Holdings Guaranty, the
Acquisition Corp. Guaranty and the Subsidiary Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Common Stock" shall have the meaning provided in Section
7.13(a).
"Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 14.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
----
obligations, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person,
provided, that Indebtedness shall not include trade payables and accrued
- --------
expenses, in each case arising in the ordinary course of business.
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"Initial Borrowing Date" shall mean the date upon which the initial
Borrowing of Loans occurs.
"Initial Refinancing" shall mean the refinancing of Designated
Indebtedness in accordance with the requirements of Section 5A.10.
"Intercompany Loan" shall have the meaning provided in Section
9.05(f).
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit M, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Holdback Amount" shall mean for each Bank, at any time for
the determination thereof, (x) in the event the 90% Requirement is not
satisfied, an amount equal to (i) $1.6 million less the aggregate amount paid or
then due and payable in respect of interest on Term Loans and the TL Commitment
Fees owing to the Banks multiplied by (ii) such Bank's TL Percentage and (y) in
the event the 90% Requirement is satisfied, an amount equal to (i) $800,000 less
the aggregate amount paid or then due and payable in respect of interest on Term
Loans and the TL Commitment Fees owing to the Banks multiplied by (ii) such
Bank's TL Percentage.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean initially 1/4 of 1%;
provided, that from and after the first day of any Margin Reduction Period (the
- --------
"Start Date") occurring after the last day of the first fiscal quarter of
Holdings ended after the Merger Date to and including the last day of such
Margin Reduction Period (the "End Date"), the Interest Reduction Discount shall
be (x) zero or (y) the respective percentage per annum set forth in clause (A),
(B), (C), (D) or (E) below if, but only if, as of the last day of the most
recent fiscal quarter or year, as the case may be, of Holdings ended immediately
prior to such Start Date (the "Test Date") the conditions in clause (A), (B),
(C), (D) or (E) below are met:
(A) 1/4 of 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 4.00:1.00 and the conditions set forth in none of clauses (B),
(C), (D) and (E) below are satisfied;
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(B) 1/2 of 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.50:1.00 and the conditions set forth in none of clauses (C),
(D) and (E) below are satisfied;
(C) 3/4 of 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.00:1.00 and the conditions set forth in neither clause (D) nor
(E) below are satisfied;
(D) 1% if, but only if, as of the Test Date for such Start Date the
Leverage Ratio for the Test Period ended on such Test Date shall be less
than 2.50:1.00 and the conditions set forth in clause (E) below are not
satisfied; or
(E) 1-1/4% if, but only if, as of the Test Period ended on such Test
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than or equal to 2.00:1.00.
The Leverage Ratio shall be determined for the relevant Test Period, in each
case taken as one accounting period, by delivery of an officer's certificate of
the Borrower to the Banks pursuant to Section 8.01(e) (or in the case of the
Test Period ended December 31, 1997, the IRD Eligibility Certificate), which
certificate shall set forth the calculation of the Leverage Ratio and the
Interest Reduction Discount which shall thereafter be applicable (until the same
is changed or ceases to apply in accordance with the following sentences). The
Interest Reduction Discount so determined shall apply, except as set forth
below, from the date on which such officer's certificate is delivered to the
Agent to the earlier of (x) the date on which the next certificate is delivered
to the Agent pursuant to Section 8.01(e) and (y) the 45th day following the
first day of the fiscal quarter immediately following the delivery of such
certificate to the Agent. Notwithstanding anything to the contrary contained
above, the Interest Reduction Discount shall be zero if no such officer's
certificate has been delivered to the Banks which sets forth the Leverage Ratio
for the relevant Test Period or the financial statements upon which any such
calculations are based have not been delivered, until such a certificate and/or
financial statements are delivered. Notwithstanding anything to the contrary
above in this definition, the Interest Reduction Discount shall be zero at all
times when there shall exist a Default or Event of Default. It is understood
and agreed that the Interest Reduction Discount as provided above shall in no
event be cumulative and only the Interest Reduction Discount available pursuant
to clause (A), (B), (C), (D) or (E), if any, contained in this definition shall
be applicable.
"Interim Refinancing" shall mean any refinancing of Designated Existing
Indebtedness in accordance with the requirements of Section 5B.01.
"Interim Refinancing Date" shall mean each date occurring after the
Initial Borrowing Date and prior to the Merger Date on which SMT incurs
Revolving Loans to effect an Interim Refinancing.
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"Interim Term Loan Borrowing Date" shall mean each date after the
Initial Borrowing Date and prior to the Merger Date on which Acquisition Corp.
incurs Term Loans pursuant to Section 1.01(a)(i)(y).
"Investment" shall have the meaning provided in the preamble to Section
9.05.
"IRD Eligibility Certificate" shall mean a certificate of the chief
financial officer or other Authorized Officer of Holdings to the effect that no
Default or Event of Default exists, which certificate shall (i) be delivered
solely in respect of the fiscal year of Holdings ended December 31, 1997, (ii)
set forth the calculations required to establish compliance with the provisions
of Sections 3.03, 9.02, 9.04(d), (f) and (g) and 9.05 (a), (g), (l) and (m) and
9.08 through and including 9.11 as at the end of such fiscal year and (iii) the
calculation of the Leverage Ratio as at the last day of the Test Period most
recently ended.
"Joint Venture" shall mean any Person, other than an individual or a
Wholly-Owned Subsidiary of Holdings or SMT, in which SMT or a Subsidiary of SMT
holds or acquires an ownership interest (whether by way of capital stock,
partnership or limited liability company interest, or other evidence of
ownership).
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Borrower or its Wholly-Owned Subsidiaries incurred in the ordinary course of
business with respect to insurance obligations and workers' compensation, surety
bonds and other similar statutory obligations and (ii) such other obligations of
the Borrower or any of its Wholly-Owned Subsidiaries as are reasonably
acceptable to the Agent and the Letter of Credit Issuer and otherwise permitted
to exist pursuant to the terms of this Agreement.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fees" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Issuer" shall mean BTCo and any other Bank which, at
the request of the Borrower and with the consent of the Agent, agrees in such
Bank's sole discretion to become a Letter of Credit Issuer for purposes of
issuing Letters of Credit pursuant to Section 2. The sole Letter of Credit
Issuer on the Initial Borrowing Date is BTCo.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
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"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Leverage Ratio" shall mean on any date the ratio of (i) Consolidated
Debt on such date to (ii) Consolidated EBITDA for the Test Period most recently
ended on or prior to such date (determined after giving effect to the proviso to
the definition of Consolidated EBITDA contained herein). All calculations of
the Leverage Ratio shall be made on a Pro Forma Basis, it being understood and
--- -----
agreed that, as provided in the definition of Pro Forma Basis, the adjustments
--- -----
contained in clause (v) thereof shall not be taken into account in determining
the Leverage Ratio.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each Swingline
Loan.
"Management Agreements" shall have the meaning provided in Section
5A.13.
"Management Participants" shall mean certain members of the management
of SMT acceptable to the Agent.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
"Margin Reduction Period" shall mean each period which shall commence on
a date on which the financial statements are delivered pursuant to Section
8.01(b) or (c) (or the date of the delivery of the IRD Eligibility Certificate,
if applicable), as the case may be, and which shall end on the earlier of (i)
the date of actual delivery of the next financial statements pursuant to Section
8.01(b) or (c), as the case may be, (but excluding the delivery of the financial
statements delivered pursuant to Section 9.01(c) for the fiscal year ended
December 31, 1997, in the event the IRD Eligibility Certificate has been
delivered to the Banks) and (ii) the latest date on which the next financial
statements are required to be delivered pursuant to Section 8.01(b) or (c), as
the case may be, (or the date occurring 45 days after the close of the first
quarterly accounting period in the fiscal year of Holdings ended December 31,
1998) it being understood that the first Margin Reduction Period shall commence
on the earlier of (x) the date of the delivery of the IRD Eligibility
Certificate and (y) the date of delivery of the first set of financial
statements pursuant to Section 9.01(b) after the Merger Date.
"Margin Stock" shall have the meaning provided in Regulation U.
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"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities, condition (financial or otherwise) or
prospects of Holdings, Acquisition Corp., Holdings and its Subsidiaries taken as
a whole, Acquisition Corp. and its Subsidiaries taken as a whole or SMT and its
Subsidiaries taken as a whole.
"Material Contracts" shall have the meaning provided in Section 5A.13.
"Maturity Date", with respect to any Tranche of Loans, shall mean the
Final Maturity Date or the Revolving Loan Maturity Date, as the case may be.
"Maximum Permitted Acquisition Leverage Ratio" shall mean, at any time,
the maximum Adjusted Leverage Ratio which may exist pursuant to Section 9.11
without giving rise to a Default or Event of Default at such time, adjusted by
reducing the ratio appearing in such maximum Adjusted Leverage Ratio by 0.25.
"Maximum Swingline Amount" shall mean $2,500,000.
"Merger" shall mean the merger of Acquisition Corp. with and into SMT,
with SMT being the surviving corporation of such merger, and as a result of
which, SMT shall become a Wholly-Owned Subsidiary of Holdings.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated as
of June 24, 1997, among Holdings, Acquisition Corp. and SMT in connection with
the Merger, as the same may be amended, modified or supplemented thereafter with
the consent of the Agent and the Required Banks.
"Merger Bridge Loans" shall mean the unsecured bridge loans incurred by
Holdings pursuant to the Merger Bridge Loan Documents, which loans shall (x) be
due and payable on the Merger Date, (y) bear interest at the same rate that is
applicable to Term Loans and (z) not be prepayable prior to the Merger Date.
"Merger Bridge Loan Documents" shall mean (i) a bridge loan agreement
which may be entered into between Holdings and a member of the Apollo Group and
(ii) the bridge loan note to be executed and delivered in connection therewith.
"Merger Date" shall mean the date of the consummation of the Merger in
accordance with the terms of the Merger Documents and this Agreement.
"Merger Date Refinancing" shall mean the refinancing of Designated
Existing Indebtedness and the Merger Bridge Loans (if any) in accordance with
the requirements of Section 5C.06.
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"Merger Documents" shall mean the Merger Agreement and all other
documents entered into by Holdings, Acquisition Corp. or SMT in connection with
the Merger.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans,
$1,000,000, (ii) for Term Loans, $5,000,000, and (iii) for Swingline Loans,
$500,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"MRI Replacement" shall mean the exchange, sale or other disposition of
an MRI Unit, which, in the reasonable opinion of SMT, is obsolete, uneconomic,
or no longer useful in the conduct of SMT's or any of its Subsidiaries' business
or otherwise requires upgrading, the purpose of which exchange, sale or other
disposition is to acquire (and has resulted within 135 days prior to such
exchange, sale or disposition, or will result within 135 days following such
exchange, sale or disposition, in the acquisition of) a replacement MRI Unit.
"MRI Unit" shall mean any of the following: a magnetic resonance imaging
machine, computer and all attachments, software and related equipment (together
with any related tractor trailers or similar vehicles in the case of a mobile
MRI Unit) required in connection with the operation of the foregoing.
"Net Cash Proceeds" shall mean for any event requiring a reduction of
the Total Revolving Loan Commitment and/or repayment of Term Loans pursuant to
Section 3.03 or 4.02, as the case may be, the gross cash proceeds (including any
cash received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received) received from such
event, net of reasonable transaction costs (including, as applicable, any
underwriting, brokerage or other customary commissions and reasonable legal,
advisory and other fees and expenses associated therewith) received from any
such event.
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of (i) reasonable transaction costs
(including, without limitation, any underwriting, brokerage or other customary
selling commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within 30
days after, the date of such sale, (ii) the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and (iii) the estimated marginal increase in income taxes which
will be payable by Holdings' consolidated group with respect to the fiscal year
in which the sale occurs as a result of such sale; provided, however, that such
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gross proceeds shall not include any portion of such gross cash proceeds which
the Borrower determines in good faith should be reserved for post-closing
adjustments (including indemnification payments) (to the extent the Borrower
delivers to the Banks a certificate signed by its chief
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financial officer or treasurer, controller or chief accounting officer as to
such determination), it being understood and agreed that on the day that all
such post-closing adjustments have been determined (which shall not be later
than six months following the date of the respective asset sale), the amount (if
any) by which the reserved amount in respect of such sale or disposition exceeds
the actual post-closing adjustments payable by Holdings or any of its
Subsidiaries shall constitute Net Sale Proceeds on such date received by
Holdings and/or any of its Subsidiaries from such sale, lease, transfer or other
disposition. The parties hereto acknowledge and agree that Net Sale Proceeds
shall not include any trade-in-credits or purchase price reductions received by
Holdings or any of its Subsidiaries in connection with an exchange of equipment
for replacement equipment that is the functional equivalent of such exchanged
equipment.
"90% Requirement" shall mean the acquisition by Acquisition Corp. of 90%
or more of the Shares pursuant to the Tender Offer.
"Non-Consolidated Joint Venture" shall mean any Joint Venture which is
not a Consolidated Subsidiary of SMT.
"Non-Consolidated Joint Venture EBITDA" shall mean, for each Non-
Consolidated Joint Venture for any period, the Proportionate Share of the
increase (or decrease) to Consolidated EBITDA for such period which would have
occurred if the respective Joint Venture had instead been a Wholly-Owned
Subsidiary of SMT during such period (or, if shorter, that portion of such
period during which the respective Non-Consolidated Joint Venture was a Non-
Consolidated Joint Venture). Notwithstanding anything to the contrary contained
above, (A) if Non-Consolidated Joint Venture EBITDA for the respective period,
as determined pursuant to the immediately preceding sentence, is positive, the
amount thereof shall be limited to the lesser of (x) the amount determined
pursuant to the immediately preceding sentence and (y) the amount of cash
actually distributed during the respective period by such Non-Consolidated Joint
Venture to SMT or its Wholly-Owned Subsidiaries and (B) if Non-Consolidated
Joint Venture EBITDA for the respective period is negative, such negative amount
shall be included, but only to the extent the aggregate of all negative amounts
so included (for the respective period and all prior periods occurring after the
Initial Borrowing Date) does not exceed the aggregate amount theretofore
invested by Holdings and its Subsidiaries in the respective Non-Consolidated
Joint Venture; provided that preceding clause (B) shall not be applicable to any
Non-Consolidated Joint Venture acquired pursuant to a Permitted Acquisition.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting Bank.
"Non-Subsidiary Joint Venture" shall mean each Joint Venture which is
not a Subsidiary of SMT.
"Note" shall mean each Term Note, each Revolving Note and the Swingline
Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
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"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to the Borrower and the Banks from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agent, the Collateral Agent or any Bank pursuant to the terms of this Agreement
or any other Credit Document.
"Offer to Purchase" shall mean the Offer to Purchase, dated June 30,
1997, issued by Holdings and Acquisition Corp. in connection with the Tender
Offer, as the same has been amended prior to the Effective Date, and as the same
may be amended, modified or supplemented thereafter in accordance with the terms
of this Agreement.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquired Debt" shall have the meaning set forth in Section
9.04(f).
"Permitted Acquisition" shall mean the acquisition by SMT of assets
constituting a business, division or product line of any Person not already a
Subsidiary of SMT or of 100% of the capital stock or other equity interests of
any such Person, which Person shall, as a result of such acquisition, become a
Domestic Subsidiary of SMT, provided that (A) the consideration paid by SMT
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consists solely of cash (including proceeds of Revolving Loans), the issuance of
Holdings Common Stock, the issuance of any Qualified Preferred Stock or
Disqualified Preferred Stock otherwise permitted in Section 9.13, the issuance
of Indebtedness otherwise permitted in Section 9.04 (including Permitted
Subordinated Indebtedness) and the assumption/acquisition of any Permitted
Acquired Debt (calculated in accordance with GAAP) relating to such business,
division, product line or Person which is permitted to remain outstanding in
accordance with the requirements of Section 9.04, (B) in the case of the
acquisition of 100% of the capital stock or other equity interests of any
Person, such Person (the "Acquired Person") shall own no capital stock or other
equity interests of any other Person unless either (x) the
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Acquired Person owns 100% of the capital stock or other equity interests of such
other Person or (y) if the Acquired Person owns capital stock or equity
interests in any other Person which is not a Wholly-Owned Subsidiary of the
Acquired Person (a "Non-Wholly Owned Entity"), both (1) the Acquired Person
shall not have been created or established in contemplation of, or for purposes
of, the respective Permitted Acquisition and (2) any Non-Wholly Owned Entity of
the Acquired Person shall have been non-wholly-owned prior to the date of the
respective Permitted Acquisition and not created or established in contemplation
thereof, (C) substantially all of the business, division or product line
acquired pursuant to the respective Permitted Acquisition, or the business of
the Person acquired pursuant to the respective Permitted Acquisition and its
Subsidiaries taken as a whole, is in the United States, (D) the assets acquired,
or the business of the Person whose stock is acquired, shall be in a Permitted
Business and (E) all applicable requirements of Sections 8.14 and 9.02
applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to
the contrary contained in the immediately preceding sentence, an acquisition
which does not otherwise meet the requirements set forth above in the definition
of "Permitted Acquisition" shall constitute a Permitted Acquisition if, and to
the extent, the Required Banks agree in writing that such acquisition shall
constitute a Permitted Acquisition for purposes of this Agreement.
"Permitted Acquisition Additional Cost-Savings" shall mean, in
connection with each Permitted Acquisition, those demonstrable cost-savings
adjustments (in each case not included pursuant to clause (iii) or (iv) of the
definition of Pro Forma Basis contained herein) reasonably anticipated by SMT to
--- -----
be achieved in connection with such Permitted Acquisition for the 12 month
period following the consummation of such Permitted Acquisition, which cost-
savings adjustments shall be estimated on a good faith basis by SMT and, if
requested by the Agent, be verified by a nationally recognized accounting firm
or as otherwise agreed to by the Agent.
"Permitted Business" shall mean the mobile magnetic resonance imaging
business conducted by SMT and its Subsidiaries on the Effective Date, any
imaging and other healthcare services business, the provision of services to
hospitals and other healthcare providers and reasonable extensions of the
foregoing.
"Permitted Debt" shall mean and include Permitted Acquired Debt and
Permitted Subordinated Indebtedness.
"Permitted Encumbrances" shall mean (i) those liens, encumbrances and
other matters affecting title to any Real Property and found reasonably
acceptable by the Agent, (ii) as to any particular Real Property at any time,
such easements, encroachments, covenants, rights of way, minor defects,
irregularities or encumbrances on title which could reasonably be expected to
materially impair such Real Property for the purpose for which it is held by the
mortgagor thereof, or the lien held by the Collateral Agent, (iii) zoning and
other municipal ordinances which are not violated in any material respect by the
existing improvements and the present use made by the mortgagor thereof of the
premises, (iv) general real estate taxes and
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assessments not yet delinquent, and (v) such other similar items as the Agent
may consent to (such consent not to be unreasonably withheld).
"Permitted Holders" shall mean Apollo Group and its Affiliates and the
Management Participants.
"Permitted Liens" shall have the meaning provided in Section 9.03.
"Permitted Sale-Leaseback Transaction" shall mean any sale by SMT or any
of its Subsidiaries of any MRI Unit first acquired by SMT or such Subsidiary
after the Initial Borrowing Date which MRI Unit is then leased back to SMT or
such Subsidiary, provided that (i) the proceeds of the respective sale shall be
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entirely cash and in an amount at least equal to 85% of the aggregate amount
expended by SMT or such Subsidiary in so acquiring such MRI Unit, (ii) such sale
and leaseback is effected within 90 days of the acquisition by SMT or such
Subsidiary of such MRI Unit, and (iii) the respective transaction is otherwise
effected in accordance with the applicable requirements of Section 9.02(k).
"Permitted Subordinated Indebtedness" shall mean subordinated
Indebtedness of the Borrower incurred in connection with a Permitted Acquisition
and in accordance with Section 8.14, which Permitted Subordinated Indebtedness
and all terms and conditions thereof (including, without limitation, the
maturity thereof, the interest rate applicable thereto, amortization, defaults,
remedies, voting rights, subordination provisions, etc.), and the documentation
therefor, shall be reasonably satisfactory to the Agent, provided, that in any
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event, unless the Required Banks otherwise expressly consent in writing prior to
the incurrence thereof, (i) no such Indebtedness shall be guaranteed by Holdings
or any of its Subsidiaries and (ii) no such Indebtedness shall be secured by any
asset of Holdings or any of its Subsidiaries. The incurrence of Permitted
Subordinated Indebtedness shall be deemed to be a representation and warranty by
the Borrower that all conditions thereto have been satisfied and that same is
permitted in accordance with the terms of this Agreement, which representation
and warranty shall be deemed to be a representation and warranty for all
purposes hereunder, including, without limitation, Sections 6 and 10.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) Holdings or a Subsidiary of Holdings or an ERISA Affiliate, and
each such plan for the five year period immediately following the latest date on
which Holdings, or a Subsidiary of Holdings or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5A.11(a).
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"Pledge Agreement Collateral" shall mean all "Collateral" as defined in
the Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined in
the Pledge Agreement.
"Preferred Stock," as applied to the capital stock of any Person, means
capital stock of such Person (other than common stock of such Person) of any
class or classes (however designed) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of capital
stock of any other class of such Person, and shall include any Qualified
Preferred Stock and Disqualified Preferred Stock.
"Prime Lending Rate" shall mean the rate which BTCo announces from time
to time as its prime lending rate, the Prime Lending Rate to change when and as
such prime lending rate changes. The Prime Lending Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. BTCo may make commercial loans or other loans at rates of interest
at, above or below the Prime Lending Rate.
"Pro Forma Balance Sheet" shall have the meaning provided in Section
--- -----
5A.16.
"Pro Forma Basis" shall mean, in connection with any calculation of
--- -----
compliance with any financial covenant or financial term, the calculation
thereof after giving effect on a pro forma basis to (w) if the relevant period
to be tested includes any period occurring prior to the Initial Borrowing Date,
the consummation of the Transaction as if same had occurred on the first day of
such period, (x) the incurrence of any Indebtedness (other than revolving
Indebtedness, except to the extent same is incurred to finance the Transaction,
to refinance other outstanding Indebtedness or to finance Permitted
Acquisitions) or Preferred Stock (other than Qualified Preferred Stock of
Holdings) after the first day of the relevant Calculation Period as if such
Indebtedness or Preferred Stock had been incurred (and the proceeds thereof
applied) on the first day of the relevant Calculation Period, (y) the permanent
repayment of any Indebtedness (other than revolving Indebtedness except to the
extent paid with Permitted Debt or Disqualified Preferred Stock) or Preferred
Stock (other than Qualified Preferred Stock of Holdings) after the first day of
the relevant Calculation Period as if such Indebtedness or Preferred Stock had
been retired or redeemed on the first day of the relevant Calculation Period and
(z) the Permitted Acquisition, if any, then being consummated as well as any
other Permitted Acquisition consummated after the first day of the relevant
Calculation Period and on or prior to the date of the respective Permitted
Acquisition then being effected, with the following rules to apply in connection
therewith:
(i) all Indebtedness and Preferred Stock (other than Qualified
Preferred Stock of Holdings) (x) (other than revolving Indebtedness, except
to the extent same is incurred to finance the Transaction, to refinance
other outstanding Indebtedness, or
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to finance Permitted Acquisitions) incurred or issued after the first day
of the relevant Calculation Period (whether incurred to finance a Permitted
Acquisition, to refinance Indebtedness or otherwise) shall be deemed to
have been incurred or issued (and the proceeds thereof applied) on the
first day of the respective Calculation Period and remain outstanding
through the date of determination (and thereafter in the case of
projections pursuant to Section 8.14(a)(iv)) and (y) (other than revolving
Indebtedness except to the extent paid with Permitted Debt or Disqualified
Preferred Stock) permanently retired or redeemed after the first day of the
relevant Calculation Period shall be deemed to have been retired or
redeemed on the first day of the respective Calculation Period and remain
retired through the date of determination (and thereafter in the case of
projections pursuant to Section 8.14(a)(iv));
(ii) all Indebtedness or Preferred Stock (other than Qualified
Preferred Stock of Holdings) assumed to be outstanding pursuant to
preceding clause (i) shall be deemed to have borne interest or accrue
dividends, as the case may be, at (x) the rate applicable thereto, in the
case of fixed rate indebtedness or Preferred Stock or (y) the rates which
would have been applicable thereto during the respective period when same
was deemed outstanding, in the case of floating rate Indebtedness or
Preferred Stock (although interest expense with respect to any Indebtedness
or Preferred Stock for periods while same was actually outstanding during
the respective period shall be calculated using the actual rates
applicable thereto while same was actually outstanding); provided that for
--------
purposes of calculations pursuant to Section 8.14(a)(iv), all Indebtedness
or Preferred Stock (whether actually outstanding or deemed outstanding)
bearing interest at a floating rate of interest shall be tested on the
basis of the rates applicable at the time the determination is made
pursuant to said provisions;
(iii) in making any determination of Consolidated EBITDA, pro
---
forma effect shall be given to any Permitted Acquisition consummated after
-----
the first day of the respective period being tested, taking into account,
for any portion of the relevant period being tested occurring prior to the
consummation of such Permitted Acquisition, demonstrable cost savings
actually achieved simultaneously with the closing of the respective
Permitted Acquisition, which cost savings would be permitted to be
recognized in pro forma statements prepared in accordance with Regulation
S-X under the Securities Act, as if such cost-savings were realized on the
first day of the relevant period;
(iv) without duplication of adjustments provided above, in case
of any Permitted Acquisition consummated after the first day of the period
being tested, pro forma effect shall be given to the termination or
--- -----
replacement of operating leases with Capitalized Lease Obligations or other
Indebtedness, and to any replacement of Capitalized Lease Obligations or
other Indebtedness with operating leases, in each case effected at the time
of the consummation of such Permitted Acquisition or thereafter, in each
case if effected after the first day of the period being tested and prior
to the date
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the respective determination is being made, as if such termination or
replacement had occurred on the first day of the relevant period; and
(v) in making any determination of Consolidated EBITDA for
purposes of any calculation of the Adjusted Leverage Ratio only, (x) for
any Permitted Acquisition which occurred during the last two fiscal
quarters comprising the respective Test Period (and, in the case of Section
8.14, thereafter and on or prior to the relevant date of determination),
there shall be added to Consolidated EBITDA the amount of Permitted
Acquisition Additional Cost Savings, determined in accordance with the
definition thereof contained herein, expected to be realized with respect
to such Permitted Acquisition, (y) for any Permitted Acquisition effected
in the second fiscal quarter of the respective Test Period (it being
understood and agreed that such fiscal quarter shall not be directly
included in the determination of Consolidated EBITDA, by virtue of the
proviso to the definition thereof), the Consolidated EBITDA shall be
increased by 50% of the Permitted Acquisition Additional Cost Savings
estimated to arise in connection with the respective Permitted Acquisition
and (z) for any Permitted Acquisition effected in the first fiscal quarter
of the respective Test Period (it being understood and agreed that such
fiscal quarter will not be directly included in the determination of
Consolidated EBITDA by virtue of the proviso to the definition thereof),
the Consolidated EBITDA shall be increased by 25% of the Permitted
Acquisition Additional Cost Savings estimated to arise in connection with
the respective Permitted Acquisition; provided that the aggregate additions
to Consolidated EBITDA, for any period being tested, pursuant to this
clause (v) shall not exceed 15% of the amount which would have been
Consolidated EBITDA in the absence of the adjustment pursuant to this
clause (v).
Notwithstanding anything to the contrary contained above, (x) for purposes of
Sections 9.08, 9.10 and 9.11, and for purposes of all determinations of the
Interest Reduction Discount, pro forma effect (as otherwise provided above)
shall only be given for events or occurrences which occurred during the
respective Test Period but not thereafter and (y) for purposes of Section 8.14,
pro forma effect (as otherwise provided above) shall be given for events or
occurrences which occurred during the respective Test Period and thereafter but
on or prior to the respective date of determination.
"Projections" shall have the meaning provided in Section 5A.16.
"Proportionate Share" shall mean, with respect to each Non-Consolidated
Joint Venture for any period, the proportion (expressed as a percentage) of the
share of SMT and its Wholly-Owned Subsidiaries (whether directly or indirectly)
in the Non-Consolidated Joint Venture EBITDA (for this purpose, calculated in
accordance with the first sentence of the definition thereof as if the phrase
"the Proportionate Share of" appearing therein and the second sentence of such
definition were deleted) of such Non-Consolidated Joint Venture for such period,
which percentage shall be determined giving effect to any priorities (including,
without
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limitation, repayments of loans to owners of equity interest in the respective
Joint Venture, preferred distribution priorities, etc.) established by such Non-
Consolidated Joint Venture (or the owners of the equity interests therein) for
the allocation of such Non-Consolidated Joint Venture EBITDA.
"Proxy Materials" shall mean all proxy materials sent by Holdings and
Acquisition Corp. to the shareholders of SMT in connection with the Acquisition.
"Qualified IPO" shall mean an underwritten public offering of Holdings
Common Stock which generates cash proceeds of at least $30,000,000.
"Qualified Preferred Stock" shall mean any Preferred Stock of Holdings,
the express terms of which shall provide that dividends thereon shall not be
required to be paid at any time (and to the extent) that such payment would be
prohibited by the terms of the Credit Agreement or any other agreement of
Holdings relating to outstanding indebtedness and which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (including any Change of
Control Event), cannot mature (excluding any maturity as the result of an
optional redemption by the issuer thereof) and is not mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, and is not redeemable, or
required to be repurchased, at the sole option of the holder thereof (including,
without limitation, upon the occurrence of a Change of Control Event), in whole
or in part, on or prior to the date occurring eight and one-half years after the
Effective Date.
"Quarterly Payment Date" shall mean the last Business Day of each March,
June, September and December.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
theft, physical destruction or damage or any other similar event with respect to
any properties or assets of Holdings or any of its Subsidiaries, (ii) by reason
of any condemnation, taking, seizing or similar event with respect to any
properties or assets of Holdings or any of its Subsidiaries and (iii) under any
policy of insurance required to be maintained under Section 8.03.
"Refinancing" shall mean and include the Initial Refinancing, the
Interim Refinancings and the Merger Date Refinancing.
"Refinancing Documents" shall mean each of the agreements, documents and
instruments entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 13.17.
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"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or any portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from to time in effect and any successor to all or any
portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or any portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27, or .28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Term Loans (and, if prior to the Merger Date, Term Loan Commitments)
and Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Adjusted RL Percentage of Swingline Loans and Letter of
Credit Outstandings) represent an amount greater than 50% of the sum of all
outstanding Term Loans (and, if prior to the Merger Date, Term Loan Commitments)
of Non-Defaulting Banks and the Adjusted Total Revolving Loan Commitment (or
after the termination thereof, the sum of the then total outstanding Revolving
Loans of Non-Defaulting Banks and the aggregate Adjusted RL Percentages of all
Non-Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Required Tender Offer Amount" shall have the meaning provided in
Section 5A.08.
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"Returns" shall have the meaning provided in Section 7.21.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Loan Commitment" shall mean, with respect to each RL Bank,
the amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "Revolving Loan Commitment," as the same may be reduced from
time to time pursuant to Sections 3.02, 3.03, 4.02 and/or Section 10.
"Revolving Loan Maturity Date" shall mean August 31, 2002.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Bank" shall mean at any time each Bank with a Revolving Loan
Commitment or with outstanding Revolving Loans.
"RL Commitment Fee" shall have the meaning provided in Section 3.01(a).
"RL Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time, provided that if the RL Percentage of any Bank is to be
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determined after the Total Revolving Loan Commitment has been terminated, then
the RL Percentages of the Banks shall be determined immediately prior (and
without giving effect) to such termination.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
McGraw Hill, Inc.
"Scheduled Commitment Reduction" shall have the meaning provided in
Section 3.03(b).
"Scheduled Commitment Reduction Date" shall have the meaning provided in
Section 3.03(b).
"Scheduled Repayment" shall have the meaning provided in Section
4.02(b).
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security
Documents.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
5A.11(b).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean and include the Security Agreement, the
Pledge Agreement and each Additional Security Document, if any.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by Holdings (and not guaranteed or supported in any way
by the Borrower or any of its Subsidiaries) in the form of Exhibit N.
"Shareholders' Agreements" shall have the meaning provided in Section
5A.13.
"Shares" shall mean all outstanding shares of common stock of SMT.
"SMT" shall have the meaning provided in the first paragraph of this
Agreement.
"SMT Guaranteed Obligations" shall mean (i) the principal and interest
on each Revolving Note issued by SMT to each Bank, and Revolving Loans made,
under this Agreement, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of SMT to such Bank, the
Agent and the Collateral Agent now existing or hereafter incurred under, arising
out of or in connection with this Agreement or any other Credit Document and the
due performance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by SMT and (ii) all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of SMT or any of its
Subsidiaries owing under any Interest Rate Protection Agreement or Other Hedging
Agreement entered into by SMT or any of its Subsidiaries with any Bank or any
affiliate thereof (even if such Bank subsequently ceases to be a Bank under this
Agreement for any reason) so long as such Bank or affiliate participate in such
Interest Rate Protection Agreement or Other Hedging Agreement, and their
subsequent assigns, if any, whether now in existence or hereafter arising, and
the due performance and compliance with all terms, conditions and agreements
contained therein.
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
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"Stated Amount" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subleased Existing Indebtedness" shall mean Existing Indebtedness with
respect to which a third party has assumed the obligations and liabilities of
SMT and its Subsidiaries, although SMT and its Subsidiaries may remain
contingently liable with respect thereto, as identified in footnote 4 to
Schedule IV.
"Subsidiaries Guaranty" shall have the meaning provided in Section
5A.12.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which such Person directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower that
is or becomes a party to the Subsidiaries Guaranty.
"Swingline Expiry Date" shall mean the date which is five Business Days
prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(c).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean that date upon which the Agent determines
(and notifies the Borrower and the Banks) that the primary syndication (and
resultant addition of Persons as Banks pursuant to Section 13.04(b)) has been
completed.
"Tax Allocation Agreements" shall have the meaning provided in Section
5A.13.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Tender Offer" shall mean the tender offer commenced by Holdings and
Acquisition Corp. pursuant to the Offer to Purchase.
"Tender Offer Documents" shall mean the Offer to Purchase, the Schedule
14D-1 filed by Holdings and Acquisition Corp. and all amendments and exhibits
thereto and related documents filed with the SEC or distributed to the
shareholders of SMT.
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"Term Loan" shall have the meaning provided in Section 1.01(a).
"Term Loan Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Term Loan Commitment," as the same may be terminated pursuant to
Sections 3.03, 4.02 and/or Section 9.
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean each period of four consecutive fiscal quarters
then last ended, in each case taken as one accounting period. Notwithstanding
anything to the contrary contained above or in Section 13.07 or otherwise
required by GAAP, in the case of any Test Period ending prior to the first
anniversary of the Initial Borrowing Date, such period shall be a one-year
period ending on the last day of the fiscal quarter last ended, with any
calculations of (x) Consolidated Interest Expense (but not for purposes of
determining Consolidated EBITDA) required in determining compliance with Section
9.10 to be made on a pro forma basis in accordance with, and to the extent
provided in, the immediately succeeding sentence and (y) Consolidated Fixed
Charges (but not for purposes of determining Consolidated EBITDA) required in
determining compliance with Section 9.08 to be made on a pro forma basis in
accordance with, and to the extent provided in, the second succeeding sentence.
To the extent the respective Test Period (i) includes the second fiscal quarter
of the fiscal year ended December 31, 1997, Consolidated Interest Expense for
such fiscal quarter shall be deemed to be $1.234 million and (ii) includes the
third fiscal quarter of the fiscal year ended December 31, 1997, Consolidated
Interest Expense shall be determined by (x) taking actual Consolidated Interest
Expense determined in accordance with the definition thereof for any period
beginning on, and ending after, the Initial Borrowing Date and (y) for each day
of such fiscal quarter occurring prior to the Initial Borrowing Date, using a
per-day Consolidated Interest Expense of $13,711. To the extent the respective
Test Period includes the third fiscal quarter of the fiscal year ended December
31, 1997, Consolidated Fixed Charges shall be determined by taking actual
Consolidated Fixed Charges determined in accordance with the definition thereof
for the relevant Test Period, except that Consolidated Interest Expense as used
in the determination of Consolidated Fixed Charges for any portion of such Test
Period occurring prior to the Initial Borrowing Date shall be calculated on the
basis provided in clause (ii)(y) of the immediately preceding sentence.
"TL Commitment Fee" shall have the meaning provided in Section 3.01(b).
"TL Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage), (x) the numerator of which is the sum of the outstanding Term
Loans of such Bank at such time plus (if prior to the Merger Date) the Term Loan
Commitment of such Bank at such time and (y) the denominator of which is the sum
of the outstanding Term Loans plus (if prior to the Merger Date) the Total Term
Loan Commitment at such time.
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"Total Available Revolving Loan Commitment" shall mean, at any time, the
Total Revolving Loan Commitment as then in effect less the Blocked Commitment,
if any, at such time.
"Total Commitment" shall mean the sum of the Total Term Loan Commitment
and the Total Revolving Loan Commitment.
"Total Non-Consolidated Joint Venture EBITDA" shall mean, for any
period, the sum of the Non-Consolidated Joint Venture EBITDA for all Non-
Consolidated Joint Ventures for such period.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Term Loan
Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
(i) the Total Revolving Loan Commitment at such time less (ii) the sum of the
----
aggregate principal amount of all Revolving Loans and Swingline Loans
outstanding at such time plus the Letter of Credit Outstandings at such time
less (iii) the Blocked Commitment as then in effect.
- ----
"Trade Letter of Credit" shall have the meaning set forth in Section
2.01(a).
"Tranche" shall mean the respective facility and commitments utilized in
making Loans hereunder, with there being two separate Tranches, i.e., Term Loans
----
and Revolving Loans.
"Transaction" shall mean, collectively, (i) the consummation of the
Tender Offer, (ii) the consummation of the Equity Financing, (iii) to the extent
the Required Tender Offer Amount exceeds the Available Proceeds, the incurrence
of Merger Bridge Loans, (iv) the consummation of the Refinancing, (v) the
entering into of the Credit Documents and the incurrence of all Loans on the
Initial Borrowing Date, (vi) the consummation of the Merger and (vi) the payment
of fees and expenses in connection with the foregoing.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
----
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its
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most recent plan year exceeds the fair market value of the assets allocable
thereto, each determined in accordance with Statement of Financial Accounting
Standards No. 87, based upon the actuarial assumptions used by the Plan's
actuary in the most recent annual valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Loan Commitment" with respect to any RL Bank at
any time shall mean such RL Bank's Revolving Loan Commitment at such time less
the sum of (i) the aggregate outstanding principal amount of all Revolving Loans
made by such RL Bank and (ii) such RL Bank's Percentage of the Letter of Credit
Outstandings at such time.
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"Voting Stock" shall mean, as to any Person, any class or classes of
capital stock of such Person pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the Board of Directors of such Person.
"Warrants" shall mean warrants to purchase Shares.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"Written" (whether lower or upper case) or "in writing" shall mean any
form of written communication or a communication by means of telex, facsimile
device, telegraph or cable.
SECTION 12. The Agent.
---------
12.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints BTCo as Agent of such Bank (such term to include for purposes of this
Section 12, BTCo acting as Collateral Agent) to act as specified herein and in
the other Credit Documents, and each such Bank hereby irrevocably authorizes
BTCo as the Agent to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement
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and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. The Agent agrees to act as such upon the express
conditions contained in this Section 12. Notwithstanding any provision to the
contrary elsewhere in this Agreement or in any other Credit Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein or in the other Credit Documents, or any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or otherwise exist against the
Agent. The provisions of this Section 12 are solely for the benefit of the Agent
and the Banks, and neither Holdings nor any of its Subsidiaries shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and the Agent does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with
or for Holdings or any of its Subsidiaries.
12.02 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
12.03 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person in its capacity as Agent under or in connection with this Agreement or
the other Credit Documents (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by Holdings, any of
its Subsidiaries or any of their respective officers contained in this
Agreement or the other Credit Documents, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Document or for any failure of Holdings or any of its Subsidiaries or any
of their respective officers to perform its obligations here under or
thereunder. The Agent shall not be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or the other Documents, or to
inspect the properties, books or records of Holdings or any of its Subsidiaries.
The Agent shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectability or sufficiency of this
Agreement or any other Document or for any representations, warranties, recitals
or statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by the
Agent to the Banks or by or on behalf of Holdings or any of its Subsidiaries to
the Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
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12.04 Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Holdings or any of its
Subsidiaries), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Credit Document unless it shall first receive
such advice or concurrence of the Required Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully pro-
tected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Banks.
12.05 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has actually received notice from a Bank, Holdings or any Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided, that,
--------
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
12.06 Nonreliance on Agent and Other Banks. Each Bank expressly
------------------------------------
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrowers or any of their
respective Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of
Holdings, the Borrowers or their respective Subsidiaries and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Bank
also represents that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other condition, prospects and
creditworthiness of Holdings, the Borrowers or their respective Subsidiaries.
The Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, operations, assets,
property, financial and other condition, prospects or creditworthiness of
Holdings, the
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Borrowers or their respective Subsidiaries which may come into the possession of
the Agent or any of its officers, directors, employees, agents, attorneys-in-
fact or affiliates.
12.07 Indemnification. The Banks agree to indemnify the Agent in its
---------------
capacity as such ratably according to their respective "percentages" as used in
determining the Required Banks at such time or, if the Commitments have
terminated and all Loans have been repaid in full, as determined immediately
prior to such termination and repayment (with such "percentages" to be
determined as if there are no Defaulting Banks), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agent under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by Holdings or any of its
Subsidiaries; provided, that no Bank shall be liable to the Agent for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 12.07
shall survive the payment of all Obligations.
12.08 Agent in its Individual Capacity. The Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with Holdings and its Subsidiaries as though the Agent were not the
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent and the terms
"Bank" and "Banks" shall include the Agent in its individual capacity.
12.09 Holders. The Agent may deem and treat the payee of any Note as
-------
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
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12.10 Resignation of the Agent. (a) The Agent may resign from the
------------------------
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 30 Business Days' prior written notice to
the Borrowers and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrowers.
(c) If a successor Agent shall not have been so appointed within such
30 Business Day period, the Agent, with the consent of the Borrowers (which
consent shall not be unreasonably withheld or delayed), shall then appoint a
successor Agent who shall serve as Agent hereunder or thereunder until such
time, if any, as the Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or
(c) above by the 30th Business Day after the date such notice of resignation was
given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The Borrowers agree on a joint and
-------------------------
several basis to: (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case and local counsel) in connection with the negotiation, preparation,
execution and delivery of the Credit Documents and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto and in
connection with the Agent's syndication efforts with respect to this Agreement;
(ii) pay all reasonable out-of-pocket costs and expenses of the Agent, each
Letter of Credit Issuer and each of the Banks in connection with the enforcement
of the Credit Documents and the documents and instruments referred to therein
and, after an Event of Default shall have occurred and be continuing, the
protection of the rights of the Agent, each Letter of Credit Issuer and each of
the Banks thereunder (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) for the Agent, for each
Letter of Credit Issuer and for each of the Banks); (iii) pay and hold each of
the Banks harmless from and against any and all present and future stamp and
other similar taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes; and (iv) indemnify the Agent, the Collateral
Agent, each Letter of Credit Issuer and each
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Bank, their respective officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not the Agent, the
Collateral Agent, any Letter of Credit Issuer or any Bank is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among the Agent, the Collateral Agent, any Letter of Credit Issuer, any Bank,
any Credit Party or any third Person or otherwise) related to the entering into
and/or performance of this Agreement or any other Document or the use of the
proceeds of any Loans hereunder or the Transaction or the consummation of any
other transactions contemplated in any Document (but excluding any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified), or (b)
the actual or alleged presence of Hazardous Materials in the air, surface water
or groundwater or on the surface or subsurface of any Real Property or any
Environmental Claim, in each case, including, without limitation, the reasonable
fees and disbursements of counsel and independent consultants incurred in
connection with any such investigation, litigation or other proceeding.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, the Agent, each Letter
of Credit Issuer and each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
Holdings or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by the Agent, such Letter of Credit Issuer or such Bank (including,
without limitation, by branches and agencies of the Agent, such Letter of Credit
Issuer and such Bank wherever located) to or for the credit or the account of
Holdings or any of its Subsidiaries against and on account of the Obligations of
the Borrowers or any of its Subsidiaries to the Agent, such Letter of Credit
Issuer or such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of the
Borrowers or any of their Subsidiaries purchased by such Bank pursuant to
Section 13.06(b), and all other claims of any nature or description arising out
of or connected with this Agreement or any other Credit Document, irrespective
of whether or not the Agent, such Letter of Credit Issuer or such Bank shall
have made any demand here under and although said Obligations shall be
contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Schedule II; or, at such other address as shall be designated
by any party in a written notice to the other parties hereto. All such notices
and communications shall be mailed,
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telegraphed, telexed, telecopied or cabled or sent by overnight courier, and
shall be effective when received.
13.04 Benefit of Agreement. (a) This Agreement shall be binding upon
--------------------
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, Holdings and the Borrowers may
-------- -------
not assign or transfer any of their rights, obligations or interest hereunder or
under any other Credit Document without the prior written consent of the Banks
and, provided further, that, although any Bank may transfer, assign or grant
----------------
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
----------------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default in crease in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment shall
not constitute a change in the terms of such participation, and that an in
crease in any Commitment or Loan shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by Holdings and the
Borrowers of any of their rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Credit Documents) supporting the
Loans hereunder in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrowers hereunder shall be determined as if
such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (or, if prior to the Merger Date, Term Loan Commitments)
to (i) its parent company and/or any affiliate of such Bank which is at least
50% owned by such Bank or its parent company or to one or more Banks or (ii) in
the case of any Bank that is a fund that invests in bank loans, any other fund
that invests in bank loans and is managed by the same investment advisor of such
Bank or by an Affiliate of such investment advisor or (y) assign all, or if less
than all, a portion equal to at least $5,000,000 in the aggregate for the
assigning Bank or assigning Banks, of such Revolving Loan
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Commitments (and related outstanding Obligations hereunder) and outstanding
principal amount of Term Loans (or, if prior to the Merger Date, Term Loan
Commitments) to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that (i) at such time Schedule I shall be deemed
--------
modified to reflect the Commitments (and/or outstanding Term Loans, as the case
may be) of such new Bank and of the existing Banks, (ii) upon surrender of the
old Notes (or the furnishing of a standard indemnity letter from the respective
assigning Bank in respect of any lost Notes), new Notes will be issued, at the
Borrowers' expense, to such new Bank and to the assigning Bank, such new Notes
to be in conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments (and/or
outstanding Term Loans, as the case may be), (iii) the consent of the Agent and,
so long as no Default or Event of Default is then in existence, the relevant
Borrower shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (y) of this Section 13.04(b) (which consent, in
each case, shall not be unreasonably withheld or delayed), (iv) the consent of
each Letter of Credit Issuer shall be required in connection with any Revolving
Loan Commitments pursuant to clause (y) of this Section 13.04(b) (which consent
shall not be unreasonably withheld or delayed) and (v) the Agent shall receive
at the time of each assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500 and, provided further, that such
-------- -------
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 13.17. To the extent of any assignment pursuant to
this Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Commitments. At the time of each
assignment pursuant to this Section 13.04(b) to a Person which is not already a
Bank hereunder and which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall provide to the Borrowers and the Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an
assignment of all or any portion of a Bank's Commitment and related outstanding
Obligations pursuant to Section 1.13 or this Section 13.04(b) would, due to
circumstances existing at the time of such assignment, result in increased costs
under Section 1.10, 1.11, 2.05 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrowers shall not
be obligated to pay such increased costs (although the Borrowers shall be
obligated to pay any other increased costs of the type described above resulting
from changes after the date of the respective assignment). Notwithstanding
anything to the contrary contained above, at any time after the termination of
the Total Revolving Loan Commitment, if any Revolving Loans or Letters of Credit
remain outstanding, assignments may be made as provided above, except that the
respective assignment shall be of a portion of the outstanding Revolving Loans
of the respective RL Bank and its participation in Letters of Credit and its
obligation to make Mandatory Borrowings, although any such assignment effected
after the termination of the Total Revolving Loan Commitment shall not release
the assigning RL Bank from its obligations as a Participant with respect to
outstanding Letters of Credit or to fund its share of any Mandatory Borrowing
(although the respective assignee may agree, as between itself and the
respective assigning RL Bank, that it shall be responsible for such amounts).
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(c) Nothing in this Agreement shall prevent or prohibit any Bank or
BTCo from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank and, with
the consent of the Agent, any Bank which is a fund may pledge all or any portion
of its Notes or Loans to its trustee in support of its obligations to its
trustee. No pledge pursuant to this clause (c) shall release the transferor
Bank from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of the Agent or any Bank in exercising any right, power or privilege hereunder
or under any other Credit Document and no course of dealing between any Credit
Party and the Agent or any Bank shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Agent or any Bank would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Agent or the Banks to any other or
further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) The Agent agrees that promptly after its
-----------------
receipt of each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall, except as otherwise provided in this
Agreement, distribute such payment to the Banks (other than any Bank that has
consented in writing to waive its pro rata share of such payment) pro rata based
--- ---- --- ----
upon their respective shares, if any, of the Obligations with respect to which
such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided, that if
--------
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
13.07 Calculations; Computations. (a) The financial statements to be
--------------------------
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise
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disclosed in writing by Holdings or the Borrowers to the Banks); provided, that
--------
except as otherwise specifically provided herein, all computations determining
compliance with Sections 4.02, 8.14 and 9, including definitions used therein
shall, in each case, utilize accounting principles and policies in effect at the
time of the preparation of, and in conformity with those used to prepare, the
December 31, 1996 financial statements of SMT delivered to the Banks pursuant
to Section 7.10(b); provided further, that (i) to the extent expressly required
-------- -------
pursuant to the provisions of this Agreement, certain calculations shall be
made on a Pro Forma Basis, (ii) to the extent compliance with any of Sections
--- -----
9.08, 9.09, 9.10 or 9.11 would include periods occurring prior to the Initial
Borrowing Date, such calculation shall be adjusted on a Pro Forma Basis to give
--- -----
effect to the Transaction as if same had occurred on the first day of the
respective period and (iii) in the case of any determinations of Consolidated
Interest Expense and Consolidated Fixed Charges for any portion of any Test
Period which ends prior to the Initial Borrowing Date, all computations
determining compliance with Sections 9.08 and 9.10 shall be calculated in
accordance with the definition of Test Period contained herein.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
13.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each of Holdings and each Borrower hereby irrevocably designates,
appoints and empowers CT Corporation System, with offices on the date hereof at
1633 Broadway, New York, New York 10019 as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices and documents
which may be served in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act as such, each
of Holdings and each Borrower agrees to designate a new designee, appointee and
agent in New York City on the terms and for the purposes of this provision
satisfactory to the Agent under this Agreement. Each of Holdings and each
Borrower hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Credit Party, and agrees not to plead or claim, in any
legal action or proceeding with respect to this Agreement or any other Credit
Document brought in any of the aforesaid courts, that any such court lacks
jurisdiction over such Credit Party. Each of Holdings and each Borrower
further irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such Credit Party, at its address for notices pursuant to
Section 13.03, such service to become effective 30 days after such mailing. Each
of Holdings and each Borrower
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hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
the Agent, any Bank or the holder of any Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each of Holdings and each Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
13.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with Holdings,
the Borrowers and the Agent.
13.10 Effectiveness. This Agreement shall become effective on the date
-------------
(the "Effective Date") on which Holdings, the Borrowers, the Agent and each of
the Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Agent at the Notice
Office or at the office of Agent's counsel. The Agent will give Holdings, the
Borrowers and each Bank prompt written notice of the occurrence of the Effective
Date.
13.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
-------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby in the case of the following clause
(i)), (i) extend the final scheduled maturity of any Loan or Note or extend the
stated maturity of any Letter of Credit beyond the Revolving Loan Maturity Date,
or reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not constitute
a reduction in any rate of interest or fees for purposes of this clause (i)),
(ii) release all or substantially all of the Collateral (except as expressly
provided in
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the Security Documents) under all the Security Documents, (iii) amend, modify
or waive any provision of this Section 13.12, (iv) reduce the percentage
specified in the definition of Required Banks (it being understood that, with
the consent of the Required Banks, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the Effective Date) or (v) consent to the assignment
or transfer by Holdings or any Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver, discharge
----------------
or termination shall (w) increase the Commitments of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase in the Commitment of such Bank), (x) without the consent of each Letter
of Issuer, amend, modify or waive any provision of Section 2 or alter its rights
or obligations with respect to Letters of Credit or Swingline Loans, (y) without
the consent of the Agent, amend, modify or waive any provision of Section 12 as
same applies to the Agent or any other provision as same relates to the rights
or obligations of the Agent and (z) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or obligations of
the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrowers
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clause (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks (or, at the option
of the Borrower if the respective Bank's consent is required with respect to
less than all Tranches of Loans (or related Commitments), to replace only the
respective Tranche of Commitments and/or Loans of the respective non-consenting
Bank which gave rise to the need to obtain such Bank's individual consent) with
one or more Replacement Banks pursuant to Section 1.13 so long as at the time of
such replacement, each such Replacement Bank consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Bank's
Revolving Loan Commitment (if such Bank's consent is required as a result of its
Revolving Loan Commitment), Term Loan Commitment (if prior to the Merger Date
and if such Bank's consent is required as a result of its Term Loan Commitment)
and/or repay each Tranche of outstanding Loans of such Bank which gave rise to
the need to obtain such Bank's consent and/or cash collateralize its applicable
Adjusted RL Percentage of the Letter of Credit of Outstandings, in accordance
with Sections 3.02(b) and/or 4.01(b), provided that, unless the Commitments
--------
which are terminated and Loans which are repaid pursuant to preceding clause (B)
are immediately replaced in full at such time through the addition of new Banks
or the increase of the Commitments and/or outstanding Loans of existing Banks
(who in each case must specifically consent thereto), then in the case of any
action pursuant to preceding clause (B) the Required Banks (determined after
giving effect to the
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proposed action) shall specifically consent thereto, provided further, that the
----------------
Borrowers shall not have the right to replace a Bank, terminate its Revolving
Loan Commitment or Term Loan Commitment or repay its Loans solely as a result of
the exercise of such Bank's rights (and the withholding of any required consent
by such Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 1.10, 1.11, 2.05, 4.04, 12.07 and 13.01, shall, subject
to the provisions of Section 13.18 (to the extent applicable), survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
13.14 Domicile of Loans and Commitments. Each Bank may transfer and
---------------------------------
carry its Loans and/or Commitments at, to or for the account of any branch
office, subsidiary or affiliate of such Bank; provided, that the Borrowers shall
--------
not be responsible for costs arising under Section 1.10, 1.11, 2.05 or 4.04
resulting from any such transfer (other than a transfer pursuant to Section
1.12) to the extent such costs would not otherwise be applicable to such Bank in
the absence of such transfer.
13.15 Confidentiality. (a) Each of the Banks agrees that it will use
---------------
its reasonable efforts not to disclose without the prior consent of Holdings or
the Borrowers (other than to its directors, employees, auditors, counsel or
other professional advisors, to affiliates or to another Bank if the Bank or
such Bank's holding or parent company in its sole discretion determines that any
such party should have access to such information) any information with respect
to Holdings or any of its Subsidiaries which is furnished pursuant to this
Agreement; provided, that any Bank may disclose any such information (a) as has
--------
become generally available to the public, (b) as may be required or appropriate
(x) in any report, statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction over such Bank
or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors or (y) in connection with any request or requirement of any such
regulatory body, (c) as may be required or appropriate in response to any
summons or subpoena or in connection with any litigation, (d) to comply with any
law, order, regulation or ruling applicable to such Bank, and (e) to any
prospective transferee in connection with any contemplated transfer of any of
the Notes or any interest therein by such Bank; provided, that such prospective
--------
transferee agrees to be bound by this Section 13.15 to the same extent as such
Bank.
(b) Each of Holdings and each Borrower hereby acknowledges and agrees
that each Bank may share with any of its affiliates any information related to
Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of Holdings and
its Subsidiaries), provided that such Persons shall be subject to the provisions
--------
of this Section 13.15 to the same extent as such Bank.
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13.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.17 Register. Each Borrower hereby designates the Agent to serve as
--------
the Borrower's agent, solely for purposes of this Section 13.17, to maintain a
register (the "Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation shall not affect
any Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Commitment and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitment
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitment and Loans shall be recorded by the
Agent on the Register only upon the acceptance by the Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate principal amount shall be issued to the
assigning or transferor Bank and/or the new Bank. The Borrowers agree to
indemnify on a joint and several basis the Agent from and against any and all
losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Agent in performing its duties
under this Section 13.17.
13.18 Limitation on Additional Amounts, etc. Notwithstanding anything
--------------------------------------
to the contrary contained in Section 1.10, 1.11, 2.05 or 4.04 of this Agreement,
unless a Bank gives notice to a Borrower that it is obligated to pay an amount
under such Section within six months after the later of (x) the date the Bank
incurs the respective increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital or
(y) the date such Bank has actual knowledge of its incurrence of the respective
increased costs, Taxes, loss, expense or liability, reductions in amounts
received or receivable or reduction in return on capital, then such Bank shall
only be entitled to be compensated for such amount jointly and severally by the
Borrowers pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be,
to the extent of the costs, Taxes, loss, expense or liability, reduction in
amounts received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs six months prior to such Bank giving
notice to the respective Borrower that it is obligated to pay the respective
amounts pursuant to said Section 1.10, 1.11, 2.05 or 4.04,
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as the case may be. This Section 13.18 shall have no applicability to any
Section of this Agreement other than said Sections 1.10, 1.11, 2.05 and 4.04.
13.19 Post-Closing Actions. Notwithstanding anything to the contrary
--------------------
contained in this Agreement or the other Credit Documents, the parties hereto
acknowledge and agree that:
(a) Security Document Filings. Form UCC-1 financing statements
-------------------------
delivered by the Borrowers to the Collateral Agent on the Initial Borrowing Date
shall be filed in the appropriate governmental office within 10 days following
the Initial Borrowing Date.
(b) Certificates Of Title. The Collateral Agent's security interest
---------------------
with respect to the certificates of title in respect of all MRI Units owned by
SMT and its Subsidiaries on the Initial Borrowing Date (other than MRI Units
securing Existing Indebtedness not being refinanced on the Initial Borrowing
Date) shall be registered in the appropriate governmental office within 90 days
following the Initial Borrowing Date.
(c) Insurance. Within 120 days following the Initial Borrowing Date,
---------
the Agent shall have received evidence of insurance complying with the
requirements of Section 8.03 for the business and properties of Holdings, in
scope, form and substance reasonably satisfactory to the Agent, and otherwise
meeting the requirements for evidence of insurance set forth in Section
5A.15(b). Within 30 days following the Initial Borrowing Date, the Collateral
Agent shall have received evidence reasonably satisfactory to it that SMT's
existing keyman life insurance policies have been assigned as Collateral to the
Collateral Agent.
(d) Insurance Policies. Within 30 days following the Initial Borrowing
------------------
Date, SMT shall have deposited with the Collateral Agent all policies or
certificates with respect to the insurance required to be maintained in favor of
the Collateral Agent pursuant to Section 8.03.
(e) UCC-3 Termination Statements. Within 45 days following the Initial
----------------------------
Borrowing Date, the Agent shall have received Form UCC-3 termination statements
in respect of the Liens listed on Part B of Schedule IX hereto and same shall be
filed in the appropriate governmental office within 60 days following the
Initial Borrowing Date. Within 90 days following the Initial Borrowing Date,
the Agent shall have received Form UCC-3 termination statements in respect of
the Liens listed on Part C of Schedule IX hereto and same shall be filed in the
appropriate governmental office within 105 days following the Initial Borrowing
Date.
(f) Interim Refinancings. With respect to each Interim Refinancing, to
--------------------
the extent SMT reasonably determines that the periods described in this clause
(f) are needed, SMT shall be granted (x) the relief described in preceding
clause (b) with respect to certificates of title to be registered following the
respective Interim Refinancing (with 90-day period from the date of the
respective Interim Refinancing) and (y) the relief described in preceding clause
(e) with respect to the filing of UCC termination statements (with the periods
described in said clause (e) to run from the date of the respective Interim
Refinancing).
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All provisions of this Credit Agreement and the other Credit Documents
(including, without limitation, all conditions precedent, representations,
warranties, covenants, events of default and other agreements herein and
therein) shall be deemed modified to the extent necessary to effect the
foregoing (and to permit the taking of the actions described above within the
time periods, required above, rather than as otherwise provided in the Credit
Documents); provided, that (x) to the extent any representation and warranty
--------
would not be true because the foregoing actions were not taken on the Initial
Borrowing Date, the respective representation and warranty shall be required to
be true and correct in all material respects at the time the respective action
is taken (or was required to be taken) in accordance with the foregoing
provisions of this Section 13.19 and (y) all representations and warranties
relating to the Collateral Documents shall be required to be true immediately
after the actions required to be taken by Section 13.19 have been taken (or were
required to be taken). The acceptance of the benefits of the Loans shall
constitute a representation, warranty and covenant by Holdings and each Borrower
to each of the Banks that the actions required pursuant to this Section 13.19
will be, or have been, taken within the relevant time periods referred to in
this Section 13.19 and that, at such time, all representations and warranties
contained in this Credit Agreement and the other Credit Documents shall then be
true and correct without any modification pursuant to this Section 13.19. The
parties hereto acknowledge and agree that the failure to take any of the actions
required above, within the relevant time periods required above, shall give rise
to an immediate Event of Default pursuant to this Agreement.
SECTION 14. Holdings Guaranty.
-----------------
14.01 The Holdings Guaranty. In order to induce the Banks to enter
---------------------
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by Holdings from the proceeds of the Loans and
the issuance of the Letters of Credit, Holdings hereby agrees with the Banks as
follows: Holdings hereby unconditionally and irrevocably guarantees, as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, acceleration or otherwise, of any and all of the Guaranteed
Obligations of each of the Borrowers to the Guaranteed Creditors. If any or all
of the Guaranteed Obligations of the Borrowers to the Guaranteed Creditors
becomes due and payable hereunder, Holdings unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, together with any
and all expenses which may be incurred by the Guaranteed Creditors in collecting
any of the Guaranteed Obligations. If claim is ever made upon any Guaranteed
Creditor for repayment or recovery of any amount or amounts received in payment
or on account of any of the Guaranteed Obligations and any of the aforesaid
payees repays all or part of said amount by reason of (i) any judgment, decree
or order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrowers), then
and in such event Holdings agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon Holdings, notwithstanding any
revocation of this Holdings Guaranty or any other instrument evidencing any
liability of the
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Borrowers, and Holdings shall be and remain liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee.
14.02 Bankruptcy. Additionally, Holdings unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrowers to the Guaranteed Creditors whether or not due or payable by
the Borrowers upon the occurrence of any of the events specified in Section
10.05, and unconditionally promises to pay such indebtedness to the Guaranteed
Creditors, or order, on demand, in lawful money of the United States.
14.03 Nature of Liability. The liability of Holdings hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrowers whether executed by Holdings, any other
guarantor or by any other party, and the liability of Holdings hereunder is not
affected or impaired by (a) any direction as to application of payment by the
Borrowers or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrowers, or (c) any payment on or in reduction
of any such other guaranty or undertaking, or (d) any dissolution, termination
or increase, decrease or change in personnel by the Borrowers, or (e) any
payment made to the Guaranteed Creditors on the Guaranteed Obligations which any
such Guaranteed Creditor repays to the Borrowers pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and Holdings waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
14.04 Independent Obligation. The obligations of Holdings hereunder
----------------------
are independent of the obligations of any other guarantor, any other party or
the Borrowers, and a separate action or actions may be brought and prosecuted
against Holdings whether or not action is brought against any other guarantor,
any other party or the Borrowers and whether or not any other guarantor, any
other party or the Borrowers be joined in any such action or actions. Holdings
waives, to the full extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Borrowers or other circumstance which operates to toll any
statute of limitations as to the Borrowers shall operate to toll the statute of
limitations as to Holdings.
14.05 Authorization. Holdings authorizes the Guaranteed Creditors
-------------
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and
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the Guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrowers or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrowers or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrowers to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrowers to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrowers remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document or
any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Guaranty.
14.06 Reliance. It is not necessary for the Guaranteed Creditors to
--------
inquire into the capacity or powers of the Borrowers or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
14.07 Subordination. Upon the occurrence and during the continuance
-------------
of an Event of Default, any of the indebtedness of the Borrowers now or
hereafter owing to Holdings
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is hereby subordinated to the Guaranteed Obligations of the Borrowers owing to
the Guaranteed Creditors; and if the Agent so requests at a time when an Event
of Default exists, all such indebtedness of the Borrowers to Holdings shall be
collected, enforced and received by Holdings for the benefit of the Guaranteed
Creditors and be paid over to the Agent on behalf of the Guaranteed Creditors on
account of the Guaranteed Obligations of the Borrowers to the Guaranteed
Creditors, but without affecting or impairing in any manner the liability of
Holdings under the other provisions of this Guaranty. Prior to the transfer by
Holdings of any note or negotiable instrument evidencing any of the indebtedness
of the Borrowers to Holdings, shall mark such note or negotiable instrument with
a legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, Holdings hereby agrees with the Guaranteed
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Holdings Guaranty (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash.
14.08 Waiver. (a) Holdings waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require any Guaranteed
Creditor to (i) proceed against the Borrowers, any other guarantor or any other
party, (ii) proceed against or exhaust any security held from the Borrowers, any
other guarantor or any other party or (iii) pursue any other remedy in any
Guaranteed Creditor's power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrowers, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrowers, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the
Borrowers other than payment in full of the Guaranteed Obligations. The
Guaranteed Creditors may, at their election, foreclose on any security held by
the Agent, the Collateral Agent or any other Guaranteed Creditor by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Guaranteed Creditors may have
against the Borrowers or any other party, or any security, without affecting or
impairing in any way the liability of Holdings hereunder except to the extent
the Guaranteed Obligations have been paid. Holdings waives any defense arising
out of any such election by the Guaranteed Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Holdings against the Borrowers or any other party or
any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Holdings
Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Holdings assumes all responsibility for
being and keeping itself informed of the Borrowers' financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks which
Holdings assumes and incurs hereunder, and
-151-
<PAGE>
agrees that the Guaranteed Creditors shall have no duty to advise Holdings of
information known to them regarding such circumstances or risks.
14.09 Nature of Liability. It is the desire and intent of Holdings
-------------------
and the Guaranteed Creditors that this Guaranty shall be enforced against
Holdings to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, however, and
to the extent that, the obligations of Holdings under this Holdings Guaranty
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of Holdings shall be deemed to be reduced and Holdings shall pay the
maximum amount of the Guaranteed Obligations which would be permissible under
applicable law.
SECTION 15. Acquisition Corp. Guaranty.
--------------------------
15.01 The Acquisition Corp. Guaranty. In order to induce the Banks
------------------------------
to enter into this Agreement and to extend credit hereunder and in recognition
of the direct benefits to be received by Acquisition Corp. from the proceeds of
the Loans and the issuance of the Letters of Credit, Acquisition Corp. hereby
agrees with the Banks as follows: Acquisition Corp. hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, acceleration or otherwise, of
any and all of the SMT Guaranteed Obligations to the Guaranteed Creditors. If
any or all of the SMT Guaranteed Obligations to the Guaranteed Creditors becomes
due and payable hereunder, Acquisition Corp. unconditionally promises to pay
such indebtedness to the Guaranteed Creditors, or order, on demand, together
with any and all expenses which may be incurred by the Guaranteed Creditors in
collecting any of the SMT Guaranteed Obligations. If claim is ever made upon any
Guaranteed Creditor for repayment or recovery of any amount or amounts received
in payment or on account of any of the SMT Guaranteed Obligations and any of the
aforesaid payees repays all or part of said amount by reason of (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including SMT), then and in such event Acquisition Corp. agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon
Acquisition Corp., notwithstanding any revocation of this Acquisition Corp.
Guaranty or any other instrument evidencing any liability of SMT, and
Acquisition Corp. shall be and remain liable to the aforesaid payees hereunder
for the amount so repaid or recovered to the same extent as if such amount had
never originally been received by any such payee.
15.02 Bankruptcy. Additionally, Acquisition Corp. unconditionally
----------
and irrevocably guarantees the payment of any and all of the SMT Guaranteed
Obligations to the Guaranteed Creditors whether or not due or payable by SMT
upon the occurrence of any of the
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<PAGE>
events specified in Section 10.05, and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money
of the United States.
15.03 Nature of Liability. The liability of Acquisition Corp.
-------------------
hereunder is exclusive and independent of any security for or other guaranty of
the SMT Guaranteed Obligations whether executed by Acquisition Corp., any other
guarantor or by any other party, and the liability of Acquisition Corp.
hereunder is not affected or impaired by (a) any direction as to application of
payment by SMT or by any other party, or (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the SMT Guaranteed Obligations, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by SMT, or (e) any payment made to the
Guaranteed Creditors on the SMT Guaranteed Obligations which any such Guaranteed
Creditor repays to SMT pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
Acquisition Corp. waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
15.04 Independent Obligation. The obligations of Acquisition Corp.
----------------------
hereunder are independent of the obligations of any other guarantor, any other
party or SMT, and a separate action or actions may be brought and prosecuted
against Acquisition Corp. whether or not action is brought against any other
guarantor, any other party or SMT and whether or not any other guarantor, any
other party or SMT be joined in any such action or actions. Acquisition Corp.
waives, to the full extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by SMT or other circumstance which operates to toll any statute of
limitations as to SMT shall operate to toll the statute of limitations as to
Acquisition Corp.
15.05 Authorization. Acquisition Corp. authorizes the Guaranteed
-------------
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the SMT Guaranteed Obligations (including any increase or decrease in the
rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and this Guaranty herein made
shall apply to the SMT Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the SMT Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the SMT Guaranteed Obligations or any liabilities
-153-
<PAGE>
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and/or any offset there against;
(c) exercise or refrain from exercising any rights against SMT or
others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, SMT
or other obligors;
(e) settle or compromise any of the SMT Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of SMT to its creditors other than the
Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of SMT to the Guaranteed Creditors regardless of
what liability or liabilities of SMT remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document or
any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Acquisition Corp. from its liabilities under this Guaranty.
15.06 Reliance. It is not necessary for the Guaranteed Creditors to
--------
inquire into the capacity or powers of SMT or the officers, directors, partners
or agents acting or purporting to act on their behalf, and any Guaranteed
Obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
15.07 Subordination. Upon the occurrence and during the continuance
-------------
of an Event of Default, any of the indebtedness of SMT now or hereafter owing to
Acquisition Corp. is hereby subordinated to the SMT Guaranteed Obligations owing
to the Guaranteed Creditors; and if the Agent so requests at a time when an
Event of Default exists, all such indebtedness of SMT to Acquisition Corp. shall
be collected, enforced and received by Acquisition Corp. for the benefit of the
Guaranteed Creditors and be paid over to the Agent on behalf of the Guaranteed
Creditors on account of the SMT Guaranteed Obligations of SMT to the Guaranteed
Creditors, but without affecting or impairing in any manner the liability of
Acquisition Corp. under the other provisions of this Acquisition Corp. Guaranty.
Prior to the transfer by
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<PAGE>
Acquisition Corp. of any note or negotiable instrument evidencing any of the
indebtedness of SMT to Acquisition Corp., shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination. Without
limiting the generality of the foregoing, Acquisition Corp. hereby agrees with
the Guaranteed Creditors that it will not exercise any right of subrogation
which it may at any time other wise have as a result of this Acquisition Corp.
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all SMT Guaranteed Obligations have been irrevocably paid in
full in cash.
15.08 Waiver. (a) Acquisition Corp. waives any right (except as
------
shall be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against SMT, any other guarantor or any other
party, (ii) proceed against or exhaust any security held from SMT, any other
guarantor or any other party or (iii) pursue any other remedy in any Guaranteed
Creditor's power whatsoever. Acquisition Corp. waives any defense based on or
arising out of any defense of SMT, any other guarantor or any other party, other
than payment in full of the SMT Guaranteed Obligations, based on or arising out
of the disability of SMT, any other guarantor or any other party, or the
unenforceability of the SMT Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of SMT other than
payment in full of the SMT Guaranteed Obligations. The Guaranteed Creditors may,
at their election, foreclose on any security held by the Agent, the Collateral
Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Guaranteed Creditors may have against SMT or any other
party, or any security, without affecting or impairing in any way the liability
of Acquisition Corp. hereunder except to the extent the SMT Guaranteed
Obligations have been paid. Acquisition Corp. waives any defense arising out of
any such election by the Guaranteed Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Acquisition Corp. against SMT or any other party or any
security.
(b) Acquisition Corp. waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional SMT Guaranteed Obligations. Acquisition Corp. assumes all
responsibility for being and keeping itself informed of SMT's financial
condition and assets, and of all other circumstances bearing upon the risk of
non payment of the SMT Guaranteed Obligations and the nature, scope and extent
of the risks which Acquisition Corp. assumes and incurs hereunder, and agrees
that the Guaranteed Creditors shall have no duty to advise Acquisition Corp. of
information known to them regarding such circumstances or risks.
15.09 Nature of Liability. It is the desire and intent of
-------------------
Acquisition Corp. and the Guaranteed Creditors that this Acquisition Corp.
Guaranty shall be enforced against Acquisition Corp. to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If, however, and to the extent that, the
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<PAGE>
obligations of Acquisition Corp. under this Acquisition Corp. Guaranty shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the SMT Guaranteed
Obligations of Acquisition Corp. shall be deemed to be reduced and Acquisition
Corp. shall pay the maximum amount of the SMT Guaranteed Obligations which would
be permissible under applicable law.
-156-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
THREE RIVERS HOLDING CORP.
- -------------------------
- -------------------------
Telephone No.:
Facsimile No.: By
Attention: ----------------------------
Title:
THREE RIVERS ACQUISITION CORP.
By
----------------------------
Title:
SMT HEALTH SERVICES INC.,
By
----------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By
----------------------------
Title:
<PAGE>
Schedule I
----------
LIST OF BANKS AND COMMITMENTS
-----------------------------
<TABLE>
<CAPTION>
Term Loan Revolving Loan
Bank Commitment Commitment
- ---- ----------- -----------
<S> <C> <C>
Bankers Trust Company $50,000,000 $30,000,000
Total $50,000,000 $30,000,000
</TABLE>
<PAGE>
Schedule II
-----------
BANK ADDRESSES
--------------
Bank Address
- ---- -------
Bankers Trust Company One Bankers Trust Plaza
New York, New York 10006
Attention: Gregory Shefrin
Telephone No.: (212) 250-2500
Facsimile No.: (212) 250-7218
<PAGE>
Schedule III
------------
REAL PROPERTIES
---------------
<PAGE>
Schedule IV
-----------
EXISTING INDEBTEDNESS
---------------------
<PAGE>
Schedule V
----------
PENSION PLANS
-------------
<PAGE>
Schedule VI
-----------
EXISTING INVESTMENTS
--------------------
<PAGE>
Schedule VII
------------
SUBSIDIARIES
------------
<PAGE>
Schedule VIII
-------------
INSURANCE
---------
<PAGE>
Schedule IX
-----------
EXISTING LIENS
--------------
<TABLE>
<CAPTION>
Filing File Original Description
Location Debtor Secured Party Number File Date of Collateral
- --------- ------ ------------- ------ --------- -------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
------------------------------------
FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
August 12, 1997, among Three Rivers Holding Corp. ("Holdings"), a Delaware
corporation, Three Rivers Acquisition Corp. ("Acquisition Corp."), a Delaware
corporation, SMT Health Services Inc. ("SMT"), a Delaware corporation,
(Acquisition Corp. and SMT each a "Borrower" and, collectively, "the
Borrowers"), the lender party to the Credit Agreement referred to below on the
date hereof and immediately before giving effect to this Amendment (the
"Existing Bank"), BANKERS TRUST COMPANY, as Agent (the "Agent") for the Banks
and each of the banks listed on Schedule A hereto (each, a "New Bank" and,
collectively, the "New Banks"). All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings provided such terms
in the Credit Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, the Borrowers, the Existing Bank, and the Agent are
parties to a Credit Agreement, dated as of August 5, 1997 (the "Credit
Agreement");
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. The definition of "Scheduled Commitment Reduction Date" appearing
in Section 3.03(c) is hereby amended by (i) deleting the text "August 31, 2002"
appearing therein and inserting in lieu thereof the text "August 31, 2001" and
(ii) deleting the text "August 31, 2003" appearing therein and inserting in lieu
thereof the text "August 31, 2002".
2. The definitions of "Applicable RL Commitment Fee Percentage",
"Applicable Excess Cash Flow Percentage" and "Applicable Prepayment Percentage"
appearing in Section 11 are hereby amended by inserting the phrase "with respect
to Revolving Loans" immediately after the phrase "Interest Reduction Discount
then in effect" appearing therein.
<PAGE>
3. The definition of "Interest Reduction Discount" appearing in
Section 11 is hereby amended by:
(i) inserting the phrase "(1) for all purposes of determining
interest with respect to Revolving Loans and Swingline Loans,"
immediately prior to the phrase "(x) zero or (y) the respective
percentage per annum set forth in clause (A), (B), (C), (D) or (E)
below if," appearing therein;
(ii) deleting the period at the end of the first sentence thereof and
inserting a semicolon in lieu thereof;
(iii) inserting the following text after clause (E) of, and as part
of, the first sentence thereof:
"or (2) for all purposes of determining interest with respect to
Term Loans, (x) zero or (y) the respective percentage per annum
set forth in clause (A) or (B) below, if, but only if, as of the
Test Date most recently ended prior to such Start Date the
conditions in clause (A) or (B) below are met:
(A) 1/4 of 1% if, but only if, as of the Test Date for such
Start Date, the Leverage Ratio for the Test Period ended on
such Test Date shall be less than 4.00:1.00 and the
conditions set forth in clause (B) below are not satisfied;
or
(B) 1/2 of 1% if, but only if, as of the Test Date for such
Start Date, the Leverage Ratio for the Test Period ended on
such Test Date shall be less than 3.00:1.00.";
(iv) deleting the word "clause" appearing in the final sentence of
such definition and inserting in lieu thereof the following text: "(x)
in the case of Revolving Loans and Swingline Loans, clause (1)"; and
(v) inserting the following text immediately at the end of, and as
part of, the last sentence of such definition: "or (y) in the case of
Term Loans, clause (2)(A) or (B), if any, contained in this definition
shall be applicable."
4. The Existing Bank hereby sells and assigns to each of the New
Banks without recourse and without representation or warranty (other than as
expressly provided herein), and each New Bank hereby purchases and assumes from
the Existing Bank, that interest in and to each of the Existing Bank's rights
and obligations under the Credit Agreement as of the date hereof which in the
aggregate represents such New Bank's pro
-2-
<PAGE>
rata share (for each such New Bank, its "Pro Rata Share") as set forth on, and
in respect of the credit facilities listed on, Schedule B hereto (calculated
after giving effect to this Amendment), and such Pro Rata Share represents all
of the outstanding rights and obligations under the Credit Agreement that are
being sold and assigned to each New Bank, including, without limitation, (x) in
the case of any assignment of all or any portion of the Total Term Loan
Commitment, all rights and obligations with respect to such New Bank's Pro Rata
Share of such Total Term Loan Commitment, including all such rights and
obligations with respect to such New Bank's Pro Rata Share of outstanding Term
Loans, and (y) in the case of any assignment of all or any portion of the Total
Revolving Loan Commitment, all rights and obligations with respect to such New
Bank's Pro Rata Share of such Total Revolving Loan Commitment, including all
such rights and obligations with respect to such New Bank's Pro Rata Share of
outstanding Revolving Loans, Swingline Loans and Letters of Credit. After
giving effect to this Amendment, the Existing Bank's and New Banks' Term Loan
Commitment, outstanding Term Loans and Revolving Loan Commitment will be as set
forth on Schedule C hereto.
5. In accordance with the requirements of Section 13.04(b) of the
Credit Agreement, on the First Amendment Effective Date (as defined below), (i)
the Credit Agreement shall be amended by deleting Schedule I thereto in its
entirety and by inserting in lieu thereof a new Schedule I in the form of
Schedule C hereto and (ii) each Borrower agrees that it will issue an
appropriate Term Note and/or Revolving Note, as the case may be, to each Bank in
conformity with the requirements of Section 1.05 of the Credit Agreement.
6. On and after the First Amendment Effective Date, Schedule II to
the Credit Agreement shall be amended by deleting Schedule II in its entirety
and inserting in lieu thereof a new Schedule II in the form of Schedule D
hereto.
7. The Existing Bank (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Holdings,
the Borrowers or any of their respective Subsidiaries or the performance or
observance by Holdings, the Borrowers or any of their respective Subsidiaries of
any of their respective obligations under the Credit Agreement or the other
Credit Documents to which they are a party or any other instrument or document
furnished pursuant thereto.
-3-
<PAGE>
8. Each New Bank (i) confirms that it has received a copy of the
Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Amendment; (ii) agrees that it will, independently
and without reliance upon the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Transferee under Section
13.04(b) of the Credit Agreement; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; and (vi) to the extent relevant, agrees to promptly
submit to the Borrowers and the Agent the appropriate Internal Revenue Service
Forms described in Section 13.04(b) of the Credit Agreement.
9. The Existing Bank, the New Banks and the Agent hereby agree that
all amounts accrued with respect to the Commitments, the Loans or the Letters of
Credit prior to the delivery by such New Bank of the amount referred to in
clause (ii) of Section 15 of this Amendment, shall be for the account of the
Existing Bank and that all such amounts accrued after the delivery of such
amounts referred to in clause (ii) of such Section 15 shall be for the account
of such New Bank based upon its Pro Rata Share.
10. In accordance with Section 13.04(b) of the Credit Agreement, on
and as of the date upon which each New Bank delivers the amount referred to in
clause (ii) of Section 15 of this Amendment, such New Bank shall become a "Bank"
under, and for all purposes of, the Credit Agreement and the other Credit
Documents and, notwithstanding anything to the contrary in Section 13.17 of the
Credit Agreement, the Agent shall record the transfers contemplated hereby in
the Register.
11. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
12. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
-4-
<PAGE>
13. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
14. Subject to Section 15 of this Amendment, this Amendment shall
become effective on the date (the "First Amendment Effective Date") when (i)
Holdings, each Borrower, the Agent, the Existing Bank and each New Bank shall
have signed a counterpart hereof (whether the same or different counterparts)
and shall have delivered (including by way of facsimile transmission) the same
to the Agent at its Notice Office and (ii) each New Bank shall have delivered to
the Agent for the account of the Existing Bank, an amount equal to such New
Bank's Pro Rata Share of the principal amount of the outstanding Loans.
15. Notwithstanding Section 14 of this Amendment, if for any reason
any New Bank shall not have (i) signed a counterpart hereof and delivered the
same to the Agent at its Notice Office and (ii) delivered to the Agent an amount
equal to such New Bank's Pro Rata Share of the principal amount of the
outstanding Loans, in each case on or prior to August 12, 1997, then, if the
Existing Bank agrees, this Amendment shall become effective notwithstanding such
failure, provided that (x) Schedules A, B, C and D shall be modified to delete
--------
any such New Bank and such New Bank's Pro Rata Share shall be retained by the
Existing Bank and (y) the signature pages of this Amendment shall be deemed
revised to delete such New Bank's name therefrom.
16. From and after the First Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as amended
hereby.
* * *
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
THREE RIVERS HOLDING CORP.
By_________________________________________________
Name:
Title:
THREE RIVERS ACQUISITION CORP.
By_________________________________________________
Name:
Title:
SMT HEALTH SERVICES INC.
By_________________________________________________
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By_________________________________________________
Name:
Title:
<PAGE>
SALOMON BROTHERS HOLDING COMPANY INC
By_________________________________________________
Name:
Title:
LASALLE NATIONAL BANK
By_________________________________________________
Name:
Title:
PILGRIM AMERICA PRIME RATE TRUST
By_________________________________________________
Name:
Title:
PRIME INCOME TRUST
By_________________________________________________
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By_________________________________________________
Name:
Title:
<PAGE>
THE ING HIGH INCOME PRINCIPAL
PRESERVATION OFFERING, L.P.
By_________________________________________________
Name:
Title:
<PAGE>
SCHEDULE A
to
First Amendment
---------------
NEW BANKS
---------
SALOMON BROTHERS HOLDING COMPANY INC
LASALLE NATIONAL BANK
PILGRIM AMERICA PRIME RATE TRUST
PRIME INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
THE ING HIGH INCOME PRINCIPAL
PRESERVATION OFFERING, L.P.
<PAGE>
SCHEDULE B
to
First Amendment
---------------
PRO RATA SHARE
--------------
<TABLE>
<CAPTION>
================================================================================
Bank Total Term Loan Total Revolving Loan
Commitment and Commitment and
Outstanding Term Outstanding Revolving
Loans Loans
<S> <C> <C>
- --------------------------------------------------------------------------------
Bankers Trust Company 24% 33.3333%
- --------------------------------------------------------------------------------
Salomon Brothers 0% 33.3333%
Holding Company Inc
- --------------------------------------------------------------------------------
LaSalle National Bank 0% 33.3333%
- --------------------------------------------------------------------------------
Pilgrim America Prime 20% 0%
Rate Trust
- --------------------------------------------------------------------------------
Prime Income Trust 20% 0%
- --------------------------------------------------------------------------------
Van Kampen American 16% 0%
Capital Prime Rate
Income Trust
- --------------------------------------------------------------------------------
The ING High Income 20% 0%
Principal Preservation
Offering, L.P.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL 100% 100%
================================================================================
</TABLE>
<PAGE>
SCHEDULE C
to
First Amendment
---------------
COMMITMENTS
-----------
<TABLE>
<CAPTION>
================================================================================
Bank Term Loan Outstanding Revolving Loan
Commitment Term Loans Commitment
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Bankers Trust $ 2,633,852.40 $9,366,147.60 $10,000,000
Company
- --------------------------------------------------------------------------------
Salomon Brothers 0 0 $10,000,000
Holding Company
Inc
- --------------------------------------------------------------------------------
LaSalle National 0 0 $10,000,000
Bank
- --------------------------------------------------------------------------------
Pilgrim America $ 2,194,877.00 $ 7,805,123 0
Prime Rate Trust
- --------------------------------------------------------------------------------
Prime Income $ 2,194,877.00 $ 7,805,123 0
Trust
- --------------------------------------------------------------------------------
Van Kampen $ 1,755,901.60 $6,244,098.40 0
American Capital
Prime Rate
Income Trust
- --------------------------------------------------------------------------------
The ING High $ 2,194,877.00 $ 7,805,123 0
Income Principal
Preservation
Offering, L.P.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $10,974,385.00 $ 39,025,615 $30,000,000
================================================================================
</TABLE>
<PAGE>
SCHEDULE D
to
First Amendment
---------------
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Contact: Gregory Shefrin
Tel: 212-250-1724
Fax: 212-250-7218
Salomon Brothers Holding Company Inc
Seven World Trade Center
32nd Floor
New York, NY 10048
Contact: Townsend U. Weekes, Jr.
Tel: 212-783-7628
Fax: 212-783-2823
LaSalle National Bank
135 South LaSalle Street
Suite 242
Chicago, IL 60674
Contact: Ward Nixon
Tel: 312-904-8339
Fax: 312-904-4779
<PAGE>
Pilgrim America Prime Rate Trust
Two Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, AZ 85004
Contact: Howard Tiffen
Tel: 602-417-8259
Fax: 602-417-8327
Prime Income Trust
c/o Dean Witter Intercapital, Inc.
72nd Floor
Two World Trade Center
New York, NY 10048
Contact: Louis Pistecchia
Tel: 212-392-5845
Fax: 212-392-5345
Van Kampen American Capital Prime
Rate Income Trust
One Parkview Plaza
Oakbrook Terrace, IL 60181
Contact: Jeffrey Maillet
Tel: 630-684-6438
Fax: 630-684-6740
The ING High Income Principal
Preservation Offering, L.P.
333 S. Grand Avenue, Suite 4250
Los Angeles, CA 90071
Contact: Kathleen Lenarcic
Tel: 213-346-3971
Fax: 213-346-3995
-2-
<PAGE>
SMT
EPS Calculation- Modified Treasury Stock Meth
Six Months Ended June 30, 1997
( Before Extraordinary Item)
<TABLE>
<CAPTION>
Exercise Assumed Tax Total
Assumptions Shares Price Proceeds Benefit Proceeds
<S> <C> <C> <C> <C> <C>
Net income before extraordinary item $1,640,470
Common Shares Outstanding 5,080,500
20% of Common Shares Outstan 1,016,100
Common Stock Equivalent (Aggregate):
Warrants-IPO 0 $7.00 $ 0
Effect of 5% Div 0
Options- employees
1993 Grant 112,910 $3.10 $ 350,021 $284,082
1994 Grant 0 $1.27 $ 0 $ 0
1995 Grant 0 $2.29 $ 0 $ 0
1995 Grant- #2 155,150 $3.54 $ 549,231 $363,051
1996 Grant 32,849 $4.19 $ 137,637 $ 68,326
1996 Grant #2 244,880 $6.40 $1,567,232 $292,876
1997 Grant (May '97) 12,000 $9.81 $ 117,720 $ (2,016)
Options- Directors:
1992 Grant 2,247 $2.99 $ 6,719 $ 5,752
1993 Grant 2,247 $1.66 $ 3,730 $ 6,948
1994 Grant 2,247 $2.05 $ 4,606 $ 6,597
1995 Grant 2,247 $4.07 $ 9,145 $ 4,782
1996 Grant 6,741 $6.21 $ 41,862 $ 8,575
Warrants-Directors
All 425,000 $3.88 $1,649,000 $936,700
7% Dividend 29,750 $0.00 $ 0
Warrants- Commonwealth 0 $4.47 $ 0
Underwriter options 0 $5.94 $ 0
Underwriter Warrants ( Unit) 0 $7.00 $ 0
5% dividend on Warrant 0
Total CSE Aggregate 1,028,268 4,436,903 $1,975,672 $6,412,575
</TABLE>
<PAGE>
Average and Quarter End Market Value:
Average Closing Bid $9.39
Quarter End Closing Bid $11.56
<TABLE>
<CAPTION>
Computation: Primary Fully Diluted
<S> <C> <C>
Total Proceeds $6,412,575 $6,412,575
Application of assumed proceeds:
Toward repurchase of o/s shares $6,412,575 $6,412,575
Toward Paydown of debt $0 $0
$6,412,575 $6,412,575
Adjustment to Net Income:
Net income $1,640,470 $1,640,470
Interest expense reduction:
Debt paydown * avg. int rate*tax $0 $0
Adjusted Net Income $1,640,470 $1,640,470
Adjustments to Shares Outstanding:
Actual shares o/s 5,080,500 5,080,500
Net additional shares 345,353 473,547
Adjusted shares 5,425,853 5,554,047
Earnings Per Share before extraordinary item:
Before adjustment $0.32 $0.32
After adjustment $0.302 $0.30
</TABLE>
<PAGE>
SMT
EPS Calculation- Modified Treasury Stock Meth
Year Ended December 31, 1997
(After Extraordinary Item)
<TABLE>
<CAPTION>
Exercise Assumed Tax Total
Assumptions Shares Price Proceeds Benefit Proceeds
<S> <C> <C> <C> <C> <C>
Net income $1,459,470
Common Shares Outstanding 5,080,500
20% of Common Shares Outstanding 1,016,100
Common Stock Equivalent (Aggregate):
Warrants-IPO 0 $7.00 $ 0
Effect of 5% Div 0
Options- employees
1993 Grant 112,910 $3.10 $ 350,021 $284,082
1994 Grant 0 $1.27 $ 0 $ 0
1995 Grant 0 $2.29 $ 0 $ 0
1995 Grant- #2 155,150 $3.54 $ 549,231 $363,051
1996 Grant 32,849 $4.19 $ 137,637 $ 68,326
1996 Grant #2 244,880 $6.40 $1,567,232 $292,876
1997 Grant 12,000 $9.81 $ 117,720 ($2,016)
Options- Directors:
1992 Grant 2,247 $2.99 $ 6,719 $ 5,752
1993 Grant 2,247 $1.66 $ 3,730 $ 6,948
1994 Grant 2,247 $2.05 $ 4,606 $ 6,597
1995 Grant 2,247 $4.07 $ 9,145 $ 4,782
1996 Grant 6,741 $6.21 $ 41,862 $ 8,575
Warrants-Directors
All 425,000 $3.88 $1,649,000 $936,700
7% Dividend 29,750 $0.00 $0
Warrants- Commonwealth 0 $4.47 $0
Underwriter options 0 $5.94 $0
Underwriter Warrants (Units) 0 $7.00 $0
5% dividend on Warrants 0
Total CSE Aggregate 1,028,268 4,436,903 1,975,672 $6,412,575
</TABLE>
<PAGE>
Average and Quarter End Market Value:
Average Closing Bid $9.39
Quarter End Closing Bid $11.56
<TABLE>
<CAPTION>
Computation: Primary Fully Diluted
<S> <C> <C>
Total Proceeds $6,412,575 $6,412,575
Application of assumed proceeds:
Toward repurchase of o/s shares $6,412,575 $6,412,575
Toward Paydown of debt $0 $0
$6,412,575 $6,412,575
Adjustment to Net Income:
Net income $1,459,470 $1,459,470
Interest expense reduction:
Debt paydown * avg. int rate*tax $0 $0
Adjusted Net Income $1,459,470 $1,459,470
Adjustments to Shares Outstanding:
Actual shares o/s 5,080,500 5,080,500
Net additional shares 345,353 473,547
Adjusted shares o/s 5,425,853 5,554,047
Earnings Per Share:
Before adjustment $0.29 $0.29
After adjustment $0.269 $0.263
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1997 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,913,262
<SECURITIES> 0
<RECEIVABLES> 2,127,781
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,719,633
<PP&E> 42,286,868
<DEPRECIATION> 9,798,183
<TOTAL-ASSETS> 50,736,315
<CURRENT-LIABILITIES> 8,036,444
<BONDS> 0
0
0
<COMMON> 57,463
<OTHER-SE> 25,317,061
<TOTAL-LIABILITY-AND-EQUITY> 50,736,315
<SALES> 13,014,262
<TOTAL-REVENUES> 13,288,865
<CGS> 0
<TOTAL-COSTS> 9,473,762
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,079,633
<INCOME-PRETAX> 2,735,470
<INCOME-TAX> 1,095,000
<INCOME-CONTINUING> 1,640,470
<DISCONTINUED> 0
<EXTRAORDINARY> 181,000
<CHANGES> 0
<NET-INCOME> 1,459,470
<EPS-PRIMARY> .27
<EPS-DILUTED> 0
</TABLE>
