SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ____________ to
_____________.
Commission File Number: 0-20199
EXPRESS SCRIPTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1420563
State of Incorporation) (I.R.S. employer identification no.)
13900 Riverport Dr., Maryland Heights, Missouri 63043
(Address of principal executive offices) (Zip Code)
14000 Riverport Dr., Maryland Heights, Missouri 63043
(Former Address of principal executive offices)
Registrant's telephone number, including area code: (314) 770-1666
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 ___
Common stock outstanding as of July 31, 1999: 23,444,255 Shares Class A
15,020,000 Shares Class B
<PAGE>
EXPRESS SCRIPTS, INC.
INDEX
Page Number
Part I Financial Information 3
Item 1. Financial Statements (unaudited)
a) Consolidated Balance Sheet 3
b) Consolidated Statement of Operations 4
c) Consolidated Statement of Changes
in Stockholders' Equity 5
d) Consolidated Statement of Cash Flows 6
e) Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures About
Market Risks - 24
Part II Other Information
Item 1. Legal Proceedings 25
Item 2. Changes in Securities and Use of Proceeds 26
Item 3. Defaults Upon Senior Securities - (Not Applicable)
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 30
Index to Exhibits 31
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30, December 31,
(in thousands, except share data) 1999 1998
<S> <C> <C>
-------------- ----------------
Assets
Current assets:
Cash and cash equivalents $82,283 $122,589
Receivables, less allowance for doubtful
accounts of $15,586 and $17,806, respectively 561,247 433,006
Inventories 45,028 55,634
Deferred taxes 41,545 41,011
Prepaid expenses 6,190 4,667
-------------- ----------------
Total current assets 736,293 656,907
Property and equipment, less accumulated depreciation and amortization 88,073 77,499
Goodwill, less accumulated amortization 993,624 282,163
Other intangible assets, less accumulated amortization 181,640 61,761
Other assets 40,534 17,131
-------------- ----------------
Total assets $2,040,164 $1,095,461
============== ================
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $- $54,000
Claims and rebates payable 555,039 338,251
Accounts payable 71,692 60,247
Accrued expenses 120,924 86,798
-------------- ----------------
Total current liabilities 747,655 539,296
Long-term debt 724,048 306,000
Other liabilities 484 471
-------------- ----------------
Total liabilities 1,472,187 845,767
-------------- ----------------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, and
no shares issued
Class A Common Stock, $.01 par value, 150,000,000 shares authorized,
23,896,000 and 18,610,000 shares issued, 239 186
respectively
Class B Common Stock, $.01 par value, 31,000,000 shares authorized,
15,020,000 shares issued 150 150
Additional paid-in capital 414,329 110,099
Accumulated other comprehensive income (38) (74)
Retained earnings 160,286 146,322
-------------- ----------------
574,966 256,683
Class A Common Stock in treasury at cost, 475,000 shares (6,989) (6,989)
-------------- ----------------
Total stockholders' equity 567,977 249,694
-------------- ----------------
Total liabilities and stockholders' equity $2,040,164 $1,095,461
============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share data) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
----------- ----------- ----------- -------------
Net revenues $996,749 $807,406 $1,895,836 $1,178,768
----------- ----------- ----------- -------------
Cost and expenses:
Cost of revenues 869,989 743,557 1,693,636 1,082,049
Selling, general & administrative 81,897 39,266 128,337 58,092
Corporate restructuring 9,400 1,651 9,400 1,651
----------- ----------- ----------- -------------
961,286 784,474 1,831,373 1,141,792
----------- ----------- ----------- -------------
Operating income 35,463 22,932 64,463 36,976
----------- ----------- ----------- -------------
Interest income (expense):
Interest income 1,444 1,751 2,837 3,889
Interest expense (23,231) (6,867) (29,453) (6,881)
----------- ----------- ----------- -------------
(21,787) (5,116) (26,616) (2,992)
----------- ----------- ----------- -------------
Income before income taxes 13,676 17,816 37,847 33,984
Provision for income taxes 6,658 8,248 17,286 14,537
----------- ----------- ----------- -------------
Income before extraordinary item 7,018 9,568 20,561 19,447
Extraordinary loss on early retirement of debt, net of taxes
of $4,144 6,597 - 6,597 -
----------- ----------- ----------- --------------
Net income $421 $9,568 $13,964 $19,447
=========== =========== =========== =============
Basic earnings per share:
Before extraordinary item $0.20 $0.29 $0.61 $0.59
Extraordinary loss on early retirement of debt 0.19 - 0.19 -
----------- ----------- ----------- -------------
Net income $0.01 $0.29 $0.42 $0.59
=========== =========== =========== =============
Weighted average number of common shares out-
standing during the period - Basic EPS 34,055 33,100 33,633 33,077
=========== =========== =========== =============
Diluted earnings per share:
Before extraordinary item $0.20 $0.28 $0.59 $0.58
Extraordinary loss on early retirement of debt 0.19 - 0.19 -
----------- ----------- ----------- -------------
Net income $0.01 $0.28 $0.40 $0.58
=========== =========== =========== =============
Weighted average number of common shares out-
standing during the period - Diluted EPS 34,952 33,643 34,553 33,611
=========== =========== =========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Number of Shares Amount
------------------ ------------------------------------------------------------------------------
Accumulated
Class A Class B Class A Class B Additional Other
Common Common Common Common Paid-in Comprehensive Retained Treasury
(in thousands) Stock Stock Stock Stock Capital Income Earnings Stock Total
- ------------------------------- ------------------ -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 18,610 15,020 $186 $150 $110,099 $(74) $146,322 $(6,989) $249,694
------------------ -------------------------------------------------------------------------------
Comprehensive income:
Net income 13,964 13,964
Other comprehensive income,
Foreign currency
translation adjustment - - - - - 36 - - 36
------------------ -------------------------------------------------------------------------------
Comprehensive income - - - - - 36 13,964 - 14,000
Issuance of common stock 5,175 52 299,260 299,312
Exercise of stock options 111 1 3,206 3,207
Tax benefit relating to
employee stock options - - - - 1,764 - - - 1,764
------------------ -------------------------------------------------------------------------------
Balance at June 30, 1999 23,896 15,020 $239 $150 $414,329 $(38) $160,286 $(6,989) $567,977
================== ===============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(in thousands) 1999 1998
- ------------------ ------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $13,964 $19,447
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 30,081 10,135
Deferred income taxes 4,429 (526)
Bad debt expense 2,223 1,472
Tax benefit relating to employee stock options 1,764 941
Corporate restructuring charge, less cash payments 9,400 1,651
Extraordinary loss on early retirement of debt 10,741
Net changes in operating assets and liabilities,
net of changes resulting from acquisitions (20,186) 38,937
----------------- -----------------
Net cash provided by operating activities 52,416 72,057
----------------- -----------------
Cash flows from investing activities:
Purchases of property and equipment (16,178) (9,244)
Acquisitions, net of cash acquired (717,886) (460,137)
Short-term investments - 57,938
----------------- -----------------
Net cash (used in) investing activities (734,064) (411,443)
----------------- -----------------
Cash flows from financing activities:
Repayment of long-term debt (924,770)
Proceeds from long-term debt 1,288,815 360,000
Net proceeds from issuance of common stock 299,312
Financing fees paid (25,258) (4,062)
Other, net 3,207 1,256
----------------- -----------------
Net cash provided by financing activities 641,306 357,194
----------------- -----------------
Effect of foreign currency translation adjustment 36 (19)
----------------- -----------------
Net (decrease) increase in cash and cash equivalents (40,306) 17,789
Cash and cash equivalents at beginning of period 122,589 64,155
----------------- -----------------
Cash and cash equivalents at end of period $82,283 $81,944
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
EXPRESS SCRIPTS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Certain financial statement note disclosures, normally included in
financial statements prepared in conformity with generally accepted accounting
principles, have been omitted in this Form 10-Q pursuant to the Rules and
Regulations of the Securities and Exchange Commission. However, in the opinion
of the Company, the disclosures contained in this Form 10-Q are adequate to make
the information presented not misleading when read in conjunction with the notes
to consolidated financial statements included in the Company's Annual Report on
Form 10-K/A for the Year Ended December 31, 1998, as filed with the Securities
and Exchange Commission on June 10, 1999.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the Unaudited Consolidated
Balance Sheet at June 30, 1999, the Unaudited Consolidated Statement of
Operations for the three months and six months ended June 30, 1999, and 1998,
the Unaudited Consolidated Statement of Changes in Stockholders' Equity for the
six months ended June 30, 1999, and the Unaudited Consolidated Statement of Cash
Flows for the six months ended June 30, 1999 and 1998. Operating results for the
three months and six months ended June 30, 1999 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1999.
Note 2 - Earnings Per Share
Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed in the same manner as basic earnings per share but adds the number of
additional common shares that would have been outstanding for the period if the
dilutive potential common shares had been issued. The only difference between
the number of weighted average shares used in the basic and diluted calculation
for all years is stock options and stock warrants granted by the Company using
the "treasury stock" method.
Note 3 - Acquisition
On April 1, 1999 the Company completed its acquisition of Diversified
Pharmaceutical Services, Inc. and Diversified Pharmaceutical Services (Puerto
Rico) Inc. (collectively, "DPS"), from SmithKline Beecham Corporation and
SmithKline Beecham InterCredit BV (collectively, "SB") for approximately $718
million, which includes a purchase price adjustment for closing working capital
and transaction costs. The Company will file an Internal Revenue Code
ss.338(h)(10) election, making amortization expense of intangible assets,
including goodwill, tax deductible. The Company used approximately $48 million
of its own cash and financed the remainder of the purchase price and related
acquisition costs through a $1.05 billion credit facility and a $150 million
senior subordinated bridge credit facility (see Note 4). On June 18, 1999, SB
transferred ownership of Diversified Prescription Delivery L.L.C. ("DPD"), to
the Company, pursuant to the Company's agreement with SB in connection with the
acquisition of DPS.
The acquisition has been accounted for using the purchase method of
accounting. The results of operations of DPS have been included in the
consolidated financial statements and pharmacy benefit management ("PBM")
segment since April 1, 1999. The purchase price has been preliminarily allocated
based on the estimated fair values of net assets acquired at the date of the
acquisition. The excess of purchase price over tangible net assets acquired has
been preliminarily allocated to other intangible assets consisting of customer
contracts in the amount of $129,500,000 which are being amortized using the
straight-line method over the estimated useful lives of 1 to 20 years and are
included in other intangible assets, and goodwill in the amount of $734,059,000
which is being amortized using the straight-line method over the estimated
useful life of 30 years. In conjunction with the acquisition, DPS retained the
following liabilities:
<TABLE>
<CAPTION>
(in thousands)
- ------------------------------------------------------------------
<S> <C>
Fair value of assets acquired $993,475
Cash paid for the capital stock (717,886)
-----------------------
Liabilities retained $275,589
=======================
</TABLE>
On April 1, 1998, the Company acquired all of the outstanding capital stock
of Value Health, Inc. and Managed Prescription Network, Inc. (collectively,
known as "ValueRx") from Columbia/HCA Healthcare Corporation ("Columbia") for
approximately $460 million in cash (which includes transactions costs and
executive management severance costs of approximately $15 million),
approximately $360 million of which was obtained through a bank credit facility
(see Note 4) and the remainder from the Company's cash balances and short-term
investments.
The acquisition has been accounted for using the purchase method of
accounting and the results of operations of ValueRx have been included in the
consolidated financial statements and PBM segment since April 1, 1998. The
purchase price has been allocated based on the estimated fair values of net
assets acquired at the date of the acquisition. The excess of purchase price
over tangible net assets acquired has been allocated to other intangible assets
consisting of customer contracts and non-compete agreements in the amount of
$57,653,000 which are being amortized using the straight-line method over the
estimated useful lives of 2 to 20 years and are included in other assets, and
goodwill in the amount of $278,113,000 which is being amortized using the
straight-line method over the estimated useful life of 30 years. The
amortization expense from ValueRx goodwill and customer contracts is
non-deductible for income tax purposes. In conjunction with the acquisition, the
Acquired Entities and their subsidiaries retained the following liabilities:
<TABLE>
<CAPTION>
(in thousands)
- ----------------------------------------------------------------
<S> <C>
Fair value of assets acquired $659,166
Cash paid for the capital stock (460,137)
-----------------
Liabilities retained $199,029
==================
</TABLE>
The following unaudited pro forma information presents a summary of
combined results of operations of the Company, DPS and ValueRx as if the
acquisitions had occurred at the beginning of the periods presented, along with
certain pro forma adjustments to give effect to amortization of goodwill, other
intangible assets, interest expense on acquisition debt and other adjustments.
The pro forma financial information is not necessarily indicative of the results
of operations as they would have been had the transaction been effected on the
assumed dates. Included in the pro forma information are certain integration
costs incurred by the Company that are being reported within selling, general
and administrative expenses in the statement of operations.
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share data) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net revenues $1,961,202 $1,684,620
Income before extraordinary loss 8,037 5,276
Extraordinary loss 6,597
Net income 1,440 5,276
Basic earnings per share
Before extraordinary loss 0.24 0.16
Extraordinary loss 0.19
Net income 0.05 0.16
Diluted earnings per share
Before extraordinary loss 0.23 0.16
Extraordinary loss 0.19
Net income 0.04 0.16
</TABLE>
Note 4 - Financing
Long-term debt consists of:
<TABLE>
<CAPTION>
June 30, December 31,
(in thousands) 1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit facility due March 31, 2005
with an interest rate of 7.92% at June 30, 1999 $140,000 $-
Term credit facility due April 15, 2003 360,000
Term A loans due March 31, 2005 with an interest
rate of 7.92% at June 30, 1999 285,000
Term B loans due March 31, 2007 with an interest
rate of 8.52% at June 30, 1999 50,230
9.625% Senior Notes due June 15, 2009 with an
effective interest rate of 9.7%,
net of unamortized discount of $1,182 248,818 -
-----------------------------
Total debt 724,048 360,000
Less current maturities - 54,000
-----------------------------
Long-term debt $724,048 $306,000
=============================
</TABLE>
On April 1, 1999, the Company executed a $1.05 billion credit facility
("Credit Facility") with a bank syndicate led by Credit Suisse First Boston and
Bankers Trust Company, consisting of $750 million in term loans, including $285
million of Term A loans and $465 million of Term B loans, and a $300 million
revolving credit facility. The Credit Facility is secured by the capital stock
of each of the Company's existing and subsequently acquired domestic
subsidiaries, excluding Practice Patterns Science, Inc. ("PPS"), and Great
Plains Reinsurance Company ("Great Plains"), ValueRx of Michigan, Inc.,
Diversified NY IPA, Inc. and Diversified Pharmaceutical Services (Puerto Rico),
Inc., and is also secured by 65% of the stock of the Company's foreign
subsidiaries. The provisions of the Credit Facility require quarterly interest
payments based on several London Interbank Offered Rates ("LIBOR") or base rate
options plus an interest rate spread. The Credit Facility contains covenants
that limit the indebtedness the Company may incur, dividends paid and the amount
of annual capital expenditures. The covenants also establish a minimum interest
coverage ratio, a maximum leverage ratio, and a minimum fixed charge coverage
ratio. In addition, the Company is required to pay an annual fee of 0.5%,
payable in quarterly installments, on the unused portion of the revolving credit
facility ($160 million at June 30, 1999). At June 30, 1999, the Company was in
compliance with all covenants associated with the Credit Facility.
Also on April 1, 1999, the Company executed a $150 million senior
subordinated bridge credit facility with Credit Suisse First Boston and Bankers
Trust Company. The proceeds from this facility and approximately $890 million in
proceeds from the Credit Facility were used to consummate the DPS acquisition
(see Note 3) and repay $360 million outstanding under the Company's pre-existing
$440 million credit facility. The bridge facility required the Company to make
quarterly interest payments on an interest rate spread over several LIBOR or
base rate options. This facility was retired in June 1999, upon the completion
of the Company's equity offering (see Note 6).
On June 16, 1999, the Company completed the offering of $250 million in
Senior Notes through a private placement under Rule 144A of the Securities Act
of 1933, as amended. The Company filed a registration statement (No. 333-83133),
which was declared effective on August 4, 1999, to exchange the privately placed
Senior Notes for registered Senior Notes on substantially the same terms. The
Senior Notes require interest to be paid semi-annually on June 15th and December
15th. The Senior Notes also provide the Company an opportunity to call the debt
at specified rates beginning in June 2004. The net proceeds from the Senior
Notes offering, along with a portion of the net proceeds from the equity
offering and $23,901,000 of the Company's own cash were used to repay
$414,770,000 of the Term B loans. As a result of the refinancing of the $440
million credit facility and the repayment of the Term B loans, the Company
recognized a $6,597,000, net of tax, extraordinary loss from the write-off of
deferred financing fees. The Senior Notes are guaranteed by the Company's
domestic subsidiaries other than Practice Patterns Science, Inc., Great Plains
Reinsurance Company, ValueRx of Michigan, Inc., Diversified NY IPA and
Diversified Pharmaceutical Services (Puerto Rico). The following is a summary of
financial position and results of operations of the issuer, the guarantor
subsidiaries and the non-guarantor subsidiaries:
<TABLE>
<CAPTION>
Express Non
(amounts in thousands) Scripts, Inc. Guarantors Guarantors Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
------------- --------------- ---------- ------------ ------------
As of June 30, 1999
Current assets $425,079 $304,507 $6,707 $- $736,293
Property and equipment, net 32,180 52,817 3,076 88,073
Investments in subsidiaries 785,937 74,297 264 (860,498)
Intercompany 349,350 (346,586) (2,764)
Goodwill, net 189 993,435 993,624
Other intangible assets, net 7,535 174,018 87 181,640
Other assets 16,092 24,889 (300) (147) 40,534
------------- --------------- ----------- ------------ -------------
Total assets $1,616,362 $1,277,377 $7,070 $(860,645) $2,040,164
============= =============== =========== ============ =============
Current liabilities $345,903 $396,728 $5,024 $- $747,655
Long-term debt 724,048 724,048
Other liabilities 225 155 104 484
Stockholders' equity 546,186 880,494 1,942 (860,645) 567,977
------------- --------------- ----------- ------------ ------------
Total liabilities and
stockholders' equity $1,616,362 $1,277,377 $7,070 $(860,645) $2,040,164
============= =============== ========== ============ ============
As of December 31, 1998
Current assets $463,818 $188,978 $4,111 $- $656,907
Property and equipment, net 27,375 46,817 3,307 77,499
Investments in subsidiaries 68,198 74,297 264 (142,759)
Intercompany 363,455 (361,202) (2,253)
Goodwill, net 210 281,953 282,163
Other intangible assets, net 8,317 53,333 111 61,761
Other assets 4,466 12,520 145 - 17,131
------------- -------------- ---------- ------------- -------------
Total assets $935,839 $296,696 $5,685 $(142,759) $1,095,461
============= ============== ========== ============= =============
Current liabilities $394,553 $141,433 $3,310 $- $539,296
Long-term debt 306,000 306,000
Other liabilities 779 (251) (57) 471
Stockholders' equity 234,507 155,514 2,432 (142,759) 249,694
------------- -------------- ----------- -------------- -------------
Total liabilities and
stockholders' equity $935,839 $296,696 $5,685 $(142,759) $1,095,461
============= ============== =========== ============= ============
Three months ended June 30, 1999
Net revenues $513,958 $471,276 $11,515 $- $996,749
Operating expenses 485,009 465,058 11,219 - 961,286
------------- -------------- ----------- -------------- ------------
Operating income (loss) 28,949 6,218 296 - 35,463
Interest income (expense) (21,984) 145 52 - (21,787)
------------- -------------- ----------- -------------- ------------
Income (loss) before tax provision 6,965 6,363 348 - 13,676
Income tax provision (benefit) 3,115 3,378 165 - 6,658
------------- -------------- ----------- -------------- ------------
Income (loss) before extraordinary 3,850 2,985 183 - 7,018
Extraordinary loss 6,597 - - - 6,597
------------- -------------- ----------- -------------- ------------
Net income (loss) $(2,747) $2,985 $183 $- $421
============= ============== =========== ============== ============
</TABLE>
<TABLE>
<CAPTION>
Express Non-
(amounts in thousands) Scripts, Inc. Guarantors Guarantors Eliminations Consolidated
------------- --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Three months ended June 30, 1998
Net revenues $396,601 $408,492 $2,313 $- $807,406
Operating expenses 386,805 395,053 2,616 - 784,474
-------------- --------------- ----------- ------------- ------------
Operating income (loss) 9,796 13,439 (303) - 22,932
Interest income (expense) (5,294) 152 26 - (5,116)
-------------- --------------- ----------- ------------- ------------
Income (loss) before tax provision 4,502 13,591 (277) - 17,816
Income tax provision (benefit) 2,828 5,509 (89) - 8,248
-------------- --------------- ----------- ------------- ------------
Income (loss) before extraordinary 1,674 8,082 (188) - 9,568
Extraordinary loss - - - - -
-------------- --------------- ----------- ------------- ------------
Net income (loss) $1,674 $8,082 $(188) $- $9,568
============== =============== =========== ============= ============
Six months ended June 30, 1999
Net revenues $1,007,503 $873,154 $15,179 $- $1,895,836
Operating expenses 951,365 865,756 14,252 - 1,831,373
-------------- --------------- ----------- ------------- -------------
Operating income (loss) 56,138 7,398 927 - 64,463
Interest income (expense) (26,923) 211 96 - (26,616)
-------------- --------------- ----------- ------------- -------------
Income (loss) before tax provision 29,215 7,609 1,023 - 37,847
Income tax provision (benefit) 11,566 5,272 448 - 17,286
-------------- --------------- ------------ ------------- -------------
Income (loss) before extraordinary 17,649 2,337 575 - 20,561
Extraordinary loss 6,597 - - - 6,597
-------------- --------------- ------------ ------------- -------------
Net Income (loss) $11,052 $2,337 $575 $- $13,964
============== =============== ============ ============= =============
Six months ended June 30, 1998
Net revenues $761,572 $412,399 $4,797 $- $1,178,768
Operating expenses 737,871 398,835 5,086 - 1,141,792
-------------- --------------- ------------ -------------- ---------------
Operating income (loss) 23,701 13,564 (289) - 36,976
Interest income (expense) (3,192) 152 48 - (2.992)
-------------- --------------- ------------ -------------- --------------
Income (loss) before tax provision 20,509 13,716 (241) - 33,984
Income tax provision (benefit) 9,032 5,557 (52) - 14,537
-------------- --------------- ------------ -------------- --------------
Income (loss) before extraordinary 11,477 8,159 (189) - 19,447
Extraordinary loss - - - - -
-------------- --------------- ------------ -------------- --------------
Net Income (loss) $11,477 $8,159 $(189) $- $19,447
============== =============== ============ ============= ==============
</TABLE>
The following represents the schedule of current maturities (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------
<S> <C> <C>
1999 $-
2000
2001 42,750
2002 57,000
2003 57,000
Thereafter 567,298
----------------
$724,048
================
</TABLE>
To manage its interest rate risk the Company entered into an interest rate
swap agreement ("swap") with The First National Bank of Chicago, a subsidiary of
Bank One Corporation, on April 3, 1998. At June 30, 1999, the swap had a
notional principal amount of $333 million. Under the terms of the swap, the
Company agreed to receive a floating rate of interest on the amount of the term
loan facility based on a three-month LIBOR rate in exchange for payment of a
fixed rate of interest of 5.88% per annum. The notional principal amount of the
swap amortizes $27 million in October 1999, increasing to $36 million in April
2000, to $45 million in April 2001 and to $48 million in April 2002. As a
result, the Company has, in effect, converted $333 million of its variable rate
debt under the Credit Facility to fixed rate debt at 5.88% per annum for the
first four years of the Credit Facility, plus the interest rate spread.
Note 5 - Restructuring
During the second quarter of 1999, the Company recorded a pre-tax
restructuring charge of $9,400,000 ($5,773,000 after taxes or $0.17 per basic
and diluted share) associated with the consolidation of the Company's Plymouth,
Minnesota facility into the Company's Bloomington, Minnesota facility. The
consolidation plan includes the relocation of all non-call center employees at
the Plymouth facility to the Bloomington facility beginning in August 1999 and
ending in February 2000. Included in the restructuring charge are anticipated
cash expenditures of approximately $5,700,000 for lease termination fees and
rent on unoccupied space and anticipated non-cash charges of approximately
$3,700,000 for the write-down of leasehold improvements and furniture and
fixtures. The restructuring charge does not include any costs associated with
the physical relocation of the employees.
During the second quarter of 1998, the Company recorded a pre-tax
restructuring charge of $1,651,000 ($1,002,000 after taxes or $0.03 per basic
and diluted share) associated with the Company closing the non-PBM service
operations of its wholly-owned subsidiary, PhyNet, Inc., and transferring
certain functions of its Express Scripts Vision Corporation to another vision
care provider. The Company anticipates completing the remainder of the
restructuring actions by the end of the third quarter of 1999.
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Utilized June 30,
(in thousands) 1998 Additions Cash Noncash 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Write-down of long-lived assets $531 $3,700 $ - $(173) $4,058
Employee transition costs for 61 employees 232 (13) - 219
Lease termination fees and rent - 5,700 - - 5,700
--------------------------------------------------------------------------------
$763 $9,400 $(13) $(173) $9,977
================================================================================
</TABLE>
Both restructuring charges include tangible assets to be disposed of being
written down to their net realizable value, less cost of disposal. Management
expects recovery to approximate its cost of disposal. Considerable management
judgment is necessary to estimate fair value; accordingly, actual results could
vary from such estimates.
Note 6 - Common Stock
In June 1999, the Company consummated its offering of 5,175,000 shares of
its Class A common stock at a price of $61 per share. The net proceeds of
$299,312,000 were used to retire the $150 million senior subordinated bridge
credit facility and a portion of the Term B loans under the $1.05 billion credit
facility (see Note 5).
Note 7 - Segment Reporting
The Company is organized on the basis of services offered and has
determined that it has two reportable segments: PBM services and non-PBM
services. The Company manages the pharmacy benefit within an operating segment
that encompasses a fully integrated PBM service. The remaining three operating
service lines (IVTx, Specialty Distribution and Vision) have been aggregated
into a non-PBM reporting segment.
The following table presents information about the reportable segments for
the six months ended June 30:
<TABLE>
<CAPTION>
(in thousands) PBM Non-PBM Total
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
1999
Net revenues $1,865,903 $29,933 $1,895,836
Income before income taxes 34,957 2,890 37,847
1998
Net revenues $1,152,014 $26,754 $1,178,768
Income before income taxes 32,394 1,590 33,984
</TABLE>
As of June 30, 1999 and December 31, 1998, total assets for the PBM segment
were $2,015,244,000 and $1,068,715,000, respectively, and the Non-PBM segment
were $24,920,000 and $26,746,000, respectively.
Note 8 - Subsequent Events
In July 1999, the Company retired the remaining Term B loans outstanding of
$50,230,000 through use of its own cash. As a result, the Company will record an
extraordinary charge during the third quarter of 1999 for the write-off of the
remaining deferred financing fees in the amount of $901,000, approximately
$553,000 net of tax.
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
In this item 2, "we," "us," "our" and the "Company" refer to Express
Scripts, Inc. and its subsidiaries, unless the context indicates otherwise.
Information included in this Quarterly Report on Form 10-Q, and information that
may be contained in other filings by us with the Securities and Exchange
Commission (the "Commission") and releases issued or statements made by us,
contain or may contain forward-looking statements, including but not limited to
statements of our plans, objectives, expectations or intentions, including as to
Year 2000 issues. Such forward-looking statements necessarily involve risks and
uncertainties. Our actual results may differ significantly from those projected
or suggested in any forward-looking statements. Factors that might cause such a
difference to occur include, but are not limited to:
* risks associated with the consummation and financing of acquisitions,
including our ability to successfully integrate the operations of the
acquired businesses with our existing operations, client retention issues,
and risks inherent in the acquired entities' operations
* risks associated with obtaining financing and capital
* risks associated with our ability to manage growth
* competition, including price competition, competition in the bidding and
proposal process and our ability to consummate contract negotiations with
prospective clients
* the possible termination of contracts with certain key clients or providers
* the possible termination of contracts with certain key pharmaceutical
manufacturers and changes in pricing, discount, rebate or other practices
of pharmaceutical manufacturers
* adverse results in litigation
* adverse results in regulatory matters, the adoption of adverse legislation
or regulations, more aggressive enforcement of existing legislation or
regulations, or a change in the interpretation of existing legislation or
regulations
* developments in the healthcare industry, including the impact of increases
in healthcare costs, changes in drug utilization patterns and introductions
of new drugs
* risks associated with the "Year 2000" issue
* dependence on key members of management
* our relationship with New York Life Insurance Company, which possesses
voting control of us
* other risks described from time to time in our filings with the Commission.
We do not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
Overview
On April 1, 1999, we completed our second major acquisition by acquiring
Diversified Pharmaceutical Services, Inc. and Diversified Pharmaceutical
Services (Puerto Rico) Inc. (collectively "DPS") from SmithKline Beecham
Corporation ("SmithKline Beecham") and SmithKline Beecham InterCredit BV for
approximately $718 million, which includes a purchase price adjustment for
closing working capital and transaction costs. On April 1, 1998, we consummated
our first major acquisition by acquiring Value Health, Inc. and Managed
Prescription Network, Inc. (collectively, "ValueRx"), the pharmacy benefit
management ("PBM") operations of Columbia/HCA Healthcare Corporation
("Columbia"), for approximately $460 million in cash, which includes transaction
costs and executive management severance costs of approximately $6.7 million and
$8.3 million, respectively. Consequently, our operating results include those of
DPS from April 1, 1999 and ValueRx from April 1, 1998. The net assets acquired
from DPS have been preliminarily recorded at their estimated fair value,
resulting in $734,059,000 of goodwill that is being amortized over 30 years. The
net assets acquired from ValueRx have been recorded at their estimated fair
value, resulting in $278,113,000 of goodwill that is being amortized over 30
years. Both acquisitions have been accounted for under the purchase method of
accounting.
Consistent with ValueRx, the DPS acquisition has contributed substantially
to our membership. As of June 30, 1999, our membership was approximately 36
million members, excluding approximately 10 million members from United
HealthCare Corp. ("UHC") whose contract expires in May 2000, compared to 23
million members as of June 30, 1998. As a result of our DPS acquisition, we have
one of the largest managed care membership bases of any PBM. Although membership
counts are based on our electronic eligibility data file, they involve some
estimates, extrapolations and approximations. For example, some plan designs
allow for family coverage under one identification number, and we make
assumptions about the average number of persons per family in calculating our
total membership. Because these assumptions may vary between PBMs, membership
counts may not be comparable between our competitors and us. However, we believe
our membership count provides a reasonable estimation of the population we
serve, and can be used as one measure of our growth. The acquisitions also
increased the scale of our business, expanded our client base, increased our
penetration of PBM markets and expanded our product and service offerings.
We primarily derive our revenues from the sale of PBM services in the
United States and Canada. Our PBM net revenues generally include administrative
fees, dispensing fees and ingredient costs of pharmaceuticals dispensed from
retail pharmacies included in one of our networks or from one of our mail
pharmacies. We then record the associated costs in cost of revenues. Where we
only administer the contracts between our clients and the clients' retail
pharmacy networks, or where we are not liable to pay the pharmacy for the
ingredient cost of dispensed drugs, we record as net revenues only the
administrative fees we receive from our activities. We also derive PBM net
revenues from the sale of informed decision counseling services through our
Express Health LineSM division and the sale of medical information management
services, which include provider profiling, formulary management support
services and outcomes assessments, through our Practice Patterns Science, Inc.
subsidiary. Non-PBM net revenues are derived from:
o The sale of pharmaceuticals for and the provision of infusion therapy
services through our IVTx, Inc. subsidiary
o Administrative fees received for members using our vision program through
our alliance with Cole Managed Vision ("Cole"), a subsidiary of Cole
National Corporation
o Administrative fees received from drug manufacturers for the dispensing or
distribution of pharmaceuticals through our Specialty Distribution
division.
Results Of Operations
<TABLE>
<CAPTION>
Net Revenues
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 1999 % Increase 1998 1999 % Increase 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PBM $981,467 23.8% $793,090 $1,865,903 62.0% $1,152,014
Non-PBM 15,282 6.8% 14,316 29,933 11.9% 26,754
--------------------------------------------------------------------------------------------
Net revenues $996,749 23.5% $807,406 $1,895,836 60.8% $1,178,768
============================================================================================
</TABLE>
Total net revenues for the second quarter of 1999 increased $189,343,000,
or 23.5%, compared to the second quarter of 1998. The increase is primarily due
to the increase in the number of retail pharmacy network claims and mail
pharmacy claims processed, and the acquisition of DPS. Although the DPS
acquisition approximately doubled the size of our membership base, it did not
double the size of our revenues. DPS only records the retail pharmacy network
claims processing administrative fee it receives as net revenue and not the drug
ingredient cost, irrespective of a member utilizing a retail pharmacy included
in one of DPS's networks or its clients' network. DPS does not have any
contractual liability to reimburse the retail pharmacy in its network, but
merely remits its client's payments through to the retail pharmacy.
Total net revenues for the six months ended 1999 increased $717,068,000, or
60.8%, compared to the first six months of 1998. The increase is primarily due
to the inclusion of ValueRx for the full six months of 1999 compared to only the
second quarter of 1998, the increased processing of retail pharmacy network
claims and mail pharmacy claims, and the acquisition of DPS.
The majority of the increase in net revenues for the second quarter of 1999
and the six months ended 1999 were derived from our PBM services. Network
pharmacy claims processed increased 146.5% and 126.5% in the second quarter of
1999 over 1998 and the first six months of 1999 over 1998, respectively. The
significant increase in the second quarter of 1999 network pharmacy claims
processed is primarily due to the acquisition of DPS and, to a lesser extent, a
larger membership base utilizing our network pharmacy services. The significant
increase in the six months ended June 30, 1999 network pharmacy claims is due to
the factors above and the inclusion of ValueRx for the full six months of 1999
compared to only the second quarter of 1998. The average net revenue per network
pharmacy claim decreased 49.2% and 27.2% in the second quarter of 1999 over 1998
and the first six months of 1999 over 1998, respectively. The decrease is
directly due to the acquisition of DPS. Excluding DPS, the average net revenue
per network pharmacy claim increased 1.2% and 10.0% in the second quarter of
1999 over 1998 and the first six months of 1999 over 1998, respectively. The
increase for the first six months of 1999 is primarily due to the inclusion of
ValueRx for the full six months of 1999 compared to only the second quarter of
1998. Substantially all ValueRx clients used retail pharmacy networks
established by ValueRx, rather than retail pharmacy networks established by its
clients, resulting in our recording dispensing fees and ingredient costs in net
revenues and cost of revenues, respectively. As a result of the above factors,
network pharmacy claims net revenues increased $146,607,000, or 25.2%, and
$540,522,000, or 65.0%, in the second quarter of 1999 over 1998 and the first
six months of 1999 over 1998, respectively.
Mail pharmacy claims processed increased 9.3% and 44.3% in the second
quarter of 1999 over 1998 and the first six months of 1999 over 1998,
respectively. The significant increase for the six months of 1999 is primarily
due to the inclusion of ValueRx for the full six months of 1999 compared to only
the second quarter of 1998. The average net revenue per mail pharmacy claim
increased 6.9% and 5.4% in the second quarter of 1999 over 1998 and the first
six months of 1999 over 1998, respectively. Due to the above factors, mail
pharmacy net revenues increased $34,997,000, or 16.9%, and $162,477,000 or
52.0%, in the second quarter of 1999 over 1998 and the first six months of 1999
over 1998, respectively.
Net revenues from our non-PBM services increased 6.8% and 11.9% in the
second quarter of 1999 over 1998 and the first six months of 1999 over 1998,
respectively. The increases were primarily due to a change in product mix sold,
which resulted in higher drug ingredient costs. These increases were partially
offset by the reduction in net revenues from our managed vision business due to
the restructuring of this operation.
<TABLE>
<CAPTION>
Cost and Expenses
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 1999 % Increase 1998 1999 % Increase 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PBM $857,941 17.1% $732,869 $1,670,033 57.3% $1,061,886
Percentage of PBM net revenues 87.4% 92.4% 89.5% 92.2%
Non-PBM 12,048 12.7% 10,688 23,603 17.1% 20,163
Percentage of non-PBM net revenues 78.8% 74.7% 78.9% 75.4%
----------------------------------------------------------------------------
Cost of revenues 869,989 17.0% 743,557 1,693,636 56.5% 1,082,049
Percentage of net revenues 87.3% 92.1% 89.3% 91.8%
Selling, general and administrative 63,539 87.1% 33,962 103,757 100.3% 51,805
Percentage of net revenues 6.4% 4.2% 5.5% 4.4%
Depreciation and amortization (1) 18,358 246.1% 5,304 24,580 291.0% 6,287
Percentage of net revenues 1.8% 0.7% 1.3% 0.5%
Corporate restructuring 9,400 469.4% 1,651 9,400 469.4% 1,651
Percentage of net revenues 0.9% 0.2% 0.5% 0.1%
============================================================================
Total cost and expenses $961,286 22.5% $784,474 $1,831,373 60.4% $1,141,792
============================================================================
Percentage of net revenues 96.4% 97.2% 96.6% 96.9%
<FN>
(1) Represents depreciation and amortization expense included in selling,
general and administrative expenses on our Statement of Operations. Cost of
revenues, above, also includes depreciation and amortization expense on property
and equipment of $2,216 and $4,481, respectively.
</FN>
</TABLE>
Our cost of revenues for PBM services as a percentage of PBM net revenues
decreased during the second quarter of 1999 over 1998 and during the first six
months of 1999 over 1998 primarily due to the acquisition of DPS, efficiencies
derived in processing pharmacy network and mail pharmacy claims, exclusive of
DPS, better formulary management, and increased revenues from integrated PBM
services, such as medical and drug data analysis, that provide higher gross
margins. These decreases were partially offset by higher drug ingredient costs
incurred in the mail pharmacy. Recently, we have been experiencing increasing
cost of revenues for PBM services as a percentage of PBM net revenues due to the
shift toward pharmacy networks established by us, as opposed to those
established by our clients. The acquisition of ValueRx accelerated this increase
as their clients primarily used retail pharmacy networks established by them. As
previously stated, DPS does not have any liability to retail pharmacies included
in its network. Therefore, it only records as net revenues its administrative
fees and no corresponding cost of revenue. Excluding DPS, this trend had begun
to stabilize as our gross margin percentage increased to 8.2% from 7.6% for the
second quarter of 1999 compared to 1998 and to 8.2% from 7.8% for the first six
months of 1999 compared to 1998 due to the factors discussed above. The
inclusion of DPS further increased our gross margin percentage to 12.6% for the
second quarter of 1999 compared to 1998 and to 10.5% for the first six months of
1999 compared to 1998. In future periods, we expect the gross margin percentage
will be greater than prior periods until we begin the process of converting DPS
clients to our pharmacy networks, at which time we anticipate that the gross
margin percentage will begin to decline, although profitability is not expected
to be affected by these changes.
Cost of revenues for non-PBM services increased as a percentage of non-PBM
net revenues from the second quarter of 1999 over 1998 and during the first six
months of 1999 over 1998. The increase is primarily due to the continued change
in the product mix sold resulting in additional costs of approximately
$1,069,000 and $1,812,000 during the second quarter of 1999 and the first six
months of 1999, respectively. This change was partially offset by our
development of new business that generated higher gross margins and the
reduction of overhead costs, as a percentage of non-PBM net revenues, due to the
change in product mix sold.
Selling, general and administrative expenses, excluding depreciation and
amortization, increased $29,577,000, or 87.1%, for the second quarter of 1999
compared to 1998 and $51,952,000, or 100.3%, for the first six months of 1999
over 1998. The increases are primarily due to our acquisition of DPS, costs
incurred during the integration of DPS and ValueRx, costs incurred in funding
our Internet operations, and costs required to expand the operational and
administrative support functions to enhance management of the pharmacy benefit.
The increase for the first six months of 1999 over 1998 is also due to the
inclusion of ValueRx for the full six months of 1999 compared to only the second
quarter of 1998. As a percentage of net revenues, selling, general and
administrative expenses, excluding depreciation and amortization, for the second
quarter of 1999 and for the first six months of 1999 increased to 6.4% and 5.5%
from 4.2% and 4.4% for the comparable periods in 1998, respectively. The
increase in the percentage of net revenues is primarily attributed to DPS's
revenue recognition policy, as discussed in "Overview" and "--Net Revenues."
As part of our overall plan to achieve operating economies, we are
integrating DPS and ValueRx into our historical business. To date, we have
substantially met our integration goals of maintaining high-quality service
levels; finalizing plans to integrate service delivery and site operations for
call center, mail service and account set-up services; combining sales, clinical
and corporate administrative functions; and completing a detailed financial plan
incorporating 1999 financial goals at the operating unit level. Integration
goals for the third quarter include: combining contracting procedures;
consolidation of administrative and operation functions in Minneapolis;
completion of the financial systems integration; marketing strengths of the
combined organization; combining the formulary management processing procedures
and operations; and consolidating benefit offerings for all employees for
January 1, 2000. During the second quarter of 1999 and the first six months of
1999, we capitalized $1,475,000 and $2,556,000 in new systems development costs
and we expensed $2,855,216 and $4,442,031 in incremental integration costs,
respectively.
Depreciation and amortization substantially increased during the second
quarter of 1999 over 1998 and the first six months of 1999 over 1998 due
principally to the acquisition of DPS and, to a lesser extent, the inclusion of
ValueRx for the entire six month period. During the second quarter of 1999, we
recorded amortization expense for goodwill and other intangible assets of
$12,031,000 associated with the acquisition of DPS. The remaining increase
during the second quarter of 1999 is primarily due to the expansion of our
operations and enhancement of our information systems to better manage the
pharmacy benefit.
The corporate restructuring charge for the second quarter of 1999 and the
first six months of 1999 is due to the consolidation of our Plymouth, Minnesota
facility into our Bloomington, Minnesota facility. The consolidation plan
includes the relocation of all non-call center employees at our Plymouth
facility to our Bloomington facility beginning in August 1999 and ending in
February 2000. Included within the restructuring charge are anticipated cash
expenditures of approximately $5,700,000 for lease termination fees and rent on
unoccupied space and anticipated non-cash charges of approximately $3,700,000
for the write-off of leasehold improvements and furniture and fixtures. The
restructuring charge does not include any costs associated with the physical
relocation of the employees.
<TABLE>
<CAPTION>
Interest Income (Expense), Net
Three Months Ended June 30, Six Months Ended June 30,
1999 % Increase/ 1998 1999 % Increase/ 1998
(in thousands) (Decrease) (Decrease)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 1,444 (17.5)% $ 1,751 $ 2,837 (27.1)% $ 3,889
Percentage of net revenues 0.1% 0.2% 0.1% 0.3%
Interest expense (23,231) 238.3% (6,867) (29,453) 328.0% (6,881)
Percentage of net revenues (2.3)% (0.9)% (1.6)% (0.6)%
----------------------------------------------------------------------------
Interest income (expense), net $(21,787) 325.9% $(5,116) $(26,616) 789.6% $(2,992)
============================================================================
Percentage of net revenues (2.2)% (0.6)% (1.4)% (0.3)%
</TABLE>
The significant increase in interest expense is due to our financing of the
DPS acquisition with $890 million in borrowings under our new $1.05 billion
credit facility and a $150 million bridge credit facility, as discussed in
"Liquidity and Capital Resources." The increase for the first six months of 1999
over 1998 is also due to the acquisition of ValueRx occurring in the second
quarter of 1998. Interest expense for the first quarter of 1998 was nominal.
Interest income decreased during the first six months of 1999 over 1998 due to
our investment of cash balances and short-term investments at higher interest
rates in 1998 than those received in 1999. Had our equity offering and Senior
Notes offering (see "Liquidity and Capital Resources") been completed as of
April 1, 1999, interest expense for the three months and six months ending June
30, 1999 would have been reduced by approximately $6,200,000.
<TABLE>
<CAPTION>
Provision for Income Taxes
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 1999 % Decrease 1998 1999 % Increase 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for income taxes $ 6,658 (19.3)% $ 8,248 $17,286 18.9% $14,537
Effective tax rate 48.7% 46.3% 45.7% 42.8%
</TABLE>
Our effective tax rate increased in the second quarter of 1999 over 1998
and the first six months of 1999 over 1998 primarily due to the lower income
before income taxes resulting from the one-time corporate restructuring charge
for the Minneapolis facility consolidation. Excluding this charge, our effective
tax rate would have been 44.6% and 44.3% for the second quarter of 1999 and the
first six months of 1999, respectively. The remaining increase in the effective
tax rate for the first six months of 1999 is primarily due to non-deductible
goodwill and customer contracts amortization expense resulting from the ValueRx
acquisition which is included in the entire six month period for 1999 compared
to only three months in 1998.
<TABLE>
<CAPTION>
Net Income and Earnings Per Share
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 1999 % Decrease 1998 1999 % Decrease 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 421 (95.6)% $ 9,568 $13,964 (28.2)% $19,447
Percentage of net revenue - 1.2% 0.7% 1.6%
Basic earnings per share $ 0.01 (96.6)% $ 0.29 $ 0.42 (28.8)% $ 0.59
Weighted average shares outstanding 34,055 33,100 33,633 33,077
Diluted earnings per share $ 0.01 (96.4)% $0.28 $ 0.40 (31.0)% $ 0.58
Weighted average shares outstanding 34,952 33,643 34,553 33,611
</TABLE>
Our net income decreased $9,147,000, or 95.6%, and $5,483,000, or 28.2%,
for the second quarter of 1999 over 1998 and for the first six months of 1999
over 1998, respectively. The decrease is due to the following one-time charges:
o A corporate restructuring charge of $9,400,000 ($5,773,000 net of tax), or
$0.17 per basic and diluted share for the second quarter of 1999 and for
the first six months of 1999, as discussed in "--Cost and Expenses."
o An extraordinary loss on the early retirement of debt of $6,597,000, net of
tax, or $0.19 per basic and diluted share for the second quarter of 1999
and for the first six months of 1999. The extraordinary loss is associated
with refinancing of the debt incurred in connection with our acquisition of
ValueRx and refinancing of the debt incurred in connection with our
acquisition of DPS from the proceeds of our equity and debt offerings, as
discussed in "Liquidity and Capital Resources" below.
Excluding one-time charges, net income for the second quarter of 1999 would
have been $0.37 per basic and diluted share compared to $0.32 per basic share
and $0.31 per diluted share for the second quarter of 1998. For the first six
months of 1999 net income excluding one-time charges would have been $0.78 per
basic share and $0.76 per diluted share compared to $0.62 per basic share and
$0.61 per diluted share for the first six months of 1998. On a pro forma basis,
excluding one-time charges and assuming our equity and debt offerings occurred
on April 1, 1999, net income per basic and diluted share for the second quarter
of 1999 and the first six months of 1999 would have been $0.43 and $0.42 and
$0.84 and $0.82, respectively.
<TABLE>
<CAPTION>
Liquidity and Capital Resources
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 1999 % Increase 1998 1999 % Decrease 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by operations $56,225 17.5% $47,835 $52,416 (27.3)% $72,057
</TABLE>
During the first six months of 1999, net cash provided by operations
decreased from 1998 primarily due to the payment of certain accruals from
December 31, 1998. Management expects to primarily fund our future debt service,
integration costs, Year 2000 costs, internet business development costs and
other normal operating cash needs primarily with operating cash flow or, to the
extent necessary, with working capital borrowings under our $1.05 billion credit
facility, discussed below.
Our capital expenditures in the first six months of 1999 increased
$6,934,000, or 75.0% over the first six months of 1998 primarily due to our
concerted effort to invest in information technology to enhance the services
provided to our clients and the acquisition of DPS. We expect to continue
investing in technology that will provide efficiencies in operations, manage
growth and enhance the services provided to our clients. We expect to fund
future anticipated capital expenditures primarily with operating cash flow or,
to the extent necessary, from working capital borrowings under our $1.05 billion
credit facility.
On April 1, 1999, we executed a $1.05 billion credit facility with a bank
syndicate led by Credit Suisse First Boston and Bankers Trust Company consisting
of $750 million in term loans, including $285 million of Term A loans and $465
million of Term B loans, and a $300 million revolving credit facility. The Term
A loans and the revolving credit facility mature on March 31, 2005 and the Term
B loans mature on March 31, 2007. The credit facility is secured by the capital
stock of each of our existing and subsequently acquired domestic subsidiaries,
excluding Practice Patterns Science, Great Plains Reinsurance, ValueRx of
Michigan, Diversified NY IPA and Diversified Pharmaceutical Services (Puerto
Rico), and is also secured by 65% of the stock of our foreign subsidiaries.
The credit facility requires us to pay interest quarterly on an interest
rate spread based on several London Interbank Offered Rates ("LIBOR") or base
rate options. Using a LIBOR spread, the Term A loans and the revolving loan had
an interest rate of 7.92% and the Term B loans had an interest rate of 8.52% on
June 30, 1999. Beginning in March 2001, we are required to make annual principal
payments on the Term A loans of $42,750,000 in 2001, $57,000,000 in 2002 and
2003, $62,700,000 in 2004 and $65,550,000 in 2005. The Term B loans require one
principal payment of $50,230,000 in 2007. The credit facility contains covenants
that limit the indebtedness we may incur, dividends paid and the amount of
annual capital expenditures. The covenants also establish a minimum interest
coverage ratio, a maximum leverage ratio, and a minimum fixed charge coverage
ratio. In addition, we are required to pay an annual fee of 0.5%, payable in
quarterly installments, on the unused portion of the revolving credit facility
($160 million at June 30, 1999). At June 30, 1999, we were in compliance with
all covenants associated with the $1.05 billion credit facility.
Additionally, on April 1, 1999, we executed a $150 million senior
subordinated bridge credit facility from Credit Suisse First Boston Corporation
and Bankers Trust Company. The facility required us to make quarterly interest
payments on a spread over several LIBOR or base rate options. The proceeds from
the bridge credit facility and $890 million in borrowings from the credit
facility were used to consummate the DPS acquisition, refinance our $440 million
credit facility, of which $360 million was outstanding, and other indebtedness
and pay related fees and expenses.
In June 1999, we completed our equity offering to sell 5,175,000 shares of
our Class A common stock at an offering price of $61 per share. We also
completed our $250 million 9 5/8% Senior Notes due 2009 offering under Rule 144A
of the Securities Act of 1933, as amended. The Company filed a registration
statement (No. 333-83133), which was declared effective on August 4, 1999, to
exchange the privately placed Senior Notes for registered Senior Notes on
substantially the same terms. The net proceeds from the equity and debt
offerings of $299,312,000 and $243,503,000, respectively, were used to retire
the $150 million senior subordinated bridge credit facility plus accrued
interest and repay a portion of the Term B portion of the credit facility plus
accrued interest. In addition, we used $23,901,000 of our own cash to repay a
portion of the Term B credit facility. As of June 30, 1999, the remaining
outstanding balance of the Term B loan was $50,230,000. In July 1999, we used
our own cash to retire the remaining balance of the Term B loans. As a result,
we will record an extraordinary charge during the third quarter of 1999 for the
write-off of the remaining deferred financing fees in the amount of $901,000, or
approximately $553,000 net of tax.
To alleviate interest rate volatility, we entered into an interest rate
swap arrangement for an original notional principal amount of $360 million,
effective April 3, 1998, with the First National Bank of Chicago, a subsidiary
of Bank One Corporation. Under the terms of the swap, we agreed to receive a
floating rate of interest on a portion of our term loans based on a three-month
LIBOR rate in exchange for payment of a fixed rate of interest of 5.88% per
annum. The notional amount of the swap amortizes, beginning in April 1999, in
semi-annual installments of $27 million, increasing to $36 million in April
2000, to $45 million in April 2001 and to $48 million in April 2002. As of June
30, 1999, the notional principal amount is $333 million. As a result, the
Company has, in effect, converted $333 million of its variable rate debt under
the Credit Facility to fixed rate debt at 5.88% per annum for the first four
years of the Credit Facility, plus the interest rate spread.
As of June 30, 1999, we had repurchased a total of 475,000 shares of our
Class A Common Stock under the open-market stock repurchase program announced by
us on October 25, 1996, although no repurchases occurred during the first six
months of 1999. Our Board of Directors approved the repurchase of up to
1,700,000 shares, and placed no limit on the duration of the program. Future
purchases, if any, will be in such amounts and at such times as we deem
appropriate based upon prevailing market and business conditions, subject to
restrictions on stock repurchases contained in our $1.05 billion credit facility
and the Indenture covering our Senior Notes.
We have reviewed and currently intend to continue reviewing potential
acquisitions and affiliation opportunities. We believe that available cash
resources, bank financing or the issuance of additional common stock could be
used to finance such acquisitions or affiliations. However, there can be no
assurance we will make other acquisitions or affiliations in 1999 or thereafter.
Other Matters
In June 1999, our two Internet sites, yourPharmacy.com and DrugDigest.org
opened to a select group of clients. The official launch of the two sites
occurred on July 27, 1999. yourPharmacy.com serves as an online drug store and
offers both prescription and over-the-counter medications, vitamins, herbs and
health and beauty aids. DrugDigest.org provides fact-based information on a
variety of medications, vitamins and herbs. By allowing us to communicate more
effectively and efficiently with our existing members, we believe that over time
we will be able to reduce our operating costs by utilizing on-line communication
as opposed to more expensive call center operations and paper-based
correspondence. We also plan to increase the utilization of our existing mail
pharmacies, which processed over 7.4 million prescriptions in 1998 and 4.6
million prescriptions during the first six months of 1999, to distribute
prescription medications ordered through our Internet e-commerce site. In
addition, we believe that sales of both pharmaceutical and non-pharmaceutical
products to the non-member general public will help us attract new clients.
Furthermore, based on our clinical capabilities, experience in database
management, and established expertise in managing prescription drug usage, we
believe DrugDigest.org will be a comprehensive and credible source of
information on prescription and non-prescription medications. To date we have
funded the development of the Internet sites through operating cash flows and
have expensed these amounts as incurred, except for the acquisition of property
and equipment. We expect to continue funding the development and operation of
these sites with operating cash flows or with working capital borrowings under
our $1.05 billion credit facility.
Under our agreement with SmithKline Beecham in connection with our
acquisition of DPS, SmithKline Beecham was obligated to dissolve a joint venture
relationship in a company known as Diversified Prescription Delivery, L.L.C.
("DPD"), which provides mail pharmacy services, including services for some
clients of DPS. On June 18, 1999, SmithKline Beecham transferred ownership of
DPD to us.
In June 1998, Statement of Financial Accounting Standards Statement 133,
Accounting for Derivative Instruments and Hedging Activities ("FAS 133") was
issued. FAS 133 requires all derivatives to be recognized as either assets or
liabilities in the statement of financial position and measured at fair value.
In addition, FAS 133 specifies the accounting for changes in the fair value of a
derivative based on the intended use of the derivative and the resulting
designation. The effective date for FAS 133 was originally effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. However, the
Financial Accounting Standards Board has deferred the effective date so that it
will begin for all fiscal quarters of fiscal years beginning after June 15,
2000, and will be applicable to our first quarter of fiscal year 2001. Our
present interest rate swap (see "--Liquidity and Capital Resources") will be
considered a cash flow hedge. Accordingly, the change in the fair value of the
swap will be reported on the balance sheet as an asset or liability. The
corresponding unrealized gain or loss representing the effective portion of the
hedge will be initially recognized in stockholders' equity and other
comprehensive income and subsequently any changes in unrealized gain or loss
from the initial measurement date will be recognized in earnings concurrent with
the interest expense on our underlying variable rate debt. If we had adopted FAS
133 as of June 30, 1999, we would have recorded the unrealized loss of $68,000
as a liability and reduction in stockholders' equity and other comprehensive
income.
Year 2000
Our operations rely heavily on computers and other information systems
technologies. In 1995, we began addressing the "Year 2000" issue, which refers
to the inability of certain computer systems to properly recognize calendar
dates beyond December 31, 1999. This arises as a result of systems having been
programmed with two digits rather than four digits to define the applicable year
in order to conserve computer storage space, reduce the complexity of
calculations and produce better performance. The two-digit system may cause
computers to interpret the year "00" as "1900" rather than as "2000," which may
cause system failures or produce incorrect results when dealing with
date-sensitive information beyond 1999.
We formed a Year 2000 task force to address this issue. The task force has
performed a self-assessment and developed a compliance plan that addresses:
o internally developed application software
o vendor developed application software
o operating system software o utility software
o vendor/trading partner-supplied files
o externally provided data or transactions
o non-information technology devices that are material to our business
o adherence to applicable industry standards.
Our plan covers the traditional Express Scripts, ValueRx and DPS systems.
Progress in each area is monitored and management reports are given
periodically.
We have various applications and operating systems that are considered
critical to our operations. Approximately 90% of these systems have been
successfully tested by us in an integrated environment for Year 2000 compliance.
The remaining systems will be modified to be compliant by the end of the third
quarter of 1999, or information residing on such systems will be integrated into
a Year 2000 compliant operating system. Testing of the applications and
operating systems includes the adjudication process, the eligibility process,
the billing and remittance process, the communication process and the reporting
process, including financial reporting. In addition, beginning in 1995, new
internally developed software has been developed to be Year 2000 compliant and
will be fully tested during the remainder of 1999.
We are participating in a joint effort with other PBMs, retail pharmacy
chains, transaction routing companies and adjudication software vendors to test
Year 2000 compliance in the industry. The joint effort is called the "Y2K
Provider & Vendor Testing Coalition" and is being facilitated by The National
Health Information Network. The coalition has the support of major U.S. retail
pharmacies, including American Stores, CVS, Eckerd, Rite-Aid, Wal-Mart and
Walgreens. The inclusion of transaction routing vendors and software companies
could permit up to 95% of our pharmacy network to be tested (although there can
be no assurance that all parties who are invited to participate will actually
participate). The program will allocate the retail pharmacy chains and software
vendors among the various PBMs who will be required to test the vendors' and
pharmacy chains' Year 2000 compliance. We successfully completed the testing in
July 1999 on seventeen retail pharmacy chains, and the balance of the testing is
scheduled to be completed in the third quarter of 1999.
Originally, we sent out approximately 1,500 letters to vendor/trading
partners requesting a status report regarding their Year 2000 compliance. We
have received responses from approximately 30% of these third parties, with the
majority of the vendor/trading partners responding that they are currently
addressing the Year 2000 issue and expect to be compliant. Subsequently, we
identified approximately 120 vendor/trading partners that we consider critical
to our operations and sent a request for a status report. Approximately 85%
responded indicating that they expected to be Year 2000 compliant by the end of
the third quarter of 1999.
We have also contacted several hundred clients and several thousand
pharmacies whose computer systems appear to us not to be Year 2000 compliant in
an effort to increase awareness of the problem and minimize or eliminate any
disruption in data transfer activity between any of these parties and us. We
have developed date windowing logic, which forces an entry into the century
field of a computer application if one is not provided by the user, which we
believe will address many issues concerning retail pharmacies and clients with
noncompliant systems. Due to our contracts typically extending over several
years and our receipt of member eligibility information from clients that
reflect dates beyond the Year 2000, we have been receiving information that
would identify certain Year 2000 issues for several years. Any problems we have
encountered to date have been rectified by the client or, if necessary, by us
using our windowing logic. There can be no assurance, however, that all of these
problems that may be encountered in the future can be rectified with the
windowing logic.
In addressing the Year 2000 issue, we have and will continue to incur
internal staff costs as well as external consulting and other expenses related
to infrastructure enhancements. To date, we have incurred approximately
$4,100,000, excluding costs incurred by DPS prior to our acquisition which were
funded by SmithKline Beecham, addressing the Year 2000 issue. We anticipate
spending an additional $500,000 to $750,000 during the remainder of 1999
addressing the Year 2000 issue. All expenditures are being expensed as incurred.
To date, these costs have not had a material adverse effect on our results of
operations or financial condition, and are not expected to have a material
adverse effect on our future results of operations or financial condition.
In connection with our acquisition of DPS, we performed certain Year 2000
due diligence and received representations that DPS had implemented a Year 2000
plan for upgrading its computer systems and communicated with its
vendors/trading partners regarding their respective Year 2000 compliance. Based
on our due diligence and the representations we received, we believe DPS's
critical applications and operating systems have been successfully tested for
Year 2000 compliance. However, the DPS systems are scheduled for another Year
2000 test during November 1999.
We believe that, with appropriate modifications to existing computer
systems, updates by vendors and trading partners and conversion to new software
in the ordinary course of our business, the Year 2000 issue is not likely to
pose significant operational problems for us. However, if the above-described
conversions are not completed in a proper and timely manner by all affected
parties, or if our logic for communicating with noncompliant systems is
ineffective, the Year 2000 issue could result in material adverse operational
and financial consequences to us. There can be no assurance that our efforts or
those of our vendors and trading partners, who are beyond our control, will be
successful in addressing the Year 2000 issue.
We are in the process of formalizing our contingency plans to address
potential Year 2000-related risks, including risks of vendor/trading partner
noncompliance, as well as noncompliance of any of our critical operations.
Departments which we believe to be critical operations in serving our clients
and their members have submitted contingency plans for formal review by our
internal audit department. Departments which we believe are not critical to our
operations are in the process of completing their contingency plans and are
expected to be substantially completed by the end of the third quarter of 1999.
However, the formalization of the contingency plans is an ongoing process as we
complete our testing and receive updates from vendor/trading partners. In
addition, there can be no assurance that our contingency plans will successfully
address all potential circumstances or consequences.
Impact of Inflation
Changes in prices charged by manufacturers and wholesalers for
pharmaceuticals affect our net revenues and cost of revenues. To date we have
been able to recover price increases from our clients under the terms of our
agreements, although under selected arrangements in which we have performance
measurements on drug costs with our clients we could be adversely affected by
inflation in drug costs if the result is an overall increase in the cost of the
drug plan to the client. To date, changes in pharmaceutical prices have not had
a significant adverse effect on us.
Market Risk
To alleviate interest rate volatility, we entered into an interest rate
swap arrangement for an original notional principal amount of $360 million
effective April 3, 1998, with First National Bank of Chicago, a subsidiary of
Bank One Corporation. Under the swap arrangement, we agreed to receive a
floating rate of interest on an amount equal to a portion of the outstanding
principal balance of our term loans based on a three-month LIBOR rate in
exchange for payment of a fixed rate of interest of 5.88% per annum on such
amount. The weighted average variable rate received by us for the period January
1, 1999 to June 30, 1999, was 5.04%. The notional amount of the swap amortizes,
beginning in April 1999, in semi-annual installments of $27 million, increasing
to $36 million in April 2000, to $45 million in April 2001 and to $48 million in
April 2002. As of June 30, 1999, the notional amount of the swap was $333
million. The swap expires on April 3, 2003. At June 30, 1999, the fair value of
the swap was $(68,000).
Interest rate risk is monitored on the basis of changes in the fair value
and a sensitivity analysis is used to determine the impact interest rate changes
will have on the fair value of the interest rate swap, measuring the change in
the net present value arising from the change in the interest rate. The fair
value of the swap is then determined by calculating the present value of all
cash-flows expected to arise thereunder, with future interest rate levels
implied from prevailing mid-market yields for money-market instruments, interest
rate futures and/or prevailing mid-market swap rates. Anticipated cash-flows are
then discounted on the assumption of a continuously compounding zero-coupon
yield curve. A 10 basis point decline in interest rates at June 30, 1998, would
have caused the fair value of the swap to decrease by an additional $4,058,000,
resulting in a fair value of $4,126,000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Response to this item is included in Item 2 "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Market Risk" above,
and incorporated by reference herein.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As discussed in detail in the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1998, filed with the Securities and Exchange
Commission on August 13, 1998 (the "Second Quarter 10-Q"), the Company acquired
all of the outstanding capital stock of Value Health, Inc., a Delaware
corporation ("VHI"), and Managed Prescription Network, Inc., a Delaware
corporation ("MPN") from Columbia HCA/HealthCare Corporation ("Columbia") and
its affiliates on April 1, 1998 (the "Acquisition"). VHI, MPN and/or their
subsidiaries (collectively, the "Acquired Entities"), were party to various
legal proceedings, investigations or claims at the time of the Acquisition. The
effect of these actions on the Company's future financial results is not subject
to reasonable estimation because considerable uncertainty exists about the
outcomes. Nevertheless, in the opinion of management, the ultimate liabilities
resulting from any such lawsuits, investigations or claims now pending will not
materially affect the consolidated financial position, results of operations or
cash flows of the Company. A brief update of the most notable of the proceedings
follows:
As discussed in detail in the Second Quarter 10-Q, the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1998, filed with the
Securities and Exchange Commission on November 16, 1998, the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1998, filed with the
Securities and Exchange Commission on June 10, 1999, and the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1999, filed with the
Securities and Exchange Commission on May 14, 1999, VHI and several of its
subsidiaries are party to two securities litigation matters, Bash, et al. v.
Value Health, Inc., et al., No. 3:97cv2711 (JCH) (D.Conn.), and Freedman, et al.
v. Value Health, Inc., et al., No. 3:95 CV 2038 (JCH) (D.Conn). The two
lawsuits, filed in 1995, allege that VHI and certain other defendants made false
or misleading statements to the public in connection with VHI's acquisition of
Diagnostek, Inc. in 1995, and in connection with one of VHI's contracts. The
Bash lawsuit also alleges false or misleading statements by Diagnostek and
certain of its former officers and directors conserning its financial condition
prior to the merger with VHI. On April 24, 1998, the two lawsuits were
consolidated.
On February 18, 1999, the court granted plaintiffs' motions for class
certification and certified a class consisting of (i) all persons who purchased
or otherwise acquired shares of VHI during the period from April 3, 1995,
through and including November 7, 1995, including those who acquired shares
issued in connection with the Diagnostek merger; and (ii) all persons who
purchased or otherwise acquired shares of Diagnostek during the period from
March 27, 1995, through and including July 28, 1995. Fact discovery in the
consolidated lawsuit is complete. The parties are awaiting an order on motions
to dismiss the Bash lawsuit filed by Diagnostek and its former officers. The
parties are also awaiting an order from the court regarding the scheduling of
expert discovery and dispositive motions.
In connection with the Acquisition, Columbia has agreed to defend and hold
the Company and its affiliates (including VHI) harmless from and against any
liability that may arise in connection with either of the foregoing proceedings.
Consequently, the Company does not believe it will incur any material liability
in connection with the foregoing matters.
The Company is a defendant in Allcare Health Management Systems, Inc. v.
Cerner Corporation, et al. No. 499-CV-0464-Y (N.D. TX). Plaintiff commenced this
action on or about June 16, 1999, alleging infringement of a patent owned by
Plaintiff on a "Wellness Health Management System" by the Company and its
wholly-owned subsidiary Diversified Pharmaceutical Services, Inc., and ten other
unrelated entities. At this stage of the litigation, neither the merits of
Plaintiff's claim nor the potential liability associated with it, if any, has
been ascertained.
Item 2. Changes in Securities and Use of Proceeds
On June 16, 1999, the Company completed a private offering of $250,000,000
of 9 5/8% Senior Notes due 2009 (the "Notes") pursuant to Section 4(2) of
Regulation D of the Securities Act of 1933, as amended. The Indenture, dated as
of June 16, 1999, among the Company, Bankers Trust Company, as trustee, and the
Guarantors named therein (the "Indenture"; see Exhibit 4.2 hereto), pursuant to
which the Notes were issued contains certain restrictions on the Company's
ability to pay dividends. Specifically, with certain limited exceptions:
o no dividends may be paid if a default (as defined in the Indenture)
shall have occurred and be continuing, or would result therefrom,
o no dividends may be paid if the Company's consolidated coverage ratio
(as defined in the Indenture) falls below 2.5 to 1.0, and
o no dividends may be paid if the aggregate amount of all dividends and
certain specified other payments made by the Company since June 16,
1999, exceed certain thresholds, with said thresholds to be determined
from time to time based upon a formula using the Company's net income,
the net cash proceeds from certain sales of securities, the reduction
of indebtedness resulting from the conversion or exchange of certain
debt to equity, and the level of the Company's investment in
restricted and unrestricted subsidiaries, all as more particularly set
forth in the Indenture.
In addition, the Company's credit facility (see Exhibit 10.8 hereto)
contains certain restrictions on the Company's ability to pay dividends. See
"Management's Discussion and Analysis - Liquidity and Capital Resources" for a
further discussion.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's annual meeting of stockholders was held on May 26, 1999.
(b) The following persons were elected directors of the Company to serve
until the next Annual Meeting of Stockholders and until their respective
successors are elected and qualified:
Howard I. Atkins
Judith E. Campbell
Richard M. Kernan, Jr.
Richard A. Norling
Frederick J. Sievert
Stephen N. Steinig
Seymour Sternberg
Barrett A. Toan
Howard L. Waltman
Norman Zachary
(c) The stockholder vote for each director was as follows:
<TABLE>
<CAPTION>
Votes Votes
Cast For Withheld
------------------ --------------
<S> <C> <C>
Howard I. Atkins 167,089,661 259,745
Judith E. Campbell 167,089,661 259,745
Richard M. Kernan, Jr. 167,089,561 259,845
Richard A. Norling 167,089,661 259,745
Frederick J. Sievert 167,089,661 259,745
Stephen N. Steinig 167,089,661 259,745
Seymour Sternberg 167,089,661 259,745
Barrett A. Toan 167,089,661 259,745
Howard L. Waltman 167,089,661 259,745
Norman Zachary 167,089,661 259,745
</TABLE>
The stockholders also voted to:
(1) Approve the Company's Employee Stock Purchase Plan (163,376,546
affirmative votes; 83,557 negative votes; 26,416 abstention votes);
(2) Approve the Company's Executive Deferred Compensation Plan
(163,911,912 affirmative votes; 527,223 negative votes; 47,384
abstention votes);
(3) Approve the Third Amendment to the Company's Amended and Restated 1994
Stock Option Plan (163,554,605 affirmative votes; 819,690 negative
votes; 53,363 abstention votes);
(4) Approve the First Amendment to the Company's Amended and Restated 1992
Stock Option Plan (166,739,915 affirmative votes; 495,910 negative
votes; 54,720 abstention votes);
(5) Approve the Fourth Amendment to the Company's Amended and Restated
1994 Stock Option Plan (166,512,385 affirmative votes; 721,726
negative votes; 56,434 abstention votes);
(6) Approve the Second Amendment to the Company's Amended and Restated
1992 Stock Option Plan (166,465,108 affirmative votes; 769,867
negative votes; 55,570 abstention votes);
(7) Approve the Second Amendment to the Company's Amended and Restated
1992 Stock Option Plan for Outside Directors (165,542,564 affirmative
votes; 1,241,121 negative votes; 506,860 abstention votes);
(8) Approve an Amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Class A Common Stock to
150,000,000 (Class A Votes: 15,953,711 affirmative votes; 1,163,340
negative votes; 32,355 abstention votes; Class B Votes: 150,200,000
affirmative votes; 0 negative votes; 0 abstention votes; Total Votes:
166,153,711 affirmative votes; 1,163,340 negative votes; 32,355
abstention votes);
(9) Approve an Amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Class B Common Stock to
31,000,000 (Class A Votes: 11,201,381 affirmative votes; 5,919,920
negative votes; 28,105 abstention votes; Class B Votes: 150,200,000
affirmative votes; 0 negative votes; 0 abstention votes; Total Votes:
161,401,381 affirmative votes; 5,919,920 negative votes; 28,105
abstention votes);
(10) Ratify the appointment of PricewaterhouseCoopers as the Company's
independent accountants for the Company's current fiscal year
(167,306,142 affirmative votes; 28,306 negative votes; 14,958
abstention votes).
Item 5. Other Information.
In May 1999, the Company relocated its principal executive offices to 13900
Riverport Drive, Maryland Heights, Missouri 63043. Its telephone number remains
(314) 770-1666.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See Index to Exhibits on page 31.
(b) Reports on Form 8-K.
(i) On April 14, 1999, the Company filed a Current Report on Form 8-K under
Item 2 regarding its acquisition of Diversified Pharmaceutical Services, Inc.
from SmithKline Beecham Corporation.
(ii) On May 12, 1999, the Company filed a Current Report on Form 8-K under
Item 5 regarding a press release issued on behalf of the Company concerning its
internet pharmacy initiative.
(iii) On May 13, 1999, the Company filed a Current Report on Form 8-K under
Item 5 regarding a press release issued on behalf of the Company concerning its
first quarter 1999 financial performance.
(iv) On May 28, 1999, the Company filed a Current Report on Form 8-K under
Item 5 regarding a press release issued on behalf of the Company announcing its
intention to offer $200 million principal amount of senior unsecured notes due
in 2009, through a private placement to qualified institutional buyers.
(v) On June 14, 1998, the Company filed an amendment to the Current Report
on Form 8-K filed on April 14, 1999 under Item 7, regarding its acquisition of
Diversified Pharmaceutical Services, Inc. from SmithKline Beecham Corporation,
to include the following financial statements required therein:
(A) The following Diversified Pharmaceutical Services, Inc. and Subsidiary
(A Wholly Owned Subsidiary of SmithKline Beecham Corporation) Unaudited
Condensed Consolidated Financial Statements:
(1) Unaudited Condensed Consolidated Balance Sheet as of December 31,
1998and March 31, 1999
(2) Unaudited Condensed Consolidated Statement of Operations for the Three
Months Ended March 31, 1998 and 1999
(3) Unaudited Condensed Consolidated Statement of Changes in Stockholder's
Equity for the Three Months ended March 31, 1999
(4) Unaudited Condensed Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1998 and 1999
(5) Notes to Unaudited Condensed Consolidated Financial Statements
(B) The following Diversified Pharmaceutical Services, Inc. and Subsidiary
(A Wholly Owned Subsidiary of SmithKline Beecham Corporation) Financial
Statements:
(1) Report of Independent Accountants
(2) Balance Sheets as of December 31, 1997 and 1998
(3) Statement of Operations for the Years Ended December 31, 1996, 1997and
1998
(4) Statement of Stockholder's Equity for the Years Ended December 31,1996,
1997 and 1998
(5) Statements of Cash Flows for the Years Ended December 31, 1996, 1997and
1998
(6) Notes to Financial Statements
(C) The following Unaudited Consolidated Condensed Pro Forma Financial
Statements:
(1) Unaudited Consolidated Condensed Pro Forma Statement of Operations for
the Three Months Ended March 31, 1999
(2) Notes to the Unaudited Consolidated Condensed Pro Forma Statement of
Operations for the Three Months Ended March 31, 1999
(3) Unaudited Consolidated Condensed Pro Forma Statement of Operations for
the Year Ended December 31, 1998
(4) Notes to the Unaudited Consolidated Condensed Pro Forma Statement of
Operations for the Year Ended December 31, 1998
(5) Unaudited Consolidated Condensed Pro Forma Balance Sheet as of March
31, 1999
(6) Notes to the Unaudited Consolidated Condensed Pro Forma Balance Sheet
as of March 31, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXPRESS SCRIPTS, INC.
(Registrant)
Date: August 11, 1999 By: /s/ Barrett A. Toan
Barrett A. Toan, President and
Chief Executive Officer
Date: August 11, 1999 By:/s/ George Paz
George Paz, Senior Vice
President and Chief
Financial Officer
INDEX TO EXHIBITS
(Express Scripts, Inc. - Commission File Number 0-20199)
Exhibit
Number Exhibit
2.1** Stock Purchase Agreement by and among SmithKline Beecham
Corporation, SmithKline Beecham InterCredit BV and Express
Scripts, Inc., dated as of February 9, 1999, and certain related
Schedules, incorporated by reference to Exhibit No. 2.1 to the
Company's Current Report on Form 8-K filed February 18, 1999.
3.1* Certificate of Incorporation of the Company, as amended.
3.2 Second Amended and Restated Bylaws, incorporated by reference to
Exhibit No. 3.3 to the Company's Quarterly Report on Form 10-Q
for the quarter ending September 30, 1998.
4.1 Form of Certificate for Class A Common Stock, incorporated by
reference to Exhibit No. 4.1 to the Company's Registration
Statement on Form S-1 filed June 9, 1992 (No. 33-46974)
4.2 Indenture, dated as of June 16, 1999, among the Company, Bankers
Trust Company, as trustee, and the Guarantors named therein,
incorporated by reference to Exhibit No. 4.1 to the Company's
Registration Statement on Form S-4 filed August 4, 1999 (No.
333-83133) (the "S-4 Registration Statement")
4.3 Registration Rights Agreement, dated as of June 11, 1999, among
the Company, Credit Suisse First Boston Corporation and Deutsche
Bank Securities Inc., incorporated by reference to Exhibit No.
4.2 to the Company's S-4 Registration Statement
10.1 First Amendment to Express Scripts, Inc. Amended and Restated
1992 Stock Option Plan incorporated by reference to Exhibit D to
the Company's Proxy Statement dated April 22, 1999.
10.2 Second Amendment to Express Scripts, Inc. Amended and Restated
1992 Stock Option Plan incorporated by reference to Exhibit F to
the Company's Proxy Statement dated April 22, 1999.
10.3 Third Amendment to Express Scripts, Inc. Amended and Restated
1994 Stock Option Plan, incorporated by reference to Exhibit C to
the Company's Proxy Statement dated April 22, 1999.
10.4 Fourth Amendment to Express Scripts, Inc. Amended and Restated
1994 Stock Option Plan, incorporated by reference to Exhibit E to
the Company's Proxy Statement dated April 22, 1999.
10.5 Second Amendment to Express Scripts, Inc. Amended and Restated
1992 Stock Option Plan for Outside Directors incorporated by
reference to Exhibit G to the Company's Proxy Statement dated
April 22, 1999.
10.6* Senior Subordinated Credit Agreement dated as of April 1, 1999
among the Company, the Lenders listed therein, Credit Suisse
First Boston, as Lead Arranger and Administrative Agent and BT
Alex. Brown Incorporated, as Co-Arranger
10.7* Senior Subordinated Subsidiary Guaranty dated as of April 1,
1999, in favor of Credit Suisse First Boston as Administrative
Agent and the Lenders listed in the Senior Subordinated Credit
Agreement, by the following parties: Managed Prescription
Network, Inc., Value Health, Inc., IVTx, Inc., Express Scripts
Vision Corp., ESI/VRx Sales Development Co., HealthCare Services,
Inc., MHI, Inc., ValueRx, Inc., ValueRx Pharmacy Program, Inc.,
Diversified Pharmaceutical Services, Inc.
10.8* Credit Agreement dated as of April 1, 1999 among the Company,
the Lenders listed therein, Credit Suisse First Boston as Lead
Arranger, Administrative Agent and Collateral Agent, Bankers
Trust Company as Syndication Agent, BT Alex. Brown Incorporated
as Co-Arranger, The First National Bank of Chicago as
Co-Documentation Agent, and Mercantile Bank, N.A. as
Co-Documentation Agent
10.9* Subsidiary Guaranty dated as of April 1, 1999, in favor of
Credit Suisse First Boston as Collateral Agent and the Lenders
listed in the Credit Agreement, by the following parties: Managed
Prescription Network, Inc., Value Health, Inc., IVTx, Inc.,
Express Scripts Vision Corp., ESI/VRx Sales Development Co.,
HealthCare Services, Inc., MHI, Inc., ValueRx, Inc., ValueRx
Pharmacy Program, Inc., Diversified Pharmaceutical Services,
Inc., ESI OnLine, Inc.
10.10* Company Pledge Agreement dated as of April 1, 1999, by the
Company in favor of Credit Suisse First Boston as Collateral
Agent and the Lenders listed in the Credit Agreement
10.11* Subsidiary Pledge Agreement dated as of April 1, 1999, in favor
of Credit Suisse First Boston as Collateral Agent and the Lenders
listed in the Credit Agreement, by the following parties: ESI
Canada Holdings, Inc., Value Health, Inc., ValueRx, Inc.
12.1* Computation of Ratios of Earnings to Fixed Charges
27.1* Financial Data Schedule (provided for the information of the
U.S. Securities and Exchange Commission only).
- ---------------------
* Filed herein.
** The Company agrees to furnish supplementally a copy of any omitted
schedule to this agreement to the Commission upon request.
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
EXPRESS SCRIPTS, INC.
1. The name of the corporation (the "Corporation") is Express Scripts, Inc.
2. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
3. The address of the registered office of the Corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, Dover (Kent County), Delaware
19901. The Prentice-Hall Corporation System, Inc. is the Corporation's
registered agent at that address.
4. The total number of shares of stock which the Corporation has authority
to issue is 35,000,000 shares, of which (I) 5,000,000 shares are preferred
stock, par value $0.01 per share (the "Preferred Stock"), and (ii) 30,000,000
shares are common stock, consisting of 20,000,000 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), and 10,000,000
shares of Class B Common Stock, par value $0.01 per share (the "Class B Common
Stock").
4.1 Except as provided in this Article Four, the Class A Common Stock and
the Class B Common Stock shall have the same rights and privileges and shall
rank equally, share ratably, and be identical in all respect as to all matters.
The holders of Class A Common Stock and Class B Common Stock shall have the
following rights and preferences, subject to the rights and preferences of
holders of Preferred Stock, as determined by the Board of Directors pursuant to
paragraph 4.3 of this Article Four.
4.1.1 Dividends.
Subject to the rights of the holders of Preferred Stock, holders of Class A
Common Stock and Class B Common Stock shall be entitled to receive such
dividends, payable in cash or otherwise, as may be declared thereon by the Board
of Directors from time to time out of assets or funds of the Corporation legally
available therefor, provided that no dividend may be declared and paid to
holders of either class of common stock unless at the same time the Board of
Directors shall also declare and pay to the holders of the other class of common
stock a per share dividend equal in amount to and, subject to the next sentence,
in the same form. Common stock dividends declared on Class A Common Stock shall
be payable in Class A Common Stock; common stock dividends declared on Class B
Common Stock shall be payable in Class B Common Stock.
4.1.2 Voting.
4.1.2.1 On all matters upon which stockholders are entitled or permitted to
vote, every holder of Class A Common Stock shall be entitled to one vote in
person or by proxy for each share of Class A Common Stock standing in his name
on the transfer books of the Corporation, and every holder of Class B Common
Stock shall be entitled to ten votes in person or by proxy for each share of
Class B Common Stock standing in his name on the transfer books of the
Corporation.
4.1.2.2 Except as provided in paragraph 4.1.2.3 and as may otherwise be
required by law, the holders of Class A Common Stock and Class B Common Stock
shall vote together as a single class.
4.1.2.3 The favorable vote of the holders of a majority of the outstanding
shares of Class A Common Stock, voting as a separate class, and the favorable
vote of the holders of a majority of the outstanding shares of Class B Common
Stock, voting as a separate class, shall be required to amend Section 32(b) of
the By-laws of the Corporation.
4.1.3 Conversion.
Each share of Class B Common Stock may, at the option of the holder
thereof, at any time, be converted into one fully paid and nonassessable share
of Class A Common Stock and shall be so converted upon any transfer of such
share to any person or entity other than New York Life Insurance Company or an
affiliate thereof.
4.1.4 Subdivisions and Combinations of Shares.
If the Corporation in any manner subdivides or combines the outstanding
shares of one class of common stock at a time when any shares of the other class
are outstanding, the outstanding shares of the other class of common stock will
be likewise subdivided or combined.
4.1.5 Liquidation or Dissolution.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation, holders of Class A Common Stock and holders of
Class B Common Stock shall receive a pro rata, on a share-for-share basis,
without distinction as to class, distribution of any remaining assets after
payment or provision for liabilities and the liquidation preference on Preferred
Stock, if any.
4.2 Preferred Stock.
4.2.1 The Board of Directors is hereby authorized to issue the Preferred
Stock in one or more series, to fix the number of shares of any such series of
Preferred Stock, to determine the designation of any such series, and to fix the
powers, preferences, and rights, and the qualifications, limitations, or
restrictions of the Preferred Stock.
4.2.2 The authority of the Board of Directors shall include, without
limitation, the power to fix or alter the dividend rights, dividend rate,
conversion rights, voting rights (except that voting rights, if any, of the
holders of Preferred Stock in respect of the election of directors shall be
limited to voting with the holders of common stock, as a single class, with no
more than one vote per share of Preferred Stock), rights and terms of redemption
(including sinking fund provisions, if any), the redemption price or prices, and
the liquidation preferences of any wholly unissued series of Preferred Stock ,
and the number of shares constituting any such unissued series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issue of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of any series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
5. The Board of Directors shall have the power to make, alter or repeal the
by-laws of the Corporation.
6. The election of the Board of Directors need not be by written ballot.
7. The Corporation shall indemnify to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware as amended
from time to time each person who is or was a director or officer of the
Corporation and the heirs, executors and administrators of such a person.
8. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director for
any act or omission occurring subsequent to the date when this provision becomes
effective, except that he may be liable (I) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director derived an
improper personal benefit. Neither the amendment nor repeal of this Article
Eight, nor the adoption of any provision of the Certificate of Incorporation
inconsistent with this Article Eight, shall eliminate or reduce the effect of
this Article Eight in respect of any matter occurring, or any cause of action,
suit or claim that, but for this Article Eight, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.
9. No action required or permitted to be taken at any annual or special
meeting of stockholders of the Corporation may be taken without a meeting, and
the power of stockholders of the Corporation to consent in writing, without a
meeting, to the taking of any action is specifically denied; provided, however,
that the holders of Preferred Stock may act by written consent to the extent
provided in a resolution or resolutions of the Board of Directors authorizing
the issuance of a particular series of Preferred Stock pursuant to Article Four
of this Certificate of Incorporation.
10. The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
11. The name and mailing address of the incorporator is as follows:
Name Mailing Address
Tonia David c/o Kaye, Scholer, Fierman, Hays &
Handler
425 Park Avenue
New York, New York 10022
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EXPRESS SCRIPTS, INC.
Express Scripts, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY
FIRST: That the Board of Directors of the Corporation at a meeting duly
held adopted resolutions proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation:
RESOLVED, that the Board of Directors hereby proposes and declares it
advisable that the first paragraph of Article Four of the Certificate of
Incorporation of the Corporation be amended to read in its entirety as follows:
4. The total number of shares of stock which the Corporation has authority
to issue is 57,000,000 shares of which (I) 5,000,000 shares are preferred stock,
par value $0.01 per share (the "Preferred Stock"), and (ii) 52,000,000 shares
are common stock, consisting of 30,000,000 shares of Class A Common Stock, par
value $0.01 per share (the "Class A Common Stock"), and 22,000,000 shares of
Class B Common Stock, par value $0.01 per share (the "Class B Common Stock").
SECOND: That thereafter at a meeting of stockholders duly called and held,
a majority of the votes of the outstanding Class A Common Stock and Class B
Common Stock of the Corporation entitled to vote thereon voting together as a
single class, and a majority of the votes of the outstanding Class A Common
Stock and Class B Common Stock entitled to vote thereon voting as separate
classes, were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
FOURTH: This Certificate of Amendment shall become effective at the close
of business on June 9, 19994.
IN WITNESS WHEREOF, Express Scripts, Inc. has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by Barrett A. Toan, its
President, and attested by Bernard N. Del Bello, its Secretary, this 25th day of
May, 1994.
Express Scripts, Inc.
By: /s/ Barrett A. Toan
Barrett A. Toan, President
ATTEST:
[Corporate Seal]
/s/ Bernard N. Del Bello
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EXPRESS SCRIPTS, INC.
Express Scripts, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY
FIRST: That the Board of Directors of the Corporation at a meeting duly
called and held adopted resolutions proposing and declaring advisable an
amendment to the Certificate of Incorporation of the Corporation, as follows:
RESOLVED, that the Board of Directors hereby proposes and declares it
advisable that the first paragraph of Article Four of the Certificate of
Incorporation of the Corporation be amended to read in its entirety as follows:
4. The total number of shares of stock which the Corporation has authority
to issue is 102,000,000 shares, of which (i) 5,000,000 shares are preferred
stock, par value $0.01 per share (the "Preferred Stock"), and (ii) 97,000,000
shares are common stock, consisting of 75,000,000 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), and 22,000,000
shares of Class B Common Stock, par value $0.01 per share (the "Class B Common
Stock").
SECOND: That thereafter at a meeting of stockholders duly called and held,
a majority of the votes of the outstanding Class A Common Stock and Class B
Common Stock of the Corporation entitled to vote thereon voting together as a
single class, and a majority of the votes of the outstanding Class A Common
Stock and Class B Common Stock entitled to vote thereon voting as separate
classes, were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Express Scripts, Inc. has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by Barrett A. Toan, its
President and Chief Executive Officer, and attested by Thomas M. Boudreau, its
Secretary, this 3rd day of June, 1998.
Express Scripts, Inc.
By:/s/ Barrett A. Toan
Barrett A. Toan, President and
Chief Executive Officer
ATTEST:
[Corporate Seal]
/s/ Thomas M. Boudrerau
Thomas M. Boudreau, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EXPRESS SCRIPTS, INC.
Express Scripts, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY
FIRST: That the Board of Directors of the Corporation at a meeting duly
called and held adopted resolutions proposing and declaring advisable an
amendment to the Certificate of Incorporation of the Corporation, as follows:
RESOLVED, that the Board of Directors hereby proposes and declares it
advisable that the first paragraph of Article Four of the Certificate of
Incorporation of the Corporation be amended to read in its entirety as follows:
4. The total number of shares of stock which the Corporation has authority
to issue is 186,000,000 shares, of which (i) 5,000,000 shares are preferred
stock, par value $0.01 per share (the "Preferred Stock"), and (ii) 181,000,000
shares are common stock, consisting of 150,000,000 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), and 31,000,000
shares of Class B Common Stock, par value $0.01 per share (the "Class B Common
Stock").
SECOND: That thereafter at a meeting of stockholders duly called and held,
a majority of the votes of the outstanding Class A Common Stock and Class B
Common Stock of the Corporation entitled to vote thereon voting together as a
single class, and a majority of the votes of the outstanding Class A Common
Stock and Class B Common Stock entitled to vote thereon voting as separate
classes, were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Express Scripts, Inc. has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by Barrett A. Toan, its
President and Chief Executive Officer, and attested by Thomas M. Boudreau, its
Secretary, this 26th day of May, 1999.
Express Scripts, Inc.
By: /s/ Barrett A. Toan
Barrett A. Toan, President and
Chief Executive Officer
ATTEST:
[Corporate Seal]
/s/ Thomas M. Boudreau
Thomas M. Boudreau, Secretary
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of April 1, 1999
among
EXPRESS SCRIPTS, INC.,
a Delaware corporation,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger and Administrative Agent,
and
BT ALEX. BROWN INCORPORATED,
as Co-Arranger
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms.................................................2
1.2. Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement; Fiscal Periods for
Determining Compliance and Pricing.................................32
1.3. Other Definitional Provisions and Rules of Construction...............32
SECTION 2.
AMOUNTS AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES
2.1. Bridge Loan and Bridge Note...........................................32
2.2. Term Loan and Term Note...............................................34
2.3. Interest on the Loans.................................................35
2.4. Fees..................................................................38
2.5. Prepayments and Payments..............................................38
2.6. Use of Proceeds.......................................................43
2.7. Special Provisions Governing Eurodollar Rate Loans....................43
2.8. Increased Costs; Taxes; Capital Adequacy..............................46
2.9. Obligation of Lenders to Mitigate; Replacement........................51
SECTION 3.
CONDITIONS TO LOANS
3.1. Conditions to Bridge Loans............................................52
3.2. Conditions to Term Loan...............................................57
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
4.1. Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries..........................................58
4.2. Authorization of Borrowing, Etc.......................................59
4.3. Financial Condition...................................................60
4.4. No Material Adverse Change; No Restricted Payments....................60
4.5. Title to Properties; Liens............................................60
4.6. Litigation; Adverse Facts.............................................61
4.7. Payment of Taxes......................................................61
4.8. Performance of Agreements; Materially Adverse Agreements;
Material Contracts.................................................62
4.9. Governmental Regulation; Accreditation................................62
4.10. Securities Activities.................................................62
4.11. Employee Benefit Plans................................................62
4.12. Certain Fees..........................................................63
4.13. Environmental Protection..............................................63
4.14. Employee Matters......................................................64
4.15. Solvency..............................................................64
4.16. Disclosure............................................................64
4.17. Accuracy of Representations and Warranties in the
Definitive Acquisition Documents...................................65
4.18. Year 2000 Compliance..................................................65
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
5.1. Financial Statements and Other Reports................................65
5.2. Corporate Existence, Etc..............................................70
5.3. Payment of Taxes and Claims; Tax Consolidation........................70
5.4. Maintenance of Properties; Insurance..................................71
5.5. Inspection Rights; Lender Meeting.....................................71
5.6. Compliance With Laws, Etc.............................................72
5.7. Environmental Claims and Violations of Environmental Laws.............72
5.8. Execution of Senior Subordinated Subsidiary Guaranty by
Certain Subsidiaries and Future Subsidiaries...................72
5.9. Year 2000 Compliance..................................................73
5.10. Equal Security for Loans and Notes....................................73
5.11. Take-Out Financing....................................................74
5.12. Exchange of Term Notes................................................74
5.13. Register..............................................................75
5.14. Senior Subordinated Indenture; Etc....................................76
5.15. Shelf Registration....................................................76
SECTION 6.
NEGATIVE COVENANTS
6.1. Indebtedness..........................................................77
6.2. Liens.................................................................80
6.3. Restricted Payments...................................................81
6.4. Senior Subordinated Indebtedness......................................83
6.5. Restriction on Fundamental Changes....................................83
6.6. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries................................84
6.7. Transactions with Stockholders and Affiliates.........................85
6.8. Subsidiary Stock......................................................86
6.9. Business Activities...................................................87
6.10. Asset Sales...........................................................87
6.11. Amendments or Waivers of Certain Documents............................87
6.12. Amendments to Charter Documents.......................................88
SECTION 7.
EVENTS OF DEFAULT
7.1. Failure To Make Payments When Due.....................................88
7.2 Default in Other Agreements...........................................88
7.3. Breach of Certain Covenants...........................................89
7.4. Breach of Warranty....................................................89
7.5. Other Defaults Under Loan Documents...................................89
7.6. Involuntary Bankruptcy; Appointment of Receiver, Etc..................89
7.7. Voluntary Bankruptcy; Appointment of Receiver, Etc....................90
7.8. Judgments and Attachments.............................................90
7.9. Dissolution...........................................................90
7.10. Change in Control.....................................................90
7.11. Invalidity of Senior Subordinated Subsidiary Guaranty;
Repudiation of Obligations.........................................90
7.12. Failure to Consummate the Acquisition.................................91
SECTION 8
SUBORDINATION
8.1 Obligations Subordinated to Senior Debt of Company....................92
8.2 Priority and Payment Over of Proceeds in Certain Events...............92
8.3 Payments May Be Paid Prior to Dissolution.............................95
8.4 Rights of Holders of Senior Debt of Company Not To Be Impaired........95
8.5 Subrogation...........................................................96
8.6 Obligations of Company Unconditional..................................96
8.7 Lenders Authorize Administrative Agent To Effectuate Subordination....97
SECTION 9.
AGENTS
9.1. Appointment...........................................................97
9.2. Powers and Duties; General Immunity...................................98
9.3. Representations and Warranties; No Responsibility for
Appraisal of Creditworthiness......................................99
9.4. Right to Indemnity....................................................100
9.5. Successor Agent.......................................................100
9.6. Subsidiary Guaranties.................................................100
SECTION 10.
MISCELLANEOUS
10.1. Assignments and Participations in Loans...............................101
10.2. Expenses..............................................................105
10.3. Indemnity.............................................................105
10.4. Set-Off...............................................................106
10.5. Ratable Sharing.......................................................107
10.6. Amendments and Waivers................................................108
10.7. Independence of Covenants.............................................109
10.8. Notices...............................................................109
10.9. Survival of Representations, Warranties and Agreements................109
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.................109
10.11 Marshalling; Payments Set Aside.......................................110
10.12 Severability..........................................................110
10.13 Obligations Several; Independent Nature of Lenders' Rights............110
10.14 Headings..............................................................110
10.15 Applicable Law........................................................111
10.16 Successors and Assigns................................................111
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS........................111
10.18 WAIVER OF JURY TRIAL..................................................112
10.19 Confidentiality.......................................................113
10.20 Counterparts; Effectiveness...........................................113
SIGNATURES S-1
<PAGE>
Schedule 2.6 Scheduled Indebtedness
Schedule 3.1 Remaining Indebtedness
Schedule 4.1 Subsidiaries
Schedule 4.6 Litigation
Schedule 4.8 Material Contracts
Schedule 6.1 Permitted Indebtedness
Schedule 6.2 Permitted Liens
Schedule 6.3 Permitted Investments
Exhibit I Form of Notice of Borrowing
Exhibit II Form of Bridge Note
Exhibit III Form of Notice of Conversion
Exhibit IV Form of Term Note
Exhibit V Form of Compliance Certificate
Exhibit VI-A Form of Opinion of Thomas Boudreau, Esq.,
General Counsel of Company
Exhibit VI-B Form of Opinion of Simpson Thacher & Bartlett,
special New York counsel for Loan Parties
Exhibit VII Form of Opinion of Cahill Gordon & Reindel, Counsel to Agents
Exhibit VIII Form of Assignment Agreement
Exhibit IX Form of Certificate Re Non-Bank Status
Exhibit X Form of Senior Subordinated Subsidiary Guaranty
Exhibit XI Form of Solvency Certificate
<PAGE>
EXPRESS SCRIPTS, INC.
SENIOR SUBORDINATED CREDIT AGREEMENT
This SENIOR SUBORDINATED CREDIT AGREEMENT is dated as of April 1, 1999 and
entered into by and among EXPRESS SCRIPTS, INC., a Delaware corporation
("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "Lender" and collectively as
"Lenders") and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York Branch ("CSFB"), as lead arranger (in
such capacity, the "Lead Arranger"), and administrative agent (in such capacity,
the "Administrative Agent").
R E C I T A L S
WHEREAS, Company intends to (i) acquire (the "Acquisition") all the issued
and outstanding shares of capital stock of Diversified Pharmaceutical Services,
Inc. ("DPS"), a subsidiary of SmithKline Beecham Corporation (the "Seller"),
pursuant to an acquisition agreement between Company and Seller (the "DPS
Acquisition Agreement") and (ii) refinance (the "Refinancing"), in connection
with the Acquisition, certain of Company's existing indebtedness;
WHEREAS, Company desires that Lenders extend credit in the form of a $150.0
million senior subordinated credit facility;
WHEREAS, the proceeds of the Loans made on the Closing Date, together with
borrowings of $890.0 million under the Senior Secured Credit Agreement, are to
be used (i) to finance the Acquisition, (ii) to consummate the Refinancing and
(iii) to pay fees and expenses related to the Acquisition and the Refinancing;
WHEREAS, all of the domestic Subsidiaries of Company, excluding Practice
Patterns Science, Inc., Great Plains Reinsurance Company, ValueRx of Michigan,
Inc., and other Subsidiaries consented to by the Requisite Lenders from time to
time (collectively, the "Exempt Subsidiaries"), have agreed, on a senior
subordinated basis, to guarantee the Obligations hereunder and under the other
Loan Documents;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of Company or
at the time it merges or consolidates with Company or any of its Subsidiaries or
assumed in connection with the acquisition of assets from such Person and in
each case not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of Company or such
acquisition, merger or consolidation.
"Acquisition" has the meaning assigned to that term in the recitals to this
Agreement.
"Adjusted Eurodollar Rate" means, with respect to any Eurodollar Rate Loans
for any Interest Period, an interest rate per annum equal to the product of (a)
the Eurodollar Rate in effect for such Interest Period and (b) Statutory
Reserves.
"Administrative Agent" has the meaning assigned to that term in the
preamble to this Agreement.
"Affected Lender" has the meaning assigned to that term in subsection 2.7C.
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise. For purposes of subsection 6.7, beneficial ownership
of 5.0% or more of any class of equity Securities of Company or any of its
Subsidiaries shall be deemed control.
"Affiliate Transaction" has the meaning assigned to such term in subsection
6.7(a).
"Agents" means, collectively, the Administrative Agent, the Lead Arranger
and the Co-Arranger and also any successor Agents appointed pursuant to
subsection 9.5.
"Aggregate Amounts Due" has the meaning assigned to such term in subsection
10.5.
"Agreement" means this Senior Subordinated Credit Agreement dated as of
April 1, 1999, as it may be amended, supplemented or otherwise modified from
time to time.
"Alternate Base Rate" means, at any time, the higher of (i) the Prime Rate
or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Alternate Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Alternate Base Rate.
"Applicable Rate" means for each Interest Period the Eurodollar Rate then
in effect or if, in accordance with the provisions of subsection 2.7B or C,
certain Eurodollar Rate Loans are converted into Alternate Base Rate Loans, the
Alternate Base Rate in effect from time to time.
"Applicable Spread" means 5.0% for the period from and including the
Closing Date and to but excluding the 90th day following the Closing Date and
for each subsequent 90-day period the Applicable Spread in effect for the
immediately preceding 90-day period plus 0.50%.
"Approved Fund" means, with respect to any Lender 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 as such Lender or by an Affiliate of such
investment advisor.
"Asset Acquisition" means (a) an Investment by Company or any Subsidiary of
Company in any other Person pursuant to which such Person shall become a
Subsidiary of Company, or shall be merged with or into Company or any Subsidiary
of Company, or (b) the acquisition by Company or any Subsidiary of Company of
the assets of any Person (other than a Subsidiary of Company) which constitute
all or substantially all of the assets of such Person or comprise any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by Company or any of its
Subsidiaries (including any Sale and Leaseback Transaction) to any Person other
than Company or a Wholly Owned Subsidiary of Company of (a) any Capital Stock of
any Subsidiary of Company; or (b) any other property or assets of Company or any
Subsidiary of Company other than in the ordinary course of business; provided,
however, that Asset Sales shall not include (i) a transaction or series of
related transactions for which Company or its Subsidiaries receive aggregate
consideration of less than $500,000, (ii) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of
Company as permitted under subsection 6.5A and (iii) a disposition consisting of
a Permitted Investment or Restricted Payment permitted under subsection 6.3
hereof.
"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit VIII annexed hereto.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Bankruptcy Order" means any court order made in a proceeding pursuant to
or within the meaning of the Bankruptcy Code, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a custodian of a debtor or of all or any
substantial part of a debtor's property, or providing for the staying,
arrangement, adjustment or composition of indebtedness or other relief of a
debt.
"Board of Directors" means, as to any Person, the board of directors or
management or supervisory board of such Person, as the case may be, or any duly
authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Administrative Agent.
"Bridge Loan" has the meaning assigned to such term in subsection 2.1A.
"Bridge Loan Commitment" has the meaning assigned to such term in
subsection 2.1A.
"Bridge Note" has the meaning assigned to such term in subsection 2.1D.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or the State of
Missouri or London, England, or is a day on which banking institutions located
in any such jurisdiction are authorized or required by law or other governmental
action to close.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and including any warrants,
options or rights to acquire any of the foregoing and instruments convertible
into any of the foregoing, and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash" means money, currency or a credit balance in a demand, time,
savings, passbook or like account, other than an account evidenced by a
negotiable certificate of deposit.
"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States or (b) issued by any agency of the United
States the obligations of which are backed by the full faith and credit of the
United States, in each case maturing within one year after such date; (ii)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time of
the acquisition thereof, the highest rating obtainable from either S&P or
Moody's; (iii) commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a rating of
at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit
or bankers' acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia that
(a) is at least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (i) and (ii) above, (b) has
net assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Certificate Re Non-Bank Status" means a certificate substantially in the
form of Exhibit IX annexed hereto delivered by a Lender to Administrative Agent
pursuant to subsection 2.8B(iii).
"Change of Control" means the occurrence of any Person or any two or more
Persons acting in concert (other than New York Life and its Affiliates) having
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Company (or other Securities convertible into such
Securities) representing 20% or more of the combined voting power of all
Securities of Company entitled to vote in the election of directors, other than
Securities having such power only by reason of the happening of a contingency;
provided that the acquisition of shares of Common Stock of Company owned by New
York Life and its Affiliates by one or more Persons from time to time shall not
be a Change of Control.
"Change of Control Date" has the meaning assigned to that term in
subsection 2.5A(iv)(a).
"Change of Control Offer" has the meaning assigned to that term in
subsection 2.5A(iv)(a).
"Closing Date" means the date on which the Bridge Loans are made.
"Co-Arranger" has the meaning assigned to that term in the preamble to this
Agreement.
"Commitments" means the commitments of Lenders to make the Bridge and Term
Loans as set forth in subsections 2.1A and 2.2A.
"Company" has the meaning assigned to that term in the preamble to this
Agreement.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit V annexed hereto delivered to Administrative Agent and Lenders by
Company pursuant to subsection 5.1(iii).
"Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense,
(iii) provisions for taxes based on income, (iv) total depreciation expense, (v)
total amortization expense, (vi) other non-cash items incurred in the ordinary
course of business reducing Consolidated Net Income not in excess of 10% of
Consolidated Net Worth and (vii) for any period that includes Fiscal Quarters
ending on or prior to March 31, 2000, retention bonuses in an aggregate amount
up to $10.0 million to the extent actually paid or accrued in such period to key
employees of DPS less other non-cash items increasing Consolidated Net Income
for such period, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP. "Consolidated Fixed Charge
Coverage Ratio" means the ratio of Consolidated EBITDA during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges for
such Four Quarter Period. In addition to and without limitation of the
foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of Company or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of Company or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If Company or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if
Company or any Subsidiary had directly incurred or otherwise assumed such
guaranteed Indebtedness; provided, however, that where Company and one or more
of its Subsidiaries are, or two or more of Company's Subsidiaries are, liable
for the same Indebtedness, whether as principal or guarantors, the above
sentence shall be calculated to avoid duplication. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means the sum, without duplication, of (i)
Consolidated Interest Expense, plus (ii) to the extent not included in
Consolidated Interest Expense, the product of (x) the amount of all dividend
payments on any series of Preferred Stock of Company (other than dividends paid
in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of Company, expressed as a decimal.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers acceptance financing
and net costs under Interest Swap Obligations.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary and (iv) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Pension Plan.
"Consolidated Net Worth" means, as at any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Company and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Contingent Obligations" shall mean, as to any Person, without duplication,
any obligation of such Person guaranteeing or expressly intended to guarantee by
its terms any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including any "keep-well" or "make-well" agreement,
guarantee of return on equity or other obligation of such Person and including
any obligation of such Person, whether or not contingent, to (a) purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) 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
assure or hold harmless the owner of such primary obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation such not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligations shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made and
(b) the maximum amount for which such guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such Contingent Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing Person may
be liable or not stated or determinable, in which case the amount of such
Contingent Obligation shall be such guaranteeing Persons maximum reasonable
anticipated liability in respect thereof as determined by Company reasonably and
in good faith.
"Contractual Obligation", as applied to any Person, means any Security
issued by that Person or any material indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.
"Conversion Date" means the one year anniversary of the Closing Date or
such later date to which the Conversion Date may be extended pursuant to
subsection 3.2D.
"CSFB" has the meaning assigned to such term in the preamble to this
Agreement.
"CSFBC" has the meaning assigned to such term in the definition of
"Take-Out Banks."
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect Company
or any Subsidiary of Company against fluctuations in currency values.
"Default" means an event or condition, the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Definitive Acquisition Documents" has the meaning assigned to that term in
subsection 3.1L of this Agreement.
"Demand Take-Out Securities" means any of (i) the senior subordinated notes
of Company issued under an indenture satisfying the definition of Senior
Subordinated Indenture (the "Take-Out Debt Securities"), (ii) the Preferred
Stock of Company (the "Take-Out Preferred Stock") or (iii) the Class A Common
Stock, par value $.01 per share of Company (the "Take-Out Common Stock"), in
each case the proceeds of which shall be used to prepay the Bridge Notes in
whole or in part.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
Senior Secured Credit Agreement and (ii) any other Indebtedness constituting
Senior Debt which, at the time of determination, has an aggregate principal
amount of at least $25.0 million and is specifically designated in the
instrument evidencing such Senior Debt as "Designated Senior Debt" by Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to, in the
case of the issuance of Disqualified Capital Stock prior to the Conversion Date,
the final maturity date of the Bridge Notes, and in the case of the issuance of
Disqualified Capital Stock on or after the Conversion Date, the final maturity
date of the Term Notes.
"Dollars" and the sign "$" mean the lawful money of the United States.
"DPS" has the meaning assigned to that term in the recitals to this
Agreement.
"DPS Acquisition Agreement" has the meaning assigned to such term in the
recitals to this Agreement.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including insurance companies, mutual funds and lease
financing companies; and (B) any Lender and any Affiliate of any Lender or any
SPV; provided that no Affiliate of Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), in each case in writing, by any
governmental authority or any other Person, arising (i) pursuant to or in
connection with any actual or alleged violation of any Environmental Law, (ii)
in connection with any Hazardous Materials, or (iii) in connection with any
actual or alleged damage, injury, threat or harm to health or safety, as
relating to the environment, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other binding requirements of governmental authorities relating to (i)
environmental matters, (ii) any activity, event or occurrence involving
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or, as relating to the environment, the protection of human,
plant or animal health or welfare, in any manner applicable to Company or any of
its Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.
136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor ----- thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which would constitute
grounds under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company, any
of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan that results in liability therefor, or the receipt by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(ix) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan,
provided that such imposition is not otherwise a "reportable event."
"Eurodollar Business Day" means any day (i) excluding Saturday, Sunday and
any day that is a legal holiday under the laws of the State of New York or is a
day on which banking institutions located in such State are authorized or
required by law, or other governmental action to close and (ii) on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan for
any Interest Period, the rate per annum determined by Administrative Agent at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in Dollars (as set
forth by any service selected by Administrative Agent which has been nominated
by the British Bankers' Association as an authorized information vendor for the
purpose of displaying rates) for a period equal to such Interest Period,
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the "Eurodollar Rate" shall be
the interest rate per annum determined by Administrative Agent equal to the rate
per annum at which deposits in dollars are offered for such Interest Period by
Administrative Agent in the London interbank market in London, England at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period. "Eurodollar Rate Loans" means
Loans bearing interest at rates determined by reference to the Adjusted
Eurodollar Rate.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Exchange Notes" has the meaning assigned to such term in subsection 5.12.
"Exchange Request" has the meaning assigned to such term in subsection
5.12.
"Exempt Subsidiaries" has the meaning assigned to such term in the recitals
to this Agreement.
"Existing Credit Agreement" means that certain Credit Agreement dated as of
April 1, 1998 by and among Company, the lenders named therein and Bankers Trust
Company, as administrative agent, as amended from time to time prior to the
Closing Date.
"Exposure" means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Bridge Loans, such Lender's
Commitment and (ii) after the funding of the Bridge Loans, the outstanding
principal amount of the Loan of that Lender.
"Express Online" means Express Online, Inc.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Administrative Agent.
"Federal Funds Effective Rate" means, 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 received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"Fee Letter" means the fee letter dated as of February 8, 1999 by and
between Company and CSFB relating to certain fees payable by Company in respect
to the Agreement.
"Financial Plan" has the meaning assigned to that term in subsection
5.1(xii).
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries ending
on December 31 of each calendar year.
"Fixed Rate" means a rate of interest per annum equal to the greatest of
(i) the interest rate on the outstanding Term Loans immediately preceding the
delivery of the notice specified in subsection 2.3A(ii) with respect to such
Term Loans, (ii) the Ten Year U.S. Treasury Rate (on the first date notice is
given to Administrative Agent pursuant to subsection 2.3A(ii) to convert any
portion of the Floating Rate Loan to a Fixed Rate Loan) plus 5.0% and (iii) the
CSFBC Single-B High Yield Index Rate (on the first date notice is given to
Administrative Agent pursuant to subsection 2.3A(ii) to convert any portion of a
Floating Rate Loan to a Fixed Rate Loan) plus 2.0%.
"Fixed Rate Loans" mean Loans described in subsection 2.3A(ii).
"Fixed Rate Spread" means 0.50% for the period from and including the first
date notice is given to Administrative Agent pursuant to subsection 2.3A(ii) to
convert any portion of a Floating Rate Loan into a Fixed Rate Loan and to but
excluding the 90th day following such date and for each subsequent 90-day period
the Fixed Spread in effect for the immediately preceding 90-day period plus
0.50%.
"Floating Rate Loans" means the loans described in subsection 2.3A(i).
"Funding and Payment Office" means (i) the office of Administrative Agent
located at Eleven Madison Avenue, New York, New York 10010 or (ii) such other
office of Administrative Agent as may from time to time hereafter be designated
as such in a written notice delivered by Administrative Agent to Company and
each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination, provided that, if Company notifies Administrative
Agent that Company requests an amendment to any provision hereof to eliminate
the effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if Administrative
Agent requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until the earliest of (i) the withdrawal of such notice,
(ii) the amendment of such provision in accordance herewith, or (iii) 180 days
after such notice has been given.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Grace Period" has the meaning assigned to such term in subsection 3.2.D.
"Granting Lender" has the meaning assigned to such term in subsection
10.1E.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any friable asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority pursuant
to Environmental Laws.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that any amendment,
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall only be deemed to be an Incurrence of Indebtedness if
and to the extent such amendment, modification or waiver increases the principal
thereof or interest rate or premium payable thereon; provided, further, that any
Indebtedness of a Person existing at the time such Person becomes (after the
Closing Date) a Subsidiary of Company (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary of Company.
"Indebtedness" means with respect to any Person, without duplication, (i)
all indebtedness, obligations and liabilities of such Person for borrowed money,
(ii) all indebtedness, obligations and liabilities of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all Capitalized
Lease Obligations of such Person, (iv) all obligations and liabilities of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all indebtedness, obligations and liabilities
under any title retention agreement (but excluding trade accounts payable and
other accrued liabilities arising in the ordinary course of business that are
not overdue by 60 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted), (v) all
indebtedness, obligations and liabilities for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below, (vii) all
indebtedness, obligations and liabilities of any other Person of the type
referred to in clauses (i) through (vi) which are secured by any lien on any
property or asset of such Person, the amount of such Indebtedness being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Indebtedness so secured, (viii) the net amount of all
indebtedness, obligations and liabilities under currency agreements and interest
swap agreements of such Person and (ix) all Disqualified Capital Stock issued by
such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase
price" of any Disqualified Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Capital Stock as if such Disqualified Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to this
Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock.
"Indemnified Liabilities" has the meaning assigned to such term in
subsection 10.3.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in Company and (ii) which, in the judgment of the
Board of Directors of Company, is otherwise independent and qualified to perform
the task for which it is to be engaged.
"Initial Request Date" has the meaning assigned to such term in subsection
5.11.
"Interest Period" has the meaning assigned to such term in subsection 2.3E.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Eurodollar Business Day prior to the first day of such
Interest Period.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor statute.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. "Investment" shall exclude extensions of trade credit by
Company and its Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of Company or such Subsidiary, as the case may be. For
the purposes of subsection 6.3 hereof, the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments by
Company or any of its Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends, distributions, interest
payments or repayments of loans or advances in connection with such Investment
or any other amounts received in respect of such Investment; provided, however,
that no such payment of dividends, distributions, interest payments, repayment
of loans or advances or receipt of any such other amounts shall reduce the
amount of any Investment if such payment of dividends, distributions, interest
payments or repayment of loans or advances or receipt of any such amounts would
be included in Consolidated Net Income. If Company or any Subsidiary of Company
sells or otherwise disposes of any Common Stock of any direct or indirect
Subsidiary of Company such that, after giving effect to any such sale or
disposition, it ceases to be a Subsidiary of Company, Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Common Stock of such Subsidiary not sold or disposed
of.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Lender" and "Lenders" means the persons identified as "Lenders" and listed
on the signature pages of this Agreement, together with their successors and
permitted assigns pursuant to subsection 10.1.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Loan Documents" means this Agreement, the Bridge Notes, the Term Notes,
the Senior Subordinated Subsidiary Guaranty, the Exchange Notes, the
Registration Rights Agreement and the Senior Subordinated Indenture.
"Loan Party" means each of Company and the Subsidiary Guarantors and "Loan
Parties" means all such Persons, collectively.
"Loans" means, collectively, Bridge Loans and Term Loans as each may be
outstanding.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, assets, financial position, operations, or results of operations of
Company and its Subsidiaries taken as a whole or (ii) the material impairment of
the ability of any Loan Party to perform, or of Administrative Agent or Lenders
to enforce, the Obligations.
"Material Contract" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
which is (i) listed on Schedule 4.8 as of the date hereof or (ii) filed by
Company or any of its Subsidiaries with the Securities and Exchange Commission.
"Maturity Date" has the meaning assigned to such term in subsection 2.2D.
"Maximum Cash Interest Rate" means an interest rate of 14% per annum;
provided that in computing such interest rate, fees paid to the Lenders shall
not be deemed an interest payment.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
Company or any of its Subsidiaries from such Asset Sale net of (a) reasonable
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements and (c) appropriate amounts to be provided by Company
or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by Company
or any Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Net Securities Proceeds" has the meaning assigned to such term in
subsection 2.5A(ii)(c).
"New York Life" means NYLIFE HealthCare Management, Inc., an indirect
subsidiary of New York Life Insurance Co., a mutual life insurance company
organized and existing under the laws of the State of New York.
"Non-US Lender" has the meaning assigned to such term in subsection
2.8B(iii)(a).
"Notes" means, collectively, the Bridge Notes and the Term Notes.
"Notice of Borrowing" means a notice substantially in the form of Exhibit I
annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B.
"Notice of Conversion" means a notice substantially in the form of Exhibit
III annexed hereto with respect to a proposed conversion.
"Obligations" means all obligations of every nature of each Loan Party from
time to time owed to the Lenders and the Agents under this Agreement, whether
for principal, reimbursements, interest, fees, expenses, indemnification or
otherwise.
"Offer Payment Date" has the meaning assigned to such term in such term in
subsection 2.5A(iv)(c)(3).
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.
"Original Bridge Notes" has the meaning assigned to such term in subsection
2.1D.
"Original Term Notes" has the meaning assigned to such term in subsection
2.2E.
"Payment Blockage Period" has the meaning assigned to such term in
subsection 8.2B.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"Permitted Indebtedness" shall have the meaning assigned to such term in
subsection 6.1.
"Permitted Investments" means (i)(a) prior to the Conversation Date,
Investments by Company or any Subsidiary of Company in Subsidiaries of Company
or Joint Venture and described on Schedule 6.3 and Investments by Company or any
Subsidiary of Company in any Person that is or will become immediately after
such Investment a Wholly Owned Subsidiary of Company or that will merge or
consolidate into Company or a Wholly Owned Subsidiary of Company, and (b) after
the Conversion Date only, Investments by Company or any Subsidiary of Company in
any Person that is or will become immediately after such Investment a Subsidiary
of Company or that will merge or consolidate into Company or a Subsidiary of
Company; (ii) Investments in Company by any Wholly Owned Subsidiary of Company;
provided, however, that any Indebtedness evidencing such Investment is unsecured
and subordinated in right of payment, pursuant to a written agreement, to
Company's obligations under the Loan Documents; (iii) Investments in cash and
Cash Equivalents; (iv) loans and advances to employees and officers of Company
and its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $2.0 million at any one time outstanding; (v) Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
Company's or its Subsidiaries' businesses and otherwise in compliance with this
Agreement; (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (vii) Investments
made by Company or its Subsidiaries as a result of consideration received in
connection with an Asset Sale made in compliance with subsection 6.10 hereof;
and (viii) guarantees of Indebtedness permitted to be incurred under subsection
6.1 hereof.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate proceedings and
as to which Company or its Subsidiaries shall have set aside on its books such
reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords or of mortgagees of landlords and Liens
of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and
other Liens imposed by law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(iv) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may have
been duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceedings may be initiated shall
not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar charges
or encumbrances in respect of real property not interfering in any material
respect with the ordinary conduct of the business of Company or any of its
Subsidiaries;
(vi) any interest or title of a lessor under any lease permitted by this
Agreement; provided, however, that such Liens do not extend to any property or
assets which is not leased property subject to such lease or other property
subject to a Permitted Lien held by the lien holder of such lease;
(vii) Liens to finance property or assets (including the cost of
construction) of Company or any Subsidiary of Company acquired in the ordinary
course of business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets (including the
cost of construction) and shall not be secured by any property or assets of
Company or any Subsidiary of Company other than the property and assets so
acquired and (B) the Lien securing such Indebtedness shall be created within 90
days of such acquisition or construction;
(viii) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of Company or any
of its Subsidiaries, including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations, which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted to be incurred
hereunder;
(xii) Liens securing Indebtedness under Currency Agreements otherwise
permitted under subsection 6.1;
(xiii) Liens securing Acquired Indebtedness Incurred in accordance with
subsection 6.1 hereof; provided, however, that (A) such Liens secured such
Acquired Indebtedness at the time of and prior to the incurrence of such
Acquired Indebtedness by Company or a Subsidiary of Company and were not granted
in connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by Company or a Subsidiary of Company and (B) such Liens do not
extend to or cover any property or assets of Company or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of
Company or a Subsidiary of Company and are no more favorable to the lienholders
than those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by Company or a Subsidiary of Company;
(xiv) Liens arising out of consignment or similar arrangements for the sale
of goods in the ordinary course of business;
(xv) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of Company and its Subsidiaries;
(xvi) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(xvii) Liens in favor of customs and revenues authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods;
(xviii) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of Company and its
Subsidiaries;
(xix) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course of
business and not interfering in any material respect with the ordinary conduct
of the business of Company or such Subsidiary;
(xx) Liens imposed by Environmental Laws to the extent not in violation of
any of the representations, warranties or covenants in respect of Environmental
Laws made by Company in this Agreement; and
(xxi) Liens incurred in the ordinary course of business of Company or any
Subsidiary of Company after the Conversion Date with respect to obligations that
do not exceed $15.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Company or
such Subsidiary.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PIK Interest Amount" has the meaning assigned to such term in subsection
2.3B.
"Practice Patterns Science" means Practice Patterns Science, Inc.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Prime Rate" means the rate that CSFB announces from time to time as its
prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. CSFB or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to any Commitment or any Loan of any Lender, the
percentage obtained by dividing (x) the Exposure of that Lender by (y) the
aggregate Exposure of all Lenders.
"Proceedings" has the meaning assigned to such term in subsection 5.1(ix).
"Purchase Money Obligations" of any Person means any obligations of such
Person or any of its Subsidiaries to any seller or any other Person incurred or
assumed in connection with the purchase of real or personal property to be used
in the business of such Person or any of its Subsidiaries within 90 days of such
purchase.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock or that is not Indebtedness that is convertible or exchangeable
into Capital Stock.
"Reference Date" has the meaning assigned to such term in subsection
6.3(a).
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Company or any
Subsidiary of Company of Indebtedness Incurred in accordance with subsection 6.1
hereof (other than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xv) or (xvi) of such subsection) and
Indebtedness permitted under subsection 6.1(iii) hereof, in each case that does
not (1) result in an increase in the aggregate principal amount of Indebtedness
of such Person as of the date of such proposed Refinancing (plus the amount of
any premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by Company in
connection with such Refinancing) or (2) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being Refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being Refinanced; provided, however, that (x)
if such Indebtedness being Refinanced is Indebtedness solely of Company, then
such Refinancing Indebtedness shall be Indebtedness solely of Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Loans and
Notes, then such Refinancing Indebtedness shall be subordinate to the Loans and
Notes at least to the same extent and in the same manner as the Indebtedness
being Refinanced.
"Register" has the meaning set forth in subsection 5.13.
"Registration Rights Agreement" means a registration rights agreement
containing terms and provisions typical for high yield financings and as
specified by subsection 5.15 and such other terms and provisions as are
reasonably satisfactory to Lead Arranger and Company.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Replacement Assets" has the meaning set forth in subsection 2.5A(ii).
"Replacement Lender" shall have the meaning assigned to such term in
subsection 2.9B.
"Replaced Lender" shall have the meaning assigned to such term in
subsection 2.9B.
"Request" has the meaning assigned to such term in subsection 5.11.
"Requisite Lenders" means Lenders having or holding more than 50% of the
sum of the aggregate principal amount of the Notes outstanding; provided,
however, that at any time that CSFB holds more than a majority of the
outstanding principal amount of the Notes, Requisite Lenders shall include
Bankers Trust Corporation in addition to CSFB so long as Bankers Trust
Corporation holds at least 30% of the outstanding principal amount of the Notes.
"Restricted Payment" has the meaning set forth in subsection 6.3(a).
"Revolving Loan Facility" means the revolving loan facility under the
Senior Secured Credit Agreement.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to Company or a Subsidiary of any property, whether owned by Company or
any Subsidiary at the Closing Date or later acquired, which has been or is to be
sold or transferred by Company or such Subsidiary to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such Property.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Scheduled Indebtedness" has the meaning set forth in subsection 2.6.
"SEC" has the meaning assigned to such term in subsection 5.1(vii).
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Seller" has the meaning assigned to that term in the recitals to the
Agreement.
"Senior Debt" means the principal of, premium, if any, interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law), fees and expenses on
any Indebtedness of Company, whether outstanding on the Closing Date or
thereafter created, incurred, assumed or guaranteed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Loans and Notes.
Without limiting the generality of the foregoing, "Senior Debt" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of, (x) all obligations of every nature under the Senior
Secured Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations and (z) all
obligations under Currency Agreements, in each case whether outstanding on the
Closing Date or thereafter incurred. Notwithstanding the foregoing, "Senior
Debt" shall not include (i) any Indebtedness of Company to a Subsidiary of
Company, (ii) Indebtedness to, or guaranteed on behalf of, any director, officer
or employee of either of Company or any of its Subsidiaries (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by Company, (vi) Indebtedness to the extent incurred in violation of subsection
6.1 hereof, (vii) Indebtedness which, when incurred and without respect to any
election under subsection 1111(b) of Title 11, United States Code, is without
recourse to Company and (viii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of Company.
"Senior Secured Credit Agreement" means the Credit Agreement dated as of
April 1, 1999, among Company, as borrower, the lenders party thereto in their
capacities as lenders thereunder and CSFB, as lead arranger administrative agent
and collateral agent, Bankers Trust Company, as syndication agent, The First
National Bank of Chicago, as co-documentation agent, and Mercantile Bank, N.A.,
as co-documentation agent, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented, replaced, refinanced or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
increase in borrowings is permitted by subsection 6.1 hereof) or adding or
deleting Subsidiaries of Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Senior Subordinated Indenture" means an indenture between Company, the
Subsidiary Guarantors and a trustee, in the case of an indenture for Exchange
Notes, containing terms and provisions typical for high yield financings, and
containing the negative covenants applicable to Company and its Subsidiaries
after the Conversion Date, the events of default after the Conversion Date, the
subordination provisions and the subsidiary guarantees substantially similar to
the provisions of Sections 6, 7, 8, and the Senior Subordinated Subsidiary
Guaranty, respectively, and, in the case of an indenture for Take-Out Debt
Securities, subject to subsection 5.11 hereof, containing terms and provisions
typical of the high yield market practice at such time and in light of the
financial condition and prospects of Company (with such changes therein as are
reasonably satisfactory to Take-Out Banks and Company, and, at such time as
notes issued thereunder are sold in a public offering, with other appropriate
changes to reflect such public offering). The bank or trust company acting as
trustee under the Senior Subordinated Indenture shall at all times be a
corporation organized and doing business under the laws of the United States of
America or the State of New York, in good standing and having its principal
offices in the Borough of Manhattan, in The City of New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has a
combined capital and surplus of not less than $50.0 million.
"Senior Subordinated Subsidiary Guaranty" means the Senior Subordinated
Subsidiary Guaranty executed and delivered by existing Subsidiaries of Company
on the Closing Date and to be executed and delivered by additional Subsidiaries
of Company from time to time thereafter in accordance with subsection 5.8,
substantially in the form of Exhibit X annexed hereto, as such Senior
Subordinated Subsidiary Guaranty may hereafter be amended, supplemented or
otherwise modified from time to time.
"Shelf Registration" shall have the meaning assigned to such term in
subsection 5.15.
"Solvent" means, with respect to any Person, that as of the date of
determination (i) the then fair saleable value of the property of such Person,
including without limitation any rights of subrogation and contribution, is (y)
greater than the total amount of liabilities (including contingent liabilities)
of such Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due. For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that, in
light of all of the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
"SPV" has the meaning given to such term in subsection 10.1E.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for Eurocurrency Liabilities (as defined in Regulation
D of the Board). Such reserve percentages shall include those imposed pursuant
to such Regulation D. Eurodollar Rate Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Indebtedness" means Indebtedness of Company or any Subsidiary
Guarantor which is expressly subordinated in right of payment to the Loans or
the Senior Subordinated Subsidiary Guaranty of such Subsidiary Guarantor, as the
case may be.
"Subsequent Bridge Note" has the meaning assigned to such term in
subsection 2.1D.
"Subsequent Term Note" has the meaning assigned to such term in subsection
2.2E.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, however, that Diversified NY IPA, Inc. and Diversified
Pharmaceutical Services (Puerto Rico) Inc. shall not be deemed Subsidiaries of
Company for all purposes of this Agreement but shall be deemed Affiliates of
Company.
"Subsidiary Guarantor" means any Subsidiary of Company that executes and
delivers a counterpart of the Senior Subordinated Subsidiary Guaranty on the
Closing Date or from time to time thereafter pursuant to subsection 5.8, but in
any event excluding the Exempt Subsidiaries.
"Surviving Entity" has the meaning assigned to such term in subsection 6.5.
"Take-Out Banks" means Credit Suisse First Boston Corporation ("CSFBC") and
BT Alex. Brown Incorporated and other financial institutions reasonably
acceptable to both Company and CSFBC.
"Take-Out Securities" means any Securities of Company and/or the Subsidiary
Guarantors the proceeds of which are used to repay the Loans, Notes and all
other Obligations in full, which Take-Out Securities shall include, without
limitation, the Demand Take-Out Securities.
"Take-Out Securities Notice" has the meaning assigned to such term in
subsection 5.11.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the Overall Net Income" of a Person shall be
construed as a reference to a tax imposed by one of: the jurisdiction in which
that Person is organized or in which that Person's principal office (and/or, in
the case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"Ten Year U.S. Treasury Rate" means (i) the rate borne by direct
obligations of the United States maturing on the tenth anniversary of the
Closing Date and (ii) if there are no such obligations, the rate determined by
linear interpolation between the rates borne by the two direct obligations of
the United States maturing closest to, but straddling, the tenth anniversary of
the Closing Date, in each case as published by the Board of Governors of the
Federal Reserve System.
"Term Loan" shall have the meaning assigned to such term in subsection
2.2A.
"Term Loan Commitment" shall have the meaning assigned to such term in
subsection 2.2A.
"Term Loan Facilities" shall mean one or more term loan facilities under
the Senior Secured Credit Agreement.
"Term Notes" has the meaning assigned to such term in subsection 2.2E.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Wholly Owned Subsidiary" shall mean a Subsidiary of which securities
(except for directors' qualifying shares) or other ownership interests
representing 100% of the equity or 100% of the ordinary voting power or 100% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held, directly or indirectly, by Company or one or
more Wholly Owned Subsidiaries.
1.2. Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement; Fiscal Periods for Determining Compliance and Pricing
A. Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii) and (xii) of
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(iv)).
1.3. Other Definitional Provisions and Rules of Construction
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
SECTION 2.
AMOUNTS AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES
2.1. Bridge Loan and Bridge Note
A. Bridge Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, the Lenders hereby agree to lend to Company on the Closing
Date $150.0 million in the aggregate (the "Bridge Loan"), each such Lender
committing to lend the amount set forth next to such Lender's name on the
signature pages hereto. The Lenders' commitments to make the Bridge Loan to
Company pursuant to this subsection 2.1A are herein called individually, the
"Bridge Loan Commitment" and collectively, the "Bridge Loan Commitments."
B. Notice of Borrowing. When Company desires to borrow under this
subsection 2.1, it shall deliver to Administrative Agent a Notice of Borrowing
substantially in the form of Exhibit I hereto no later than 11:00 A.M. (New York
time), at least three Eurodollar Business Days in advance of the Closing Date or
such later date as shall be agreed to by Administrative Agent. The Notice of
Borrowing shall specify the applicable date of borrowing (which shall be a
Eurodollar Business Day). Upon receipt of such Notice of Borrowing,
Administrative Agent shall promptly notify each Lender of its share of the
Bridge Loan and the other matters covered by the Notice of Borrowing.
C. Disbursement of Funds.
(i) No later than 12:00 Noon (New York time) on the Closing Date, each
Lender will make available its pro rata share of the Bridge Loan requested to be
made on such date in the manner provided below. All amounts shall be made
available to Administrative Agent in U.S. dollars in immediately available funds
at the Funding and Payment Office and Administrative Agent promptly will make
available to Company by depositing to an account designated by Company at the
Funding and Payment Office the aggregate of the amounts so made available in the
type of funds received. Unless Administrative Agent shall have been notified by
any Lender prior to the Closing Date that such Lender does not intend to make
available to Administrative Agent its portion of the Bridge Loan to be made on
such date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on such date, and Administrative Agent, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to Company a corresponding amount. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender and Administrative Agent has made available the same to Company,
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company, and Company shall immediately pay such corresponding amount to
Administrative Agent. Administrative Agent shall also be entitled to recover
from the Lender or Company, 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 Administrative Agent to Company to the date such corresponding
amount is recovered by Administrative Agent, at a rate per annum equal to (x) if
paid by such Lender, the Federal Funds Effective Rate or (y) if paid by Company,
the then applicable rate of interest on the Loans.
(ii) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any
rights which Company may have against any Lender as a result of any default by
such Lender hereunder.
D. Bridge Notes. Company shall execute and deliver to each Lender on the
Closing Date a Bridge Note dated the Closing Date substantially in the form of
Exhibit II annexed hereto to evidence the portion of the Bridge Loan made on
such date by such Lender and with appropriate insertions (the "Original Bridge
Notes"). On each interest payment date prior to the Conversion Date on which
Company elects to pay a PIK Interest Amount pursuant to subsection 2.3B, Company
shall execute and deliver to each Lender on such interest payment date a Bridge
Note dated such interest payment date substantially in the form of Exhibit II
annexed hereto in a principal amount equal to such Lender's pro rata portion of
such PIK Interest Amount and with other appropriate insertions (each a
"Subsequent Bridge Note" and, together with the Original Bridge Notes, the
"Bridge Notes"). A Subsequent Bridge Note shall bear interest from the date of
its issuance at the same rate borne by all Bridge Notes.
E. Scheduled Payment of Bridge Loan. Subject to Section 2.2, Company shall
pay in full the outstanding amount of the Bridge Loan and all other Obligations
owing hereunder no later than the Conversion Date unless such Loan is converted
into a Term Loan.
F. Termination of Bridge Loan Commitment. The Bridge Loan Commitment
hereunder shall terminate on June 30, 1999, if the Bridge Loan is not made on or
before such date. Company shall have the right, without premium or penalty, to
reduce or terminate the Bridge Loan Commitment of the Lenders hereunder at any
time.
G. Pro Rata Borrowings. The Bridge Loan made under this Agreement shall be
made by the Lenders pro rata on the basis of their respective Bridge Loan
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Bridge
Loan hereunder and that each Lender shall be obligated to make its portion of
the Bridge Loan hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder.
2.2. Term Loan and Term Note
A. Term Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, the Lenders hereby agree, on the Conversion Date, upon the
request of Company, to convert the then outstanding principal amount of the
Bridge Notes into a term loan (the "Term Loan"), such Term Loan to be in the
aggregate principal amount of the then outstanding principal amount of the
Bridge Notes. The Lenders' commitments under this subsection 2.2A are herein
called individually, the "Term Loan Commitment" and collectively, the "Term Loan
Commitments."
B. Notice of Conversion/Borrowing. If Company has not repaid the Bridge
Loan in full on or prior to the Conversion Date, then Company shall convert the
then outstanding principal amount of the Bridge Notes into a Term Loan under
this subsection 2.2. Company shall deliver to the Lenders a Notice of Conversion
substantially in the form of Exhibit III annexed hereto no later than 11:00 A.M.
(New York time), at least two Business Days in advance of the Conversion Date.
The Notice of Conversion shall specify the principal amount of the Bridge Notes
outstanding on the Conversion Date to be converted into a Term Loan.
C. Making of Term Loan. Upon satisfaction or waiver of the conditions
precedent specified in subsection 3.2 hereof, each Lender shall extend to
Company the Term Loan to be issued on the Conversion Date by such Lender by
cancelling on its records a corresponding principal amount of the Bridge Notes
held by such Lender.
D. Maturity of Term Loan. The Term Loan shall mature and Company shall pay
in full the outstanding principal amount thereof and accrued interest thereon on
April 1, 2009 (the "Maturity Date").
E. Term Notes. Company, as borrower, shall execute and deliver to each
Lender on the Conversion Date a Term Note dated the Conversion Date
substantially in the form of Exhibit IV annexed hereto to evidence the Term Loan
made on such date, in the principal amount of the Bridge Notes held by such
Lender on such date and with other appropriate insertions (collectively, the
"Original Term Notes"). On or after the Conversion Date, on each interest
payment date on which Company elects to pay a PIK Interest Amount pursuant to
subsection 2.3B, Company shall execute and deliver to each Lender on such
interest payment date a Term Note dated such interest payment date substantially
in the form of Exhibit IV annexed hereto in a principal amount equal to such
Lender's pro rata portion of such PIK Interest Amount and with other appropriate
insertions (each, a "Subsequent Term Note" and, together with the Original Term
Notes, the "Term Notes"). A Subsequent Term Note shall bear interest at the same
rate borne by all Term Notes.
2.3. Interest on the Loans
A. Rate of Interest. The Loans shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by prepayment,
acceleration or otherwise) at a rate determined as set forth below.
(i) Floating Rate Loans. Subject to subsection 2.3A(ii), the Loans shall
bear interest at a rate per annum equal to the Applicable Rate plus the
Applicable Spread.
(ii) Fixed Rate Loans. At any time after the Conversion Date, at the
request of any Lender, all or any portion of the Term Loan owing to such Lender
shall bear interest at a rate per annum equal to the Fixed Rate plus the Fixed
Rate Spread, effective as of the first interest payment date with respect to
such Term Loan after such notice so long as the 20 Business Days' notice set
forth below is given; provided that no such conversion shall be permitted in
respect of amounts to be voluntarily prepaid following receipt of a notice of
prepayment pursuant to subsection 2.5A. In order to request the conversion of a
Floating Rate Loan to a Fixed Rate Loan, the Lender shall notify the
Administrative Agent in writing of its intention to do so at least 20 Business
Days prior to an interest payment date indicating the amount of the Term Loan
for which it is requesting conversion to a Fixed Rate Loan, which shall be not
less than $5,000,000 and increments of $500,000 in excess thereof (or, in the
case any Lender holds a Term Loan with an outstanding amount less than
$5,000,000, such remaining amount), and Administrative Agent shall so notify
Company in writing at least 5 Business Days prior to such next succeeding
interest payment date. Upon the conversion of a portion of a Floating Rate Loan
to a Fixed Rate Loan an appropriate notation will be made on the Term Note and,
on and after the first interest payment date following the receipt by Company of
a notice hereunder, such portion of the Term Loan which is converted to a Fixed
Rate Loan shall bear interest at the Fixed Rate plus the Fixed Rate Spread until
repaid in full.
(iii) Notwithstanding clause (i) or (ii) of this subsection 2.3A or any
other provision herein, in no event will the combined sum of interest (cash or
otherwise) on the Loans (other than post-maturity interest pursuant to
subsection 2.3C) exceed 16.00% per annum.
B. Interest Payments. Interest shall be payable (i) with respect to the
Bridge Loans, in arrears on, in the case of Eurodollar Rate Loans, the last day
of each Interest Period, and in the case of Alternate Base Rate Loans, on July
15, 1999, October 15, 1999, and January 15, 2000, and, in the case of all Bridge
Loans, upon any prepayment of the Bridge Loans (to the extent accrued on the
amount being prepaid) and at maturity of the Bridge Loans in respect of any
amounts paid on such date and not converted to Term Loans and (ii) with respect
to the Term Loans, in arrears on, in the case of Eurodollar Rate Loans, the last
day of each Interest Period, and in the case of Alternate Base Rate Loans and
Fixed Rate Loans, on each January 15, April 15, July 15 and October 15 of each
year, commencing on the first of such dates to follow the Conversion Date, and,
in the case of all Term Loans, upon any prepayment of the Term Loans (to the
extent accrued on the amount being prepaid) and at maturity of the Term Loans;
provided, however, that if, on any interest payment date, the interest rate
borne by the Bridge Loans or the Term Loans (other than post-maturity interest
pursuant to subsection 2.3C), as the case may be, exceeds the Maximum Cash
Interest Rate, Company may pay all or a portion of the interest payable in
excess of the amount of interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes or Subsequent
Term Notes, as the case may be, in an aggregate principal amount equal to the
amount of such interest being so paid (the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent permitted by applicable law, any interest payment on
the Loans not paid when due, in each case whether at stated maturity, by notice
of prepayment, by acceleration or otherwise, shall thereafter bear interest
payable upon demand at a rate which is 2.00% per annum in excess of the rate of
interest otherwise payable under this Agreement for the Loans.
D. Computation of Interest. Interest on the Loans shall be computed on the
basis of, in the case of Eurodollar Rate Loans, a 360-day year, and in the case
of Alternate Base Rate Loans, a 365 or 366-day year, and, with respect to any
amount of the Loans which are Floating Rate Loans, the actual number of days
elapsed in the period during which it accrues or, with respect to any amount of
the Loans which are Fixed Rate Loans, twelve 30-day months. In computing
interest on the Loans, the date of the making of the Loans shall be included and
the date of payment shall be excluded; provided, however, that if a Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan.
E. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, in the case of the first Interest Period, in the Notice of Borrowing and,
in the case of subsequent Interest Periods upon written notice to Administrative
Agent that is received no later than 11:00 A.M. (New York time) at least three
Eurodollar Business Days in advance of the expiration of the preceding Interest
Period, select an interest period (each an "Interest Period") to be applicable
to such Loan, which Interest Period shall be, at Company's option, either a one,
two or three month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall commence
on the Funding Date in respect of such Loan;
(ii) in the case of immediately successive Interest Periods applicable to a
Eurodollar Rate Loan, each successive Interest Period shall commence on the day
on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(v) in the event Company fails to specify an Interest Period for any
Eurodollar Rate Loan in a written notice to Administrative Agent that is
received no later than 11:00 A.M. (New York time) at least three Eurodollar
Business Days in advance of the expiration of the preceding Interest Period,
Company shall be deemed to have selected the same Interest Period as the
immediately preceding Interest Period.
2.4. Fees
Company agrees to pay to Administrative Agent all fees and other
obligations in accordance with, and at the times specified by, the Fee Letter,
except that any fees stated therein to be due and payable upon the exchange of
Bridge Loans for Exchange Notes shall be due and payable on the Conversion Date
based on the principal amount of the Bridge Notes outstanding on the Conversion
Date.
2.5. Prepayments and Payments A. Prepayments
(i) Voluntary Prepayments. Company may, without payment of premium or
penalty, but subject to subsection 2.7D, upon not less than ten days' prior
written or telephonic notice confirmed in writing to Administrative Agent at any
time and from time to time, prepay the Loans made to Company in whole.
Notice of prepayment having been given as aforesaid, the principal amount
of the Loans to be prepaid shall become due and payable on the prepayment date.
Amounts of the Loans so prepaid may not be reborrowed.
(ii) Mandatory Prepayments
(a) Prepayments from Asset Sales. Upon receipt by Company or any Subsidiary
of Company of Net Cash Proceeds of any Asset Sale occurring after the Closing
Date (other than Net Cash Proceeds from the sale or issuance of Capital Stock of
Express Online or Practice Patterns Science which shall be treated as Net
Securities Proceeds under subsection 2.5A(ii)(c)), Company shall, or shall cause
its Subsidiaries to, prepay the Loans with the Net Cash Proceeds received from
such Asset Sale on a date not later than the Business Day next succeeding (i) in
the case the date of consummation of such Asset Sale is prior to the Conversion
Date, the 180th day after the date of consummation of such Asset Sale if and to
the extent that such Net Cash Proceeds are not applied by such date by Company
or its Subsidiaries to either repay any Indebtedness outstanding under the
Senior Secured Credit Agreement or to make an investment in properties and
assets that replace the properties and assets that were the subject of such
Asset Sale or in properties and assets that will be used in the business of
Company and its Subsidiaries as existing on the Closing Date or in businesses
which are similar or related to the businesses of Company as conducted on the
Closing Date ("Replacement Assets") and (ii) in the case the date of
consummation of such Asset Sale is on or after the Conversion Date, the 360th
day after the date of consummation of such Asset Sale if and to the extent that
such Net Cash Proceeds are not applied by such date by Company or its
Subsidiaries to either repay any Indebtedness outstanding under the Senior
Secured Credit Agreement or to make an investment in Replacement Assets;
provided, however, that, to avoid any imposition of any costs pursuant to
subsection 2.7D, in lieu of prepaying the Loans on any such date, Company may
elect not to prepay the Loans by (i) so notifying the Administrative Agent in
writing of such election and (ii) paying such amount of Net Cash Proceeds to
Administrative Agent to be held as Cash collateral for the Obligations and
applied to such prepayment of the Loans at the end of the applicable Interest
Period in accordance with the term of this Agreement. Concurrently with the
consummation of an Asset Sale, Company shall deliver to Administrative Agent an
Officers' Certificate demonstrating the derivation of Net Cash Proceeds from the
gross sales price of such Asset Sale.
(b) Prepayments from Issuances of Take-Out Securities. Concurrently with
the receipt by Company of proceeds from the issuance of Take-Out Securities,
Company shall prepay the Loans in a principal amount equal to the lesser of the
proceeds thereof (net of expenses payable by Company to any Person other than an
affiliate of Company in connection with the issuance thereof) or the aggregate
principal amount of the Notes then outstanding; provided, however, that, to
avoid any imposition of any costs pursuant to subsection 2.7D, in lieu of
prepaying the Loans on any such date, Company may elect not to prepay the Loans
by (i) so notifying the Administrative Agent in writing of such election and
(ii) paying such amount of proceeds from the issuance of such Take-Out
Securities to Administrative Agent to be held as Cash collateral for the
Obligations and applied to such prepayment of the Loans at the end of the
applicable Interest Period in accordance with the terms of this Agreement.
(c) Prepayments from Issuances of Securities. On the first Business Day
following receipt by Company or a Subsidiary of the cash proceeds (any such
proceeds, net of underwriting discounts and commissions and other reasonable
costs and expenses associated therewith, including reasonable legal fees and
expenses, being "Net Securities Proceeds") from the issuance of debt Securities
of Company or such Subsidiary or the issuance or sale of equity Securities of
Company, Express Online or Practice Patterns Science or any other incurrence of
Indebtedness by Company or such Subsidiary, or any other capital contribution to
Company by a holder of Capital Stock of Company, after the Closing Date, other
than Permitted Indebtedness, Company shall prepay the Loans in an aggregate
amount equal to such Net Securities Proceeds; provided, however, that the
foregoing shall not apply to the first $15.0 million of Net Securities Proceeds
in respect of the sale or issuance of Capital Stock of Express Online; provided,
further, however, that, to avoid any imposition of any costs pursuant to
subsection 2.7D, in lieu of prepaying the Loans on any such date, Company may
elect not to prepay the Loans by (i) so notifying the Administrative Agent in
writing of such election and (ii) paying such amount of Net Securities Proceeds
to Administrative Agent to be held as Cash collateral for the Obligations and
applied to such prepayment of the Loans at the end of the applicable Interest
Period in accordance with the terms of this Agreement.
(d) Notice. Company shall notify Administrative Agent of any prepayment to
be made pursuant to this subsection 2.5A(ii) at least two Business Days prior to
such prepayment date (unless shorter notice is satisfactory to the Required
Lenders).
(e) Election to Prepay Prior to End of the Interest Period. Notwithstanding
the provisos of subsections 2.5A(ii)(a)-(c) above, Company may also elect, by
notifying Administrative Agent in writing, to cause the Loans to be prepaid
prior to the end of the Interest Period or Interest Periods referred to therein
(subject to subsection 2.7D). Any amounts held by Administrative Agent pursuant
to the election referred to in such subsections 2.5(A)(ii)(a)-(c) shall be
invested in investments agreed upon by Administrative Agent and Company for the
account of Company, which investments shall mature no later than the end of the
appropriate Interest Period.
(iii) Company's Mandatory Prepayment Obligations; Application of
Prepayments. All prepayments shall include payment of accrued interest on the
principal amount so prepaid and shall be applied to payment of interest before
application to principal and shall not include any prepayment or other premium.
(iv) Mandatory Offer to Purchase Notes.
(a) Upon the occurrence of a Change of Control at any time on or after the
Conversion Date (the date of such occurrence, the "Change of Control Date"), the
Lenders shall have the right to require the repurchase of all of the Notes
pursuant to an offer to purchase (the "Change of Control Offer") at a purchase
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon to the date of repurchase.
(b) The notice to Administrative Agent and each Lender shall contain all
instructions and materials necessary to enable the Lenders to tender Notes.
(c) Within 30 days following any Change of Control, Company shall mail a
notice to Administrative Agent and each Lender stating:
(1) the circumstances involving the Change of Control;
(2) that the Change of Control Offer is being made pursuant to this
subsection 2.5A(iv) and that all Notes validly tendered will be accepted for
payment;
(3) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 45 days from the date such notice is mailed (the
"Offer Payment Date");
(4) that any Note not tendered will continue to accrue interest;
(5) that any Note accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Offer Payment Date unless Company
shall default in the payment of the repurchase price of the Notes;
(6) that if a Lender elects to have a Note purchased pursuant to the Change
of Control Offer it will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to Company prior to 5:00 p.m. New York time on the Offer Payment
Date;
(7) that a Lender will be entitled to withdraw its election if Company
receives, not later than 5:00 p.m. New York time on the Business Day preceding
the Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the principal amount of Notes such Lender delivered for purchase,
and a statement that such Lender is withdrawing its election to have such Note
purchased; and
(8) that if Notes are purchased only in part a new Note of the same type
will be issued in principal amount equal to the unpurchased portion of the Notes
surrendered.
(d) On or before the Offer Payment Date, Company shall (i) accept for
payment Notes or portions thereof which are to be purchased in accordance with
the above, and (ii) deposit at the Funding and Payment Office immediately
available funds sufficient to pay the purchase price of all Notes to be
purchased. Administrative Agent shall promptly mail to the Lenders whose Notes
are so accepted payment in an amount equal to the purchase price unless such
payment is prohibited pursuant to Section 8.
(e) Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes pursuant to an offer hereunder. To the extent the provisions of any
securities laws or regulations conflict with the provisions under this
subsection, Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section by virtue thereof.
B. Manner and Time of Payment. All payments of principal and interest
hereunder and under the Notes by Company shall be made without defense, set-off
or counterclaim and in same-day funds and delivered to Administrative Agent,
unless otherwise specified, not later than 12:00 noon. (New York time) on the
date due at the Funding and Payment Office for the account of the Lenders; funds
received by Administrative Agent after that time shall be deemed to have been
paid by Company on the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its account with Administrative Agent in order to
cause timely payment to be made of all principal, interest and fees due
hereunder (subject to sufficient funds being available in its account for that
purpose).
C. Payments on Non-Business Days. Whenever any payment to be made hereunder
or under the Notes shall be stated to be due on a day which is not a Business
Day, the payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Notes or of the commitment and other fees
hereunder, as the case may be.
D. Notation of Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by granting participations
therein), such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify Company of the name and address of the transferee of that Note;
provided, however, that the failure to make (or any error in the making of) such
a notation or to notify Company of the name and address of such transferee shall
not limit or otherwise affect the obligation of Company hereunder or under such
Notes with respect to the Loans and payments of principal or interest on any
such Note.
E. Application of Payments Under Senior Subordinated Subsidiary Guaranty.
All payments received by Administrative Agent under the Senior Subordinated
Subsidiary Guaranty shall be applied promptly from time to time by
Administrative Agent in the following order of priority:
(a) to the payment of the costs and expenses of any collection or other
realization under the Senior Subordinated Guaranty, including reasonable
compensation to Administrative Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by Administrative Agent in
connection therewith, all in accordance with the terms of this Agreement and the
Senior Subordinated Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments, to the payment
of all other Guarantied Obligations (as defined in the Senior Subordinated
Subsidiary Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to the payment
of the applicable Subsidiary Guarantor or to whosoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.
2.6. Use of Proceeds
A. Bridge Loan. The proceeds of the Bridge Loan shall be applied by
Company, together with borrowings of $890.0 million under the Senior Secured
Credit Agreement, to (i) pay the consideration for the Acquisition in an
aggregate amount of $700.0 million (subject to adjustment), (ii) refinance the
Indebtedness set forth in Schedule 2.6 hereof (the "Scheduled Indebtedness") in
an amount of approximately $360.0 million, and (iii) pay fees and expenses
related to the Acquisition and Refinancing in the aggregate amount of
approximately $30.0 million.
B. Term Loan. The proceeds of the Term Loan shall be used to cancel any
outstanding amount of Bridge Notes converted to Term Notes on such date.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company in any manner which might cause the
borrowing or the application of such proceeds to violate the applicable
requirements of Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of the Board of
Governors or to violate the Exchange Act, in each case as in effect on the date
or dates of such borrowing and such use of proceeds.
2.7. Special Provisions Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) each
such Loan shall bear interest at a rate per annum equal to the Alternate Base
Rate in effect from time to time plus the Applicable Spread, less 1.50%, until
such time as Administrative Agent notifies Company and Lenders that the
circumstances giving rise to such notice no longer exist and (ii) any Notice of
Borrowing given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Administrative Agent) that the making, maintaining or
continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the Eurodollar Rate Loans of such Lender shall bear
interest at a rate per annum equal to the Alternate Base Rate in effect from
time to time plus the Applicable Spread, less 1.50% until such notice shall be
withdrawn by the Affected Lender and (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing, the Affected Lender shall make such
Loan as an Alternate Base Rate Loan and such Alternate Base Rate Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate in effect from
time to time plus the Applicable Spread, less 1.50%, until such notice shall be
withdrawn by the Affected Lender. Notwithstanding the foregoing, to the extent a
determination by an Affected Lender as described above relates to a Eurodollar
Rate Loan then being requested by Company pursuant to a Notice of Borrowing,
Company shall have the option, subject to the provisions of subsection 2.7D, to
rescind such Notice of Borrowing as to all Lenders by giving notice (by
telefacsimile or by telephone confirmed in writing) to Administrative Agent of
such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Administrative
Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this subsection 2.7 shall affect the
obligation of any Lender other than an Affected Lender to make or maintain Loans
as Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation for Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, (ii) if any prepayment (including any prepayment pursuant to
subsection 2.5) or other principal payment or any conversion of any of its
Eurodollar Rate Loans pursuant to subsection 2.7B or 2.7C occurs on a date prior
to the last day of an Interest Period applicable to that Loan, (iii) if any
prepayment of any of its Eurodollar Rate Loans is not made on any date specified
in a notice of prepayment given by Company or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender; provided, that such making, carrying
or transferring Eurodollar Rate Loans does not result in any costs or taxes to
Company pursuant to subsection 2.8.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.7 and under subsection
2.8A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of that Lender to a domestic
office of that Lender in the United States of America; provided, however, that
each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit
and the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this subsection 2.7 and under subsection 2.8A.
2.8. Increased Costs; Taxes; Capital Adequacy
A. Compensation for Increased Costs and Taxes. Subject to the provisions of
subsection 2.8B (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the Overall Net Income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax matter)
on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar market; and the result of any
of the foregoing is to increase the cost to such Lender of agreeing to make,
making or maintaining Loans hereunder or to reduce any amount received or
receivable by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, Company shall promptly pay to such Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder; provided that
Company shall not be required to compensate a Lender pursuant to this subsection
for any increased cost or reduction incurred more than one year prior to the
date that such Lender notifies Company of such change giving rise to such
increased cost or reduction and of such Lender's intention to claim compensation
therefor; provided further that, if such change giving rise to such increased
cost or reduction is retroactive, then the one year period referred to above
shall be extended to include the period of retroactive effect thereof. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection 2.8A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under this
Agreement and the other Loan Documents shall (except to the extent required by
law) be paid free and clear of, and without any deduction or withholding on
account of, any Tax (other than a Tax on the Overall Net Income of any Lender)
imposed, levied, collected, withheld or assessed by or within the United States
of America or any political subdivision in or of the United States of America or
any other jurisdiction from or to which a payment is made by or on behalf of
Company or by any federation or organization of which the United States of
America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-Up of Payments. If Company or any other Person is required by
law to make any deduction or withholding on account of any such Tax from any sum
paid or payable by Company to Administrative Agent or any Lender under any of
the Loan Documents:
(a) Company shall notify Administrative Agent of any such requirement or
any change in any such requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which penalties
attach thereto, such payment to be made (if the liability to pay is imposed on
Company) for its own account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in the name of
Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary to
ensure that, after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be, receives on the due
date a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is required by law to
make any deduction or withholding, and within 30 days after the due date of
payment of any Tax which it is required by clause (b) above to pay, Company
shall deliver to Administrative Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change in any law,
treaty or governmental rule, regulation or order, or any change therein or in
the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof (in the case of each Lender listed on
the signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other Lender)
affecting any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Agreement or at
the date of such Assignment Agreement, as the case may be, in respect of
payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is not a United States person as defined in Section
7701(a)(30) of the Internal Revenue Code (for purposes of this subsection
2.8B(iii), a "Non-US Lender") shall deliver to Administrative Agent for
transmission to Company, on or prior to the Closing Date (in the case of each
Lender listed on the signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in the determination
of Company or Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form 1001 or
4224 (or any successor forms), properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a
Certificate re Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender, together with any other certificate or statement of
exemption requested by Company required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or other
evidence with respect to United States federal income tax withholding matters
pursuant to subsection 2.8B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or other evidence,
whenever a lapse in time or change in circumstances renders such forms,
certificates or other evidence obsolete or inaccurate in any material respect,
that such Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue Service Form
1001 or 4224, or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption requested by Company required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United States federal
income tax with respect to payments to such Lender under the Loan Documents or
(2) notify Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount to any
Non-US Lender under clause (c) of subsection 2.8B(ii) if such Lender shall have
failed to satisfy the requirements of clause (a) or (b)(1) of this subsection
2.8B(iii); provided that if such Lender shall have satisfied the requirements of
subsection 2.8B(iii)(a) on the Closing Date (in the case of each Lender listed
on the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.8B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection 2.8B(ii) in the
event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.8B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or participations therein or other
obligations hereunder with respect to the Loans to a level below that which such
Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
the next sentence, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction; provided that Company shall not be required
to compensate a Lender pursuant to this subsection for any reduction incurred
more than one year prior to the date that such Lender notifies Company of such
change giving rise to such reduction and of such Lender's intention to claim
compensation therefor; provided further that, if such change giving rise to such
reduction is retroactive, then the one year period referred to above shall be
extended to include the period of retroactive effect thereof. Such Lender shall
deliver to Company (with a copy to Administrative Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
D. Refund and Contest. If Administrative Agent or any Lender receives a
refund with respect to Tax deducted, withheld or paid by Company and with
respect to which Company has been required to and has paid an additional amount
under this subsection 2.8, which in the good faith judgment of such Lender is
allocable to such deduction, withholding or payment, it shall promptly pay such
refund, together with any other amount paid by Company in connection with such
refunded Tax, to Company, net of all out-of-pocket expenses of such Lender
incurred in obtaining such refund, provided, however, that Company agrees to
promptly return such refund to Administrative Agent or the applicable Lender, as
the case may be, if it receives notice from Administrative Agent or applicable
Lender that such Administrative Agent or Lender is required to repay such
refund. Each of Administrative Agent and such Lender agrees that it will contest
such Tax or liabilities paid by Company if Agent or such Lender determines, in
good faith and in its sole discretion, that it would not be materially
disadvantaged or prejudiced as a result of such contest.
2.9. Obligation of Lenders to Mitigate; Replacement
A. Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender becomes aware
of the occurrence of an event or the existence of a condition that would cause
such Lender to become an Affected Lender or that would entitle such Lender to
receive payments under subsection 2.8, it will, to the extent not inconsistent
with the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans of such Lender through another
lending office of such Lender, or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the circumstances which would cause
such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender pursuant to
subsection 2.8 would be materially reduced and if, as determined by such Lender
in its sole discretion, the making, issuing, funding or maintaining of such
Commitments or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or the interests of such Lender;
provided that such Lender will not be obligated to utilize such other lending
office pursuant to this subsection 2.9 unless Company agrees to pay all
reasonable incremental expenses incurred by such Lender as a result of utilizing
such other lending office as described in clause (i) above. A certificate as to
the amount of any such expenses payable by Company pursuant to this subsection
2.9 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to Company (with a copy to Administrative Agent) shall
be conclusive absent manifest error.
B. Replacement. In the event that (a) any Lender becomes an Affected Lender
or requests compensation under subsection 2.8A or 2.8C, (b) Company is required
to pay any additional amount to any Lender or any governmental authority for the
account of any Lender pursuant to subsection 2.8B, or (c) any Lender defaults in
its obligation to fund Loans hereunder, then Company may, at its sole expense
and effort, if no Default or Event of Default exists, replace such Lender (a
"Replaced Lender") with one or more Eligible Assignees (collectively, the
"Replacement Lender") acceptable to Administrative Agent, provided that (i) at
the time of any replacement pursuant to this subsection 2.9 the Replacement
Lender shall enter into one or more Assignment Agreements pursuant to subsection
10.1B (and with all fees payable pursuant to such subsection 10.1B to be paid by
the Replacement Lender) pursuant to which the Replacement Lender shall acquire
all of the outstanding Loans and Commitments of the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender 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 of the Replaced Lender and (B) an
amount equal to all accrued, but theretofore unpaid, fees owing to the Replaced
Lender with respect thereto and (ii) all obligations (including without
limitation all such amounts, if any, owing under subsection 2.7D) of Company
owing to the Replaced Lender (other than those specifically described in clause
(i) above in respect of which the assignment purchase price has been, or is
concurrently being, paid), shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
Assignment Agreements and the acceptance thereof by Administrative Agent
pursuant to subsection 10.1B, the payment of amounts referred to in clauses (i)
and (ii) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note or Notes executed by Company, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder except with respect to indemnification
provisions under this Agreement which by the terms of this Agreement survive the
termination of this Agreement, which indemnification provisions shall survive as
to such Replaced Lender. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling Company to require such
assignment and delegation cease to apply.
SECTION 3.
CONDITIONS TO LOANS
The obligations of Lenders to make the Loans hereunder are subject to the
satisfaction of the following conditions.
3.1. Conditions to Bridge Loans
The obligations of Lenders to make the Bridge Loans to be made on the
Closing Date are subject to prior or concurrent satisfaction of the following
conditions:
A. Loan Documents. On or before the Closing Date, Company shall, and shall
cause each other Loan Party to, deliver to Lenders (or to Administrative Agent
for Lenders with sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following with respect to Company or such Loan
Party, as the case may be, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation of
such Person, together with a good standing certificate from the Secretary of
State of its jurisdiction of incorporation and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
such jurisdiction, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing Date
by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving and
authorizing the execution, delivery and performance of the Loan Documents to
which it is a party, certified as of the Closing Date by the corporate secretary
or an assistant secretary of such Person as being in full force and effect
without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such Person
executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party; and
(vi) Such other documents as Administrative Agent may reasonably request.
B. No Material Adverse Effect. Since December 31, 1998, no event or events,
adverse condition or change in or affecting Company or DPS that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
shall have occurred.
C. Termination of Existing Credit Agreement and Related Liens; Existing
Letters of Credit; Scheduled Indebtedness. On the Closing Date, Company and its
Subsidiaries shall have (or shall direct that the proceeds of the Bridge Loans
made on the Closing Date be applied to) (i) repaid in full all Indebtedness
outstanding under the Existing Credit Agreement; (ii) terminated any commitments
to lend or make other extensions of credit thereunder; (iii) delivered to
Administrative Agent all documents or instruments necessary to release all Liens
securing Indebtedness or other obligations of Company and its Subsidiaries
thereunder; (iv) repaid in full all Scheduled Indebtedness listed on Schedule
2.6 hereto; and (v) delivered to Administrative Agent all documents and
instruments necessary to evidence such repayment.
D. Other Indebtedness. On the Closing Date, other than Indebtedness
outstanding under the Senior Secured Credit Agreement, if any, and this
Agreement, Company and its Subsidiaries shall have outstanding no Indebtedness,
Contingent Obligations or Preferred Stock other than (i) the Indebtedness or
guarantees of Indebtedness aggregating not more than $1.0 million set forth on
Schedule 3.1 and (ii) the Contingent Obligations listed on Schedule 6.1.
E. Solvency Certificate. Agents shall have received a certificate of the
chief financial officer of Company, in his capacity as such, substantially in
the form of Exhibit X and in form and substance satisfactory to Agents,
supporting the conclusions that, after giving effect to the Acquisition, the
Refinancing, the Senior Secured Credit Agreement and the loans to be made
thereunder, this Agreement and the loans to be made hereunder and related
transactions, Company will be Solvent and not be rendered insolvent by the
indebtedness incurred in connection therewith.
F. Evidence of Insurance. Agents shall have received a certificate from
Company's insurance broker or other evidence satisfactory to them that all
insurance required to be maintained pursuant to subsection 5.4 is in full force
and effect.
G. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of (A) Thomas M. Boudreau, Esq., Senior Vice
President of Administration and General Counsel of Company, and (B) Simpson
Thacher & Bartlett, special New York counsel for Loan Parties, each in form and
substance reasonably satisfactory to Agents and their counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibits VI-A and VI-B annexed hereto and as to such other matters
as Agents acting on behalf of Lenders may reasonably request and (ii) evidence
satisfactory to Agents that Company has requested such counsel to deliver such
opinions to Lenders.
H. Opinions of Agents' Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of Cahill Gordon &
Reindel, counsel to Agents, dated as of the Closing Date, substantially in the
form of Exhibit VII annexed hereto and as to such other matters as Agents acting
on behalf of Lenders may reasonably request.
I. Fees. Company shall have paid to Administrative Agent, for distribution
(as appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.4.
J. Representations and Warranties; Performance of Agreements. Company shall
have delivered to Agents an Officers' Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties in
Section 4 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agents.
K. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
L. Approval of Acquisition Structure and Documentation. The structure
utilized to consummate the Acquisition and the Stock Purchase Agreement among
SmithKline Beecham Corporation, SmithKline Beecham Intercredit BV and Express
Scripts, Inc. dated as of February 9, 1999 (the "Definitive Acquisition
Documents") shall be in full force and effect, no provision of which shall have
been amended, supplemented, waived or otherwise modified in any material respect
without the prior written consent of Agents, and the Acquisition shall occur
simultaneously with the making of the Bridge Loans under this Agreement.
M. Senior Secured Credit Agreement. The Senior Secured Credit Agreement
shall be in form and substance reasonably satisfactory to Agents, and the Senior
Secured Credit Agreement shall be in full force and effect, no provision of
which shall have been amended, supplemented, waived or otherwise modified in any
material respect without the prior written consent of Agents, no default of
event of default shall have occurred thereunder and Company shall have
concurrently with the making of Loans under this Agreement borrowed gross
proceeds of not less than $890.0 million thereunder on the Closing Date.
N. Certain Approvals and Agreements Relating to the Acquisition. All
governmental and third party approvals necessary or advisable in connection with
the Acquisition, the Refinancing, the financings contemplated thereby and the
continuing operations of the business of Company and its Subsidiaries shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose material
adverse conditions on the Acquisition, the Refinancing or the financing thereof.
O. Financial Information. Company shall have delivered to Agents and the
Lenders: financial statements of each of Company and DPS (including notes
thereto), consisting of (a) audited balance sheets as of the end of each period
in the three fiscal-year period ended December 31, 1998 and a pro forma balance
sheet as of such date, (b) audited consolidated statements of operations and
cash flows for each period in the three fiscal-year period ended December 31,
1998 and a pro forma statement of operations for the most recent fiscal year and
(c) such other financial statements as may be reasonably requested by Agents,
and any supporting documents as shall be reasonably satisfactory to Agents, and
all such financial statements, historical or pro forma, delivered pursuant to
this paragraph (O) shall be in compliance with the requirements of Regulation
S-X for a public offering registered under the Securities Act and shall not be
materially inconsistent with financial statements previously provided to Agents
and Lenders. Administrative Agent shall have received originally executed copies
of a "comfort letter" of PricewaterhouseCoopers LLP, independent public
accountants to Company, covering such matters as Agents acting on behalf of
Lenders may reasonably request.
P. Notice of Borrowing. Administrative Agent shall have received before the
Closing Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by the chief
executive officer, the chief financial officer or the treasurer of Company or by
any executive officer of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Administrative Agent.
Q. Representations and Warranties; No Default or Event of Default.
(i) The representations and warranties contained herein and in the other
Loan Documents shall be true, correct and complete in all material respects on
and as of the Closing Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material respects on and as of
such earlier date;
(ii) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of Borrowing that
would constitute a Default or Event of Default;
(iii) Each Loan Party shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall be
performed or satisfied by it on or before the Closing Date; and
(iv) No order, judgment or decree of any court, arbitrator or governmental
authority shall purport to enjoin or restrain any Lender from making the Loans
to be made by it on the Closing Date.
3.2. Conditions to Term Loan
The obligation of the Lenders to make the Term Loan on the Conversion Date
is subject to the prior or concurrent satisfaction or waiver of the following
conditions precedent:
A. The Administrative Agent shall have received in accordance with the
provisions of Section 2.2B an originally executed Notice of Conversion.
B. Company or any of its Subsidiaries shall not be subject to a Bankruptcy
Order or other insolvency proceeding and a Default or Event of Default shall not
be in existence under subsection 7.6, 7.7 or 7.9.
C. No Event of Default or Default (whether matured or not) shall have
occurred and be continuing under subsection 7.1.
D. No Event of Default or Default shall have occurred under subsection 7.2
and be continuing; provided that if an event described in this subsection 3.2D
is continuing at the Conversion Date but 30 days has not passed since the date
of written notice of the commencement of such 30-day period from the holder or
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding (the "Grace Period"), the Conversion Date shall be deferred until
the earlier to occur of (x) the cure of such event or (y) the expiration of such
Grace Period. E. On or prior to the Conversion Date, Administrative Agent shall
have received a form of Senior Subordinated Note Indenture and Registration
Rights Agreement reasonably satisfactory in form and substance to Agents.
F. On the Conversion Date, Administrative Agent shall have received an
Officers' Certificate from Company dated the Conversion Date and reasonably
satisfactory in form and substance to Administrative Agent, to the effect that
the conditions in this subsection 3.2 are satisfied on and as of the Conversion
Date.
G. Company shall have executed and delivered to Administrative Agent on the
Conversion Date for delivery to the Lenders Term Notes dated the Conversion Date
substantially in the form of Exhibit III annexed hereto to evidence the Term
Loan, in the principal amount of (which principal amount shall be the aggregate
principal amount of the Bridge Notes outstanding on the Conversion Date) the
Term Loan and with other appropriate insertions.
H. Company shall have paid any fees owing pursuant to subsection 2.4 in
cash to Administrative Agent.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans and to induce other Lenders to purchase participations therein, Company
represents and warrants to each Lender (both before and after giving effect to
the Acquisition and the transactions in connection therewith), on the date of
this Agreement and the Closing Date, that the following statements are true,
correct and complete:
4.1. Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 4.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 6.9.
D. Subsidiaries. All of the Subsidiaries of Company are identified in
Schedule 4.1 annexed hereto, as said Schedule 4.1 may be supplemented from time
to time pursuant to the provisions of subsection 5.1(xv). The capital stock of
each of the Subsidiaries of Company identified in Schedule 4.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and is free and clear of all Liens other than Liens securing the
Senior Secured Credit Agreement and Liens permitted hereunder and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 4.1 annexed hereto (as so supplemented) is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation set forth therein, has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such corporate power and authority has not had and is not reasonably expected to
have a Material Adverse Effect. Schedule 4.1 annexed hereto (as so supplemented)
correctly sets forth the ownership interest of Company and each of its
Subsidiaries in each of the Subsidiaries of Company identified therein.
4.2. Authorization of Borrowing, Etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the consummation of the transactions contemplated by the
Loan Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries,
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals or consents which will be obtained on or before the
Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
D. Binding Obligation. Each of the Loan Documents has been duly executed
and delivered by each Loan Party that is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally or (ii)
general equitable principles (whether considered in a proceeding in equity or at
law) and (iii) an implied covenant of good faith and fair dealing.
4.3. Financial Condition
Company has heretofore delivered to Lenders, at Lenders' request, the
audited financial statements (including balance sheets and statements of
operations, stockholders' equity and cash flows) of Company and its Subsidiaries
for the fiscal year ended December 31, 1998. All such statements were prepared
in conformity with GAAP and fairly present, in all material respects, the
financial position (on a consolidated basis) of the entities described in such
financial statements as at the date thereof and the results of operations and
cash flows (on a consolidated basis) of the entities described therein for the
period then ended. Company does not (and will not immediately following the
funding of the Bridge Loans) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial statements
or the notes thereto and which in any such case is material in relation to the
business, operations, properties, assets or financial condition of Company and
its Subsidiaries taken as a whole.
4.4. No Material Adverse Change; No Restricted Payments
Since December 31, 1998, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Payment or agreed to do so except as permitted by subsection 6.3.
4.5. Title to Properties; Liens
Company and its Subsidiaries have (i) good title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets necessary or useful for the conduct of their business, in each case
except for assets disposed of since the date of the most recent financial
statements received by Administrative Agent in the ordinary course of business
or as otherwise permitted under subsection 6.10 and except where failure to have
such title would not, individually or in the aggregate, have a Material Adverse
Effect. Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens.
4.6. Litigation; Adverse Facts
Except as set forth on Schedule 4.6, there are no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Company or any of its Subsidiaries) at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including any Environmental Claims) that are pending or, to the
knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property, license or registration of Company or any of its
Subsidiaries and that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Company nor any of its
Subsidiaries (i) is in violation of any applicable laws (including those
involving the licensing or registration relating to the pharmaceutical and
healthcare services provided by Company and its Subsidiaries and Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or (ii) is subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
4.7. Payment of Taxes
Except to the extent permitted by subsection 5.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable,
except (a) for taxes that are being contested in good faith by appropriate
proceedings for which Company or relevant Subsidiary, as applicable, has set
aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so would not reasonably be expected to result in a
Material Adverse Effect. Company knows of no proposed tax assessment against
Company or any of its Subsidiaries which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
4.8. Performance of Agreements; Materially Adverse Agreements; Material
Contracts
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, could not reasonably be expected to have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 4.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. Except as described on
Schedule 4.8, all such Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
4.9. Governmental Regulation; Accreditation
A. Neither Company nor any of its Subsidiaries is subject to regulation as
a "holding company" under the Public Utility Holding Company Act of 1935 or as
an "investment company" under the Investment Company Act of 1940.
B. Company's facilities that provide infusion therapy services are
accredited by the Joint Commission on Accreditation of Healthcare Organizations.
4.10. Securities Activities
Neither Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
4.11. Employee Benefit Plans
A. Except as would not reasonably be expected to result in a Material
Adverse Effect: (i) Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan and have performed all
their obligations under each Employee Benefit Plan and (ii) each Pension Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
is so qualified.
B. No ERISA Event that would reasonably be expected to result in a Material
Adverse Effect has occurred or is reasonably expected to occur.
C. As of the most recent valuation date for any Pension Plan, the amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), which if amortized over ten years, would not reasonably be
expected, after considering the financial condition of all of the more closely
related ERISA Affiliates, to result in a Material Adverse Effect.
D. For each Multiemployer Plan as of the most recent valuation date for
which an actuarial report has been received, the potential liability of Company,
its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, would not reasonably be expected, after considering the financial
condition of all of the more closely related ERISA Affiliates, to result in a
Material Adverse Effect.
4.12. Certain Fees
Other than certain fees payable to CSFB, Bankers Trust Company or their
respective affiliates, no broker's or finder's fee or commission will be payable
with respect to this Agreement or any of the transactions contemplated hereby,
and Company hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
4.13. Environmental Protection
No event or condition has occurred or is occurring with respect to Company
or any of its Subsidiaries relating to any Environmental Law, that individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
4.14. Employee Matters
There is no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
4.15. Solvency
Each Loan Party is and, upon the incurrence of any Obligations by such Loan
Party on any date on which this representation is made, will be, Solvent.
4.16. Disclosure
A. No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein, taken
as a whole, not misleading in light of the circumstances in which the same were
made; provided, that no representation is made as to projections or pro forma
financial information except as set forth in the next sentence. Any projections
and pro forma financial information contained in such materials are based upon
good faith estimates and assumptions believed by Company to be reasonable at the
time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There are no facts known to Company (other than matters of a general
economic nature) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
B. No information submitted to Agents and Lenders in their due diligence
investigation is known to Company to contain any untrue statements of material
fact, or omit material facts, which untrue statements or material omissions
could reasonably be determined, when taken as a whole, to be material and
adverse to the business, assets, financial position, operations or results of
operations of DPS and its Subsidiaries, taken as a whole.
4.17. Accuracy of Representations and Warranties in the Definitive
Acquisition Documents
Subject to the qualifications set forth therein, each of the
representations and warranties given by Company to Seller in the Definitive
Acquisition Documents is true and correct in all material respects as of the
date hereof and as of the Closing Date.
4.18. Year 2000 Compliance
Company has (i) initiated a review and assessment of its and its
Subsidiaries' business and operations (including those affected by suppliers and
vendors) that Company believes could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by Company or
Subsidiaries (or suppliers and vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on or before October 31, 1999, and (iii) to date, implemented
that plan substantially in accordance with that timetable. Company believes that
its own computer applications that are material to its or its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant") except to the extent that a failure to do so could
not reasonably be expected to have Material Adverse Effect.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 5.
5.1. Financial Statements and Other Reports
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Quarterly Financial: as soon as available and in any event within 45
days after the end of each Fiscal Quarter, (a) the consolidated balance sheets
of Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for
the period from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year, all
in reasonable detail and certified by the chief financial officer of Company
that they fairly present, in all material respects, the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and (b) beginning with the
Fiscal Quarter ending September 30, 1999, a statement of operations and any
narrative report for Company and its Subsidiaries as provided to the Board of
Directors of Company and the corresponding figures from the Financial Plan for
the current Fiscal Year, setting forth in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, certified by
the chief financial officer of Company as aforesaid;
(ii) Year-End Financial: as soon as available and in any event within 90
days after the end of each Fiscal Year, (a) the consolidated balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous Fiscal
Year and the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated, (b) a statement of operations and any narrative report for
Company and its Subsidiaries as provided to the Board of Directors of Company,
setting forth in comparative form the corresponding figures for the previous
Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal
Year, certified by the chief financial officer of Company as aforesaid, and (c)
in the case of such consolidated financial statements, a report thereon of
PricewaterhouseCoopers LLP or other independent certified public accountants of
recognized national standing selected by Company and satisfactory to
Administrative Agent, which report shall be unqualified, shall express no doubts
about the ability of Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards;
(iii) Officers' and Compliance Certificates: together with each delivery of
the consolidated financial statements of Company and its Subsidiaries pursuant
to subdivisions (i) and (ii) above, (a) an Officers' Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries during
the accounting period covered by such financial statements and that such review
has not disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the date of
such Officers' Certificate, of any condition or event that constitutes a Default
or an Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Company
has taken, is taking and proposes to take with respect thereto; and (b) a
Compliance Certificate demonstrating in reasonable detail compliance during and
at the end of the applicable accounting periods with the restrictions contained
in subsections 6.1, 6.3 and 6.10;
(iv) Reconciliation Statements: if, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements most recently delivered pursuant to subsection 5.3 or this
subsection 6.1, the consolidated financial statements of Company and its
Subsidiaries delivered pursuant to subdivisions (i), (ii) or (xii) of this
subsection 6.1 will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been made,
then together with the first delivery of financial statements pursuant to
subdivision (i), (ii) or (xii) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief financial officer of
Company setting forth the differences which would have resulted if such
financial statements had been prepared without giving effect to such change;
(v) Accountants' Certification: together with each delivery of consolidated
financial statements of Company and its Subsidiaries pursuant to subdivision
(ii) above, a written statement by the independent certified public accountants
giving the report thereon (a) stating that their audit examination has included
a review of the terms of this Agreement and the other Loan Documents as they
relate to accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes a Default or an Event
of Default has come to their attention and, if such a condition or event has
come to their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of their audit examination, and (c) stating that based
on their audit examination nothing has come to their attention that causes them
to believe either or both that the information contained in the certificates
delivered therewith pursuant to subdivision (iii) above is not correct or that
the matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iii) above for the applicable Fiscal Year
are not stated in accordance with the terms of this Agreement;
(vi) Accountants' Reports: promptly upon receipt thereof (unless restricted
by applicable professional standards), copies of the annual letter to management
prepared by Company's independent certified public accountants;
(vii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by Company to its security holders
or by any Subsidiary of Company to its security holders other than Company or
another Subsidiary of Company, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission ("SEC") or
any governmental or private regulatory authority (other than filings in the
ordinary course of business to maintain Company's licenses and permits), and (c)
all press releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(viii) Events of Default, Etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event of
Default, or becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a claimed
Default or Event of Default, (b) that any Person has given any notice to Company
or any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 7.2, (c) of
any condition or event that would be required to be disclosed in a current
report filed by Company with the SEC on Form 8-K (Items 1, 2, 3, 4 and 6 of such
Form as in effect on the date hereof) if Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect (including, without limitation, termination or modification of
customer contracts), an Officers' Certificate specifying the nature and period
of existence of such condition, event or change, or specifying the notice given
or action taken by any such Person and the nature of such claimed Default, Event
of Default, default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;
(ix) Litigation or Other Proceedings: promptly upon any officer of Company
obtaining knowledge of (a) the institution of any action, suit, proceeding
(whether administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property, license or registration of Company or any of its Subsidiaries
(collectively, "Proceedings") not previously disclosed in writing by Company to
Lenders or (b) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of giving rise to
a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or to recover
any damages or obtain relief as a result of, the transactions contemplated
hereby; written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to evaluate
such matters;
(x) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event that would reasonably be expected to
result in a Material Adverse Effect, a written notice specifying the nature
thereof, what action Company, any of its Subsidiaries or any of their respective
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a) all notices
received by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event that
would reasonably be expected to result in a Material Adverse Effect; and (b)
copies of such other documents or governmental reports or filings relating to
any Pension Plan as Administrative Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable and in any event no later
than 60 days after the beginning of each Fiscal Year, a consolidated plan and
financial forecast for such Fiscal Year (the "Financial Plan"), including (a)
forecasted consolidated balance sheet and forecasted consolidated statement of
operations and a forecasted consolidated statement of cash flows of Company and
its Subsidiaries for such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, (b) forecasted consolidated
statements of operations and cash flows of Company and its Subsidiaries for each
quarter of such Fiscal Year, together with an explanation of the assumptions on
which such forecasts are based, and (c) such other information and projections
as any Lender may reasonably request;
(xiii) Insurance: as soon as practicable and in any event by the last day
of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained as of
the date of such report by Company and its Subsidiaries and all material
insurance coverage planned to be maintained by Company and its Subsidiaries in
the immediately succeeding Fiscal Year;
(xiv) Board of Directors: with reasonable promptness, written notice of any
change in the Board of Directors of Company;
(xv) New Subsidiaries: promptly upon any Person becoming a Subsidiary of
Company, a written notice setting forth with respect to such Person (a) the date
on which such Person became a Subsidiary of Company and (b) all of the data
required to be set forth in Schedule 4.1 annexed hereto with respect to all
Subsidiaries of Company (it being understood that such written notice shall be
deemed to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement);
(xvi) Licensing, Registration and Accreditation: with reasonable
promptness, information regarding proceedings regarding any licensing,
registration or accreditation of Company or a Subsidiary by or with any
governmental body or the Joint Commission Accreditation of Healthcare
Organizations, if failure to obtain or maintain such license, registration or
accreditation has a reasonable possibility of giving rise to a Material Adverse
Effect; and
(xvii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as from
time to time may be reasonably requested by any Lender.
5.2. Corporate Existence, Etc.
Except as permitted under subsection 6.5, Company will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
its corporate existence and all rights and franchises material to its business;
provided, however, that neither Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the Board of Directors of
Company or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof would not have a Material Adverse
Effect.
5.3. Payment of Taxes and Claims; Tax Consolidation
A. Company will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
5.4. Maintenance of Properties; Insurance
A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry.
5.5. Inspection Rights; Lender Meeting
A. Inspection Rights. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by
Administrative Agent (on its behalf or on behalf of any Lender), or if an Event
of Default has occurred and is continuing the Lenders, to visit and inspect any
of the properties of Company or of any of its Subsidiaries, to inspect, copy and
take extracts from its and their financial and accounting records, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants (provided that Company may, if it so chooses,
be present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
reasonably be requested.
B. Lender Meeting. Company will, upon the request of Administrative Agent
or Requisite Lenders, participate in a meeting of Agents and Lenders once during
each Fiscal Year to be held at Company's corporate offices (or at such other
location as may be agreed to by Company and Administrative Agent) at such time
as may be agreed to by Company and Administrative Agent to discuss topics
including, but not limited to, the current Fiscal Year's Financial Plan and the
outlook and projections for Company for the next two Fiscal Years.
5.6. Compliance With Laws, Etc.
A. Compliance. Company shall comply and operate in compliance, and shall
cause each of its Subsidiaries to comply and to operate in compliance, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including those involving licensing or registration
relating to the pharmaceutical and healthcare services provided by Company and
its Subsidiaries and Environmental Laws) at all times, noncompliance with which
could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.
B. Licenses. To the extent not obtained prior to the Closing Date, Company
will obtain all licenses required to conduct the businesses conducted by DPS and
its Subsidiaries at the times required by applicable law, except those that the
failure to obtain which, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.
5.7. Environmental Claims and Violations of Environmental Laws
Except as could not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect, Company shall promptly take, and shall use
best efforts to cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental Laws by
Company or its Subsidiaries and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries and discharge any
obligations it may have to any Person thereunder.
5.8. Execution of Senior Subordinated Subsidiary Guaranty by Certain
Subsidiaries and Future Subsidiaries
A. Execution of Senior Subordinated Subsidiary Guaranty. In the event that
any Person becomes a Subsidiary of Company after the date hereof, Company will
promptly notify Agents of that fact and cause such Subsidiary to execute and
deliver to Administrative Agent a counterpart of the Senior Subordinated
Subsidiary Guaranty, and to take all such further actions and execute all such
further documents and instruments as may be necessary to evidence its guaranty
of the Loans hereunder.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Substantially
concurrent with the execution and delivery by a Subsidiary of the Loan Documents
described under subsection 5.8A, Company shall deliver to Administrative Agent,
together with such Loan Documents, (i) certified copies of such Subsidiary's
Certificate or Articles of Incorporation, together with a good standing
certificate from the Secretary of State of the jurisdiction of its incorporation
and, to the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of such jurisdiction, each to be dated a recent
date prior to their delivery to Administrative Agent, (ii) a copy of such
Subsidiary's Bylaws, certified by its corporate secretary or an assistant
secretary as of a recent date prior to their delivery to Administrative Agent,
(iii) a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iv) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to
Administrative Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary, (b) the due authorization, execution and delivery
by such Subsidiary of such Loan Documents, (c) the enforceability of such Loan
Documents against such Subsidiary, (d) such other matters as Administrative
Agent may reasonably request, all of the foregoing to be reasonably satisfactory
in form and substance to Administrative Agent and its counsel.
5.9. Year 2000 Compliance
Company will promptly but in no event later than October 31, 1999 notify
Administrative Agent in the event Company discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or its Subsidiaries' business and operations will not be Year
2000 compliant as of January 1, 2000, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
5.10. Equal Security for Loans and Notes.
If Company or any of its Subsidiaries shall create, assume or suffer to
exist any Lien upon any of their respective property or assets, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
subsection 6.2, Company shall, at the request of Administrative Agent, make or
cause to be made effective provision whereby the Obligations under this
Agreement will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided, however, that this covenant shall not be construed as or
deemed to be a consent by the Lenders to any violation of the provisions of
subsection 6.2.
5.11. Take-Out Financing
Company agrees that upon such date (the "Initial Request Date") as Company
receives a request (a "Request") from either the holder or holders of a majority
of the aggregate principal amount of the Bridge Notes then outstanding or any of
the Take-Out Banks at any time prior to the Conversion Date but on or after the
90-day anniversary of the Closing Date, Company will use its reasonable efforts,
to the extent within its power, so that the Take-Out Banks can, as soon as
practicable after such a Request, publicly sell or privately place the Demand
Take-Out Securities. If the Demand Take-Out Securities have not been sold or
privately placed within 90 days of the Initial Request Date, Company agrees that
upon notice by the Take-Out Banks (a "Take-Out Securities Notice"), at any time
and from time to time following the 90-day anniversary of the Initial Request
Date, Company will issue and sell Demand Take-Out Securities upon such terms and
conditions as specified in such notice; provided, however, that for a Take-Out
Securities Notice (i) the cash interest rate (whether floating or fixed), in the
case of Take-Out Debt Securities, and the price per share, in the case of
Take-Out Common Stock and Take-Out Preferred Stock, as applicable, shall be
determined by the Take-Out Banks, in light of then prevailing market conditions
and the financial condition and prospects of Company, but, in the case of
Take-Out Debt Securities, the cash interest rate shall not exceed 14.0% per
annum and the total interest rate shall not exceed 16.0% per annum; (ii)
Company, in its reasonable discretion after consultation with the Take-Out
Banks, shall determine whether the Demand Take-Out Securities shall be Take-Out
Debt Securities, Take-Out Preferred Stock or Take-Out Common Stock and whether
the Demand Take-Out Securities shall be issued through a public offering or a
private placement and, if issued in a private placement, the Demand Take-Out
Securities will be accompanied by customary registration rights for the benefit
of the holders of such Demand Take-Out Securities; (iii) the scheduled final
maturity of any Take-Out Debt Securities shall not be later than the tenth
anniversary of the issuance thereof; (iv) the aggregate principal amount or
aggregate number of shares, as applicable, to be issued by Company shall be
determined by the Take-Out Banks in light of the prevailing market conditions
and the financial condition and prospects of Company; provided, that the
aggregate principal amount or aggregate number of shares of Demand Take-Out
Securities, as applicable, shall not exceed an amount calculated to yield net
proceeds sufficient to repay the Bridge Notes then outstanding in full; and (v)
all other arrangements with respect to the Demand Take-Out Securities shall be
reasonably satisfactory in all respects to the Take-Out Banks and Company in
light of the prevailing market conditions and the financial condition and
prospects of Company.
5.12. Exchange of Term Notes
Company will, on the fifth Business Day following the written request (the
"Exchange Request") of the holder of any Term Note bearing interest as a Fixed
Rate Loan:
A. Execute and deliver, cause each Subsidiary Guarantor to execute and
deliver, and cause a bank or trust company acting as trustee thereunder to
execute and deliver, the Senior Subordinated Indenture, if such Senior
Subordinated Indenture has not previously been executed and delivered;
B. Execute and deliver to such holder or beneficial owner in accordance
with the Senior Subordinated Indenture a note in the form attached to the Senior
Subordinated Indenture (the "Exchange Notes") bearing an interest rate equal to
the Fixed Rate plus the Fixed Rate Spread in exchange for such Term Note dated
the date of the issuance of such Exchange Note, payable to the order of such
holder or owner, as the case may be, in the same principal amount as such Term
Note (or portion thereof) being exchanged, and cause each Subsidiary Guarantor
to endorse its guarantee thereon; and
C. Execute and deliver, and cause each Subsidiary Guarantor to execute and
deliver, to such holder or owner, as the case may be, the Registration Rights
Agreement, if the Registration Rights Agreement has not previously been executed
and delivered or, if the Registration Rights Agreement has previously been
executed and delivered and such holder or owner is not already a party thereto,
permit such holder or owner to become a party thereto.
The Exchange Request shall specify the principal amount of the Term Notes
to be exchanged pursuant to this subsection 5.12 which shall be at least
$5,000,000 and integral multiples of $500,000 in excess thereof (or, in the case
any Lender holds Term Notes with an outstanding amount less than $5,000,000,
such remaining amount). Term Notes delivered to Company under this subsection
5.12 in exchange for Exchange Notes shall be cancelled by Company and the
corresponding amount of the Term Loan deemed repaid and the Exchange Notes shall
be governed by and construed in accordance with the terms of the Senior
Subordinated Indenture.
5.13. Register
Company hereby designates Administrative Agent to serve as Company's agent,
solely for purposes of this subsection 5.13, to maintain a register (the
"Register") on which it will record the Loans made by each of the Lenders and
each repayment in respect of the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in such recordation shall not
affect Company's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Commitments of such Lender 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
Administrative Agent with respect to ownership of such Commitments and Loans and
prior to such recordation all amounts owing to the transferor with respect to
such Commitments and Loans shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Commitments and
Loans shall be recorded by Administrative Agent on the Register only upon the
receipt by the Agent of a properly executed and delivered Assignment Agreement
pursuant to subsection 10.1B. Coincident with the delivery of such an Assignment
Agreement to Administrative 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 Lender shall surrender the Note evidencing such Loan,
and thereupon one or more new Notes of the same type and in the same aggregate
principal amount shall be issued to the assigning or transferor Lender and/or
the new Lender.
5.14. Senior Subordinated Indenture; Etc.
Company and the Subsidiary Guarantors shall, on the date it executes and
delivers the Senior Subordinated Indenture and the Exchange Notes and the
Take-Out Debt Securities (and the guarantees thereof) and the indenture
governing the Take-Out Debt Securities, as the case may be, have the full
corporate power, authority and capacity to do so and to perform all of its
obligations to be performed thereunder; all corporate and other acts, conditions
and things required to be done and performed or to have occurred prior to such
execution and delivery to constitute them as valid and legally binding
obligations of Company and the Subsidiary Guarantors enforceable against Company
and the Subsidiary Guarantors in accordance with their respective terms subject
to (i) the effect of applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights generally, (ii) general equitable principles (whether considered in a
proceeding in equity or at law) and (iii) an implied covenant of good faith and
fair dealing, shall have been done and performed and shall have occurred in due
compliance with all applicable laws; on the date of such execution and delivery
by Company and the Subsidiary Guarantors, the Senior Subordinated Indenture and
the Exchange Notes and the Take-Out Debt Securities (and the guarantees thereof)
and the indenture governing the Take-Out Debt Securities shall constitute legal,
valid, binding and unconditional obligations of Company and the Subsidiary
Guarantors, as applicable, enforceable against Company and the Subsidiary
Guarantors in accordance with their respective terms, subject to (i) the effect
of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing.
5.15. Shelf Registration
Company shall, and shall cause the Subsidiary Guarantors to, use their
respective reasonable best efforts to cause a registration statement for an
offering to be made on a continuous basis pursuant to Rule 415 (or any successor
rule) under the Securities Act covering all of the Exchange Notes that may be
issued under the Senior Subordinated Indenture pursuant to subsection 5.12 (the
"Shelf Registration") to be declared effective under the Securities Act on or
prior to the Business Day immediately succeeding the Conversion Date and to keep
the Shelf Registration continuously effective under the Securities Act as
required by the Registration Rights Agreement (whether or not it has been
executed and delivered by the Conversion Date). The Shelf Registration shall be
on Form S-3 or another appropriate form permitting registration of such Exchange
Notes for resale by the holders thereof in any manner or manners that they may
designate (including, without limitation, one or more underwritten offerings.)
Once the Registration Rights Agreement has been executed and delivered, Company
shall, and shall cause the Subsidiary Guarantors to, comply with the terms
thereof as they relate to the Shelf Registration. Company and the Subsidiary
Guarantors shall bear all costs and expenses in connection with complying with
this subsection 5.15.
SECTION 6.
NEGATIVE COVENANTS
Company covenants and agrees that until the satisfaction in full of all
Loans, Notes and other Obligations due under this Agreement it will fully and
timely perform all covenants in this Section 6.
6.1. Indebtedness
Company shall not, nor shall it cause or permit any of its Subsidiaries,
directly or indirectly, to Incur any Indebtedness, except for the following
(clauses (i) through (xvii) being referred to as "Permitted Indebtedness"):
(i) Obligations under the Loan Documents, including the Bridge Notes, Term
Notes and Exchange Notes, and the Take-Out Securities;
(ii) Indebtedness under the Senior Secured Credit Agreement in an aggregate
principal amount at any time outstanding not to exceed (a) under the Term Loan
Facilities, $800.0 million, less any required permanent repayments actually made
thereunder (excluding any such repayment to the extent refinanced and replaced
at the time of payment), and (b) under the Revolving Loan Facility, $300.0
million;
(iii) Indebtedness of Company and its Subsidiaries outstanding on the
Closing Date and described on Schedule 6.1 reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Swap Obligations of Company or any of its Subsidiaries
covering Indebtedness of Company or any of its Subsidiaries and Interest Swap
Obligations of any Subsidiary of Company covering Indebtedness of such
Subsidiary; provided, however, that such Interest Swap Obligations are entered
into to protect Company and its Subsidiaries from fluctuations in interest rates
on Indebtedness permitted to be incurred under this Agreement and not for
speculative purposes and the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to which
such Interest Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided, however, that such
agreements are designed to protect against fluctuations in currency values and
are entered into in the ordinary course of business and for bona fide (i.e., not
speculative) purposes and that, in the case of Currency Agreements which relate
to Indebtedness, such Currency Agreements do not increase the Indebtedness of
Company and its Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Subsidiary of Company to Company or to
another Wholly Owned Subsidiary of Company for so long as such Indebtedness is
held by Company or a Wholly Owned Subsidiary of Company in each case subject to
no Lien held by a Person other than Company or a Wholly Owned Subsidiary of
Company; provided, however, that if as of any date any Person other than Company
or a Wholly Owned Subsidiary of Company owns or holds any such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer
of such Indebtedness;
(vii) Indebtedness of Company to a Wholly Owned Subsidiary of Company for
so long as such Indebtedness is held by a Wholly Owned Subsidiary of Company, in
each case subject to no Lien; provided, however, that (a) any Indebtedness of
Company to any Wholly Owned Subsidiary of Company is unsecured and subordinated
in right of payment, pursuant to a written agreement, to Company's Obligations
under the Loan Documents and (b) if as of any date any Person other than a
Wholly Owned Subsidiary of Company owns or holds any such Indebtedness or any
Person holds a Lien in respect of such Indebtedness, such date shall be deemed
the incurrence of Indebtedness not constituting Permitted Indebtedness by
Company;
(viii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business; provided, however, that
such Indebtedness is extinguished within five business days of incurrence;
(ix) Indebtedness of Company or any of its Subsidiaries in order to finance
insurance premiums and other Indebtedness represented by letters of credit for
the account of Company or such Subsidiary, as the case may be, in order to
provide security for workers' compensation claims or payment obligations in
connection with self-insurance or similar requirements, all in the ordinary
course of business and so long as such Indebtedness is not an obligation for
money borrowed;
(x) obligations in respect of performance and surety bonds and completion
guarantees provided by Company or any Subsidiary of Company in the ordinary
course of business in accordance with customary industry practice in amount and
for purposes customary in Company's industry and so long as not an obligation
for money borrowed;
(xi) Indebtedness arising from agreements of Company or a Subsidiary of
Company providing for adjustment of purchase price, earn out or other similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets, or a Subsidiary of Company or any of its
Subsidiaries, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition, provided, however, that the maximum
assumable liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by Company and its Subsidiaries in
connection with such disposition;
(xii) Capitalized Lease Obligations and Purchase Money Obligations of
Company and its Subsidiaries incurred in the ordinary course of business in an
aggregate principal amount not to exceed (a) $25.0 million at any one time
outstanding prior to the Conversion Date and (b) $40.0 million at any one time
outstanding on and after the Conversion Date;
(xiii) guarantees of Indebtedness permitted to be incurred under this
subsection 6.1;
(xiv) Refinancing Indebtedness;
(xv) Acquired Indebtedness; provided, however, that (i) the aggregate
principal amount thereof does not exceed $10.0 million at any one time
outstanding prior to the Conversion Date and (ii) on and after the Conversion
Date, after giving effect to such incurrence, Company could incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) in compliance
with this subsection 6.1;
(xvi) Contingent Obligations of Company and its Subsidiaries; provided,
however, that the maximum aggregate liability, contingent or otherwise, of
Company and its Subsidiaries in respect of all such Contingent Obligations shall
not exceed (a) $10.0 million at any one time outstanding prior to the Conversion
Date and (b) $15.0 million at any one time outstanding on and after the
Conversion Date; and
(xvii) additional Indebtedness of Company and its Subsidiaries in an
aggregate principal amount not to exceed (a) $15.0 million at any one time
outstanding prior to the Conversion Date and (b) $25.0 million at any one time
outstanding on and after the Conversion Date.
Each of the foregoing clauses (i) through (xvii) shall be given independent
effect and Indebtedness which may be incurred pursuant to two or more of the
foregoing clauses shall be incurrable under each such clause at the option of
Company.
In addition to the foregoing, at any time on or after the Conversion Date,
if no Default or Event of Default shall have occurred and be continuing at the
time of or as a consequence of the incurrence of any such Indebtedness, Company
and the Subsidiary Guarantors may Incur Indebtedness if immediately before and
immediately after giving effect to the incurrence of such Indebtedness the
Consolidated Fixed Charge Coverage Ratio of Company would be greater than (i) if
such incurrence is on or prior to April 1, 2001, 2.25 to 1.0, and (ii) if such
incurrence is after April 1, 2001, 2.50 to 1.0.
6.2. Liens
Company shall not, and shall not cause or permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or permit or suffer to exist
any Liens of any kind against or upon any property or assets of Company or any
of its Subsidiaries whether owned on the Closing Date or acquired after the
Closing Date, or any proceeds therefrom, or assign or otherwise convey any right
to receive income or profits therefrom, unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to the
Loans and Notes, the Loans and Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens and (ii) in all
other cases, the Loans and Notes are equally and ratably secured, except for (A)
Liens existing as of the Closing Date and described on Schedule 6.2 to the
extent and in the manner such Liens are in effect on the Closing Date and
described on Schedule 6.2; (B) Liens securing the Senior Secured Credit
Agreement; (C) on and after the Conversion Date, Liens securing Senior Debt and
Liens securing Guarantor Senior Debt (as defined in the Senior Subordinated
Subsidiary Guaranty); (D) Liens securing the Loans and Notes; (E) Liens of
Company or a Wholly Owned Subsidiary of Company on assets of any Subsidiary of
Company; (F) Liens securing Refinancing Indebtedness which is incurred to
Refinance any Indebtedness which has been secured by a Lien permitted under this
Agreement and which has been incurred in accordance with the provisions of this
Agreement; provided, however, that such Liens (y) are no less favorable to the
Lenders and are not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being Refinanced and (z) do not
extend to or cover any property or assets of Company or any of its Subsidiaries
not securing the Indebtedness so Refinanced; and (G) Permitted Liens.
6.3. Restricted Payments
(a) Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of Company) on or in respect of shares of Company's Capital Stock
to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of Company or any warrants, rights or options
to purchase or acquire shares of any class of such Capital Stock, (c) make any
principal payment on, purchase, defease, redeem, prepay or otherwise acquire or
retire for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Indebtedness; or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment") prior to the Conversion Date. In addition, Company shall not, and
shall not cause or permit any of its Subsidiaries to, directly or indirectly,
make any Restricted Payment on and after the Conversion Date, if at the time of
such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing or (ii)
Company is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with subsection 6.1 of this Agreement
or (iii) the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made on or after the Conversion Date (the amount expended
for such purposes, if other than in cash, being the fair market value of such
property as determined reasonably and in good faith by the Board of Directors of
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of Company earned on or after the Conversion Date and through the
last day of the fiscal quarter ending prior to the date the Restricted Payment
occurs (the "Reference Date") (treating such period as a single accounting
period); plus (x) 100% of the aggregate net cash proceeds received by Company
from any Person (other than a Subsidiary of Company) from the issuance and sale
subsequent to the Conversion Date and on or prior to the Reference Date of
Qualified Capital Stock of Company, including the net cash proceeds received by
Company upon the exercise, exchange or conversion of Indebtedness or
Disqualified Capital Stock into Qualified Capital Stock; plus (y) without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by Company from
a holder of Company's Capital Stock; plus (z) without duplication of amounts
included in clause (iii)(w) above, the amount equal to the net reduction in
Investments (other than Permitted Investments) made by Company or any of its
Subsidiaries on and after the Conversion Date in any Person resulting from
repurchases or redemptions of such Investments by such Person, proceeds realized
by such Person upon the sale of such Investment to a purchaser who is not an
Affiliate of Company and repayments of loans or advances or other transfers of
assets by such Person to Company or any Subsidiary of the Company.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; (2) if no Default or Event
of Default shall have occurred and be continuing or would result therefrom, the
acquisition of any shares of Capital Stock of Company, either (i) solely in
exchange for shares of Qualified Capital Stock of Company or (ii) through the
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of Company) of shares of Qualified Capital Stock of
Company; provided, however, that any such net cash proceeds are excluded from
clause (iii)(x) of paragraph (a) above; (3) if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the acquisition
of any Subordinated Indebtedness, either (i) solely in exchange for shares of
Qualified Capital Stock of Company or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of Company) of shares of Qualified Capital Stock of Company; provided, however,
that any such net cash proceeds are excluded from clause (iii)(x) of paragraph
(a) above; (4) if no Default or Event of Default shall have occurred and be
continuing or would result therefrom, repurchases by Company of Common Stock of
Company from employees of Company or any of its Subsidiaries or their authorized
representatives upon the death, disability or termination of employment of such
employees, in an amount not to exceed (i) $5.0 million prior to the Conversion
Date and (ii) $5.0 million in any calendar year and $10.0 million in the
aggregate on and after the Conversion Date, plus the aggregate cash proceeds
from any reissuance during such calendar year of Common Stock by Company to
employees, officers or directors of Company and its Subsidiaries (without
duplication of amounts included in clause (iii)(x) of paragraph (a) above); and
(5) if no Default or Event of Default shall have occurred and be continuing or
would result therefrom, Investments by Company and its Subsidiaries in an
aggregate amount outstanding (i) at any time prior to the Conversion Date not
exceeding $10.0 million and (ii) at any time on and after the Conversion Date
not exceeding $40.0 million. In determining the aggregate amount of Restricted
Payments made on or after the Conversion Date in accordance with clause (iii) of
the second sentence in paragraph (a) above, amounts expended pursuant to clauses
(1), (2)(ii), (3)(ii), (4) and (5) shall be included in such calculation
(whether or not such amounts were expended prior to or on and after the
Conversion Date).
Not later than the date of making any Restricted Payment, Company shall
deliver to Administrative Agent an Officers' Certificate stating that such
Restricted Payment complies with this Agreement and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon Company's latest available internal quarterly
financial statements.
6.4. Senior Subordinated Indebtedness
Neither Company nor any Subsidiary Guarantor shall, directly or indirectly,
Incur any Indebtedness (other than pursuant to the Loan Documents, the Exchange
Notes, the Take-Out Securities and Indebtedness between Company and its Wholly
Owned Subsidiaries) that by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness of Company or such Subsidiary Guarantor, as the case may be, unless
such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Loans and the
Notes and the Senior Subordinated Subsidiary Guaranties, as the case may be, to
the same extent and in the same manner as such Loans, Notes and Senior
Subordinated Subsidiary Guaranties, as the case may be, are subordinated to the
Senior Secured Credit Agreement.
6.5. Restriction on Fundamental Changes
A. Company shall not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of Company's assets (determined on a
consolidated basis for Company and Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless: (i) either (1)
Company shall be the surviving or continuing corporation or (2) the Person (if
other than Company) formed by such consolidation or into which Company is merged
or the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of Company and of Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws the United States or
any State thereof or the District of Columbia and (y) shall expressly assume, by
supplemental agreement (in form and substance satisfactory to Administrative
Agent), executed and delivered to Administrative Agent, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Loans and Notes and the performance of every covenant herein and the payment of
any other Obligations; (ii) immediately after giving effect to such transaction
and the assumption contemplated by clause (i)(2)(y) above (including giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred in connection with or in respect of such transaction), Company or
such Surviving Entity, as the case may be, shall be able to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 6.1 of this Agreement; (iii) immediately before and immediately after
giving effect to such transaction and the assumption contemplated by clause
(i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred
and any Lien granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred and be continuing; and (iv)
Company or the Surviving Entity shall have delivered to Administrative Agent an
Officers' Certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, and if a supplemental agreement is required in connection with such
transaction, such supplemental agreement, comply with the applicable provisions
of this Agreement and that all conditions precedent in this Agreement relating
to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of
Company, the Capital Stock of which constitutes all or substantially all of the
properties and assets of Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of Company.
B. Company shall not permit any Subsidiary Guarantor (other than any
Subsidiary Guarantor whose guarantee under the Senior Subordinated Subsidiary
Guaranty is to be released in accordance with the terms of this Agreement) to
consolidate with or merge with or into any Person other than Company or any
other Subsidiary Guarantor unless: (i) the entity formed by or surviving any
such consolidation or merger (if other than the Subsidiary Guarantor) or to
which such sale, lease, conveyance or other disposition shall have been made is
a corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia; (ii) such entity assumes all of the
obligations of the Subsidiary Guarantor under its guarantee under the Senior
Subordinated Subsidiary Guaranty and the performance of every covenant in the
Senior Subordinated Subsidiary Guaranty to be performed or observed; and (iii)
the conditions in clause (iii) of subsection 6.5A (with references therein to
clause (i)(2)(y) being deemed to be references to clause (ii) of this paragraph)
shall have been satisfied.
6.6. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries
Company shall not, and shall not cause or permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
of Company to (a) pay dividends or make any other distributions on or in respect
of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or
other obligation owed to Company or any other Subsidiary of Company; or (c)
transfer any of its property or assets to Company or any other Subsidiary of
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) the Loan Documents, the Senior Subordinated
Indenture, the Take-Out Securities, the Exchange Notes or the Senior Secured
Credit Agreement, in each case to the extent incurred in accordance with this
Agreement; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Subsidiary of Company; (4) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired; (5) agreements
existing on the Closing Date to the extent and in the manner such agreements are
in effect on the Closing Date; (6) any restriction or encumbrance contained in
contracts for sale of assets permitted by this Agreement in respect of the
assets being sold pursuant to such contracts pending the close of such sale,
which encumbrance or restriction is not applicable to any asset other than the
asset being sold pursuant to such contract; (7) Purchase Money Obligations to
the extent permitted to the incurred hereunder for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (c) above on the property so acquired; (8) restrictions of the nature
described in clause (c) above on the transfer of assets subject to any Lien to
the extent permitted to be incurred hereunder imposed by the holder of such
Lien; or (9) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (2), (4) or (5) above; provided, however, that the provisions relating to
such encumbrance or restriction contained in any such Indebtedness are no less
favorable to Company in any material respect as determined by the Board of
Directors of Company in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (2), (4) or (5).
6.7. Transactions with Stockholders and Affiliates
(a) Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction or series
of related transactions (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with, or for
the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under paragraph (b) below and (y)
Affiliate Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of Company or such
Subsidiary. All Affiliate Transactions (and each series of related Affiliate
Transactions) other than that permitted under clause (b) below involving
aggregate payments or other property with a fair market value in excess of $5.0
million shall be approved by the disinterested members of the Board of Directors
of Company or such Subsidiary, as the case may be, such approval to be evidenced
by a Board Resolution filed with Administrative Agent stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If Company or any Subsidiary of Company enters into an Affiliate
Transaction (or a series of related Affiliate Transactions) other than that
permitted under clause (b) below that involves an aggregate fair market value of
more than $10.0 million Company or such Subsidiary, as the case may be, shall,
prior to the consummation thereof, obtain a favorable opinion as to the fairness
of such transaction or series of related transactions to Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with Administrative Agent.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees, agents or consultants of Company or any
Subsidiaries of Company as determined in good faith by Company's Board of
Directors; (ii) transactions exclusively between or among Company and any of the
Wholly Owned Subsidiaries of Company or exclusively between or among any of the
Wholly Owned Subsidiaries of Company; provided, however, that such transactions
are not otherwise prohibited by this Agreement; (iii) any agreement as in effect
as of the Closing Date or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to Company or its Subsidiaries, as the case may be, in any
material respect than the original agreement as in effect on the Closing Date;
(iv) Restricted Payments permitted by this Agreement; (v) any issuance of
securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans of Company entered into in the ordinary course of business and
approved by the Board of Directors; and (vi) loans and advances to employees and
officers of Company and its Subsidiaries in the ordinary course of business for
bona fide business purposes not in excess of $2.0 million at any time
outstanding.
6.8. Subsidiary Stock
Except for (a) any sale of 100% of the Capital Stock or other equity
securities of any of Company's Subsidiaries otherwise in compliance with the
provisions of this Agreement, (b) the disposition prior to the Conversion Date
of up to 49% of Company's interest in PPS or Express Online otherwise in
compliance with the provisions of this Agreement, (c) the disposition on and
after the Conversion Date of up to 50% of Company's interest in PPS, and (d) the
disposition on and after the Conversion Date of some or all of Company's
interest in Express Online (provided that Company shall always retain the right
to regain in the future a majority interest in the combined voting power of all
securities of Express Online), Company shall not directly or indirectly sell,
assign, pledge or otherwise encumber or dispose of any shares of Capital Stock
or other equity securities of any of its Subsidiaries and shall not permit any
of its Subsidiaries to directly or indirectly issue, sell, assign, pledge or
otherwise dispose of any shares of Capital Stock or other equity securities of
it or any of its Subsidiaries, except (i) to qualify directors if required by
applicable law, (ii) to Company or to a Wholly Owned Subsidiary of Company, and
(iii) Liens in favor of the lenders under the Senior Secured Credit Agreement.
Company shall not permit any Subsidiary of Company to issue or sell any shares
of Preferred Stock of such Subsidiary other than to Company or Wholly Owned
Subsidiary of Company.
6.9. Business Activities
From and after the Closing Date, Company shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the business
engaged in by Company and its Subsidiaries on the Closing Date and similar or
related businesses and (ii) such other lines of business as may be consented to
by the Requisite Lenders.
6.10. Asset Sales
Company shall not, nor shall it cause or permit any of its Subsidiaries to,
directly or indirectly, consummate any Asset Sale unless (1) the aggregate of
all Asset Sales prior to the Conversion Date (other than dispositions permitted
by subsection 6.8(b)) does not exceed $10.0 million, (2) Company or such
Subsidiary, as the case may be, receives consideration therefor at the time
thereof at least equal to the fair market value at the time of such Asset Sale
of the property, assets or stock that is the subject of such Asset Sale, (3) at
least 75% of the consideration received therefor by Company or such Subsidiary
is in the form of cash or Cash Equivalents, and (4) all of the Net Cash Proceeds
in respect thereof are applied by Company or a Subsidiary of Company in
accordance with subsection 2.5A(ii)(a).
6.11. Amendments or Waivers of Certain Documents
Company shall not, nor shall it cause or permit any of its Subsidiaries to,
directly or indirectly, enter into any amendment, modification, supplement or
waiver with respect to the Senior Secured Credit Agreement as in effect on the
Closing Date that would modify any of the provisions thereof or any of the
definitions relating to the provisions thereof in respect of issuances of the
Term Notes or the Exchange Notes or in respect of Company's ability to incur
Indebtedness in an amount sufficient to repay in full the Obligations and the
application of the proceeds therefrom to repay in full the Obligations in a
manner adverse to the Lenders.
6.12. Amendments to Charter Documents
Company shall not, nor shall it cause or permit any of its Subsidiaries to,
amend its certificate of incorporation or bylaws in any respect which could be
materially adverse to the interests of the Lenders.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
7.1. Failure To Make Payments When Due
Failure to pay any installment of principal of the Loans when due, whether
at stated maturity, by acceleration, by notice of prepayment or otherwise
(whether or not such payment is prohibited by Section 8); or failure to pay any
interest on the Loans or any other amount due under this Agreement within (A)
prior to the time the Term Loans shall accrue interest as a Fixed Rate Loan, ten
days or more after the date due (whether or not such payment is prohibited by
Section 8) or (B) on and after the such time as the Term Loans shall accrue
interest as a Fixed Rate Loan, 30 days after the date due (whether or not such
payment is prohibited by Section 8); or
7.2 Default in Other Agreements
Failure of Company or any of its Subsidiaries to pay at final maturity any
principal on one or more issues of Indebtedness or Contingent Obligations of the
Company or of any of its Subsidiaries (other than Indebtedness referred to in
subsection 7.1) after any applicable grace period or a breach or default by the
Company or any of its Subsidiaries with respect to any other term of any one or
more issues of Indebtedness or Contingent Obligations of the Company or of any
of its Subsidiaries or any agreement or instrument evidencing or securing such
Indebtedness or Contingent Obligations and such default or breach results in the
acceleration of that Indebtedness or Contingent Obligation prior to its stated
maturity and, in each case, the principal amount of such Indebtedness or
Contingent Obligation and all other such Indebtedness or Contingent Obligations
of the Company and its Subsidiaries in respect of which there is a failure to
pay principal or which has been so accelerated equals $15.0 million or more; or
7.3. Breach of Certain Covenants
Failure of Company to perform or comply with any term or condition
contained in subsections 2.5A(ii), 2.5A(iv), 5.1(viii), 5.2 (with respect to
corporate existence) or 6.5 of this Agreement; or
7.4. Breach of Warranty
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
7.5. Other Defaults Under Loan Documents
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 7, and such
default shall not have been remedied or waived within 30 days after the date of
written notice from the holder or holders of not less than 25% in aggregate
principal amount of the Loans then outstanding of such default; or
7.6. Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed within 60 days of the entry thereof; or any other similar
relief shall be granted under any applicable federal or state law; or (ii) an
involuntary case shall be commenced against Company or any of its Subsidiaries
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Company or any of its Subsidiaries, or over all or a substantial
part of its property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian of
Company or any of its Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Company or any of
its Subsidiaries, and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
7.7. Voluntary Bankruptcy; Appointment of Receiver, Etc.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
7.8. Judgments and Attachments
Any money judgment, writ or warrant of attachment or similar process
involving in any individual case or in the aggregate an amount in excess of
$15.0 million (in either case not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged coverage) shall be
entered or filed against Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or
7.9. Dissolution
Any order, judgment or decree shall be entered against Company or any
Subsidiary decreeing the dissolution or split up of Company or such Subsidiary
and such order shall remain undischarged or unstayed for a period in excess of
60 days; or
7.10. Change in Control
A Change of Control shall have occurred prior to the Conversion Date.
7.11. Invalidity of Senior Subordinated Subsidiary Guaranty; Repudiation of
Obligations
At any time after the execution and delivery thereof, (i) the Senior
Subordinated Subsidiary Guaranty for any reason, other than the satisfaction in
full of all Obligations, shall cease to be in full force and effect (other than
in accordance with its terms) or shall be declared to be null and void, or (ii)
any Loan Party shall contest the validity or enforceability of any Loan Document
in writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Loan Document to which it is a
party.
7.12. Failure to Consummate the Acquisition
If Company fails to consummate the Acquisition by the close of business on
the Closing Date, regardless of fault on the part of Company pursuant to the
Definitive Acquisition Documents.
Then (i) upon the occurrence of any Event of Default described in
subsection 7.6 or 7.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans and (b) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Company,
and the obligation of each Lender to make any Loan shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) and (b) above to be, and
the same shall forthwith become, immediately due and payable, and the obligation
of each Lender to make any Loan hereunder shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph, if at any
time within 60 days after an acceleration of the Loans pursuant to clause (ii)
of such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Defaults (other than non-payment of the principal of and
accrued interest on the Loans, in each case which is due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to subsection 10.6,
then Requisite Lenders, by written notice to Company, may at their option
rescind and annul such acceleration and its consequences; but such action shall
not affect any subsequent Event of Default or Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Company, and such
provisions shall not at any time be construed so as to grant Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Agents or Lenders from exercising any of the rights or remedies available to
them under any of the Loan Documents, even if the conditions set forth in this
paragraph are met.
SECTION 8
SUBORDINATION
8.1 Obligations Subordinated to Senior Debt of Company
The Lenders covenant and agree that payments of the Obligations by Company
shall be subordinated in accordance with the provisions of this Section 8 to the
prior payment in full, in cash or Cash Equivalents of all amounts payable in
respect of Senior Debt of Company, whether now outstanding or hereafter created
(including any interest accruing subsequent to an event specified in subsection
7.6 or 7.7 whether or not such interest is an allowed claim against Company),
that the subordination is for the benefit of the holders of Senior Debt of
Company, and that each holder of Senior Debt of Company whether now outstanding
or hereafter created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Debt of Company in reliance upon the covenants and provisions
contained in this Agreement.
8.2 Priority and Payment Over of Proceeds in Certain Events
A. Subordination on Dissolution, Liquidation or Reorganization of Company.
Upon any payment or distribution of assets or securities of Company of any kind
or character, whether in cash, property or securities, upon any dissolution or
winding up or total or partial liquidation or reorganization of Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all Senior Debt of Company (including any interest accruing
subsequent to an event specified in subsection 7.6 or 7.7 whether or not such
interest is an allowed claim enforceable against Company) shall first be paid in
full in cash or Cash Equivalents before the Lenders shall be entitled to receive
any payment by Company of any Obligations and upon any such dissolution or
winding up or liquidation or reorganization, any payment or distribution of
assets or securities of Company of any kind or character, whether in cash,
property or securities, to which the Lenders would be entitled except for the
provisions of this Section 8 shall be made by Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, directly to the holders of the Senior Debt of Company
or their representatives to the extent necessary to pay all of the Senior Debt
of Company to the holders of such Senior Debt of Company.
B. Subordination on Default on Designated Senior Debt. Upon the maturity of
any Designated Senior Debt of Company by lapse of time, acceleration or
otherwise, all Designated Senior Debt then due and payable shall first be paid
in full in cash or Cash Equivalents before any payment is made by Company or any
Person acting on behalf of Company with respect to the Obligations. No direct or
indirect payment by Company or any Person acting on behalf of Company of any
Obligations whether pursuant to the terms of the Loans or upon acceleration or
otherwise shall be made, if at the time of such payment, there exists a default
(as defined in the document governing any Designated Senior Debt of Company) in
the payment of all or any portion of any Designated Senior Debt of Company and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Designated Senior Debt
unless such Designated Senior Debt has been discharged or paid in full in cash
or Cash Equivalents in accordance with its terms. In addition, during the
continuation of any other default with respect to Designated Senior Debt of
Company pursuant to which the maturity thereof may be accelerated, upon the
receipt by Administrative Agent of written notice from the agent or
representative of the holders of such Designated Senior Debt, no such payment
may be made by Company upon or in respect of the Obligations, for a period
("Payment Blockage Period") commencing on the date of receipt of such notice and
ending on the earlier to occur of (i) 179 days after receipt of such notice
(unless such Payment Blockage Period shall be terminated by written notice to
Administrative Agent from such agent or representative) has elapsed, (ii) such
default has been cured or waived or has ceased to exist or (iii) such Designated
Senior Debt has been discharged or paid in full in Cash or Cash Equivalents in
accordance with its terms. Notwithstanding anything herein to the contrary, (x)
in no event will a Payment Blockage Period or successive Payment Blockage
Periods with respect to the same payment on the Obligations extend beyond 179
days from the date the payment on the Obligations was due and (y) only one such
Payment Blockage Period may be commenced within any 360 consecutive days. For
all purposes of this subsection 8.2B, no default which existed or was continuing
on the date of the commencement of any Payment Blockage Period with respect to
the Designated Senior Debt of Company initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period by the holders or by the agent or other representative of such
Designated Senior Debt whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
C. Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, Administrative Agent or any Lender shall have received any payment
on account of any Obligation at a time when such payment is prohibited by this
subsection 8.2, then and in such event such payment or distribution shall be
received and held in trust for the holders of the Senior Debt of Company and
shall be paid over or delivered to the holders of the Senior Debt of Company
remaining unpaid to the extent necessary to pay in full in cash or Cash
Equivalents all Senior Debt of Company in accordance with their terms after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt of Company.
If payment of the Obligations is accelerated because of an Event of
Default, Company shall promptly notify the agent or other representatives for
Senior Debt of Company of the acceleration.
Upon any payment or distribution of assets or securities referred to in
this Section 8, the Lenders and Administrative Agent (notwithstanding any other
provision of this Agreement) shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making any such payment or distribution, delivered to the Lenders or
Administrative Agent for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Debt of Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section 8.
Administrative Agent shall not at any time be charged with the knowledge of
the existence of any facts that would prohibit the making of any payment to or
by Administrative Agent under this Section 8, unless and until Administrative
Agent shall have received written notice thereof from Company or one or more
holders of the Senior Debt of Company or a representative of any holders of such
Senior Debt; and, prior to the receipt of any such written notice,
Administrative Agent shall be entitled to assume conclusively that no such facts
exist. Administrative Agent shall be entitled to rely on the delivery to it of
written notice by a Person representing itself to be a holder of the Senior Debt
of Company (or a representative thereof) to establish that such notice has been
given.
Company shall promptly give written notice to Administrative Agent and each
of the Lenders of any default or event of default under any Senior Debt of
Company or under any agreement pursuant to which Senior Debt of Company may have
been issued, and, in the event of any such event of default, shall provide to
Administrative Agent the names and address of the trustees or other
representatives of holders of such Senior Debt of Company.
With respect to the holders and owners of Senior Debt of Company,
Administrative Agent and each Lender undertake to perform only such obligations
on the part of Administrative Agent or such Lender, as the case may be, as are
specifically set forth in this Section 8, and no implied covenants or
obligations with respect to the holders or owners of Senior Debt of Company
shall be read into this Agreement against Administrative Agent or the Lenders.
Administrative Agent and the Lenders shall not be deemed to owe any fiduciary
duty to the holders or owners of Senior Debt of Company or to the agent under
the Senior Secured Credit Agreement or any other representative of the holders
of the Senior Debt of Company.
Administrative Agent in its individual or any other capacity may hold
Indebtedness of Company (including Senior Debt) with the same rights it would
have if it were not Administrative Agent.
8.3 Payments May Be Paid Prior to Dissolution
Nothing contained in this Section 8 or elsewhere in this Agreement shall
prevent or delay (i) Company, except under the conditions described in
subsection 8.2, from making payments at any time for the purpose of paying
Obligations, or from depositing with Administrative Agent any moneys for such
payments, or (ii) subject to subsection 8.2, the application by Administrative
Agent of any moneys deposited with it for the purpose of paying Obligations.
8.4 Rights of Holders of Senior Debt of Company Not To Be Impaired
No right of any present or future holder of any Senior Debt of Company to
enforce subordination as provided in this Section 8 shall at any time in any way
be prejudiced or impaired by any act or failure to act by any such holder, or by
any noncompliance by Company with the terms and provisions and covenants herein,
regardless of any knowledge thereof any such holder may have or otherwise be
charged with. Without in any way limiting the generality of the foregoing
sentence, such holders of Senior Debt of Company may, at any time and from time
to time without impairing or releasing the subordination provided in this
Section 8 or the obligations of the Lender hereunder to the holders of Senior
Debt of Company, do any one or more of the following: (i) change the manner,
place, terms or time of payment of, or renew or alter, Senior Debt of Company or
otherwise amend or supplement in any manner Senior Debt of Company or any
instrument evidencing the same or any agreement under which any Senior Debt of
Company is outstanding; (ii) sell, exchange, release, or otherwise deal with any
property pledged, mortgaged, or otherwise securing Senior Debt of Company or
fail to perfect or delay in the perfection of the security interest in such
property; (iii) release any Person liable in any manner for the collection of
Senior Debt of Company; and (iv) exercise or refrain from exercising any rights
against Company and any other Person. Each Lender by purchasing or accepting a
Note waives any and all notice of the creation, modification, renewal, extension
or accrual of any Senior Debt of Company and notice of or proof of reliance by
any holder or owner of Senior Debt of Company upon this Section 8 and the Senior
Debt of Company shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Section 8, and all dealings between Company and
the holders and owners of the Senior Debt of Company shall be deemed to have
been consummated in reliance upon this Section 8.
The provisions of this Section 8 are intended to be for the benefit of, and
shall be enforceable directly by, the holders of the Senior Debt of Company.
8.5 Subrogation
Upon the payment in full in accordance with the terms of subsection 8.2 of
all amounts payable under or in respect of the Senior Debt of Company, the
Lenders shall be subrogated to the rights of the holders of such Senior Debt of
Company to receive payments or distributions of assets of Company made on such
Senior Debt of Company until the Obligations shall be paid in full in cash or
Cash Equivalents to the extent set forth herein; and for purposes of such
subrogation no payments or distributions to holders of such Senior Debt of
Company of any cash, property or securities to which the Lenders would be
entitled except for the provisions of this Section 8, and no payment over
pursuant to the provisions of this Section 8 to holders of such Senior Debt of
Company by the Lenders, shall, as between Company, its creditors other than
holders of such Senior Debt of Company and the Lenders, be deemed to be a
payment by Company to or on account of such Senior Debt of Company, it being
understood that the provisions of this Section 8 are solely for the purpose of
defining the relative rights of the holders of such Senior Debt of Company, on
the one hand, and the Lenders, on the other hand. A release of any claim by any
holder of Senior Debt of Company shall not limit the Lenders' rights of
subrogation under this subsection 8.5.
If any payment or distribution to which the Lenders would otherwise have
been entitled but for the provisions of this Section 8 shall have been applied,
pursuant to the provisions of this Section 8, to the payment of all amounts
payable under the Senior Debt of Company, then and in such case, the Lenders
shall be entitled to receive from the holders of such Senior Debt of Company at
the time outstanding the full amount of any such payments or distributions
received by such holders of Senior Debt of Company in excess of the amount
sufficient to pay all Senior Debt of Company payable under or in respect of the
Senior Debt of Company in full in cash or Cash Equivalents in accordance with
the terms of subsection 8.2.
8.6 Obligations of Company Unconditional
Nothing contained in this Section 8 or elsewhere in this Agreement is
intended to or shall impair as between Company and the Lenders the obligations
of Company, which are absolute and unconditional, to pay to the Lenders the
Obligations as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Lenders and creditors of Company other than the holders of the Senior Debt of
Company, nor shall anything herein or therein prevent the Lenders from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under this Section 8 of the
holders of such Senior Debt of Company in respect of cash, property or
securities of Company received upon the exercise of any such remedy.
The failure to make a payment on account of Obligations by reason of any
provision of this Section 8 shall not prevent the occurrence of an Event of
Default under Section 7.
8.7 Lenders Authorize Administrative Agent To Effectuate Subordination
Each Lender hereby authorizes and expressly directs Administrative Agent on
its behalf to take such action as may be necessary or appropriate to effectuate
the subordination provided in this Section 8 and appoints Administrative Agent
its attorney in fact for such purpose, including, without limitation, in the
event of any dissolution, winding up, liquidation or reorganization of Company
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or any other
similar remedy or otherwise) tending towards liquidation of the business and
assets of Company, the immediate filing of a claim for the unpaid balance of the
Obligations in the form required in said proceedings and causing said claim to
be approved. If Administrative Agent does not file a proper claim or proof of
debt in the form required in such proceeding prior to 30 days before the
expiration of the time to file such claim or claims, then the holders of the
Senior Debt of Company are hereby authorized to have the right to file and are
hereby authorized to file an appropriate claim for and on behalf of the Lenders.
SECTION 9.
AGENTS
9.1. Appointment
A. Appointment of Agent. CSFB is hereby appointed as Lead Arranger and
Administrative Agent and BT Alex. Brown Incorporated is hereby appointed as
Co-Arranger hereunder and under the other Loan Documents, and each Lender hereby
authorizes each Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Each Agent agrees to act upon the
express conditions contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 9 are solely for the benefit of
Agents and Lenders and Company shall have no rights as a third party beneficiary
of any of the provisions thereof. In performing its functions and duties under
this Agreement, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Company or any of its Subsidiaries.
All obligations of the Lead Arranger and the Co-Arranger hereunder shall
terminate and thereafter the Lead Arranger and the Co-Arranger (in such
capacities) shall have no obligations or liabilities under any of the Loan
Documents.
9.2. Powers and Duties; General Immunity
A. Powers; Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. An
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement with respect to such Agent and the other Loan
Documents. An Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. An Agent shall not have, by
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon any Agent any obligations in respect of this
Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. An Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by such Agent to Lenders or by or on behalf of
Company to such Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall such Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event
of Default or Default. Anything contained in this Agreement to the contrary
notwithstanding, an Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the component amounts
thereof.
C. Exculpatory Provisions. None of Agents or any of their respective
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by such Agent under or in connection with any of the
Loan Documents except to the extent caused by such Agent's gross negligence or
willful misconduct. Such Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) an Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against an Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).
D. Agents Entitled to Act as Lenders. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, an Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include such Agent in its individual
capacity. Each Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3. Representations and Warranties; No Responsibility for Appraisal of
Creditworthiness
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness of
Company and its Subsidiaries. Agents shall not have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and Agents
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4. Right to Indemnity
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as an
Agent, in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from an Agent's gross negligence or
willful misconduct. If any indemnity furnished to such Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5. Successor Agent
Any Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company. Upon any such notice of resignation, Requisite
Lenders shall have the right, upon five Business Days' notice to Company, to
appoint a successor to such Agent. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, as the case may be, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
9 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was an Agent under this Agreement.
9.6. Subsidiary Guaranties
Each Lender hereby further authorizes Administrative Agent, on behalf of
and for the benefit of Lenders and to be the agent for and representative of
Lenders under the Senior Subordinated Subsidiary Guaranty, and each Lender
agrees to be bound by the terms of the Senior Subordinated Subsidiary Guaranty;
provided that Administrative Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision contained in the
Senior Subordinated Subsidiary Guaranty without the consent of the Requisite
Lenders; provided further, however, that, without further written consent or
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to release any Subsidiary Guarantor from the Senior
Subordinated Subsidiary Guaranty if all of the capital stock of such Subsidiary
Guarantor is sold to any Person (other than an Affiliate of Company) pursuant to
a sale or other disposition permitted hereunder or to which Requisite Lenders
have otherwise consented. Each Lender agrees to be bound by the subordination
provisions of Section 3 of the Senior Subordinated Subsidiary Guaranty as they
apply to it. Anything contained in any of the Loan Documents to the contrary
notwithstanding, Company, Administrative Agent and each Lender hereby agree that
no Lender shall have any right individually to enforce the Senior Subordinated
Subsidiary Guaranty, it being understood and agreed that all rights and remedies
under the Senior Subordinated Subsidiary Guaranty may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof.
SECTION 10.
MISCELLANEOUS
10.1. Assignments and Participations in Loans
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or in any case its rights or obligations with respect
thereto or participations therein or any other interest herein or in any other
obligations owed to it; provided that no such sale, assignment, transfer or
participation shall, without the consent of Company, require Company to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities
laws of any state; provided, further, that no such sale, assignment or transfer
described in clause (i) above shall be effective unless and until an Assignment
Agreement effecting such sale, assignment or transfer shall have been accepted
by Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Except as otherwise provided in this subsection 10.1, no Lender
shall, as between Company and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment or transfer of, or any granting of
participations in, all or any part of its Commitments or the Loans or the other
Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender or to an Approved Fund, with
the giving of notice to Company and Administrative Agent or (b) be assigned in
an aggregate amount of not less than $5,000,000 (or such lesser amount as shall
constitute the aggregate amount of the Commitments, Loans and other Obligations
of the assigning Lender) to any other Eligible Assignee with the consent of
Company and Administrative Agent (which consent of Company and Administrative
Agent shall not be unreasonably withheld or delayed); provided that assignment
to an Affiliate of the assigning Lender (or an Approved Fund) that would result
in increased costs to Company shall also require the prior written consent of
Company and such prior written consent of Company shall not be unreasonably
withheld and which may be conditioned on the Eligible Assignee agreeing not to
require reimbursement from Company of such increased costs; provided, further,
that after an Event of Default occurs and is continuing, the consent of Company
shall not be required for assignment to an Eligible Assignee. To the extent of
any such assignment in accordance with either clause (a) or (b) above, the
assigning Lender shall be relieved of its obligations with respect to its
Commitments, Loans or other obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to Administrative
Agent, for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $3,500 (except in
the event of an Assignment to a Lender or an Affiliate of a Lender) and such
forms, certificates or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such Assignment
Agreement may be required to deliver to Administrative Agent pursuant to
subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto. The Commitments hereunder shall be modified to reflect the Commitment of
such assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its applicable Notes to Administrative
Agent for cancellation, and thereupon new Notes shall be issued to the assignee
and/or to the assigning Lender, substantially in the form of Exhibit II or
Exhibit IV annexed hereto, as the case may be, with appropriate insertions, to
reflect the new Commitments and/or outstanding Loans, as the case may be, of the
assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent
shall, if Administrative Agent and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required pursuant
to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence any
required consent of Administrative Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company. Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the scheduled final maturity date of any Loan
allocated to such participation or (ii) a reduction of the principal amount of
or the rate of interest payable on any Loan allocated to such participation, and
all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.7D and 2.8) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Assignments of Special Purpose Funding Vehicles. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender (a "Granting Lender") may grant to special purpose
funding vehicle (an "SPV"), identified as such in writing from time to time by
the Granting Lender to Administrative Agent and Company, the option to provide
to Company all or any part of any Loan that such Granting Lender would otherwise
be obligated to make Company pursuant to this Agreement; provided, (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and (ii) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPV, it will not institute
against, or join any other person in instituting against, such SPV, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this subsection 10.1E(i),
any SPV may (i) with notice to, but without the prior written consent of,
Company and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loan to the Granting
Lender or to any financial institutions (consented to by Company and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPV to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit liquidity enhancement to such SPV. After the date of a grant
to any SPV, this section may not be amended without the written consent of such
SPV.
F. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignee and participants),
subject to subsection 10.19.
G. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of or investing in loans such as the Loans; and
(iii) that it will make or invest in its Loans for its own account in the
ordinary course of its business and without a view to distribution of such Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of this
subsection 10.1, the disposition of such Loans or any interests therein shall at
all times remain within its exclusive control). Each Lender that becomes a party
hereto pursuant to an Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in Section 2(c) of such
Assignment Agreement are incorporated herein by this reference.
10.2. Expenses
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of Agents in connection with the preparation of the Loan Documents and
any consents, amendments, waivers or other modifications thereto; (ii) all
reasonable costs of furnishing all opinions by counsel for Company (including
any opinions requested by Lenders as to any legal matters arising hereunder) and
of Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agents (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Company; (iv) all other actual and reasonable costs and expenses incurred by
Agents in connection with the syndication of the Commitments and the
negotiation, preparation and execution of the Loan Documents and any consents,
amendments, waivers or other modifications thereto and the transactions
contemplated thereby; and (v) after the occurrence of an Event of Default, all
costs and expenses, including reasonable attorneys' fees (including allocated
costs of internal counsel) and costs of settlement, incurred by Agents and
Lenders in enforcing any Obligations of or in collecting any payments due from
any Loan Party hereunder or under the other Loan Documents by reason of such
Event of Default (including in connection with the enforcement of the Senior
Subordinated Subsidiary Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3. Indemnity
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend (subject to Indemnitees' selection of counsel), indemnify, pay and
hold harmless Agents and Lenders, and the officers, directors, employees,
trustee, agents and affiliates of Agents and Lenders (collectively called the
"Indemnitees"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for Indemnitees in connection
with any investigative, administrative or judicial proceeding commenced or
threatened by any Person, whether or not any such Indemnitee shall be designated
as a party or a potential party thereto, and any fees or expenses incurred by
Indemnitees in enforcing this indemnity), whether direct, indirect or
consequential and whether based on any federal, state or foreign laws, statutes,
rules or regulations (including securities and commercial laws, statutes, rules
or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby (including Lenders' agreement to make the Loans hereunder or the use or
intended use of the proceeds thereof or any enforcement of any of the Loan
Documents (including the enforcement of the Senior Subordinated Subsidiary
Guaranty) or (ii) the statements contained in the commitment letter delivered by
any Lender to Company with respect thereto.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4. Set-Off
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby authorized by Company at any time or from time to
time, without notice to Company or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender to or for the
credit or the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement and the other Loan
Documents, including all claims of any nature or description arising out of or
connected with this Agreement or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
10.5. Ratable Sharing
Administrative Agent agrees that promptly after its receipt of each payment
of any interest or premium on or principal of the Loans or Notes from or on
behalf of Company or any Subsidiary Guarantor, it shall, except as otherwise
provided in this Agreement, distribute such payment to the Lenders (other than
any Lender that has consented in writing to waive its pro rata share of such
payment) pro rata based upon their respective pro rata shares, if any, of such
payment.
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to that Lender hereunder or under the other Loan Documents (collectively,
the "Aggregate Amounts Due" to such Lender) which is greater than the proportion
received by any other Lender in respect of the Aggregate Amounts Due to such
other Lender, then the Lender receiving such proportionately greater payment
shall (i) notify Administrative Agent and each other Lender of the receipt of
such payment and (ii) apply a portion of such payment to purchase participations
(which it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
10.6. Amendments and Waivers
No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by Company therefrom,
shall in any event be effective without the written concurrence of Requisite
Lenders; provided that any such amendment, modification, termination, waiver or
consent which: reduces the principal amount of any of the Loans; changes in any
manner the definition of "Pro Rata Share" or the definition of "Requisite
Lenders"; changes in any manner any provision of this Agreement which, by its
terms, expressly requires the approval or concurrence of all Lenders; postpones
the scheduled final maturity date of any of the Loans or Notes; postpones the
date on which any interest or any fees are payable; decreases the interest rate
borne by any of the Loans or Notes or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; makes
any change in subsection 2.5A(iv) or in the definition of "Change of Control" or
waives performance by Company of any of its obligations under, or consent to any
departure from any of the terms or provisions of, subsection 2.5A(iv) after the
occurrence of a Change of Control; releases any Subsidiary Guarantor from its
obligations under the Senior Subordinated Subsidiary Guaranty; modify the
provisions of Section 8 or any of the defined terms related thereto in any
manner adverse to the Lenders, in each case other than in accordance with the
terms of the Loan Documents; or changes in any manner the provisions contained
in subsection 9.1 or this subsection 10.6 shall be effective only if evidenced
by a writing signed by or on behalf of all Lenders; provided, further, that no
such amendment, modification, termination, waiver or consent shall increase the
Commitment of a Lender over the amount hereof then in effect without the consent
of such Lender. In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 3 shall be effective only
if evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of any Agent shall be effective without the written concurrence of
such Agent. No amendment, modification or waiver of Section 8 of this Agreement
that adversely affects the rights of a holder of Senior Debt shall be binding on
such holder without the prior written consent of such holder. Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Company
in any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by
Company, on Company.
10.7. Independence of Covenants
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Default if such action is taken or condition exists.
10.8. Notices
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agents shall not be effective
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and any Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
10.9. Survival of Representations, Warranties and Agreements
A. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.7D, 2.8, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4
and 10.5 shall to the extent set forth therein survive the payment of the Loans,
and the termination of this Agreement.
10.10. Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of any Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11. Marshalling; Payments Set Aside
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12. Severability
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13. Obligations Several; Independent Nature of Lenders' Rights
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14. Headings
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15. Applicable Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16. Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17. CONSENT TO JURISDICTION AND SERVICE OF PROCESS
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT,
COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(i) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS;
(ii) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS WITH RESPECT TO ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK;
(iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.8;
(iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(v) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE COURTS OF
ANY OTHER JURISDICTION; AND
(vi) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.18. WAIVER OF JURY TRIAL
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19. Confidentiality
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, if applicable, it being understood and agreed by Company that
in any event a Lender may make disclosures to the accountants, auditors,
attorneys, and Affiliates of such Lender or disclosures reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participations therein or disclosures required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any routine compliance
examination or examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further, that in no event shall
any Lender be obligated or required to return any materials furnished by Company
or any of its Subsidiaries.
10.20. Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
EXPRESS SCRIPTS, INC.
By: /s/ George Paz
Title: Senior Vice President and Chief
Financial Officer
Notice Address:
14000 Riverport Drive
Maryland Heights, Missouri 63047
<PAGE>
AGENTS:
CREDIT SUISSE FIRST BOSTON
individually and as Lead Arranger and
Administrative Agent
By: /s/ Todd C. Morgan
Title: Director
By: /s/ Gregory R. Perry
Title: Vice President
Notice Address:
Eleven Madison Avenue
New York, New York 10010
Attention: Todd Mareen
LENDERS:
Commitment: $97,500,000 CREDIT SUISSE FIRST BOSTON
By: /s/ Todd C. Morgan
Title: Director
By: /s/ Gegory R. Perry
Title: Vice President
Commitment: $52,500,000 BANKERS TRUST CORPORATION
By: /s/ William W. Archer
Title: Managing Director
SENIOR SUBORDINATED SUBSIDIARY GUARANTY
This SENIOR SUBORDINATED SUBSIDIARY GUARANTY is entered into as of April 1,
1999 by THE UNDERSIGNED (each a "Guarantor" and collectively, "Guarantors") in
favor of and for the benefit of Credit Suisse First Boston as Administrative
Agent for and representative of (in such capacity herein called "Guaranteed
Party") the Agent (as hereinafter defined) and the financial institutions party
to the Credit Agreement ("Lenders") referred to below, and, subject to
subsection 4.12 hereof, for the benefit of the other Beneficiaries (as
hereinafter defined).
RECITALS
A. Express Scripts, Inc., a Delaware corporation ("Company"), has entered
into that certain Senior Subordinated Credit Agreement dated as of April 1, 1999
with Guaranteed Party, Credit Suisse First Boston, as Lead Arranger and
Administrative Agent (the "Agent") and the financial institutions listed as
Lenders therein (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined).
B. A portion of the proceeds of the Loans may be advanced to Guarantors and
thus the Guaranteed Obligations (as hereinafter defined) are being incurred for
and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
C. It is a condition precedent to the making of the Bridge Loans under the
Credit Agreement that Company's obligations thereunder be guarantied by
Guarantors.
D. Guarantors are willing irrevocably and unconditionally to guaranty such
obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guaranteed Party to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder,
Guarantors hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the following terms
shall have the following meanings unless the context otherwise requires:
"Additional Guarantor" shall have the meaning assigned to such term in
subsection 4.12.
"Adjusted Maximum Amount" has the meaning assigned to such term in
subsection 2.2(b).
"Beneficiaries" means Guaranteed Party, Agent and Lenders.
"Designated Guarantor Senior Debt" means, with respect to any Guarantor,
(i) Indebtedness of such Guarantor under or in respect of the Senior Secured
Credit Agreement and (ii) any other Indebtedness constituting Guarantor Senior
Debt of such Guarantor which, at the time of determination, has an aggregate
principal amount of at least $25.0 million and is specifically designated in the
instrument evidencing such Guarantor Senior Debt as "Designated Guarantor Senior
Debt" by such Guarantor.
"Fair Share" has the meaning assigned to that term in subsection 2.2(b).
"Fair Share Shortfall" has the meaning assigned to such term in subsection
2.2(b).
"Fraudulent Transfer Laws" has the meaning assigned to such term in
subsection 2.2(a).
"Guaranteed Obligations" has the meaning assigned to such term in
subsection 2.1.
"Guarantor Payment Blockage Period" has the meaning assigned to such term
in subsection 3.2(b).
"Guarantor Senior Debt" means, with respect to any Guarantor, (i) the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law), fees and expenses on any Indebtedness of
such Guarantor, whether outstanding on the Closing Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the guaranty of such Guarantor hereunder. Without limiting
the generality of the foregoing, "Guarantor Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (x) all obligations of every nature of such Guarantor under the Senior
Secured Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations of such Guarantor
and (z) all obligations under Currency Agreements of such Guarantor, in each
case whether outstanding on the Closing Date or thereafter incurred.
Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include (i) any
Indebtedness of such Guarantor to a Subsidiary of such Guarantor, (ii)
Indebtedness to, or guaranteed on behalf of, any director, officer or employee
of either of such Guarantor or any Subsidiary of such Guarantor (including,
without limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by such Guarantor, (vi) Indebtedness to the extent incurred in violation of
subsection 6.1 of the Credit Agreement, (vii) Indebtedness which, when incurred
and without respect to any election under Section 1111(b) of Title 11, United
States Code, is without recourse to such Guarantor, and (viii) any Indebtedness
which is, by its express terms, subordinated in right of payment to any other
Indebtedness of such Guarantor.
"Guaranty" means this Senior Subordinated Subsidiary Guaranty, as it may be
amended, supplemented or otherwise modified from time to time.
"Obligee Guarantor" has the meaning assigned to that term in subsection
2.8.
"payment in full", "paid in full" or any similar term means payment in full
of the Guaranteed Obligations, including all principal, interest, costs, fees
and expenses (including reasonable legal fees and expenses) of Beneficiaries as
required under the Loan Documents.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guaranteed Obligations. Subject to the provisions of
subsections 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guarantee the due and punctual payment in full of all Guaranteed
Obligations when the same shall become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term
"Guaranteed Obligations" is used herein in its most comprehensive sense and
includes:
(a) any and all Obligations of Company, in each case now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or unliquidated,
whether due or not due, and however arising under or in connection with the
Credit Agreement and the other Loan Documents, including those arising under
successive borrowing transactions under the Credit Agreement which shall either
continue the Obligations of Company or from time to time renew them after they
have been satisfied and including interest which, but for the filing of a
petition in bankruptcy with respect to Company, would have accrued on any
Guaranteed Obligations, whether or not a claim is allowed against Company for
such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.9 hereof.
2.2 Limitation on Amount Guaranteed; Contribution by Guarantors. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including any such
right of contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves in a fair and equitable manner their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "Funding Guarantor") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "Fair Share
Shortfall" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty determined as of such date, in
the case of any Guarantor, in accordance with subsection 2.2(a); provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect to
any Guarantor for purposes of this subsection 2.2(b), any assets or liabilities
of such Guarantor arising by virtue of any rights to subrogation, reimbursement
or indemnification or any rights to or obligations of contribution hereunder
shall not be considered as assets or liabilities of such Guarantor. "Aggregate
Payments" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Guarantor in respect of this Guaranty (including
in respect of this subsection 2.2(b)) minus (ii) the aggregate amount of all
payments received on or before such date by such Guarantor from the other
Guarantors as contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Guarantors of their obligations as set forth in this subsection
2.2(b) shall not be construed in any way to limit the liability of any Guarantor
hereunder.
2.3 Subordination of Guaranty. The obligations of each Guarantor to the
Beneficiaries pursuant to the guaranty of such Guarantor hereunder are expressly
subordinate and subject in right of payment to the prior payment in full all
Guarantor Senior Debt of such Guarantor to the extent and in the manner provided
in Section 3.
2.4 Payment by Guarantors; Application of Payments. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
any Beneficiary may have at law or in equity against any Guarantor by virtue
hereof, that upon the failure of Company to pay any of the Guaranteed
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Guaranteed
Party for the ratable benefit of Beneficiaries, an amount equal to the sum of
the unpaid principal amount of all Guaranteed Obligations then due as aforesaid,
accrued and unpaid interest on such Guaranteed Obligations (including interest
which, but for the filing of a petition in bankruptcy with respect to Company,
would have accrued on such Guaranteed Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy proceeding)
and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.
All such payments shall be applied promptly from time to time by Guaranteed
Party as provided in subsection 2.5E of the Credit Agreement.
2.5 Liability of Guarantors Absolute. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guaranteed Party may enforce this Guaranty upon the occurrence of an
Event of Default under the Credit Agreement notwithstanding the existence of any
dispute between Company and any Beneficiary with respect to the existence of
such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Company under the Loan Documents and the obligations of any other
guarantor (including any other Guarantor) of the obligations of Company under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against such Guarantor whether or not any action is brought against
Company or any of such other guarantors and whether or not Company is joined in
any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge any Guarantor's
liability for any portion of the Guaranteed Obligations which has not been paid.
Without limiting the generality of the foregoing, if Guaranteed Party is awarded
a judgment in any suit brought to enforce any Guarantor's covenant to pay a
portion of the Guaranteed Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the Guaranteed
Obligations that is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor's liability hereunder in respect of the Guaranteed
Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability hereunder, from time to time may (i)
renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations, (ii)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Guaranteed Obligations or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties of
the Guaranteed Obligations and take and hold security for the payment of this
Guaranty or the Guaranteed Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guaranteed
Obligations, any other guaranties of the Guaranteed Obligations, or any other
obligation of any Person (including any other Guarantor) with respect to the
Guaranteed Obligations; (v) enforce and apply any security now or hereafter held
by or for the benefit of such Beneficiary in respect of this Guaranty or the
Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such Beneficiary may have against any
such security, in each case as such Beneficiary in its discretion may determine
consistent with the Credit Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Guarantor
against Company or any security for the Guaranteed Obligations; and (vi)
exercise any other rights available to it under the Loan Documents.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than payment in full
of the Guaranteed Obligations), including the occurrence of any of the
following, whether or not any Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Loan
Documents, at law, in equity or otherwise) with respect to the Guaranteed
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guaranteed Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including provisions relating to events of
default) of the Credit Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Guaranteed Obligations, in each case whether or not in
accordance with the terms of the Credit Agreement or such Loan Document or any
agreement relating to such other guaranty or security; (iii) the Guaranteed
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received pursuant to the
other Loan Documents or from the proceeds of any security for the Guaranteed
Obligations) to the payment of indebtedness other than the Guaranteed
Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary's
consent to the change, reorganization or termination of the corporate structure
or existence of Company or any of its Subsidiaries and to any corresponding
restructuring of the Guaranteed Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any other
act or thing, which may or might in any manner or to any extent vary the risk of
any Guarantor as an obligor in respect of the Guaranteed Obligations.
2.6 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of
Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment or
performance by such Guarantor, to (i) proceed against Company, any other
guarantor (including any other Guarantor) of the Guaranteed Obligations or any
other Person, (ii) proceed against or exhaust any security held from Company,
any such other guarantor or any other Person, (iii) proceed against or have
resort to any balance of any deposit account or credit on the books of any
Beneficiary in favor of Company or any other Person, or (iv) pursue any other
remedy in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority or
any disability or other defense of Company including any defense based on or
arising out of the lack of validity or the unenforceability of the Guaranteed
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of Company from any cause other than payment in full
of the Guaranteed Obligations;
(c) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in the
administration of the Guaranteed Obligations, except behavior which amounts to
bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise, which
are or might be in conflict with the terms of this Guaranty and any legal or
equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit
of any statute of limitations affecting such Guarantor's liability hereunder or
the enforcement hereof, (iii) any rights to set-offs, recoupments and
counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices
of dishonor and notices of any action or inaction, including acceptance of this
Guaranty, notices of default under the Credit Agreement or any agreement or
instrument related thereto, notices of any renewal, extension or modification of
the Guaranteed Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
subsection 2.5 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by law
which limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Guaranty.
2.7 Guarantors' Rights of Subrogation, Contribution, Etc. Each Guarantor
hereby waives, until the Guaranteed Obligations shall have been indefeasibly
paid in full and the Commitments shall have terminated, any claim, right or
remedy, direct or indirect, that such Guarantor now has or may hereafter have
against Company or any of its assets in connection with this Guaranty or the
performance by such Guarantor of its obligations hereunder, in each case whether
such claim, right or remedy arises in equity, under contract, by statute under
common law or otherwise and including (a) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter
have against Company, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company, and (c) any benefit of, and any right to participate in, any collateral
or security now or hereafter held by any Beneficiary. In addition, until the
Guaranteed Obligations shall have been indefeasibly paid in full and the
Commitments shall have terminated, each Guarantor shall withhold exercise of any
right of contribution such Guarantor may have against any other guarantor
(including any other Guarantor) of the Guaranteed Obligations (including any
such right of contribution under subsection 2.2(b)). Each Guarantor further
agrees that, to the extent the waiver or agreement to withhold the exercise of
its rights of subrogation, reimbursement, indemnification and contribution as
set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification such Guarantor may have against Company or against any
collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights
any Beneficiary may have against Company, to all right, title and interest any
Beneficiary may have in any such collateral or security, and to any right any
Beneficiary may have against such other guarantor. If any amount shall be paid
to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guaranteed
Obligations shall not have been paid in full, such amount shall be held in trust
for Guaranteed Party on behalf of Beneficiaries and shall forthwith be paid over
to Guaranteed Party for the benefit of Beneficiaries to be credited and applied
against the Guaranteed Obligations, whether matured or unmatured, in accordance
with the terms hereof.
2.8 Subordination of Other Obligations. Any indebtedness of Company or any
Guarantor now or hereafter held by any Guarantor (the "Obligee Guarantor") is
hereby subordinated in right of payment to the Guaranteed Obligations, and any
such indebtedness collected or received by the Obligee Guarantor after an Event
of Default has occurred and is continuing shall be held in trust for Guaranteed
Party on behalf of Beneficiaries and shall forthwith be paid over to Guaranteed
Party for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of the Obligee Guarantor under any other provision of this
Guaranty.
2.9 Expenses. Guarantors jointly and severally agree to pay, or cause to be
paid, on demand, and to save Beneficiaries harmless against liability for, any
and all costs and expenses (including reasonable fees and disbursements of
counsel and allocated reasonable costs of internal counsel) incurred or expended
by any Beneficiary in connection with the enforcement of or preservation of any
rights under this Guaranty.
2.10. Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guaranteed Obligations shall have been paid in
full and the Commitments shall have terminated. Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guaranteed Obligations.
2.11 Rights Cumulative. The rights, powers and remedies given to
Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in any of the other Loan Documents or any
agreement between any Guarantor and any Beneficiary or Beneficiaries or between
Company and any Beneficiary or Beneficiaries. Any forbearance or failure to
exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.12 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty. (a) So
long as any Guaranteed Obligations remain outstanding, no Guarantor shall,
without the prior written consent of Guaranteed Party acting pursuant to the
instructions of Requisite Lenders, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantors under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or by any
defense which Company may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion
of the Guaranteed Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guaranteed Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guaranteed Obligations if said proceedings had not been
commenced) shall be included in the Guaranteed Obligations because it is the
intention of Guarantors and Beneficiaries that the Guaranteed Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guaranteed Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guaranteed Party, or allow the claim of
Guaranteed Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guaranteed Obligations for all purposes under this Guaranty.
2.13 Notice of Events. As soon as Guarantor obtains knowledge thereof,
Guarantor shall give Guaranteed Party written notice of any condition or event
which has resulted in (a) a material adverse change in the financial condition
of Guarantor or Company or (b) any Default or Event of Default.
2.14 Set Off. In addition to any other rights any Beneficiary may have
under law or under this Guaranty, such Beneficiary is authorized at any time or
from time to time while an Event of Default has occurred and is continuing,
without notice (any such notice being hereby expressly waived), to set off and
to appropriate and to apply any and all deposits (general or special, including
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness of such Beneficiary owing to Guarantor and any other
property of Guarantor held by any Beneficiary to or for the credit or the
account of Guarantor against and on account of the Guaranteed Obligations and
liabilities of Guarantor to any Beneficiary under this Guaranty.
2.15 Evidence of Guaranty. To evidence their guaranties to the
Beneficiaries set forth in this Guaranty, each of the Guarantors hereby agrees
to execute the notation of guaranty in substantially the form included in the
form of each of the Bridge Note and Term Note. Each such notation of guaranty
shall be signed on behalf of each Guarantor by two officers (each of whom shall,
in each case, have been duly authorized by all requisite corporate actions).
Failure to execute the notation of guaranty shall not in any way limit the
guaranty of each Guarantor hereunder.
SECTION 3. SUBORDINATION OF GUARANTEED OBLIGATIONS
3.1 Guaranteed Obligations Subordinated to Guarantor Senior Debt. The
Lenders covenant and agree that payments of the Guaranteed Obligations by a
Guarantor hereunder shall be subordinated in accordance with the provisions of
this Section 3 to the prior payment in full, in cash or Cash Equivalents, of all
amounts payable in respect of Guarantor Senior Debt of such Guarantor whether
now outstanding or hereafter created (including any interest accruing subsequent
to an event specified in subsection 7.6 or 7.7 of the Credit Agreement whether
or not such interest is an allowed claim against such Guarantor), that the
subordination is for the benefit of the holders of Guarantor Senior Debt, and
that each holder of Guarantor Senior Debt whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired
Guarantor Senior Debt in reliance upon the covenants and provisions contained in
this Guaranty.
3.2 Priority and Payment Over of Proceeds in Certain Events.
(a) Subordination of Guaranteed Obligations on Dissolution, Liquidation or
Reorganization of Such Guarantor. Upon any payment or distribution of assets or
securities of any Guarantor of any kind or character, whether in cash, property
or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of such Guarantor, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings
(other than a liquidation or dissolution of such Guarantor into the Company or
another Guarantor), all Guarantor Senior Debt of such Guarantor (including any
interest accruing subsequent to an event specified in subsection 7.6 or 7.7 of
the Credit Agreement whether or not such interest is an allowed claim
enforceable against such Guarantor) shall first be paid in full in cash or Cash
Equivalents, before the Lenders shall be entitled to receive any payment with
respect to any Guaranteed Obligations of such Guarantor and upon any such
dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Lenders would be entitled
except for the provisions of this Section 3 shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Debt of such Guarantor or their representatives to the extent
necessary to pay all of the Guarantor Senior Debt of such Guarantor to the
holders of such Guarantor Senior Debt.
(b) Subordination of Guaranteed Obligations on Default on Designated
Guarantor Senior Debt. Upon the maturity of any Designated Guarantor Senior Debt
of a Guarantor by lapse of time, acceleration or otherwise, all Designated
Guarantor Senior Debt of such Guarantor then due and payable shall first be paid
in full in cash or Cash Equivalents before any payment is made by such Guarantor
or any Person acting on behalf of such Guarantor with respect to the Guaranteed
Obligations. No direct or indirect payment by any Guarantor or any Person acting
on behalf of such Guarantor of any Guaranteed Obligations of such Guarantor
whether pursuant to the terms of the Loans or upon acceleration or otherwise
shall be made, if at the time of such payment, there exists a default (as
defined in the document governing any Designated Guarantor Senior Debt of such
Guarantor) in the payment of all or any portion of any Designated Guarantor
Senior Debt of such Guarantor and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Designated Guarantor Senior Debt unless such Designated Guarantor Senior
Debt has been discharged or paid in full in cash or Cash Equivalents in
accordance with its terms. In addition, during the continuation of any other
event of default with respect to any Designated Guarantor Senior Debt pursuant
to which the maturity thereof may be accelerated, upon the receipt by Guaranteed
Party of written notice from the agent or representative of the holders of such
Designated Guarantor Senior Debt, no such payment may be made by such Guarantor
in respect of the Guaranteed Obligations for a period ("Guarantor Payment
Blockage Period") commencing on the date of receipt of such notice and ending on
the earlier to occur of (i) 179 days after receipt of such written notice by
Guaranteed Party (unless such Guarantor Payment Blockage Period shall be
terminated by written notice to Guaranteed Party from such agent or
representative) has elapsed, (ii) such default has been cured or waived or
ceased to exist or (iii) such Designated Guarantor Senior Debt has been
discharged or paid in full in cash or Cash Equivalents in accordance with its
terms. Notwithstanding anything herein to the contrary, (x) in no event will a
Guarantor Payment Blockage Period or successive Guarantor Payment Blockage
Periods with respect to the same payment on the Guaranteed Obligations extend
beyond 179 days from the date the payment on the Guaranteed Obligations was due
and (y) only one such Payment Blockage Period may be commenced within any 360
consecutive days. For all purposes of this subsection 3(b), no default which
existed or was continuing on the date of the commencement of any Guarantor
Payment Blockage Period with respect to the Designated Guarantor Senior Debt
initiating such Guarantor Payment Blockage Period shall be, or be made, the
basis for the commencement of a second Guarantor Payment Blockage Period by the
holders or by the agent or other representative of such Designated Guarantor
Senior Debt whether or not within a period of 365 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, Guaranteed Party or any Lender shall have received any payment on
account of any Guaranteed Obligation (other than as permitted by Sections (a)
and (b) of this subsection 3.2) at a time when such payment is prohibited by
this subsection 3.2, then and in such event such payment or distribution shall
be received and held in trust for the holders of the Guarantor Senior Debt of
the relevant Guarantor and shall be paid over or delivered to the holders of the
Guarantor Senior Debt of the relevant Guarantor remaining unpaid to the extent
necessary to pay in full in cash or Cash Equivalents all Guarantor Senior Debt
of the relevant Guarantor in accordance with their terms after giving effect to
any concurrent payment or distribution to the holders of such Guarantor Senior
Debt.
Nothing contained in this Section 3 will limit the right of the Lenders to
take any action to accelerate the maturity of the Loans pursuant to Section 7 of
the Credit Agreement or to pursue any rights or remedies hereunder or otherwise.
Upon any payment or distribution of assets or securities referred to in
this Section 3, the Lenders and Guaranteed Party (notwithstanding any other
provision of this Guaranty or the Credit Agreement) shall be entitled to rely
upon any order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making any such payment or distribution,
delivered to the Lenders or Guaranteed Party for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of Guarantor
Senior Debt, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section
3.
Guaranteed Party shall not at any time be charged with the knowledge of the
existence of any facts that would prohibit the making of any payment to or by
Guaranteed Party under this Section 3, unless and until Guaranteed Party shall
have received written notice thereof from a Guarantor or one or more holders of
the Guarantor Senior Debt of a Guarantor or a representative of any holders of
such Guarantor Senior Debt; and, prior to the receipt of any such written
notice, Guaranteed Party shall be entitled to assume conclusively that no such
facts exist. Guaranteed Party shall be entitled to rely on the delivery to it of
written notice by a Person representing itself to be a holder of Guarantor
Senior Debt (or a representative thereof) to establish that such notice has been
given.
The Guarantors shall give written notice to Guaranteed Party and each of
the Lenders of any default or event of default under any Guarantor Senior Debt
or under any agreement pursuant to which Guarantor Senior Debt may have been
issued, and, in the event of any such event of default, shall provide to
Guaranteed Party the names and address of the trustees or other representatives
of holders of such Guarantor Senior Debt.
With respect to the holders and owners of Guarantor Senior Debt, Guaranteed
Party and each Lender undertakes to perform only such obligations on the part of
Guaranteed Party or such Lenders, as the case may be, as are specifically set
forth in this Section 3, and no implied covenants or obligations with respect to
the holders or owners of Guarantor Senior Debt shall be read into this Agreement
against Guaranteed Party or the Lenders. Guaranteed Party and the Lenders shall
not be deemed to owe any fiduciary duty to the holders or owners of Guarantor
Senior Debt or to any agent under the Senior Secured Credit Agreement or any
other representative of the holders of Guarantor Senior Debt.
Guaranteed Party in its individual or any other capacity may hold
Indebtedness of a Guarantor (including Guarantor Senior Debt) with the same
rights it would have if it were not Guaranteed Party.
3.3 Payments May Be Paid Prior to Dissolution. Nothing contained in this
Section 3 or elsewhere in this Guaranty shall prevent or delay (i) Guarantors,
except under the conditions described in subsection 3.2, from making payments at
any time for the purpose of paying Guaranteed Obligations, or from depositing
with Guaranteed Party any moneys for such payments, or (ii) subject to
subsection 3.2, the application by Guaranteed Party of any moneys deposited with
it for the purpose of paying Guaranteed Obligations.
3.4 Rights of Holders of Guarantor Senior Debt Not To Be Impaired. No right
of any present or future holder of any Guarantor Senior Debt to enforce
subordination as provided in this Section 3 shall at any time in any way be
prejudiced or impaired by any act or failure to act by any such holder, or by
any noncompliance by the Guarantors with the terms and provisions and covenants
herein, regardless of any knowledge thereof any such holder may have or
otherwise be charged with. Without in any way limiting the generality of the
foregoing sentence, such holders of Guarantor Senior Debt may, at any time and
from time to time without impairing or releasing the subordination provided in
this Section 3 or the obligations of Guaranteed Party hereunder to the holders
of Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place, terms or time of payment of, or renew or alter, Guarantor Senior
Debt or otherwise amend or supplement in any manner Guarantor Senior Debt or any
instrument evidencing the same or any agreement under which any Guarantor Senior
Debt is outstanding; (ii) sell, exchange, release, or otherwise deal with any
property pledged, mortgaged, or otherwise securing Guarantor Senior Debt or fail
to perfect or delay in the perfection of the security interest in such property;
(iii) release any Person liable in any manner for the collection of Guarantor
Senior Debt; and (iv) exercise or refrain from exercising any rights against the
Guarantors and any other Person. Each Lender by purchasing or accepting a Loan
or a Note waives any and all notice of the creation, modification, renewal,
extension or accrual of any Guarantor Senior Debt and notice of or proof of
reliance by any holder or owner of Guarantor Senior Debt upon this Section 3 and
the Guarantor Senior Debt shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Section 3, and all dealings between
the Guarantors and the holders and owners of the Guarantor Senior Debt shall be
deemed to have been consummated in reliance upon this Section 3.
The provisions of this Section 3 are intended to be for the benefit of, and
shall be enforceable directly by, the holders of the Guarantor Senior Debt.
3.5 Subrogation. Upon the payment in full in accordance with the terms of
subsection 3.2 of all amounts payable under or in respect of the Guarantor
Senior Debt, the Lenders shall be subrogated to the rights of the holders of
such Guarantor Senior Debt to receive payments or distributions of assets of the
Guarantors made on such Guarantor Senior Debt until the Guaranteed obligations
shall be paid in full in cash or Cash Equivalents to the extent set forth
herein; and for purposes of such subrogation no payments or distributions to
holders of such Guarantor Senior Debt of any cash, property or securities to
which the Lenders would be entitled except for the provisions of this Section 3,
and no payment made pursuant to the provisions of this Section 3 to holders of
such Guarantor Senior Debt by the Lenders, shall, as between such Guarantor, its
creditors other than holders of such Guarantor Senior Debt and the Lenders, be
deemed to be a payment by such Guarantor to or on account of such Guarantor
Senior Debt, it being understood that the provisions of this Section 3 are
solely for the purpose of defining the relative rights of the holders of such
Guarantor Senior Debt, on the one hand, and the Lenders, on the other hand. A
release of any claim by any holder of Guarantor Senior Debt shall not limit the
Lenders' rights of subrogation under this subsection 3.5.
If any payment or distribution to which the Lenders would otherwise have
been entitled but for the provisions of this Section 3 shall have been applied,
pursuant to the provisions of this Section 3, to the payment of all amounts
payable under the Guarantor Senior Debt, then and in such case, the Lenders
shall be entitled to receive from the holders of such Guarantor Senior Debt at
the time outstanding the full amount of any payments or distributions received
by such holders of Guarantor Senior Debt in excess of the amount sufficient to
pay all Guarantor Senior Debt payable under or in respect of the Guarantor
Senior Debt in full in cash or Cash Equivalents in accordance with the terms of
subsection 3.2.
3.6 Obligations of the Guarantors Unconditional. Nothing contained in this
Section 3 or elsewhere in this Guaranty is intended to or shall impair as
between the Guarantors and the Lenders the obligations of the Guarantors, which
are absolute and unconditional, to pay to the Lenders the Guaranteed Obligations
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Lenders and
creditors of the Guarantors other than the holders of the Guarantor Senior Debt,
nor shall anything herein or therein prevent the Lenders from exercising all
remedies otherwise permitted by applicable law upon default under the Credit
Agreement, subject to the rights, if any, under this Section 3 of the holders of
such Guarantor Senior Debt in respect of cash, property or securities of the
Guarantors received upon the exercise of any such remedy.
The failure to make a payment on account of Guaranteed Obligations by
reason of any provision of this Section 3 shall not prevent the occurrence of a
Default or an Event of Default under Section 7 of the Credit Agreement.
3.7 Lenders Authorize Guaranteed Party To Effectuate Subordination. Each
Lender hereby authorizes and expressly directs Guaranteed Party on its behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 3 and appoints Guaranteed Party its
attorney in fact for such purpose, including, without limitation, in the event
of any dissolution, winding up, liquidation or reorganization of any Guarantor
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or any other
similar remedy or otherwise) tending towards liquidation of the business and
assets of any Guarantor, the immediate filing of a claim for the unpaid balance
of the Guaranteed Obligations in the form required in said proceedings and
causing said claim to be approved. If Guaranteed Party does not file a proper
claim or proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then the holders
of the Guarantor Senior Debt are hereby authorized to have the right to file and
are hereby authorized to file an appropriate claim for and on behalf of the
Lenders. In the event of any such proceeding, until the Guarantor Senior Debt is
paid in full in cash or Cash Equivalents, without the consent of the holders of
a majority in principal amount outstanding of Guarantor Senior Debt, no Lender
shall waive, settle or compromise any such claim or claims relating to the
Guaranteed Obligations that such Lender now or hereafter may have against the
Guarantors.
SECTION 4. MISCELLANEOUS
4.1 Survival of Warranties. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Guaranty and the
other Loan Documents and any increase in the Commitments under the Credit
Agreement.
4.2 Notices. Any communications between Guaranteed Party and any Guarantor
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Credit Agreement, on the signature
pages hereof or to such other addresses as each such party may in writing
hereafter indicate. Any notice, request or demand to or upon Guaranteed Party or
any Guarantor shall not be effective until received.
4.3 Severability. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
4.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Guaranteed Party and, in the case of any such amendment or
modification, each Guarantor against whom enforcement of such amendment or
modification is sought. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
4.5 Headings. Section and subsection headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
4.6 Applicable Law; Rules of Construction. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Guaranty mutatis mutandis.
4.7 Successors and Assigns. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Beneficiaries and their respective
successors and assigns. No Guarantor shall assign this Guaranty or any of the
rights or obligations of such Guarantor hereunder without the prior written
consent of all Lenders. Any Beneficiary may, without notice or consent, assign
its interest in this Guaranty in whole or in part. The terms and provisions of
this Guaranty shall inure to the benefit of any transferee or assignee of any
Loan, and in the event of such transfer or assignment the rights and privileges
herein conferred upon such Beneficiary shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
4.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 4.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GUARANTOR IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
4.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each
Guarantor and, by its acceptance of the benefits hereof, each Beneficiary, each
(i) acknowledges that this waiver is a material inducement for such Guarantor
and Beneficiaries to enter into a business relationship, that such Guarantor and
Beneficiaries have already relied on this waiver in entering into this Guaranty
or accepting the benefits thereof, as the case may be, and that each will
continue to rely on this waiver in their related future dealings and (ii)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 4.9 AND EXECUTED
BY GUARANTIED PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
4.10 No Other Writing. This writing is intended by Guarantors and
Beneficiaries as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
4.11 Further Assurances. At any time or from time to time, upon the request
of Guaranteed Party, Guarantors shall execute and deliver such further documents
and do such other acts and things as Guaranteed Party may reasonably request in
order to effect fully the purposes of this Guaranty.
4.12 Additional Guarantors. The initial Guarantors hereunder shall be such
of the Subsidiaries of Company as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
Guarantor"), by executing a counterpart of this Guaranty. Upon delivery of any
such counterpart to Administrative Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of Administrative Agent not to cause
any Subsidiary of Company to become an Additional Guarantor hereunder. This
Guaranty shall be fully effective as to any Guarantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Guarantor hereunder.
4.13 Counterparts; Effectiveness. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by Guaranteed Party of written or telephonic
notification of such execution and authorization of delivery thereof.
4.14 Guaranteed Party as Agent.
(a) Guaranteed Party has been appointed to act as Guaranteed Party
hereunder by Lenders. Guaranteed Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that Guaranteed
Party shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the instructions of Requisite Lenders.
(b) Guaranteed Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Guaranteed Party under this Guaranty;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Guaranteed Party under this Guaranty;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor
Guaranteed Party under this Guaranty. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Guaranteed Party under this Guaranty, and the
retiring or removed Guaranteed Party under this Guaranty shall promptly (i)
transfer to such successor Guaranteed Party all sums held hereunder, together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Guaranteed Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guaranteed Party of the rights
created hereunder, whereupon such retiring or removed Guaranteed Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guaranteed Party's resignation or removal hereunder as
Guaranteed Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guaranteed Party hereunder.
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
MANAGED PRESCRIPTION NETWORK, INC.
VALUE HEALTH, INC.
IVTX, INC.
EXPRESS SCRIPTS VISION CORP.
ESI/VRX SALES DEVELOPMENT CO.
HEALTHCARE SERVICES, INC.
MHI, INC.
VALUERX, INC.
VALUERX PHARMACY PROGRAM, INC.
DIVERSIFIED PHARMACEUTICAL SERVICES,
INC.
By: /s/ George Paz
Title: Senior Vice President and Chief
Financial Officer
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, ____.
(Name of Additional Guarantor)
By:
Title:
CREDIT AGREEMENT
dated as of April 1, 1999
among
EXPRESS SCRIPTS, INC.,
a Delaware corporation,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger, Administrative Agent and
Collateral Agent,
BANKERS TRUST COMPANY,
as Syndication Agent,
BT ALEX. BROWN INCORPORATED,
as Co-Arranger,
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Documentation Agent,
and
MERCANTILE BANK, N.A.,
as Co-Documentation Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms....................................................2
1.2. Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement;
Fiscal Periods for Determining Compliance and Pricing...............30
1.3. Other Definitional Provisions and Rules of Construction.................30
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1. Commitments; Making of Loans; the Register; Notes.......................31
2.2. Interest on the Loans...................................................38
2.3. Fees....................................................................45
2.4. Repayments, Prepayments and Reductions in Revolving
Loan Commitments; General Provisions Regarding Payments.............46
2.5. Use of Proceeds.........................................................55
2.6. Special Provisions Governing Eurodollar Rate Loans......................56
2.7. Increased Costs; Taxes; Capital Adequacy................................59
2.8. Obligation of Lenders and Issuing Lenders to
Mitigate; Replacement...............................................63
SECTION 3.
LETTERS OF CREDIT
3.1. Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein..............................................66
3.2. Letter of Credit Fees...................................................68
3.3. Drawings and Reimbursement of Amounts Paid Under Letters of Credit......69
3.4. Obligations Absolute....................................................72
3.5. Indemnification; Nature of Issuing Lenders' Duties......................73
3.6. Increased Costs and Taxes Relating to Letters of Credit.................74
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.1. Conditions to Term Loans and Initial Revolving Loans
and Swing Line Loans.............................................76
4.2. Conditions to All Loans.................................................80
4.3. Conditions to Letters of Credit.........................................81
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
5.1. Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries...........................................82
5.2. Authorization of Borrowing, Etc.........................................83
5.3. Financial Condition.....................................................84
5.4. No Material Adverse Change; No Restricted Junior Payments...............84
5.5. Title to Properties; Liens..............................................84
5.6. Litigation; Adverse Facts...............................................84
5.7. Payment of Taxes........................................................85
5.8. Performance of Agreements; Materially Adverse Agreements;
Material Contracts.............................................85
5.9. Governmental Regulation; Accreditation..................................86
5.10. Securities Activities...................................................86
5.11. Employee Benefit Plans..................................................86
5.12. Certain Fees............................................................87
5.13. Environmental Protection................................................87
5.14. Employee Matters........................................................87
5.15. Solvency................................................................87
5.16. Matters Relating to Collateral..........................................87
5.17. Disclosure..............................................................88
5.18. Accuracy of Representations and Warranties in the
Definitive Acquisition Documents....................................89
5.19. Year 2000 Compliance....................................................89
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
6.1. Financial Statements and Other Reports..................................90
6.2. Corporate Existence, Etc................................................95
6.3. Payment of Taxes and Claims; Tax Consolidation..........................95
6.4. Maintenance of Properties; Insurance....................................95
6.5. Inspection Rights; Lender Meeting.......................................96
6.6. Compliance With Laws, Etc...............................................96
6.7. Environmental Claims and Violations of Environmental Laws...............97
6.8. Execution of Subsidiary Guaranty and Collateral
Documents by Certain Subsidiaries and Future Subsidiaries...........97
6.9. Certain Matters Regarding Collateral....................................98
6.10. Year 2000 Compliance....................................................99
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
7.1. Indebtedness...........................................................100
7.2. Liens and Related Matters..............................................102
7.3. Investments; Joint Ventures............................................103
7.4. Contingent Obligations.................................................104
7.5. Restricted Junior Payments.............................................105
7.6. Financial Covenants....................................................105
7.7. Restriction on Fundamental Changes; Asset Sales and Acquisitions.......107
7.8. Consolidated Capital Expenditures......................................108
7.9. Fiscal Year............................................................108
7.10. Sales and Lease-Backs..................................................109
7.11. Sale or Discount of Receivables........................................109
7.12. Transactions With Shareholders and Affiliates..........................109
7.13. Disposal of Subsidiary Stock...........................................109
7.14. Conduct of Business....................................................110
SECTION 8.
EVENTS OF DEFAULT
8.1. Failure to Make Payments When Due......................................110
8.2. Default in Other Agreements............................................110
8.3. Breach of Certain Covenants............................................111
8.4. Breach of Warranty.....................................................111
8.5. Other Defaults Under Loan Documents....................................111
8.6. Involuntary Bankruptcy; Appointment of Receiver, Etc...................111
8.7. Voluntary Bankruptcy; Appointment of Receiver, Etc.....................112
8.8. Judgments and Attachments..............................................112
8.9. Dissolution............................................................113
8.10. Employee Benefit Plans.................................................113
8.11. Change in Control......................................................113
8.12. Invalidity of Subsidiary Guaranty; Failure of Security;
Repudiation of Obligations.........................................113
8.13. Failure to Consummate the Acquisition..................................114
SECTION 9.
AGENTS
9.1. Appointment............................................................115
9.2. Powers and Duties; General Immunity....................................116
9.3. Representations and Warranties; No Responsibility for Appraisal
of Creditworthiness................................................118
9.4. Right to Indemnity.....................................................118
9.5. Successor Agent and Swing Line Lender..................................119
9.6. Collateral Documents and Guaranties....................................119
SECTION 10.
MISCELLANEOUS
10.1. Assignments and Participations in Loans and Letters of Credit..........120
10.2. Expenses...............................................................124
10.3. Indemnity..............................................................125
10.4. Set-Off................................................................126
10.5. Ratable Sharing........................................................127
10.6. Amendments and Waivers.................................................127
10.7. Independence of Covenants..............................................129
10.8. Notices................................................................130
10.9. Survival of Representations, Warranties and Agreements.................130
10.10.Failure or Indulgence Not Waiver; Remedies Cumulative..................130
10.11.Marshalling; Payments Set Aside........................................131
10.12.Severability...........................................................131
10.13.Obligations Several; Independent Nature of Lenders' Rights.............131
10.14.Headings...............................................................131
10.15.Applicable Law.........................................................132
10.16.Successors and Assigns.................................................132
10.17.CONSENT TO JURISDICTION AND SERVICE OF PROCESS.........................132
10.18.WAIVER OF JURY TRIAL...................................................133
10.19.Confidentiality........................................................134
10.20.Counterparts; Effectiveness............................................134
SIGNATURES S-1
<PAGE>
Schedule 2.1 Term Loan and Revolving Commitments
Schedule 2.5 Scheduled Indebtedness
Schedule 4.1 Remaining Indebtedness
Schedule 5.1 Subsidiaries
Schedule 5.6 Litigation
Schedule 5.8 Material Contracts
Schedule 7.1 Indebtedness
Schedule 7.2 Liens
Schedule 7.3 Investments
Schedule 7.4 Contingent Obligations
Schedule 7.10 Sale and Lease-back Property
Exhibit I Form of Notice of Borrowing
Exhibit II Form of Notice of Continuation/Conversion
Exhibit III Form of Request to Issue Letter of Credit
Exhibit IV-A Form of Tranche A Term Note
Exhibit IV-B Form of Tranche B Term Note
Exhibit V Form of Revolving Note
Exhibit VI Form of Swing Line Note
Exhibit VII Form of Compliance Certificate
Exhibit VIII-A Form of Opinion of Thomas Boudreau, Esq., General Counsel of
the Company
Exhibit VIII-B Form of Opinion of Simpson Thacher & Bartlett, special
New York counsel for Loan Parties
Exhibit IX Form of Opinion of Cahill Gordon & Reindel, Counsel to
Administrative Agent
Exhibit X Form of Assignment Agreement
Exhibit XI Form of Certificate Re Non-Bank Status
Exhibit XII Form of Company Pledge Agreement
Exhibit XIII Form of Subsidiary Guaranty
Exhibit XIV Form of Subsidiary Pledge Agreement
Exhibit XV Form of Solvency Certificate
<PAGE>
EXPRESS SCRIPTS, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of April 1, 1999 and entered into by and
among EXPRESS SCRIPTS, INC., a Delaware corporation ("Company"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), CREDIT SUISSE FIRST BOSTON,
a bank organized under the laws of Switzerland, acting through its New York
Branch ("CSFB"), as lead arranger (in such capacity, the "Lead Arranger"),
administrative agent (in such capacity, the "Administrative Agent") and
collateral agent (in such capacity, the "Collateral Agent"), BANKERS TRUST
COMPANY ("BTCo"), as syndication agent (in such capacity, the "Syndication
Agent"), THE FIRST NATIONAL BANK OF CHICAGO, as co-documentation agent, and
MERCANTILE BANK, N.A., as co-documentation agent (together with The First
National Bank of Chicago, the "Co-Documentation Agents").
R E C I T A L S
WHEREAS, Company intends to (i) acquire (the "Acquisition") all the issued
and outstanding shares of capital stock of Diversified Pharmaceutical Services,
Inc. ("DPS"), a subsidiary of SmithKline Beecham Corporation (the "Seller"),
pursuant to an acquisition agreement between Company and Seller (the "DPS
Acquisition Agreement") and (ii) refinance (the "Refinancing"), in connection
with the Acquisition, certain of Company's existing indebtedness;
WHEREAS, Company desires that Lenders extend credit in the form of (a)
Tranche A Term Loans on the Closing Date in an aggregate principal amount of
$285,000,000, (b) Tranche B Term Loans on the Closing Date in an aggregate
principal amount of $465,000,000 and (c) Revolving Loans at any time and from
time to time prior to the Revolving Credit Maturity Date in an aggregate
principal amount at any time outstanding not in excess of $300,000,000;
WHEREAS, the proceeds of the Term Loans and of Revolving Loans made on the
Closing Date, together with borrowings of $150 million under the Senior
Subordinated Credit Facility, are to be used (i) to finance the Acquisition,
(ii) to consummate the Refinancing, and (iii) to pay fees and expenses related
to the Acquisition and Refinancing;
WHEREAS, Company desires to secure all of the Obligations hereunder and
under the other Loan Documents by granting to the Agents, on behalf of Lenders,
a pledge of all of the capital stock of each of its domestic Subsidiaries,
excluding Practice Patterns Science, Inc., Great Plains Reinsurance Company,
ValueRx of Michigan, Inc. and other Subsidiaries consented to by the Requisite
Lenders from time to time (the "Exempt Subsidiaries"), and 65% of the stock of
its foreign Subsidiaries; and
WHEREAS, all of the domestic Subsidiaries of Company, excluding the Exempt
Subsidiaries, have agreed to guarantee the Obligations hereunder and under the
other Loan Documents and to secure their guaranties by granting to the Agents,
on behalf of Lenders, a pledge of all of the capital stock of each of their
domestic Subsidiaries, excluding the Exempt Subsidiaries, and 65% of the stock
of all foreign Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" has the meaning assigned to that term in the recitals to this
Agreement.
"Adjusted Eurodollar Rate" means, with respect to any Eurodollar Rate Loans
for any Interest Period, an interest rate per annum equal to the product of (a)
the Eurodollar Rate in effect for such Interest Period and (b) Statutory
Reserves.
"Administrative Agent" has the meaning assigned to that term in the
preamble to this Agreement.
"Affected Lender" has the meaning assigned to that term in subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agents" means, collectively, the Administrative Agent, the Syndication
Agent, the Collateral Agent, the Lead Arranger, the Co-Arranger and the
Co-Documentation Agents and also any successor Agents appointed pursuant to
subsection 9.5A.
"Agreement" means this Credit Agreement dated as of April 1, 1999, as it
may be amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate" means, at any time, the higher of (i) the Prime Rate
or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Alternate Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Alternate Base Rate as provided in subsection
2.2A.
"Approved Fund" means, with respect to any Lender 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 as such Lender or by an Affiliate of such
investment advisor.
"Asset Sale" means the sale by Company or any of its Subsidiaries to any
Person other than Company or any of its Wholly Owned Subsidiaries of (i) any of
the stock of any of Company's Subsidiaries (other than Express Online, Inc. and,
until the Senior Subordinated Credit Facility is repaid in full, Practice
Patterns Science, Inc., for purposes of subsection 2.4B(iii)(b)), (ii)
substantially all of the assets of any division or line of business of Company
or any of its Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of Company or any of its Subsidiaries (other than (a) inventory sold
in the ordinary course of business and (b) any such other assets to the extent
that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $500,000 or less); provided, that,
with respect to any sale that would be otherwise deemed an Asset Sale pursuant
to the foregoing, if Company shall deliver an Officers' Certificate to
Administrative Agent at or prior to receipt of proceeds of such sale setting
forth Company's intent to use such proceeds to replace Plant Assets that are the
subject of such sale with other Plant Assets necessary or desirable for the
conduct of its business, or to exchange Plant Assets for other Plant Assets used
in the conduct of its business, within 180 days of such receipt and no Event of
Default or Potential Event of Default shall have occurred and shall be
continuing at such time, such sale shall not be deemed to constitute an Asset
Sale, except to the extent such Plant Assets or proceeds thereof are not so used
within such 180-day period, after which time such sale, to such extent, shall be
deemed an Asset Sale.
"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit X annexed hereto.
"Assignment of Rents and Leases" means the Assignment of Rents and Leases
in such form as is customary for transactions of this type and as may be
approved by the Agents.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BTAB" means BT Alex. Brown Incorporated, as Co-Arranger.
"BTCo" has the meaning assigned to that term in the preamble to this
Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or the State of
Missouri or London, England, or is a day on which banking institutions located
in any such jurisdiction are authorized or required by law or other governmental
action to close.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a demand, time,
savings, passbook or like account, other than an account evidenced by a
negotiable certificate of deposit.
"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States or (b) issued by any agency of the United
States the obligations of which are backed by the full faith and credit of the
United States, in each case maturing within one year after such date; (ii)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time of
the acquisition thereof, the highest rating obtainable from either S&P or
Moody's; (iii) commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a rating of
at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit
or bankers' acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia that
(a) is at least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (i) and (ii) above, (b) has
net assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Certificate Re Non-Bank Status" means a certificate substantially in the
form of Exhibit XI annexed hereto delivered by a Lender to Administrative Agent
pursuant to subsection 2.7B(iii).
"Class," when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Tranche
A Term Loans, Tranche B Term Loans or Swing Line Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a Revolving
Commitment, Tranche A Commitment or Tranche B Commitment.
"Closing Date" means the date on which the initial Loans are made.
"Co-Documentation Agents" has the meaning assigned to that term in the
preamble to this Agreement.
"Collateral" means, collectively, all of the property (including capital
stock) on which Liens are required to be granted pursuant to, and in accordance
with, this Agreement and the applicable Collateral Documents as security for the
Obligations.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble of this Agreement.
"Collateral Documents" means (i) the Company Pledge Agreement and the
Subsidiary Pledge Agreements, and (ii) in the event Company is required to grant
or cause to be granted First Priority Liens on the tangible and intangible
assets of Company or its Subsidiaries pursuant to the terms of subsection 6.9A,
for so long as Company is required to maintain such First Priority Liens
pursuant to subsection 6.9B, the Mortgages, the Assignments of Rents and Leases
and the Security Agreement, in each case together with all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to the Collateral Agent, on behalf of
Lenders, a Lien on property of that Loan Party as security for the Obligations.
"Commitments" means the commitments of Lenders to make Loans as set forth
in subsection 2.1A.
"Company" has the meaning assigned to that term in the preamble to this
Agreement.
"Company Pledge Agreement" means the Company Pledge Agreement executed and
delivered by Company and the Agents on the Closing Date, substantially in the
form of Exhibit XII annexed hereto, as such Company Pledge Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit VII annexed hereto delivered to Agent and Lenders by Company pursuant to
subsection 6.1(iii).
"Consolidated Capital Expenditures" means, for any period, the aggregate of
all expenditures (whether paid in cash or other consideration or accrued as a
liability and including that portion of Capital Leases which is capitalized on
the consolidated balance sheet of Company and its Subsidiaries) by Company and
its Subsidiaries during that period that, in conformity with GAAP, are included
in "additions to property, plant or equipment" or comparable items reflected in
the consolidated statement of cash flows of Company and its Subsidiaries minus
(i) the aggregate of all trade-in allowances and proceeds received by Company
and its Subsidiaries during that period for the exchange of plant assets owned
by Company, as described in the definition of the term "Asset Sale", (ii) up to
$25,000,000 for the cost of integrating the computer systems of DPS and Company
to the extent capitalized before December 31, 2000 and (iii) up to $12,000,000
for the cost of construction and furnishing of Company's new office building in
St. Louis and the renovation and furnishing of Company's existing office
building through December 31, 2000.
"Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense,
(iii) provisions for taxes based on income, (iv) total depreciation expense, (v)
total amortization expense, (vi) other non-cash items incurred in the ordinary
course of business reducing Consolidated Net Income not in excess of 10% of
Consolidated Net Worth and (vii) for any period that includes Fiscal Quarters
ending on or prior to March 31, 2000, retention bonuses in an aggregate amount
up to $10,000,000 to the extent actually paid or accrued in such period to key
employees of DPS less other non-cash items increasing Consolidated Net Income,
all of the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) the sum, without
duplication, of (i) Consolidated Interest Expense for such period, (ii) the
aggregate amount of cash taxes paid by Company and its Subsidiaries during such
period, (iii) mandatory and scheduled principal payments during such period in
respect of any Indebtedness of Company and its Subsidiaries, (iv) cash dividends
on capital stock declared by Company or any of its Subsidiaries during such
period (excluding dividends payable to Company or any of its Wholly Owned
Subsidiaries), (v) the principal component of obligations with respect to
Capital Leases paid during such period and (vi) Consolidated Capital
Expenditures during such period (the items referred to in the foregoing clauses
(i) through (vi) being collectively called "Consolidated Fixed Charges").
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, any
amounts referred to in subsection 2.3 payable to Agent and Lenders on or before
the Closing Date and for purposes of determining compliance with the financial
covenants in subsections 7.6A, 7.6B and 7.6C, fees which will be payable with
respect to the Senior Subordinated Credit Facility, as amended through the date
hereof.
"Consolidated Leverage Ratio" means the ratio of (i) Consolidated Total
Debt as of the last day of any Fiscal Quarter to (ii) Consolidated EBITDA for
the four-Fiscal Quarter period ending as of such day, subject to subsection
1.2B.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary and (iv) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Pension Plan.
"Consolidated Net Worth" means, as at any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Company and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any Security
issued by that Person or any material indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.
"CSFB" has the meaning assigned to such term in the preamble to this
Agreement.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"Definitive Acquisition Documents" has the meaning assigned to that term in
subsection 4.1M of this Agreement.
"Dollars" and the sign "$" mean the lawful money of the United States.
"DPS" has the meaning assigned to that term in the recitals to this
Agreement.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including insurance companies, funds and lease financing
companies; and (B) any Lender and any Affiliate of any Lender or an SPV;
provided that no Affiliate of Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), in each case in writing, by any
governmental authority or any other Person, arising (i) pursuant to or in
connection with any actual or alleged violation of any Environmental Law, (ii)
in connection with any Hazardous Materials, or (iii) in connection with any
actual or alleged damage, injury, threat or harm to health or safety, as
relating to the environment, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other binding requirements of governmental authorities relating to (i)
environmental matters, (ii) any activity, event or occurrence involving
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or, as relating to the environment, the protection of human,
plant or animal health or welfare, in any manner applicable to Company or any of
its Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.
136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which would constitute
grounds under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company, any
of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan that results in liability therefor, or the receipt by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(ix) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan,
provided that such imposition is not otherwise a "reportable event."
"Eurodollar Business Day" means any day (i) excluding Saturday, Sunday and
any day that is a legal holiday under the laws of the State of New York or is a
day on which banking institutions located in such State are authorized or
required by law, or other governmental action to close and (ii) on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by Administrative Agent at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in Dollars (as set
forth by any service selected by Administrative Agent which has been nominated
by the British Bankers' Association as an authorized information vendor for the
purpose of displaying rates) for a period equal to such Interest Period,
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the "Eurodollar Rate" shall be
the interest rate per annum determined by Administrative Agent equal to the rate
per annum at which deposits in Dollars are offered for such Interest Period by
the Administrative Agent in the London interbank market in London, England at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period. "Eurodollar Rate Loans" means
Loans bearing interest at rates determined by reference to the Adjusted
Eurodollar Rate as provided in subsection 2.2A.
"Eurodollar Rate Margin" has the meaning specified in subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Excess Cash Flow" shall mean, for any Fiscal Year, the sum (without
duplication) of:
(a) Consolidated Net Income, adjusted to exclude any income, gains or
losses attributable to any Asset Sale the proceeds of which are required to be
applied to prepay Loans under subsection 2.4(B)(iii)(b); plus
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining Consolidated Net Income for such period; minus
(c) payments during such period on account of charges added to Excess Cash
Flow for an earlier period pursuant to clause (b) above as "non-cash charges or
losses" in such earlier period; plus
(d) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period, plus (ii) the aggregate principal amount of
Indebtedness (other than obligations with respect to Capital Leases) incurred by
Company and its Subsidiaries during such period to finance Capital Expenditures;
minus
(e) the sum of (i) any non-cash gains included in determining such
Consolidated Net Income (or loss) for such period, plus (ii) the amount, if any,
by which Net Working Capital increased during such period; plus
(f) amounts received during such period on account of gains subtracted from
Excess Cash Flow for an earlier period pursuant to clause (e)(i) above as
"non-cash gains" in such earlier period; minus
(g) Consolidated Capital Expenditures for such period; minus
(h) the sum of (i) scheduled amortization payments made in respect of the
Term Loans during such period, (ii) scheduled amortization or similar payments
made during such period in respect of other Indebtedness of Company and its
Subsidiaries and (iii) mandatory prepayments made during such period in respect
of other Indebtedness of Company and its Subsidiaries; plus
(i) the net proceeds of Indebtedness incurred by Company and its
Subsidiaries during such period to the extent such proceeds were applied to make
payments or prepayments of Indebtedness referred to in clause (h) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Exempt Subsidiaries" has the meaning assigned to that term in the recitals
to this Agreement.
"Existing Credit Agreement" means that certain Credit Agreement dated as of
April 1, 1998 by and among Company, the lenders named therein and BTCo, as
administrative agent, as amended from time to time prior to the Closing Date.
"Facilities" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company or any of its Subsidiaries or any of
their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, 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 received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xii).
"First Priority" means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that, other than Permitted
Encumbrances and Liens permitted pursuant to subsection 7.2, (i) such Lien has
priority over any other Lien on such Collateral or (ii) such Lien is the only
Lien to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries ending
on December 31 of each calendar year.
"Funding and Payment Office" means (i) the office of Administrative Agent
and Swing Line Lender located at Eleven Madison Avenue, New York, New York 10010
or (ii) such other office of Administrative Agent and Swing Line Lender as may
from time to time hereafter be designated as such in a written notice delivered
by Agent and Swing Line Lender to Company and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination, provided that, if Company notifies Administrative
Agent that Company requests an amendment to any provision hereof to eliminate
the effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if Administrative
Agent requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until the earliest of (i) the withdrawal of such notice,
(ii) the amendment of such provision in accordance herewith, or (iii) 180 days
after such notice has been given.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Granting Lender" has the meaning given such term in subsection 10.1E.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any friable asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority pursuant
to Environmental Laws.
"Hedge Agreement" means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively.
"Indebtedness", as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency Agreements constitute
(X) in the case of Hedge Agreements, Contingent Obligations, and (Y) in all
other cases, Investments, and in neither case constitute Indebtedness.
"Indemnity" has the meaning assigned to that term in subsection 10.3.
"Initial Period" means the period commencing on and including the Closing
Date and ending on the earlier of (i) the date on which the Lead Arranger
notifies Company that the Agents have concluded their primary syndication of the
Loans and the Commitments, and (ii) ninety (90) days after the Closing Date.
"Insurance or Condemnation Event" means the receipt by Company or any of
its Subsidiaries of (i) any Cash payments under any insurance policy as a result
of any damage to or loss of all or any portion of its tangible assets, (ii) any
Cash payments as a result of any warranty claims or (iii) any Cash proceeds
resulting from the taking of assets by the power of eminent domain, condemnation
or otherwise; provided, that with respect to any such event that would be
otherwise deemed an Insurance or Condemnation Event pursuant to the foregoing,
and if cash proceeds are less than $10,000,000, if Company shall deliver an
Officers' Certificate to Administrative Agent at or prior to receipt of the Cash
payment or proceeds of such event setting forth Company's intent to use such
Cash payment or proceeds to replace assets that would be included in Plant
Assets that are the subject of such event with other Plant Assets necessary or
desirable for the conduct of its business within 360 days of such receipt and no
Event of Default or Potential Event of Default shall have occurred and shall be
continuing at such time, such receipt shall not be deemed to constitute an
Insurance or Condemnation Event, except to the extent such Cash payment or
proceeds are not so used within such 360-day period, after which time such
event, to such extent, shall be deemed an Insurance or Condemnation Event.
"Interest Payment Date" means (i) with respect to any Alternate Base Rate
Loan, each January 15, April 15, July 15 and October 15 of each year, commencing
on July 15, 1999, and (ii) with respect to any Eurodollar Rate Loan, the last
day of each Interest Period applicable to such Loan; provided that in the case
of each Interest Period of longer than three months "Interest Payment Date"
shall also include each date that is three months, or an integral multiple
thereof, after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which Company or any of its Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Eurodollar Business Day prior to the first day of such
Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor statute.
"Investment" means (i) any direct or indirect purchase or other acquisition
by Company or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person (other than a Person that immediately prior to
such purchase or acquisition was a Subsidiary of Company and so long as such
Person remains a Subsidiary of Company), (ii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Company or any of its Subsidiaries to any
other Person (other than a Subsidiary of Company), including all indebtedness
and accounts receivable from that other Person that are not current assets or
did not arise from sales to that other Person in the ordinary course of
business, or (iii) Interest Rate Agreements or Currency Agreements not
constituting Hedge Agreements. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment.
"Investment Grade" means (i) with respect to S&P, any of the rating
categories from and including AAA to and including BBB- and (ii) with respect to
Moody's, any of the rating categories from and including Aaa to and including
Baa3.
"Issuing Lender" means, with respect to any Letter of Credit, the Lender
which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property.
"Lender" and "Lenders" means the persons identified as "Lenders" and listed
on the signature pages of this Agreement, together with their successors and
permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means Standby Letters of Credit
issued or to be issued by Issuing Lenders for the account of Company pursuant to
subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the sum of
(i) the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed by Company (including, without
duplication, any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B).
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans, Revolving Loans or
Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Subsidiary Guaranty, any Hedge Agreement to which a
Lender is a counterparty and the Collateral Documents.
"Loan Party" means each of Company and any of Company's Subsidiaries from
time to time executing a Loan Document, and "Loan Parties" means all such
Persons, collectively.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, assets, financial position, operations, or results of operations of
Company and its Subsidiaries taken as a whole or (ii) the material impairment of
the ability of any Loan Party to perform, or of Administrative Agent or Lenders
to enforce, the Obligations.
"Material Contract" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
which is (i) listed on Schedule 5.8 as of the date hereof or (ii) is filed by
Company or any of its Subsidiaries with the Securities and Exchange Commission.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a security instrument (whether designated as a deed of
trust or a mortgage or by any similar title) executed and delivered by any Loan
Party, in such form as is customary for transactions of this type and as may be
approved by the Agents.
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset
Sale, (ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than the Loans) that is secured
by a Lien on the assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale and (iii) payment of fees and
reasonable out-of-pocket expenses in connection with such sale.
"Net Insurance Proceeds" means, with respect to any Insurance or
Condemnation Event, Cash received (including any Cash received by way of
deferred payment, but only as and when so received) by Company or any of its
Subsidiaries as a result of such Insurance or Condemnation Event, net of any
bona fide direct costs incurred in connection with such Insurance or
Condemnation Event, including payment of fees and reasonable out-of-pocket
expenses in connection with adjustment and settlement thereof.
"Net Working Capital" shall mean, at any date, (a) the consolidated current
assets of Company and its Subsidiaries as of such date (excluding Cash and Cash
Equivalents) minus (b) the consolidated current liabilities of Company and its
Subsidiaries as of such date (excluding current liabilities in respect of
Indebtedness). Net Working Capital at any date may be a positive number or
negative number. Net Working Capital increases when it becomes more positive or
less negative and decreases when it becomes less positive or more negative.
"New York Life" means NYLIFE HealthCare Management, Inc., an indirect
subsidiary of New York Life Insurance Co., a mutual life insurance company
organized and existing under the laws of the State of New York.
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"Notes" means one or more of the Term Notes, Revolving Notes or Swing Line
Note or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of Exhibit I
annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Request to Issue Letter of Credit" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations, including obligations under Hedge
Agreements, of every nature of each Loan Party from time to time owed to the
Agents, Lenders or any of them under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.
"Operating Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"Permitted Acquisitions" means the acquisition of stock or other assets for
consideration (with non-cash consideration being valued at fair market value)
that results in acquired assets being owned by Company or a Wholly Owned
Subsidiary and, if such assets are equity interests in a Person, such Person
being a Wholly Owned Subsidiary, provided, however, that, on a pro forma basis,
after giving effect to any such acquisition or acquisitions for aggregate
consideration exceeding $5,000,000 in any Fiscal Year, the Consolidated Leverage
Ratio is less than 3.0 to 1.0.
"Permitted Encumbrances" means the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and rights of
set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law, in each case incurred
in the ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of 30 days) are being contested in good faith by appropriate
proceedings, so long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any such contested
amounts, and (2) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any material portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal 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), so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any material
portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of Default
under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with any
applicable terms of the Collateral Documents and not interfering in any material
respect with the ordinary conduct of the business of Company or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries or result in a material diminution in the
value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any lease
permitted by this Agreement, (b) restriction or encumbrance that the interest or
title of such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b), so long as the holder of
such restriction or encumbrance agrees to recognize the rights of such lessee or
sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating solely
to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of Company and its
Subsidiaries;
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course of
business and not interfering in any material respect with the ordinary conduct
of the business of Company or such Subsidiary;
(xiii) Liens securing Hedge Agreements to the extent such Liens are limited
to the property that is the subject of the Hedge Agreements: and
(xiv) Liens imposed by Environmental Laws to the extent not in violation of
any of the representations, warranties or covenants in respect of Environmental
Laws made by Company in this Agreement.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Plant Assets" means assets that would be included in "property, plant and
equipment" reflected in the consolidated balance sheet of Company and its
Subsidiaries.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Company Pledge Agreement and the Subsidiary Pledge Agreements.
"Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default.
"Prime Rate" means the rate that CSFB announces from time to time as its
prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. CSFB or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to any Term Loan Commitment or any Term Loan of any
Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that
Lender by (y) the aggregate Term Loan Exposure of all Lenders, in each case,
with respect to the applicable Tranche, (ii) with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein purchased by any Lender or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (x) the Revolving
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
Lenders, and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Term Loan Exposure of that
Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of the
aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving Loan
Exposure of all Lenders, in any such case as the applicable percentage may be
adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro
Rata Share of each Lender for purposes of each of clauses (i), (ii) and (iii) of
the preceding sentence is set forth opposite the name of that Lender in Schedule
2.1 annexed hereto.
"Recovery Event" has the meaning assigned to that term in subsection
2.4(iii)(d).
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iii).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in subsection
3.3B.
"Replaced Lender" and "Replacement Lender" have the meanings assigned to
those terms in subsection 2.8.
"Requisite Lenders" means Lenders having or holding more than 50% of the
sum of (i) the aggregate Term Loan Exposure of all Lenders plus (ii) the
aggregate Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"Revolving Lender" means a Lender having a Revolving Loan Commitment.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(ii), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means March 31, 2005.
"Revolving Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the termination of the Revolving Loan Commitments,
that Lender's Revolving Loan Commitment and (ii) after the termination of the
Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (b) in the event that Lender
is an Issuing Lender and without duplication from amounts counted under (a)
above, the aggregate Letter of Credit Usage in respect of all Letters of Credit
issued by that Lender (in each case net of any participations purchased by other
Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus
(c) the aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any Letters of
Credit plus (d) in the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any participations therein
purchased by other Lenders) plus (e) the aggregate amount of all participations
purchased by that Lender in any outstanding Swing Line Loans.
"Revolving Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(ii).
"Revolving Notes" means (i) the promissory notes of Company issued pursuant
to subsection 2.1E(ii) on the Closing Date and (ii) any promissory notes issued
by Company pursuant to the last sentence of subsection 10.1B(i) in connection
with assignments of the Revolving Loan Commitments and Revolving Loans of any
Lenders, in each case substantially in the form of Exhibit V annexed hereto, as
they may be amended, supplemented or otherwise modified from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Secured Obligations" shall have the meaning given such term in subsection
2.4D(i).
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Security Agreement" means the Security Agreement in such form as is
customary for transactions of this type and as may be approved by the Agents in
their sole discretion.
"Seller" has the meaning assigned to that term in the recitals to the
Agreement.
"Senior Subordinated Credit Facility" means that certain senior
subordinated credit agreement dated as of April 1, 1999 by and among Company,
the lenders named therein and CSFB, as lead arranger and administrative agent,
consisting of up to $150 million in loan commitments (including the conversions
or exchanges thereof pursuant to the provisions of such senior subordinated
credit agreement).
"Solvent" means, with respect to any Person, that as of the date of
determination (i) the then fair saleable value of the property of such Person,
including without limitation any rights of subrogation and contribution, is (y)
greater than the total amount of liabilities (including contingent liabilities)
of such Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due. For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that, in
light of all of the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
"SPV" has the meaning given such term in subsection 10.1E.
"Standby Letter of Credit" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) Indebtedness of Company or
any of its Subsidiaries in respect of industrial revenue or development bonds or
financings, (ii) workers, compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company or any of
its Subsidiaries arising by virtue of the laws of any jurisdiction requiring
third party insurers, (iv) obligations with respect to Capital Leases or
Operating Leases of Company or any of its Subsidiaries, and (v) performance,
payment, deposit or surety obligations of Company or any of its Subsidiaries, in
any case if required by law or governmental rule or regulation or in accordance
with custom and practice in the industry; provided that Standby Letters of
Credit may not be issued for the purpose of supporting (a) trade payables or (b)
any Indebtedness constituting "antecedent debt" (as that term is used in Section
547 of the Bankruptcy Code).
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for Eurocurrency Liabilities (as defined in Regulation
D of the Board). Such reserve percentages shall include those imposed pursuant
to such Regulation D. Eurodollar Rate Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Indebtedness" means Indebtedness of Company subordinated in
right of payment to the Obligations pursuant to documentation containing
maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance satisfactory to
Administrative Agent and Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, that Diversified NY IPA, Inc. and Diversified Pharmaceutical
Services (Puerto Rico) Inc. shall not be deemed Subsidiaries of Company for all
purposes of this Agreement but shall be deemed Affiliates of Company.
"Subsidiary Guarantor" means any Subsidiary of Company that executes and
delivers a counterpart of the Subsidiary Guaranty on the Closing Date or from
time to time thereafter pursuant to subsection 6.8, but in any event excluding
the Exempt Subsidiaries.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and delivered
by existing Subsidiaries of Company on the Closing Date and to be executed and
delivered by additional Subsidiaries of Company from time to time thereafter in
accordance with subsection 6.8, substantially in the form of Exhibit XIII
annexed hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
or executed and delivered by any additional Subsidiary Guarantor from time to
time thereafter in accordance with subsection 6.8, in each case substantially in
the form of Exhibit XIV annexed hereto, as such Subsidiary Pledge Agreement may
be amended, supplemented or otherwise modified from time to time, and
"Subsidiary Pledge Agreements" means all such Subsidiary Pledge Agreements,
collectively.
"Supplemental Collateral Agent" has the meaning assigned to that term in
subsection 9.1B.
"Swing Line Lender" means CSFB or any Person serving as a successor Agent
hereunder, in its capacity as Swing Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender to
make Swing Line Loans to Company pursuant to subsection 2.1A(iii).
"Swing Line Loans" means the Loans made by Swing Line Lender to Company
pursuant to subsection 2.1A(iii).
"Swing Line Note" means (i) the promissory note of Company issued pursuant
to subsection 2.1E(iii) on the Closing Date and (ii) any promissory note issued
by Company to any successor Administrative Agent and Swing Line Lender pursuant
to the last sentence of subsection 9.5B, in each case substantially in the form
of Exhibit VI annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.
"Syndication Agent" has the meaning assigned to that term in the preamble
to this Agreement.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the Overall Net Income" of a Person shall be
construed as a reference to a tax imposed by one of: the jurisdiction in which
that Person is organized or in which that Person's principal office (and/or, in
the case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office). "Term Lender" means a Lender having a
Term Loan Commitment, or who has made a Term Loan, and any assignee of such
Lender pursuant to subsection 10.1.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Exposure" means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Term Loans, that Lender's Term
Loan Commitment and (ii) after the funding of the Term Loans, the outstanding
principal amount of the Term Loan of that Lender.
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans.
"Term Notes" shall mean the Tranche A Term Notes and the Tranche B Term
Notes.
"Tranche A Commitment" means the commitment of a Lender to make a Tranche A
Term Loan as set forth on Schedule 2.1, as the same may be (a) reduced from time
to time pursuant to subsection 2.4 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to subsection 10.1.
"Tranche A Lender" shall mean a Lender with a Tranche A Commitment or with
outstanding Tranche A Term Loans.
"Tranche A Maturity Date" shall mean March 31, 2005.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A
Term Loans.
"Tranche A Term Loans" shall mean the term loans made by Lenders to Company
pursuant to subsection 2.1(A)(i)(a).
"Tranche A Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i) on the Closing Date with respect to the Tranche A
Term Loans and (ii) any promissory notes issued by Company pursuant to the last
sentence of subsection 10.1B(i) in connection with assignments of the Tranche A
Commitments or Tranche A Term Loans of any Lenders, in each case substantially
in the form of Exhibit IV-A annexed hereto, as they may be amended, supplemented
or otherwise modified from time to time.
"Tranche B Commitment" means the commitment of a Lender to make a Tranche B
Term Loan as set forth on Schedule 2.1, as the same may be (a) reduced from time
to time pursuant to subsection 2.4 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to subsection 10.1.
"Tranche B Lender" shall mean a Lender with a Tranche B Commitment or with
outstanding Tranche B Term Loans.
"Tranche B Maturity Date" shall mean March 31, 2007.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B
Term Loans.
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
Company pursuant to subsection 2.1(A)(i)(b).
"Tranche B Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i) on the Closing Date with respect to the Tranche B
Term Loans and (ii) any promissory notes issued by Company pursuant to the last
sentence of subsection 10.1B(i) in connection with assignments of the Tranche B
Commitments or Tranche B Term Loans of any Lenders, in each case substantially
in the form of Exhibit IV-B annexed hereto, as they may be amended, supplemented
or otherwise modified from time to time.
"Total Utilization of Revolving Loan Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans plus (ii) the aggregate principal amount of all outstanding
Swing Line Loans plus (iii) the Letter of Credit Usage.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"ValueRx" means ValueRx Pharmacy Program, Inc., a Michigan corporation.
"Wholly Owned Subsidiary" shall mean a Subsidiary of which securities
(except for directors' qualifying shares) or other ownership interests
representing 100% of the equity or 100% of the ordinary voting power or 100% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held, directly or indirectly, by Company or one or
more Wholly Owned Subsidiaries.
1.2. Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement; Fiscal Periods for Determining Compliance and Pricing
A. Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii) and (xii) of
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(iv)).
B. For purposes of determining Consolidated EBITDA, Consolidated Interest
Expense, and the Consolidated Leverage Ratio for purposes of subsections 2.2A
and 2.3A and determining compliance with the financial covenants in subsections
7.6A, 7.6B and 7.6C for any period including Fiscal Quarters ending on or prior
to March 31, 2000, if such calculation requires using the four prior Fiscal
Quarters, such calculation shall be annualized based upon the Fiscal Quarters
ending after the Closing Date.
1.3. Other Definitional Provisions and Rules of Construction
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1. Commitments; Making of Loans; the Register; Notes
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Term Lender hereby severally agrees to make the Term Loans described in
subsection 2.1A(i), each Revolving Lender hereby severally agrees to make the
Revolving Loans described in subsection 2.1A(ii), and Swing Line Lender hereby
agrees to make the Loans described in subsection 2.1A(iii).
(i) Term Loans. (a) Each Tranche A Lender severally agrees to lend to
Company on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the Tranche A Commitments, to be used for the purposes
identified in subsection 2.5A. (b) Each Tranche B Lender severally agrees to
lend to Company on the Closing Date an amount not exceeding its Pro Rata Share
of the Tranche B Commitments, to be used for the purposes identified in
subsection 2.5A. The amount of each Term Lender's Tranche A Commitment and
Tranche B Commitment, respectively, is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Term Loan Commitments is
$750,000,000; provided that the Term Loan Commitments of Term Lenders shall be
adjusted to give effect to any assignments of the Term Loan Commitments pursuant
to subsection 10.1B. Each Term Lender's Term Loan Commitment shall expire
immediately and without further action on June 30, 1999 if the Term Loans are
not made on or before that date. Company may make only one borrowing under the
Term Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) Revolving Loans. Each Revolving Lender severally agrees, subject to
the limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount not exceeding its
Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to be
used for the purposes identified in subsection 2.5B. The original amount of each
Revolving Lender's Revolving Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the Revolving
Loan Commitments is $300,000,000; provided that the Revolving Loan Commitments
of Revolving Lenders shall be adjusted to give effect to any assignments of the
Revolving Loan Commitments pursuant to subsection 10.1B; and provided, further
that the amount of the Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to subsections
2.4B(ii). Each Revolving Lender's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and the Revolving
Loan Commitments shall be paid in full no later than that date; provided that
each Revolving Lender's Revolving Loan Commitment shall expire immediately and
without further action on June 30, 1999 if the Term Loans are not made on or
before that date. Amounts borrowed under this subsection 2.1A(ii) may be repaid
and reborrowed to but excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, the
Revolving Loans and the Revolving Loan Commitments shall be subject to the
limitation that in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in effect.
(iii) Swing Line Loans. Swing Line Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time, to make a portion of the
Revolving Loan Commitments available to Company from time to time during the
period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date by making Swing Line Loans to Company in an aggregate amount
not exceeding the amount of the Swing Line Loan Commitment to be used for the
purposes identified in subsection 2.5B, notwithstanding the fact that such Swing
Line Loans, when aggregated with Swing Line Lender's outstanding Revolving Loans
and Swing Line Lender's Pro Rata Share of the Letter of Credit Usage then in
effect, may exceed Swing Line Lender's Revolving Loan Commitment. The original
amount of the Swing Line Loan Commitment is $15,000,000; provided that any
reduction of the Revolving Loan Commitments made pursuant to subsection 2.4B(ii)
which reduces the aggregate Revolving Loan Commitments to an amount less than
the then current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any further
action on the part of Company, Administrative Agent or Swing Line Lender. The
Swing Line Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Swing Line Loans and all other amounts owed hereunder
with respect to the Swing Line Loans shall be paid in full no later than that
date; provided that the Swing Line Loan Commitment shall expire immediately and
without further action on June 30, 1999 if the Term Loans are not made on or
before that date. Amounts borrowed under this subsection 2.1A(iii) may be repaid
and reborrowed to but excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, the
Swing Line Loans and the Swing Line Loan Commitment shall be subject to the
limitation that in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may, at any
time in its sole and absolute discretion, deliver to Administrative Agent (with
a copy to Company), no later than 10:00 A.M. (New York City time) at least one
Business Day prior to the proposed Funding Date, a notice (which shall be deemed
to be a Notice of Borrowing given by Company) requesting Revolving Lenders to
make Revolving Loans that are Alternate Base Rate Loans on such Funding Date in
an amount equal to the amount of such Swing Line Loans (the "Refunded Swing Line
Loans") outstanding on the date such notice is given which Swing Line Lender
requests Revolving Lenders to prepay. Anything contained in this Agreement to
the contrary notwithstanding, (i) the proceeds of such Revolving Loans made by
Revolving Lenders other than Swing Line Lender shall be immediately delivered by
Administrative Agent to Swing Line Lender (and not to Company) and applied to
repay a corresponding portion of the Refunded Swing Line Loans and (ii) on the
day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the
Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a
Revolving Loan made by Swing Line Lender, and such portion of the Swing Line
Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans
and shall no longer be due under the Swing Line Note of Swing Line Lender but
shall instead constitute part of Swing Line Lender's outstanding Revolving Loans
and shall be due under the Revolving Note of Swing Line Lender. Company hereby
authorizes Administrative Agent and Swing Line Lender to charge Company's
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line Lender
the amount of the Refunded Swing Line Loans to the extent the proceeds of such
Revolving Loans made by Revolving Lenders, including the Revolving Loan deemed
to be made by Swing Line Lender, are not sufficient to repay in full the
Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to
be paid) to Swing Line Lender should be recovered by or on behalf of Company
from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors
or otherwise, the loss of the amount so recovered shall be ratably shared among
all Revolving Lenders in the manner contemplated by subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the request of
Swing Line Lender as provided in the immediately preceding paragraph in an
amount sufficient to repay any amounts owed to Swing Line Lender in respect of
any outstanding Swing Line Loans or (b) the Revolving Loan Commitments are
terminated at a time when any Swing Line Loans are outstanding, each Revolving
Lender shall be deemed to, and hereby agrees to, have purchased a participation
in such outstanding Swing Line Loans in an amount equal to its Pro Rata Share
(calculated, in the case of the foregoing clause (b), immediately prior to such
termination of the Revolving Loan Commitments) of the unpaid amount of such
Swing Line Loans together with accrued interest thereon. Upon one Business Day's
notice from Swing Line Lender, each Revolving Lender shall deliver to Swing Line
Lender an amount equal to its respective participation in same day funds at the
Funding and Payment Office. In order to further evidence such participation (and
without prejudice to the effectiveness of the participation provisions set forth
above), each Revolving Lender agrees to enter into a separate participation
agreement at the request of Swing Line Lender in form and substance reasonably
satisfactory to Swing Line Lender. In the event any Revolving Lender fails to
make available to Swing Line Lender the amount of such Revolving Lender's
participation as provided in this paragraph, Swing Line Lender shall be entitled
to recover such amount on demand from such Revolving Lender together with
interest thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and thereafter at the
Alternate Base Rate. In the event Swing Line Lender receives a payment of any
amount in which other Revolving Lenders have purchased participations as
provided in this paragraph, Swing Line Lender shall promptly distribute to each
such other Revolving Lender its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each Revolving
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and each
Revolving Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including (a) any
set-off, counterclaim, recoupment, defense or other right which such Revolving
Lender may have against Swing Line Lender, Company or any other Person for any
reason whatsoever; (b) the occurrence or continuation of an Event of Default or
a Potential Event of Default; (c) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Company or any of its Subsidiaries; (d) any breach of this Agreement or any
other Loan Document by any party thereto; or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided that such obligations of each Revolving Lender are subject to the
condition that (X) Swing Line Lender believed in good faith that all conditions
under Section 4 to the making of the applicable Refunded Swing Line Loans or
other unpaid Swing Line Loans, as the case may be, were satisfied at the time
such Refunded Swing Line Loans or unpaid Swing Line Loans were made or (Y) the
satisfaction of any such condition not satisfied had been waived in accordance
with subsection 10.6 prior to or at the time such Refunded Swing Line Loans or
other unpaid Swing Line Loans were made.
B. Borrowing Mechanics. Term Loans or Revolving Loans made on any Funding
Date (other than Revolving Loans made pursuant to a request by Swing Line Lender
pursuant to subsection 2.1A(iii) for the purpose of repaying any Refunded Swing
Line Loans or Revolving Loans made pursuant to subsection 3.3B for the purpose
of reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount. Swing Line Loans made
on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount. Whenever Company
desires that Lenders make Term Loans or Revolving Loans it shall deliver to
Administrative Agent a Notice of Borrowing no later than 10:00 A.M. (New York
City time) at least three Eurodollar Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at least one Business
Day in advance of the proposed Funding Date (in the case of an Alternate Base
Rate Loan). Whenever Company desires that Swing Line Lender make a Swing Line
Loan, it shall deliver to Administrative Agent a Notice of Borrowing no later
than 12:00 Noon (New York City time) on the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing
Line Loans, that such Loans shall be an Alternate Base Rate Loans, (iv) in the
case of Term Loans and Revolving Loans, whether such Loans shall be Alternate
Base Rate Loans or Eurodollar Rate Loans; provided, that Loans made on the
Closing Date shall be Alternate Base Rate Loans, provided, however, on the
Closing Date Company may request such Loans be converted to Eurodollar Rate
Loans with a two week Interest Period in the manner provided in subsection 2.2D;
provided, further, that Loans made subsequent to the Closing Date and prior to
the last day of the first two week Interest Period shall be Alternate Base Rate
Loans, and (v) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor. Term Loans and Revolving
Loans may be continued as or converted into Alternate Base Rate Loans and
Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Administrative Agent not later than 12:00
Noon (New York City time) on the applicable Funding Date, and Swing Line Lender
shall make the amount of its Swing Line Loan available to Administrative Agent
not later than 2:00 P.M.(New York City time) on the applicable Funding Date, in
each case in same day funds in Dollars, at the Funding and Payment Office.
Except as provided in subsection 2.1A(iii) or subsection 3.3B with respect to
Revolving Loans used to repay Refunded Swing Line Loans or to reimburse any
Issuing Lender for the amount of a drawing under a Letter of Credit issued by
it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date) and 4.2 (in the
case of all Loans), Administrative Agent shall make the proceeds of such Loans
available to Company on the applicable Funding Date by causing an amount of same
day funds in Dollars equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Alternate Base Rate. If such Lender does not pay such corresponding amount
within three Business Days after such amount should have been made available,
Administrative Agent shall promptly notify Company and Company shall immediately
pay such corresponding amount to Administrative Agent together with interest
thereon, for each day from such Funding Date until the date such amount is paid
to Administrative Agent, at the rate payable under this Agreement for Alternate
Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Company may have against any Lender as a result of any default
by such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses of
Lenders and the Commitments and Loans of each Lender from time to time (the
"Register"). The Register shall be available for inspection by Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(ii) Administrative Agent shall record in the Register the Tranche A
Commitment and Tranche B Commitment, respectively, and the Tranche A Term Loan
and the Tranche B Term Loan, respectively, of each Term Lender, the Revolving
Loan Commitment and the Revolving Loans from time to time of each Revolving
Lender, the Swing Line Loan Commitment and the Swing Line Loans from time to
time of Swing Line Lender, and each repayment or prepayment in respect of the
principal amount of the Tranche A Term Loan and the Tranche B Term Loan,
respectively, of each Term Lender, the Revolving Loans of each Revolving Lender
or the Swing Line Loans of Swing Line Lender. Any such recordation shall be
conclusive and binding on Company and each Lender, absent manifest error;
provided that failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments or Company's Obligations
in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including any Notes
held by such Lender) the amount of the Tranche A Term Loan and the Tranche B
Term Loan, respectively, and each Revolving Loan made by it and each payment in
respect thereof. Any such recordation shall be conclusive and binding on
Company, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any Lender's
Commitments or Company's Obligations in respect of any applicable Loans; and
provided, further, that in the event of any inconsistency between the Register
and any Lender's records, the recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof, and
no assignment or transfer of any such Commitment or Loan shall be effective, in
each case unless and until an Assignment Agreement effecting the assignment or
transfer thereof shall have been accepted by Administrative Agent and recorded
in the Register as provided in subsection 10.1B(ii). Prior to such recordation,
all amounts owed with respect to the applicable Commitment or Loan shall be owed
to the Lender listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates CSFB to serve as Company's agent solely for
purposes of maintaining the Register as provided in this subsection 2.1D, and
Company hereby agrees that, to the extent CSFB serves in such capacity, CSFB and
its officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. Notes. At the request of any Lender, Company shall execute and deliver
to that Lender (or to Administrative Agent for that Lender) each of the
following, as appropriate: (i) a Tranche A Term Note substantially in the form
of Exhibit IV-A annexed hereto to evidence that Lender's Tranche A Term Loan, in
the principal amount of that Lender's Tranche A Term Loan and with other
appropriate insertions, and a Tranche B Term Note substantially in the form of
Exhibit IV-B annexed hereto to evidence that Lender's Tranche B Term Loan, in
the principal amount of that Lender's Tranche B Term Loan and with other
appropriate insertions, (ii) a Revolving Note substantially in the form of
Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions, and (iii) a Swing Line Note substantially in the form of
Exhibit VI annexed hereto to evidence that Lender's Swing Line Loans, in the
principal amount of the Swing Line Loan Commitment and with other appropriate
insertions. In the event a Lender requests such Notes prior to the Closing Date,
Company shall execute and deliver the Notes on the Closing Date.
2.2. Interest on the Loans
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Alternate
Base Rate or the Adjusted Eurodollar Rate. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Alternate Base Rate. The
applicable basis for determining the rate of interest with respect to any Term
Loans or any Revolving Loan shall be selected by Company initially at the time a
Notice of Borrowing is given with respect to such Loans pursuant to subsection
2.1B, and the basis for determining the interest rate with respect to any Term
Loans or any Revolving Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Tranche A Term Loan, Tranche B Term Loan or
Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Alternate
Base Rate. Subject to the provisions of subsections 2.2E and 2.7, the Term Loans
and the Revolving Loans shall bear interest through maturity as follows:
(i) if an Alternate Base Rate Loan, then at the sum of the Alternate Base
Rate and the applicable Base Rate Margin set forth in the table below opposite
the Consolidated Leverage Ratio for the four-Fiscal Quarter period ending on the
date for which the applicable Compliance Certificate has been delivered pursuant
to subsection 6.1(iii):
<TABLE>
<CAPTION>
APPLICABLE ALTERNATE
BASE RATE
MARGIN (PER ANNUM)
==============================================
Revolving Loans and Tranche B
CONSOLIDATED LEVERAGE RATIO Tranche A Term Loans Term Loans
<S> <C> <C>
===================================================== ====================== ======================
Greater than 3.25x 1.250% 2.000%
- ----------------------------------------------------- ----------------------- ----------------------
Greater than 2.75x but equal to or less than 3.25x 0.750% 1.750%
- ----------------------------------------------------- ----------------------- ----------------------
Greater than 2.00x but equal to or less than 2.75x 0.500% 1.750%
- ----------------------------------------------------- ----------------------- ----------------------
Greater than 1.50x but equal to or less than 2.00x 0.250% 1.750%
- ----------------------------------------------------- ----------------------- ----------------------
Equal to or less than 1.50x 0.250% 1.750%
- ----------------------------------------------------- ----------------------- ----------------------
</TABLE>
provided, that until the earlier of August 15, 1999 or the date on which the
first Compliance Certificate is delivered pursuant to subsection 6.1(iii) for
the Fiscal Quarter ended June 30, 1999, the Base Rate Margin shall be 1.25% for
Revolving Loans and Tranche A Term Loans and 2.00% for Tranche B Term Loans.
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar
Rate and the applicable Eurodollar Rate Margin set forth in the table below,
opposite the Consolidated Leverage Ratio for the four-Fiscal Quarter period
ending on the date for which the applicable Compliance Certificate has been
delivered pursuant to subsection 6.1(iii):
<TABLE>
<CAPTION>
APPLICABLE EURODOLLAR RATE
MARGIN (PER ANNUM)
===============================================
Revolving Loans and Tranche B
CONSOLIDATED LEVERAGE RATIO Tranche A Term Loans Term Loans
<S> <C> <C>
====================================================== ======================== ======================
Greater than 3.25x 2.750% 3.500%
- ------------------------------------------------------- ------------------------ ----------------------
Greater than 2.75x but equal to or less than 3.25x 2.250% 3.250%
- ------------------------------------------------------- ------------------------ ----------------------
Greater than 2.00x but equal to or less than 2.75x 2.000% 3.250%
- ------------------------------------------------------- ------------------------ ----------------------
Greater than 1.50x but equal to or less than 2.00x 1.500% 3.250%
- ------------------------------------------------------- ------------------------ ----------------------
Equal to or less than 1.50x 1.000% 3.250%
======================================================= ======================== ======================
</TABLE>
provided, that until the earlier of August 15, 1999 or the date on which the
first Compliance Certificate is delivered pursuant to subsection 6.1(iii) for
the Fiscal Quarter ended June 30, 1999, the Eurodollar Rate Margin shall be
2.75% per annum for Revolving Loans and Tranche A Term Loans and 3.50% for
Tranche B Term Loans.
Upon delivery of the Compliance Certificate by Company to Administrative
Agent pursuant to subsection 6.1(iii), the applicable Base Rate Margin and
Eurodollar Rate Margin shall automatically be adjusted in accordance with such
Compliance Certificate, such adjustment to become effective on the next
succeeding Business Day following receipt by Administrative Agent of such
Compliance Certificate; provided, that if at any time a Compliance Certificate
is not delivered at the time required pursuant to subsection 6.1(iii), from the
time such Compliance Certificate was required to be delivered until delivery of
such Compliance Certificate, such applicable Base Rate Margin and Eurodollar
Rate Margin shall be the maximum percentage amount until such Compliance
Certificate is delivered.
Subject to the provisions of subsections 2.2E and 2.7, any Swing Line Loans
provided to Company shall bear interest through maturity at the rate then
applicable to Revolving Loans pursuant to subsection 2.2A(i).
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period or, if
deposits in the interbank Eurodollar market are available to all Lenders for
such period (as determined by each Lender), a nine or twelve month period;
provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall commence
on the Funding Date in respect of such Loan, in the case of a Loan initially
made as a Eurodollar Rate Loan, or on the date specified in the applicable
Notice of Conversion/Continuation, in the case of a Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable to a
Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause (v)
of this subsection 2.2B, end on the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Tranche A Term
Loans shall extend beyond the Tranche A Maturity Date, no Interest Period with
respect to any portion of the Tranche B Term Loans shall extend beyond the
Tranche B Maturity Date and no Interest Period with respect to any portion of
the Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
(vi) no Interest Period with respect to any portion of the Term Loans shall
extend beyond a date on which Company is required to make a scheduled payment of
principal of such Term Loans unless the sum of (a) the aggregate principal
amount of Term Loans of the type to be repaid that are Alternate Base Rate Loans
plus (b) the aggregate principal amount of Term Loans of the type to be repaid
that are Eurodollar Rate Loans with Interest Periods expiring on or before such
date equals or exceeds the principal amount required to be paid on the Term
Loans of such type on such date;
(vii) there shall be no more than 12 Interest Periods outstanding at any
time; and
(viii) in the event Company fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an Interest
Period of one month.
Notwithstanding the foregoing, the Interest Period for any Eurodollar Rate
Loan made pursuant to a Notice of Conversion/Continuation delivered on the
Closing Date shall be a two week period.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Alternate Base Rate Loans are prepaid pursuant to subsection
2.4B(i), interest accrued on such Swing Line Loans or Revolving Loans through
the date of such prepayment shall be payable on the next succeeding Interest
Payment Date applicable to Alternate Base Rate Loans (or, if earlier, at final
maturity). Notwithstanding the foregoing, the Company may not convert (other
than on the Closing Date) Alternate Base Rate Loans to Eurodollar Rate Loans
prior to the last day of the first two week Interest Period.
D. Conversion or Continuation. Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Tranche A Term Loans, Tranche B Term Loans or Revolving Loans equal
to $5,000,000 and integral multiples of $1,000,000 in excess of that amount from
Loans bearing interest at a rate determined by reference to one basis to Loans
bearing interest at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $5,000,000 and
integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate
Loan; provided, however, that a Eurodollar Rate Loan may only be converted into
a Alternate Base Rate Loan on the expiration date of an Interest Period
applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to Administrative
Agent no later than 10:00 A.M. (New York City time) at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to an
Alternate Base Rate Loan) and at least three Eurodollar Business Days in advance
of the proposed conversion/continuation date (in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
2.2D; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Administrative Agent on or
before the proposed conversion/continuation date. Upon receipt of written or
telephonic notice of any proposed conversion/continuation under this subsection
2.2D, Administrative Agent shall promptly transmit such notice by telefacsimile
or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum, in
excess of the interest rate otherwise payable under this Agreement for Alternate
Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Alternate Base Rate Loans and shall thereafter bear interest payable upon demand
at a rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Alternate Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed on the
basis of a 360-day year or, in the case of Alternate Base Rate Loans, a 365 or
366 day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to an Alternate Base Rate Loan being converted from a
Eurodollar Rate Loan the date of conversion of such Eurodollar Rate Loan to such
Alternate Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to an Alternate Base Rate Loan being converted to a
Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such
Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Loan.
2.3. Fees
A. Commitment Fees. Company agrees to pay to Agent, for distribution to
each Revolving Lender in proportion to that Revolving Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan Commitments over the sum of the aggregate
principal amount of outstanding Revolving Loans (but not any outstanding Swing
Line Loans) and the Letter of Credit Usage multiplied by the percentage per
annum determined by reference to the applicable percentage set forth in the
table below opposite the Consolidated Leverage Ratio for the four-Fiscal Quarter
period ending on the date for which the applicable Compliance Certificate has
been delivered pursuant to subsection 6.1(iii), such commitment fees to be
calculated on the basis of a 365 or 366 day year and the actual number of days
elapsed and to be payable quarterly in arrears on January 15, April 15, July 15
and October 15 of each year, commencing on July 15, 1999, and on the Revolving
Loan Commitment Termination Date:
<TABLE>
<CAPTION>
Commitment Fee
Applicable
Percentage
Consolidated Leverage Ratio (Per Annum)
<S> <C>
==============================================================================
Greater than 3.25x 0.500%
- ------------------------------------------------------------------------------
Greater than 2.75x but equal to or less than 3.25x 0.500
- ------------------------------------------------------------------------------
Greater than 2.00x but equal to or less than 2.75x 0.500%
- ------------------------------------------------------------------------------
Greater than 1.50x but equal to or less than 2.00x 0.375%
- ------------------------------------------------------------------------------
Equal to or less than 1.50x 0.250%
==============================================================================
</TABLE>
provided, that until the earlier of November 15, 1999 or the date on which the
first Compliance Certificate is delivered pursuant to subsection 6.1(iii) for
the Fiscal Quarter ended September 30, 1999, the commitment fee percentage shall
equal 0.50% per annum. Upon delivery of the Compliance Certificate by Company to
Administrative Agent pursuant to subsection 6.1(iii), the applicable commitment
fee percentage shall automatically be adjusted in accordance with such
Compliance Certificate, such adjustment to become effective on the next
succeeding Business Day following receipt by Administrative Agent of such
Compliance Certificate; provided, that if at any time a Compliance Certificate
is not delivered at the time required pursuant to subsection 6.1(iii), from the
time such Compliance Certificate was required to be delivered until delivery of
such Compliance Certificate, such applicable commitment fee percentage shall be
the maximum percentage amount until such Compliance Certificate is delivered.
B. Other Fees. Company agrees to pay to Administrative Agent such other
fees in the amounts and at the times separately agreed upon between Company and
Administrative Agent.
2.4. Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments
A. Scheduled Payments of Term Loans.
(i) Company shall make principal payments on the Tranche A Term Loans in
installments on the dates and in the amounts set forth below:
<TABLE>
<CAPTION>
Scheduled Repayment
of Tranche A Term Loans
==========================================================================
Date Amount Repaid
<S> <C>
March 31, 2001 $42,750,000
March 31, 2002 $57,000,000
March 31, 2003 $57,000,000
March 31, 2004 $62,700,000
March 31, 2005 $65,550,000
</TABLE>
; provided that the scheduled installments of principal of the Tranche A Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.4B(iv);
and provided, further, that the Tranche A Term Loans and all other amounts owed
hereunder with respect to the Tranche A Term Loans shall be paid in full no
later than the Tranche A Maturity Date, and the final installment payable by
Company in respect of the Tranche A Term Loans on such date shall be in an
amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by Company under this Agreement with respect to the
Tranche A Term Loans.
(ii) Company shall make principal payments on the Tranche B Term Loans in
installments on the dates and in the amounts set forth below:
<TABLE>
<CAPTION>
Scheduled Repayment
of Tranche B Term Loans
==========================================================================
Date Amount Repaid
<S> <C>
March 31, 2000 $4,650,000
March 31, 2001 $4,650,000
March 31, 2002 $4,650,000
March 31, 2003 $4,650,000
March 31, 2004 $4,650,000
March 31, 2005 $4,650,000
March 31, 2006 $111,600,000
March 31, 2007 $325,500,000
</TABLE>
; provided that the scheduled installments of principal of the Tranche B Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.4B(iv);
and provided, further, that the Tranche B Term Loans and all other amounts owed
hereunder with respect to the Tranche B Term Loans shall be paid in full no
later than the Tranche B Maturity Date, and the final installment payable by
Company in respect of the Tranche B Term Loans on such date shall be in an
amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by Company under this Agreement with respect to the
Tranche B Term Loans.
B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic notice
to Administrative Agent on or prior to 12:00 Noon (New York City time) on the
date of prepayment, which notice, if telephonic, shall be promptly confirmed in
writing, at any time and from time to time prepay any Swing Line Loan on any
Business Day in whole or in part in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount. Company may, upon not
less than one Business Day's prior written or telephonic notice, in the case of
Alternate Base Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (New York City time) on the date required
and, if given by telephone, promptly confirmed in writing to Administrative
Agent (which original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Tranche A Term Loans, Tranche B Term Loans or
Revolving Loans on any Business Day in whole or in part in an aggregate minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of that
amount; provided, however, that a Eurodollar Rate Loan may only be prepaid on
the expiration of the Interest Period applicable thereto. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans specified in
such notice shall become due and payable on the prepayment date specified
therein. Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may, upon
not less than one Business Day's prior written or telephonic notice confirmed in
writing to Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone to
each Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments at the
time of such proposed termination or reduction; provided that any such partial
reduction of the Revolving Loan Commitments shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of that
amount. Company's notice to Administrative Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's notice and
shall reduce the Revolving Loan Commitment of each Revolving Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments. The Loans shall be prepaid in the amounts and
under the circumstances set forth below, all such prepayments and/or reductions
to be applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments from Excess Cash Flow. No later than the earlier of (i) 90
days after the end of each Fiscal Year of Company, commencing with the Fiscal
Year ending December 31, 1999, and (ii) the date on which the financial
statements with respect to such Fiscal Year are delivered pursuant to subsection
6.1(ii), Company shall prepay outstanding Term Loans and, if the Term Loans
shall have been paid in full, Revolving Loans, in an aggregate principal amount
equal to 50% of Excess Cash Flow for such Fiscal Year; provided, however, that,
to avoid imposition of any costs pursuant to subsection 2.6D, in lieu of
prepaying the Loans on any such date, Company may elect not to prepay the Loans
by (i) so notifying Administrative Agent in writing of such election and (ii)
paying such amount of Excess Cash Flow to Administrative Agent to be held as
Cash collateral for the Obligations and applied in accordance with subsection
2.4B(iv) to such prepayment at the end of the Interest Period or Interest
Periods with the shortest remaining duration for Eurodollar Rate Loans of the
type to be prepaid that exceed in aggregate amount such amount of Excess Cash
Flow; provided further, that no prepayments from Excess Cash Flow shall be
required under this subsection 2.4B(iii)(a) for any Fiscal Year in which Company
has delivered to Administrative Agent a Compliance Certificate pursuant to
subsection 6.1(iii) which reflects a Consolidated Leverage Ratio of less than
3.5 to 1.0.
(b) Prepayments and Reductions From Net Asset Sale Proceeds. No later than
the first Business Day following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale,
Company shall prepay the Loans in an aggregate amount equal to such Net Asset
Sale Proceeds; provided, however, that, to avoid imposition of any costs
pursuant to subsection 2.6D, in lieu of prepaying the Loans on such first
Business Day after receipt, Company may elect not to prepay the Loans by (i) so
notifying Administrative Agent in writing of such election and (ii) paying such
Net Asset Sale Proceeds to Administrative Agent to be held as Cash collateral
for the Obligations and applied in accordance with subsection 2.4B(iv) to such
prepayment at the end of the Interest Period or Interest Periods with the
shortest remaining duration for Eurodollar Rate Loans of the type to be prepaid
that exceed in aggregate amount such Net Asset Sale Proceeds.
(c) Prepayments and Reductions Due to Issuance of Securities. On the first
Business Day following receipt by Company or a Subsidiary of the Cash proceeds
(any such proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses, being "Net Securities Proceeds") from the issuance of debt or
equity Securities of Company or such Subsidiary after the Closing Date other
than (i) Indebtedness permitted under subsection 7.1 (except Indebtedness
incurred pursuant to subsection 7.1(viii) (to the extent not applied to a
Permitted Acquisition up to $100 million)) and (ii) proceeds received from the
issuance of equity Securities of Express Online, Inc. to the public or
management, Company shall prepay the Loans in an aggregate amount equal to such
Net Securities Proceeds; provided, however, that, to avoid imposition of any
costs pursuant to subsection 2.6D, in lieu of prepaying the Loans on such first
Business Day after receipt, Company may elect not to prepay the Loans by (i) so
notifying Administrative Agent in writing of such election and (ii) paying such
Net Securities Proceeds to Administrative Agent to be held as Cash collateral
for the Obligations and applied in accordance with subsection 2.4B(iv) to such
prepayment at the end of the Interest Period or Interest Periods with the
shortest remaining duration for Eurodollar Rate Loans of the type to be prepaid
that exceed in aggregate amount such Net Securities Proceeds; provided further,
that, notwithstanding the provisions of this subsection 2.4B(iii)(c), so long as
no Event of Default has occurred and is continuing, the first $150 million of
such Net Securities Proceeds shall be applied to the repayment of the Senior
Subordinated Credit Facility; provided, further, that no mandatory prepayments
shall be required from, and Net Securities Proceeds shall not include proceeds
from, the issuance of equity Securities after the issuance of $350 million in
equity Securities under this subsection 2.4B(iii)(c) for any period thereafter
in which Company has delivered to Administrative Agent a Compliance Certificate
pursuant to subsection 6.1(iii) which reflects a Consolidated Leverage Ratio of
less than 3.5 to 1.0.
(d) Prepayments and Reductions from Net Insurance Proceeds. No later than
the first Business Day following the date of receipt by Company or any of its
Subsidiaries of any Net Insurance Proceeds in respect of any Insurance or
Condemnation Event, Company shall prepay the Loans in an aggregate amount equal
to such Net Insurance Proceeds; provided, however, that, to avoid imposition of
any costs pursuant to subsection 2.6D, in lieu of prepaying the Loans on such
first Business Day after receipt, Company may elect not to prepay the Loans by
(i) so notifying Administrative Agent in writing of such election and (ii)
paying such Net Insurance Proceeds to Administrative Agent to be held as Cash
collateral for the Obligations and applied in accordance with subsection
2.4B(iv) to such prepayment at the end of the Interest Period or Interest
Periods with the shortest remaining duration for Eurodollar Rate Loans of the
type to be prepaid that exceed in aggregate amount such Net Insurance Proceeds.
(e) Calculations of Net Proceeds Amounts; Additional Prepayments and
Reductions Based on Subsequent Calculations. Concurrently with any prepayment of
the Loans and/or reduction of the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(d), Company shall deliver to Administrative Agent an
Officers' Certificate demonstrating the calculation of the amount (the "Net
Proceeds Amount") of the applicable Net Asset Sale Proceeds, Net Insurance
Proceeds or Net Securities Proceeds (as such term is defined in subsection
2.4B(iii)(c)) that gave rise to such prepayment and/or reduction. In the event
that Company shall subsequently determine that the actual Net Proceeds Amount
was greater than the amount set forth in such Officers' Certificate, Company
shall promptly make an additional prepayment of the Loans (and/or, if
applicable, the Revolving Loan Commitments shall be permanently reduced) in an
amount equal to the amount of such excess, and Company shall concurrently
therewith deliver to Administrative Agent an Officers' Certificate demonstrating
the derivation of the additional Net Proceeds Amount resulting in such excess.
(f) Prepayments Due to Reductions or Restrictions of Revolving Loan
Commitments. Company shall from time to time prepay first the Swing Line Loans
and second the Revolving Loans to the extent necessary so that the Total
Utilization of Revolving Loan Commitments shall not at any time exceed the
Revolving Loan Commitments then in effect.
(g) Election to Prepay Prior to End of the Interest Period. Notwithstanding
the provisos of subsections 2.4B(iii)(a)-(d) above, Company may also elect, by
notifying Administrative Agent in writing, to cause the Loans to be prepaid
prior to the end of the Interest Period or Interest Periods referred to therein,
(subject to subsection 2.6D). Any amounts held by Administrative Agent pursuant
to the election referred to in such subsections 2.4(B)(iii)(a)-(d) shall be
invested in investments agreed upon by Administrative Agent and Company for the
account of Company, which investments shall mature no later than the end of the
appropriate Interest Period.
(iv) Application of Prepayments and Unscheduled Reductions of Revolving
Loan Commitments.
(a) Application of Voluntary Prepayments by Type of Loans and Maturity. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied as
specified by Company in the applicable notice of prepayment. In the event
Company fails to specify the Loans to which prepayment shall be applied, such
prepayment shall be applied first, to outstanding Swing Line Loans to the full
extent thereof, second to outstanding Revolving Loans to the full extent
thereof, and third to outstanding Term Loans pro rata between Tranche A Term
Loans and Tranche B Term Loans based upon the aggregate amounts then outstanding
to the full extent thereof. Any voluntary prepayments of the Term Loans pursuant
to subsection 2.4B(i) shall be applied to reduce the scheduled installments of
principal of the Tranche A Term Loans and the Tranche B Term Loans set forth in
subsections 2.4A(i) and (ii), respectively, as specified by Company.
(b) Application of Mandatory Prepayments by Type of Loans. Any amount
required to be applied as a mandatory prepayment of the Loans pursuant to
subsections 2.4B(iii)(a),(b) and (d) (the "Applied Amount") shall be applied,
first, to the Tranche A Term Loans and the Tranche B Term Loans pro rata between
Tranche A Term Loans and Tranche B Term Loans based upon the aggregate amounts
then outstanding to the full extent thereof, second, to the extent of any
remaining portion of the Applied Amount, to prepay the Swing Line Loans to the
full extent thereof and, third, to the extent of any remaining portion of the
Applied Amount, to prepay the Revolving Loans to the full extent thereof. Any
Net Securities Proceeds shall be applied, net of amounts applied to prepay the
Senior Subordinated Credit Facility (the "Adjusted Net Securities Proceeds"),
first, to the Tranche A Term Loans and the Tranche B Term Loans pro rata between
Tranche A Term Loans and Tranche B Term Loans based upon aggregate amounts then
outstanding to the full extent thereof, provided, until the six month
anniversary of the Closing Date, the Adjusted Net Securities Proceeds may be
applied at Company's option first to prepay Tranche B Term Loans, second, to the
extent of any remaining portion of the Adjusted Net Securities Proceeds, to
prepay Swing Line Loans to the full extent thereof and, third, to the extent of
any remaining portion of the Adjusted Net Securities Proceeds, to prepay the
Revolving Loans to the full extent thereof.
(c) Application of Mandatory Prepayments of Term Loans by Order of
Maturity. Any mandatory prepayments of the Tranche A Term Loans and the Tranche
B Term Loans pursuant to subsection 2.4B(iii) in accordance with subsections
2.4B(iv)(a) and (b) shall be applied to reduce the scheduled installments of
principal of such Tranche A Term Loans and Tranche B Term Loans set forth in
subsection 2.4A (i) and (ii), respectively, on a pro rata basis (in accordance
with the respective outstanding principal amounts thereof) to each such
scheduled installment that is unpaid at the time of such prepayment.
(d) Application of Prepayments to Alternate Base Rate Loans and Eurodollar
Rate Loans. Considering Tranche A Term Loans, Tranche B Term Loans and Revolving
Loans being prepaid separately, any prepayment thereof shall be applied first to
Alternate Base Rate Loans to the full extent thereof before application to
Eurodollar Rate Loans, in each case in a manner which minimizes the amount of
any payments required to be made by Company pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be made
in Dollars in same day funds, without defense, setoff or counterclaim, free of
any restriction or condition, and delivered to Administrative Agent not later
than 12:00 Noon (New York City time) on the date due at the Funding and Payment
Office for the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day. Company hereby authorizes Administrative Agent to
charge its accounts with Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees and expenses due hereunder
(subject to sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as provided
in subsection 2.2C, all payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal amount being repaid
or prepaid, and all such payments (and, in any event, any payments in respect of
any Loan on a date when interest is due and payable with respect to such Loan)
shall be applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest payments
in respect of Tranche A Term Loans, Tranche B Term Loans and Revolving Loans
shall be apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders' respective Pro Rata Shares. Agent shall
promptly distribute to each Lender, at its primary address set forth below its
name on the appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received by Agent
and the commitment fees of such Lender when received by Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this subsection
2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Alternate Base Rate Loans in lieu of its Pro Rata Share of
any Eurodollar Rate Loans, Agent shall give effect thereto in apportioning
payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest hereunder or of
the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of all Loans evidenced by
that Note and all principal payments previously made thereon and of the date to
which interest thereon has been paid; provided that the failure to make (or any
error in the making of) a notation of any Loan made under such Note shall not
limit or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest on such
Note.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided in subsection
2.4B(iii)(b) with respect to prepayments from Net Asset Sale Proceeds, all
proceeds received by the Collateral Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral under any
Collateral Document may, in the discretion of the Collateral Agent, be held by
Collateral Agent as Collateral for, and/or (then or at any time thereafter)
applied in full or in part by the Collateral Agent against, the applicable
secured obligations (as defined in such Collateral Document, the "Secured
Obligations" ) in the following order of priority:
(a) To the payment of all costs and expenses of such sale, collection or
other realization, including reasonable compensation to Collateral Agent and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by Collateral Agent in connection therewith, and all amounts for which
Collateral Agent is entitled to indemnification under such Collateral Document
and all advances made by Collateral Agent thereunder for the account of the
applicable Loan Party, and to the payment of all costs and expenses paid or
incurred by Collateral Agent in connection with the exercise of any right or
remedy under such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to the payment
of all other such Secured Obligations for the ratable benefit of the holders
thereof;
(c) thereafter, to the extent of any excess such proceeds, to the payment
of Cash collateral for Letters of Credit for the ratable benefit of the Issuing
Lenders thereof and holders of participations therein; and
(d) thereafter, to the extent of any excess such proceeds, to the payment
to or upon the order of such Loan Party or to whosoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All payments
received by Administrative Agent under the Subsidiary Guaranty shall be applied
promptly from time to time by Agent in the following order of priority:
(a) to the payment of the costs and expenses of any collection or other
realization under the Subsidiary Guaranty, including reasonable compensation to
Administrative Agent and its agents and counsel, and all expenses, liabilities
and advances made or incurred by Administrative Agent in connection therewith,
all in accordance with the terms of this Agreement and the Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments, to the payment
of all other Guarantied Obligations (as defined in the Subsidiary Guaranty) for
the ratable benefit of the holders thereof;
(c) thereafter, to the extent of any excess such payments, to the payment
of Cash collateral for Letters of Credit for the ratable benefit of the Issuing
Lenders thereof and holders of participations therein; and
(d) thereafter, to the extent of any excess such payments, to the payment
to the applicable Subsidiary Guarantor or to whosoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.
2.5. Use of Proceeds
A. Term Loans. The proceeds of the Term Loans shall be applied by Company:
(i) to refinance the Indebtedness set forth on Schedule 2.5 hereof (the
"Scheduled Indebtedness") in an amount of approximately $360 million;
(ii) to pay a portion of the consideration for the Acquisition in an
aggregate maximum amount of $410 million (subject to adjustment); and
(iii) to pay fees and expenses in connection with the Acquisition and
Refinancing in an aggregate amount of approximately $30 million.
The additional amounts necessary to consummate the Acquisition and to pay
related fees and expenses shall be provided from $150 million in proceeds from
borrowing under the Senior Subordinated Credit Facility.
B. Revolving Loans; Swing Line Loans. Revolving Loans in the amount of $140
million made at the Closing Date shall be applied by Company to pay a portion of
the consideration for the Acquisition. Thereafter, Revolving Loans and any Swing
Line Loans shall be applied by Company for working capital requirements and
general corporate purposes, which may include the making of intercompany loans
to any of Company's Wholly Owned Subsidiaries, in accordance with subsection
7.1(iv), for their own general corporate purposes and subject to a sublimit of
$20,000,000 to issue Standby Letters of Credit.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6. Special Provisions Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Administrative Agent) that the making, maintaining or
continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) an Alternate Base Rate Loan, (c) the Affected
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"Affected Loans") shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Alternate Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. Compensation for Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including any prepayment pursuant to subsection 2.4B(i)) or other principal
payment or any conversion of any of its Eurodollar Rate Loans occurs on a date
prior to the last day of an Interest Period applicable to that Loan, (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company in the repayment of its Eurodollar Rate Loans
when required by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender; provided, that such making, carrying
or transferring Eurodollar Rate Loans does not result in any costs or taxes to
Company pursuant to subsection 2.7.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of that Lender to a domestic
office of that Lender in the United States of America; provided, however, that
each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit
and the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7. Increased Costs; Taxes; Capital Adequacy
A. Compensation for Increased Costs and Taxes. Subject to the provisions of
subsection 2.7B (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the Overall Net Income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax matter)
on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar market; and the result of any
of the foregoing is to increase the cost to such Lender of agreeing to make,
making or maintaining Loans hereunder or to reduce any amount received or
receivable by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, Company shall promptly pay to such Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder; provided that
Company shall not be required to compensate a Lender pursuant to this subsection
for any increased cost or reduction incurred more than one year prior to the
date that such Lender notifies Company of such change giving rise to such
increased cost or reduction and of such Lender's intention to claim compensation
therefor; provided further that, if such change giving rise to such increased
cost or reduction is retroactive, then the one year period referred to above
shall be extended to include the period of retroactive effect thereof. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under this
Agreement and the other Loan Documents shall (except to the extent required by
law) be paid free and clear of, and without any deduction or withholding on
account of, any Tax (other than a Tax on the Overall Net Income of any Lender)
imposed, levied, collected, withheld or assessed by or within the United States
of America or any political subdivision in or of the United States of America or
any other jurisdiction from or to which a payment is made by or on behalf of
Company or by any federation or organization of which the United States of
America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-Up of Payments. If Company or any other Person is required by
law to make any deduction or withholding on account of any such Tax from any sum
paid or payable by Company to Administrative Agent or any Lender under any of
the Loan Documents:
(a) Company shall notify Administrative Agent of any such requirement or
any change in any such requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which penalties
attach thereto, such payment to be made (if the liability to pay is imposed on
Company) for its own account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in the name of
Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary to
ensure that, after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be, receives on the due
date a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is required by law to
make any deduction or withholding, and within 30 days after the due date of
payment of any Tax which it is required by clause (b) above to pay, Company
shall deliver to Administrative Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change in any law,
treaty or governmental rule, regulation or order, or any change therein or in
the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof (in the case of each Lender listed on
the signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other Lender)
affecting any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Agreement or at
the date of such Assignment Agreement, as the case may be, in respect of
payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is not a United States person as defined in Section
7701(a)(30) of the Internal Revenue Code (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent for
transmission to Company, on or prior to the Closing Date (in the case of each
Lender listed on the signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in the determination
of Company or Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form 1001 or
4224 (or any successor forms), properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a
Certificate re Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender, together with any other certificate or statement of
exemption requested by Company required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or other
evidence with respect to United States federal income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or other evidence,
whenever a lapse in time or change in circumstances renders such forms,
certificates or other evidence obsolete or inaccurate in any material respect,
that such Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue Service Form
1001 or 4224, or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption requested by Company required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United States federal
income tax with respect to payments to such Lender under the Loan Documents or
(2) notify Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount to any
Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have
failed to satisfy the requirements of clause (a) or (b)(1) of this subsection
2.7B(iii); provided that if such Lender shall have satisfied the requirements of
subsection 2.7B(iii)(a) on the Closing Date (in the case of each Lender listed
on the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction;
provided that Company shall not be required to compensate a Lender pursuant to
this subsection for any reduction incurred more than one year prior to the date
that such Lender notifies Company of such change giving rise to such reduction
and of such Lender's intention to claim compensation therefor; provided further
that, if such change giving rise to such reduction is retroactive, then the one
year period referred to above shall be extended to include the period of
retroactive effect thereof. Such Lender shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of such additional amounts, which statement shall
be conclusive and binding upon all parties hereto absent manifest error.
D. Refund and Contest. If Administrative Agent or any Lender receives a
refund with respect to Tax deducted, withheld or paid by Company and with
respect to which Company has been required to and has paid an additional amount
under this subsection 2.7, which in the good faith judgment of such Lender is
allocable to such deduction, withholding or payment, it shall promptly pay such
refund, together with any other amount paid by Company in connection with such
refunded Tax, to Company, net of all out-of-pocket expenses of such Lender
incurred in obtaining such refund, provided, however, that Company agrees to
promptly return such refund to Administrative Agent or the applicable Lender, as
the case may be, if it receives notice from Administrative Agent or applicable
Lender that such Administrative Agent or Lender is required to repay such
refund. Each of Administrative Agent and such Lender agrees that it will contest
such Tax or liabilities paid by Company if Agent or such Lender determines, in
good faith and in its sole discretion, that it would not be materially
disadvantaged or prejudiced as a result of such contest.
2.8. Obligation of Lenders and Issuing Lenders to Mitigate; Replacement
A. Mitigation. Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all reasonable incremental expenses incurred by such Lender or Issuing
Lender as a result of utilizing such other lending or letter of credit office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
or Issuing Lender to Company (with a copy to Administrative Agent) shall be
conclusive absent manifest error.
B. Replacement. In the event of (a) a refusal by a Lender to consent to a
proposed change, waiver, discharge or termination with respect to this Agreement
which has been approved by Requisite Lenders (but requires consent of all
Lenders) as provided in subsection 10.6, (b) any Lender becomes an Affected
Lender or requests compensation under subsection 2.7A, 2.7C or 3.6, (c) Company
is required to pay any additional amount to any Lender or any governmental
authority for the account of any Lender pursuant to subsection 2.7B, or (d) any
Lender defaults in its obligation to fund Loans hereunder, then Company may, at
its sole expense and effort, if no Potential Event of Default or Event of
Default then exists, replace such Lender (a "Replaced Lender") with one or more
Eligible Assignees (collectively, the "Replacement Lender") acceptable to
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this subsection 2.8 the Replacement Lender shall enter into one or more
Assignment Agreements pursuant to subsection 10.1B (and with all fees payable
pursuant to such subsection 10.1B to be paid by the Replacement Lender) pursuant
to which the Replacement Lender shall acquire all of the outstanding Loans and
Commitments of, and in each case participations in Letters of Credit and Swing
Line Loans by, the Replaced Lender and, in connection therewith, shall pay to
(x) the Replaced Lender 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 of the Replaced Lender, (B) an amount equal to all unpaid drawings with
respect to Letters of Credit that have been funded by (and not reimbursed to)
such Replaced Lender, 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 Lender with respect thereto, (y) the
appropriate Issuing Lender an amount equal to such Replaced Lender's Pro Rata
Share of any unpaid drawings with respect to Letters of Credit (which at such
time remains an unpaid drawing) issued by it to the extent such amount was not
theretofore funded by such Replaced Lender, and (z) Swing Line Lender an amount
equal to such Replaced Lender's Pro Rata Share of any Refunded Swing Line Loans
to the extent such amount was not theretofore funded by such Replaced Lender,
and (ii) all obligations (including without limitation all such amounts, if any,
owing under subsection 2.6D) of Company owing to the Replaced Lender (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid), shall be
paid in full to such Replaced Lender concurrently with such replacement. Upon
the execution of the respective Assignment Agreements and the acceptance thereof
by Administrative Agent pursuant to subsection 10.1B, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by Company, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder
except with respect to indemnification provisions under this Agreement which by
the terms of this Agreement survive the termination of this Agreement, which
indemnification provisions shall survive as to such Replaced Lender.
Notwithstanding anything to the contrary contained above, no Issuing Lender may
be replaced hereunder at any time while it has Letters of Credit outstanding
hereunder unless arrangements satisfactory to such Issuing Lender (including the
furnishing of a Standby Letter of Credit in form and substance, and issued by an
issuer satisfactory to such Issuing Lender or the furnishing of cash collateral
in amounts and pursuant to arrangements satisfactory to such Issuing Lender)
have been made with respect to such outstanding Letters of Credit. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling Company to require such assignment and delegation cease to apply.
SECTION 3.
LETTERS OF CREDIT
3.1. Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein
A. Letters of Credit. In addition to Company requesting that Revolving
Lenders make Revolving Loans pursuant to subsection 2.1A(ii) and that Swing Line
Lender make Swing Line Loans pursuant to subsection 2.1A(iii), Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the date that is
30 days prior to the Revolving Loan Commitment Termination Date, that one or
more Revolving Lenders issue Letters of Credit for the account of Company for
the purposes specified in the definition of Standby Letters of Credit. Subject
to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Company herein set forth, any one or more
Revolving Lenders may, but (except as provided in subsection 3.1B(ii)) shall not
be obligated to, issue such Letters of Credit in accordance with the provisions
of this subsection 3.1; provided that such Letters of Credit shall be issued on
a sight basis only and Company shall not request that any Revolving Lender issue
(and no Revolving Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Revolving Loan Commitments would exceed the Revolving Loan
Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $20,000,000;
(iii) any Letter of Credit denominated in a currency other than Dollars; or
(iv) any Letter of Credit having an expiration date later than the earlier
of (a) the date that is ten Business Days prior to the Revolving Loan Commitment
Termination Date and (b) the date which is one year from the date of issuance of
such Letter of Credit; provided that the immediately preceding clause (b) shall
not prevent any Issuing Lender from agreeing that a Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year each unless such Issuing Lender elects not to extend for any such
additional period; and provided, further, that such Issuing Lender shall elect
not to extend such Letter of Credit if it has knowledge that an Event of Default
or Potential Event of Default has occurred and is continuing (and has not been
waived in accordance with subsection 10.6) at the time such Issuing Lender must
elect whether or not to allow such extension.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of a Letter
of Credit, it shall deliver to Administrative Agent a Notice of Request to Issue
Letter of Credit in the form of Exhibit III annexed hereto no later than 12:00
Noon (New York City time) at least three Business Days or in each case such
shorter period as may be agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Notice of Request to
Issue Letter of Credit shall specify (a) the proposed date of issuance (which
shall be a Business Day), (b) the face amount of the Letter of Credit, (c) the
expiration date of the Letter of Credit, (d) the name and address of the
beneficiary, and (e) either the verbatim text of the proposed Letter of Credit
or the proposed terms and conditions thereof, including a precise description of
any documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would require
the Issuing Lender to make payment under the Letter of Credit; provided that the
Issuing Lender, in its reasonable discretion, may require changes in the text of
the proposed Letter of Credit or any such documents.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance
of any Letter of Credit in the event that any of the matters to which Company is
required to certify in the applicable Notice of Request to Issue Letter of
Credit is no longer true and correct as of the proposed date of issuance of such
Letter of Credit, and upon the issuance of any Letter of Credit Company shall be
deemed to have re-certified, as of the date of such issuance, as to the matters
to which Company is required to certify in the applicable Notice of Request to
Issue Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Administrative Agent
of a Notice of Request to Issue Letter of Credit pursuant to subsection 3.1B(i)
requesting the issuance of a Letter of Credit, in the event Administrative Agent
elects to issue such Letter of Credit, Administrative Agent shall promptly so
notify Company, and Administrative Agent shall be the Issuing Lender with
respect thereto. In the event that Administrative Agent, in its sole discretion,
elects not to issue such Letter of Credit, Administrative Agent shall promptly
so notify Company, whereupon Company may request any other Revolving Lender to
issue such Letter of Credit by delivering to such Revolving Lender a copy of the
applicable Notice of Request to Issue Letter of Credit. Any Revolving Lender so
requested to issue such Letter of Credit shall promptly notify Company and
Administrative Agent whether or not, in its sole discretion, it has elected to
issue such Letter of Credit, and any such Revolving Lender which so elects to
issue such Letter of Credit shall be the Issuing Lender with respect thereto. In
the event that all other Revolving Lenders shall have declined to issue such
Letter of Credit, notwithstanding the prior election of Administrative Agent not
to issue such Letter of Credit, Administrative Agent shall be obligated to issue
such Letter of Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect to such
Letter of Credit and with respect to all other Letters of Credit issued by
Administrative Agent, when aggregated with Administrative Agent's outstanding
Revolving Loans and Swing Line Loans, may exceed Administrative Agent's
Revolving Loan Commitment then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection 4.3,
the Issuing Lender shall issue the requested Letter of Credit in accordance with
the Issuing Lender's standard operating procedures.
(iv) Notification to Revolving Lenders. Upon the issuance of any Letter of
Credit the applicable Issuing Lender shall promptly notify Administrative Agent
and each other Revolving Lender of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit. Promptly after receipt of such
notice (or, if Administrative Agent is the Issuing Lender, together with such
notice), Administrative Agent shall notify each Revolving Lender of the amount
of such Revolving Lender's respective participation in such Letter of Credit,
determined in accordance with subsection 3.1C.
(v) Reports to Revolving Lenders. Within 5 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of Credit
shall have been outstanding during such calendar quarter, each Issuing Lender
shall deliver to Administrative Agent a report setting forth for such calendar
quarter the daily aggregate amount available to be drawn under the Letters of
Credit issued by such Issuing Lender that were outstanding during such calendar
quarter.
C. Revolving Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Revolving Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Revolving Lender's Pro Rata Share of the
maximum amount which is or at any time may become available to be drawn
thereunder.
3.2. Letter of Credit Fees
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee, payable
directly to the applicable Issuing Lender for its own account, equal to the
greater of $500 or 0.1875% per annum of the daily amount available to be drawn
under such Letter of Credit and (b) a letter of credit fee, payable to
Administrative Agent for the account of Revolving Lenders, equal to the
applicable Eurodollar Rate Margin plus 0.1875% per annum of the daily amount
available to be drawn under such Letter of Credit, each such fronting fee or
letter of credit fee to be payable in arrears on and to (but excluding) each
January 15, April 15, July 15 and October 15 of each year and computed on the
basis of a 360 day year for the actual number of days elapsed;
(ii) with respect to the issuance, amendment or transfer of each Letter of
Credit and each payment of a drawing made thereunder (without duplication of the
fees payable under clauses (a) and (b) above), documentary and processing
charges payable directly to the applicable Issuing Lender for its own account in
accordance with such Issuing Lender's standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or payment, as the case
may be.
For purposes of calculating any fees payable under clause (i) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(b) of this subsection 3.2, Administrative Agent shall
distribute to each Revolving Lender its Pro Rata Share of such amount.
3.3. Drawings and Reimbursement of Amounts Paid Under Letters of Credit
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In the
event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on or before the Business
Day immediately following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 10:00 A.M. (New
York City time) on the date such drawing is honored that Company intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Loans, Company shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Revolving
Lenders to make Revolving Loans that are Alternate Base Rate Loans on the
Reimbursement Date in an amount in Dollars equal to the amount of such honored
drawing and (ii) subject to satisfaction or waiver of the conditions specified
in subsection 4.2B, Revolving Lenders shall, on the Reimbursement Date, make
Revolving Loans that are Base Rate Loans in the amount of such honored drawing,
the proceeds of which shall be applied directly by Administrative Agent to
reimburse such Issuing Lender for the amount of such honored drawing; and
provided, further that if for any reason proceeds of Revolving Loans are not
received by such Issuing Lender on the Reimbursement Date in an amount equal to
the amount of such honored drawing, Company shall reimburse such Issuing Lender,
on demand, in an amount in same day funds equal to the excess of the amount of
such honored drawing over the aggregate amount of such Revolving Loans, if any,
which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Revolving Lender from its obligation to make Revolving Loans on the
terms and conditions set forth in this Agreement, and Company shall retain any
and all rights it may have against any Revolving Lender resulting from the
failure of such Revolving Lender to make such Revolving Loans under this
subsection 3.3B.
C. Payment by Revolving Lenders of Unreimbursed Amounts Paid Under Letters
of Credit.
(i) Payment by Revolving Lenders. In the event that Company shall fail for
any reason to reimburse any Issuing Lender as provided in subsection 3.3B in an
amount equal to the amount of any drawing honored by such Issuing Lender under a
Letter of Credit issued by it, such Issuing Lender shall promptly notify each
other Revolving Lender of the unreimbursed amount of such honored drawing and of
such other Revolving Lender's respective participation therein based on such
Revolving Lender's Pro Rata Share. Each Revolving Lender shall make available to
such Issuing Lender an amount equal to its respective participation, in Dollars
and in same day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (New York City time) on the first business day
(under the laws of the jurisdiction in which such office of such Issuing Lender
is located) after the date notified by such Issuing Lender. In the event that
any Revolving Lender fails to make available to such Issuing Lender on such
business day the amount of such Revolving Lender's participation in such Letter
of Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Revolving Lender together
with interest thereon at the rate customarily used by such Issuing Lender for
the correction of errors among banks for three Business Days and thereafter at
the Alternate Base Rate. Nothing in this subsection 3.3C shall be deemed to
prejudice the right of any Revolving Lender to recover from any Issuing Lender
any amounts made available by such Revolving Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with respect to a
Letter of Credit by such Issuing Lender in respect of which payment was made by
such Revolving Lender constituted gross negligence or willful misconduct on the
part of such Issuing Lender.
(ii) Distribution to Revolving Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by other
Revolving Lenders pursuant to subsection 3.3C(i) for all or any portion of any
drawing honored by such Issuing Lender under a Letter of Credit issued by it,
such Issuing Lender shall distribute to each other Revolving Lender which has
paid all amounts payable by it under subsection 3.3C(i) with respect to such
honored drawing such other Revolving Lender's Pro Rata Share of all payments
subsequently received by such Issuing Lender from Company in reimbursement of
such honored drawing when such payments are received. Any such distribution
shall be made to a Revolving Lender at its primary address set forth below its
name on the appropriate signature page hereof or at such other address as such
Revolving Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each Issuing
Lender, with respect to drawings honored under any Letters of Credit issued by
it, interest on the amount paid by such Issuing Lender in respect of each such
honored drawing from the date such drawing is honored to but excluding the date
such amount is reimbursed by Company (including any such reimbursement out of
the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to
(a) for the period from the date such drawing is honored to but excluding the
Reimbursement Date, the rate then in effect under this Agreement with respect to
Revolving Loans that are Alternate Base Rate Loans and (b) thereafter, a rate
which is 2% per annum in excess of the rate of interest otherwise payable under
this Agreement with respect to Revolving Loans that are Alternate Base Rate
Loans. Interest payable pursuant to this subsection 3.3D(i) shall be computed on
the basis of a 365 or 366 day year for the actual number of days elapsed in the
period during which it accrues and shall be payable on demand or, if no demand
is made, on the date on which the related drawing under a Letter of Credit is
reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly upon
receipt by any Issuing Lender of any payment of interest pursuant to subsection
3.3D(i) with respect to a drawing honored under a Letter of Credit issued by it,
(a) such Issuing Lender shall distribute to each other Revolving Lender, out of
the interest received by such Issuing Lender in respect of the period from the
date such drawing is honored to but excluding the date on which such Issuing
Lender is reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B), the amount that such other Revolving Lender would have been entitled to
receive in respect of the letter of credit fee that would have been payable in
respect of such Letter of Credit for such period pursuant to subsection 3.2 if
no drawing had been honored under such Letter of Credit, and (b) in the event
such Issuing Lender shall have been reimbursed by other Revolving Lenders
pursuant to subsection 3.3C(i) for all or any portion of such honored drawing,
such Issuing Lender shall distribute to each other Revolving Lender which has
paid all amounts payable by it under subsection 3.3C(i) with respect to such
honored drawing such other Revolving Lender's Pro Rata Share of any interest
received by such Issuing Lender in respect of that portion of such honored
drawing so reimbursed by other Revolving Lenders for the period from the date on
which such Issuing Lender was so reimbursed by other Revolving Lenders to but
excluding the date on which such portion of such honored drawing is reimbursed
by Company. Any such distribution shall be made to a Revolving Lender at its
primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Revolving Lender may request.
3.4. Obligations Absolute
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Loans made by Revolving Lenders pursuant to subsection 3.3B and the obligations
of Revolving Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company or any Revolving Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Revolving Lender or any
other Person or, in the case of a Revolving Lender, against Company, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Company or
one of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any 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) payment by the applicable Issuing Lender under any Letter of Credit
against presentation of a draft or other document which does not substantially
comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any party
thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of Default
shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under
the applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5. Indemnification; Nature of Issuing Lenders' Duties
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6. Increased Costs and Taxes Relating to Letters of Credit
Subject to the provisions of subsection 2.7B (which shall be controlling
with respect to the matters covered thereby), in the event that any Issuing
Lender or Revolving Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Revolving Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Revolving Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of such Issuing Lender or Revolving Lender) with respect
to the issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under this
Section 3, whether directly or by such being imposed on or suffered by any
particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement in respect of any Letters
of Credit issued by any Issuing Lender or participations therein purchased by
any Revolving Lender; or
(iii) imposes any other condition (other than with respect to a Tax matter)
on or affecting such Issuing Lender or Revolving Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter of
Credit or any participation therein; and the result of any of the foregoing is
to increase the cost to such Issuing Lender or Revolving Lender of agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Issuing Lender or Revolving Lender (or its
applicable lending or letter of credit office) with respect thereto; then, in
any case, Company shall promptly pay to such Issuing Lender or Revolving Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate such Issuing Lender or
Revolving Lender for any such increased cost or reduction in amounts received or
receivable hereunder; provided that Company shall not be required to compensate
a Lender pursuant to this subsection for any increased cost or reduction
incurred more than one year prior to the date that such Lender notifies Company
of such change giving rise to such increased cost or reduction and of such
Lender's intention to claim compensation therefor; provided further that, if
such change giving rise to such increased cost or reduction is retroactive, then
the one year period referred to above shall be extended to include the period of
retroactive effect thereof. Such Issuing Lender or Revolving Lender shall
deliver to Company (with a copy to Administrative Agent) a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Issuing Lender or Revolving Lender under this subsection
3.6, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1. Conditions to Term Loans and Initial Revolving Loans and Swing Line
Loans
The obligations of Lenders to make the Term Loans and any Revolving Loans
and Swing Line Loans to be made on the Closing Date are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Loan Documents. On or before the Closing Date, Company shall, and shall
cause each other Loan Party to, deliver to Lenders (or to Administrative Agent
for Lenders with sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following with respect to Company or such Loan
Party, as the case may be, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation of
such Person, together with a good standing certificate from the Secretary of
State of its jurisdiction of incorporation and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
such jurisdiction, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing Date
by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving and
authorizing the execution, delivery and performance of the Loan Documents to
which it is a party, certified as of the Closing Date by the corporate secretary
or an assistant secretary of such Person as being in full force and effect
without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such Person
executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party; and
(vi) Such other documents as Administrative Agent may reasonably request.
B. No Material Adverse Effect. Since December 31, 1998, no event or events,
adverse condition or change in or affecting Company or DPS that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
shall have occurred.
C. Termination of Existing Credit Agreement and Related Liens; Existing
Letters of Credit; Scheduled Indebtedness. On the Closing Date, Company and its
Subsidiaries shall have (or shall direct that the proceeds of the Loans made on
the Closing Date be applied to) (i) repaid in full all Indebtedness outstanding
under the Existing Credit Agreement; (ii) terminated any commitments to lend or
make other extensions of credit thereunder; (iii) delivered to Administrative
Agent all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Company and its Subsidiaries thereunder;
(iv) made arrangements satisfactory to Administrative Agent with respect to the
cancellation of any letters of credit outstanding thereunder or the issuance of
Letters of Credit to support the obligations of Company and its Subsidiaries
with respect thereto; (v) repaid in full all Scheduled Indebtedness listed on
Schedule 2.5 hereto; and (vi) delivered to Administrative Agent all documents
and instruments necessary to evidence such repayment.
D. Other Indebtedness. On the Closing Date, other than Indebtedness
outstanding under the Senior Subordinated Credit Facility, if any, and this
Agreement, Company and its Subsidiaries shall have outstanding no Indebtedness,
Contingent Obligations or preferred stock other than (i) the Indebtedness or
guarantees of Indebtedness aggregating not more than $1 million set forth on
Schedule 4.1 and (ii) the Contingent Obligations listed on Schedule 7.4.
E. Security Interests in Investment Securities. Agents shall have received
evidence satisfactory to them that Company and Subsidiary Guarantors shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings, if any, that may be necessary or, in
the reasonable opinion of Agents, desirable in order to create in favor of
Agents, for the benefit of Lenders, a valid and perfected First Priority Lien in
the entire Pledged Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Agents of accurate and
complete schedules to the Company Pledge Agreement and the Subsidiary Pledge
Agreement.
(ii) Stock Certificates. Delivery to Collateral Agent of certificates
(which certificates shall be accompanied by irrevocable undated stock powers,
duly endorsed in blank and otherwise satisfactory in form and substance to
Collateral Agent) representing all capital stock pledged pursuant to the Company
Pledge Agreement and the Subsidiary Pledge Agreements.
F. Solvency Certificate. Agents shall have received a certificate of the
chief financial officer of Company, in his capacity as such, substantially in
the form of Exhibit XV and in form and substance satisfactory to Agents,
supporting the conclusions that, after giving effect to the Acquisition, the
Refinancing, this Agreement and the loans to be made under the Senior
Subordinated Credit Facility and related transactions, Company will be Solvent
and not be rendered insolvent by the indebtedness incurred in connection
therewith.
G. Evidence of Insurance. Agents shall have received a certificate from
Company's insurance broker or other evidence satisfactory to them that all
insurance required to be maintained pursuant to subsection 6.4 is in full force
and effect.
H. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of (A) Thomas M. Boudreau, general counsel of Company
and (B) Simpson Thacher & Bartlett, special New York counsel for Loan Parties,
each in form and substance reasonably satisfactory to Agents and their counsel,
dated as of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibits VIII-A and VIII-B annexed hereto and as to such
other matters as Agents acting on behalf of Lenders may reasonably request and
(ii) evidence satisfactory to Agents that Company has requested such counsel to
deliver such opinions to Lenders.
I. Opinions of Agents' Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of Cahill Gordon &
Reindel, counsel to Agents, dated as of the Closing Date, substantially in the
form of Exhibit IX annexed hereto and as to such other matters as Agents acting
on behalf of Lenders may reasonably request.
J. Fees. Company shall have paid to Administrative Agent, for distribution
(as appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
K. Representations and Warranties; Performance of Agreements. Company shall
have delivered to Agents an Officers' Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agents.
L. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
M. Approval of Acquisition Structure and Documentation. The structure
utilized to consummate the Acquisition and the Stock Purchase Agreement among
SmithKline Beecham Corporation, SmithKline Beecham Intercredit BV and Express
Scripts, Inc. dated as of February 9, 1999 (the "Definitive Acquisition
Documents") shall be in full force and effect, no provision of which shall have
been amended, supplemented, waived or otherwise modified in any material respect
without the prior written consent of Agents and the Acquisition shall occur
simultaneously with the making of the initial Loans under this Agreement.
N. Senior Subordinated Credit Facility. The Senior Subordinated Credit
Facility shall be in form and substance satisfactory to Agents, and the Senior
Subordinated Credit Facility shall be in full force and effect, no provision of
which shall have been amended, supplemented, waived or otherwise modified in any
material respect without the prior written consent of Agents and Company shall
have borrowed gross proceeds of $150 million thereunder.
O. Certain Approvals and Agreements Relating to the Acquisition. All
governmental and third party approvals necessary or advisable in connection with
the Acquisition, the Refinancing, the financings contemplated thereby and the
continuing operations of the business of Company and its subsidiaries shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose material
adverse conditions on the Acquisition or the financing thereof.
P. Financial Information. Company shall have delivered to Agents and the
Lenders: financial statements of each of Company and DPS (including notes
thereto), consisting of (a) consolidated audited balance sheets as of the end of
each period in the three fiscal year period ended December 31, 1998, and a pro
forma balance sheet as of such date, (b) consolidated audited statements of
operations and cash flows for each period in the three fiscal-year period ended
December 31, 1998 and a pro forma statement of operations for the most recent
fiscal year, and (c) such other financial statements as may be reasonably
requested by Agents, and any supporting documents as shall be reasonably
satisfactory to Agents, and all such financial statements, historical or pro
forma, delivered pursuant to this paragraph (P) shall be in compliance with the
requirements of Regulation S-X for a public offering registered under the
Securities Act of 1933 and shall not be materially inconsistent with financial
statements previously provided to Agents and Lenders. Agents shall have received
originally executed copies of a comfort letter of PricewaterhouseCoopers LLP,
independent public accountants to Company, covering such matters as Agents
acting on behalf of Lenders may reasonably request.
4.2. Conditions to All Loans
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the other
Loan Documents shall be true, correct and complete in all material respects on
and as of that Funding Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material respects on and as of
such earlier date;
(ii) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by such Notice of Borrowing that
would constitute an Event of Default or a Potential Event of Default;
(iii) Each Loan Party shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall be
performed or satisfied by it on or before that Funding Date; and
(iv) No order, judgment or decree of any court, arbitrator or governmental
authority shall purport to enjoin or restrain any Lender from making the Loans
to be made by it on that Funding Date.
4.3. Conditions to Letters of Credit
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Agent shall
have received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Notice of Request to Issue Letter of Credit, in each case
signed by the chief executive officer, the chief financial officer or the
treasurer of Company or by any executive officer of Company designated by any of
the above-described officers on behalf of Company in a writing delivered to
Agent, together with all other information specified in subsection 3.1B(i) and
such other documents or information as the applicable Issuing Lender may
reasonably require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders to purchase participations therein, Company represents and warrants to
each Lender (both before and after giving effect to the Acquisition and the
transactions in connection therewith), on the date of this Agreement, on each
Funding Date and on the date of issuance of each Letter of Credit, that the
following statements are true, correct and complete:
5.1. Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.14.
D. Subsidiaries. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xv). The capital stock of
each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and free and clear of all liens except liens created by the Loan
Documents and liens permitted thereunder and none of such capital stock
constitutes Margin Stock. Each of the Subsidiaries of Company identified in
Schedule 5.1 annexed hereto (as so supplemented) is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation set forth therein has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such corporate power and authority has not had and is not reasonably expected to
have a Material Adverse Effect. Schedule 5.1 annexed hereto (as so supplemented)
correctly sets forth the ownership interest of Company and each of its
Subsidiaries in each of the Subsidiaries of Company identified therein.
5.2. Authorization of Borrowing, Etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the consummation of the transactions contemplated by the
Loan Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of the
Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
D. Binding Obligation. Each of the Loan Documents has been duly executed
and delivered by each Loan Party that is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in equity or at
law) and (iii) an implied covenant of good faith and fair dealing.
E. Senior Subordinated Credit Facility. The Obligations constitute Senior
Debt (as defined in the Senior Subordinated Credit Facility).
5.3. Financial Condition
Company has heretofore delivered to Lenders, at Lenders' request, the
audited financial statements (including balance sheets and statements of
operations, stockholders' equity and cash flows) of Company and its Subsidiaries
for the fiscal year ended December 31, 1998. All such statements were prepared
in conformity with GAAP and fairly present, in all material respects, the
financial position (on a consolidated basis) of the entities described in such
financial statements as at the date thereof and the results of operations and
cash flows (on a consolidated basis) of the entities described therein for the
period then ended. Company does not (and will not immediately following the
funding of the initial Loans) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial statements
or the notes thereto and which in any such case is material in relation to the
business, operations, properties, assets or financial condition of Company and
its Subsidiaries taken as a whole.
5.4. No Material Adverse Change; No Restricted Junior Payments
Since December 31, 1998, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.
5.5. Title to Properties; Liens
Company and its Subsidiaries have (i) good title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets necessary or useful for the conduct of their business, in each case
except for assets disposed of since the date of the most recent financial
statements received by Administrative Agent in the ordinary course of business
or as otherwise permitted under subsection 7.7 and except where failure to have
such title would not, individually or in the aggregate, have a Material Adverse
Effect. Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens.
5.6. Litigation; Adverse Facts
Except as set forth on Schedule 5.6, there are no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Company or any of its Subsidiaries) at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including any Environmental Claims) that are pending or, to the
knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property, license or registration of Company or any of its
Subsidiaries and that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Company nor any of its
Subsidiaries (i) is in violation of any applicable laws (including those
involving the licensing or registration relating to the pharmaceutical and
healthcare services provided by Company and its Subsidiaries and Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or (ii) is subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7. Payment of Taxes
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable,
except (a) for taxes that are being contested in good faith by appropriate
proceedings for which Company or relevant Subsidiary, as applicable, has set
aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so would not reasonably be expected to result in a
Material Adverse Effect. Company knows of no proposed tax assessment against
Company or any of its Subsidiaries which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
5.8. Performance of Agreements; Materially Adverse Agreements; Material
Contracts
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, could not reasonably be expected to have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. Except as described on
Schedule 5.8, all such Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
5.9. Governmental Regulation; Accreditation
A. Neither Company nor any of its Subsidiaries is subject to regulation as
a "holding company" under the Public Utility Holding Company Act of 1935 or as
an "investment company" under the Investment Company Act of 1940.
B. Company's facilities that provide infusion therapy services are
accredited by the Joint Commission on Accreditation of Healthcare Organizations.
5.10. Securities Activities
Neither Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11. Employee Benefit Plans
A. Except as would not reasonably be expected to result in a Material
Adverse Effect: (i) Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan and have performed all
their obligations under each Employee Benefit Plan and (ii) each Pension Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
is so qualified.
B. No ERISA Event that would reasonably be expected to result in a Material
Adverse Effect has occurred or is reasonably expected to occur.
C. As of the most recent valuation date for any Pension Plan, the amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), which if amortized over ten years, would not reasonably be
expected, after considering the financial condition of all of the more closely
related ERISA Affiliates, to result in a Material Adverse Effect.
D. For each Multiemployer Plan as of the most recent valuation date for
which an actuarial report has been received, the potential liability of Company,
its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, would not reasonably be expected, after considering the financial
condition of all of the more closely related ERISA Affiliates, to result in a
Material Adverse Effect.
5.12. Certain Fees
Other than certain fees payable to CSFB, BTCo or their respective
affiliates, no broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13. Environmental Protection
No event or condition has occurred or is occurring with respect to Company
or any of its Subsidiaries relating to any Environmental Law, that individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
5.14. Employee Matters
There is no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15. Solvency
Each Loan Party is and, upon the incurrence of any Obligations by such Loan
Party on any date on which this representation is made, will be, Solvent.
5.16. Matters Relating to Collateral
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 4.1E and 6.8, (ii) if
applicable, the actions to be taken pursuant to subsection 6.9A and (iii) the
delivery to the Collateral Agent of any Pledged Collateral not delivered to
Collateral Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of the Collateral Agent for the benefit of Lenders,
as security for the respective Secured Obligations (as defined in the applicable
Collateral Document in respect of any Collateral), a valid and perfected First
Priority Lien on all of the Collateral, and other actions necessary or desirable
to perfect and maintain the perfection and First Priority status of such Liens
have been duly made or taken and remain in full force and effect.
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens with respect to the Pledged Collateral purported to be created in favor of
the Collateral Agent pursuant to any of the Collateral Documents or (ii) the
exercise by the Collateral Agent of any rights or remedies in respect of any
Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except for
filings or recordings contemplated by subsections 5.16A and, if applicable, 6.9A
and except as may be required, in connection with the disposition of any
Collateral, by laws generally affecting the offering, sale or disposition of
property of the same type as the Collateral.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of the Collateral Agent, Company has not filed any UCC financing statement
or other instrument similar in effect covering all or any part of the Collateral
in any filing or recording office.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to the
Collateral Agent by or on behalf of any Loan Party with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17. Disclosure
A. No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein, taken
as a whole, not misleading in light of the circumstances in which the same were
made; provided, that no representation is made as to projections or pro forma
financial information except as set forth in the next sentence. Any projections
and pro forma financial information contained in such materials are based upon
good faith estimates and assumptions believed by Company to be reasonable at the
time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There are no facts known to Company (other than matters of a general
economic nature) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
B. No information submitted to Agents in their due diligence investigation
is known to Company to contain any untrue statements of material fact, or omit
material facts, which untrue statements or material omissions could reasonably
be determined, when taken as a whole, to be material and adverse to the
business, assets, financial position, operations or results of operations of DPS
and its Subsidiaries, taken as a whole.
5.18. Accuracy of Representations and Warranties in the Definitive
Acquisition Documents
Subject to the qualifications set forth therein, each of the
representations and warranties given by Company to Seller in the Definitive
Acquisition Documents is true and correct in all material respects as of the
date hereof and as of the Closing Date.
5.19. Year 2000 Compliance
Company has (i) initiated a review and assessment of its and its
Subsidiaries' business and operations (including those affected by suppliers and
vendors) that Company believes could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by Company or
Subsidiaries (or suppliers and vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on or before October 31, 1999, and (iii) to date, implemented
that plan substantially in accordance with that timetable. Company believes that
its own computer applications that are material to its or its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant") except to the extent that a failure to do so could
not reasonably be expected to have Material Adverse Effect.
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1. Financial Statements and Other Reports
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Quarterly Financial: as soon as available and in any event within 45
days after the end of each Fiscal Quarter, (a) the consolidated balance sheets
of Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for
the period from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year, all
in reasonable detail and certified by the chief financial officer of Company
that they fairly present, in all material respects, the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and (b) beginning with the
Fiscal Quarter ending September 30, 1999, a statement of operations and any
narrative report for Company and its Subsidiaries as provided to the Board of
Directors of Company and the corresponding figures from the Financial Plan for
the current Fiscal Year, setting forth in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, certified by
the chief financial officer of Company as aforesaid;
(ii) Year-End Financial: as soon as available and in any event within 90
days after the end of each Fiscal Year, (a) the consolidated balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous Fiscal
Year and the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated, (b) a statement of operations and any narrative report for
Company and its Subsidiaries as provided to the Board of Directors of Company,
setting forth in comparative form the corresponding figures for the previous
Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal
Year, certified by the chief financial officer of Company as aforesaid, and (c)
in the case of such consolidated financial statements, a report thereon of
PricewaterhouseCoopers LLP or other independent certified public accountants of
recognized national standing selected by Company and satisfactory to
Administrative Agent, which report shall be unqualified, shall express no doubts
about the ability of Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards;
(iii) Officers' and Compliance Certificates: together with each delivery of
the consolidated financial statements of Company and its Subsidiaries pursuant
to subdivisions (i) and (ii) above, (a) an Officers' Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries during
the accounting period covered by such financial statements and that such review
has not disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the date of
such Officers' Certificate, of any condition or event that constitutes an Event
of Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof and
what action Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable detail
compliance during and at the end of the applicable accounting periods with the
restrictions contained in Section 7;
(iv) Reconciliation Statements: if, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements most recently delivered pursuant to subsection 5.3 or this
subsection 6.1, the consolidated financial statements of Company and its
Subsidiaries delivered pursuant to subdivisions (i), (ii) or (xii) of this
subsection 6.1 will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been made,
then together with the first delivery of financial statements pursuant to
subdivision (i), (ii) or (xii) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief financial officer of
Company setting forth the differences (including any differences that would
affect any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;
(v) Accountants' Certification: together with each delivery of consolidated
financial statements of Company and its Subsidiaries pursuant to subdivision
(ii) above, a written statement by the independent certified public accountants
giving the report thereon (a) stating that their audit examination has included
a review of the terms of this Agreement and the other Loan Documents as they
relate to accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of Default
or Potential Event of Default has come to their attention and, if such a
condition or event has come to their attention, specifying the nature and period
of existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of their
audit examination, and (c) stating that based on their audit examination nothing
has come to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant to
subdivision (iii) above is not correct or that the matters set forth in the
Compliance Certificates delivered therewith pursuant to clause (b) of
subdivision (iii) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(vi) Accountants' Reports: promptly upon receipt thereof (unless restricted
by applicable professional standards), copies of the annual letter to management
prepared by Company's independent certified public accountants;
(vii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by Company to its security holders
or by any Subsidiary of Company to its security holders other than Company or
another Subsidiary of Company, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission ("SEC") or
any governmental or private regulatory authority (other than filings in the
ordinary course of business to maintain Company's licenses and permits), and (c)
all press releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(viii) Events of Default, Etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that any Lender has
given any notice (other than to Administrative Agent) or taken any other action
with respect to a claimed Event of Default or Potential Event of Default, (b)
that any Person has given any notice to Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or condition
of the type referred to in subsection 8.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by Company with the
SEC on Form 8-K (Items 1, 2, 3, 4 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange Act, or
(d) of the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect (including,
without limitation, termination or modification of customer contracts), an
officers' Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken by
any such Person and the nature of such claimed Event of Default, Potential Event
of Default, default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;
(ix) Litigation or Other Proceedings: promptly upon any officer of Company
obtaining knowledge of (a) the institution of any action, suit, proceeding
(whether administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property, license or registration of Company or any of its Subsidiaries
(collectively, "Proceedings") not previously disclosed in writing by Company to
Lenders or (b) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of giving rise to
a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or to recover
any damages or obtain relief as a result of, the transactions contemplated
hereby; written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to evaluate
such matters;
(x) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event that would reasonably be expected to
result in a Material Adverse Effect, a written notice specifying the nature
thereof, what action Company, any of its Subsidiaries or any of their respective
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a) all notices
received by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event that
would reasonably be expected to result in a Material Adverse Effect; and (b)
copies of such other documents or governmental reports or filings relating to
any Pension Plan as Administrative Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable and in any event no later
than 60 days after the beginning of each Fiscal Year, a consolidated plan and
financial forecast for such Fiscal Year (the "Financial Plan"), including (a)
forecasted consolidated balance sheet and forecasted consolidated statement of
operations and a forecasted consolidated statement of cash flows of Company and
its Subsidiaries for such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, (b) forecasted consolidated
statements of operations and cash flows of Company and its Subsidiaries for each
quarter of such Fiscal Year, together with an explanation of the assumptions on
which such forecasts are based, and (c) such other information and projections
as any Lender may reasonably request;
(xiii) Insurance: as soon as practicable and in any event by the last day
of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained as of
the date of such report by Company and its Subsidiaries and all material
insurance coverage planned to be maintained by Company and its Subsidiaries in
the immediately succeeding Fiscal Year;
(xiv) Board of Directors: with reasonable promptness, written notice of any
change in the Board of Directors of Company;
(xv) New Subsidiaries: promptly upon any Person becoming a Subsidiary of
Company, a written notice setting forth with respect to such Person (a) the date
on which such Person became a Subsidiary of Company and (b) all of the data
required to be set forth in Schedule 5.1 annexed hereto with respect to all
Subsidiaries of Company (it being understood that such written notice shall be
deemed to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement);
(xvi) Licensing, Registration and Accreditation: with reasonable
promptness, information regarding proceedings regarding any licensing,
registration or accreditation of Company or a Subsidiary by or with any
governmental body or the Joint Commission Accreditation of Healthcare
Organizations, if failure to obtain or maintain such license, registration or
accreditation has a reasonable possibility of giving rise to a Material Adverse
Effect; and
(xvii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as from
time to time may be reasonably requested by any Lender.
6.2. Corporate Existence, Etc.
Except as permitted under subsection 7.7, Company will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
its corporate existence and all rights and franchises material to its business;
provided, however, that neither Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the Board of Directors of
Company or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof would not have a Material Adverse
Effect.
6.3. Payment of Taxes and Claims; Tax Consolidation
A. Company will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (1) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and (2) in the case of a charge or claim which has or may become a
Lien against any of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim.
B. Company will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4. Maintenance of Properties; Insurance
A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry.
6.5. Inspection Rights; Lender Meeting
A. Inspection Rights. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by
Administrative Agent (on its behalf or on behalf of any Lender), or if an Event
of Default has occurred and is continuing, the Lenders, to visit and inspect any
of the properties of Company or of any of its Subsidiaries, to inspect, copy and
take extracts from its and their financial and accounting records, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants (provided that Company may, if it so chooses,
be present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
reasonably be requested.
B. Lender Meeting. Company will, upon the request of Administrative Agent
or Requisite Lenders, participate in a meeting of Agents and Lenders once during
each Fiscal Year to be held at Company's corporate offices (or at such other
location as may be agreed to by Company and Administrative Agent) at such time
as may be agreed to by Company and Administrative Agent to discuss topics
including, but not limited to, the current Fiscal Year's Financial Plan and the
outlook and projections for Company for the next two Fiscal Years.
6.6. Compliance With Laws, Etc.
A. Compliance. Company shall comply and operate in compliance, and shall
cause each of its Subsidiaries to comply and to operate in compliance, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including those involving licensing or registration
relating to the pharmaceutical and healthcare services provided by Company and
its Subsidiaries and Environmental Laws) at all times, noncompliance with which
could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.
B. Licenses. To the extent not obtained prior to the Closing Date, Company
will obtain all licenses required to conduct the businesses conducted by DPS and
its Subsidiaries at the times required by applicable law, except those that the
failure to obtain which, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.
6.7. Environmental Claims and Violations of Environmental Laws
Except as could not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect, Company shall promptly take, and shall use
best efforts to cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental Laws by
Company or its Subsidiaries and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries and discharge any
obligations it may have to any Person thereunder.
6.8. Execution of Subsidiary Guaranty and Collateral Documents by Certain
Subsidiaries and Future Subsidiaries
A. Execution of Subsidiary Guaranty and Collateral Documents. In the event
that any Person becomes a Subsidiary of Company after the date hereof, Company
will promptly notify Agents of that fact and cause such Subsidiary to execute
and deliver to Collateral Agent a counterpart of the Subsidiary Guaranty, a
Subsidiary Pledge Agreement and any other Collateral Documents then required to
be executed and delivered pursuant to the terms of subsection 6.9A hereof, and
to take all such further actions and execute all such further documents and
instruments (including actions, documents and instruments comparable to those
described in subsections 4.1E and, if applicable, 6.9A) as may be necessary or,
in the opinion of Collateral Agent, desirable to create in favor of Collateral
Agent, for the benefit of Lenders, a valid and perfected First Priority Lien on
all of the property of such Subsidiary described in the applicable forms of
Collateral Documents.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Substantially
concurrent with the execution and delivery by a Subsidiary of the Loan Documents
described under subsection 6.8A, Company shall deliver to Administrative Agent,
together with such Loan Documents, (i) certified copies of such Subsidiary's
Certificate or Articles of Incorporation, together with a good standing
certificate from the Secretary of State of the jurisdiction of its incorporation
and, to the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of such jurisdiction, each to be dated a recent
date prior to their delivery to Administrative Agent, (ii) a copy of such
Subsidiary's Bylaws, certified by its corporate secretary or an assistant
secretary as of a recent date prior to their delivery to Administrative Agent,
(iii) a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iv) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to
Administrative Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary, (b) the due authorization, execution and delivery
by such Subsidiary of such Loan Documents, (c) the enforceability of such Loan
Documents against such Subsidiary, (d) such other matters (including matters
relating to the creation and perfection of Liens in any Collateral pursuant to
such Loan Documents) as Administrative Agent may reasonably request, all of the
foregoing to be reasonably satisfactory in form and substance to Administrative
Agent and its counsel.
6.9. Certain Matters Regarding Collateral
A. Additional Collateral. In the event that within six months after the
Closing Date either (i) Company has not attained a Consolidated Leverage Ratio
of less than 3.5 to 1.0 or (ii) the Indebtedness outstanding under this
Agreement has not been rated Investment Grade by both S&P and Moody's, then
Company shall grant or cause to be granted to the Collateral Agent on behalf of
Lenders a valid and perfected First Priority Lien on, and mortgages on,
substantially all tangible and intangible assets of Company and its Subsidiaries
pursuant to the applicable Collateral Documents.
At such time, Company and its Subsidiaries (other than the Exempt
Subsidiaries) shall execute and deliver to Agents (a) one or more supplements to
the Company Pledge Agreement and Subsidiary Pledge Agreements, as the case may
be, granting First Priority Liens in all intercompany Indebtedness then
outstanding which supplements shall be in full force and effect, and all such
intercompany Indebtedness shall be duly and validly pledged thereunder (or to
the extent not evidenced by any instrument, under the Security Agreement) to
Agents for the ratable benefit of Lenders and certificates or other instruments
representing such Indebtedness (to the extent such Indebtedness is evidenced by
instruments), accompanied by instruments of transfer endorsed in blank, shall be
provided to Agents; (b) the Security Agreement granting First Priority Liens in
all Collateral purported to be covered thereby which Security Agreement shall be
in full force and effect (and all consents of third parties required for the
effectiveness or enforceability of the Liens created by the Security Agreement,
including the assignment of contract rights, shall be obtained), and each
document (including each UCC financing statements and each filing with respect
to intellectual property owned by Company and such Subsidiaries party to the
Security Agreement) required by law or reasonably requested by Collateral Agent
to be filed, registered or recorded in order to create in favor of Collateral
Agent for the benefit of Lenders a valid, legal and perfected First Priority
Lien on the Collateral subject to the Security Agreement (subject to any Lien
expressly permitted thereby) shall be so filed, registered or recorded and
evidence thereof delivered to Agents; (c) Mortgages in favor of Collateral Agent
in real property owned by Company and such Subsidiaries (the "Mortgaged
Properties") which Mortgages shall be in full force and effect, and (i) each of
such Mortgaged Properties shall not be subject to any Lien other than those
expressly permitted under the applicable Mortgage, (ii) each such Mortgage shall
be filed and recorded in the recording office as specified by Agents, and, in
connection therewith, Agents shall receive evidence satisfactory to them of each
such filing and recordation and (iii) Agents shall have received such other
documents, including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such endorsements,
coinsurance and reinsurance as may be requested by Agents, insuring the
Mortgages as valid first Liens on such Mortgaged Properties, free of Liens other
than those expressly permitted under such Mortgage, together with such surveys,
abstracts, appraisals, environmental reports and legal opinions required to be
furnished pursuant to the terms of the Mortgage or as reasonably requested by
Agents and (d) Assignments of Rent and Leases granting First Priority Liens in
all Collateral purported to be covered thereby which Assignment of Rents and
Leases shall be in full force and effect (and all consents of third parties
required for the effectiveness or enforceability of the Liens created hereunder
shall be obtained). Agents shall receive consents from each person required
under the terms of any agreement to which Company and its Subsidiaries shall be
party to consent to the assignment pursuant to the Security Agreement of the
rights of Company and such Subsidiaries under such agreement in order for such
assignment to be effective which consents shall be executed and delivered in
form and substance satisfactory to Agents. Agents may request such other
certificates, instruments and opinions as Agents may reasonably believe
necessary to confirm the Liens required to be granted under this subsection
6.9A. Administrative Agent shall also have received a copy of, or a certificate
as to coverage under, the insurance policies required by applicable provisions
of the Security Documents, each of which shall be endorsed or otherwise amended
to include a "standard" or "New York" lender's loss payable endorsement and to
name Collateral Agent as additional insured, in form and substance satisfactory
to Agents.
B. Release of Collateral. Any Collateral with respect to which a Lien shall
have been granted pursuant to subsection 6.9A shall be released by Collateral
Agent upon the first to occur of Company's delivery to Administrative Agent of
either (x) a Compliance Certificate pursuant to subsection 6.1(iii) which
reflects a Consolidated Leverage Ratio of less than 3.5 to 1.0 or (y) an
Officers' Certificate evidencing notification to Company that the Indebtedness
outstanding under this Agreement has been rated Investment Grade by both S&P and
Moody's.
6.10. Year 2000 Compliance
Company will promptly but in no event later than October 31, 1999 notify
Administrative Agent in the event Company discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or its Subsidiaries' business and operations will not be Year
2000 compliant as of January 1, 2000, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1. Indebtedness
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the Obligations
and obligations under the Senior Subordinated Credit Facility;
(ii) Company and its Subsidiaries may become and remain liable with respect
to Contingent Obligations permitted by subsection 7.4 and, upon any matured
obligations actually arising pursuant thereto, the Indebtedness corresponding to
the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such Capital
Leases are permitted if the aggregate amount of such Capital Leases that
constitutes Indebtedness does not exceed $25,000,000 at any time outstanding;
(iv) Company may become and remain liable with respect to Indebtedness to
any of its Subsidiaries, and any Subsidiary of Company may become and remain
liable with respect to Indebtedness to Company or any other Subsidiary of
Company; provided that (a) all such intercompany Indebtedness owed by Company to
any of its Subsidiaries shall be subordinated in right of payment to the payment
in full of the Obligations pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, and (b) any payment by any
Subsidiary of Company under any guaranty of the Obligations shall result in a
pro tanto reduction of the amount of any intercompany Indebtedness owed by such
Subsidiary to Company or to any of its Subsidiaries for whose benefit such
payment is made;
(v) Company and its Subsidiaries, as applicable, may remain liable with
respect to Indebtedness described in Schedule 7.1 annexed hereto and extensions,
renewals, and replacement of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof;
(vi) Indebtedness of Company or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets, other
than Capital Leases and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof, provided that such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal thereof or result in an earlier
maturity date or decreased weighted average life thereof, and provided, further,
that the aggregate principal amount of Indebtedness permitted by this clause
(vi) that is incurred following the Closing Date shall not exceed $15,000,000 at
any time outstanding;
(vii) Indebtedness of any Person that becomes a Subsidiary after the date
hereof, provided that (A) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (B) the acquisition in which such
Person becomes a subsidiary is a Permitted Acquisition;
(viii) Company may become and remain liable with respect to other unsecured
Indebtedness in the form of debt securities in an aggregate principal amount not
to exceed $350,000,000 at any time outstanding, provided, however, that (a)
$100,000,000 in proceeds of such Indebtedness may be applied to consummate a
Permitted Acquisition substantially contemporaneous with the incurrence of such
Indebtedness and (b) the proceeds of such Indebtedness to the extent not applied
pursuant to the immediately preceding clause (a) shall be applied in the manner
set forth in subsection 2.4B (iii), provided, further, (i) such Indebtedness
does not mature or have mandatory prepayments prior to March 31, 2009, and does
not have covenants requiring the maintenance of specified financial ratios and
otherwise has covenants no more restrictive those set forth in this Agreement
(other than a provision requiring redemption of such Indebtedness in the event
of a change of control of Company substantially the same as contemplated by
subsection 8.11 hereof) and (ii) after giving pro forma effect to such
Indebtedness, the Consolidated Leverage Ratio of Company is less than 3.5 to
1.0; and
(ix) Company and its Subsidiaries may become and remain liable with respect
to other Indebtedness in an aggregate principal amount not to exceed $15,000,000
at any time outstanding.
7.2. Liens and Related Matters
A. Prohibition on Liens. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the UCC of any
State or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto; provided, that such
Liens shall secure only those obligations it secures on the date hereof and
extensions, renewals, and replacement thereof that do not increase the
outstanding principal amount thereof;
(iv) Any Lien existing on any property or asset prior to the acquisition
thereof by Company or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary, provided that (A) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, (B) such Lien shall not apply to any other property or assets of
Company or any Subsidiary and (C) such Lien shall secure only those obligations
that it secures on the date of such acquisition or the date such Person becomes
a Subsidiary, as the case may be, and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
(v) Liens on fixed or capital assets acquired, constructed or improved by
Company or any Subsidiary, provided that (A) such security interests secure
Indebtedness permitted by clauses (iii) and (vi) of Section 7.1, (B) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 75% (100% of
the Indebtedness if in the form of a Capital Lease) of the cost of acquiring,
constructing or improving such fixed or capital assets and (D) such security
interests shall not apply to any other property or assets of Company or any
Subsidiary; and
(vi) Other Liens securing Indebtedness in an aggregate amount not to exceed
$15,000,000 at any time outstanding.
B. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness, to be sold pursuant to
an executed agreement with respect to an Asset Sale or subject to a lease that
contains customary provisions restricting assignment, neither Company nor any of
its Subsidiaries shall enter into any agreement (other than the Senior
Subordinated Credit Facility and any agreement prohibiting only the creation of
Liens securing Subordinated Indebtedness) prohibiting the creation or assumption
of any Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
C. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein and except with respect to specific
property encumbered to secure payment of particular Indebtedness, to be sold
pursuant to an executed agreement with respect to an Asset Sale or subject to a
lease that contains customary provisions restricting assignment, Company will
not, and will not permit any of its Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Subsidiary to (i) pay dividends or make
any other distributions on any of such Subsidiary's capital stock owned by
Company or any other Subsidiary of Company, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other Subsidiary of
Company, or (iv) transfer any of its property or assets to Company or any other
Subsidiary of Company.
7.3. Investments; Joint Ventures
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(iii) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto and extensions,
renewals and replacements of any such Investments that do not increase the
amount thereof;
(iv) Company and its Subsidiaries may own promissory notes given in payment
of the purchase price of assets purchased from Company and its Subsidiaries as
permitted by subsection 7.7;
(v) Company and its Subsidiaries may make Permitted Acquisitions; and
(vi) Company and its Subsidiaries may make and own other Investments in an
aggregate amount not to exceed at any time $40,000,000.
7.4. Contingent Obligations
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with respect to
Contingent Obligations in respect of the Subsidiary Guaranty and guarantees of
the Senior Subordinated Credit Facility;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit and Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations in respect of
other letters of credit in an aggregate amount not to exceed at any time
$20,000,000;
(iii) Company may become and remain liable with respect to Contingent
Obligations under Hedge Agreements;
(iv) Company and its Subsidiaries may become and remain liable with respect
to Contingent Obligations in respect of customary indemnification and purchase
price adjustment obligations incurred in connection with Asset Sales or other
sales of assets permitted by subsection 7.7;
(v) Company and its Subsidiaries may become and remain liable with respect
to Contingent Obligations under guarantees in the ordinary course of business of
the obligations of suppliers, customers, franchisees and licensees of Company
and its Subsidiaries;
(vi) Company and its Subsidiaries may become and remain liable with respect
to Contingent Obligations in respect of any Indebtedness of Company or any of
its Subsidiaries permitted by subsection 7.1;
(vii) Company and its Subsidiaries, as applicable, may remain liable with
respect to Contingent Obligations described in Schedule 7.4 annexed hereto and
extension, renewals and replacements of any such Contingent Obligations that do
not increase the amount thereof; and
(viii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum aggregate
liability, contingent or otherwise, of Company and its Subsidiaries in respect
of all such Contingent Obligations shall at no time exceed $15,000,000.
7.5. Restricted Junior Payments
Except for payments pursuant to the Senior Subordinated Credit Facility,
Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment; provided that, so long as no Event of Default or Potential Event
of Default has occurred and is continuing or would result from making such
Restricted Junior Payment, Company may cumulatively make Restricted Junior
Payments in an aggregate amount of $35,000,000 plus 25% of Consolidated Net
Income for the period commencing on the Closing Date and ending with the Fiscal
Quarter most recently ended prior to the date of payment.
7.6. Financial Covenants
A. Minimum Interest Coverage Ratio. Company shall not permit the ratio of
(i) Consolidated EBITDA to (ii) Consolidated Interest Expense at the end of the
four Fiscal Quarter period ending on the date set forth below, subject to
subsection 1.2B, to be less than the correlative ratio indicated:
<TABLE>
<CAPTION>
Minimum
Period Interest Coverage Ratio
<S> <C>
================================================== =============================
September 30, 1999 2.50x
- -------------------------------------------------- -----------------------------
December 31, 1999 2.50x
- -------------------------------------------------- -----------------------------
March 31, 2000 2.75x
- -------------------------------------------------- -----------------------------
June 30, 2000 3.00x
- -------------------------------------------------- -----------------------------
September 30, 2000 3.25x
- -------------------------------------------------- -----------------------------
December 31, 2000 and thereafter 3.50x
- -------------------------------------------------- -----------------------------
</TABLE>
B. Maximum Leverage Ratio. Company shall not permit the Consolidated
Leverage Ratio as of the last day of any Fiscal Quarter ending during any of the
periods set forth below to exceed the correlative ratio indicated:
<TABLE>
<CAPTION>
Maximum
Period Consolidated Leverage Ratio
================================================== =============================
<S> <C>
September 30, 1999 4.50x
- -------------------------------------------------- -----------------------------
December 31, 1999 4.50x
- -------------------------------------------------- -----------------------------
March 31, 2000 4.00x
- -------------------------------------------------- -----------------------------
June 30, 2000 3.75x
- -------------------------------------------------- -----------------------------
September 30, 2000 3.50x
- -------------------------------------------------- -----------------------------
December 31, 2000 3.25x
- -------------------------------------------------- -----------------------------
June 30, 2001 3.00x
- -------------------------------------------------- -----------------------------
December 31, 2001 2.75x
- -------------------------------------------------- -----------------------------
December 31, 2002 and thereafter 2.50x
- -------------------------------------------------- -----------------------------
</TABLE>
C. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
Consolidated Fixed Charge Ratio for any four-Fiscal Quarter period ending on any
date set forth below to be less than the correlative ratio indicated:
<TABLE>
<CAPTION>
Minimum Fixed
Period Charge Coverage Ratio
================================================== =============================
<S> <C>
September 30, 1999 1.20x
- -------------------------------------------------- -----------------------------
December 31, 1999 1.20x
- -------------------------------------------------- -----------------------------
March 31, 2000 1.20x
- -------------------------------------------------- -----------------------------
June 30, 2000 1.20x
- -------------------------------------------------- -----------------------------
September 30, 2000 1.20x
- -------------------------------------------------- -----------------------------
December 31, 2000 1.20x
- -------------------------------------------------- -----------------------------
June 30, 2001 and thereafter 1.25x
- -------------------------------------------------- -----------------------------
</TABLE>
7.7. Restriction on Fundamental Changes; Asset Sales and Acquisitions
Company shall not, and shall not permit any of its Subsidiaries to enter
into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sublease (as lessor or sublessor), transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any part of its business,
property or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or any
Wholly Owned Subsidiary Guarantor, or be liquidated, wound up or dissolved, or
all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any Wholly Owned Subsidiary Guarantor; provided
that, in the case of such a merger, Company or such Wholly Owned Subsidiary
Guarantor shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete, worn out or
surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof;
(v) Company and its Subsidiaries may make Permitted Acquisitions; and
(vi) subject to subsection 7.13, Company and its Subsidiaries may make
Asset Sales, the aggregate value of all such sales having a book value not
exceeding 15% of the consolidated total assets of the Company on the date of
such sale, provided that (x) the consideration received for such assets in each
such Asset Sale shall (i) be in an amount at least equal to the fair market
value thereof and (ii) consists of not less than 75% in Cash or Cash
Equivalents; (y) no more than $40,000,000 of the consideration received in the
aggregate for all such sales shall be non-cash; and (z) the Net Asset Sale
Proceeds of such Asset Sales shall be applied as required by subsection
2.4B(iii)(b).
7.8. Consolidated Capital Expenditures
Company shall not, and shall not permit its Subsidiaries to, make or incur
Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year shall be increased by an amount equal to the excess, if any, of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
(as adjusted in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year; provided,
further, that in no event shall the amount of such increase exceed 25% of the
Maximum Consolidated Capital Expenditures Amount for such previous Fiscal Year
(prior to any adjustment in accordance with this proviso):
<TABLE>
<CAPTION>
Maximum Consolidated
Fiscal Year Capital Expenditures
================================================== =============================
<S> <C>
1999 (from Closing Date to end of
Fiscal Year) $50,000,000
- -------------------------------------------------- -----------------------------
2000 $50,000,000
- -------------------------------------------------- -----------------------------
2001 $50,000,000
- -------------------------------------------------- -----------------------------
2002 $45,000,000
- -------------------------------------------------- -----------------------------
2003 through 2007 $40,000,000
- -------------------------------------------------- -----------------------------
</TABLE>
7.9. Fiscal Year
Company shall not change its Fiscal Year-end from December 31.
7.10. Sales and Lease-Backs
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease except that Company and its Subsidiaries may enter into sale and
lease-back transactions with respect to the properties listed on Schedule 7.10
annexed hereto.
7.11. Sale or Discount of Receivables
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable,
except in connection with the sale of all or substantially all of any line of
business of Company or its Subsidiaries.
7.12. Transactions With Shareholders and Affiliates
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its Wholly Owned Subsidiaries or between
any of its Wholly Owned Subsidiaries or (ii) reasonable and customary fees paid
to members of the Boards of Directors of Company and its Subsidiaries.
7.13. Disposal of Subsidiary Stock
Except for any sale in compliance with the provisions of subsection 7.7(vi)
of (i) 100% of the capital stock or other equity Securities of any of its
Subsidiaries, (ii) the disposition of up to 50% of Company's interest in
Practice Patterns Science, Inc. or (iii) the disposition of some or all of
Company's interest in Express Online Inc., provided that Company shall always
retain the right to regain in the future a majority interest in the combined
voting power of all securities of Express Online Inc., Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity Securities of any of its
Subsidiaries, except to qualify directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell, assign,
pledge or otherwise encumber or dispose of any shares of capital stock or other
equity Securities of any of its Subsidiaries (including such Subsidiary), except
to Company, another Subsidiary of Company, or to qualify directors if required
by applicable law.
7.14. Conduct of Business
From and after the Closing Date, Company shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
engaged in by Company and its Subsidiaries on the Closing Date and similar or
related businesses and (ii) such other lines of business as may be consented to
by Requisite Lenders.
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
8.1. Failure to Make Payments When Due
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
8.2. Default in Other Agreements
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in an individual principal amount of $10,000,000
or more or with an aggregate principal amount of $10,000,000 or more, in each
case beyond the end of any grace period provided therefor; or (ii) breach or
default by Company or any of its Subsidiaries with respect to any other term of
(a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or
be declared due and payable prior to its stated maturity or the stated maturity
of any underlying obligation, as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or
8.3. Breach of Certain Covenants
Failure of Company to perform or comply with any term or condition
contained in subsections 2.5, 6.1 (viii) or 6.2 (with respect to corporate
existence) or Section 7 of this Agreement; or
8.4. Breach of Warranty
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5. Other Defaults Under Loan Documents
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Company or such Loan Party becoming aware of such default
or (ii) receipt by Company and such Loan Party of notice from Administrative
Agent or any Lender of such default; or
8.6. Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed within 60 days of the entry thereof; or any other similar
relief shall be granted under any applicable federal or state law; or (ii) an
involuntary case shall be commenced against Company or any of its Subsidiaries
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Company or any of its Subsidiaries, or over all or a substantial
part of its property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian of
Company or any of its Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Company or any of
its Subsidiaries, and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
8.7. Voluntary Bankruptcy; Appointment of Receiver, Etc.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8. Judgments and Attachments
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $10,000,000 or (ii)
in the aggregate at any time an amount in excess of $10,000,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9. Dissolution
Any order, judgment or decree shall be entered against Company or any of
its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 60 days; or
8.10. Employee Benefit Plans
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates; or
there shall exist an amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans with respect
to which assets exceed benefit liabilities), which if amortized over ten years
that would reasonably be expected, after considering the financial condition of
all of the more closely related ERISA Affiliates, to result in a Material
Adverse Effect.
8.11. Change in Control
Any Person or any two or more Persons acting in concert (other than New
York Life and its Affiliates) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act), directly or indirectly, of Securities of Company (or other
Securities convertible into such Securities) representing 20% or more of the
combined voting power of all Securities of Company entitled to vote in the
election of directors, other than Securities having such power only by reason of
the happening of a contingency; provided that the acquisition of shares of
Common Stock of Company owned by New York Life and its Affiliates by one or more
Persons from time to time shall not be an Event of Default pursuant to this
subsection 8.11.
8.12. Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation
of Obligations
At any time after the execution and delivery thereof, (i) the Subsidiary
Guaranty for any reason, other than the satisfaction in full of all Obligations,
shall cease to be in full force and effect (other than in accordance with its
terms) or shall be declared to be null and void, (ii) any Collateral Document
shall cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or the Collateral Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral purported to be
covered thereby, in each case for any reason other than as contemplated by
subsection 6.9B or the failure of any Agent or any Lender to take any action
within its control, or (iii) any Loan Party shall contest the validity or
enforceability of any Loan Document in writing or deny in writing that it has
any further liability, including with respect to future advances by Lenders,
under any Loan Document to which it is a party.
8.13. Failure to Consummate the Acquisition
If Company fails to consummate the Acquisition by the close of business on
the Closing Date, regardless of fault on the part of Company pursuant to the
Definitive Acquisition Documents.
Then (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any Loan,
the obligation of Administrative Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any other
Event of Default, Administrative Agent shall, upon the written request or with
the written consent of Requisite Lenders, by written notice to Company, declare
all or any portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(iii).
Notwithstanding anything contained in the preceding paragraph, if at any
time within 60 days after an acceleration of the Loans pursuant to clause (ii)
of such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 10.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended, directly or indirectly, to
benefit Company, and such provisions shall not at any time be construed so as to
grant Company the right to require Lenders to rescind or annul any acceleration
hereunder or to preclude Agents or Lenders from exercising any of the rights or
remedies available to them under any of the Loan Documents, even if the
conditions set forth in this paragraph are met.
SECTION 9.
AGENTS
9.1. Appointment
A. Appointment of Agent. CSFB is hereby appointed as Lead Arranger,
Administrative Agent and Collateral Agent, BTCo is appointed as Syndication
Agent, and BTAB is appointed as Co-Arranger hereunder and under the other Loan
Documents, and each Lender hereby authorizes each Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. Each
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agents and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, each Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or any
of its Subsidiaries. Upon the conclusion of the Initial Period, all obligations
of the Lead Arranger and Co-Arranger hereunder shall terminate and thereafter
the Lead Arranger and Co-Arranger (in such capacities) shall have no obligations
or liabilities under any of the Loan Documents.
B. Appointment of Supplemental Collateral Agents. It is the intent of this
Agreement and the other Loan Documents that there shall be no violation of any
law of any jurisdiction denying or restricting the right of banking corporations
or associations to transact business as agent or trustee in such jurisdiction.
It is recognized that in case of litigation under this Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan Documents, or in case Collateral Agent deems that by reason of any present
or future law of any jurisdiction it may not exercise any of the rights, powers
or remedies granted herein or in any of the other Loan Documents or take any
other action which may be desirable or necessary in connection therewith, it may
be necessary that the Collateral Agent appoint an additional individual or
institution as a separate trustee, co-trustee, collateral agent or collateral
co-agent (any such additional individual or institution being referred to herein
individually as a "Supplemental Collateral Agent" and collectively as
"Supplemental Collateral Agents").
In the event that the Collateral Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to the Collateral Agent
with respect to such Collateral shall be exercisable by and vest in such
Supplemental Collateral Agent to the extent, and only to the extent, necessary
to enable such Supplemental Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Collateral Agent shall run to and be enforceable by either the
Collateral Agent or such Supplemental Collateral Agent, and (ii) the provisions
of this Section 9 and of subsections 10.2 and 10.3 that refer to the Collateral
Agent shall inure to the benefit of such Supplemental Collateral Agent and all
references therein to the Collateral Agent shall be deemed to be references to
Agent and/or such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by the Collateral
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by the Collateral Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by the Collateral Agent until the appointment of a new Supplemental Collateral
Agent.
9.2. Powers and Duties; General Immunity
A. Powers; Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. An
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement with respect to such Agent and the other Loan
Documents. An Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. An Agent shall not have, by
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon any Agent any obligations in respect of this
Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. An Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by such Agent to Lenders or by or on behalf of
Company to such Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall such Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, an Agent
shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. None of Agents or any of their respective
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by such Agent under or in connection with any of the
Loan Documents except to the extent caused by such Agent's gross negligence or
willful misconduct. An Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) an Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against an Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).
D. Agents Entitled to Act as Lenders. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, an Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Each Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3. Representations and Warranties; No Responsibility for Appraisal of
Creditworthiness
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. Agents
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and Agents shall not have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4. Right to Indemnity
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Agent, in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5. Successor Agent and Swing Line Lender
A. Successor Agent. Any Agent may resign at any time by giving 30 days'
prior written notice thereof to Lenders and Company. Upon any such notice of
resignation, Requisite Lenders shall have the right, upon five Business Days'
notice to Company, to appoint a successor to such Agent. Upon the acceptance of
any appointment as an Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, as the case may be, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation hereunder as an Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was an Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation of Administrative Agent
pursuant to subsection 9.5A shall also constitute the resignation of CSFB or its
successor as Swing Line Lender, and any successor Administrative Agent appointed
pursuant to subsection 9.5A shall, upon its acceptance of such appointment,
become the successor Swing Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made by the retiring
Administrative Agent in its capacity as Swing Line Lender, (ii) upon such
prepayment, the retiring Administrative Agent and Swing Line Lender shall
surrender the Swing Line Note held by it to Company for cancellation, and (iii)
Company shall issue a new Swing Line Note to the successor Administrative Agent
and Swing Line Lender substantially in the form of Exhibit VI annexed hereto, in
the principal amount of the Swing Line Loan Commitment then in effect and with
other appropriate insertions.
9.6. Collateral Documents and Guaranties
Each Lender hereby further authorizes Collateral Agent, on behalf of and
for the benefit of Lenders, to enter into each Collateral Document as secured
party and to be the agent for and representative of Lenders under the Subsidiary
Guaranty, and each Lender agrees to be bound by the terms of each Collateral
Document and the Subsidiary Guaranty; provided that Collateral Agent shall not
(i) enter into or consent to any amendment, modification, termination or waiver
of any provision contained in any Collateral Document or the Subsidiary Guaranty
or (ii) release any Collateral (except as otherwise expressly permitted or
required pursuant to the terms of this Agreement or the applicable Collateral
Document), in each case without the prior consent of Requisite Lenders (or, if
required pursuant to subsection 10.6, all Lenders); provided further, however,
that, without further written consent or authorization from Lenders, Collateral
Agent may execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented or (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the capital stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders have
otherwise consented. Anything contained in any of the Loan Documents to the
contrary notwithstanding, Company, Collateral Agent and each Lender hereby agree
that (X) no Lender shall have any right individually to realize upon any of the
Collateral under any Collateral Document or to enforce the Subsidiary Guaranty,
it being understood and agreed that all rights and remedies under the Collateral
Documents and the Subsidiary Guaranty may be exercised solely by Collateral
Agent for the benefit of Lenders in accordance with the terms thereof, and (Y)
in the event of a foreclosure by Collateral Agent on any of the Collateral
pursuant to a public or private sale, Collateral Agent or any Lender may be the
purchaser of any or all of such Collateral at any such sale and Collateral
Agent, as agent for and representative of Lenders (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Collateral Agent at such sale.
SECTION 10.
MISCELLANEOUS
10.1. Assignments and Participations in Loans and Letters of Credit
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or in any case its rights or
obligations with respect thereto or participations therein or any other interest
herein or in any other obligations owed to it; provided that no such sale,
assignment, transfer or participation shall, without the consent of Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further, that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided, further
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided, further that, anything
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
Credit or participation therein, or other Obligation may (a) be assigned in any
amount to another Lender, or to an Affiliate of the assigning Lender or another
Lender or to an Approved Fund, with the giving of notice to Company and
Administrative Agent or (b) be assigned in an aggregate amount of not less than
$5,000,000 (or such lesser amount as shall constitute the aggregate amount of
the Commitments, Loans, Letters of Credit and participations therein, and other
Obligations of the assigning Lender) to any other Eligible Assignee with the
consent of Company and Administrative Agent (which consent of Company and
Administrative Agent shall not be unreasonably withheld or delayed); provided
that assignment to an Affiliate of the assigning Lender (or an Approved Fund)
that would result in increased costs to Company shall also require the prior
written consent of Company and such prior written consent of Company would not
be unreasonably withheld and which may be conditioned on the Eligible Assignee
agreeing not to require reimbursement from Company of such increased costs;
provided, further, that after an Event of Default occurs and is continuing, the
consent of Company shall not be required for assignment to an Eligible Assignee.
To the extent of any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with respect to
its Commitments, Loans, Letters of Credit or participations therein, or other
obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Administrative Agent, for its acceptance
and recording in the Register, an Assignment Agreement, together with a
processing and recordation fee of $3,500 (except in the event of an assignment
to a Lender, an Affiliate of a Lender or an Approved Fund) and such forms,
certificates or other evidence, if any, with respect to United States federal
income tax withholding matters as the assignee under such Assignment Agreement
may be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a). Upon such execution, delivery, acceptance and recordation, from
and after the effective date specified in such Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and (z)
the assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination of
this Agreement under subsection 10.9B) and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering all
or the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto; provided that,
anything contained in any of the Loan Documents to the contrary notwithstanding,
if such Lender is the Issuing Lender with respect to any outstanding Letters of
Credit such Lender shall continue to have all rights and obligations of an
Issuing Lender with respect to such Letters of Credit until the cancellation or
expiration of such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall, upon the effectiveness of such assignment
or as promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be issued
to the assignee and/or to the assigning Lender, substantially in the form of
Exhibit IV-A, Exhibit IV-B or Exhibit V annexed hereto, as the case may be, with
appropriate insertions, to reflect the new Commitments and/or outstanding Loans,
as the case may be, of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent
shall, if Administrative Agent and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required pursuant
to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence any
required consent of Administrative Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company. Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the scheduled final maturity date of any Loan
allocated to such participation or (ii) a reduction of the principal amount of
or the rate of interest payable on any Loan allocated to such participation, and
all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Assignments to Special Purpose Funding Vehicles. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender (a "Granting Lender") may grant to special purpose
funding vehicle (an "SPV"), identified as such in writing from time to time by
the Granting Lender to Administrative Agent and Company, the option to provide
to Company all or any part of any Loan that such Granting Lender would otherwise
be obligated to make Company pursuant to this Agreement; provided, (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and (ii) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPV, it will not institute
against, or join any other person in instituting against, such SPV, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this subsection 10.1E(i),
any SPV may (i) with notice to, but without the prior written consent of,
Company and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loan to the Granting
Lender or to any financial institutions (consented to by Company and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPV to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit liquidity enhancement to such SPV. After the date of a grant
to any SPV, this section may not be amended without the written consent of such
SPV.
F. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignee and participants),
subject to subsection 10.19.
G. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of or investing in loans such as the Loans; and
(iii) that it will make or invest in its Loans for its own account in the
ordinary course of its business and without a view to distribution of such Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of this
subsection 10.1, the disposition of such Loans or any interests therein shall at
all times remain within its exclusive control). Each Lender that becomes a party
hereto pursuant to an Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in Section 2(c) of such
Assignment Agreement are incorporated herein by this reference.
10.2. Expenses
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of Agents in connection with the preparation of the Loan Documents and
any consents, amendments, waivers or other modifications thereto; (ii) all
reasonable costs of furnishing all opinions by counsel for Company (including
any opinions requested by Lenders as to any legal matters arising hereunder) and
of Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agents (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Company; (iv) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent on behalf of Lenders pursuant to
any Collateral Document, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Collateral Agent and
of counsel providing any opinions that Collateral Agent or Requisite Lenders may
request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) the custody or preservation of any of the Collateral; (vi) all
other actual and reasonable costs and expenses incurred by Agents in connection
with the syndication of the Commitments and the negotiation, preparation and
execution of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (vii) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Agents and Lenders in enforcing any Obligations
of or in collecting any payments due from any Loan Party hereunder or under the
other Loan Documents by reason of such Event of Default (including in connection
with the sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
10.3. Indemnity
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend (subject to Indemnitees' selection of counsel), indemnify, pay and
hold harmless Agents and Lenders, and the officers, directors, employees,
trustee, agents and affiliates of Agents and Lenders (collectively called the
"Indemnitees"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for Indemnitees in connection
with any investigative, administrative or judicial proceeding commenced or
threatened by any Person, whether or not any such Indemnitee shall be designated
as a party or a potential party thereto, and any fees or expenses incurred by
Indemnitees in enforcing this indemnity), whether direct, indirect or
consequential and whether based on any federal, state or foreign laws, statutes,
rules or regulations (including securities and commercial laws, statutes, rules
or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby (including Lenders' agreement to make the Loans hereunder or the use or
intended use of the proceeds thereof or the issuance of Letters of Credit
hereunder or the use or intended use of any thereof, or any enforcement of any
of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty) or (ii) the statements contained in the commitment letter delivered by
any Lender to Company with respect thereto.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4. Set-Off
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby authorized by Company at any time or from time to
time, without notice to Company or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender to or for the
credit or the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan Documents, including all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
10.5. Ratable Sharing
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder or
under the other Loan Documents (collectively, the "Aggregate Amounts Due" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify Administrative
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
10.6. Amendments and Waivers
A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: reduces the principal amount of any of the Loans;
changes in any manner the definition of "Pro Rata Share" or the definition of
"Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date of any of the Loans (but
not the date of any scheduled installment of principal); postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; reduces the amount or postpones the due date of any amount
payable in respect of any Letter of Credit; extends the required expiration date
of any Letter of Credit beyond the Revolving Commitment Termination Date;
changes in any manner the obligations of Lenders relating to the purchase of
participations in Letters of Credit; releases any Lien granted in favor of
Administrative Agent with respect to all or substantially all of the Collateral;
releases any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty, in each case other than in accordance with the terms of the Loan
Documents; or changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6 shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders; provided, further, that no such amendment,
modification, termination, waiver or consent shall increase the Commitments of a
Lender over the amount hereof then in effect without the consent of such Lender;
provided, further, that if any matter described in the first proviso of this
subsection 10.6A relates only to (a) all Term Loans, the approval of all Term
Lenders shall be sufficient, (b) Tranche A Term Loans or Tranche B Term Loans,
as the case may be, the approval of all of the Lenders of the affected Term Loan
shall be sufficient; and (c) a Revolving Loan or Revolving Loan Commitment, the
approval of all Revolving Lenders shall be sufficient. In addition, (i) any
amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Administrative Agent and Requisite Lenders, (ii) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note, (iii) no amendment, modification, termination or waiver of
any provision of subsection 2.1A(iii) or of any other provision of this
Agreement relating to the Swing Line Loan Commitment or the Swing Line Loans
shall be effective without the written concurrence of Swing Line Lender, (iv) no
amendment, modification, termination or waiver of any Letter of Credit and no
amendment, modification, termination or waiver of Section 3 that changes in any
manner the rights and obligations of an Issuing Lender with respect to an
outstanding Letter of Credit shall be effective without the written concurrence
of the Issuing Lender of such Letter of Credit, (v) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of any Agent shall be effective without the written concurrence of
such Agent, (vi) any amendment, modification, termination or waiver of any
provision of this Agreement that adversely affects the rights of Lenders holding
Loans of any Class differently than those holding Loans of any other Class shall
not be effective without the written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each affected Class
and (vii) any amendment which (a) adds a new tranche of term loans to this
Agreement, (b) changes the Base Rate Margin or the Eurodollar Rate Margin
applicable to any Class or (c) amends the interim amortization of any Class,
shall not be effective without the written consent of Lenders holding a majority
in interest of the outstanding Loans and unused Commitments of each Class. Each
such amendment, modification, waiver or consent shall indicate with respect to
each Lender party thereto whether such Lender is executing in the capacity of a
Requisite Lender and/or as a member of a Class, with separate signatures with
respect to each such capacity. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
B. Replacement of Lender. If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this Agreement as
contemplated by the first proviso contained in the first sentence of subsection
10.6A, the consent of the Requisite Lenders is obtained but the consent of one
or more of such other Lenders whose consent is required is not obtained, then
Administrative Agent shall have the right, so long as all non-consenting Lenders
whose individual consent is required are treated as described in either clauses
(A) or (B) below, to either (A) replace each such non-consenting Lender or
Lenders with one or more Replacement Lenders pursuant to subsection 2.9 so long
as at the time of such replacement each outstanding Loan of each such Lender
being replaced is repaid in full and so long as each such Replacement Lender
consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Lender's Commitments and/or repay in full each
outstanding Loan of such Lender, provided that, unless the Commitments that are
terminated, and Loans repaid, pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Lenders or the
increase of the Commitments and/or outstanding Loans of existing Lenders (who in
each case must specifically consent thereto), then in the case of any action
pursuant to preceding clause (B) the Requisite Lenders (determined after giving
effect to the proposed action) shall specifically consent thereto; provided,
further, that Company shall not have the right to terminate such non-consenting
Lender's Commitments and repay in full its outstanding Loans pursuant to clause
(B) if, immediately after the termination of such Lender's Revolving Loan
Commitment, the Revolving Loan Exposure of all Lenders would exceed the
Revolving Loan Commitments of all Lenders; and provided, further, that in any
event Administrative Agent shall not have the right to replace a Lender,
terminate its Commitments or repay its Loans solely as a result of the exercise
of such Lender's rights (and the withholding of any required consent by such
Lender) pursuant to the second proviso contained in the first sentence of
subsection 10.6A.
10.7. Independence of Covenants
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8. Notices
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agents shall not be effective
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and any Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
10.9. Survival of Representations, Warranties and Agreements
A. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall to the extent set forth therein survive the payment of
the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.
10.10. Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of any Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11. Marshalling; Payments Set Aside
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12. Severability
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13. Obligations Several; Independent Nature of Lenders' Rights
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14. Headings
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15. Applicable Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16. Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17. CONSENT TO JURISDICTION AND SERVICE OF PROCESS
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT,
COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(i) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS;
(ii) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS WITH RESPECT TO ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK;
(iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.8;
(iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(v) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE COURTS OF
ANY OTHER JURISDICTION; AND
(vi) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.18. WAIVER OF JURY TRIAL
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19. Confidentiality
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, if applicable, it being understood and agreed by Company that
in any event a Lender may make disclosures to the accountants, auditors,
attorneys, and Affiliates of such Lender or disclosures reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participations therein or disclosures required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any routine compliance
examination or examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further, that in no event shall
any Lender be obligated or required to return any materials furnished by Company
or any of its Subsidiaries.
10.20. Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
EXPRESS SCRIPTS, INC.
By: /s/ George Paz
Name: George Paz
Title:Senior Vice President and Chief
Financial Officer
Notice Address:
14000 Riverport Drive
Maryland Heights, Missouri 63047
Attention:
GUARANTORS:
Diversified POharmaceutical Services, Inc.
ESI Online, Inc.
ESI/VRX Sales Development Co.
Express Scripts Vision Corp.
Healthcare Services, Inc.
IVTx, Inc.
Manged Prescription Network, Inc.
MHI, Inc.
Value Health, Inc.
ValueRx, Inc.
ValueRx Pharmacy Program, Inc.
By: /s/ George Paz
Name: George Paz
Title:Senior Vice President and
Chief Financial Officer
Notice Address:
14000 Riverport Drive
Maryland Heights, Missouri 63047
Attention:
CREDIT SUISSE FIRST BOSTON
as Lead Arranger, Administrative and
Collateral Agent
By: /s/ Gregory R. Perry
Name: Gregory R. Perry
Title:Vice President
By: /s/ William Matthew Carter
Name: William Matthew Carter
Title:Assistant Vice President
Notice Address:
Eleven Madison Avenue
New York, New York 10010
Attention:
BANKERS TRUST COMPANY
as Syndication Agent
By: /s/ Mary Jo Jolly
Name: Mary Jo Jolly
Title:Assistant Vice President
Notice Address:
25th Floor
130 Liberty Street
One Bankers Trust Plaza
New York, NY 10006
Attention:
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Documentation Agent
By: /s/ Arthur Williams
Name: Arthur Williams
Title:
Notice Address:
1 First National Plaza
Chicago, IL 60670
Attention:
MERCANTILE BANK, N.A.
as Co-Documentation Agent
By: /s/ Mary Ann Lemonds
Name: Mary Ann Lemonds
Title:Vice President
Notice Address:
1 Mercantile Center
St. Louis, MO 63101
Attention:
LENDERS:
CREDIT SUISSE FIRST BOSTON
as a Lender
By: /s/ Gregory R. Perry
Name:Gregory R. Perry
Title:Vice President
By: /s/ William S. Lutkins
Name:William S. Lutkins
Title:Vice President
Notice Address:
Eleven Madison Avenue
New York, New York 10010
Attention:
BANKERS TRUST COMPANY
as a Lender
By: /s/ Mary Jo Jolly
Name:Mary Jo Jolly
Title:Assistant Vice President
Notice Address:
25th Floor
130 Liberty Street
One Bankers Trust Plaza
New York, NY 10006
Attention:
ABN AMRO BANK N.A.
as a Lender
By: /s/ Bernard J. McGuigan
Name:Bernard J. McGuigan
Title:Group Vice President and Director
By: /s/ Mary L. Honda
Name:Mary L. Honda
Title:Vice President
Notice Address:
135 S. LaSalle Street
Ste. 625
Chicago, IL 60603
Attn: Tim Finley
Bank of Montreal, as a Lender
By: /s/ R.J. McClorey
Name: R.J. McClorey
Title: Director
The Bank of New York, as a Lender
By: /s/ David G. Shedd
Name: David G. Shedd
Title: Vice President
Notice Address:
The Bank of New York
One Wall Street
19th Floor
New York, NY 10286
Attn: David G. Shedd
Bankboston, N.A., as a Lender
By: /s/ Grace A. Barnett
Name: Grace A. Barnett
Title: Vice President
Notice Address:
100 Federal Street
Ste. 01-10-01
Boston, MA 02110
Attn: Grace A. Barnett
Banque National De Paris, as a Lender
By: /s/ Arnaud Collin du Bocage
Name: Arnaud Collin du Bocage
Title: Executive Vice President and
General Manager
Notice Address:
209 South LaSalle Street
Ste. 500
Chicago, IL 60604
Attn: Jo Ellen Bender
Sr. V.P. and Manager
Osprey Investments Portfolio
By: Citibank, N.A., as Manager
as a Lender
By: /s/ Hans L. Christensen
Name: Hans L. Christensen
Title: Vice President
Notice Address:
599 Lexington Avenue, 26/12
New York, NY 10022
Attn: Bob Ros
City National Bank, as a Lender
By: /s/ George Hayrapetian
Name: George Hayrapetian
Title: Vice President
Notice Address:
400 N. Roxbury Drive, 3rd Floor
Beverly Hills, CA 90210
Attn: Scott Kelly
KZH CNC LLC
as a Lender
By: /s/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
Notice Address:
For Business and/or Credit Matters
Virginia Conway
KZH CNC LLC
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Credit Agricole Indosuez, as a Lender
By: /s/ Raymond A. Falkenberg
Name: Raymond A. Falkenberg
Title: Vice President, Manager
By: /s/ Jean Yves Klein
Name: Jean Yves Klein
Title: Executive Vice President
Notice Address:
55 E. Monroe, Suite 4700
Chicago, IL 60603
Attn: Phillip J. Salter
Vice President
KZH Cypress Tree-1 LLC, as a Lender
By: /s/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
Notice Address:
For Business and/or Credit Matters
Virginia Conway
KZH Cypress Tree-1 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
The First National Bank of Chicago, as a Lender
By: /s/ Arthur Williams
Name: Arthur Williams
Title:
Fleet National Bank, as a Lender
By: /s/ Carol Paige
Name: Carol Paige
Title: Senior Vice President
Notice Addresss:
Fleet Bank
One Federal Street
MAOFD078
Boston, MA 02110
Attn: Carol Paige
Franklin Floating Rate Trust, as a Lender
By: /s/ Chauncey Lufkin
Name: Chauncey Lufkin
Title: Vice President
Notice Address:
777 Mariners Island Boulevard, 3rd Floor
San Mateo, CA 94404
Attn: Madeline Ip
Heller Financial, Inc., as a Lender
By: /s/ Linda W. Wolf
Name: Linda W. Wolf
Title: Senior Vice President
Notice Address:
500 West Monroe Street
Chicago, IL 60661
Attn: Linda W. Wolf
Bayerische Hypo - und Vereinsbank AG
New York Branch, as a Lender
By: /s/ Hans Dick
Name: Hans Dick
Title: Director
By: /s/ Steven Simons
Name: Steven Simons
Title: Associate Director
Notice Address:
150 East 42nd Street
New York, NY 10017-4679
Attn: Steven Simons
KZH ING-2 LLC, as a Lender
By: /s/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
Notice Address:
For Business and/or Credit Matters
Virginia Conway
KZH ING-2 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Bank Boston, N.A., as Trust Administrator
for Longlane Master Trust IV, as a Lender
By: /s/ Renee A. Ross
Name: Renee A. Ross
Title: Managing Director Credit Derivatives
Mellon Bank, N.A., as a Lender
By: /s/ Martin J. Randal
Name: Martin J. Randal
Title: Assistant Vice President
Notice Address:
` Mellon Bank, N.A.
Room 151-4525
One Mellon Bank Center
Pittsburgh, PA 15258
Attn: Martin J. Randal
MERCANTILE BANK, N.A., as a Lender
By: /s/ Mary Ann Lemonds
Name: Mary Ann Lemonds
Title: Vice President
Notice Address:
One Mercantile Center
St. Louis, MO 63101
Attn: Corporate Banking, Service
Industries Group
Merrill Lynch Senior Floating Rate Fund, Inc.
as a Lender
By: /s/ Colleen M. Cunniffe
Name: Colleen M. Cunniffe
Title: Authorized Signatory
Notice Address:
Merrill Lynch Senior Floating Rate Fund
c/o Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, NJ 08536
MICHIGAN NATIONAL BANK, as a Lender
By: /s/ Draga B. Palincas
Name: Draga B. Palincas
Title: Relationship Manager
Notice Address:
2777 Inkster Road 10-36
Farmington Hills, MI 48334
Attn: Draga B. Palincas
Morgan Stanley Dean Witter Prime Income Trust,
as a Lender
By: /s/ Sheila Finnerty
Name: Sheila Finnerty
Title: Vice President
MONY Life Insurance Company, as a Lender
By: /s/ Barry J. Scheinholtz
Name: Barry J. Scheinholtz
Title: Assistant Vice President
Notice Address:
MONY Life Insurance Company
Capital Management Unit
1740 Broadway
New York, NY 10019
Attn: Barry J. Scheinholtz
National City Bank, as a Lender
By: /s/ Joseph D. Robison
Name: Joeseph D. Robison
Title: Vice President
Notice Address:
National City Bank
1900 E. Ninth Street, 7th Floor
Cleveland, OH 44114
Attn: Joseph D. Robison
Nationsbank, N.A., as a Lender
By: /s/ Larry J. Gordon
Name: Larry J. Gordon
Title: Vice President
Notice Address:
700 Louisiana, 8th floor
Houston, TX 77002
Attn: Larry J. Gordon
Pinehurst Trading, Inc., as a Lender
By: /s/ Kelly C. Walker
Name: Kelly C. Walker
Title: Vice President
Notice Address:
NationsBank,N.A.
100 North Tryon Street
NC1-007-06-07
Charlotte, N.C. 28255
Attn: Ms. Kelly C. Walker
Jackson National Life Insurance Company
By: PPM America, Inc., as attorney in fact,
on behalf of Jackson Natinal Life
Insurance Company, as a Lender
By: /s/ Michael King
Name: Michael King
Title: Vice President
Notice Address:
Susan Perrino, PPM America, Inc.
225 W. Wacker Drive, Ste. 1200
Chicago, IL 60606
Tarsa Lewis, Northern Trust
801 S. Canal, Floor CIN
Chicago, IL 60607
Mike Wells, Jackson National Life
225 W. Wacker Drive, Ste. 1200
Chicago, IL 60606
The Prudential Insurance Company of America, as a
Lender
By: /s/ B. Ross Smead
Name: B. Ross Smead
Title: Vice President
Notice Addresss:
100 Mulberry Street
Gateway Center Four, 7th floor
Newark, NJ 07102
Attn: B. Ross Smead
SRF Trading, Inc., as a Lender
By: /s/ Kelly C. Walker
Name: Kelly C. Walker
Title: Vice President
Notice Address:
Stein Roe & Farnham Incorporated
One South Wacker Drive, 33rd Floor
Chicago, IL 60606
Attn: Brian W. Good
Stein Roe & Farnham Incorporated, as Agent
for Keyport Life Insurance Company, as a Lender
By: /s/ Brian W. Good
Name Brian W. Good
Title: Vice President and Portfolio Manager
Stein Roe & Farnham Incorporated
One South Wacker Drive, 33rd Floor
Chicago, IL 60606
Attn: Brian W. Good
KZH Sterling LLC
as a Lender
By: /s/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
Notice Address:
For Business and/or Credit Matters
Virginia Conway
KZH Sterling LLC
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Transamerica Life Insurance and Annuity Company
as a Lender
By: /s/ John M. Casparian
Name: John M. Casparian
Title: Investment Officer
Union Bank of California, N.A.
as a Lender
By: /s/ Virginia Hart
Name: Virginia Hart
Title: Vice President
Notice Address:
445 S. Figueroa Street, 16th Flr.
G16-237
Los Angeles, CA 90071
Attn: Virginia Hart
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of April 1, 1999
by THE UNDERSIGNED (each a "Guarantor" and collectively, "Guarantors") in favor
of and for the benefit of Credit Suisse First Boston as Collateral Agent for and
representative of (in such capacity herein called "Guarantied Party") the Agents
(as hereinafter defined) and the financial institutions party to the Credit
Agreement ("Lenders") referred to below, and, subject to subsection 3.12, for
the benefit of the other Beneficiaries (as hereinafter defined).
RECITALS
A. Express Scripts, Inc., a Delaware corporation ("Company"),
has entered into that certain Credit Agreement dated as of April 1, 1999 with
Credit Suisse First Boston, as Lead Arranger, Administrative Agent and
Collateral Agent, Bankers Trust Company, as Syndication Agent, BT Alex. Brown
Incorporated, as Co-Arranger, The First National Bank of Chicago, as
Co-Documentation Agent and Mercantile Bank, N.A., as Co-Documentation Agent
(collectively "Agents") and Lenders (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined).
B. A portion of the proceeds of the Loans may be advanced to
Guarantors and thus the Guarantied Obligations (as hereinafter defined) are
being incurred for and will inure to the benefit of Guarantors (which benefits
are hereby acknowledged).
C. It is a condition precedent to the making of the initial
Loans under the Credit Agreement that Company's obligations thereunder be
guarantied by Guarantors.
D. Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lenders and Guarantied Party to enter into
the Credit Agreement and to make Loans and other extensions of credit
thereunder, Guarantors hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the following terms
shall have the following meanings unless the context otherwise requires:
"Beneficiaries" means Guarantied Party, Agents and Lenders.
"Guarantied Obligations" has the meaning assigned to that term in
subsection 2.1.
"Guaranty" means this Subsidiary Guaranty, as it may be amended,
supplemented or otherwise modified from time to time.
"payment in full", "paid in full" or any similar term means payment in full
of the Guarantied Obligations, including all principal, interest, costs, fees
and expenses (including reasonable legal fees and expenses) of Beneficiaries as
required under the Loan Documents.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guarantied Obligations. Subject to the provisions of
subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty the due and punctual payment in full of all Guarantied
Obligations when the same shall become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term
"Guarantied Obligations" is used herein in its most comprehensive sense and
includes:
(a) any and all Obligations of Company, in each case now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or unliquidated,
whether due or not due, and however arising under or in connection with the
Credit Agreement and the other Loan Documents, including those arising under
successive borrowing transactions under the Credit Agreement which shall either
continue the Obligations of Company or from time to time renew them after they
have been satisfied and including interest which, but for the filing of a
petition in bankruptcy with respect to Company, would have accrued on any
Guarantied Obligations, whether or not a claim is allowed against Company for
such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Limitation on Amount Guarantied; Contribution by Guarantors. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including any such
right of contribution under subsection 2.2(b).
(b) Guarantors under this Guaranty together desire to allocate among
themselves in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "Funding Guarantor") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "Fair Share
Shortfall" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty determined as of such date, in
the case of any Guarantor, in accordance with subsection 2.2(a); provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect to
any Guarantor for purposes of this subsection 2.2(b), any assets or liabilities
of such Guarantor arising by virtue of any rights to subrogation, reimbursement
or indemnification or any rights to or obligations of contribution hereunder
shall not be considered as assets or liabilities of such Guarantor. "Aggregate
Payments" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Guarantor in respect of this Guaranty (including
in respect of this subsection 2.2(b)) minus (ii) the aggregate amount of all
payments received on or before such date by such Guarantor from the other
Guarantors as contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Guarantors of their obligations as set forth in this subsection
2.2(b) shall not be construed in any way to limit the liability of any Guarantor
hereunder.
2.3 Payment by Guarantors; Application of Payments. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
any Beneficiary may have at law or in equity against any Guarantor by virtue
hereof, that upon the failure of Company to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Guarantied
Party for the ratable benefit of Beneficiaries, an amount equal to the sum of
the unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including interest
which, but for the filing of a petition in bankruptcy with respect to Company,
would have accrued on such Guarantied Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy proceeding)
and all other Guarantied Obligations then owed to Beneficiaries as aforesaid.
All such payments shall be applied promptly from time to time by Guarantied
Party as provided in subsection 2.4D of the Credit Agreement.
2.4 Liability of Guarantors Absolute. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence of an
Event of Default under the Credit Agreement notwithstanding the existence of any
dispute between Company and any Beneficiary with respect to the existence of
such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Company under the Loan Documents and the obligations of any other
guarantor (including any other Guarantor) of the obligations of Company under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against such Guarantor whether or not any action is brought against
Company or any of such other guarantors and whether or not Company is joined in
any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the Guarantied
Obligations shall in no way limit, affect, modify or abridge any Guarantor's
liability for any portion of the Guarantied Obligations which has not been paid.
Without limiting the generality of the foregoing, if Guarantied Party is awarded
a judgment in any suit brought to enforce any Guarantor's covenant to pay a
portion of the Guarantied Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor's liability hereunder in respect of the Guarantied
Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability hereunder, from time to time may (i)
renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guarantied Obligations, (ii)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Guarantied Obligations or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties of
the Guarantied Obligations and take and hold security for the payment of this
Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any other
obligation of any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or hereafter held
by or for the benefit of such Beneficiary in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such Beneficiary may have against any
such security, in each case as such Beneficiary in its discretion may determine
consistent with the Credit Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Guarantor
against Company or any security for the Guarantied Obligations; and (vi)
exercise any other rights available to it under the Loan Documents.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than payment in full
of the Guarantied Obligations), including the occurrence of any of the
following, whether or not any Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Loan
Documents, at law, in equity or otherwise) with respect to the Guarantied
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including provisions relating to events of
default) of the Credit Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Guarantied Obligations, in each case whether or not in
accordance with the terms of the Credit Agreement or such Loan Document or any
agreement relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received pursuant to the
other Loan Documents or from the proceeds of any security for the Guarantied
Obligations) to the payment of indebtedness other than the Guarantied
Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guarantied Obligations; (v) any Beneficiary's
consent to the change, reorganization or termination of the corporate structure
or existence of Company or any of its Subsidiaries and to any corresponding
restructuring of the Guarantied Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guarantied Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in respect of the
Guarantied Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any other
act or thing, which may or might in any manner or to any extent vary the risk of
any Guarantor as an obligor in respect of the Guarantied Obligations.
2.5 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of
Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment or
performance by such Guarantor, to (i) proceed against Company, any other
guarantor (including any other Guarantor) of the Guarantied Obligations or any
other Person, (ii) proceed against or exhaust any security held from Company,
any such other guarantor or any other Person, (iii) proceed against or have
resort to any balance of any deposit account or credit on the books of any
Beneficiary in favor of Company or any other Person, or (iv) pursue any other
remedy in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority or
any disability or other defense of Company including any defense based on or
arising out of the lack of validity or the unenforceability of the Guarantied
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of Company from any cause other than payment in full
of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in the
administration of the Guarantied Obligations, except behavior which amounts to
bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise, which
are or might be in conflict with the terms of this Guaranty and any legal or
equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit
of any statute of limitations affecting such Guarantor's liability hereunder or
the enforcement hereof, (iii) any rights to set-offs, recoupments and
counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices
of dishonor and notices of any action or inaction, including acceptance of this
Guaranty, notices of default under the Credit Agreement or any agreement or
instrument related thereto, notices of any renewal, extension or modification of
the Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
subsection 2.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by law
which limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Guaranty.
2.6 Guarantors' Rights of Subrogation, Contribution, Etc. Each Guarantor
hereby waives, until the Guarantied Obligations shall have been indefeasibly
paid in full and the Commitments shall have terminated and all Letters of Credit
shall have expired or been cancelled, any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against Company or
any of its assets in connection with this Guaranty or the performance by such
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute under common law or
otherwise and including (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that any Beneficiary now has or may hereafter have against Company, and
(c) any benefit of, and any right to participate in, any collateral or security
now or hereafter held by any Beneficiary. In addition, until the Guarantied
Obligations shall have been indefeasibly paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
each Guarantor shall withhold exercise of any right of contribution such
Guarantor may have against any other guarantor (including any other Guarantor)
of the Guarantied Obligations (including any such right of contribution under
subsection 2.2(b)). Each Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against Company,
to all right, title and interest any Beneficiary may have in any such collateral
or security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall
forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.7 Subordination of Other Obligations. Any indebtedness of Company or any
Guarantor now or hereafter held by any Guarantor (the "Obligee Guarantor") is
hereby subordinated in right of payment to the Guarantied Obligations, and any
such indebtedness collected or received by the Obligee Guarantor after an Event
of Default has occurred and is continuing shall be held in trust for Guarantied
Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied
Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations but without affecting, impairing or limiting in any
manner the liability of the Obligee Guarantor under any other provision of this
Guaranty.
2.8 Expenses. Guarantors jointly and severally agree to pay, or cause to be
paid, on demand, and to save Beneficiaries harmless against liability for, any
and all costs and expenses (including reasonable fees and disbursements of
counsel and reasonable allocated costs of internal counsel) incurred or expended
by any Beneficiary in connection with the enforcement of or preservation of any
rights under this Guaranty.
2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guarantied Obligations shall have been paid in
full and the Commitments shall have terminated and all Letters of Credit shall
have expired or been cancelled. Each Guarantor hereby irrevocably waives any
right to revoke this Guaranty as to future transactions giving rise to any
Guarantied Obligations.
2.10 Rights Cumulative. The rights, powers and remedies given to
Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in any of the other Loan Documents or any
agreement between any Guarantor and any Beneficiary or Beneficiaries or between
Company and any Beneficiary or Beneficiaries. Any forbearance or failure to
exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.11 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty. (a) So
long as any Guarantied Obligations remain outstanding, no Guarantor shall,
without the prior written consent of Guarantied Party acting pursuant to the
instructions of Requisite Lenders, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantors under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or by any
defense which Company may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.12 Notice of Events. As soon as Guarantor obtains knowledge thereof,
Guarantor shall give Guarantied Party written notice of any condition or event
which has resulted in (a) a material adverse change in the financial condition
of Guarantor or Company or (b) any Event of Default or Potential Event of
Default.
2.13 Set Off. In addition to any other rights any Beneficiary may have
under law or under this Guaranty, such Beneficiary is authorized at any time or
from time to time while an Event of Default has occurred and is continuing,
without notice (any such notice being hereby expressly waived), to set off and
to appropriate and to apply any and all deposits (general or special, including
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness of such Beneficiary owing to Guarantor and any other
property of Guarantor held by any Beneficiary to or for the credit or the
account of Guarantor against and on account of the Guarantied Obligations and
liabilities of Guarantor to any Beneficiary under this Guaranty.
SECTION 3. MISCELLANEOUS
3.1 Survival of Warranties. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Guaranty and the
other Loan Documents and any increase in the Commitments under the Credit
Agreement.
3.2 Notices. Any communications between Guarantied Party and any Guarantor
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Credit Agreement, on the signature
pages hereof or to such other addresses as each such party may in writing
hereafter indicate. Any notice, request or demand to or upon Guarantied Party or
any Guarantor shall not be effective until received.
3.3 Severability. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
3.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Guarantied Party and, in the case of any such amendment or
modification, each Guarantor against whom enforcement of such amendment or
modification is sought. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
3.5 Headings. Section and subsection headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
3.6 Applicable Law; Rules of Construction. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Guaranty mutatis mutandis.
3.7 Successors and Assigns. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Beneficiaries and their respective
successors and assigns. No Guarantor shall assign this Guaranty or any of the
rights or obligations of such Guarantor hereunder without the prior written
consent of all Lenders. Any Beneficiary may, without notice or consent, assign
its interest in this Guaranty in whole or in part. The terms and provisions of
this Guaranty shall inure to the benefit of any transferee or assignee of any
Loan, and in the event of such transfer or assignment the rights and privileges
herein conferred upon such Beneficiary shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
3.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GUARANTOR IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
3.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each
Guarantor and, by its acceptance of the benefits hereof, each Beneficiary, each
(i) acknowledges that this waiver is a material inducement for such Guarantor
and Beneficiaries to enter into a business relationship, that such Guarantor and
Beneficiaries have already relied on this waiver in entering into this Guaranty
or accepting the benefits thereof, as the case may be, and that each will
continue to rely on this waiver in their related future dealings and (ii)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED
BY GUARANTIED PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
3.10 No Other Writing. This writing is intended by Guarantors and
Beneficiaries as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
3.11 Further Assurances. At any time or from time to time, upon the request
of Guarantied Party, Guarantors shall execute and deliver such further documents
and do such other acts and things as Guarantied Party may reasonably request in
order to effect fully the purposes of this Guaranty.
3.12 Additional Guarantors. The initial Guarantors hereunder shall be such
of the Subsidiaries of Company as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
Guarantor"), by executing a counterpart of this Guaranty. Upon delivery of any
such counterpart to Administrative Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of Administrative Agent not to cause
any Subsidiary of Company to become an Additional Guarantor hereunder. This
Guaranty shall be fully effective as to any Guarantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Guarantor hereunder.
3.13 Counterparts; Effectiveness. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by Guarantied Party of written or telephonic
notification of such execution and authorization of delivery thereof.
3.14 Guarantied Party as Agent.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders. Guarantied Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that Guarantied
Party shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the instructions of Requisite Lenders.
(b) Guarantied Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Guarantied Party under this Guaranty;
and appointment of a successor Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Guarantied Party
under this Guaranty. Upon the acceptance of any appointment as Agent under
subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Guarantied Party under this Guaranty, and the retiring or removed Guarantied
Party under this Guaranty shall promptly (i) transfer to such successor
Guarantied Party all sums held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Guarantied Party under this Guaranty, and (ii) take such
other actions as may be necessary or appropriate in connection with the
assignment to such successor Guarantied Party of the rights created hereunder,
whereupon such retiring or removed Guarantied Party shall be discharged from its
duties and obligations under this Guaranty. After any retiring or removed
Guarantied Party's resignation or removal hereunder as Guarantied Party, the
provisions of this Guaranty shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Guaranty while it was Guarantied Party
hereunder.
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
DIVERSIFIED PHARMACEUTICAL SERVICES, INC.
ESI ONLINE, INC.
ESI/VRX SALES DEVELOPMENT CO.
EXPRESS SCRIPTS VISION CORP.
HEALTH CARE SERVICES, INC.
IVTX, INC.
MANAGED PRESCRIPTION NETWORK, INC.
MHI, INC.
VALUE HEALTH, INC.
VALUERX, INC.
VALUERX PHARMACY PROGRAM, INC.
By: /s/ George Paz
Name: George Paz
Title: Senior Vice President
Notice Address:
14000 Riverport Drive
Maryland Heights, Missouri 63047
Attention:
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, ____.
(Name of Additional Guarantor)
By:
Title:
Address:
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "Agreement") is dated as of April 1,
1999 and entered into by and between Express Scripts, Inc., a Delaware
corporation ("Pledgor"), and Credit Suisse First Boston, as Collateral Agent for
and representative of (in such capacity herein called "Secured Party") the
financial institutions ("Lenders") and agents ("Agents") party to the Credit
Agreement referred to below.
PRELIMINARY STATEMENTS
A. Secured Party, Agents and Lenders have entered into a Credit Agreement
dated as of April 1, 1999 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement," the terms defined therein and not
otherwise defined herein being used herein as therein defined) with Pledgor
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "Pledged
Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged Shares
and any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time r eceived, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights;
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of this
Agreement, the term "proceeds" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any indemnity or guaranty payable to Pledgor or Secured Party from
time to time with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery or, as applicable, shall be accompanied by Pledgor's
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Secured Party.
Upon the occurrence and during the continuation of an Event of Default (as
defined in the Credit Agreement), Secured Party shall have the right to transfer
to or to register in the name of Secured Party or any of its nominees any or all
of the Pledged Collateral, subject only to the revocable rights specified in
Section 7(a); provided that, except in the case of a bankruptcy default or an
acceleration of the Loan, no such transfer or registration shall be made without
notice to Pledgor. In addition, Secured Party shall have the right at any time
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents and warrants
as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute all of
the issued and outstanding shares of stock of each issuer thereof organized
under the laws of a state of the United States (each a "U.S. Issuer") and 65% of
the issued and outstanding shares of stock of each other issuer thereof (each a
"Non-U.S. Issuer"), and there are no outstanding warrants, options or other
rights to purchase, or other agreements outstanding with respect to, or property
that is now or hereafter convertible into, or that requires the issuance or sale
of, any Pledged Shares or other equity interests of the issuer of Pledged
Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral, (ii) create or suffer to
exist any Lien upon or with respect to any of the Pledged Collateral, except for
the security interest under this Agreement, or (iii) permit any issuer of
Pledged Shares to merge or consolidate unless all the outstanding capital stock
of the surviving or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no cash, securities or other property is distributed in
respect of the outstanding shares of any other constituent corporation; provided
that in the event Pledgor makes an Asset Sale permitted by the Credit Agreement
and the assets subject to such Asset Sale are Pledged Shares, Secured Party
shall release the Pledged Shares that are the subject of such Asset Sale to
Pledgor free and clear of the lien and security interest under this Agreement
concurrently with the consummation of such Asset Sale; provided, further that,
as a condition precedent to such release, Secured Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Secured Party of the Net Asset Sale Proceeds of such Asset Sale;
if required by, and in accordance with the provisions of, the Credit Agreement.
(b) (i) cause each issuer of Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares except to the extent
that such pledge would result in the pledge of more than 65% of the stock of a
Non-U.S. Issuer, and (iii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor unless such subsidiary is a Non-U.S. Issuer, in
which case no more than 65% of such shares of stock shall be pledged hereunder;
(c) promptly deliver to Secured Party all written notices received by it
with respect to the Pledged Collateral; and
(d) pay promptly when due all taxes, assessments and governmental charges
or levies imposed upon, and all claims against, the Pledged Collateral, except
to the extent the validity thereof is being contested in good faith; provided
that Pledgor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale of the
Pledged Collateral under any judgment, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (ii) at Secured Party's reasonable request, appear in and defend any action
or proceeding that may affect Pledgor's title to or Secured Party's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b) or (c), promptly (and in any event within 30 days) deliver to
Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially the
form of Exhibit I annexed hereto (a "Pledge Amendment"), in respect of the
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Shares pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement in a manner which would not have a material adverse effect on the
value of the Pledged Collateral or any part thereof. It is understood, however,
that neither (A) the voting by Pledgor of any Pledged Shares for or Pledgor's
consent to the election of directors at a regularly scheduled annual or other
meeting of stockholders or with respect to incidental matters at any such
meeting nor (B) Pledgor's consent to or approval of any action otherwise
permitted under this Agreement and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement within the
meaning of this Section 7(a)(i).
(ii) Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the lien of this Agreement, any and all dividends paid in respect
of the Pledged Collateral; provided, however, that any and all
(A) dividends paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in exchange for any Pledged
Collateral, shall be, and shall forthwith be delivered to Secured Party to hold
as, Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Secured Party, be segregated from the other property or funds
of Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in
the same form as so received (with all necessary endorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such dividend payment orders and other
instruments as Pledgor may from time to time reasonably request for the purpose
of enabling Pledgor to receive the dividends which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of Default:
(i) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
(ii) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to receive the dividends which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends; and
(iii) upon written notice from Secured Party to Pledgor, all dividends
which are received by Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid over
to Secured Party as Pledged Collateral in the same form as so received (with any
necessary endorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders, calling special meetings of shareholders and voting at
such meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence of an
Event of Default and during the continuance thereof and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including filing one or
more financing or continuation statements, or amendments thereto, relative to
all or any part of the Pledged Collateral without the signature of Pledgor;
provided, that unless an Event of Default has occurred and is continuing,
Secured Party may not (i) receive, endorse and collect any instruments made
payable to Pledgor representing any dividend or other distribution in respect of
the Pledged Collateral or any part thereof; or (ii) file any claims or take any
action or institute any proceedings that Secured Party may deem necessary or
desirable for the collection of any of the Pledged Collateral or otherwise to
enforce the rights of Secured Party with respect to any of the Pledged
Collateral.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Pledged Collateral), and Secured Party
may also in its sole discretion, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party or any Lender may
be the purchaser of any or all of the Pledged Collateral at any such sale and
Secured Party, as agent for and representative of Lenders (but not any Lender or
Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing), shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at any such public sale, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for
any Pledged Collateral payable by Secured Party at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten Business Days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives any claims against Secured Party arising by
reason of the fact that the price at which any Pledged Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall be liable for the
deficiency and the fees of any attorneys employed by Secured Party to collect
such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, Pledgor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that Secured Party shall have
no obligation to engage in public sales and no obligation to delay the sale of
any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Secured Party all such information as Secured Party may request in order to
determine the number of shares and other instruments included in the Pledged
Collateral which may be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
SECTION 12. Application of Proceeds. All proceeds received by Secured Party
in respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral shall be applied as provided in subsection 2.4D
of the Credit Agreement.
SECTION 13. Continuing Security Interest; Transfer of Loans. This
Agreeement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in ful force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provsions of subsection 10.1 of the
Credit Agreement, any Lender may assign or otherwise transfer any Loans held by
it to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to Lenders herein or otherwise. Upon
the payment in full of all Secured Obligations, the cancellation or termination
of the Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest granted hereby shall terminate and all rights
to the Pledged Collateral shall revert to Pledgor. Upon any such termination
Secured Party will, at Pledgor's expense, execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination and
Pledgor shall be entitled to te return, upon its request and at its expense,
against receipt and without recourse to Secured Party, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 14. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Pledged Collateral), solely in accordance with this Agreement
and the Credit Agreement; provided that Secured Party shall exercise, or refrain
from exercising, any remedies provided for in Section 11 in accordance with the
instructions of Requisite Lenders.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 15. Amendments; Etc. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 16. Notices. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as provided in
subsection 10.8 of the Credit Agreement.
SECTION 17. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 18. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 19. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 20. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms used in Articles 8
and 9 of the Uniform Commercial Code in the State of New York are used herein as
therein defined.
SECTION 21. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
EXPRESS SCRIPTS, INC.,
as a Pledgor
By: /s/ George Paz
Name: George Paz
Title: Senior Vice President
CREDIT SUISSE FIRST BOSTON,
as Secured Party
By: /s/ William S. Lutkins
Name: William S. Lutkins
Title:Vice President
By: /s/ William Matthew Carter
Name: William Matthew Carter
Title: Assistant Vice President
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of April 1,
1999 between Exress Scripts, Inc., as Pledgor, and Credit Suisse First Boston,
as Secured Party.
Part A
Stock Certificate Number of
Stock Issuer Class of Stock Nos. Par Value Shares
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT I
PLEDGE AMENDMENT
This Pledge Amendment, dated __________, ____, is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
April 1, 1999, between the undersigned and Credit Suisse First Boston, as
Secured Party (the "Pledge Agreement," capitalized terms defined therein being
used herein as therein defined), and that the Pledged Shares listed on this
Pledge Amendment shall be deemed to be part of the Pledged Shares and shall
become part of the Pledged Collateral and shall secure all Secured Obligations.
EXPRESS SCRIPTS, INC.
By:
Title:
Stock Certificate Number of
Stock Issuer Class of Stock Nos. Par Value Shares
- -------------------------------------------------------------------------------
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "Agreement") is dated
as of April 1, 1999 and entered into by and between all Subsidiaries of the
Company that are signatories hereto (each as a "Pledgor" and collectively all
"Pledgors") and Credit Suisse First Boston as Collateral Agent for and
representative of (in such capacity herein called "Secured Party"), the
financial institutions ("Lenders") and agents ("Agents") party to the Credit
Agreement referred to below.
PRELIMINARY STATEMENTS
A. Each Pledgor is the legal and beneficial owner of the
shares of stock (the "Pledged Shares") described in Part A of Schedule I annexed
hereto and issued by the corporations named therein.
B. Secured Party, Agents and Lenders have entered into a
Credit Agreement dated as of April 1, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement," the terms defined
therein and not otherwise defined herein being used herein as therein defined)
with Express Scripts, Inc., a Delaware corporation ("Company"), pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Company.
C. Pledgor has executed and delivered that certain Subsidiary
Guaranty dated as of April 1, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Guaranty") in favor of Secured Party for the
benefit of Lenders pursuant to which Pledgor has guarantied the prompt payment
and performance when due of all obligations of Company under the Credit
Agreement.
D. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "Pledged
Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged Shares and
any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any issuer
of the Pledged Shares from time to time acquired by Pledgor in any manner (which
shares shall be deemed to be part of the Pledged Shares), the certificates or
other instruments representing such additional shares, securities, warrants,
options or other rights and any interest of Pledgor in the entries on the books
of any financial intermediary pertaining to such additional shares, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such additional shares, securities, warrants,
options or other rights;
(c) all shares of, and all securities convertible into and warrants, options and
other rights to purchase or otherwise acquire, stock of any Person that, after
the date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of Pledgor (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights;
(d) to the extent not covered by clauses (a) through (d) above, all proceeds of
any or all of the foregoing Pledged Collateral. For purposes of this Agreement,
the term "proceeds" includes whatever is receivable or received when Pledged
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to Pledgor or Secured Party from time to time
with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement secures, and the Pledged
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Guaranty and all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a petition
in bankruptcy with respect to Company, would accrue on such obligations, whether
or not a claim is allowed against Company for such interest in the related
bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery or, as applicable, shall be accompanied by Pledgor's
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Secured Party.
Upon the occurrence and during the continuation of an Event of Default (as
defined in the Credit Agreement), Secured Party shall have the right to transfer
to or to register in the name of Secured Party or any of its nominees any or all
of the Pledged Collateral, subject only to the revocable rights specified in
Section 7(a); provided that, except in the case of a bankruptcy default or an
acceleration of the Loan, no such transfer or registration shall be made without
notice to Pledgor. In addition, Secured Party shall have the right at any time
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents and warrants
as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute all of the
issued and outstanding shares of stock of each issuer thereof organized under
the laws of a state of the United States (each a "U.S. Issuer") and 65% of the
issued and outstanding shares of stock of each other issuer thereof (each a
"Non-U.S. Issuer"), and there are no outstanding warrants, options or other
rights to purchase, or other agreements outstanding with respect to, or property
that is now or hereafter convertible into, or that requires the issuance or sale
of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and beneficial
owner of the Pledged Collateral free and clear of any Lien except for the
security interest created by this Agreement.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i) sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral, (ii) create or suffer to exist
any Lien upon or with respect to any of the Pledged Collateral, except for the
security interest under this Agreement, or (iii) permit any issuer of Pledged
Shares to merge or consolidate unless all the outstanding capital stock of the
surviving or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no cash, securities or other property is distributed in
respect of the outstanding shares of any other constituent corporation; provided
that in the event Pledgor makes an Asset Sale permitted by the Credit Agreement
and the assets subject to such Asset Sale are Pledged Shares, Secured Party
shall release the Pledged Shares that are the subject of such Asset Sale to
Pledgor free and clear of the lien and security interest under this Agreement
concurrently with the consummation of such Asset Sale; provided, further that,
as a condition precedent to such release, Secured Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Secured Party of the Net Asset Sale Proceeds of such Asset Sale;
(b) (i) cause each issuer of Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares except to the extent
that such pledge would result in the pledge of more than 65% of the stock of a
Non-U.S. Issuer, and (iii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor unless such subsidiary is a Non-U.S. Issuer, in
which case no more than 65% of such shares of stock shall be pledged hereunder;
(c) promptly deliver to Secured Party all written notices received by it with
respect to the Pledged Collateral; and
(d) pay promptly when due all taxes, assessments and governmental charges or
levies imposed upon, and all claims against, the Pledged Collateral, except to
the extent the validity thereof is being contested in good faith; provided that
Pledgor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale of the
Pledged Collateral under any judgment, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (ii) at Secured Party's reasonable request, appear in and defend any action
or proceeding that may affect Pledgor's title to or Secured Party's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional shares of
stock or other securities required to be pledged hereunder as provided in
Section 5(b) or (c), promptly (and in any event within 30 days) deliver to
Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially the
form of Exhibit I annexed hereto (a "Pledge Amendment"), in respect of the
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Shares pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement in a manner which would not have a material adverse effect on the
value of the Pledged Collateral or any part thereof. It is understood, however,
that neither (A) the voting by Pledgor of any Pledged Shares for or Pledgor's
consent to the election of directors at a regularly scheduled annual or other
meeting of stockholders or with respect to incidental matters at any such
meeting nor (B) Pledgor's consent to or approval of any action otherwise
permitted under this Agreement and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement within the
meaning of this Section 7(a)(i).
(ii) Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the lien of this Agreement, any and all dividends paid in respect
of the Pledged Collateral; provided, however, that any and all
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in
trust for the benefit of Secured Party, be segregated from the other
property or funds of Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so received (with all
necessary endorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such dividend payment orders and other
instruments as Pledgor may from time to time reasonably request for the purpose
of enabling Pledgor to receive the dividends which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of Default:
(i) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
(ii) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to receive the dividends which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends; and
(iii) upon written notice from Secured Party to Pledgor, all dividends
which are received by Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid over
to Secured Party as Pledged Collateral in the same form as so received (with any
necessary endorsements). (c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
to Section 7(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i)
Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request and (ii)
without limiting the effect of the immediately preceding clause (i), Pledgor
hereby grants to Secured Party an irrevocable proxy to vote the Pledged Shares
and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Shares would be entitled (including giving or withholding
written consents of shareholders, calling special meetings of shareholders and
voting at such meetings), which proxy shall be effective, automatically and
without the necessity of any action (including any transfer of any Pledged
Shares on the record books of the issuer thereof) by any other Person (including
the issuer of the Pledged Shares or any officer or agent thereof), upon the
occurrence of an Event of Default and during the continuance thereof and which
proxy shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor, Secured Party or
otherwise, from time to time in Secured Party's discretion to take any action
and to execute any instrument that Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including filing one or more
financing or continuation statements, or amendments thereto, relative to all or
any part of the Pledged Collateral without the signature of Pledgor; provided,
that unless an Event of Default has occurred and is continuing, Secured Party
may not (i) receive, endorse and collect any instruments made payable to Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof; or (ii) file any claims or take any action or
institute any proceedings that Secured Party may deem necessary or desirable for
the collection of any of the Pledged Collateral or otherwise to enforce the
rights of Secured Party with respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform any agreement
contained herein, Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 13(b).
SECTION 10. Standard of Care. The powers conferred on Secured Party hereunder
are solely to protect its interest in the Pledged Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Pledged Collateral in its possession and
the accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Pledged Collateral, it being understood that Secured
Party shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Secured Party has or is
deemed to have knowledge of such matters, (b) taking any necessary steps (other
than steps taken in accordance with the standard of care set forth above to
maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured Party
may exercise in respect of the Pledged Collateral, in addition to all other
rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code as in effect in any relevant jurisdiction (the "Code") (whether or not the
Code applies to the affected Pledged Collateral), and Secured Party may also in
its sole discretion, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Secured Party or any Lender may be the
purchaser of any or all of the Pledged Collateral at any such sale and Secured
Party, as agent for and representative of Lenders (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing), shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten Business Days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives any claims against Secured Party arising by
reason of the fact that the price at which any Pledged Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall be liable for the
deficiency and the fees of any attorneys employed by Secured Party to collect
such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, Pledgor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that Secured Party shall have
no obligation to engage in public sales and no obligation to delay the sale of
any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all of the
Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Secured Party all such information as Secured Party may request in order to
determine the number of shares and other instruments included in the Pledged
Collateral which may be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
SECTION 12. Application of Proceeds. All proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral shall be applied as provided in subsection 2.4D
of the Credit Agreement.
SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each Lender for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including reasonable counsel fees and
disbursements) or disbursements of any kind or nature whatsoever in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including enforcement of this Agreement),
except to the extent such claims, losses or liabilities result solely from
Secured Party's or such Lender's gross negligence or willful misconduct.
(b) Pledgor shall pay to Secured Party upon demand the amount of any and all
actual and reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by Pledgor to perform or observe any of the provisions hereof.
SECTION 14. Continuing Security Interest; Transfer of Loans. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon
any such termination Secured Party will, at Pledgor's expense, execute and
deliver to Pledgor such documents as Pledgor shall reasonably request to
evidence such termination and Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Secured
Party, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
SECTION 15. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Pledged Collateral), solely in accordance with this Agreement
and the Credit Agreement; provided that Secured Party shall exercise, or refrain
from exercising, any remedies provided for in Section 11 in accordance with the
instructions of Requisite Lenders.
(b) Secured Party shall at all times be the same Person that is Administrative
Agent under the Credit Agreement. Written notice of resignation by
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as Agent
under subsection 9.5 of the Credit Agreement by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Secured Party under this Agreement, and the retiring or removed Secured
Party under this Agreement shall promptly (i) transfer to such successor Secured
Party all sums, securities and other items of Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder, whereupon
such retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. Amendments; Etc. No amendment, modification, termination or waiver
of any provision of this Agreement, and no consent to any departure by Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 17. Notices. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice delivered
to the other party hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Secured Party in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 19. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 21. Governing Law; Terms; Rules of Construction. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Credit Agreement shall be applicable to this Agreement
mutatis mutandis.
SECTION 22. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, PLEDGOR, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO PLEDGOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 18;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PLEDGOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 23 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1402 OR OTHERWISE.
SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Pledgor and Secured Party each acknowledge that this
waiver is a material inducement for Pledgor and Secured Party to enter into a
business relationship, that Pledgor and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Pledgor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 24. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
IN WITNESS WHEREOF, Pledgors and Secured Party have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ESI CANADA HOLDINGS, INC.
VALUE HEALTH, INC.
VALUERX, INC.
Each as a Pledgor
By: /s/ George Paz
Name: George Paz
Title: Senior Vice President
Notice Address:
14000 Riverport Drive
Maryland Heights, Missouri 63047
Attention:
CREDIT SUISSE FIRST BOSTON,
as Secured Party
By: /s/ Gregory R. Perry
Name: Gregory R. Perry
Title: Vice President
By: /s/ William S. Lutkins
Name: William S. Lutkins
Title:Vice President
Notice Address:
Eleven Madison Avenue
New York, New York 10010
Attention:
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated
as of April 1, 1999 between each of the Pledgors party thereto, and Credit
Suisse First Boston, as Secured Party.
Part A
Stock Certificate Number of
Stock Issuer Class of Stock Nos. Par Value Shares
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT I
PLEDGE AMENDMENT
This Pledge Amendment, dated __________, ____, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated April 1, 1999, between the Pledgors party thereto and
Credit Suisse First Boston, as Secured Party (the "Pledge Agreement,"
capitalized terms defined therein being used herein as therein defined), and
that the Pledged Shares listed on this Pledge Amendment shall be deemed to be
part of the Pledged Shares and shall become part of the Pledged Collateral and
shall secure all Secured Obligations.
[NAME OF PLEDGOR]
By:
Title:
Stock Certificate Number of
Stock Issuer Class of Stock Nos. Par Value Shares
- -------------------------------------------------------------------------------
EXHIBIT 12
EXPRESS SCRIPTS, INC.
STATEMENTS RE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED JUNE 30, 1999 AND
YEARS ENDED DECEMBER 31, 1998, 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
June 30, December 31,
--------------------------------------------------------------------------
(in thousands) 1999 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
Fixed charges:
<S> <C> <C> <C> <C> <C> <C>
Interest expense (1) $29,453 $20,230 $ 225 $ 59 $ 86 $ 68
Interest portion of rental expense (2) 1,276 1,292 757 700 627 443
----------------------------------------------------------------------------------------
Total fixed charges 30,729 21,522 982 759 713 511
Earnings:
Income before income taxes and
extraordinary items (3) 37,847 76,240 54,706 43,080 29,634 20,776
----------------------------------------------------------------------------------------
Total adjusted earnings $68,576 $97,762 $55,688 $43,839 $30,347 $21,287
========================================================================================
Ratio of earnings to fixed charges 2.23 4.54 56.71 57.76 42.56 41.66
========================================================================================
<FN>
(1) Interest expense includes the amortization on the Senior Notes
discount and deferred financing fees.
(2) The interest portion of rental expense is calculated as one-third
of rental expense.
(3) Income before income taxes and extraordinary items includes
corporate restructuring charges of $9,400,000 and $1,651,000 for
the first six months ending June 30, 1999 and the year ended
December 31, 1998, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000885721
<NAME> Express Scripts, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 82,283
<SECURITIES> 0
<RECEIVABLES> 576,833
<ALLOWANCES> 15,586
<INVENTORY> 45,028
<CURRENT-ASSETS> 736,293
<PP&E> 129,215
<DEPRECIATION> 41,142
<TOTAL-ASSETS> 2,040,164
<CURRENT-LIABILITIES> 747,655
<BONDS> 724,048
0
0
<COMMON> 389
<OTHER-SE> 567,588
<TOTAL-LIABILITY-AND-EQUITY> 2,040,164
<SALES> 996,749
<TOTAL-REVENUES> 996,749
<CGS> 869,989
<TOTAL-COSTS> 951,886
<OTHER-EXPENSES> 9,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,231
<INCOME-PRETAX> 13,676
<INCOME-TAX> 6,658
<INCOME-CONTINUING> 7,018
<DISCONTINUED> 0
<EXTRAORDINARY> 6,597
<CHANGES> 0
<NET-INCOME> 421
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
