<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
May 29, 1996
------------------------------------------------
Date of Report (Date of earliest event reported)
Renal Treatment Centers, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 1-14142 23-2518331
- ----------------------- ----------- --------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
1180 W. Swedesford Road, Building 2, Suite 300, Berwyn, PA 19312
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 610/644-4796
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<PAGE>
ITEM 2. Acquisition or Disposition of Assets
- ---------------------------------------------
On May 29, 1996, Renal Treatment Centers, Inc. (the "Company") acquired
substantially all of the non-current and certain other assets of two affiliated
corporations, Kidney Center of Delaware County, Ltd. ("KCDC") and Kidney Center
of Chester County, Ltd. ("KCCC"), each of which operates a Medicare-certified
end-stage renal disease facility (collectively "the Facilities") in the suburban
Philadelphia, Pennsylvania area. KCDC is owned by James Clark, M.D. and Richard
R. Soricelli, M.D. and KCCC is owned by James Clark, M.D., Richard R. Soricelli,
M.D., Hardy Sorkin, M.D. and George Randolph Westby, M.D. The parties made the
purchase and sale pursuant to two separate asset purchase agreements ("the
Agreements") dated May 29, 1996, with an effective time of May 31, 1996 at 11:59
PM, between a subsidiary of the Company and liquidating trusts into which KCDC
and KCCC, respectively, had transferred their assets.
The Company acquired all of KCDC's and KCCC's inventory, equipment, patient
list, goodwill and other non-current assets used in operation of the Facilities.
As part of the transaction, the Company entered into covenants not to compete
with each of the selling physicians and concurrently entered into new agreements
and received assignments of existing agreements to provide acute dialysis
services at an aggregate of nine area hospitals. In addition, the Company
entered into a physician director agreement with a physician group affiliated
with the selling physicians to act as Physician Director of the Facilities.
The Company paid total cash consideration of $26,618,496 and determined the
consideration based on negotiations with KCDC and KCCC and the fair market value
of the assets used in the facilities as a going concern.
The cash consideration was funded entirely through borrowings under the
Company's credit agreement with a consortium of banks.
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ITEM 5. Other Events
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On June 5, 1996, the Company and the consortium of banks under the Company's
existing credit facility amended and restated the credit facility (as amended
and restated, the "Credit Agreement") to increase the amount available under a
line of credit which may be utilized to fund acquisition and development
activities and general working capital requirements from $75,000,000 to
$100,000,000. In addition, certain changes were made to the terms of the credit
facility, including amendments to certain covenants, the amortization schedule,
the interest rates and the events of default. In connection with the amendment
of the Credit Agreement, a term loan in the principal amount of $3,125,000
payable in quarterly installments through June 1997 was repaid through
borrowings under the line of credit.
In a news release issued on June 10, 1996, the Company announced the amending of
the Credit Agreement and the private placement of $125,000,000 of 5 5/8%
Convertible Subordinated Notes due 2006 in accordance with Rule 144A and
Regulation S under the Securities Act of 1933, as amended. A copy of the news
release is attached to this Report and incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired.
--------------------------------------------
The historical financial statements of the acquired companies required
under Rule 3-05 of Regulation S-X are not yet available. Pursuant to Item
7(a)(4) of Form 8-K, such financial statements will be filed as soon as
practicable, but not later than August 13, 1996.
(b) Pro Forma Financial Information.
--------------------------------
The pro forma financial information required by Article 11 of Regulation S-
X is not yet available. Pursuant to Item 7(b)(2) of Form 8-K, such pro
forma financial information will be filed as soon as practicable, but not
later than August 13, 1996.
(c) Exhibits.
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The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
2.1 Asset Purchase Agreement, Dated as of May 29, 1996, with an
effective time of May 31, 1996 at 11:59 PM, between Renal
Treatment Centers-Pennsylvania, Inc. and KCCC Liquidating
Trust (the exhibits and schedules to this agreement have
been omitted pursuant to Item 601(b)(2) of Regulation S-K
and will be provided supplementally to the Commission upon
its request).
2.2 Asset Purchase Agreement, Dated as of May 29, 1996, with an
effective time of May 31, 1996 at 11:59 PM, between Renal
Treatment Centers-Pennsylvania, Inc. and KCDC Liquidating
Trust (the exhibits and schedules to this agreement have
been omitted pursuant to Item 601(b)(2) of Regulation S-K
and will be provided supplementally to the Commission upon
its request).
99.1 Fourth Amended and Restated Loan Agreement dated as of June
5, 1996 between Renal Treatment Centers, Inc. and the
various lenders set forth therein.
99.2 Press release dated June 10, 1996 issued by Renal
Treatment Centers, Inc.
</TABLE>
3
<PAGE>
SIGNATURES
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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 hereunto duly authorized.
RENAL TREATMENT CENTERS, INC.
Date June 13, 1996 By: /s/ RONALD H. RODGERS, JR.
---------------------------- ------------------------------
Ronald H. Rodgers, Jr.
Vice President - Finance
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C>
2.1 Asset Purchase Agreement, Dated as of May 29, 1996, with an
effective time of May 31, 1996 at 11:59 PM, between
Renal Treatment Centers-Pennsylvania, Inc. and KCCC Liquidating
Trust (the exhibits and schedules to this agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K and will
be provided supplementally to the Commission upon its request).
2.2 Asset Purchase Agreement, Dated as of May 29, 1996, with an
effective time of May 31, 1996 at 11:59 PM, between
Renal Treatment Centers-Pennsylvania, Inc. and KCDC Liquidating
Trust (the exhibits and schedules to this agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K and will
be provided supplementally to the Commission upon its request).
99.1 Fourth Amended and Restated Loan Agreement dated as of June 5, 1996 between
Renal Treatment Centers, Inc. and the various lenders set forth therein.
99.2 Press release dated June 10, 1996 issued by Renal Treatment Centers, Inc.
</TABLE>
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DATED: As of May 29, 1996
ASSET PURCHASE AGREEMENT
BETWEEN RENAL TREATMENT CENTERS -
PENNSYLVANIA, INC.
1180 W. Swedesford Road
Suite 300, Building 2
Berwyn, PA 19312
("Buyer")
<TABLE>
<CAPTION>
AND KCCC LIQUIDATING TRUST
710 East Lancaster Avenue
Exton, PA 19341
("Seller")
<S> <C> <C>
A. SCOPE Purchase of Substantially all the Non-Current and
Certain Other Assets of Seller's Dialysis Services
Business.
B. PURCHASE PRICE $9,831,500
C. CLOSING DATE On or prior to May 29, 1996
D. EFFECTIVE DATE May 31, 1996, at 11:59 p.m.
AND TIME
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
PARTIES TO AGREEMENT 4
BODY OF AGREEMENT 4
<S> <C> <C>
Article One Sale and Purchase 4
Article Two The Assets and Assumed Liabilities 5
Article Three The Purchase Price 5
Article Four The Closing 6
Article Five Representations and Warranties of Seller 7
Article Six Representations and Warranties of Buyer 13
Article Seven Seller's Obligations Before Closing 14
Article Eight Buyer's Obligations Before Closing 16
Article Nine Conditions Precedent to Buyer's Performance 16
Article Ten Conditions Precedent to Seller's Performance 18
Article Eleven Other Agreements 19
Article Twelve Fees and Expenses 23
Article Thirteen Form of Agreement 23
Article Fourteen Parties 24
Article Fifteen Remedies 24
Article Sixteen Notices 25
SIGNATURES 25
</TABLE>
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ASSET PURCHASE AGREEMENT
EXHIBIT LIST
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("Exhibits")
1.01 Facilities and Hospitals
2.01 Transferred Assets
2.02 Excluded Assets
2.03 Assumed Liabilities
3.04 Allocation of Purchase Price
4.03 Memorandum of Closing (including form of closing documents)
5.02 Seller's Beneficiaries, KCCC's Capital Stock
5.03 Consents and Approvals
5.06 Financial Statements
5.08 Disclosure of Liabilities
5.11 Tangible Asset List
5.12 Contracts
5.14 Patient List
5.15 Physician List
5.16 Insurance Policies
5.18 Litigation and Incident Reports
5.20 Licenses
5.22 Personnel List
5.23 Employee Benefit Plans
9.04 Form of Opinion of Seller's Counsel
9.09 CPA's Report
9.12 Agreements
10.04 Form of Opinion of Buyer's Counsel
SUPPLEMENTAL INFORMATION
------------------------
("Supplemental Information")
5.01 Seller's Liquidating Trust Agreement;
KCCC's Articles or Certificate of Incorporation and Bylaws
5.06(ii) Tax Returns
5.06(iii) HCFA Form 265
5.12 Copies of Contracts
5.18 Incident Reports
5.19 Medicare and Other Surveys, Reports and Deficiency Notices
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 29th day of May,
1996, by and among RENAL TREATMENT CENTERS - PENNSYLVANIA, INC., 1180 W.
Swedesford Road, Suite 300, Building 2, Berwyn, Pennsylvania 19312 ("Buyer") and
KCCC LIQUIDATING TRUST (the "Seller"), 710 East Lancaster Avenue, Exton,
Pennsylvania 19094, a Pennsylvania trust for the benefit of the shareholders of
KIDNEY CENTER OF CHESTER COUNTY, LTD., a Pennsylvania corporation ("KCCC").
WITNESSETH:
----------
WHEREAS, KCCC is the operator of a dialysis services business ("Business")
consisting of the provision of outpatient dialysis services by and through the
dialysis facility ("Facility") as provided in attached Exhibit 1.01 and dialysis
services under arrangement with the hospitals ("Hospitals") as provided in
Exhibit 1.01.
WHEREAS, immediately prior to the execution and delivery of this Agreement,
pursuant to that certain Bill of Sale, Assignment and Assumption Agreement dated
as of the date hereof between KCCC and the Seller (the "Bill of Sale"), KCCC
sold, assigned, transferred and delivered to the Seller all of the assets of
KCCC, including, without limitation, all of the assets of the Business and the
Seller assumed all of the liabilities of KCCC.
WHEREAS, Hardy L. Sorkin, M.D. is the trustee of the Seller (the "Trustee").
NOW THEREFORE, in consideration of the covenants and promises contained in this
Agreement and intending to be legally bound, the parties agree as follows:
ARTICLE ONE
SALE AND PURCHASE
1.01 The Business
------------
The subject of this Agreement is the Business as formerly conducted by KCCC.
1.02 Sale and Purchase of Assets
---------------------------
Subject to the terms and conditions of this Agreement, at the Closing as
provided in Article Four, Seller shall sell, assign and transfer to Buyer and
Buyer shall buy the Assets of the Business, as provided in Section 2.01, free
and clear of any liabilities, security interests, liens,
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claims,and encumbrances, except the Assumed Liabilities as provided in Section
2.03, and liens for accrued but unpaid taxes not yet due and payable to be paid
by Seller when due.
ARTICLE TWO
THE ASSETS AND ASSUMED LIABILITIES
2.01 The Assets
----------
The assets ("Assets") to be sold, assigned and transferred to Buyer consist of
all of the assets and properties of the Business of every kind, character, and
description, whether tangible, intangible, personal or mixed and wherever
located, including those as provided in attached Exhibit 2.01, but excluding the
------------
Excluded Assets as provided in Section 2.02.
2.02 Excluded Assets
---------------
Specifically excluded from the Assets are the assets and properties as provided
in attached Exhibit 2.02 and no others.
------------
2.03 Assumed Liabilities
-------------------
The liabilities to be assumed by Buyer (the "Assumed Liabilities") are as
provided in attached Exhibit 2.03 and no others. Buyer shall not assume any
------------
other liability or obligation of Seller, including, without limitation, any
liability or obligation with respect to any litigation disclosed on Exhibit
5.08. On the Closing Date, Buyer shall assume the Assumed Liabilities.
ARTICLE THREE
THE PURCHASE PRICE
3.01 Purchase Price
--------------
The purchase price ("Purchase Price") for the Assets and the Covenant Not To
Compete shall be the sum of Nine Million, Eight Hundred Thirty-One Thousand,
Five Hundred Dollars ($9,831,500), subject to valuation, adjusted as provided in
Section 3.03.
3.02 Payment of Purchase Price
-------------------------
The Purchase Price shall be paid at Closing by wire transfer to Seller's
specified bank account.
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3.03 Adjustment of Purchase Price
----------------------------
The Purchase Price shall be adjusted at Closing as follows: at the Closing,
Seller and Buyer shall jointly prepare a statement (the "Statement of
Adjustments") in form as provided in attached Exhibit 4.03, setting forth all
------------
expenses pre-paid by KCCC which will benefit Buyer, and accrued compensable
employee vacation and sick pay incurred by KCCC not yet due and payable as of
the Closing Date. In the event that Seller and Buyer cannot agree on the
Statement of Adjustments, the parties shall within thirty (30) days of the
Closing Date jointly choose an independent accounting firm of national stature
which shall prepare the Statement of Adjustments on the foregoing basis, and
whose determination shall be conclusive and binding on all parties and whose
fees shall be paid equally by Seller and Buyer. In the event that the parties
cannot agree upon the identity of such accounting firm, Coopers & Lybrand and
Anthony D'Aquila, C.P.A. shall jointly choose such accounting firm. The
Purchase Price payable on the Closing Date shall be increased or decreased, as
the case may be, on a dollar-for-dollar basis equal to the amount, if any, by
which such vacation and sick pay fail to equal or exceed such pre-paid expenses.
Such adjustment shall be satisfied by payment by Seller or Buyer, as the case
may be, equal to the amount of the adjustment, which payment shall be made on
the Closing Date or within fifteen (15) days after determination by the third-
party auditor.
3.04 Allocation of Purchase Price
----------------------------
The Purchase Price (and all other capitalizable costs) shall be allocated (for
all purposes including financial accounting and tax purposes) as provided in
attached Exhibit 3.04.
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ARTICLE FOUR
THE CLOSING
4.01 Place of Closing
----------------
Closing and settlement of this transaction ("Closing") shall take place at the
offices of Duane, Morris & Heckscher, 42nd Floor, One Liberty Place,
Philadelphia, Pennsylvania.
4.02 Closing Date
------------
Pre-Closing shall commence at 9:00 a.m. on May 29, 1996, and Closing shall
commence at 9:00 a.m. on May 29, 1996 (the "Closing Date"). Upon consummation
of Closing, Closing shall be deemed effective as of 11:59 p.m. on May 31, 1996.
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4.03 Memorandum of Closing
---------------------
On the Closing Date, the parties shall execute a Memorandum of Closing, in form
as provided in attached Exhibit 4.03, which shall state the events that occurred
------------
at the Closing. All transactions at the Closing shall be considered to take
place simultaneously. No delivery shall be considered to be made until all
transactions are completed.
4.04 Deliveries at Closing
---------------------
(i) Seller's Obligations. At the Closing, Seller shall deliver to Buyer and
--------------------
its counsel the items as provided in attached Exhibit 4.03 against delivery
------------
of the items by Buyer as provided in Subsection 4.04(ii).
(ii) Buyer's Obligations. At the Closing, Buyer shall deliver to seller and
-------------------
its counsel the items as provided in attached Exhibit 4.03 against delivery
------------
of the items by Seller as provided in Subsection 4.04(i).
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement, Seller makes the following
representations and warranties to Buyer:
5.01 Organization
------------
Seller is a liquidating trust duly formed and existing under the laws of the
Commonwealth of Pennsylvania. KCCC is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. Copies of Seller's Liquidating Trust Agreement and other related
formation documents and KCCC's articles of incorporation and bylaws, as amended
to date, have been delivered to Buyer, are true, correct and complete, and are
in full force and effect.
5.02 Capitalization and Ownership
----------------------------
The beneficiaries of Seller are, and the authorized, issued, and outstanding
capital stock of KCCC is held, as provided in attached Exhibit 5.02. Seller has
------------
no interest in any corporation, partnership, joint venture or other legal
entity.
5.03 Authority
---------
Seller has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and no further approvals or
consents of any persons are necessary in connection with the performance of its
obligations under this Agreement and the
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<PAGE>
Acquisition Agreements, as defined below, except as set forth in Exhibit 5.03
------------
hereto. The execution and delivery of this Agreement and the consummation of
this transaction by Seller have been duly authorized by the beneficiaries of the
Seller, the Trustee and all other necessary or appropriate action. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid, and binding obligation of Seller enforceable in accordance with
its terms.
5.04 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and consummation of the
transactions contemplated by this Agreement and compliance with the terms of
this Agreement and/or the Acquisition Agreements, as defined below, by Seller
will not result in or constitute any of the following: (i) a default or an event
that, with notice or lapse of time or both, would be a default, breach, or
violation of the Liquidating Trust Agreement of Seller, or any document,
agreement, instrument, or arrangement to which Seller is a party or by which
Seller is bound; (ii) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of Seller unless such obligations are to be satisfied at Closing; or (iii) the
creation or imposition of any lien, charge, or encumbrance on any of the Assets.
5.05 Title
-----
Seller and KCCC have furnished to Buyer true, correct and complete copies of the
Bill of Sale and all exhibits and other agreements between KCCC and Seller
relating to the acquisition of assets by Seller from KCCC (collectively, the
"Acquisition Agreements"). Pursuant to the Acquisition Agreements Seller has
acquired good and marketable title to the Assets free and clear of all liens,
pledges, security interests and other encumbrances. Seller is presently the
owner, beneficially and of record, of good and marketable title to the Assets
free and clear of all liens, security interests, restrictions, claims, and
encumbrances.
5.06 Financial Information
---------------------
(i) Seller has delivered to Buyer a true, correct and complete copy of
the financial statements of KCCC as provided in attached Exhibit 5.06
------------
("Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently
followed throughout the period indicated, and fairly present the financial
condition and the results of operation of KCCC for the periods indicated.
Financial Statements have not been prepared with respect to Seller, but
such financial statements, if prepared, would be substantially similar to
the Financial Statements.
(ii) Seller has delivered to Buyer a correct and complete copy of KCCC's
U.S. Income Tax Returns, filed by KCCC for tax years ending December 31,
1992, December 31, 1993, and December 31, 1994. Seller has not filed
any tax returns.
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(iii) Seller has delivered to Buyer a correct and complete copy of KCCC's
HCFA Form 265, Renal Dialysis Facility Statistical Data, for the Facility
for Fiscal years ending December 31, 1992, December 31, 1993, and
December 31, 1994.
5.07 Sources of Revenue
------------------
The source of revenue of the Business consists of reimbursement for dialysis
services, items and supplies and related tests, studies, drugs, biologicals and
blood provided by and through the Facility and inpatient dialysis services
provided at the Hospitals. There are no other sources of revenue of the
Business, other than interest and dividend income reflected on the U.S. Income
Tax Returns described in Section 5.06(ii) above.
5.08 No Undisclosed Liabilities and Solvency
---------------------------------------
(i) Seller has no liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, including liabilities for
or in respect of federal, state and local taxes and any interest or
penalties relating thereto, except (a) to the extent fully reflected on
the Financial Statements, (b) liabilities incurred by KCCC in the
ordinary course of business since December 31, 1995, or (c) as
specifically provided in attached Exhibit 5.08.
------------
(ii) Seller is solvent, having assets which at a fair valuation exceed its
liabilities, and Seller is able to meet its debts as they mature and will
not become insolvent as a result of the transactions contemplated hereby.
Seller is not entering into the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud any entity to
which it is indebted. Following consummation of the transactions
contemplated by this Agreement, Seller does not intend to engage in any
business.
(iii) KCCC has no liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, including liabilities for or in
respect of federal, state and local taxes and any interest or penalties relating
thereto, except (a) to the extent fully reflected on the KCCC Financial
Statements, (b) liabilities incurred in the ordinary course of business since
December 31, 1995, or (c) as specifically provided in attached Exhibit 5.08.
(iv) KCCC is solvent, having assets which at a fair valuation exceed its
liabilities, and KCCC is able to meet its debts as they mature and will not
become insolvent as a result of the transactions contemplated hereby.
Following consummation of the transactions contemplated by the Acquisition
Agreements, KCCC does not intend to engage in any business.
5.09 No Changes
----------
Since December 31, 1995, KCCC has conducted its business only in the ordinary
course. Without limiting the generality of the foregoing sentence, since
December 31, 1995, there has not been:
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(i) Any change in the financial condition, assets, liabilities, or
prospects of KCCC, except changes in the ordinary course of business;
(ii) Any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the Assets, Business or prospects of
KCCC, or any material deterioration in the operating condition of the
Assets;
(iii) Any increase in the salaries or other compensation payable or to
become payable to (other than increases in the ordinary course of KCCC's
business), or any advance (excluding advances for ordinary business
expenses) or loan to, any employee of KCCC, or any increase in, or any
addition to, other benefits (including without limitation any bonus,
profit-sharing, pension or other plan) to which any of KCCC's employees
may be entitled; or
(iv) Any change by KCCC in any method of accounting or keeping its books of
account or accounting practices.
5.10 Taxes
-----
KCCC has: (i) timely filed, or joined in the filing of, all returns required to
be filed by it with respect to all federal, state and local income, payroll,
withholding, excise, sales, use, personal property, use and occupancy, business
and occupation, mercantile, real estate, capital stock and franchise or other
taxes (all the foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively called "Taxes"); (ii)
paid all Taxes shown to have become due, whether pursuant to such returns or
otherwise; (iii) paid all other Taxes for which a notice of or assessment or
demand for payment has been received; and (iv) adequately accrued and reserved
for the payment of all Taxes not yet due and payable. To the best of Seller's
and KCCC's knowledge, all such returns have been prepared in accordance with all
applicable laws and requirements and accurately reflect the taxable income (or
other measure of Tax) of the corporation or person filing the same.
5.11 Tangible Assets and Premises
----------------------------
Exhibit 5.11 contains a complete and accurate list identifying and specifying
- ------------
the location of all tangible assets used in the Business. On the Closing Date,
the tangible assets used in the Business are in good operating condition and
repair, except as provided in Exhibit 5.11. The premises and leasehold
improvements of the Facility are in tenantable condition and repair. There
exists no defect or condition which interferes with or prevents the use and
occupancy of the Facility as a dialysis facility in compliance with law.
5.12 Contracts
---------
Except as provided in attached Exhibit 5.12 ("Contracts"), neither Seller nor
------------
KCCC is a party to or bound by any lease, contract, agreement, or commitment,
oral or written, formal or informal, including contracts with any third party
payor or state kidney disease program,
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which is material to the Assets or Business. The Contracts are in full force
and effect. The copies of the Contracts delivered to Buyer are correct and
complete. There is no default or event that with notice or lapse of time or
both would constitute a default by any party to the Contracts. Neither Seller
nor KCCC has received any notice that any party to the Contracts intends to
terminate any of the Contracts or to exercise or not exercise any option under
the Contracts. The Contracts contain the entire agreement between the parties
thereto pertaining to the subject matter contained therein; there are no other
agreements, representations or understandings between or among Seller and/or
KCCC and the parties to the Contracts, pertaining to the matters contained
therein, which would conflict with the performance of the Contracts.
5.13 Inventory
---------
The inventory of Seller consists of items of a quality and quantity useable in
the ordinary course of the Business and is no less inventory than necessary to
conduct the Business for fourteen (14) business days.
5.14 Patients
--------
Attached Exhibit 5.14 is a complete and correct list ("Patient List") of all end
------------
stage renal disease ("ESRD") patients ("Patients") of the Facility indicating
the age of the patient, the type of service provided and the current utilization
rate of such service. All Patients covered by Medicare have elected Method I
reimbursement.
5.15 Physicians
----------
Attached Exhibit 5.15 is a complete and correct list ("Physician List") of all
------------
physicians or groups of physicians ("Physicians") attending or admitting
patients to the Facility, indicating the number of patients appearing on the
Patient List admitted by each.
5.16 Insurance
---------
For the five (5) year period prior to the date of this Agreement, to the best of
Seller's and KCCC's knowledge, KCCC has maintained adequate insurance for the
Business and Assets with respect to risks normally insured against by similar
businesses. Attached to Exhibit 5.16 are complete and correct copies of all
------------
policies of insurance ("Insurance Policies") of which Seller or KCCC is the
owner, insured or beneficiary, or covering any of the Assets or the Business.
5.17 Compliance with Laws
--------------------
To the best of Seller's and KCCC's knowledge, Seller and KCCC have each complied
with, and are not in violation of, applicable federal state or local statutes,
laws, and regulations affecting Seller, KCCC, the Facility, the Business or the
Assets.
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5.18 Claims and Litigation
---------------------
There is no claim, suit, action, arbitration, or legal, administrative or other
proceeding, or governmental investigation ("Claims and Litigation") pending or
to the knowledge of the Seller and KCCC threatened against or affecting Seller,
KCCC, the Facility, the Business or the Assets. Attached Exhibit 5.18 is a
------------
complete and correct list of all Claims and Litigation involving Seller and/or
KCCC during the past two (2) years. Seller has delivered to Buyer complete and
correct copies of all incident reports of Facility for the past two (2) years.
5.19 Medicare Certification
----------------------
The Facility is certified under the conditions of coverage and participates in
the federal Medicare program as an ESRD facility providing ESRD services
indicated on the Patient List. Seller has delivered to Buyer complete and
correct copies of all surveys, reports or deficiency notices concerning the
Facility by the Medicare program, the state survey agency, the Medicaid program
or the Pennsylvania Kidney Disease Program. The Medicare certification of the
Facility is in full force and effect and, to the best of Seller's and KCCC's
knowledge, no violation of the conditions and standards of coverage,
participation or certification exists and, to the best of Seller's and KCCC's
knowledge, no event or circumstances exist which, with the giving of notice or
passage of time, or both, would constitute a violation thereof.
5.20 Other Licenses and Certificates
-------------------------------
Complete and correct copies of all other licenses, certifications,
accreditation, consents, permits, approvals or certificates of need ("Licenses")
held and used in connection with conduct of the Business are attached as Exhibit
-------
5.20. To the best of Seller's and KCCC's knowledge, Seller has all Licenses as
- ----
are necessary to conduct the Business as now being conducted, and all Licenses
are in full force and effect. To the best of Seller's and KCCC's knowledge, no
violation of any License exists and no event or circumstance exists which, with
giving of notice or passage of time, would constitute a violation.
5.21 Overpayments
------------
Neither Seller nor KCCC has any liability for any overpayment, refund, discount
or adjustment ("Overpayment") in connection with Medicare, Medicaid or any other
reimbursement program or third party payor, other than standard and customary
Overpayments made in the ordinary course of Seller's or KCCC's business,
provided that in the event Overpayments do arise and are paid by Buyer, Seller
hereby agrees to reimburse Buyer for such amounts. No reimbursement program or
payor has made or threatened any claim for any Overpayment. The Facility has
never claimed or received from the Medicare program reimbursement for bad debts.
-12-
<PAGE>
5.22 Personnel
---------
Attached Exhibit 5.22 is a complete and correct list of the names and addresses
------------
of all employees, stating the rates or terms of compensation and health and life
benefits of each. Neither Seller nor KCCC is not party to any collective
bargaining or labor agreement or arrangement. To the best of Seller's and
KCCC's knowledge, there is no work stoppage pending or threatened with respect
to Seller or KCCC, and no application for certification as a collective
bargaining agent with respect to Seller or KCCC is pending or anticipated.
5.23 Employee Benefits
-----------------
Neither Seller nor KCCC is under any obligation to make any payment or
contribution to a "multiemployer plan" as defined in Section 3(37) of the
Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Section 1002(37),
and neither Seller nor KCCC has any actual or potential liability under Section
4201 of ERISA, 29 U.S.C. Section 1381, for any complete or partial withdrawal
from a multiemployer plan. The only retirement, pension, profit sharing, or
health or insurance benefit plans ("Plans") of Seller and/or KCCC are as
provided in attached Exhibit 5.23, which Plans comply with the applicable
------------
provisions of ERISA.
5.24 Full Disclosure
---------------
To the best of Seller's and KCCC's knowledge, none of the representations and
warranties made by Seller and/or KCCC in this Agreement, in any Exhibit or
Supplemental Information or in any other agreement or document furnished or to
be furnished by either of them, or on their behalf, contains or will contain any
untrue statement of material fact, or omit any material fact the omission of
which would be misleading, which would have a material adverse effect on the
Business.
5.25 Purchase Price
--------------
The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer makes the following
representations and warranties to Seller:
-13-
<PAGE>
6.01 Organization
------------
Buyer is a corporation duly organized, existing, and in good standing under the
laws of the State of Delaware and is duly qualified to do business in the
Commonwealth of Pennsylvania. Copies of Buyer's certificate of incorporation
and bylaws, as amended to date, have been delivered to Seller, are correct and
complete and are in full force and effect.
6.02 Authorization
-------------
Buyer has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and no further approvals or
consents of any persons are necessary in connection with it. The execution and
delivery of this Agreement and the consummation of this transaction by Buyer
have been duly authorized and approved by its board of directors. This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms.
6.03 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and the consummation of the
transactions contemplated by this Agreement and compliance with the Terms of
this Agreement by Buyer will not result in or constitute any of the following:
(i) a default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the certificate of incorporation or bylaws of
Buyer or any document, agreement, instrument, or arrangement to which Buyer is a
party or by which Buyer is bound; or (ii) an event that would permit any party
to terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation of Buyer.
6.04 Purchase Price
--------------
The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SEVEN
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller agrees that from and after the date of this Agreement and to and
including the Closing Date:
-14-
<PAGE>
7.01 Access to Information
---------------------
Buyer and its representatives shall have, at all reasonable times, upon the
giving of reasonable notice, access to Seller's premises and KCCC's premises and
to the books and records of Seller and KCCC, and Seller shall , and shall cause
KCCC to, furnish to Buyer and its representatives such financial and operating
data, and such other information with respect to the Assets, the Facility and
the Business, as Buyer may from time to time reasonably request. In connection
therewith, Buyer and its representatives shall be privileged to communicate with
KCCC's administrators, head nurse, medical director, business office manager and
such other persons as Buyer may reasonably request. All such access,
investigations and contacts shall be conducted in such manner as not to
unreasonably interfere with the normal conduct of business.
7.02 Conduct of Business
-------------------
Seller shall cause KCCC to conduct the Business diligently and in substantially
the same manner as previously conducted by KCCC. Seller shall cause KCCC not to
remove, sell, lease or otherwise dispose of any Assets except in the ordinary
course of business as previously conducted by KCCC. Seller shall neither make
nor agree to make any material change in the operation or conduct of the
Business or the Facility.
7.03 Business Relationships
----------------------
Seller shall cause KCCC to preserve its business as a going concern and shall
use its best efforts to cause KCCC to maintain its relationships with all
Patients, Physicians and Hospitals. Seller shall not, and shall not permit KCCC
to, make or permit, or agree to make or permit, any amendment, modification or
termination of any Assigned Agreement.
7.04 Insurance and Risk of Loss
--------------------------
Seller shall, and shall cause KCCC to, maintain its existing policies of
insurance. Until the consummation of Closing Seller and KCCC shall bear the
risk of loss and damage to the Business and the Assets.
7.05 Personnel Changes
-----------------
Seller shall not permit KCCC to increase compensation, benefits or other amounts
payable to any of its employees. Seller shall not permit KCCC to hire
additional permanent employees without the written approval of Buyer.
7.06 Exclusive Dealing
-----------------
Seller shall not, and shall not permit KCCC to, take any action to seek,
encourage, solicit or support any inquiry, proposal, expression of interest or
offer from any other person or entity
-15-
<PAGE>
with respect to an acquisition, combination or similar transaction involving
Seller, the Business, the Facility or any portion of the Assets (except sales of
inventory in the ordinary course of business), and Seller shall, and shall cause
KCCC to, promptly inform Buyer of the existence of any such inquiry, proposal,
expression of interest or offer and shall not, without the written consent of
Buyer, furnish any information to or participate in any discussions or
negotiations with any other person or entity regarding the same.
7.07 Consents to Assignment
----------------------
Seller shall use, and shall cause KCCC to use, reasonable and diligent effort to
secure, in the form provided in attached Exhibit 4.03, consents to the
------------
assignment of the Assigned Agreements.
ARTICLE EIGHT
BUYER'S OBLIGATIONS BEFORE CLOSING
Buyer agrees that from and after the date of this Agreement and to and including
the Closing Date:
8.01 Confidentiality
---------------
Unless and until the Closing has been completed, Buyer and its officers,
directors, and other representatives will hold in strict confidence, and will
not use to the detriment of Seller and/or KCCC, all data and information
obtained from Seller and/or KCCC in connection with this transaction or
Agreement. If Closing is not completed, this covenant shall survive and Buyer
will promptly return to Seller all such data and information.
8.02 Consents
--------
Buyer shall make reasonable and diligent effort to secure the certification,
consent, or approval of any federal, state or local agencies or authorities
necessary to permit consummation of the transactions contemplated by this
Agreement, except as provided in Section 7.07.
ARTICLE NINE
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets and complete Closing are subject
to the satisfaction, at or before the Closing, of all the conditions set out
below in this Article Nine. Buyer may waive any or all of these conditions in
whole or in part without prior notice.
-16-
<PAGE>
9.01 Accuracy of Seller's Representations
------------------------------------
All representations and warranties by Seller in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
9.02 Performance of Seller
---------------------
Seller will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Seller on or before the Closing Date.
9.03 Certificate of Seller's
-----------------------
Buyer will have received a certificate, dated the Closing Date, executed by
Seller's Trustee, certifying that the conditions specified in Sections 9.01 and
9.02 have been fulfilled, in form and substance as provided in attached Exhibit
-------
4.03.
- ----
9.04 Opinion of Seller's Counsel
---------------------------
Buyer will have received from counsel for Seller an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 9.04.
------------
9.05 Absence of Litigation
---------------------
No action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the transactions contemplated by this Agreement or to
its Closing will have been instituted or threatened on or before the Closing
Date.
9.06 Minimum Utilization
-------------------
On the Closing Date the total number of Registered Patients of the Facility will
be no less than One Hundred Forty Eight (148) ("Minimum Utilization Level" or
"MUL"). No Patient or group of Patients, whose transfer in the aggregate would
reduce the total number of Patients of the Facility below the MUL, have
threatened or indicated an intention to transfer from the Facility. As used
herein, the term "Registered Patients" shall mean Patients who have completed
and mailed Health Care Financing Administration Form 2728 indicating that they
are registered patients of the Facility.
9.07 Physician Referrals
-------------------
No physician or group of physicians, who in the aggregate serve as attending
physician to more than ten percent (10%) of the total number of non-transient
patients of the Facility on
-17-
<PAGE>
the date of this Agreement, have threatened or indicated an intention to cease,
reduce, limit or restrict their referral of patients to the Facility.
9.08 Reimbursement Changes
---------------------
There have been no material changes announced after the date of this Agreement
and on or before the Closing Date in the Medicare program's reimbursement of
institutional dialysis services and supplies.
9.09 Auditor's Report
----------------
Buyer shall have received, on or before the Closing Date, a report of its
independent public accountants in form and substance as provided in attached
Exhibit 9.09.
- ------------
9.10 Employees
---------
Seller shall have delivered to Buyer evidence satisfactory to Buyer that each of
KCCC's employees and each of KCCC's employees has been compensated for all paid
time off, including vacation and sick pay, which has accrued to each such
employee as of the Closing Date, in accordance with the standard policies and
procedures of KCCC.
9.11 Consents and Approvals
----------------------
All certifications, consents or approvals necessary to permit consummation of
the Closing will have been received on or before the Closing Date.
9.12 Agreements
----------
In addition to the Agreements set forth in the Memorandum of Closing, Buyer
shall have entered into, on or before the Closing Date, the additional
Agreements as provided in attached Exhibit 9.12 in form and substance acceptable
------------
to Buyer.
ARTICLE TEN
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell, assign and transfer the Assets and complete
the Closing are subject to the satisfaction, at or before the Closing, of all
the conditions in this Article Ten. Seller may waive any or all of these
conditions in whole or in part without prior notice.
-18-
<PAGE>
10.01 Accuracy of Buyer's Representations
-----------------------------------
All representations and warranties by Buyer in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
10.02 Performance of Buyer
--------------------
Buyer will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Buyer on or before the Closing Date.
10.03 Certificate of Buyer
--------------------
Seller will have received a certificate, dated the Closing Date, executed by
Buyer's President, certifying that the conditions specified in Sections 10.01
and 10.02 have been fulfilled, in form and substance as provided in attached
Exhibit 4.03.
- ------------
10.04 Opinion of Buyer's Counsel
--------------------------
Seller will have received from counsel for Buyer an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 10.04.
-------------
ARTICLE ELEVEN
OTHER AGREEMENTS
11.01 Certain Payments
----------------
Seller shall promptly and in due course pay and fully discharge all liabilities,
claims, obligations, debts and expenses which relate to, or arise out of, the
operation or ownership of the Business, the Facility or the Assets on or before
the Closing Date, including without limitation amounts owed to KCCC's employees,
Taxes and Overpayments, and which, if not satisfied, would constitute a lien on
the Assets or give rise to successor liability on the part of Buyer.
11.02 Accounts Receivable
-------------------
In the event Seller or KCCC shall receive any payment which relates to the
accounts receivable generated from services rendered at the Facility after the
Closing Date, Seller or KCCC, as the case may be, shall promptly transmit these
funds to Buyer. In the event Buyer receives any payment which relates to
accounts receivable generated from services rendered at
-19-
<PAGE>
the Facility on or before the Closing Date, Buyer shall promptly transmit these
funds to Seller.
11.03 Medicare Cost Reports
---------------------
Seller shall cause KCCC to promptly prepare, submit to Buyer for its review, and
file Medicare cost reports for the Facility for all periods up to and including
the Closing Date within the time provided by applicable law and regulations.
11.04 Tail Insurance
--------------
Seller shall deliver to Buyer at the Closing a Certificate of Insurance
evidencing the effective date of insurance coverage issued on a per occurrence
basis, in form and substance satisfactory to Buyer. The insurance shall be
health care service professional liability coverage with a financially sound and
reputable insurance company or association selected by Seller and acceptable to
Buyer, with limits of liability of $1,000,000 per loss and $3,000,000 annual
aggregate, naming Seller, its individual beneficiaries, KCCC, its individual
shareholders or its successor in interest, as may be appropriate, as an insured
and covering the health care services professional liability risk arising out of
KCCC's operation of the Business and Facility on or before the Closing Date.
11.05 Tax Matters
-----------
Each party will provide the other such assistance as may reasonably be requested
in connection with the preparation of any tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for taxes, and each will retain and provide
the other with any records or information which may be relevant to such return,
audit or examination, proceedings or determination. The party requesting
assistance hereunder shall reimburse the other party for reasonable expenses
incurred in providing such assistance. Any information obtained pursuant to
this Section or pursuant to any other Section hereof providing for the sharing
of information or the review of any tax return or other schedule relating to
taxes shall be kept confidential by the parties, and shall not be used to the
detriment of the other party or for the benefit of the requesting party.
11.06 Records and Documents
---------------------
(i) For ten (10) years following the Closing Date, Seller shall grant, and
shall cause KCCC to grant to Buyer and its representatives, at Buyer's request,
at such reasonable times during regular business hours as may be requested by
Buyer, access to and the right to make copies of those records and documents
related to the Business, the Facility or the Assets, possession of which is
retained by Seller and/or KCCC, as Buyer may deem to be necessary or useful in
regard to the Business, the Facility or the Assets. If during such period Seller
or KCCC elects to dispose of such records, Seller shall, or shall cause KCCC, as
the case may
-20-
<PAGE>
be, to first give Buyer 90 days' written notice, during which period Buyer
shall have the right to take such records.
(ii) For ten (10) years following the Closing Date, Buyer shall grant to Seller
and its representatives, at Seller's request, at such reasonable times during
regular business hours as may be requested by Seller, access to and the right to
make copies of those records and documents related to the Business, the Facility
or the Assets held or used by Seller prior to the Closing Date, possession of
which is delivered to Buyer pursuant to this Agreement, as Seller may deem to be
necessary or useful in regard to the preparation of any Tax return or the
handling of any Tax controversy. If during such period Buyer elects to dispose
of such records, Buyer shall first give Seller 90 days' written notice, during
which period Seller shall have the right to take such records.
11.07 Indemnification
---------------
(i) Extent of Indemnity. Seller agrees to indemnify and hold harmless Buyer
-------------------
from and against:
(a) Any loss, liability, claim, obligation, damage or deficiency arising
out or resulting from any material misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of the Seller, except for any
material misrepresentation, breach of warranty or nonfulfillment of the Covenant
Not To Compete on the part of any party thereto who is not a shareholder of
Clinical Renal Associates, Ltd.;
(b) Any loss, liability, claim, obligation, damage or deficiency arising
out of or resulting from operation or ownership of the Business, the Facility or
Assets on or before the Closing Date;
(c) Any actions, judgements, costs and expenses (including reasonable
actual fees of attorneys and all other expenses incurred by Buyer in
investigating, preparing for, or defending any litigation or proceeding,
commenced or threatened) incident to any of the foregoing or the enforcement of
this Section 11.07.
For the purposes of this Agreement, the aggregate amount of such losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees shall be hereinafter referred to as "Damage" or "Damages".
(ii) Limitations on Liability. Seller shall not be liable under Section 11.07
------------------------
for Damages in the event Damages in the aggregate are less than $50,000. If
the aggregate amount of Damages exceeds $50,000, then Buyer may claim
indemnification for the entire aggregate amount of Damages, less the
$50,000 deductible referred to in the previous sentence. In no event shall
Seller's obligation for Damages exceed the Purchase Price. Buyer shall have
any and all rights and remedies provided by law or contract except for
the right of rescission.
-21-
<PAGE>
(iii) Time Limit on Claims. Any claim for Damages under Section 11.07 must be
--------------------
made on or before 120 days following December 31, 1997. Any claim involving
Taxes must be made on or before the date which is six (6) months after the close
of the applicable statute of limitations for the tax year in question. A claim
shall be made by written notice specifying the nature of the claim and as
otherwise provided in Section 11.07 and shall be deemed to be made on the date
as provided in Section 16.01. Notwithstanding the foregoing there shall be no
time limit on claims involving personal injury or malpractice, or Overpayments.
(iv) Certain Matters Excluded. Notwithstanding anything to the contrary in
------------------------
this Section 11.07, no limitation or condition of liability provided in this
Section shall apply to the breach of any of the representations and
warranties contained herein if such representation or warranty was made
with the intent to deceive.
(v) Procedure. Buyer shall give prompt written notice of any indemnification
---------
claim hereunder to Seller specifying the amount and nature of the claim,
and giving Seller the right to contest any such claim; provided, however,
that the failure of Buyer to so notify Seller shall not relieve Seller of
its obligations hereunder, unless and only to the extent that such failure
to notify prejudices Seller. If any such claim is made hereunder by the
Buyer and Seller does not elect to undertake the defense thereof by written
notice within thirty (30) days after receipt of the original notice from
the Buyer, the Buyer shall be entitled to indemnity hereunder to the extent
of its Damages in respect of such claim. To the extent that Seller
undertakes the defense of such claim in good faith by proceeding diligently at
its expense, and without materially impairing the financial condition or
operations of the Buyer, the Buyer shall be entitled to indemnity hereunder only
if, and to the extent that, such defense is unsuccessful as determined by a
final judgement of a court of competent jurisdiction or is settled with the
consent of Seller. The Buyer shall have the right to participate in the defense
of such claim at its sole cost and expense.
11.08 Survival
--------
All representations, warranties, covenants, and agreements made by any party to
this Agreement or pursuant hereto shall survive the Closing and any
investigation at any time made by or on behalf of any party hereto.
11.09 Other Documents and Action
--------------------------
Buyer and Seller shall, at any time at or after the Closing Date, execute and
deliver all such documents and instruments and do or cause to be done all such
other acts and things as may be reasonably necessary to carry out the terms of
this Agreement.
11.10 Notice
------
If requested by either party, Buyer and Seller shall issue a joint notice
advising of the purchase of the Assets by Buyer.
-22-
<PAGE>
ARTICLE TWELVE
FEES AND EXPENSES
12.01 Transaction Costs
-----------------
Each of the parties shall pay the respective costs and expenses incurred or to
be incurred by it in negotiation and preparation of this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
ARTICLE THIRTEEN
FORM OF AGREEMENT
13.01 Headings
--------
The subject headings of the articles and sections of this Agreement are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
13.02 Modification and Waiver
-----------------------
This Agreement constitutes the entire Agreement between the parties pertaining
to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
13.03 Counterparts
------------
This Agreement may be executed simultaneously in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Executed counterparts may be delivered by
telecopier which counterparts shall have the same effect as the Agreement
itself.
13.04 Governing Law
-------------
This Agreement shall be construed in accordance with, and governed by, the laws
of the Commonwealth of Pennsylvania, conflict of laws provisions
notwithstanding.
-23-
<PAGE>
13.05 Time
----
Time is of the essence to this Agreement.
ARTICLE FOURTEEN
PARTIES
14.01 Successors and Assigns; Assignment
----------------------------------
This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective heirs, legal representatives, successors,
and assigns. Neither party may assign this Agreement, except Buyer which may
assign this Agreement and its rights and obligations hereunder, in whole or in
part, to Renal Treatment Centers, Inc. or any wholly-owned subsidiary of Renal
Treatment Centers, Inc.
ARTICLE FIFTEEN
REMEDIES
15.01 Mediation After Closing
-----------------------
(i) If, after the consummation of Closing, a dispute relating to this
Agreement arises between the parties hereto, the parties agree to use the
following procedure prior to either party's pursuing other available remedies.
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute.
(b) If, within thirty (30) days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, they agree to submit the
dispute to mediation in accordance with the Commercial Mediation Rules of the
American Arbitration Association and to bear equally the costs of the mediation.
(c) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in such regard from the American Arbitration Association if
they have been unable to agree upon such appointment within twenty (20) days
from the conclusion of the negotiation period.
(d) The parties agree to participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days. If the parties
are not successful in resolving
-24-
<PAGE>
the dispute through mediation, then the parties may agree to submit the matter
to binding arbitration or a private adjudicator, or either party may seek an
adjudicated resolution through the appropriate court.
(ii) Notwithstanding the foregoing, nothing herein shall be construed as
limiting a party's right to seek at any time injunctive relief from any
court of appropriate jurisdiction.
ARTICLE SIXTEEN
NOTICES
16.01 Notices
-------
All notices, claims, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given or
made on the date of service if served personally or on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as set
forth above. Any party may change its address for the purposes of this Section
by giving the other party written notice of the new address in the manner set
forth above.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day and year first above written.
KCCC LIQUIDATING TRUST RENAL TREATMENT CENTERS -
PENNSYLVANIA, INC.
By: /s/ Hardy L. Sorkin, M.D. By: /s/ John Chambers
----------------------------- ------------------------------
Name: Hardy L. Sorkin, M.D. Name: John Chambers
Title: Trustee Title: Vice President
-25-
<PAGE>
DATED: as of May 29, 1996
ASSET PURCHASE AGREEMENT
BETWEEN RENAL TREATMENT CENTERS -
PENNSYLVANIA, INC.
1180 W. Swedesford Road
Suite 300, Building 2
Berwyn, PA 19312
( "Buyer")
AND KCDC LIQUIDATING TRUST
194 South Fairview Road
Woodlyn, PA 19094
("Seller")
<TABLE>
<S> <C> <C>
A. SCOPE Purchase of Substantially all the Non-Current and
Certain Other Assets of Seller's Dialysis Services
Business.
B. PURCHASE PRICE $16,668,500
C. CLOSING DATE On or prior to May 29, 1996
D. EFFECTIVE DATE May 31, 1996, at 11:59 p.m.
AND TIME
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PARTIES TO AGREEMENT 4
BODY OF AGREEMENT 4
Article One Sale and Purchase 4
Article Two The Assets and Assumed Liabilities 5
Article Three The Purchase Price 5
Article Four The Closing 6
Article Five Representations and Warranties of Seller 7
Article Six Representations and Warranties of Buyer 13
Article Seven Seller's Obligations Before Closing 14
Article Eight Buyer's Obligations Before Closing 16
Article Nine Conditions Precedent to Buyer's Performance 16
Article Ten Conditions Precedent to Seller's Performance 18
Article Eleven Other Agreements 19
Article Twelve Fees and Expenses 23
Article Thirteen Form of Agreement 23
Article Fourteen Parties 24
Article Fifteen Remedies 24
Article Sixteen Notices 25
SIGNATURES 25
</TABLE>
-2-
<PAGE>
ASSET PURCHASE AGREEMENT
EXHIBIT LIST
------------
("Exhibits")
<TABLE>
<C> <S>
1.01 Facilities and Hospitals
2.01 Transferred Assets
2.02 Excluded Assets
2.03 Assumed Liabilities
3.04 Allocation of Purchase Price
4.03 Memorandum of Closing (including form of closing documents)
5.02 Seller's Beneficiaries; KCDC's Capital Stock
5.03 Consents and Approvals
5.06 Financial Statements
5.08 Disclosure of Liabilities
5.11 Tangible Asset List
5.12 Contracts
5.14 Patient List
5.15 Physician List
5.16 Insurance Policies
5.18 Litigation and Incident Reports
5.20 Licenses
5.22 Personnel List
5.23 Employee Benefit Plans
9.04 Form of Opinion of Seller's Counsel
9.09 CPA's Report
9.12 Agreements
10.04 Form of Opinion of Buyer's Counsel
</TABLE>
SUPPLEMENTAL INFORMATION
------------------------
("Supplemental Information")
<TABLE>
<C> <S>
5.01 Seller's Liquidating Trust Agreement; KCDC's Articles
or Certificate of Incorporation and Bylaws
5.06(ii) Tax Returns
5.06(iii) HCFA Form 265
5.12 Copies of Contracts
5.18 Incident Reports
5.19 Medicare and Other Surveys, Reports and Deficiency Notices
</TABLE>
-3-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 29th day of May,
1996, by and among RENAL TREATMENT CENTERS - PENNSYLVANIA, INC., 1180 W.
Swedesford Road, Suite 300, Building 2, Berwyn, Pennsylvania 19312 ("Buyer") and
KCDC LIQUIDATING TRUST (the Seller"), 194 South Fairview Road, Woodlyn,
Pennsylvania 19094, a Pennsylvania trust for the benefit of the shareholders of
Kidney Center of Delaware County, Ltd., a Pennsylvania corporation ("KCDC").
WITNESSETH:
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WHEREAS, KCDC is the operator of a dialysis services business ("Business")
consisting of the provision of outpatient dialysis services by and through the
dialysis facility ("Facility") as provided in attached Exhibit 1.01 and dialysis
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services under arrangement with the hospitals ("Hospitals") as provided in
attached Exhibit 1.01.
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WHEREAS, immediately prior to the execution and delivery of this Agreement,
pursuant to that certain Bill of Sale, Assignment and Assumption Agreement dated
as of the date hereof between KCDC and the Seller (the "Bill of Sale"), KCDC
sold, assigned, transferred and delivered to the Seller all of the assets of
KCDC, including, without limitation, all of the assets of the Business and the
Seller assumed all of the liabilities of KCDC.
WHEREAS, James E. Clark, M.D. is the trustee of the Seller (the "Trustee").
NOW THEREFORE, in consideration of the covenants and promises contained in this
Agreement and intending to be legally bound, the parties agree as follows:
ARTICLE ONE
SALE AND PURCHASE
1.01 The Business
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The subject of this Agreement is the Business as formerly conducted by KCDC.
1.02 Sale and Purchase of Assets
---------------------------
Subject to the terms and conditions of this Agreement, at the Closing as
provided in Article Four, Seller shall sell, assign and transfer to Buyer and
Buyer shall buy the Assets of the Business, as provided in Section 2.01, free
and clear of any liabilities, security interests, liens,
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claims,and encumbrances, except the Assumed Liabilities as provided in Section
2.03, and liens for accrued but unpaid taxes not yet due and payable to be paid
by Seller when due.
ARTICLE TWO
THE ASSETS AND ASSUMED LIABILITIES
2.01 The Assets
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The assets ("Assets") to be sold, assigned and transferred to Buyer consist of
all of the assets and properties of the Business of every kind, character, and
description, whether tangible, intangible, personal or mixed and wherever
located, including those as provided in attached Exhibit 2.01, but excluding the
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Excluded Assets as provided in Section 2.02.
2.02 Excluded Assets
---------------
Specifically excluded from the Assets are the assets and properties as provided
in attached Exhibit 2.02 and no others.
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2.03 Assumed Liabilities
-------------------
The liabilities to be assumed by Buyer (the "Assumed Liabilities") are as
provided in attached Exhibit 2.03 and no others. Buyer shall not assume any
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other liability or obligation of Seller, including, without limitation, any
liability or obligation with respect to any litigation disclosed on Exhibit
5.08. On the Closing Date, Buyer shall assume the Assumed Liabilities.
ARTICLE THREE
THE PURCHASE PRICE
3.01 Purchase Price
--------------
The purchase price ("Purchase Price") for the Assets and the Covenant Not To
Compete shall be the sum of Sixteen Million, Six Hundred Sixty-Eight Thousand,
Five Hundred Dollars ($16,668,500), subject to valuation, adjusted as provided
in Section 3.03.
3.02 Payment of Purchase Price
-------------------------
The Purchase Price shall be paid at Closing by wire transfer to Seller's
specified bank account.
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3.03 Adjustment of Purchase Price
----------------------------
The Purchase Price shall be adjusted at Closing as follows: at the Closing,
Seller and Buyer shall jointly prepare a statement (the "Statement of
Adjustments") in form as provided in attached Exhibit 4.03, setting forth all
------------
expenses pre-paid by KCDC which will benefit Buyer, and accrued compensable
employee vacation and sick pay incurred by KCDC not yet due and payable as of
the Closing Date. In the event that Seller and Buyer cannot agree on the
Statement of Adjustments, the parties shall within thirty (30) days of the
Closing Date jointly choose an independent accounting firm of national stature
which shall prepare the Statement of Adjustments on the foregoing basis, and
whose determination shall be conclusive and binding on all parties and whose
fees shall be paid equally by Seller and Buyer. In the event that the parties
cannot agree upon the identity of such accounting firm, Coopers & Lybrand and
Anthony D'Aquila, C.P.A. shall jointly choose such accounting firm. The
Purchase Price payable on the Closing Date shall be increased or decreased, as
the case may be, on a dollar-for-dollar basis equal to the amount, if any, by
which such vacation and sick pay fail to equal or exceed such pre-paid expenses.
Such adjustment shall be satisfied by payment by Seller or Buyer, as the case
may be, equal to the amount of the adjustment, which payment shall be made on
the Closing Date or within fifteen (15) days after determination by the third-
party auditor.
3.04 Allocation of Purchase Price
----------------------------
The Purchase Price (and all other capitalizable costs) shall be allocated (for
all purposes including financial accounting and tax purposes) as provided in
attached Exhibit 3.04.
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ARTICLE FOUR
THE CLOSING
4.01 Place of Closing
----------------
The closing and settlement of this transaction ("Closing") shall take place at
the offices of Duane, Morris & Heckscher, 42nd Floor, One Liberty Place,
Philadelphia, Pennsylvania.
4.02 Closing Date
------------
Pre-Closing shall commence at 9:00 a.m. on May 29, 1996, and Closing shall
commence at 9:00 a.m. on May 29, 1996 (the "Closing Date"). Upon consummation
of Closing, Closing shall be deemed effective as of 11:59 p.m. on May 31, 1996.
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4.03 Memorandum of Closing
---------------------
On the Closing Date, the parties shall execute a Memorandum of Closing, in form
as provided in attached Exhibit 4.03, which shall state the events that occurred
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at the Closing. All transactions at the Closing shall be considered to take
place simultaneously. No delivery shall be considered to be made until all
transactions are completed.
4.04 Deliveries at Closing
---------------------
(i) Seller's Obligations. At the Closing, Seller shall deliver to Buyer and
--------------------
its counsel the items as provided in attached Exhibit 4.03 against delivery
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of the items by Buyer as provided in Subsection 4.04(ii).
(ii) Buyer's Obligations. At the Closing, Buyer shall deliver to seller and
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its counsel the items as provided in attached Exhibit 4.03 against delivery of
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the items by Seller as provided in Subsection 4.04(i).
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement, Seller makes the following
representations and warranties to Buyer:
5.01 Organization
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Seller is a liquidating trust duly formed and existing under the laws of the
Commonwealth of Pennsylvania. KCDC is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. Copies of Seller's Liquidating Trust Agreement and other related
formation documents and KCDC's articles of incorporation and bylaws, as amended
to date, have been delivered to Buyer, are true, correct and complete, and are
in full force and effect.
5.02 Capitalization and Ownership
----------------------------
The beneficiaries of Seller and the authorized, issued, and outstanding capital
stock of KCDC is held as provided in attached Exhibit 5.02. Seller has no
------------
interest in any corporation, partnership, joint venture or other legal entity.
5.03 Authority
---------
Seller has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement, and no further approvals or
consents of any persons are necessary in connection with the performance of its
obligations under this Agreement and the
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Acquisition Agreements, as defined below, except as set forth in Exhibit 5.03
------------
hereto. The execution and delivery of this Agreement and the consummation of
this transaction by Seller have been duly authorized by the beneficiaries of the
Seller, the Trustee, and all other necessary or appropriate action. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid, and binding obligation of Seller enforceable in accordance with
its terms.
5.04 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and consummation of the
transactions contemplated by this Agreement and compliance with the terms of
this Agreement and/or the Acquisition Agreements, as defined below, by Seller
will not result in or constitute any of the following: (i) a default or an event
that, with notice or lapse of time or both, would be a default, breach, or
violation of the Liquidating Trust Agreement of Seller, or any document,
agreement, instrument, or arrangement to which Seller is a party or by which
Seller is bound; (ii) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of Seller unless such obligations are to be satisfied at Closing; or (iii) the
creation or imposition of any lien, charge, or encumbrance on any of the Assets.
5.05 Title
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Seller and KCDC have furnished to Buyer true, correct and complete copies of the
Bill of Sale and all exhibits and other agreements between KCDC and Seller
relating to the acquisition of assets by Seller from KCDC (collectively, the
"Acquisition Agreements"). Pursuant to the Acquisition Agreements Seller has
acquired good and marketable title to the Assets free and clear of all liens,
pledges, security interests and other encumbrances. Seller is presently the
owner, beneficially and of record, of good and marketable title to the Assets
free and clear of all liens, security interests, restrictions, claims, and
encumbrances.
5.06 Financial Information
---------------------
(i) Seller has delivered to Buyer a true, correct and complete copy of the
financial statements of KCDC as provided in attached Exhibit 5.06
------------
("Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the period indicated, and fairly present the financial condition and
the results of operation of KCDC for the periods indicated. Financial statements
have not been prepared with respect to the Seller, but such financial
statements, if prepared, would be substantially similar to the Financial
Statements.
(ii) Seller has delivered to Buyer a correct and complete copy of KCDC's U.S.
Income Tax Returns, filed by KCDC for tax years ending December 31, 1992,
December 31, 1993, and December 31, 1994. Seller has not filed any tax returns.
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(iii) Seller has delivered to Buyer a correct and complete copy of KCDC's HCFA
Form 265, Renal Dialysis Facility Statistical Data, for the Facility for Fiscal
years ending December 31, 1993, and December 31, 1994.
5.07 Sources of Revenue
------------------
The source of revenue of the Business consists of reimbursement for dialysis
services, items and supplies and related tests, studies, drugs, biologicals and
blood provided by and through the Facility and inpatient dialysis services
provided at the Hospitals. There are no other sources of revenue of the
Business, other than interest and dividend income reflected on the U.S. Income
Tax Returns described in Section 5.06(ii) above.
5.08 No Undisclosed Liabilities and Solvency
---------------------------------------
(i) Seller has no liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, including liabilities for or in
respect of federal, state and local taxes and any interest or penalties relating
thereto, except (a) to the extent fully reflected on the Financial Statements,
(b) liabilities incurred by KCDC in the ordinary course of business since
December 31, 1995, or (c) as specifically provided in attached Exhibit 5.08.
------------
(ii) Seller is solvent, having assets which at a fair valuation exceed its
liabilities, and Seller is able to meet its debts as they mature and will not
become insolvent as a result of the transactions contemplated hereby. Seller is
not entering into the transactions contemplated by this Agreement with the
intent to hinder, delay or defraud any entity to which it is indebted. Following
consummation of the transactions contemplated by this Agreement, Seller does not
intend to engage in any business.
(iii) KCDC has no liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, including liabilities for or in
respect of federal, state and local taxes and any interest or penalties relating
thereto, except (a) to the extent fully reflected on the KCDC Financial
Statements, (b) liabilities incurred in the ordinary course of business since
December 31, 1995, or (c) as specifically provided in attached Exhibit 5.08.
------------
(iv) KCDC is solvent, having assets which at a fair valuation exceed its
liabilities, and KCDC is able to meet its debts as they mature and will not
become insolvent as a result of the transactions contemplated hereby. Following
consummation of the transactions contemplated by the Acquisition Agreements,
KCDC does not intend to engage in any business.
5.09 No Changes
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Since December 31, 1995, KCDC has conducted its business only in the ordinary
course. Without limiting the generality of the foregoing sentence, since
December 31, 1995, there has not been:
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(i) Any change in the financial condition, assets, liabilities, or prospects
of KCDC, except changes in the ordinary course of business;
(ii) Any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the Assets, Business or prospects of KCDC, or
any material deterioration in the operating condition of the Assets;
(iii) Any increase in the salaries or other compensation payable or to become
payable to (other than increases in the ordinary course of KCDC's business), or
any advance (excluding advances for ordinary business expenses) or loan to, any
employee of KCDC, or any increase in, or any addition to, other benefits
(including without limitation any bonus, profit-sharing, pension or other plan)
to which any of KCDC's employees may be entitled; or
(iv) Any change by KCDC in any method of accounting or keeping its books of
account or accounting practices.
5.10 Taxes
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KCDC has: (i) timely filed, or joined in the filing of, all returns required to
be filed by it with respect to all federal, state and local income, payroll,
withholding, excise, sales, use, personal property, use and occupancy, business
and occupation, mercantile, real estate, capital stock and franchise or other
taxes (all the foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively called "Taxes"); (ii)
paid all Taxes shown to have become due, whether pursuant to such returns or
otherwise; (iii) paid all other Taxes for which a notice of or assessment or
demand for payment has been received; and (iv) adequately accrued and reserved
for the payment of all Taxes not yet due and payable. To the best of KCDC's and
Seller's knowledge, all such returns have been prepared in accordance with all
applicable laws and requirements and accurately reflect the taxable income (or
other measure of Tax) of the corporation or person filing the same.
5.11 Tangible Assets and Premises
----------------------------
Exhibit 5.11 contains a complete and accurate list identifying and specifying
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the location of all tangible assets used in the Business. On the Closing Date,
the tangible assets used in the Business are in good operating condition and
repair, except as provided in Exhibit 5.11. The premises and leasehold
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improvements of the Facility are in tenantable condition and repair. There
exists no defect or condition which interferes with or prevents the use and
occupancy of the Facility as a dialysis facility in compliance with law.
5.12 Contracts
---------
Except as provided in attached Exhibit 5.12 ("Contracts"), neither Seller nor
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KCDC is a party to or bound by any lease, contract, agreement, or commitment,
oral or written, formal or informal, including contracts with any third party
payor or state kidney disease program,
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which is material to the Assets or Business. The Contracts are in full force
and effect. The copies of the Contracts delivered to Buyer are correct and
complete. There is no default or event that with notice or lapse of time or
both would constitute a default by any party to the Contracts. Neither Seller
nor KCDC has received notice that any party to the Contracts intends to
terminate any of the Contracts or to exercise or not exercise any option under
the Contracts. The Contracts contain the entire agreement between the parties
thereto pertaining to the subject matter contained therein; there are no other
agreements, representations or understandings between or among Seller and/or
KCDC and the parties to the Contracts, pertaining to the matters contained
therein, which would conflict with the performance of the Contracts.
5.13 Inventory
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The inventory of Seller consists of items of a quality and quantity useable in
the ordinary course of the Business and is no less inventory than necessary to
conduct the Business for fourteen (14) business days.
5.14 Patients
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Attached Exhibit 5.14 is a complete and correct list ("Patient List") of all end
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stage renal disease ("ESRD") patients ("Patients") of the Facility indicating
the age of the patient, the type of service provided and the current utilization
rate of such service. All Patients covered by Medicare have elected Method I
reimbursement.
5.15 Physicians
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Attached Exhibit 5.15 is a complete and correct list ("Physician List") of all
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physicians or groups of physicians ("Physicians") attending or admitting
patients to the Facility, indicating the number of patients appearing on the
Patient List admitted by each.
5.16 Insurance
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For the five (5) year period prior to the date of this Agreement, to the best of
Seller's and KCDC's knowledge, KCDC has maintained adequate insurance for the
Business with respect to risks normally insured against by similar businesses.
Attached to Exhibit 5.16 are complete and correct copies of all policies of
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insurance ("Insurance Policies") of which Seller or KCDC is the owner, insured
or beneficiary, or covering any of the Assets or the Business.
5.17 Compliance with Laws
--------------------
To the best of Seller's and KCDC's knowledge, Seller and KCDC have each complied
with, and are not in violation of, applicable federal state or local statutes,
laws, and regulations affecting Seller, KCDC, the Facility, the Business or the
Assets.
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5.18 Claims and Litigation
---------------------
There is no claim, suit, action, arbitration, or legal, administrative or other
proceeding, or governmental investigation ("Claims and Litigation") pending or
to the knowledge of the Seller and KCDC threatened against or affecting Seller,
KCDC, the Facility, the Business or the Assets. Attached Exhibit 5.18 is a
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complete and correct list of all Claims and Litigation involving Seller and/or
KCDC during the past two (2) years. Seller has delivered to Buyer complete and
correct copies of all incident reports of Facility for the past two (2) years.
5.19 Medicare Certification
----------------------
The Facility is certified under the conditions of coverage and participates in
the federal Medicare program as an ESRD facility providing ESRD services
indicated on the Patient List. Seller has delivered to Buyer complete and
correct copies of all surveys, reports or deficiency notices concerning the
Facility by the Medicare program, the state survey agency, the Medicaid program
or the Pennsylvania Kidney Disease Program. The Medicare certification of the
Facility is in full force and effect and, to the best of Seller's and KCDC's
knowledge, no violation of the conditions and standards of coverage,
participation or certification exists and, to the best of Seller's and KCDC's
knowledge, no event or circumstances exist which, with the giving of notice or
passage of time, or both, would constitute a violation thereof.
5.20 Other Licenses and Certificates
-------------------------------
Complete and correct copies of all other licenses, certifications,
accreditation, consents, permits, approvals or certificates of need ("Licenses")
held and used in connection with conduct of the Business are attached as Exhibit
-------
5.20. To the best of Seller's and KCDC's knowledge, Seller has all Licenses as
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are necessary to conduct the Business as now being conducted, and all Licenses
are in full force and effect. To the best of Seller's and KCDC's knowledge, no
violation of any License exists and no event or circumstance exists which, with
giving of notice or passage of time, would constitute a violation.
5.21 Overpayments
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Neither Seller nor KCDC has any liability for any overpayment, refund, discount
or adjustment ("Overpayment") in connection with Medicare, Medicaid or any other
reimbursement program or third party payor, other than standard and customary
Overpayments made in the ordinary course of KCDC's business, provided that in
the event Overpayments do arise and are paid by Buyer, Seller hereby agrees to
reimburse Buyer for such amounts. No reimbursement program or payor has made or
threatened any claim for any Overpayment. The Facility has never claimed or
received from the Medicare program reimbursement for bad debts.
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5.22 Personnel
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Attached Exhibit 5.22 is a complete and correct list of the names and addresses
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of all employees, stating the rates or terms of compensation and health and life
benefits of each. Neither Seller nor KCDC is a party to any collective
bargaining or labor agreement or arrangement. To the best of Seller's and
KCDC's knowledge, there is no work stoppage pending or threatened with respect
to Seller or KCDC, and no application for certification as a collective
bargaining agent with respect to Seller or KCDC is pending or anticipated.
5.23 Employee Benefits
-----------------
Neither Seller nor KCDC is under any obligation to make any payment or
contribution to a "multiemployer plan" as defined in Section 3(37) of the
Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Section 1002(37),
and neither Seller nor KCDC has any actual or potential liability under Section
4201 of ERISA, 29 U.S.C. Section 1381, for any complete or partial withdrawal
from a multiemployer plan. The only retirement, pension, profit sharing, or
health or insurance benefit plans ("Plans") of Seller and/or KCDC are as
provided in attached Exhibit 5.23, which Plans comply with the applicable
------------
provisions of ERISA.
5.24 Full Disclosure
---------------
To the best of Seller's and KCDC's knowledge, none of the representations and
warranties made by Seller and/or KCDC in this Agreement, in any Exhibit or
Supplemental Information or in any other agreement or document furnished or to
be furnished by either of them, or on their behalf, contains or will contain any
untrue statement of material fact, or omit any material fact the omission of
which would be misleading, which would have a material adverse effect on the
Business.
5.25 Purchase Price
--------------
The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer makes the following
representations and warranties to Seller:
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6.01 Organization
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Buyer is a corporation duly organized, existing, and in good standing under the
laws of the State of Delaware and is duly qualified to do business in the
Commonwealth of Pennsylvania. Copies of Buyer's certificate of incorporation
and bylaws, as amended to date, have been delivered to Seller, are correct and
complete and are in full force and effect.
6.02 Authorization
-------------
Buyer has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and no further approvals or
consents of any persons are necessary in connection with it. The execution and
delivery of this Agreement and the consummation of this transaction by Buyer
have been duly authorized and approved by its board of directors. This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms.
6.03 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and the consummation of the
transactions contemplated by this Agreement and compliance with the Terms of
this Agreement by Buyer will not result in or constitute any of the following:
(i) a default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the certificate of incorporation or bylaws of
Buyer or any document, agreement, instrument, or arrangement to which Buyer is a
party or by which Buyer is bound; or (ii) an event that would permit any party
to terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation of Buyer.
6.04 Purchase Price
--------------
The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SEVEN
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller agrees that from and after the date of this Agreement and to and
including the Closing Date:
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7.01 Access to Information
---------------------
Buyer and its representatives shall have, at all reasonable times, upon the
giving of reasonable notice, access to Seller's premises and KCDC's premises and
to the books and records of Seller and KCDC, and Seller shall, and shall cause
KCDC to, furnish to Buyer and its representatives such financial and operating
data, and such other information with respect to the Assets, the Facility and
the Business, as Buyer may from time to time reasonably request. In connection
therewith, Buyer and its representatives shall be privileged to communicate with
KCDC's administrators, head nurse, medical director, business office manager and
such other persons as Buyer may reasonably request. All such access,
investigations and contacts shall be conducted in such manner as not to
unreasonably interfere with the normal conduct of KCDC's business.
7.02 Conduct of Business
-------------------
Seller shall cause KCDC to conduct the Business diligently and in substantially
the same manner as previously conducted by KCDC. Seller shall cause KCDC not to
remove, sell, lease or otherwise dispose of any Assets except in the ordinary
course of business as previously conducted by KCDC. Seller shall neither make
nor agree to make any material change in the operation or conduct of the
Business or the Facility.
7.03 Business Relationships
----------------------
Seller shall cause KCDC to preserve its business as a going concern and shall
use its best efforts to cause KCDC to maintain its relationships with all
Patients, Physicians and Hospitals. Seller shall not, and shall not permit KCDC
to, make or permit, or agree to make or permit, any amendment, modification or
termination of any Assigned Agreement.
7.04 Insurance and Risk of Loss
--------------------------
Seller shall, and shall cause KCDC to, maintain its existing policies of
insurance. Until the consummation of Closing Seller and KCDC shall bear the
risk of loss and damage to the Business and the Assets.
7.05 Personnel Changes
-----------------
Seller shall not permit KCDC to increase compensation, benefits or other amounts
payable to any of its employees. Seller shall not permit KCDC to hire
additional permanent employees without the written approval of Buyer.
7.06 Exclusive Dealing
-----------------
Seller shall not, and shall not permit KCDC to, take any action to seek,
encourage, solicit or support any inquiry, proposal, expression of interest or
offer from any other person or entity
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with respect to an acquisition, combination or similar transaction involving
Seller, the Business, the Facility or any portion of the Assets (except sales of
inventory in the ordinary course of business), and Seller shall, and shall cause
KCDC to, promptly inform Buyer of the existence of any such inquiry, proposal,
expression of interest or offer and shall not, without the written consent of
Buyer, furnish any information to or participate in any discussions or
negotiations with any other person or entity regarding the same.
7.07 Consents to Assignment
----------------------
Seller shall use, and shall cause KCDC to use, reasonable and diligent effort to
secure, in the form provided in attached Exhibit 4.03, consents to the
------------
assignment of the Assigned Agreements.
ARTICLE EIGHT
BUYER'S OBLIGATIONS BEFORE CLOSING
Buyer agrees that from and after the date of this Agreement and to and including
the Closing Date:
8.01 Confidentiality
---------------
Unless and until the Closing has been completed, Buyer and its officers,
directors, and other representatives will hold in strict confidence, and will
not use to the detriment of Seller and/or KCDC, all data and information
obtained from Seller and/or KCDC in connection with this transaction or
Agreement. If Closing is not completed, this covenant shall survive and Buyer
will promptly return to Seller all such data and information.
8.02 Consents
--------
Buyer shall make reasonable and diligent effort to secure the certification,
consent, or approval of any federal, state or local agencies or authorities
necessary to permit consummation of the transactions contemplated by this
Agreement, except as provided in Section 7.07.
ARTICLE NINE
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets and complete Closing are subject
to the satisfaction, at or before the Closing, of all the conditions set out
below in this Article Nine. Buyer may waive any or all of these conditions in
whole or in part without prior notice.
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9.01 Accuracy of Seller's Representations
------------------------------------
All representations and warranties by Seller in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
9.02 Performance of Seller
---------------------
Seller will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Seller on or before the Closing Date.
9.03 Certificate of Seller's Trustee
-------------------------------
Buyer will have received a certificate, dated the Closing Date, executed by
Seller's trustee, certifying that the conditions specified in Sections 9.01 and
9.02 have been fulfilled, in form and substance as provided in attached Exhibit
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4.03.
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9.04 Opinion of Seller's Counsel
---------------------------
Buyer will have received from counsel for Seller an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 9.04.
------------
9.05 Absence of Litigation
---------------------
No action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the transactions contemplated by this Agreement or to
its Closing will have been instituted or threatened on or before the Closing
Date.
9.06 Minimum Utilization
-------------------
On the Closing Date the total number of Registered Patients of the Facility will
be no less than Two Hundred Thirty Seven (237) ("Minimum Utilization Level" or
"MUL"). No Patient or group of Patients, whose transfer in the aggregate would
reduce the total number of Patients of the Facility below the MUL, have
threatened or indicated an intention to transfer from the Facility. As used
herein, the term "Registered Patients" shall mean Patients who have completed
and mailed Health Care Financing Administration Form 2728 indicating that they
are registered patients of the Facility.
9.07 Physician Referrals
-------------------
No physician or group of physicians, who in the aggregate serve as attending
physician to more than ten percent (10%) of the total number of non-transient
patients of the Facility on
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<PAGE>
the date of this Agreement, have threatened or indicated an intention to cease,
reduce, limit or restrict their referral of patients to the Facility.
9.08 Reimbursement Changes
---------------------
There have been no material changes announced after the date of this Agreement
and on or before the Closing Date in the Medicare program's reimbursement of
institutional dialysis services and supplies.
9.09 Auditor's Report
----------------
Buyer shall have received, on or before the Closing Date, a report of its
independent public accountants in form and substance as provided in attached
Exhibit 9.09.
- ------------
9.10 Employees
---------
Seller shall have delivered to Buyer evidence satisfactory to Buyer that each of
KCDC's employees has been compensated for all paid time off, including vacation
and sick pay, which has accrued to each such employee as of the Closing Date, in
accordance with the standard policies and procedures of KCDC.
9.11 Consents and Approvals
----------------------
All certifications, consents or approvals necessary to permit consummation of
the Closing will have been received on or before the Closing Date.
9.12 Agreements
----------
In addition to the Agreements set forth in the Memorandum of Closing, Buyer
shall have entered into, on or before the Closing Date, the additional
Agreements as provided in attached Exhibit 9.12 in form and substance acceptable
------------
to Buyer.
ARTICLE TEN
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell, assign and transfer the Assets and complete
the Closing are subject to the satisfaction, at or before the Closing, of all
the conditions in this Article Ten. Seller may waive any or all of these
conditions in whole or in part without prior notice.
-18-
<PAGE>
10.01 Accuracy of Buyer's Representations
-----------------------------------
All representations and warranties by Buyer in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
10.02 Performance of Buyer
--------------------
Buyer will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Buyer on or before the Closing Date.
10.03 Certificate of Buyer
--------------------
Seller will have received a certificate, dated the Closing Date, executed by
Buyer's President, certifying that the conditions specified in Sections 10.01
and 10.02 have been fulfilled, in form and substance as provided in attached
Exhibit 4.03.
- ------------
10.04 Opinion of Buyer's Counsel
--------------------------
Seller will have received from counsel for Buyer an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 10.04.
ARTICLE ELEVEN
OTHER AGREEMENTS
11.01 Certain Payments
----------------
Seller shall promptly and in due course pay and fully discharge all liabilities,
claims, obligations, debts and expenses which relate to, or arise out of, the
operation or ownership of the Business, the Facility or the Assets on or before
the Closing Date, including without limitation amounts owed to KCDC's employees,
Taxes and Overpayments, and which, if not satisfied, would constitute a lien on
the Assets or give rise to successor liability on the part of Buyer.
11.02 Accounts Receivable
-------------------
In the event Seller or KCDC shall receive any payment which relates to the
accounts receivable generated from services rendered at the Facility after the
Closing Date, Seller or KCDC, as the case may be, shall promptly transmit these
funds to Buyer. In the event Buyer receives any payment which relates to
accounts receivable generated from services rendered at
-19-
<PAGE>
the Facility on or before the Closing Date, Buyer shall promptly transmit these
funds to Seller.
11.03 Medicare Cost Reports
---------------------
Seller shall cause KCDC to promptly prepare, submit to Buyer for its review, and
file Medicare cost reports for the Facility for all periods up to and including
the Closing Date within the time provided by applicable law and regulations.
11.04 Tail Insurance
--------------
Seller shall deliver to Buyer at the Closing a Certificate of Insurance
evidencing the effective date of insurance coverage issued on a per occurrence
basis, in form and substance satisfactory to Buyer. The insurance shall be
health care service professional liability coverage with a financially sound and
reputable insurance company or association selected by Seller and acceptable to
Buyer, with limits of liability of $1,000,000 per loss and $3,000,000 annual
aggregate, naming Seller, its individual beneficiaries and successors in
interest and KCDC, its individual shareholders or its successor in interest, as
may be appropriate, as an insured and covering the health care services
professional liability risk arising out of KCDC's operation of the Business and
Facility on or before the Closing Date.
11.05 Tax Matters
-----------
Each party will provide the other and its authorized representatives such
assistance as may reasonably be requested in connection with the preparation of
any tax return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for taxes, and each
will retain and provide the other with any records or information which may be
relevant to such return, audit or examination, proceedings or determination.
The party requesting assistance hereunder shall reimburse the other party for
reasonable expenses incurred in providing such assistance. Any information
obtained pursuant to this Section or pursuant to any other Section hereof
providing for the sharing of information or the review of any tax return or
other schedule relating to taxes shall be kept confidential by the parties, and
shall not be used to the detriment of the other party or for the benefit of the
requesting party.
11.06 Records and Documents
---------------------
(i) For ten (10) years following the Closing Date, Seller shall grant, and
shall cause KCDC to grant, to Buyer and its representatives, at Buyer's request,
at such reasonable times during regular business hours as may be requested by
Buyer, access to and the right to make copies of those records and documents
related to the Business, the Facility or the Assets, possession of which is
retained by Seller and/or KCDC , as Buyer may deem to be necessary or useful in
regard to the Business, the Facility or the Assets. If during such period Seller
or KCDC elects to dispose of such records, Seller shall, or shall cause KCDC, as
the case may
-20-
<PAGE>
be, to first give Buyer 90 days' written notice, during which period Buyer shall
have the right to take such records.
(ii) For ten (10) years following the Closing Date, Buyer shall grant to
Seller and its representatives, at Seller's request, at such reasonable times
during regular business hours as may be requested by Seller, access to and the
right to make copies of those records and documents related to the Business, the
Facility or the Assets, held or used by Seller prior to the Closing Date,
possession of which is delivered to Buyer pursuant to this Agreement, as Seller
may deem to be necessary or useful in regard to the preparation of any Tax
return or the handling of any Tax controversy. If during such period Buyer
elects to dispose of such records, Buyer shall first give Seller 90 days'
written notice, during which period Seller shall have the right to take such
records.
11.07 Indemnification
---------------
(i) Extent of Indemnity. Seller agrees to indemnify and hold harmless Buyer
-------------------
from and against:
(a) Any loss, liability, claim, obligation, damage or deficiency arising
out or resulting from any material misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Seller, except for any material
misrepresentation, breach of warranty or nonfulfillment of the Covenant Not To
Compete on the part of any party thereto who is not a shareholder of Clinical
Renal Associates, Ltd.;
(b) Any loss, liability, claim, obligation, damage or deficiency arising
out of or resulting from operation or ownership of the Business, the Facility or
Assets on or before the Closing Date;
(c) Any actions, judgements, costs and expenses (including reasonable
actual fees of attorneys and all other expenses incurred by Buyer in
investigating, preparing for, or defending any litigation or proceeding,
commenced or threatened) incident to any of the foregoing or the enforcement of
this Section 11.07.
For the purposes of this Agreement, the aggregate amount of such losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees shall be hereinafter referred to as "Damage" or "Damages".
(ii) Limitations on Liability. Seller shall not be liable under Section 11.07
------------------------
for Damages in the event Damages in the aggregate are less than $50,000. If the
aggregate amount of Damages exceeds $50,000, then Buyer may claim
indemnification for the entire aggregate amount of Damages, less the $50,000
deductible referred to in the previous sentence. Buyer shall have any and all
rights and remedies provided by law or contract except the right of rescission.
-21-
<PAGE>
(iii) Time Limit on Claims. Any claim for Damages under Section 11.07 must be
--------------------
made on or before 120 days after December 31, 1996. Any claim involving Taxes
must be made on or before the date which is six (6) months after the close of
the applicable statute of limitations for the tax year in question. A claim
shall be made by written notice specifying the nature of the claim and as
otherwise provided in Section 11.07 and shall be deemed to be made on the date
as provided in Section 16.01. Notwithstanding the foregoing there shall be no
time limit on claims involving personal injury or malpractice, or Overpayments.
(iv) Certain Matters Excluded. Notwithstanding anything to the contrary in
------------------------
this Section 11.07, no limitation or condition of liability provided in this
Section shall apply to the breach of any of the representations and warranties
contained herein if such representation or warranty was made with the intent to
deceive.
(v) Procedure. Buyer shall give prompt written notice of any indemnification
---------
claim hereunder to Seller specifying the amount and nature of the claim, and
giving Seller the right to contest any such claim; provided, however, that the
failure of Buyer to so notify Seller shall not relieve Seller of its obligations
hereunder, unless and only to the extent that such failure to notify prejudices
Seller. If any such claim is made hereunder by the Buyer and Seller does not
elect to undertake the defense thereof by written notice within thirty (30) days
after receipt of the original notice from the Buyer, the Buyer shall be entitled
to indemnity hereunder to the extent of its Damages in respect of such claim. To
the extent that Seller undertakes the defense of such claim in good faith by
proceeding diligently at their expense, and without materially impairing the
financial condition or operations of the Buyer, the Buyer shall be entitled to
indemnity hereunder only if, and to the extent that, such defense is
unsuccessful as determined by a final judgement of a court of competent
jurisdiction or is settled with the consent of Seller. The Buyer shall have the
right to participate in the defense of such claim at its sole cost and expense.
11.08 Survival
--------
All representations, warranties, covenants, and agreements made by any party to
this Agreement or pursuant hereto shall survive the Closing and any
investigation at any time made by or on behalf of any party hereto.
11.09 Other Documents and Action
--------------------------
Buyer and Seller shall, at any time at or after the Closing Date, execute and
deliver all such documents and instruments and do or cause to be done all such
other acts and things as may be reasonably necessary to carry out the terms of
this Agreement.
11.10 Notice
------
If requested by either party, Buyer and Seller shall issue a joint notice
advising of the purchase of the Assets by Buyer.
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<PAGE>
ARTICLE TWELVE
FEES AND EXPENSES
12.01 Transaction Costs
-----------------
Each of the parties shall pay the respective costs and expenses incurred or to
be incurred by it in negotiation and preparation of this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
ARTICLE THIRTEEN
FORM OF AGREEMENT
13.01 Headings
--------
The subject headings of the articles and sections of this Agreement are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
13.02 Modification and Waiver
-----------------------
This Agreement constitutes the entire Agreement between the parties pertaining
to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
13.03 Counterparts
------------
This Agreement may be executed simultaneously in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Executed counterparts may be delivered by
telecopier which counterparts shall have the same effect as the Agreement
itself.
13.04 Governing Law
-------------
This Agreement shall be construed in accordance with, and governed by, the laws
of the Commonwealth of Pennsylvania, conflict of laws provisions
notwithstanding.
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<PAGE>
13.05 Time
----
Time is of the essence to this Agreement.
ARTICLE FOURTEEN
PARTIES
14.01 Successors and Assigns; Assignment
----------------------------------
This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective heirs, legal representatives, successors,
and assigns. Neither party may assign this Agreement, except Buyer which may
assign this Agreement and its rights and obligations hereunder, in whole or in
part, to Renal Treatment Centers, Inc. or any wholly-owned subsidiary of Renal
Treatment Centers, Inc.
ARTICLE FIFTEEN
REMEDIES
15.01 Mediation After Closing
-----------------------
(i) If, after the consummation of Closing, a dispute relating to this
Agreement arises between the parties hereto, the parties agree to use the
following procedure prior to either party's pursuing other available remedies.
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute.
(b) If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they agree to submit
the dispute to mediation in accordance with the Commercial Mediation Rules of
the American Arbitration Association and to bear equally the costs of the
mediation.
(c) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in such regard from the American Arbitration Association if
they have been unable to agree upon such appointment within twenty (20) days
from the conclusion of the negotiation period.
(d) The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of thirty (30) days. If the
parties are not successful in resolving
-24-
<PAGE>
the dispute through mediation, then the parties may agree to submit the matter
to binding arbitration or a private adjudicator, or either party may seek an
adjudicated resolution through the appropriate court.
(ii) Notwithstanding the foregoing, nothing herein shall be construed as
limiting a party's right to seek at any time injunctive relief from any
court of appropriate jurisdiction.
ARTICLE SIXTEEN
NOTICES
16.01 Notices
-------
All notices, claims, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given or
made on the date of service if served personally or on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as set
forth above. Any party may change its address for the purposes of this Section
by giving the other party written notice of the new address in the manner set
forth above.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day and year first above written.
KCDC LIQUIDATING TRUST RENAL TREATMENT CENTERS -
PENNSYLVANIA, INC.
By: /s/ James E. Clark, M.D. By: /s/ John Chambers
-------------------------- -------------------
Name: James E. Clark, M.D. Name: John Chambers
Title: Trustee Title: Vice President
-25-
<PAGE>
FOURTH
AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
AS AGENT
VARIOUS LENDERS
AND
RENAL TREATMENT CENTERS, INC.
AS BORROWER
$100,000,000 REVOLVING CREDIT/TERM FACILITY
JUNE 5, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS.......................................................... 1
ARTICLE I
DEFINITIONS
1.1 Defined Terms........................................... 2
1.2 Accounting Terms...................................... 28
1.3 Singular/Plural....................................... 28
1.4 Other Terms........................................... 28
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1 The Loans............................................. 28
2.2 Borrowings............................................ 29
2.3 Revolving Credit/Term Notes........................... 31
2.4 Reduction of Commitments.............................. 32
2.5 Payments; Voluntary, Mandatory........................ 32
2.6 Interest.............................................. 33
2.7 Fees.................................................. 35
2.8 Interest Periods...................................... 36
2.9 Conversions and Continuations......................... 37
2.10 Method of Payments; Computations...................... 38
2.11 Increased Costs, Change in Circumstances, etc......... 40
2.12 Taxes................................................. 43
2.13 Compensation.......................................... 45
2.14 Use of Proceeds....................................... 46
2.15 Recovery of Payments.................................. 46
2.16 Pro Rata Borrowings................................... 46
2.17 Letters of Credit..................................... 47
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1 Closing............................................... 53
3.2 Conditions of Loans and Advances...................... 54
3.2.1 Executed Loan Documents........................ 54
3.2.2 Closing Certificates; etc...................... 54
3.2.3 Consents; No Adverse Change.................... 56
3.2.4 Financial Matters.............................. 57
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
3.2.5 Miscellaneous................................. 57
3.3 Conditions to All Loans and Advances................. 57
3.4 Acquisition Loans.................................... 58
3.5 Waiver of Conditions Precedent....................... 58
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power..................... 59
4.2 Litigation; Government Regulation.................... 59
4.3 Taxes................................................ 59
4.4 Enforceability of Loan Documents; Compliance With
Other Instruments.................................... 60
4.5 Governmental Authorization........................... 60
4.6 Event of Default..................................... 61
4.7 Margin Securities.................................... 61
4.8 Full Disclosure...................................... 61
4.9 Principal Places of Business......................... 61
4.10 ERISA; Employee Benefits............................. 61
4.11 Subsidiaries......................................... 63
4.12 Financial Statements................................. 63
4.13 Title to Assets...................................... 63
4.14 Solvency............................................. 64
4.15 Use of Proceeds...................................... 64
4.16 Assets for Conduct of Business....................... 64
4.17 Compliance With Laws................................. 64
4.18 Environmental Matters................................ 64
4.19 Projections.......................................... 65
4.20 First Priority....................................... 65
4.21 Contracts; Labor Disputes............................ 65
4.22 Insurance............................................ 65
4.23 Reimbursement from Third Party Payors................ 65
4.24 Fraud and Abuse...................................... 66
4.25 Single Business Enterprise........................... 66
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Repayment of Obligations............................. 67
5.2 Performance Under Loan Documents..................... 67
5.3 Financial and Business Information about the Borrower 67
5.4 Notice of Certain Events............................. 69
5.5 Corporate Existence and Maintenance of Properties.... 70
5.6 Payment of Debt...................................... 70
5.7 Maintenance of Insurance............................. 71
5.8 Inspection........................................... 72
5.9 COBRA................................................ 72
5.10 Payment of Taxes..................................... 72
5.11 Compliance with Laws................................. 72
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
5.12 Name Change.......................................... 73
5.13 Creation or Acquisition of New Subsidiaries.......... 73
5.14 Disbursement of Proceeds By the Borrower............. 74
5.15 Certain Acquisitions................................. 74
ARTICLE VI
NEGATIVE COVENANTS
6.1 Merger, Consolidation................................ 76
6.2 Debt................................................. 76
6.3 Contingent Obligations............................... 77
6.4 Liens and Encumbrances............................... 78
6.5 Disposition of Assets................................ 78
6.6 Transactions with Related Persons.................... 78
6.7 Restricted Investments............................... 78
6.8 Restricted Payments.................................. 79
6.9 Capital Expenditures................................. 79
6.10 Consolidated Net Worth............................... 80
6.11 [intentionally left blank]........................... 80
6.12 Cash Available to Fixed Charges...................... 80
6.13 Cash Available to Debt Service Ratio................. 80
6.14 Consolidated Senior Debt to Annualized Cash Flow..... 80
6.15 Consolidated Debt to Annualized Cash Flow............ 80
6.16 Consolidated Debt to Consolidated Total Capital...... 80
6.17 Sale and Leaseback................................... 80
6.18 New Business......................................... 80
6.19 Subsidiaries or Partnerships......................... 81
6.20 Transactions Affecting the Collateral................ 81
6.21 Hazardous Wastes..................................... 81
6.22 Fiscal Year.......................................... 81
6.23 Amendments; Prepayments of Debt, etc................. 81
6.24 Fraud and Abuse...................................... 82
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default...................................... 82
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1 Remedies: Termination of Commitments, Acceleration,
etc.................................................. 85
8.2 Right of Set-off..................................... 86
8.3 Rights and Remedies Cumulative; Non-Waiver; etc...... 86
</TABLE>
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<PAGE>
ARTICLE IX
THE AGENT
<TABLE>
<S> <C> <C>
9.1 Appointment............................................. 87
9.2 Nature of Duties........................................ 87
9.3 Absence of Reliance on the Agent........................ 87
9.4 Certain Rights of the Agent............................. 89
9.5 Notice of Default....................................... 89
9.6 Reliance by Agent....................................... 89
9.7 Indemnification......................................... 90
9.8 The Agent in its Individual Capacity.................... 90
9.9 Holders................................................. 90
9.10 Successor Agent......................................... 91
9.11 Collateral Matters...................................... 91
ARTICLE X
MISCELLANEOUS
10.1 Survival................................................ 92
10.2 Governing Law; Consent to Jurisdiction.................. 92
10.3 Arbitration; Remedies................................... 93
10.4 Notice.................................................. 94
10.5 Assignments, Participations............................. 96
10.6 Fees and Expenses....................................... 99
10.7 Indemnification......................................... 100
10.8 Amendments, Waivers, Etc................................ 101
10.9 Rights and Remedies Cumulative, Nonwaiver, etc.......... 102
10.10 Binding Effect, Assignment.............................. 102
10.11 Severability............................................ 103
10.12 Entire Agreement........................................ 103
10.13 Interpretation.......................................... 103
10.14 Counterparts, Effectiveness............................. 103
10.15 Conflict of Terms....................................... 103
10.16 Injunctive Relief....................................... 104
10.17 Confidentiality......................................... 104
10.18 Post-Closing Matters.................................... 104
10.19 Acknowledgement......................................... 104
</TABLE>
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<PAGE>
<TABLE>
EXHIBITS
<S> <C>
Exhibit A - Form of Revolving Credit/Term Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion/Continuation
Exhibit B-3 - Form of Letter of Credit Request
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1(a) Existing Liens
Schedule 4.1 Foreign Jurisdictions; Names
Schedule 4.2 Litigation; Government Regulation
Schedule 4.3 Taxes
Schedule 4.4 Compliance with Other Agreements
Schedule 4.9 Principal Place of Business
Schedule 4.10 ERISA Matters
Schedule 4.11 Subsidiaries
Schedule 4.13 Title to Assets
Schedule 4.22 Insurance
Schedule 6.17 Sale and Leaseback
</TABLE>
-V-
<PAGE>
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AGREEMENT, dated as of the 5th day of
June, 1996 (the "Loan Agreement" or "Agreement"), is made among RENAL TREATMENT
CENTERS, INC., a Delaware corporation (the "Borrower") with its principal
offices in Berwyn, Pennsylvania, the banks and other financial institutions from
time to time parties hereto (each, a "Lender," and collectively, the "Lenders"),
and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the "Agent").
RECITALS
A. The Borrower, the Agent and the Lenders entered into a Loan
Agreement, dated as of September 4, 1991 (the "Original Loan Agreement")
pursuant to which certain of the Lenders extended to the Borrower refinancing
term loans in the original principal amount of $10,500,000 and established in
favor of the Borrower a working capital revolving line of credit in the original
principal amount of up to $2,000,000 and an acquisition revolving line of credit
in the original principal amount of up to $6,000,000 (the facilities established
under the Original Loan Agreement are collectively referred to herein as the
"Original Facilities").
B. The Borrower, the Agent and certain of the Lenders entered into a
Second Amended and Restated Loan Agreement dated as of September 27, 1993,
providing for the extension of term loans in the original principal amount of
$10,000,000, the establishment of an acquisition revolving line of credit in the
original principal amount of up to $23,000,000 and the establishment of a
working capital revolving line of credit in the original principal amount of up
to $2,000,000.
C. The Borrower and the Lenders restructured the facilities pursuant to
a Third Amended and Restated Loan Agreement, dated as of November 3, 1994.
D. The Borrower has requested that the Lenders increase the revolving
credit facilities to a $100,000,000 revolving credit/term loan, terminate the
existing term loans and make certain other amendments and the Borrower, the
Agent and the Lenders wish to evidence those amendments by an amendment and
restatement of the Third Amended and Restated Loan Agreement.
E. The parties acknowledge that this Fourth Amended and Restated Loan
Agreement and each of the other Loan Documents (as
<PAGE>
hereinafter defined) have been negotiated, executed and delivered in Charlotte,
North Carolina.
F. The Lenders are willing to amend and restate the Third Amended and
Restated Loan Agreement and to make the Loans described herein based on the
terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Loan Agreement, in addition to
the terms defined elsewhere in this Loan Agreement, the following terms shall
have the meanings set forth below:
"Account Debtor" shall mean any Person who is or who may become obligated
to the Borrower or any Subsidiary under or on account of an Account or Account
Receivable.
"Accounts" shall mean all "accounts," within the meaning of the Uniform
Commercial Code, of the Borrower and its Subsidiaries, including, without
limitation, any existing and future Medicare, Medicaid and other similar
accounts receivable.
"Acquisition" shall mean any bona fide transaction or series of related
transactions, consummated after the date hereof, by which the Borrower or any
Subsidiary (i) acquires all or a substantial part of the assets, or a going
business or division, of any Person, whether through purchase of assets or
securities, merger or otherwise, or (ii) directly or indirectly acquires control
of at least a majority in voting power of the securities or other ownership
interests of any Person. For the purpose of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
"Acquisition Amount" shall mean, with respect to any Permitted Acquisition,
the sum (without duplication) of (i) the aggregate original principal amount of
all Revolving Credit/Term Loans the proceeds of which are utilized to finance
such Acquisition, in part or in whole, (ii) the amount of cash paid by the
Borrower and its Subsidiaries in connection with such Acquisition, (iii) the
Fair Market Value of all capital stock or other ownership interests of the
Borrower or any Subsidiary issued or given in connection with such Acquisition,
(iv) the amount (determined by using the face amount or the amount payable at
maturity, whichever is greater) of
-2-
<PAGE>
all Debt incurred, assumed or acquired in connection with such Acquisition, (v)
all additional purchase price amounts in the form of earnouts and other
contingent obligations that should be recorded on the financial statements of
the Borrower and its Subsidiaries in accordance with Generally Accepted
Accounting Principles, (vi) all amounts paid in respect of covenants not to
compete, consulting agreements and other affiliated contracts in connection with
such Acquisition and (vii) the aggregate fair market value of all other
consideration given by the Borrower and its Subsidiaries in connection with such
Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Loan, a
rate per annum equal to the Base Rate plus the Applicable Margin for Base Rate
Loans, each as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any Loan, a
rate per annum equal to the LIBOR Rate plus the Applicable Margin for LIBOR
Loans, each as in effect at such time.
"Affiliate" shall mean, as to any Person, each of the Persons that directly
or indirectly, through one or more intermediaries, owns or controls, or is
controlled by or under common control with, such Person. Notwithstanding the
foregoing, with respect to the Borrower or any Subsidiary, the term "Affiliate"
shall not include First Union or any Affiliate of First Union. For the purpose
of this definition, "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean First Union, in its capacity as appointed in ARTICLE IX
hereof, and its permitted successors and assigns.
"Agreement" or "this Agreement" or "Loan Agreement" shall mean this Fourth
Amended and Restated Loan Agreement and any amendments, modifications and
supplements hereto, any replacements, renewals, extensions and restatements
hereof, and any substitutes herefor, in whole or in part and all schedules and
exhibits hereto, and shall refer to this Agreement as the same may be in effect
at the time such reference becomes operative.
"Annualized Cash Flow" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any fiscal quarter,
twice the aggregate of (i) Consolidated Net Income for the two (2) immediately
preceding fiscal quarters then ended, plus (ii) the sum of Interest Expense,
----
taxes, depreciation, amortization and other non-cash expenses or charges
reducing income for such period (to the extent taken into account in the
calculation of Consolidated Net Income for such period), minus (iii) non-cash
-----
credits increasing Consolidated Net Income for such period (to the extent taken
into account in the calculation of Consolidated Net Income for such period).
-3-
<PAGE>
"Applicable Margin" shall mean, at any time with respect to any Loan, the
applicable percentage points as determined under the following matrix with
reference to the ratio of Consolidated Senior Debt to Annualized Cash Flow
calculated as provided below:
<TABLE>
<CAPTION>
Ratio of Consolidated Senior Applicable Margin Applicable Margin
Debt to Annualized Cash Flow (LIBOR Rate) (Base Rate)
- ------------------------------- ------------------ ------------------
<S> <C> <C>
Greater than or equal to
2.25 to 1.0 1.75% 0.25%
Greater than or equal to
2.0 to 1.0
but less than 2.25 to 1.0 1.50% 0.00%
Greater than or equal to
1.5 to 1.0
but less than 2.0 to 1.0 1.25% 0.00%
Greater than or equal to
1.0 to 1.0
but less than 1.5 to 1.0 1.00% 0.00%
Less than 1.0 to 1.0 0.75% 0.00%
</TABLE>
The Applicable Margins shall be reset from time to time in accordance with the
above matrix on the fifteenth (15th) day (or, if the fifteenth day is not a
Business Day, on the next Business Day) after delivery by the Borrower in
accordance with SECTION 5.3 of financial statements together with a Compliance
Certificate attaching an Interest Rate Calculation Worksheet (reflecting the
computation of the ratio of Consolidated Senior Debt to Annualized Cash Flow as
of the last day of the preceding fiscal quarter or fiscal year, as appropriate)
that provides for different Applicable Margins than those then in effect.
"Assignment Agreement" shall mean the Assignment Agreement, dated as of
July 27, 1992, as amended by a First Amendment to Assignment Agreement, dated as
of February 8, 1993, and as further amended, whereby the Borrower has assigned
to RTC Holdings as an equity contribution all of its right, title and interest
in and to the Intercompany Loan Documents referenced therein, and any further
amendments, modifications and supplements thereto, any replacements, renewals,
extensions and restatements thereof, and any substitutes therefor, in whole or
in part.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement entered into between a Lender and an Eligible Assignee, and accepted
by the Agent, in substantially the form of EXHIBIT E.
"Assignment Restrictions" shall mean, with respect to any contracts or
agreements assigned to the Agent, on behalf of the Lenders, as Collateral by the
Borrower or any Subsidiary, any
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<PAGE>
restriction or prohibition on assignment that has not been waived or consented
to by the Person for whose benefit such restriction or prohibition exists with
respect to which the Agent has waived the requirement of such waiver or consent
and with respect to Medicare and Medicaid accounts receivable, assignment
restrictions as provided in the Medicare Regulations and the Medicaid
Regulations.
"Bankruptcy Code" shall mean 11 U.S.C. (S) 101 et seq., as amended, and any
successor statute or statute having substantially the same function.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime or base rate (which may not necessarily be its best
lending rate), as adjusted to conform to changes as of the opening of business
on the date of any such change in such prime or base rate, or (ii) one-half
percentage point (0.5%) in excess of the Federal Funds Rate, as adjusted to
conform to changes as of the opening of business on the date of any such change
in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted Base Rate.
"Bloodborne Pathogens Standard" shall mean the Final Standard for
Occupational Exposure to Bloodborne Pathogens promulgated by OSHA at 56 Federal
Register 64004 et seq. (December 6, 1991) and codified at 29 C.F.R. (S)
1910.1030, or any similar regulation promulgated by any Governmental Authority.
"Borrower" shall mean Renal Treatment Centers, Inc., a Delaware
corporation, and its successors and assigns.
"Borrowing" shall mean the incurrence by the Borrower on a given date
(including as a result of conversions of outstanding Loans pursuant to SECTION
2.9) of one Type of Loan under a single Facility, provided that Base Rate Loans
incurred pursuant to SECTION 2.11(c) shall be considered part of the related
Borrowing of LIBOR Loans.
"Borrowing Base" shall mean, at any time, the aggregate amount of the
following for all existing operating units of the Borrower and its Domestic
Subsidiaries: (a) the number of end stage renal disease patients then admitted
to receive renal dialysis services, items or supplies, at each, or under the
direction of each such operating unit, plus (b) patients being dialyzed at
----
hospitals under contract for inpatient services by the Borrower and its Domestic
Subsidiaries, utilizing the following formula: monthly average treatments
performed by hospitals for the last three months divided by 11.7, multiplied by
---------- -------------
(c) $18,000, less Consolidated Senior Debt (other than Debt pursuant to the
Revolving Credit/Term Loan Facility and Letter of Credit Outstandings), which
calculation
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<PAGE>
shall be satisfactory to the Agent. In connection with Acquisitions, the
Borrowing Base shall be calculated taking into account all operating units then
being acquired by the Borrower or a Subsidiary; provided, however, that the
number of patients in clauses (a) and (b) above shall not include patients
related to the operating units of any Foreign Subsidiary or acquired pursuant to
any Foreign Acquisition unless and until otherwise agreed in writing by the
Agent and the Required Lenders.
"Borrowing Base Certificate" shall mean a fully completed certificate in
the form of EXHIBIT C to this Loan Agreement.
"Borrowing Date" shall have the meaning assigned to such term in SECTION
2.2(a).
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Expenditures" shall mean the aggregate amount of all expenditures
and liabilities (including, without limitation, Capital Lease Obligations) made
and incurred in respect of the acquisition by the Borrower or any Subsidiary of
Capital Assets.
"Capital Lease" shall mean any lease of any property that would, in
accordance with Generally Accepted Accounting Principles, be required to be
classified and accounted for as a capital lease on the balance sheet of the
lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder that would, in accordance
with Generally Accepted Accounting Principles, appear on a balance sheet as a
liability of such lessee in respect of such Capital Lease, net of any government
grant applicable to such Capital Lease.
"Cash Available" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any fiscal quarter,
twice the aggregate of (i) Consolidated Net Income for the two (2) immediately
preceding fiscal quarters then ended, plus (ii) the sum of Interest Expense,
----
Lease Expense, depreciation, amortization and other non-cash expenses or charges
reducing income for such period (to the extent taken into account in the
calculation of Consolidated Net Income for such period), minus (iii) non-cash
-----
credits increasing income for such period (to the
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<PAGE>
extent taken into account in the calculation of Consolidated Net Income for such
period).
"Cash Collateral Account" shall have the meaning assigned to such term in
SECTION 2.17(i).
"Cash Investments" shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States of
America, in each case maturing within one (1) year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) marketable commercial paper maturing no more than one (1)
year from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent thereof by Moody's Investors
Service, Inc.; and (iv) demand deposits, time deposits and certificates of
deposit maturing within one (1) year from the date of issuance thereof and
issued by a bank or trust company organized under the laws of the United States
of America or any state thereof and having a long term debt rating by Standard &
Poor's Corporation of A or higher.
"Closing" shall have the meaning assigned to such term in SECTION 3.1.
"Closing Date" shall mean the date referred to in SECTION 3.1 hereof.
"Collateral" shall mean and include all Stock (other than RTC Holdings
S.A., a direct Subsidiary of RTC Holdings, Inc.) or other equity interest and
Intercompany Loan Documents of each Subsidiary, whether now owned or hereafter
acquired, from time to time pledged by the Borrower to the Agent, for the
benefit of the Lenders, pursuant to the Pledge Agreement or the Subsidiary
Pledge Agreement, in either case directly or indirectly securing the Obligations
or the obligations of any Guarantor under the Guaranty Agreement, and all other
property and interests in property that shall, from time to time, directly or
indirectly secure the Obligations or the obligations of any Guarantor under the
Guaranty Agreement.
"Commitment" shall mean, for any Lender, such Lender's Revolving
Credit/Term Commitment.
"Compliance Certificate" shall mean a fully completed certificate in the
form of EXHIBIT D.
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<PAGE>
"Consolidated Debt" shall mean, at any time, the aggregate (without
duplication) of all Debt of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis.
"Consolidated Net Income" shall mean, for any fiscal quarter, the net
income (or loss) of the Borrower and its Subsidiaries, on a consolidated basis
and excluding intercompany items, for such quarter, determined in accordance
with Generally Accepted Accounting Principles, but excluding as income: (a)
gains on the sale, conversion or other disposition of Capital Assets, (b) gains
on the acquisition, retirement, sale or other disposition of Stock of the
Borrower or any Subsidiary, (c) gains on the collection of life insurance
proceeds, (d) any write-up of any asset, and (e) any other gain or credit of an
extraordinary nature. For purposes of calculating the financial covenants
contained in this Agreement, the Borrower may exclude, without duplication, up
to $5,000,000 of Excludable Acquisition Expenses, including tax benefits related
thereto, per fiscal year.
"Consolidated Net Revenue" shall mean net revenue of the Borrower and its
Subsidiaries, on a consolidated basis, calculated in accordance with Generally
Accepted Accounting Principles.
"Consolidated Net Worth" shall mean, as of the last day of any fiscal
quarter, the net worth of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Consolidated Senior Debt" shall mean, at any time, Consolidated Debt as of
such date less Consolidated Subordinated Debt as of such date.
----
"Consolidated Subordinated Debt" shall mean, at any time, the aggregate
(without duplication) of all Subordinated Debt of the Borrower and its
Subsidiaries as of such date, determined on a consolidated basis.
"Consolidated Total Capital" shall mean, with respect to the Borrower and
its Subsidiaries, the sum of Consolidated Net Worth and Consolidated Debt.
"Contingent Obligation" shall mean, with respect to any Person, any direct
or indirect liability of such Person with respect to any Debt, lease, dividend,
guaranty, letter of credit or other obligation (the "primary obligation") of
another Person (the "primary obligor"), whether or not contingent, (a) to
purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, (b) to advance or
provide funds (i) for the payment or discharge 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 or any balance sheet item, level
of income or financial condition of the primary obligor, (c) to purchase
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<PAGE>
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor in respect
thereof to make payment of such primary obligation or (d) otherwise to assure or
hold harmless the owner of any such primary obligation against loss or failure
or inability to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Convertible Notes" shall mean the notes issued pursuant to the Indenture.
"Covenant Compliance Worksheet" shall mean a fully completed certificate in
the form of Attachment A to EXHIBIT D.
"Current Assets" shall mean, at any date, the aggregate of the current
assets of the Borrower and its Subsidiaries appearing on the asset side of their
consolidated balance sheet, as determined in accordance with Generally Accepted
Accounting Principles.
"Current Liabilities" shall mean, at any date, the aggregate of the current
liabilities of the Borrower and its Subsidiaries appearing on the liability side
of their consolidated balance sheet, as determined in accordance with Generally
Accepted Accounting Principles.
"Debt" shall mean, with respect to any Person, (i) all indebtedness of such
Person for money borrowed, (ii) all reimbursement obligations of such Person
with respect to surety bonds, letters of credit and bankers' acceptances (in
each case, whether or not matured), (iii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iv) all
obligations of such Person to pay the deferred purchase price of property or
services (including earnouts and other similar contingent obligations,
calculated in accordance with Generally Accepted Accounting Principles), other
than trade payables, (v) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (vi) all Capital Lease Obligations of such Person,
(vii) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any capital stock or other equity
securities that, by their stated terms (or by the terms of any equity securities
issuable upon conversion thereof or in exchange therefor), or upon the
occurrence of any event, mature or are mandatorily redeemable, or are redeemable
at the option of the holder thereof, in whole or in part, (viii) all
indebtedness referred to in clauses (i) through (vii) above secured by any lien
on any property or asset owned or
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<PAGE>
held by such Person regardless of whether the indebtedness secured thereby shall
have been assumed by such Person or is nonrecourse to the credit of such Person,
and (ix) any Contingent Obligation of such Person.
"Debt Service" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any fiscal quarter,
the sum of Fixed Charges for such period plus current maturities (due within
----
twelve (12) months) of all Debt of the Borrower and its Subsidiaries.
"Default" shall mean any event that, with the passage of time or giving of
notice, or both, would constitute an Event of Default.
"Dollars" or "$" shall mean dollars of the United States of America.
"Domestic Subsidiary" shall mean any subsidiary that is not a Foreign
Subsidiary.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in excess
of $5,000,000,000, (ii) a commercial bank organized under the laws of any other
country that is a member of the OECD or a political subdivision of any such
country and having total assets in excess of $5,000,000,000, provided that such
bank is acting through a branch or agency located in the United States, in the
country under the laws of which it is organized or in another country that is
also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual funds, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $3,000,000,000, (v) any Affiliate of an existing
Lender or (vi) any other Person (other than an Affiliate of the Borrower)
approved by the Agent and the Borrower, which approval shall not be unreasonably
withheld.
"Employee Plan" shall mean any "employee benefit plan" within the meaning
of Section 3(3) of ERISA maintained by the Borrower or any Subsidiary.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any Subsidiary solely in the ordinary course of its business
and not in response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereinafter, "Claims"),
including, without limitation, (i) any and all Claims by
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<PAGE>
Governmental Authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Substances or arising from alleged injury or threat of injury to
health or the environment.
"Environmental Laws" shall mean any and all laws, subsequent enactments,
amendments and modifications, including, without limitation, federal, state and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities,
relating to the protection of human health or the environment, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances. Environmental Laws include, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
seq.) ("CERCLA"), the Hazardous Material Transportation Act (49 U.S.C. (S) 1801
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et
seq.) ("RCRA"), the Federal Water Pollution Control Act (33 U.S.C. (S) 1251 et
seq.), the Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. (S) 2601 et seq.), the Safe Drinking Water Act (42 U.S.C.
(S) 300, et seq.), the Environmental Protection Agency's regulations relating to
underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational
Safety and Health Act (29 U.S.C. (S) 651 et seq.) ("OSHA"), as such laws have
been amended or supplemented and any analogous future federal, or present or
future applicable state or local, statutes and the rules and regulations
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified Plan
(as defined in SECTION 4.10); (b) a withdrawal by any Borrower Affiliate from a
Qualified Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a
complete or partial withdrawal by any Borrower Affiliate from a Multiemployer
Plan; (d) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of
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<PAGE>
ERISA for the termination of, or the appointment of a trustee to administer,
any Qualified Plan or Multiemployer Plan; (g) the imposition of any liability
under Title IV of ERISA, other than Pension Benefit Guaranty Corporation
premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower
Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Internal Revenue Code with
respect to any Qualified Plan; (i) any Borrower Affiliate engages in or
otherwise becomes liable for a non-exempt prohibited transaction; or (j) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Internal Revenue Code by any
fiduciary with respect to any Qualified Plan for which any Borrower Affiliate
may be directly or indirectly liable.
"Event of Default" shall have the meaning specified in ARTICLE VII hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
"Excludable Acquisition Expenses" shall mean fees, costs and expenses
actually incurred by the Borrower and its Subsidiaries in connection with
Acquisitions permitted hereunder that are accounted for under Generally Accepted
Accounting Principles Board Opinion #16 as poolings of interest.
"Facility" shall mean the Revolving Credit/Term Facility.
"Fair Market Value" shall mean, with respect to any capital stock or other
ownership interests issued or given by the Borrower or any Subsidiary in
connection with a Permitted Acquisition, (i) in the case of common stock of the
Borrower that is then designated as a national market system security by the
National Association of Securities Dealers, Inc. ("NASDAQ") or is listed on a
national securities exchange, the average of the last reported bid and ask
quotations or prices reported thereon for such common stock or (ii) in all other
cases, the determination of the fair market value thereof in good faith by a
majority of disinterested members of the board of directors of the Borrower or
such Subsidiary, in each case effective as of the close of business on the
Business Day immediately preceding the closing date of such Permitted
Acquisition.
"Federal Funds Rate" shall mean, for any day, the interest rate per annum
equal to the weighted average of the rates of 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 Richmond, or
if such rate is not so published on the relevant Business Day, the average of
the quotations for such day on such transactions
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<PAGE>
received by the Agent from three (3) federal funds brokers of recognized
standing selected by the Agent.
"Fee Letter" shall mean the letter, dated the Closing Date, from First
Union to the Borrower, relating to the agent's fee payable to the Agent for its
own account.
"Financials" or "Financial Statements" shall mean the audited consolidated
financial statements of the Borrower and its Subsidiaries for the fiscal years
ended December 31, 1995, December 31, 1994, December 31, 1993, December 31, 1992
and December 31, 1991; the unaudited consolidated interim financial statements
of the Borrower and its Subsidiaries for the three (3) months ended March 31,
1996; and all other financial statements of the Borrower and its Subsidiaries
that have previously been delivered by the Borrower or any Subsidiary to the
Agent or any Lender, including, without limitation, interim financial
statements.
"First Union" shall mean First Union National Bank of North Carolina, a
national banking association, and its successors and assigns.
"Fixed Charges" shall mean at any time, with respect to the Borrower and
its Subsidiaries on a consolidated basis as of the last day of any fiscal
quarter, twice the sum of Interest Expense and Lease Expense for the two (2)
immediately preceding fiscal quarters.
"Foreign Acquisition" shall mean (i) any Acquisition in which a substantial
part of the assets or business being acquired is located outside of the United
States of America or (ii) the Acquisition of any Foreign Subsidiary.
"Foreign Subsidiary" shall mean a Subsidiary that is organized under or
operates under the laws of, or is headquartered or maintains a significant
portion of its assets in, any jurisdiction located outside the United States of
America.
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles, as recognized by the American Institute of Certified
Public Accountants, consistently applied and maintained on a consistent basis
for the Borrower and its Subsidiaries on a consolidated basis throughout the
period indicated and consistent with the financial practice of the Borrower and
its Subsidiaries after the date hereof.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any
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corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"Guarantors" shall mean RTC Acquisition, RTC Supply, Renal-Delaware, Renal-
Florida, Renal-Georgia, Renal-Maryland, Renal-New Jersey, Renal-New Orleans,
Renal-Pennsylvania, Renal-Virginia, Renal-Colorado, Renal-Nebraska, Renal-
Wyoming, Renal-California, Renal-Oklahoma, Renal-Texas, Renal-Kansas, Renal-
Hawaii, Renal-Ohio, Renal-Indiana, Renal-Illinois, Renal-Missouri, Renal-North
Carolina, Renal-D.C., Inc., Renal-Management Acquisition, Inc., and RTC Holdings
S.A. and any other Person that guarantees the Obligations of the Borrower and
the other Guarantors.
"Guaranty Agreement" shall mean the Third Amended and Restated Guaranty
Agreement, dated as of the date hereof, executed by each Guarantor in favor of
the Agent, whereby each Guarantor has guaranteed to the Lenders the payment and
performance of the Obligations and the obligations of each of the other
Guarantors under the Guaranty Agreement, and all other similar agreements
executed and delivered from time to time by any Guarantor in form and substance
satisfactory to the Lenders, together with any amendments, modifications and
supplements thereto, any replacements, renewals, extensions and restatements
thereof, and any substitutes therefor, in whole or in part.
"Guaranty Documents" shall mean the Guaranty Agreement and the Subsidiary
Pledge Agreement and any other documents or agreements between the Agent and any
of the Guarantors, whereby certain Guarantors have pledged Collateral to the
Agent, together with any amendments, modifications and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"HCFA" shall mean the United States Health Care Financing Administration
and any successor agency.
"Hazardous Substances" means any substances or materials (i) that are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law; (ii) that are
toxic, explosive, corrosive, flammable, infectious, radioactive, mutagenic or
otherwise hazardous and are or become regulated by any Governmental Authority;
(iii) the presence of which require investigation or remediation under any
Environmental Law or common law; (iv) that are deemed to constitute a nuisance,
a trespass or pose a health or safety hazard to persons or neighboring
properties; (v) materials consisting of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance; or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
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"IRS" shall mean the Internal Revenue Service and any successor thereto.
"Indemnified Costs" shall have the meaning assigned to such term in SECTION
10.7.
"Indemnified Person" shall have the meaning assigned to such term in
SECTION 10.7.
"Indenture" means the Indenture between the Borrower and PNC Bank, National
Association, as Trustee, pursuant to which the Borrower has issued, or is
issuing, certain convertible subordinated notes due 2006, as amended, restated,
modified or supplemented from time to time.
"Intercompany Loan Documents" shall mean the intercompany notes issued from
time to time by any Subsidiary to the Borrower and contributed by the Borrower
to RTC Holdings as an equity contribution pursuant to the Assignment Agreement,
together with any amendments, modifications and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"Interest Expense" shall mean, for any period, total interest expense of
the Borrower and its Subsidiaries on a consolidated basis for such period
(including, without limitation, interest expense attributable to Capital Lease
Obligations), determined in accordance with Generally Accepted Accounting
Principles.
"Interest Rate Calculation Worksheet" shall mean a fully completed
worksheet in the form of Attachment B to EXHIBIT D.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Issuing Bank" shall mean First Union, in its capacity as issuer of the
Letters of Credit, and its successors and assigns in such capacity.
"L/C Participant" shall have the meaning assigned to such term in SECTION
2.17(c).
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at such
time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising part of
the same Borrowing for any Interest Period, an interest rate per annum obtained
by dividing (i) the rate of interest determined by the Agent to be the rate or
the arithmetic mean of rates (rounded upward, if necessary, to the nearest 1/16
of one percentage point) at which Dollar deposits in immediately available funds
are offered by first-tier banks in the London interbank Eurodollar market to the
Charlotte offices of First Union
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at 10:00 a.m., Charlotte time, two (2) Business Days prior to the first day of
such Interest Period for a period equal to such Interest Period and in an amount
substantially equal to the amount of the Agent's LIBOR Loan in connection with
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve Requirement
(expressed as a decimal) for such Interest Period.
"Lease Expense" shall mean, for any period, all amounts paid, payable or
accrued during such period by the Borrower and its Subsidiaries on a
consolidated basis with respect to all leases of real and personal property,
excluding intercompany items.
"Lender" shall mean each financial institution signatory hereto and each
other financial institution that becomes a "Lender" hereto pursuant to SECTION
10.5, and their permitted successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the branch or
branches (or Affiliates) from which any of such Lender's Loans are made or
maintained.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i) the
aggregate Stated Amount of all outstanding Letters of Credit at such time and
(ii) the aggregate amount of all Reimbursement Obligations at such time.
"Letter of Credit Request" shall have the meaning assigned to such term in
SECTION 2.17(b).
"Letters of Credit" shall have the meaning assigned to such term in SECTION
2.17(a).
"Loan Documents" shall mean and collectively refer to this Agreement, the
Revolving Credit/Term Notes, the Pledge Agreement, the Subsidiary Pledge
Agreement, the Guaranty Documents, the Intercompany Loan Documents, the
Assignment Agreement, the Letters of Credit, and any and all agreements,
instruments and documents, including, without limitation, notes, guaranties,
mortgages, deeds to secure debt, deeds of trust, chattel mortgages, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, trust account agreements and all other written matters whether
heretofore, now or hereafter executed by or on behalf of the Borrower or any
Subsidiary or delivered to the Agent or any Lender, with respect to this
Agreement or with respect to the transactions contemplated by this Agreement,
and in each case, together with any amendments, modifications and supplements
thereto, any replacements, renewals, extensions and restatements thereof, and
any substitutes therefor, in whole or in part.
"Loans" shall mean and collectively refer to the Revolving Credit/Term
Loans.
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"Material Adverse Effect" or "Material Adverse Change" shall mean, in the
good faith opinion of the Required Lenders, a material adverse effect upon, or a
material adverse change in, any of (a) the financial condition, operations,
business, properties of the Borrower and its Subsidiaries, taken as a whole; (b)
the ability of the Borrower or any Subsidiary to perform under any Loan Document
or any other material contract to which it is a party; (c) the legality,
validity or enforceability of any Loan Document; (d) the perfection or priority
of the liens of the Agent granted under the Loan Documents or the rights and
remedies of the Agent or the Lenders under the Loan Documents; or (e) the
condition or value of any material portion of the Collateral.
"Medicaid Certification" shall mean, with respect to any health care
facility, certification by HCFA or another Governmental Authority, or any Person
under contract with HCFA, that such health care facility is in compliance with
all conditions of participation set forth in the Medicaid Regulations, except
where the failure to so comply would not have a Material Adverse Effect.
"Medicaid Provider Agreement" shall mean an agreement entered into between
any Person administering the Medicaid program and a health care facility under
which the health care facility agrees to provide services for Medicaid patients
in accordance with the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act, 42 USC (S)(S) 1396
et seq., or elsewhere) affecting the medical assistance program established by
Title XIX of the Social Security Act, and any statutes succeeding thereto; (ii)
all applicable provisions of all federal rules, regulations, manuals and orders
of all Governmental Authorities promulgated pursuant to or in connection with
the statutes described in clause (i) above and all federal administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes and plans for medical
assistance enacted in connection with the statutes and provisions described in
clauses (i) and (ii) above; and (iv) all applicable provisions of all rules,
regulations, manuals and orders of all Governmental Authorities promulgated
pursuant to or in connection with the statutes described in clause (iii) above
and all state administrative, reimbursement and other guidelines of all
Governmental Authorities having the force of law promulgated pursuant to or in
connection with the statutes described in clause (iii) above, in each case as
may be amended, supplemented or otherwise modified from time to time.
"Medicare Certification" shall mean, with respect to any health care
facility, certification by HCFA or any other Governmental Authority, or any
Person under contract with HCFA,
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that such health care facility is in compliance with all the conditions of
participation set forth in the Medicare Regulations, except where the failure to
so comply would not have a Material Adverse Effect.
"Medicare Provider Agreement" shall mean an agreement entered into between
any Person administering the Medicare program and a health care facility under
which the health care facility agrees to provide services for Medicare patients
in accordance with the terms of the agreement and Medicare Regulations.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC (S)(S) 1396
et seq., or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities (including,
without limitation, Health and Human Services ("HHS"), HCFA, the Office of the
Inspector General for HHS, or any Person succeeding to the functions of any of
the foregoing) promulgated pursuant to or in connection with any of the
foregoing having the force of law, in each case as may be amended, supplemented
or otherwise modified from time to time.
"Mellon" shall mean Mellon Bank, N.A., a national banking association, and
its successors and assigns.
"Multiemployer Plan" shall mean any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which any Borrower or any Subsidiary is
required to make contributions.
"Notice of Borrowing" shall have the meaning assigned to such term in
SECTION 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned to such
term in SECTION 2.9(b).
"Notification and Consent Agreement" shall mean the Notification and
Consent Agreement, dated as of September 30, 1992, as amended, among RTC
Holdings, Mellon and the Agent, whereby Mellon has agreed to hold the
Intercompany Loan Documents on behalf and as bailee of the Agent, for the
benefit of the Lenders, in order to perfect the Lenders' security interest
therein, together with any amendments, modifications and supplements thereto,
any replacements, renewals, extensions and restatements thereof, and any
substitutes therefor, in whole or in part.
"OECD" shall mean the Organization for Economic Cooperation and Development
and any successor thereto.
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"OSHA" shall mean the Occupational Safety and Health Act, as amended from
time to time, and all rules and regulations from time to time promulgated
thereunder.
"Obligations" shall mean and include (i) the Loans, any Reimbursement
Obligations and all other loans, advances, indebtedness, liabilities,
obligations, covenants and duties owing, arising, due or payable from the
Borrower to the Agent, the Issuing Bank or any Lender of any kind or nature,
present or future, howsoever evidenced, created, incurred, acquired or owing,
arising under this Agreement, the Revolving Credit/Term Notes or the other Loan
Documents or in any other way related to this Agreement, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, and (ii) all interest (including, to the extent permitted
by law, all post-petition interest), charges, expenses, fees, attorneys' fees
and any other sums payable by the Borrower to the Agent, the Issuing Bank or any
Lender under this Agreement or any of the other Loan Documents.
"Operating Leases" shall mean all leases of the Borrower or any Subsidiary
that are not Capital Leases.
"Participant" shall mean any Person, now or at any time hereafter,
participating with any Lender in the Loans pursuant to this Agreement, and its
permitted successors and assigns.
"Pension Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA maintained by the Borrower or any Subsidiary
(other than any Multiemployer Plan that is subject to the provisions of Title IV
of ERISA).
"Percentage" shall mean, with respect to any Lender at any time, such
Lender's Revolving Credit/Term Percentage at such time.
"Permitted Acquisition" shall mean an Acquisition with respect to which the
following conditions are satisfied:
(i) The Person, or division or business thereof, being acquired engages
chiefly in the business of providing kidney dialysis services and
ancillary services relating to the needs of patients with end stage
renal disease, including, without limitation, laboratories
predominately performing dialysis related functions;
(ii) To the extent that any Subsidiaries are created or acquired in
connection with the Acquisition, the Borrower and each such
Subsidiary shall have complied with the provisions of SECTION 5.13;
(iii) The Borrower and each Subsidiary shall have executed and delivered
such other Loan Documents as the Agent or
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the Required Lenders shall have reasonably requested; and
(iv) Any borrowing in connection with a Permitted Acquisition must be in
compliance with SECTION 2.2(a)(i)-(vi) hereof.
(v) Immediately prior to and after giving effect to the Acquisition, no
Default or Event of Default shall have occurred and be continuing.
"Permitted Liens" shall mean any of the following liens, restrictions or
encumbrances securing any liability or indebtedness of the Borrower or any
Subsidiary on, or otherwise affecting, any of the Borrower's or such
Subsidiary's property, real or personal, whether now owned or hereafter
acquired; provided that, in addition to and notwithstanding the other
restrictions set forth in this definition, any lien or other restriction
described in this definition (other than liens described in clause (a) or (b))
shall be a Permitted Lien only if the sum of (i) the principal amount of Debt of
the Borrower and its Subsidiaries secured by such lien or restriction, (ii) the
aggregate principal amount of all Debt of the Borrower and its Subsidiaries
secured by all other liens or restrictions described in this definition (other
than liens or restrictions described in clause (a) or (b)), and (iii) the
aggregate amount of all other Debt of the Borrower and its Subsidiaries
permitted hereunder only by SECTION 6.2(vi), does not exceed $4,000,000.
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) Liens imposed by mandatory provisions of law of carriers,
warehousemen, mechanics, repairmen and materialmen and other like liens required
by provisions of law and incurred in the ordinary course of business for sums
not yet due and payable (or with respect to any obligation not greater than
$200,000, not more than sixty (60) days past the date of service) or that are
being contested in good faith and with due diligence by appropriate proceedings;
(c) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or liens arising from good faith deposits in connection
with letters of credit, bids, tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary course of
business, or to secure obligations on surety or appeal bonds provided that all
such liens in the aggregate have no Material Adverse Effect;
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(d) Liens for current taxes, assessments or other governmental charges
that are not delinquent or remain payable without any penalty or that are being
contested in good faith and with due diligence by appropriate proceedings,
provided that all such liens in the aggregate have no Material Adverse Effect
and, if reasonably requested by the Agent, the Borrower or such Subsidiary has
established reserves reasonably satisfactory to the Agent with respect thereto;
(e) Liens upon property leased under a Capital Lease and placed upon
such property at the time of, or within ten (10) days after, the commencement of
the lease thereof to secure the lease payments under such Capital Lease,
provided that any such lien (i) shall not encumber any other property of the
Borrower or any Subsidiary, (ii) shall not exceed the total of such lease
payments and (iii) shall not be pursuant to a lease that is for a term of less
than thirty-six (36) months;
(f) Liens set forth on SCHEDULE 1.1(a) attached hereto, provided that
such liens are not renewed, extended or increased;
(g) Purchase money liens incurred in the purchase of equipment permitted
under SECTION 6.9 hereof, provided that any such lien (i) attaches to such asset
concurrently with or within ten (10) days after the acquisition thereof, (ii)
shall not encumber any other property of the Borrower or any Subsidiary and
(iii) shall not exceed the purchase price of such asset;
(h) Assignment Restrictions;
(i) Easements, rights of way, zoning restrictions and other similar
encumbrances on real estate that do not materially impair the value of the
property to which they relate; and
(j) Any other liens or encumbrances as the Required Lenders may approve
in writing from time to time.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, an organization, a business, an individual, a trust or a government
or political subdivision thereof or any government agency or any other legal
entity.
"Pledge Agreement" shall mean the Second Amended and Restated Pledge
Agreement, dated as of the date hereof, between the Borrower and the Agent, as
amended, whereby the Borrower has pledged all of the Stock of its Subsidiaries
and the Intercompany Loan Documents to the Agent as Collateral for the
Obligations, together with any amendments, modifications and supplements
thereto, any replacements, renewals, extensions and restatements thereof, and
any substitutes therefor, in whole or in part.
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"Prime Rate" shall mean the per annum interest rate publicly announced from
time to time by First Union from its principal office in Charlotte, North
Carolina, to be its Prime Rate, which may not necessarily be its best lending
rate, as adjusted to conform to changes as of the opening of business on the
date of any such change in the Prime Rate. In the event First Union shall
abolish or abandon the practice of announcing its Prime Rate or should the same
be unascertainable, the Agent shall designate a comparable reference rate that,
upon the Borrower's consent (which shall not be unreasonably withheld), shall be
deemed to be the Prime Rate under this Loan Agreement and the other Loan
Documents.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or
(ii) Section 4975(c) of the Internal Revenue Code that is not exempt by reason
of Section 4975(c) or 4975(d).
"Projections" shall mean the financial projections delivered to the Agent
by the Borrower pursuant to SECTION 4.19 hereof.
"Pro Rata Share" of any amount shall mean, with respect to any Lender at
any time, the product of (i) such amount, multiplied by (ii) such Lender's
---------- --
Percentage at such time under the Facility or Facilities under which such amount
is being paid or advanced or to which such amount relates.
"RTC Acquisition" shall mean RTC Acquisition, Inc., a Delaware corporation,
and its successors and assigns.
"RTC Holdings" shall mean RTC Holdings, Inc., a Delaware corporation, and
its successors and assigns.
"RTC Supply" shall mean RTC Supply, Inc., a Delaware corporation, and its
successors and assigns.
"RTC Holdings S.A." shall mean RTC Holdings S.A., a corporation organized
under the laws of the Republic of Argentina, and its successors and assigns.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 207, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation G and having
substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
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"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Reimbursement Obligation" shall have the meaning assigned to such term in
SECTION 2.17(d).
"Renal-California" shall mean Renal Treatment Centers - California, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Colorado" shall mean Renal Treatment Centers - Colorado, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-D.C." shall mean Renal Treatment Centers, D.C., Inc., a Delaware
corporation and its successors and assigns.
"Renal-Delaware" shall mean Renal Treatment Centers - Delaware, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Florida" shall mean Renal Treatment Centers - Florida, Inc., a
Delaware corporation, that is a wholly owned subsidiary of the Borrower, and its
successors and assigns.
"Renal-Georgia" shall mean Renal Treatment Centers - Georgia, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Hawaii" shall mean Renal Treatment Centers - Hawaii, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Indiana" shall mean Renal Treatment Centers - Indiana, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Illinois" shall mean Renal Treatment Centers - Illinois, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Kansas" shall mean Renal Treatment Centers - Kansas, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Management Acquisition, Inc." shall mean Renal Management
Acquisition, Inc., a Delaware corporation, and its successors and assigns.
"Renal-Maryland" shall mean Renal Treatment Centers - Maryland, Inc., a
Delaware corporation, and its successors and assigns.
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"Renal-Missouri" shall mean Renal Treatment Centers - Missouri, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Nebraska" shall mean Renal Treatment Centers - Nebraska, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-New Jersey" shall mean Renal Treatment Centers - New Jersey, Inc., a
Delaware corporation formerly known as Renal Treatment Centers - West Virginia,
Inc., and its successors and assigns.
"Renal-New Orleans" shall mean Renal Treatment Centers - New Orleans, Inc.,
a Delaware corporation, and its successors and assigns.
"Renal-North Carolina" shall mean Renal Treatment Centers - North Carolina,
Inc., a Delaware corporation, and its successors and assigns.
"Renal-Ohio" shall mean Renal Treatment Centers - Ohio, Inc., a Delaware
corporation, and its successors and assigns.
"Renal-Oklahoma" shall mean Renal Treatment Centers - Oklahoma, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Pennsylvania" shall mean Renal Treatment Centers - Pennsylvania,
Inc., a Delaware corporation formerly known as Dialysis Corporation of
Harrisburg, and its successors and assigns.
"Renal-Texas" shall mean Renal Treatment Centers - Texas, Inc., a Delaware
corporation, and its successors and assigns.
"Renal-Virginia" shall mean Renal Treatment Centers - Virginia, Inc., a
Delaware corporation, and its successors and assigns.
"Renal-Wyoming" shall mean Renal Treatment Centers - Wyoming, Inc., a
Delaware corporation, and its successors and assigns.
"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA (other than an event for which notice is waived under the ERISA
regulations).
"Required Lenders" shall mean, at any time, the Lenders owning or holding
66-2/3% or more of the sum of (i) the then aggregate principal amount of the
Loans then outstanding plus (ii) the aggregate Stated Amount of all Letters of
----
Credit then outstanding; or, if no Loans or Letters of Credit are then
outstanding, the Lenders with 66-2/3% or more of the aggregate of all
Commitments at such time. For purposes of this definition, the Stated Amount of
each outstanding Letter of Credit shall be considered to be owed to
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the Lenders according to their respective Revolving Credit/Term Percentages.
"Requirement of Law" means, as to any Person, the charter, articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any statute, law, treaty, rule, regulation, order,
decree, writ, injunction or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any Interest Period, the
reserve percentage (expressed as a decimal) applicable two (2) Business Days
before the first day of such Interest Period determined by the Agent to be in
effect on such day, as provided by the Board of Governors of the Federal Reserve
System (or any successor governmental body), applied for determining the maximum
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to the Lenders under Regulation D
with respect to "Eurocurrency liabilities" within the meaning of Regulation D,
or under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding.
"Revolving Credit/Term Commitment" shall mean, with respect to any Lender
at any time, the amount set forth under such Lender's name on its signature page
hereto under the caption "Revolving Credit/Term Commitment" or, if such Lender
has entered into one or more Assignment and Acceptances, the amount set forth
for such Lender at such time in the Register maintained by the Agent pursuant to
SECTION 10.5(c) as such Lender's "Revolving Credit/Term Commitment," as such
amount may be reduced at or prior to such time pursuant to the terms hereof.
"Revolving Credit/Term Facility" shall mean the revolving line of credit
established by the Lenders under SECTION 2.1(b).
"Revolving Credit/Term Facility Conversion Date" shall mean September 30,
1999.
"Revolving Credit/Term Facility Maturity Date" shall mean September 30,
2003.
"Revolving Credit/Term Facility Termination Date" shall mean the Revolving
Credit/Term Facility Conversion Date, or such earlier date of termination of the
Total Revolving Credit/Term Commitment in accordance with SECTION 2.4(a) or
SECTION 8.1.
"Revolving Credit/Term Loans" shall have the meaning assigned to such term
in SECTION 2.1(b).
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"Revolving Credit/Term Notes" shall mean the promissory notes of the
Borrower in substantially the form of EXHIBIT A, executed and delivered to the
Lenders with Revolving Credit Commitments pursuant to SECTION 2.3(c) or, in
connection with an Assignment and Acceptance, pursuant to SECTION 10.5(d),
together with any amendments, modifications and supplements thereto and
restatements thereof, in whole or in part.
"Revolving Credit/Term Percentage" shall mean, with respect to any Lender
at any time, a fraction (expressed as a percentage) the numerator of which is
the Revolving Credit/Term Commitment of such Lender at such time and the
denominator of which is the Total Revolving Credit/Term Commitment at such time;
provided that if the Revolving Credit/Term Percentage of any Lender is to be
determined after the Revolving Credit/Term Commitments have been terminated,
then such Revolving Credit/Term Percentage shall be determined immediately prior
(and without giving effect) to such termination.
"Solvent" shall mean, as to any Person on any particular date, that such
Person (i) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage, (ii) is able to
pay its debts as they mature, (iii) owns property having a fair saleable value
greater than the amount required to pay its probable liability on existing debts
as they mature (including known reasonable contingencies and contingencies that
should be included in notes of the Financial Statements pursuant to Generally
Accepted Accounting Principles), and (iv) does not intend to, and does not
believe that it will, incur debts or probable liabilities beyond its ability to
pay such debts or liabilities as they mature.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or non-voting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
For purposes of this Agreement, prior to conversion, the Convertible Notes shall
not constitute stock.
"Subordinated Debt" shall mean (i) the Convertible Notes and (ii) any Debt
of the Borrower or any Subsidiary to the extent such Debt is expressly
subordinated and made junior to the payment and performance of the Obligations
and evidenced as such by a written instrument the terms and conditions
(including, without limitation, subordination provisions) of which are
satisfactory in form and
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substance to the Required Lenders in their sole discretion and are approved in
writing by the Agent.
"Subsidiary" shall mean any corporation or other entity of which more than
fifty percent (50%) of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors is at the time, directly or
indirectly, owned by any Person or one or more of its Subsidiaries (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency). When used without reference to a parent corporation, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
"Subsidiary Pledge Agreement" shall mean the Amended and Restated
Subsidiary Pledge Agreement, dated as of the date hereof, between each Guarantor
and the Agent, which each Guarantor has pledged all of the Stock of its
Subsidiaries and its Intercompany Loan Documents, to the Agent as Collateral,
together with any amendment, modifications and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"Target" shall have the meaning assigned to such term in SECTION
5.15(c)(i).
"Taxes" shall have the meaning assigned to such term in SECTION 2.12(a).
"Total Commitment" shall mean, at any time, the sum of all Commitments at
such time.
"Total Revolving Credit/Term Commitment" shall mean, at any time, the sum
of the Revolving Credit/Term Commitment of each Lender at such time.
"Total Unutilized Revolving Credit/Term Commitment" shall mean, at any
time, the sum of the Unutilized Revolving Credit/Term Commitments of each Lender
at such time.
"Type" shall have the meaning assigned to such term in SECTION 2.1(c).
"Uniform Commercial Code" shall mean the Uniform Commercial Code of the
State of North Carolina, as amended from time to time, unless in any particular
instance the Uniform Commercial Code of another state is applicable, in which
case it shall mean the Uniform Commercial Code of such state.
"Uniform Customs" shall have the meaning assigned to such term in SECTION
10.2.
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"Unutilized Revolving Credit/Term Commitment" shall mean, with respect to
any Lender at any time, such Lender's Revolving Credit/Term Commitment at such
time less the sum of (i) the aggregate principal amount of all Revolving
----
Credit/Term Loans made by such Lender that are outstanding at such time and (ii)
such Lender's Pro Rata Share of all Letter of Credit Outstandings at such time.
1.2 Accounting Terms. Any accounting terms used in this Agreement that
are not specifically defined shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles; provided, however,
that, in the event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the
Borrower's certified public accountants, to the extent that such changes would
modify or could modify such accounting terms or the interpretation or
computation thereof, such changes shall be followed in defining such accounting
terms only from and after the date this Agreement shall have been amended to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.
1.3 Singular/Plural. Unless the context otherwise requires, words in
the singular include the plural and words in the plural include the singular.
1.4 Other Terms. All other terms contained in this Agreement shall,
when the context so indicates, have the meanings provided for by the Uniform
Commercial Code of the State of North Carolina to the extent the same are used
or defined therein.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1 The Loans.
(a) The term loan in favor of the Borrower evidenced by the Second
Amended and Restated Renewal Term Promissory Notes, dated as of November 3,
1994, as amended, shall be repaid in full and terminated on the Closing Date.
(b) Each Lender having a Revolving Credit/Term Commitment severally
agrees, subject to and on the terms and conditions of this Agreement, to make
Loans (each, a "Revolving Credit/Term Loan" and collectively, the "Revolving
Credit/Term Loans") to the Borrower, from time to time on any Business Day
during the period from the date hereof to the Revolving Credit/Term Facility
Termination Date, provided that (i) the aggregate principal amount of
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Revolving Credit/Term Loans at any time outstanding for any Lender shall not
exceed the difference between (A) such Lender's Revolving Credit/Term Commitment
at such time less (B) such Lender's Pro Rata Share (calculated based on its
----
Revolving Credit/Term Percentage) of the aggregate Letter of Credit Outstandings
at such time (exclusive of Reimbursement Obligations that are repaid with the
proceeds of, and simultaneously with the incurrence of, Revolving Credit/Term
Loans) and (ii) no Borrowing of Revolving Credit/Term Loans shall be made if,
immediately after giving effect thereto, the sum of (W) the aggregate principal
amount of Revolving Credit/Term Loans outstanding at such time plus (X) the
----
aggregate Letter of Credit Outstandings at such time would exceed the lesser of
(Y) the Total Revolving Credit/Term Commitment or (Z) the Borrowing Base at such
time, and (iii) no Borrowing of Revolving Credit/Term Loans shall be required
if, immediately after giving effect thereto, a Default or Event of Default
exists. Subject to and on the terms and conditions of this Agreement, the
Borrower may borrow, repay and reborrow Revolving Credit/Term Loans.
(c) The Loans shall, at the option of the Borrower and subject to the
terms and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each such type of Loan, a "Type"), provided that all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type.
2.2 Borrowings.
(a) Whenever the Borrower desires to make a Borrowing (other than
continuations or conversions of outstanding Loans pursuant to SECTION 2.9) under
the Revolving Credit/Term Facility, the Borrower will give the Agent written
notice (by telecopier or otherwise), prior to 11:00 a.m., Charlotte time, at
least three (3) Business Days prior to each Borrowing to be comprised of LIBOR
Loans and at least one (1) Business Day prior to each Borrowing to be comprised
of Base Rate Loans. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall be
appropriately completed to specify (i) the aggregate principal amount and Type
of the Loans to be made pursuant to such Borrowing (and, in the case of a
Borrowing of LIBOR Loans, the initial Interest Period to be applicable thereto)
and (ii) the requested date of the Borrowing (the "Borrowing Date"), which shall
be a Business Day. Notwithstanding anything to the contrary contained herein:
(1) the aggregate principal amount of each Borrowing hereunder (y) in
the case of Borrowings comprised of Base Rate Loans, shall not be
less than $250,000 and, if greater, shall be in an integral multiple
of $50,000 in excess thereof, and (z) in the case of Borrowings
comprised of LIBOR Loans, shall not be less than $1,000,000 and, if
greater, shall be in an integral multiple of $100,000 in excess
thereof;
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(ii) the aggregate principal amount of all Borrowings under the Revolving
Credit/Term Facility, the proceeds of which are utilized to finance
any single Permitted Acquisition, in part or in whole, shall not be
more than $15,000,000, without the prior written consent of the
Required Lenders;
(iii) no Revolving Credit/Term Loans may be incurred to the extent that,
immediately after giving effect thereto, the aggregate original
principal amount of all Revolving Credit/Term Loans the proceeds of
which were utilized to finance Permitted Acquisitions during any
single fiscal year, in part or in whole, shall exceed $60,000,000,
without the prior written consent of the Required Lenders;
(iv) if the Borrower shall have failed to designate the Type of Loans
comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans;
(v) if the Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans,
then the Borrower shall be deemed to have selected an Interest
Period with a duration of one (1) month; and
(vi) LIBOR Loans under the Revolving Credit/Term Facility may not be
outstanding under more than five (5) separate Interest Periods at
any one time.
(b) Upon the receipt of a Notice of Borrowing, the Agent will promptly
notify each Lender with a Revolving Credit/Term Commitment of the proposed
Borrowing, of such Lender's Pro Rata Share thereof and of the other matters
specified in the Notice of Borrowing. Each such Lender will make the amount of
its Pro Rata Share of such Borrowing available to the Agent at its office
referred to in SECTION 10.4, for the account of the Borrower, in Dollars and in
immediately available funds, prior to 12:00 noon, Charlotte time, on the
Borrowing Date. To the extent the relevant Lenders have made such amounts
available to the Agent as provided hereinabove, the Agent will make the
aggregate of such amounts available to the Borrower's account at the Agent's
office and in like funds as received by the Agent, prior to 3:30 p.m., Charlotte
time, on the Borrowing Date.
(c) Unless the Agent has received, prior to 12:00 noon, Charlotte time,
on any Borrowing Date, written notice from a Lender that such Lender will not
make available to the Agent its Pro Rata Share of the relevant Borrowing, the
Agent may assume that such Lender has made its Pro Rata Share of such Borrowing
available to the Agent on such Borrowing Date in accordance with subsection (b)
above, and the Agent may, in reliance upon such assumption, make a
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corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such Pro Rata Share available to
the Agent, and the Agent shall have made such corresponding amount available to
the Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) if recovered from such Lender, at the Federal Funds Rate, and (ii) if
recovered from the Borrower, at the rate of interest applicable to Loans
comprising such Borrowing, as determined under SECTION 2.6. If such Lender shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) The failure of any Lender to make any Loan required to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation
hereunder to make its Loan on the respective Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender as part of any Borrowing.
2.3 Revolving Credit/Term Notes.
(a) The Revolving Credit/Term Loans made by each Lender shall be
evidenced by a Revolving Credit/Term Note appropriately completed in
substantially the form of EXHIBIT A.
(b) The Revolving Credit/Term Note issued to each Lender with a
Revolving Credit/Term Commitment shall (i) be executed by the Borrower, (ii) be
payable to the order of such Lender, (iii) be dated as of the Closing Date (or,
in the case of Revolving Credit/Term Notes issued pursuant to an Assignment and
Acceptance, as of the date thereof), (iv) be in a stated principal amount equal
to such Lender's Revolving Credit/Term Commitment, (v) bear interest in
accordance with the provisions of SECTION 2.6, as the same may be applicable to
the Revolving Credit/Term Loans made by such Lender from time to time, and (vi)
be entitled to all of the benefits of this Agreement and the other Loan
Documents and subject to the provisions hereof and thereof. The Revolving
Credit/Term Notes are an amendment, restatement and renewal of a series of
Second Amended and Restated Renewal Revolving Credit/Term Promissory Notes,
dated November 3, 1994, in the original aggregate principal amount of up to
$68,125,000, each executed and delivered by the Borrower to the Lenders to
evidence the loans made under the Revolving Credit/Term Facility, pursuant to
the Third Amended and Restated Loan Agreement. Upon execution and delivery of
the Revolving Credit/Term Notes, the notes amended, restated and renewed thereby
will be marked: "Renewed and reevidenced by a series of promissory notes dated
June 5, 1996, which are substituted herefor in entirety."
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(c) Each Lender will record on its internal records the amount of each
Loan made by it and each payment received by it in respect thereof and will, in
the event of any transfer of any of its Revolving Credit/Term Notes, either
endorse on the reverse side thereof the outstanding principal amount of the
Loans evidenced thereby as of the date of transfer or provide such information
on Annex I to the Assignment and Acceptance relating to such transfer; provided,
however, that the failure of any Lender to make any such recordation or provide
any such information, or any error in such recordation or information, shall not
affect the Borrower's obligations in respect of such Loans.
2.4 Reduction of Commitments.
(a) At any time and from time to time, upon at least five (5) Business
Days' prior written notice to the Agent, the Borrower may terminate in whole or
reduce in part the Total Unutilized Revolving Credit/Term Commitment, provided
that any such partial reduction shall be in an aggregate amount of not less than
$1,000,000 or integral multiples thereof. The amount of any termination or
reduction made under this subsection (a) may not thereafter be reinstated.
(b) Each reduction of the Revolving Credit/Term Commitment under this
Section shall be applied ratably to the Revolving Credit/Term Commitments of the
Lenders according to their respective Percentages under the Revolving
Credit/Term Facility. After any such reduction, the fee provided for in SECTIONS
2.7(a) shall be calculated with respect to the reduced Commitments.
2.5 Payments; Voluntary, Mandatory.
(a) The Borrower shall have the right from time to time to prepay the
Loans, in whole or in part, upon written notice to the Agent prior to 11:00
a.m., Charlotte time, at least three (3) Business Days' prior to each intended
prepayment of LIBOR Loans and at least one (1) Business Day prior to each
intended prepayment of Base Rate Loans, provided that (i) each partial
prepayment shall be in an aggregate principal amount of no less than $500,000 or
an integral multiple thereof, (ii) no partial prepayment of LIBOR Loans made
pursuant to any single Borrowing shall reduce the outstanding principal amount
of the remaining LIBOR Loans under such Borrowing to less than $1,000,000 and
(iii) unless made together with all amounts required under SECTION 2.13 to be
paid as a consequence of such prepayment, a prepayment of a LIBOR Loan may be
made only on the last day of the Interest Period applicable thereto. Each such
notice shall specify (x) the proposed date of such prepayment and (y) the
aggregate principal amount and the Types of the Loans to be prepaid (and, in the
case of LIBOR Loans, the specific Borrowing or Borrowings pursuant to which
made) and shall be irrevocable and shall bind the Borrower to make such
prepayment on the terms specified therein. Amounts prepaid under
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the Revolving Credit/Term Facility pursuant to this subsection (a) may be
reborrowed, subject to the terms and conditions of this Agreement.
(b) In the event that the sum of (i) the aggregate principal amount of
the Revolving Credit/Term Loans outstanding on any date plus (ii) the aggregate
----
Letter of Credit Outstandings as of such date exceeds the lesser of (y) the
Total Revolving Credit/Term Commitment as of such date (after giving effect to
any termination or reduction thereof as of such date), or (z) the Borrowing Base
as of such date, the Borrower will repay the principal amount of the Revolving
Credit/Term Loans on such date in the amount of such excess; provided that, (A)
such payment shall be accompanied by all amounts required under SECTION 2.13 if
applied to a LIBOR Loan and such payment is not made on the last day of the
Interest Period applicable thereto, and (B) to the extent such excess amount
required to be repaid is greater than the aggregate principal amount of the
Revolving Credit/Term Loans outstanding immediately prior to the application of
such repayment, the amount so repaid shall be retained by the Agent and held in
the Cash Collateral Account as security for the Borrower's Reimbursement
Obligations, as more particularly described in SECTION 2.17(i).
(c) The Borrower shall repay the Revolving Credit/Term Notes in full on
the Revolving Credit/Term Facility Termination Date; provided, however, that if
the Revolving Credit/Term Facility Termination Date occurs on, and solely
because of, the occurrence of the Revolving Credit/Term Facility Conversion
Date, the aggregate outstanding principal balance of the Revolving Credit/Term
Loans on the Revolving Credit/Term Facility Conversion Date will be converted to
a term loan and shall be due and payable and repaid by the Borrower in sixteen
(16) equal quarterly installments, on March 31, June 30, September 30 and
December 31 in each year, commencing on December 31, 1999 through and including
the Revolving Credit/Term Facility Maturity Date.
2.6 Interest.
(a) The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full, (i) at the Adjusted Base Rate, as in effect from
time to time during such periods as such Loan is a Base Rate Loan, and (ii) at
the Adjusted LIBOR Rate, as in effect from time to time during such periods as
such Loan is a LIBOR Loan.
(b) Any principal amounts of the Loans not paid when due and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other fees and amounts hereunder not paid when due (whether at maturity,
pursuant to acceleration or otherwise), shall bear interest at a rate per annum
equal to the interest rate then applicable to such Loans (whether the Adjusted
Base Rate or
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the Adjusted LIBOR Rate) plus two percentage points (2.0%), and such default
interest shall be payable on demand. Further, but without duplication of the
foregoing, during the existence of any Event of Default in response to which the
Lenders do not elect to declare the outstanding principal amounts of the
Revolving Credit Loans immediately due and payable, if required by the Required
Lenders, the Borrower will pay interest on the dates provided pursuant to
subsection (c), below, in respect of the unpaid principal amount of each
Revolving Credit Loan, from the date the Event of Default first exists until it
is cured, at a rate per annum equal to the Adjusted Base Rate plus two
percentage points (2.0%). To the greatest extent permitted by law, interest
shall continue to accrue after the filing by or against the Borrower of any
petition seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.
(c) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, in arrears on the last Business Day of each
fiscal quarter, beginning with the last Business Day of the fiscal quarter
ending June 30, 1996 and (ii) in respect of each LIBOR Loan, in arrears on the
last Business Day of the Interest Period applicable thereto (subject to the
provisions of clause (iv) in SECTION 2.8) and for any Interest Period longer
than three (3) months, interest shall also be payable on the first Business Day
occurring three (3) months after the first day of such Interest Period and (iii)
in respect of any Loan, on the date of any repayment or prepayment in full, at
maturity (whether pursuant to acceleration or otherwise) and, after maturity, on
demand.
(d) Nothing contained in this Agreement or in any other Loan Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
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(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing after its receipt of the
relevant Notice of Borrowing or Notice of Conversion/Continuation; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination
of the Reserve Requirement in connection with a Borrowing of LIBOR Loans) shall,
absent manifest error, be final and conclusive and binding on all parties
hereto.
2.7 Fees. The Borrower agrees to pay:
(a) To the Agent, for the account of each Lender with a Revolving
Credit/Term Commitment, a commitment fee per annum for the period from the
Closing Date to the Revolving Credit/Term Facility Termination Date, at the
applicable percentage per annum determined under the following matrix and
applied to the average daily Unutilized Revolving Credit/Term Commitment of such
Lender, payable in arrears (i) on the last Business Day of each fiscal quarter,
beginning with the last Business Day of the fiscal quarter ending December 31,
1994, and (ii) on the Revolving Credit/Term Facility Termination Date:
<TABLE>
<CAPTION>
Ratio of Consolidated Senior Commitment Fee
Debt to Annualized Cash Flow Percentage
---------------------------- --------------
<S> <C>
Greater than or equal to
2.25 to 1.0 0.35%
Greater than or equal to
1.5 to 1.0
but less than 2.25 to 1.0 0.30%
Less than 1.5 to 1.0 0.25%
</TABLE>
(b) To the Agent, for the account of each Lender with a Revolving
Credit/Term Commitment, a letter of credit fee in respect of each Letter of
Credit for the period from the date of its issuance to the date of its
termination, at a rate per annum equal to the Applicable Margin for LIBOR Loans
in effect from time to time during such period on the daily average Stated
Amount thereof, payable in advance (i) on the last Business Day of each fiscal
quarter, beginning with the last Business Day of the fiscal quarter ending June
30, 1996, and (ii) on the later of the Revolving Credit/Term Facility
Termination Date or the date of termination of the last outstanding Letter of
Credit;
(c) To the Issuing Bank, for its own account, a facing fee in respect of
each Letter of Credit for the period from the date of its issuance to the date
of its termination, at the rate of 0.125% per annum on the daily average Stated
Amount thereof, payable in arrears (i) on the last Business Day of each fiscal
quarter,
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beginning with the last Business Day of the fiscal quarter ending June 30, 1996,
and (ii) on the later of the Revolving Credit/Term Facility Termination Date and
the date of termination of the last outstanding Letter of Credit;
(d) To the Issuing Bank, for its own account, such commissions, issuance
fees, transfer fees and other fees and charges incurred in connection with the
issuance and administration of each Letter of Credit as are customarily charged
from time to time by the Issuing Bank for the performance of such services in
connection with similar letters of credit, or as may be otherwise agreed to by
the Issuing Bank, but without duplication of amounts payable under subsection
(c) above; and
(e) To the Agent, for its own account, the annual agency fee in the
amount and at the times provided in the Fee Letter, such fee to accrue from the
Closing Date to the date upon which all of the Obligations have been
indefeasibly paid in full and the Commitments have been terminated.
2.8 INTEREST PERIODS. Concurrently with the giving of any Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six-month period (subject to
availability); provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall commence on the
date of the Borrowing of such Loan (including the date of any
continuation of, or conversion into, such LIBOR Loan), and each
successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) the Borrower may not select any Interest Period that expires after
the Revolving Credit Facility Maturity Date, with respect to
Revolving Credit/Term Loans that are to be maintained as LIBOR
Loans;
(iv) if any Interest Period otherwise would expire on a day that is not a
Business Day, such Interest Period shall expire on the next
succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
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(v) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month during which
such Interest Period would otherwise expire, such Interest Period
shall expire on the last Business Day of such calendar month; and
(vi) if, upon the expiration of any Interest Period applicable to a
Borrowing of LIBOR Loans, the Borrower shall have failed to elect a
new Interest Period to be applicable to such LIBOR Loans, then the
Borrower shall be deemed to have elected to convert such LIBOR Loans
into Base Rate Loans as of the expiration of the then current
Interest Period applicable thereto.
2.9 Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day, to elect (y)
to convert all (or a portion in an amount not less than (A) in the case of Base
Rate Loans, $250,000 or, if greater, an integral multiple of $50,000 in excess
thereof and (B) in the case of LIBOR Loans, $1,000,000 or, if greater, an
integral multiple of $100,000 in excess thereof) of the outstanding principal
amount of any Loans of one Type made pursuant to one or more Borrowings under
any Facility (and, in the case of LIBOR Loans, having the same Interest Period)
into a Borrowing or Borrowings of Loans (under the same Facility) of the other
Type, or (z) to continue all (or a portion, subject to the restrictions as to
amount set forth in clause (B) of the parenthetical in clause (y) above) of the
outstanding principal amount of any LIBOR Loans made pursuant to one or more
Borrowings under any Facility (and having the same Interest Period) for an
additional Interest Period, provided that (i) except as otherwise provided for
in SECTION 2.11(d), LIBOR Loans may be converted into Base Rate Loans only on
the last day of the Interest Period applicable thereto (and, in any event, if a
LIBOR Loan is converted into a Base Rate Loan on any day other than the last day
of the Interest Period applicable thereto, the Borrower will pay, upon such
conversion, all amounts required under SECTION 2.13 to be paid as a consequence
thereof), (ii) if any partial conversion of LIBOR Loans into Base Rate Loans
shall have reduced the outstanding principal amount of the remaining LIBOR Loans
made pursuant to a single Borrowing (and thereby continued) to less than
$1,000,000, such remaining LIBOR Loans shall be converted immediately into Base
Rate Loans and may not thereafter be converted into or continued as LIBOR Loans
unless the requirements of clause (y) above are satisfied, (iii) no conversion
of Base Rate Loans into LIBOR Loans or continuation of LIBOR Loans shall be
permitted during the continuance of a Default or Event of Default and (iv) no
conversion or continuation under this Section shall result in a greater number
of separate Interest Periods in respect of LIBOR Loans under either Facility
than is permitted under SECTION 2.2(a)(vi).
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(b) The Borrower shall make each such election by delivering written
notice to the Agent prior to 11:00 a.m., Charlotte time, at least three (3)
Business Days prior to the effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and at least one (1) Business Day prior to
the effective date of any conversion of LIBOR Loans into Base Rate Loans. Each
such notice (each, a "Notice of Conversion/Continuation") shall be irrevocable,
shall be given in the form of EXHIBIT B-2 and shall be appropriately completed
to specify (x) the date of such conversion or continuation, (y) in the case of a
conversion into, or a continuation of, LIBOR Loans, the Interest Period to be
applicable thereto and (z) the aggregate amount and Type of the Loans being
converted or continued. Upon the receipt of a Notice of Conversion/Continuation,
the Agent will promptly notify each Lender having a Commitment under the
Facility pursuant to which such conversion or continuation is elected of the
proposed conversion or continuation, of such Lender's Pro Rata Share thereof and
of the other matters specified in the Notice of Conversion/Continuation. In the
event that the Borrower shall fail to deliver a Notice of
Conversion/Continuation as provided hereinabove with respect to any Borrowing of
LIBOR Loans, such LIBOR Loans shall automatically be converted to Base Rate
Loans upon the expiration of the then current Interest Period applicable
thereto.
2.10 Method of Payments; Computations.
(a) All payments by the Borrower hereunder and under the Revolving
Credit/Term Notes shall be made without setoff, counterclaim or other defense,
in Dollars and in immediately available funds to the Agent, for the account of
the Lenders (except as otherwise provided in SECTIONS 2.7(d), 2.7(e), 2.11,
2.12, 2.13, 2.17, 10.6 and 10.7 as to payments required to be made directly to
the Issuing Bank and the Lenders) to the Agent to First Union, ABA Routing
#053000219, to the Credit of First Union National Bank of North Carolina,
Charlotte, North Carolina, Attention: Syndication Agency Services, G/L #465906,
RC # 5007, RE: Renal Treatment Centers, prior to 12:00 noon, Charlotte time, on
the date payment is due. Any payment made as required hereinabove, but after
12:00 noon, Charlotte time, shall be deemed to have been made on the next
succeeding Business Day. If any payment falls due on a day that is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day (except that in the case of LIBOR Loans to which the provisions of
clause (iv) in SECTION 2.8 are applicable, such due date shall be the next
preceding Business Day), and such extension of time shall then be included in
the computation of payment of interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of such Lenders as follows: (i) if
the payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make
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to each such Lender on the same date, by wire transfer of immediately available
funds, such Lender's Pro Rata Share of such payment, and (ii) if such payment is
received after 12:00 noon, Charlotte time, or in other than immediately
available funds, the Agent will make available to each such Lender its Pro Rata
Share of such payment by wire transfer of immediately available funds on the
next succeeding Business Day (or in the case of uncollected funds, as soon as
practicable after collected). If the Agent shall not have made a required
distribution to the appropriate Lenders as required hereinabove after receiving
a payment for the account of such Lenders, the Agent will pay to each such
Lender, on demand, its Pro Rata Share of such payment with interest thereon at
the Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Agent until the date repaid to such Lender. The Agent will
distribute to the Issuing Bank like amounts relating to payments made to the
Agent for the account of the Issuing Bank in the same manner, and subject to the
same terms and conditions, as set forth hereinabove with respect to
distributions of amounts to the Lenders.
(c) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to any Lender hereunder that such
payment will not be made in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date, and the Agent may, in
reliance on such assumption, cause to be distributed to each Lender on such due
date an amount equal to the amount then due to each such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each such Lender shall repay to the Agent forthwith on demand such amount so
distributed to such Lender, together with interest thereon for each day from the
date such amount is so distributed to such Lender until the date repaid to the
Agent, at the Federal Funds Rate.
(d) The Borrower hereby authorizes each Lender, if and to the extent
that any payment owed to such Lender is not made when due hereunder or under any
Revolving Credit/Term Note held by such Lender, to charge from time to time
against any or all of the accounts of the Borrower with such Lender any amount
so due.
(e) With respect to each payment on the Loans hereunder, except as
specifically provided otherwise herein or in any of the other Loan Documents,
the Borrower may designate by written notice to the Agent prior to or
concurrently with such payment the Types of Loans that are to be repaid or
prepaid and, in the case of LIBOR Loans, the specific Borrowing or Borrowings
pursuant to which made, provided that (i) unless made together with all amounts
required under SECTION 2.13 to be paid as a consequence thereof, a prepayment of
a LIBOR Loan may be made only on the last day of the Interest Period applicable
thereto, (ii) if any partial prepayment of LIBOR Loans made pursuant to any
single Borrowing shall reduce the outstanding principal amount of the remaining
LIBOR Loans under
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such Borrowing to less than $1,000,000, such remaining LIBOR Loans shall be
converted immediately into Base Rate Loans and (iii) each prepayment of Loans
comprising a single Borrowing shall be applied pro rata among such Loans. In the
absence of any such designation by the Borrower, the Agent shall, subject to the
foregoing, make such designation in its sole discretion.
(f) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed; provided, that interest on Base Rate Loans
shall be computed on the basis of 365-day year and the actual days elapsed.
2.11 Increased Costs, Change in Circumstances, etc.
(a) If, at any time after the Closing Date and from time to time, the
adoption or modification of any applicable law, rule or regulation, or any
interpretation or administration thereof by any Governmental Authority or
central bank (whether or not having the force of law) charged with the
interpretation, administration or compliance of the Lenders with any of such
requirements, shall:
(i) subject any Lender to, or increase the net amount of, any tax,
impost, duty, charge or withholding with respect to any amount
received or to be received hereunder in connection with LIBOR Loans
(other than taxes imposed on net income or profits of, or any branch
or franchise tax applicable to, such Lender or a Lending Office of
such Lender);
(ii) change the basis of taxation of payments to any Lender in connection
with LIBOR Loans (other than changes in taxes on the net income or
profits of, or any branch or franchise tax applicable to, such
Lender or a Lending Office of such Lender);
(iii) impose, increase or render applicable any reserve (other than the
Reserve Requirement), capital adequacy, special deposit or similar
requirement against assets of, deposits with or for the account of,
or loans, credit or commitments extended by, any Lender or a Lending
Office of such Lender; or
(iv) impose on any Lender or in the London interbank Eurodollar market
any other condition or requirement affecting this Agreement or LIBOR
Loans;
and the result of any of the foregoing is to increase the costs to any Lender of
agreeing to make, making, funding or maintaining any LIBOR Loans or to reduce
the yield or rate of return of such Lender on any LIBOR Loans to a level below
that which such Lender could
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have achieved but for the adoption or modification of any such requirements, the
Borrower will, within fifteen (15) days after delivery to the Borrower by such
Lender of written demand therefor (with a copy thereof to the Agent), pay to
such Lender such additional amounts as shall compensate such Lender for such
increase in costs or reduction in return.
(b) If, at any time after the Closing Date and from time to time, any
Lender shall have determined that the adoption or modification of any applicable
federal, state or local law, rule or regulation regarding such Lender's required
level of capital (including any allocation of capital requirements or
conditions, but excluding federal, state or local income tax liability), or the
implementation of any such requirements previously adopted but not implemented
prior to the Closing Date, or any interpretation or administration thereof by
any Governmental Authority (whether or not having the force of law) charged with
the interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of reducing the rate of return on
such Lender's capital as a consequence of its Commitments, Loans or
participations in Letters of Credit hereunder to a level below that which such
Lender could have achieved but for such adoption, modification, implementation
or interpretation (taking into account such Lender's policies with respect to
capital adequacy), the Borrower will, within fifteen (15) days after delivery to
the Borrower by such Lender of written demand therefor (with a copy thereof to
the Agent), pay to such Lender such additional amounts as will compensate such
Lender for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (i) the
Agent shall have received written notice from any Lender of such Lender's
determination that Dollar deposits in the amount of such Lender's required LIBOR
Loan pursuant to such Borrowing are not generally available in the London
interbank Eurodollar market or that the rate at which such Dollar deposits are
being offered will not adequately and fairly reflect the cost to such Lender of
making or maintaining its LIBOR Loan during such Interest Period or (ii) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period, the Agent will
forthwith so notify the Borrower and the Lenders, whereupon the obligation of
(y) in the case of clause (i) above, each such affected Lender, and (z) in the
case of clause (ii) above, all Lenders, in each case to make, to convert Base
Rate Loans into, or to continue, LIBOR Loans shall be suspended (including
pursuant to the Borrowing to which such Interest Period applies), and any Notice
of Borrowing or Notice of Conversion/Continuation given at any time thereafter
with respect to LIBOR Loans shall be deemed to be a request for Base Rate Loans
(but in the case of clause (i) above, only to the extent of such affected
Lender's Pro Rata Share thereof) until the Agent or the affected Lender, as the
case may be, shall have determined that the circumstances giving rise to such
suspension no longer exist (and
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the affected Lender, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the Closing Date and from time to time, any Lender shall have
determined that the adoption or modification of any applicable law, rule or
regulation, or any interpretation or administration thereof by any Governmental
Authority or central bank (whether or not having the force of law) charged with
the interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of making it unlawful for such Lender
to honor its obligation to make LIBOR Loans or to continue to make or maintain
LIBOR Loans, such Lender will forthwith so notify the Agent and the Borrower,
whereupon (i) each of such Lender's outstanding LIBOR Loans shall automatically,
on the expiration date of the respective Interest Period applicable thereto or,
to the extent any such LIBOR Loan may not lawfully be maintained as a LIBOR Loan
until such expiration date, upon such notice, be converted into a Base Rate Loan
and (ii) the obligation of such Lender to make, to convert Base Rate Loans into,
or to continue, LIBOR Loans shall be suspended, and any Notice of Borrowing or
Notice of Conversion/Continuation given at any time thereafter with respect to
LIBOR Loans shall, as to such Lender, be deemed to be a request for Base Rate
Loans, until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. Each Lender agrees
that, upon the occurrence of any event giving rise to the operation of this
Section with respect to such Lender, it will, if requested by the Borrower and
to the extent permitted by law, endeavor in good faith to designate another
Lending Office for its LIBOR Loans, but only if such designation would make it
lawful for such Lender to continue to make or maintain LIBOR Loans hereunder;
provided that such designation is made on such terms that such Lender, in its
good faith determination, suffers no increased cost or economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of this Section.
(f) Each demand for payment under this Section shall be preceded by a
notice to the Borrower of such anticipated demand, which notice shall specify in
reasonable detail the basis for such demand, but the failure to provide such
advance notice shall not relieve the Borrower of any of its obligations
hereunder. No failure by the Agent or any Lender to demand payment of any
amounts
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payable under this Section shall constitute a waiver of its right to demand
payment of any additional amounts arising at any subsequent time. Nothing in
this Section shall be construed or so operate as to require the Borrower to pay
any interest, fees, costs or charges in excess of that permitted by applicable
law.
2.12 Taxes.
(a) Any and all payments by the Borrower hereunder or under any
Revolving Credit/Term Note shall be made, in accordance with the terms hereof
and thereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (other than net income and franchise taxes
imposed on the Agent, the Issuing Bank or any Lender) (y) by the jurisdiction
under the laws of which the Agent, the Issuing Bank or such Lender, as the case
may be, is organized or any political subdivision thereof and (z) in the case of
each Lender, by the jurisdiction in which any Lending Office of such Lender is
located or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Revolving Credit/Term Note to the Agent, the Issuing Bank or any Lender, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), the Agent, the Issuing Bank or such Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower will make such deductions and (iii) the
Borrower will pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) The Borrower will indemnify the Agent, the Issuing Bank and each
Lender for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Agent, the Issuing Bank or such Lender, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Agent, the
Issuing Bank or any Lender, as the case may be, makes written demand therefor.
Within thirty (30) days after the date of any payment of Taxes pursuant to this
Section, the Borrower will furnish to the Agent, the Issuing Bank or the
relevant Lender, as the case may be, the original or a certified copy of a
receipt evidencing payment thereof.
(c) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code, and such Lender claims exemption from United
States withholding tax under Section 1441 or
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1442 of the Code, such Lender will deliver to the Agent and the Borrower:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year, and before the payment of any interest in each
third succeeding calendar year, during which interest may be paid to
such Lender under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
(2) properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such
Lender, and in each succeeding taxable year of such Lender, during
which interest may be paid to such Lender under this Agreement, and
IRS Form W-9; and
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Each such Lender will promptly notify the Agent and the Borrower of any
changes in circumstances that would modify or render invalid any claimed
exemption or reduction.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required under subsection
(c) above are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax. For purposes of this
Section, a distribution hereunder by the Agent to or for the account of any
Lender shall be deemed a payment by the Borrower.
(e) If the IRS or any other Governmental Authority, domestic or foreign,
asserts a claim that the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (whether because the appropriate form was
not delivered or was not properly executed, because such Lender failed to notify
the Agent of a change in circumstances that rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason), such Lender
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and including
any
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taxes imposed by any jurisdiction on the amounts payable to the Agent under this
subsection (E), together with all costs, expenses and reasonable attorneys' fees
incurred or paid in connection therewith.
(f) If at any time the Borrower requests any Lender to deliver any forms
or other documentation pursuant to subsection (c) above, then the Borrower
shall, upon demand of such Lender, reimburse such Lender for any reasonable
costs or expenses incurred by such Lender in the preparation or delivery of such
forms or other documentation.
(g) Each Lender agrees that, if the Borrower is required to pay
additional amounts to any Lender pursuant to subsection (a) above, then such
Lender will, if requested by the Borrower and to the extent permitted by law,
endeavor in good faith to designate another Lending Office for its LIBOR Loans,
but only if such designation would make it lawful for such Lender to continue to
make or maintain LIBOR Loans hereunder; provided that such designation is made
on such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section.
2.13 Compensation. The Borrower will compensate each Lender, upon its
written request (which request shall set forth the basis for requesting such
compensation and shall be copied to the Agent), for all losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its LIBOR Loans) that such Lender may sustain
(i) if for any reason (other than a default by such Lender or the Agent) a
Borrowing of, or conversion of or into, LIBOR Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation, (ii) if any repayment, prepayment or conversion of any
of its LIBOR Loans occurs on a date other than the last day of an Interest
Period applicable thereto, (iii) if any prepayment of any of its LIBOR Loans is
not made on any date specified in a notice of prepayment given by the Borrower
or (iv) as a consequence of any other failure by the Borrower to make any
payments with respect to LIBOR Loans when due hereunder, including as a
consequence of acceleration of the maturity of such Loans pursuant to SECTION
8.1. In addition, the Borrower will pay to the Agent, for its own account, an
administrative fee of $1,000 concurrently with any payments made in respect of
any single occurrence pursuant to this Section. Calculation of all amounts
payable to a Lender under this Section shall be made as though such Lender had
actually funded its relevant LIBOR Loan through the purchase of a Eurodollar
deposit bearing interest at the LIBOR Rate in an amount equal to the amount of
such LIBOR Loan, having a maturity comparable to the relevant
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Interest Period and through the transfer of such Eurodollar deposit from an
offshore Lending Office of such Lender to a Lending Office of such Lender in the
United States; provided, however, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section.
2.14 Use of Proceeds. The proceeds of the Revolving Credit/Term Loans
shall be used by the Borrower solely (i) to refinance existing Debt, (ii) to
provide working capital and for general corporate purposes for the Borrower and
its Subsidiaries and (iii) to finance Permitted Acquisitions pursuant to this
Agreement.
2.15 Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower make a payment
or payments to or for the account of the Agent, the Lenders or the Issuing Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party under any bankruptcy, insolvency or
similar state or federal law, common law or equitable cause, then, to the extent
of such payment or repayment, the Obligation intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
received.
(b) If any amounts distributed by the Agent to a Lender are subsequently
returned or repaid by the Agent to the Borrower or its representative or
successor in interest, whether by court order or by settlement approved by the
Lender in question, such Lender will, promptly upon receipt of notice thereof
from the Agent, pay the Agent such amount. If any such amounts are recovered by
the Agent from the Borrower or its representative or successor in interest, the
Agent shall redistribute such amounts to the Lenders on the same basis as such
amounts were originally distributed.
2.16 Pro Rata Borrowings.
(a) All Borrowings, continuations and conversions of Loans shall be made
by the Lenders pro rata on the basis of their respective Percentages, as
appropriate from time to time, rounded to the nearest penny.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, enforcement of any
right under the Loan Documents, or otherwise) applicable to the payment of any
of the Obligations that exceeds its Pro Rata Share of payments on account of
such Obligations then or therewith obtained by all the Lenders to which such
payments are required to have been made, such Lender shall forthwith purchase
from the other Lenders such participations in
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such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such other Lender's ratable share (according to the proportion of (i)
the amount of such other Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to the provisions of this Section may, to the fullest extent
permitted by law, exercise any and all rights of payment (including, without
limitation, setoff, banker's lien or counterclaim) with respect to such
participation as fully as if such participant were a direct creditor of the
Borrower in the amount of such participation.
2.17 Letters of Credit.
(a) Subject to and upon the terms and conditions herein set forth, so
long as no Default or Event of Default has occurred and is continuing, the
Issuing Bank will, at any time and from time to time on and after the Closing
Date and prior to the Revolving Credit/Term Facility Termination Date, and upon
request by the Borrower in accordance with the provisions of SECTION 2.17(b),
issue for the account of the Borrower one or more irrevocable standby letters of
credit denominated in Dollars and in a form customarily used or otherwise
approved by the Issuing Bank (together with all amendments, modifications and
supplements thereto, substitutions therefor and renewals and restatements
thereof, collectively, the "Letters of Credit"). The Stated Amount of each
Letter of Credit shall not be less than such amount as may be acceptable to the
Issuing Bank. Notwithstanding the foregoing:
(i) No Letter of Credit shall be issued the Stated Amount upon issuance
of which (i) when added to all other Letter of Credit Outstandings
at such time, would exceed $5,000,000 or (ii) when added to all
other Letter of Credit Outstandings at such time and the aggregate
principal amount of all Revolving Credit/Term Loans then
outstanding, would exceed the lesser of (y) the Total Revolving
Credit/Term Commitment at such time or (z) the Borrowing Base at
such time;
(ii) No Letter of Credit shall be issued that by its terms expires more
than one (1) year after its date of issuance or later than the
seventh day prior to September 30, 1999; provided, however, that a
Letter of Credit may, if requested by the Borrower, provide by
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its terms, and on terms acceptable to the Issuing Bank, for renewal
for successive periods of one year or less (but not beyond the
seventh day prior to September 30, 1999), unless and until the
Issuing Bank shall have delivered a notice of nonrenewal to the
beneficiary of such Letter of Credit; and
(iii) The Issuing Bank shall be under no obligation to issue any Letter of
Credit if, at the time of such proposed issuance, (A) any order,
judgment or decree of any Governmental Authority or arbitrator shall
purport by its terms to enjoin or restrain the Issuing Bank from
issuing such Letter of Credit, or any Requirement of Law applicable
to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that
the Issuing Bank refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose
upon the Issuing Bank with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated) not in effect on the Closing
Date, or any unreimbursed loss, cost or expense that was not
applicable, in effect or known to the Issuing Bank as of the Closing
Date and that the Issuing Bank in good faith deems material to it,
or (B) the Issuing Bank shall have actual knowledge, or shall have
received notice from any Lender, prior to the issuance of such
Letter of Credit that one or more of the conditions specified in
SECTION 2.17(c) are not then satisfied or that the issuance of such
Letter of Credit would violate the provisions of subsection (i)
above.
(b) Whenever the Borrower desires the issuance of a Letter of Credit,
the Borrower will notify the Issuing Bank (with copies to the Agent) in writing,
by 11:00 a.m., Charlotte time, at least three (3) Business Days' (or such
shorter period as is acceptable to the Issuing Bank in any given case) prior to
the requested date of issuance thereof. Each such request (each, a "Letter of
Credit Request") shall be irrevocable, shall be given in the form of EXHIBIT B-3
and shall be appropriately completed to specify (i) the proposed date of
issuance (which shall be a Business Day), (ii) the proposed Stated Amount and
expiry date of the Letter of Credit, and (iii) the name and address of the
proposed beneficiary or beneficiaries of the Letter of Credit. The Borrower will
also complete any application procedures and documents required by the Issuing
Bank in connection with the issuance of any Letter of Credit. The Agent will,
promptly upon its receipt thereof, notify each Lender of the Letter of Credit
Request. Upon its issuance of any Letter of Credit, the Issuing Bank will
promptly notify each Lender of such issuance and will notify each Lender with a
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Revolving Credit/Term Commitment of the amount of its participation therein
under SECTION 2.17(c).
(c) Immediately upon the issuance of any Letter of Credit, the Issuing
Bank shall be deemed to have sold and transferred to each Lender with a
Revolving Credit/Term Commitment, and each such Lender (each, in such capacity,
an "L/C Participant") shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation, pro rata to the extent of its Revolving
Credit/Term Percentage at such time, in such Letter of Credit, each drawing made
thereunder and the obligations of the Borrower under this Agreement with respect
thereto and any security therefor (including the Collateral) or guaranty
pertaining thereto; provided, however, that the fees and other charges relating
to Letters of Credit described in SECTIONS 2.7(d) and (e) shall be payable
directly to the Issuing Bank as provided therein, and the L/C Participants shall
have no right to receive any portion thereof. Upon any change in the Revolving
Credit/Term Commitments of any of the Lenders pursuant to SECTION 10.5, with
respect to all outstanding Letters of Credit and Reimbursement Obligations there
shall be an automatic adjustment to the participations pursuant to this Section
to reflect the new Revolving Credit/Term Percentages of the assigning Lender and
the Eligible Assignee.
(d) The Borrower hereby agrees to reimburse the Issuing Bank by making
payment to the Agent, for the account of the Issuing Bank, in immediately
available funds, for any payment made by the Issuing Bank under any Letter of
Credit (each such amount so paid until reimbursed, together with interest
thereon payable as provided hereinbelow, a "Reimbursement Obligation")
immediately after, and in any event on the date of, such payment, together with
interest on the amount so paid by the Issuing Bank, to the extent not reimbursed
prior to 2:00 p.m., Charlotte time, on the date of such payment or disbursement,
(i) for the period from the date of the respective payment to the date of
receipt by the Borrower from the Issuing Bank of notice of such payment, the
Adjusted Base Rate as in effect from time to time during such period, and (ii)
for the period from the date of receipt by the Borrower from the Issuing Bank of
notice of such payment to the date the Reimbursement Obligation created thereby
is satisfied, the Base Rate as in effect from time to time during such period
plus two percentage points (2.0%), such interest also to be payable on demand.
The Issuing Bank will provide the Agent and the Borrower with prompt notice of
any payment or disbursement made under any Letter of Credit, although the
failure to give, or any delay in giving, any such notice shall not release,
diminish or otherwise affect the Borrower's obligations under this Section or
any other provision of this Agreement.
(e) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have timely
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satisfied in full its Reimbursement Obligation to the Issuing Bank pursuant to
SECTION 2.17(d), and to the extent that any amounts then held in the Cash
Collateral Account established pursuant to SECTION 2.17(i) shall be insufficient
to satisfy such Reimbursement Obligation in full, the Issuing Bank will promptly
notify the Agent, and the Agent will promptly notify each L/C Participant, of
such failure. If the Agent gives such notice prior to 11:00 a.m., Charlotte
time, on any Business Day to any L/C Participant, such L/C Participant will make
available to the Agent, for the account of the Issuing Bank, its Pro Rata Share
(calculated with respect to its Revolving Credit/Term Percentage) of the amount
of such payment on such Business Day in immediately available funds. If the
Agent gives such notice after 11:00 a.m., Charlotte time, on any Business Day to
any such L/C Participant, such L/C Participant shall make its Pro Rata Share of
such amount available to the Agent on the next succeeding Business Day. If and
to the extent such L/C Participant shall not have so made its Pro Rata Share of
the amount of such payment available to the Agent, such L/C Participant agrees
to pay to the Agent, for the account of the Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Agent at the Federal Funds Rate. The failure
of any L/C Participant to make available to the Agent its Pro Rata Share of any
payment under any Letter of Credit shall not relieve any other L/C Participant
of its obligation hereunder to make available to the Agent its Pro Rata Share of
any payment under any Letter of Credit on the date required, as specified above,
but no L/C Participant shall be responsible for the failure of any other L/C
Participant to make available to the Agent such other L/C Participant's Pro Rata
Share of any such payment. Each such payment by an L/C Participant under this
SECTION 2.17(e) of its Pro Rata Share of an amount paid by the Issuing Bank
shall constitute a Revolving Credit/Term Loan by such Lender (the Borrower being
deemed to have given a timely Notice of Borrowing therefor) and shall be treated
as such for all purposes of this Agreement; provided that for purposes of
determining the available unused portion of the Total Revolving Credit/Term
Commitment immediately prior to giving effect to the application of the proceeds
of such Revolving Credit/Term Loans, the Reimbursement Obligation being
satisfied thereby shall be deemed not to be outstanding at such time.
(f) Whenever the Issuing Bank receives a payment in respect of a
Reimbursement Obligation as to which the Agent has received, for the account of
the Issuing Bank, any payments from the L/C Participants pursuant to SECTION
2.17(e), the Issuing Bank will promptly pay to the Agent, and the Agent will
promptly pay to each L/C Participant that has paid its Pro Rata Share thereof,
in immediately available funds, an amount equal to such L/C Participant's
ratable share (based on the proportionate amount funded by such L/C Participant
to the aggregate amount funded by all L/C Participants) of such Reimbursement
Obligation.
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(g) The Reimbursement Obligations of the Borrower, and the obligations
of the L/C Participants to make payments to the Agent, for the account of the
Issuing Bank, with respect to Letters of Credit, shall be irrevocable, shall
remain in effect until the Issuing Bank shall have no further obligations to
make any payments or disbursements under any circumstances with respect to any
Letter of Credit, and, except to the extent resulting from any gross negligence
or willful misconduct on the part of the Issuing Bank as finally determined by a
court of competent jurisdiction and not subject to any appeal (or pursuant to
arbitration as set forth herein), shall not be subject to counterclaim, setoff
or other defense or any other qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) Any lack of validity or enforceability of this Agreement, any of the
other Loan Documents or any documents or instruments relating to any
Letter of Credit;
(ii) Any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations in respect of any
Letter of Credit or any other amendment, modification or waiver of
or any consent to departure from any Letter of Credit or any
documents or instruments relating thereto, in each case whether or
not the Borrower has notice or knowledge thereof;
(iii) The existence of any claim, setoff, defense or other right that the
Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Agent, the
Issuing Bank, any Lender or other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated
hereby or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any
such Letter of Credit);
(iv) Any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, any errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
telecopier or otherwise, or any errors in translation or in
interpretation of technical terms;
(v) Any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit (the Issuing
Bank's sole obligation,
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in determining whether to pay under any Letter of Credit, being in
good faith to confirm that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear
on their face to comply with the requirements of such Letter of
Credit), any nonapplication or misapplication by the beneficiary or
any transferee of the proceeds of such drawing or any other act or
omission of such beneficiary or transferee in connection with such
Letter of Credit;
(vi) The exchange, release, surrender or impairment of any Collateral
or other security for the Obligations;
(vii) The occurrence of any Default or Event of Default; or
(viii) Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or a
guarantor.
None of the foregoing shall impair, prevent or otherwise affect any of the
rights and powers granted to the Issuing Bank hereunder. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall be binding upon the Borrower and each L/C Participant and
shall not create or result in any liability of the Issuing Bank to the Borrower
or any L/C Participant.
(h) If at any time after the Closing Date the Issuing Bank or any L/C
Participant determines that the introduction of or any change in any applicable
law, rule, regulation, order, guideline or request or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Issuing Bank or
any L/C Participant with any request or directive by any such authority (whether
or not having the force of law) shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
Letters of Credit issued by the Issuing Bank or participated in by any L/C
Participant or (ii) impose on the Issuing Bank or any L/C Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to the
Issuing Bank or L/C Participant of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Issuing Bank or such L/C Participant hereunder or reduce the rate of return
on its capital with respect to Letters of Credit, then the Borrower will, within
fifteen (15) days after delivery to the Borrower by the Issuing Bank or such L/C
Participant of written demand therefor (with a copy thereof to the Agent), pay
to the Issuing Bank or such L/C Participant such additional amounts as shall
compensate the
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Issuing Bank or such L/C Participant for such increase in costs or reduction in
return. A certificate submitted to the Borrower by the Issuing Bank or such L/C
Participant, as the case may be (a copy of which certificate shall be sent by
the Issuing Bank or such L/C Participant to the Agent), setting forth the basis
for the determination of such additional amount or amounts necessary to
compensate the Issuing Bank or such L/C Participant as aforesaid, shall be
conclusive and binding on the Borrower absent manifest error.
(i) At any time and from time to time (i) during the continuance of an
Event of Default, the Agent, at the direction, or with the consent, of the
Required Lenders, may require the Borrower to deliver to the Agent such
additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit at any time outstanding (whether or not any beneficiary under
any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) and (ii) in the event of a repayment under SECTION 2.5(b), the Agent
will retain such amount as may then be required to be retained under the proviso
in SECTION 2.5(b), such amount in each case under clauses (i) and (ii) above to
be held by the Agent in a non-interest bearing cash collateral account (the
"Cash Collateral Account") as security for, and for application to, the
Borrower's Reimbursement Obligations. In the event of a drawing, and subsequent
payment by the Issuing Bank, under any Letter of Credit at any time during which
any amounts are held in the Cash Collateral Account, the Agent will deliver to
the Issuing Bank an amount equal to the Reimbursement Obligation created as a
result of such payment (or, if the amounts so held are less than such
Reimbursement Obligation, all of such amounts) to reimburse the Issuing Bank
therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Bank for all of its obligations thereunder shall be held by the Agent, for the
benefit of the Borrower, to be applied against the Obligations in such order as
the Agent may direct.
(j) Notwithstanding any termination of the Commitments or repayment of
the Loans, or both, the obligations of the Borrower under this SECTION 2.17
shall remain in full force and effect until the Issuing Bank and the L/C
Participants shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
ARTICLE
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1 Closing. The closing of the transactions contemplated by this Loan
Agreement (the "Closing") shall take place at the offices of Robinson, Bradshaw
& Hinson, P.A., 1900 Independence Center,
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101 North Tryon Street, Charlotte, North Carolina 28246 at 10:00 a.m. on June 5,
1996, or at such other place or time as the parties hereto shall mutually agree.
3.2 Conditions of Loans and Advances. The obligations of the Lenders to
enter into this financing and to make the Loans under this Agreement on the
Closing Date are subject to the satisfaction of the following conditions:
3.2.1 Executed Loan Documents.
(a) Revolving Credit/Term Notes. The Revolving Credit/Term Notes
required under SECTIONS 2.3 shall have been duly authorized, executed and
delivered to the appropriate Lenders by the Borrower, in form and substance
satisfactory to the Lenders, shall be in full force and effect and no Default
shall exist thereunder, each Lender shall have received its original Revolving
Credit/Term Note and a copy of each other Revolving Credit/Term Note, and the
Agent shall have received a copy of each Revolving Credit/Term Note.
(b) Pledge Agreements. The Pledge Agreement and the Subsidiary Pledge
Agreement shall have been duly authorized, executed and delivered to the Agent
and each Lender by the Borrower and Guarantors, respectively, in form and
substance satisfactory to the Lenders, together with all certificates for the
Stock being pledged thereunder and duly executed undated stock powers for each
such certificate, shall be in full force and effect and no Default shall exist
thereunder, and the Agent and each Lender shall have received a fully executed
original thereof.
(c) Guaranty Agreement. Each Guarantor shall have duly authorized,
executed and delivered to the Agent and each Lender the Guaranty Agreement, or a
confirmation thereof, in form and substance satisfactory to the Lenders, each
such document shall be in full force and effect and no Default shall exist
thereunder, and the Agent and each Lender shall have received a fully executed
original thereof.
(d) Intercompany Loan Documents. A promissory note in respect of
intercompany indebtedness shall have been duly authorized, executed and
delivered by each Guarantor and assigned by the Borrower to the Agent, in form
and substance satisfactory to the Agent, such assignment shall be evidenced and
perfected in a manner satisfactory to the Agent, each such document shall be in
full force and effect and no Default shall exist thereunder, and the Agent shall
have received a fully executed original thereof.
3.2.2 Closing Certificates; etc.
(a) Certificate of the Borrower. The Agent and each Lender shall have
received a certificate dated as of the Closing Date from the
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President or Vice President and Secretary of the Borrower, in form and substance
satisfactory to the Lenders, to the effect that, to the best of their knowledge
after diligent inquiry, all representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are true, correct and
complete as of the Closing Date; that the Borrower is not in violation of any of
the covenants contained in this Agreement and the other Loan Documents; that,
after giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing; and that the
Borrower has satisfied each of the conditions set forth in this Section.
(b) Secretaries' Certificates. The Agent and each Lender shall have
received a certificate dated as of the Closing Date from the Secretary or an
Assistant Secretary of the Borrower and each Guarantor, in form and substance
satisfactory to the Lenders, certifying: (i) that attached thereto is a true and
complete copy of the bylaws of such corporation as in effect on the date of such
certification; (ii) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors and stockholders (if necessary) of
such corporation, authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents, as applicable; and (iii) as to the
incumbency and genuineness of the signature of each officer of such corporation
executing this Agreement or any of the other Loan Documents, as applicable.
(c) Articles of Incorporation. The Agent and each Lender shall have
received copies of the articles or certificate of incorporation of the Borrower
and each Guarantor and all amendments thereto, each certified as of a recent
date by the Secretary of State (or other equivalent officer) of its state of
incorporation, together with a certification by the Secretary or an Assistant
Secretary of the Borrower and each Guarantor that such articles of incorporation
have not been amended since such date.
(d) Certificates of Good Standing. The Agent and each Lender shall have
received (i) long-form certificates as of a recent date of the good standing of
the Borrower and each Guarantor under the laws of its state of incorporation and
each state where the Borrower and each Guarantor is qualified to transact
business, and (ii) where reasonably available, certificates as of a recent date
from the department of revenue or other appropriate Governmental Authority of
each such state indicating that the Borrower or such Guarantor, as appropriate,
has filed all required tax returns and owes no delinquent taxes.
(e) Opinion of Counsel to the Borrower and the Guarantors. The Agent
and each Lender shall have received the favorable opinion of Duane, Morris &
Heckscher, counsel to the Borrower and the Guarantors, addressed to the Agent,
for the benefit of the Lenders, the Issuing
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Bank and each Lender, in form and substance satisfactory to the Agent and each
Lender.
(f) UCC Search. The Agent and each Lender shall have received the
results of a search of all filings made against the Borrower and each Guarantor
under the Uniform Commercial Code as in effect in any state in which any assets
of the Borrower or any Guarantor are located, indicating that the Collateral is
free and clear of any liens or encumbrances except for Permitted Liens.
(g) Insurance. The Agent shall have received certificates, and copies
of policies, of insurance, in form and substance satisfactory to the Agent, upon
the Collateral and the business of the Borrower and each Guarantor, with the
mortgagee and loss payable clauses and endorsements required by SECTION 5.7.
(h) Borrowing Base Certificate. The Agent and each Lender shall have
received a Borrowing Base Certificate, calculated as of the end of the previous
month.
3.2.3 Consents; No Adverse Change.
(a) Consents and Approvals. All necessary approvals, authorizations and
consents, if any be required, of any Person and all Governmental Authorities
having jurisdiction with respect to the Collateral and the transactions
contemplated by this Agreement shall have been obtained.
(b) No Injunction, Etc. No action, proceeding, investigation, claim,
regulation or legislation shall have been instituted, threatened or proposed
before any court or other Governmental Authority to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or that is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or that, in the Required Lenders' discretion, would make
inadvisable the consummation of the transactions contemplated by this Agreement.
(c) No Material Adverse Change. Since the date of the most recent
audited Financial Statements, there shall not have occurred any Material Adverse
Change or any event, condition or state of facts that could reasonably be
expected to have a Material Adverse Effect, other than as specifically
contemplated by this Agreement and the other Loan Documents.
(d) Event of Default. No Default or Event of Default shall have
occurred and be continuing.
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3.2.4 Financial Matters.
(a) Financial Statements. The Lenders shall have received the Financial
Statements from the Borrower, in form and substance satisfactory to the Lenders.
(b) Projections. The Lenders shall have received the Projections from
the Borrower, together with a certificate of the chief financial officer of the
Borrower as to the assumptions used in preparing the Projections, all in form
and substance satisfactory to the Lenders.
(c) Financial Condition Certificate. The Lenders shall have received a
certificate of the Borrower, in form and substance satisfactory to the Lenders,
executed by the chief financial officer of the Borrower, to the effect that on a
consolidated basis the Borrower and each of its Subsidiaries is Solvent as of
the Closing Date, taking into account any rights of contribution that may exist
between the Subsidiaries or between any Subsidiary and the Borrower.
(d) Taxes. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any of the Loan
Documents shall have been paid by the Borrower.
3.2.5 Miscellaneous.
(a) Disbursement Instructions. The Agent shall have received written
instructions from the Borrower to the Agent directing the payment of any
proceeds of Loans made hereunder that are to be paid on the Closing Date.
(b) Proceedings and Documents. The Agent and the Lenders shall have
received copies of all other documents, certificates, opinions, instruments and
other evidence as each may reasonably request, in form and substance
satisfactory to the Agent and the Lenders, with respect to the transactions
contemplated by this Agreement and the taking of all actions in connection
therewith.
(c) Repayment of Term Loan. The term loans from the Lenders to the
Borrower pursuant to the Second Amended and Restated Renewal Term Promissory
Notes, dated as of November 3, 1994, as amended, shall have been repaid in full
and terminated.
3.3 Conditions to All Loans and Advances. The obligation of the Lenders
to make any Loan hereunder (including any Loans made on the Closing Date) and
the obligation of the Issuing Bank to issue any Letters of Credit are subject to
the continued validity of all Loan Documents and the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
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(a) Each of the representations and warranties made by the Borrower
contained in ARTICLE IV shall be true and correct on and as of such Borrowing
Date with the same effect as if made on and as of the Borrowing Date, except to
the extent the facts upon which such representation and warranty are based may
be changed as a result of transactions permitted or contemplated hereby and such
representation or warranty relates solely to a prior date; and
(b) No Default or Event of Default shall have occurred and be continuing
on the Borrowing Date with respect to such Loan or Letter of Credit or after
giving effect to the Loans to be made or Letters of Credit to be issued on such
Borrowing Date.
(c) The security interest in certain Collateral previously pledged to
the Agent, for the benefit of the Lenders, pursuant to the Loan Documents shall
remain in full force and effect.
3.4 Acquisition Loans. The obligation of the Lenders to make any
Revolving Credit/Term Loan the proceeds of which are requested to be used, in
whole or in part, to pay all or a portion of the purchase price in connection
with a Permitted Acquisition, shall be subject to the following conditions, in
addition to the other conditions precedent set forth in this ARTICLE III:
(a) All acquisition agreements and other material agreements and
documents relating to the Permitted Acquisition shall have been fully executed
and, to the extent necessary, recorded or filed with the appropriate
Governmental Authorities;
(b) All conditions to the Borrower's and any Subsidiary's obligations
with respect to the Permitted Acquisition shall have been satisfied or waived,
and the Permitted Acquisition shall have been consummated (before or concurrent
with such Loan); and
(c) The Permitted Acquisition complies with the provisions of SECTION
5.15.
3.5 Waiver of Conditions Precedent. If any Lender makes any Loan
hereunder, or if the Issuing Bank issues any Letter of Credit, prior to the
fulfillment of any of the conditions precedent set forth in this ARTICLE III,
the making of such Loan or the issuance of such Letter of Credit shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and unless the Required Lenders indicate otherwise in
writing, the Borrower shall thereafter use its best efforts to fulfill each such
condition promptly. No failure by the Borrower to fulfill any such condition
precedent shall constitute a Default or an Event of Default hereunder, except to
the extent any such failure is continuing after the expiration of any period
within which such condition is specifically required to be fulfilled.
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ARTICLE
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Loan Agreement, to make
the Loans and to continue to make the Loans, and to induce the Issuing Bank to
issue, and the Lenders to participate in, the Letters of Credit, the Borrower
makes the following warranties and representations to the Agent, the Issuing
Bank and each Lender:
4.1 Corporate Organization and Power. The Borrower and each Subsidiary
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction set forth opposite its name on SCHEDULE 4.1; (b) is
qualified to do business and is in good standing in every other jurisdiction
where the nature of its business or the ownership of its properties requires it
to be so qualified and where the failure to be so qualified would have a
Material Adverse Effect, which jurisdictions are set forth on SCHEDULE 4.1; (c)
except as set forth on SCHEDULE 4.1, has no Subsidiaries or Affiliates (other
than its officers, directors and shareholders) and is not a partner or joint
venturer in any partnerships or joint ventures; (d) has the corporate power to
own and give a lien on and security interest in its respective Collateral and to
engage in the transactions contemplated hereby; and (e) has the full corporate
power, authority and legal right to execute and deliver this Agreement and the
other Loan Documents to which it is a party and to perform and observe the terms
and provisions thereof. Neither the Borrower nor any of its Subsidiaries has,
during the preceding five (5) years, been known as or used any other corporate,
fictitious or trade names in the United States other than as set forth on
SCHEDULE 4.1.
4.2 Litigation; Government Regulation. Except as set forth in SCHEDULE
4.2, there are no material actions, suits, investigations or proceedings
pending (pursuant to which the Borrower or any Subsidiary has been served) or,
to the knowledge of the Borrower, threatened against or affecting the Borrower
or any Subsidiary or its business, or that question the validity of this
Agreement or any of the Loan Documents, at law or in equity before any court,
arbitrator or Governmental Authority, and neither the Borrower nor any
Subsidiary is in violation of or in default under any Requirement of Law where
such violation could have a Material Adverse Effect.
4.3 Taxes. Except as set forth in SCHEDULE 4.3, neither the Borrower
nor any Subsidiary is delinquent in the payment of any taxes that have been
levied or assessed by any Governmental Authority against it or its assets.
Except as set forth in SCHEDULE 4.3, the Borrower and each Subsidiary (a) has
timely filed all tax returns that are required by law to be filed prior to the
date hereof, and has paid all taxes shown on said returns and all
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other assessments or fees levied upon it or upon its properties to the extent
that such taxes, assessments or fees have become due, and if not due, such taxes
have been adequately provided for and sufficient reserves therefor established
on its books of account, and (b) is current with respect to payment of all
federal and state withholding taxes, social security taxes and other payroll
taxes.
4.4 Enforceability of Loan Documents; Compliance With Other Instruments.
Each of the Loan Documents to which the Borrower or any Guarantor is a party, as
the case may be, has been duly authorized by all necessary corporate action on
the part of the Borrower or such Guarantor, has been validly executed and
delivered by the Borrower or such Guarantor and is the legal, valid and binding
obligation of the Borrower or such Guarantor, enforceable against the Borrower
or such Guarantor in accordance with its terms. Except as set forth in SCHEDULE
4.4, neither the Borrower nor any Subsidiary is in default in any material
respect with respect to any indenture, loan agreement, mortgage, lease, deed or
similar agreement related to the borrowing of monies to which it is a party or
by which it, or any of its property, is bound. Neither the execution, delivery
or performance of the Loan Documents by the Borrower and the Guarantors, nor
compliance by the Borrower and the Guarantors therewith: (a) conflicts or will
conflict with or results or will result in any breach of, or constitutes or will
constitute with the passage of time or the giving of notice or both, a default
under, (i) any Requirement of Law or (ii) any agreement or instrument to which
the Borrower or any Guarantor is a party or by which it, or any of its property,
is bound or (b) results or will result in the creation or imposition of any
lien, charge or encumbrance upon the properties of the Borrower or any
Subsidiary pursuant to any such agreement or instrument, except for Permitted
Liens.
4.5 Governmental Authorization.
(a) No authorization, consent or approval of, notice to, or declaration
or filing with, any Governmental Authority is required for the valid execution,
delivery and performance by the Borrower or any Guarantor of the Loan Documents
to which it is a party or the consummation by the Borrower or any Guarantor of
the transactions contemplated thereby. The Borrower and each Subsidiary has, and
is in good standing with respect to, all material licenses, approvals, permits,
certificates, inspections, consents and franchises of Governmental Authorities
and other Persons necessary to continue to conduct its business as heretofore
conducted and to own or lease and operate its respective properties as now owned
or leased by it. None of such licenses, approvals, permits, certificates,
consents, or franchises contains any term, provision, condition or limitation
more burdensome than such as are generally applicable to Persons engaged in the
same or similar business as the Borrower or such Subsidiary. Without limitation
of the foregoing, the Borrower and each Subsidiary has, to the extent
applicable, (i) obtained (or been duly assigned) all required
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certificates of need or determinations of need, as required by the relevant
state Governmental Authority, for the acquisition, construction, expansion of,
investment in or operation of its businesses as currently operated; (ii)
obtained and maintains Medicare Certification; and (iii) entered into and
maintains in good standing its Medicaid Provider Agreement.
4.6 Event of Default. No Default or Event of Default has occurred and
is continuing.
4.7 Margin Securities. None of the proceeds of the Loans will be used,
directly or indirectly, for the purpose of purchasing or carrying any "margin
stock," as such term is defined in Regulation U, or for the purposes of
maintaining, reducing or retiring any Debt originally incurred to purchase or
carry margin stock or for any other purpose that might constitute the
transactions contemplated herein a "purpose credit" within the meaning of
Regulation U, Regulation X or Regulation G or any other regulations of the Board
of Governors of the Federal Reserve System, as in effect from time to time.
4.8 Full Disclosure. None of (i) the Loan Documents, (ii) any document,
report or other correspondence filed with the Securities and Exchange Commission
or distributed to the Borrower's stockholders pursuant to the requirements of
the Exchange Act, or (iii) any statements furnished to the Agent or any Lender
by or on behalf of the Borrower or any Subsidiary in connection with the Loan
Documents, contains any untrue statement of a material fact or, to the
Borrower's knowledge, omits to state a material fact necessary to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading. To the Borrower's knowledge, there is no
fact that the Borrower or any other Person has not disclosed to the Agent or the
Lenders that may result in a Material Adverse Effect.
4.9 Principal Places of Business. SCHEDULE 4.9 lists the chief
executive office and principal place of business, as provided in the Uniform
Commercial Code, of the Borrower and each Subsidiary as of the Closing Date.
4.10 ERISA; Employee Benefits.
(a) SCHEDULE 4.10 (i) lists, as of the Closing Date, all Employee Plans
and Pension Plans ("Plans") maintained or sponsored by the Borrower and its
Subsidiaries or to which the Borrower or any Subsidiary is obligated to
contribute and (ii) separately identifies all Qualified Plans (as defined below)
and all Multiemployer Plans.
(b) Each such Plan is in compliance in all material respects (or may be
brought into compliance without a Material Adverse Effect) with the applicable
provisions of ERISA, the Internal
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Revenue Code and other federal or state law, including all requirements under
the Internal Revenue Code or ERISA for filing reports (which are true and
correct in all material respects as of the date filed), and benefits have been
paid in accordance with the provisions of each such Plan.
(c) The form of each Plan intended to be qualified under Section 401 of
the Internal Revenue Code ("Qualified Plan") in the opinion of Borrower
qualifies under Section 401 of the Internal Revenue Code, and the trusts created
thereunder are, in the opinion of the Borrower, exempt from tax under the
provisions of Section 501 of the Internal Revenue Code, and to the knowledge of
the Borrower nothing has occurred that would cause the loss of such
qualification or tax-exempt status.
(d) There is no outstanding liability under Title IV of ERISA with
respect to any Plan maintained or sponsored by the Borrower and its Subsidiaries
(as to which the Borrower or any Subsidiary is or may be liable), nor with
respect to any Plan to which the Borrower or any Subsidiary (wherein the
Borrower or any Subsidiary is or may be liable) contributes or is obligated to
contribute.
(e) None of the Qualified Plans subject to Title IV of ERISA has any
unfunded benefit liability (as to which the Borrower or any Subsidiary is or may
be liable).
(f) No Plan maintained or sponsored by the Borrower or any Subsidiary
provides medical or other welfare benefits or extends coverage relating to such
benefits beyond the date of a participant's termination of employment with the
Borrower or such Subsidiary, except to the extent required by Section 4980B of
the Internal Revenue Code and at the sole expense of the participant or the
beneficiary of the participant to the fullest extent permissible under such
Section of the Internal Revenue Code. The Borrower and its Subsidiaries have
complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Internal Revenue Code.
(g) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by the Borrower and its Subsidiaries
or to which the Borrower or any Subsidiaries is obligated to contribute.
(h) As of the Closing Date, there are no pending or, to the knowledge of
the Borrower, threatened claims, actions or lawsuits, other than routine claims
for benefits in the usual and ordinary course, asserted or instituted against
(i) any Plan maintained or sponsored by the Borrower and its Subsidiaries or
their assets, or (ii) any fiduciary with respect to any Plan for which the
Borrower or any Subsidiary may be directly or indirectly liable, through
indemnification obligations or otherwise.
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(i) Neither the Borrower nor any Subsidiary has incurred or, to the
knowledge of the Borrower, reasonably expects to incur (i) any liability (and no
event has occurred that, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan or (ii) any liability under Title IV of ERISA (other
than premiums due and not delinquent under Section 4007 of ERISA) with respect
to a Plan.
(j) Neither the Borrower nor any Subsidiary has engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Internal Revenue Code or Section 406 of ERISA) in connection with any
Plan that has a Material Adverse Effect.
4.11 Subsidiaries. SCHEDULE 4.11 contains a complete and accurate list
of the Subsidiaries of the Borrower as of the Closing Date, showing, as to each
Subsidiary, the number of shares of each class of capital stock authorized and
outstanding. All of such issued and outstanding shares of capital stock of all
of the Borrower's Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Borrower, free and clear of
any liens, charges, encumbrances, security interests, claims or restrictions of
any nature whatsoever, except for liens in favor of the Agent, for the benefit
of the Lenders, granted under the Loan Documents, and there are no other equity
securities of any Subsidiary issued and outstanding or reserved for any purpose.
4.12 Financial Statements. The Financial Statements delivered to the
Lenders have been prepared by the Borrower and its Subsidiaries and, in the case
of the annual Financial Statements, audited in accordance with Generally
Accepted Accounting Principles by Coopers & Lybrand, independent certified
public accountants, contain no material misstatement or omission and fairly
present the financial position, assets and liabilities of the Borrower and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of the Borrower and its Subsidiaries for the
respective periods then ended. Except for the transactions contemplated by the
Loan Documents, since the date of the most recent audited Financial Statements
there has been no Material Adverse Change.
4.13 Title to Assets. Except as set forth on SCHEDULE 4.13, (a) the
Borrower and each Subsidiary holds interests as lessee under leases in full
force and effect with respect to all leased real and personal property used in
connection with its business, and has good and indefeasible title to the
Collateral and the other assets owned by it that are reflected in the most
recent Financial Statements, in each case free and clear of all liens, claims,
security interests and encumbrances except Permitted Liens; and (b) no financing
statement that names the Borrower or any
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Subsidiary as debtor has been filed and is still in effect or has been
authorized to be filed, other than financing statements evidencing Permitted
Liens.
4.14 Solvency. The Borrower and each Subsidiary (i) is Solvent, and (ii)
after giving effect to the transactions contemplated hereby, will be Solvent.
4.15 Use of Proceeds. The Borrower's use of the proceeds of any Loans
made by the Lenders to the Borrower pursuant to this Agreement are and will be
legal and proper corporate uses, duly authorized by the Board of Directors of
the Borrower, and such uses are and will be consistent with all applicable laws
and statutes, as in effect from time to time.
4.16 Assets for Conduct of Business. The Borrower and each Subsidiary
possesses adequate assets, licenses and trade names to continue to conduct its
business as heretofore conducted without any material conflict with the rights
of other Persons.
4.17 Compliance With Laws. The Borrower and each Subsidiary has duly
complied with, and the Collateral and their business operations and leaseholds
are in compliance in all material respects with, all Requirements of Law,
including, without limitation, all federal and state securities laws, OSHA,
Titles XVIII and XIX of the Social Security Act (42 U.S.C. (S)(S) 1395 et seq.
and (S)(S) 1396 et seq., respectively, as amended from time to time), the
Bloodborne Pathogens Standard, the Medicare Regulations and the Medicaid
Regulations, other than those the failure to comply with which would not have a
Material Adverse Effect.
4.18 Environmental Matters.
(a) All activities and operations of the Borrower and its Subsidiaries
are in material compliance with all applicable Environmental Laws.
(b) Neither the Borrower nor any Subsidiary is involved in any suit or
proceeding or has received any notice from any Governmental Authority with
respect to a release of Hazardous Substances or has received notice of any
claims from any Person relating to personal injuries from exposure to Hazardous
Substances.
(c) The Borrower and each Subsidiary has timely filed all reports
required to be filed, has acquired all necessary certificates, approvals and
permits and has generated and maintained in all material respects all required
data, documentation and records under all applicable Environmental Laws.
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(d) Neither the Borrower nor any Subsidiary has ever sent a Hazardous
Substance to a site that, pursuant to any Environmental Law, (1) has been placed
on the "National Priorities List" or "CERCLIS List" of hazardous waste sites (or
any similar state list) or (2) that is subject to a claim, an administrative
order or other request to take "removal" or "remedial" action (as defined under
CERCLA) or to pay for the costs of cleaning up such a site.
4.19 Projections. Prior to the date hereof, the Borrower has delivered
to the Lenders projected financial statements of the Borrower and its
Subsidiaries (the "Projections"). The Projections have been prepared by the
executive and financial personnel of the Borrower in light of the past business
of the Borrower and its Subsidiaries and on the basis of the assumptions that
are set forth therein, and give effect to the transactions contemplated by this
Agreement. The Projections have been prepared in good faith, have a reasonable
basis and represent the good faith opinion of the Borrower and senior management
of the Borrower as to the projected results of the operations of the Borrower
and its Subsidiaries, on a consolidated basis.
4.20 First Priority. Except for Permitted Liens, when the initial Loans
are made hereunder, this Agreement, together with the other Loan Documents, will
create valid and perfected first priority security interests and liens in and
upon the Collateral covered thereby, in each case enforceable against the
Borrower or such Subsidiary and all other Persons in all relevant jurisdictions
and securing the payment of all Obligations purported to be secured thereby.
4.21 Contracts; Labor Disputes. Neither the Borrower nor any Subsidiary
is a party to any contract or agreement, or subject to any charge, corporate
restriction, judgment, injunction, decree, rule, regulation or order of any
court or other Governmental Authority, that has or could reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is a
party to, and there is not pending or, to the Borrower's knowledge, threatened,
any labor dispute, strikes, lock-out, grievance, work stoppage or walkouts
relating to any labor contract to which the Borrower or any Subsidiary is a
party.
4.22 Insurance. SCHEDULE 4.22 accurately summarizes all insurance
policies or programs of the Borrower and its Subsidiaries in effect as of the
Closing Date, and indicates the insurer's name, policy number, expiration date,
amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
4.23 Reimbursement from Third Party Payors. The Accounts of the Borrower
and its Subsidiaries have been and will continue to be adjusted to reflect
reimbursement policies of third party payors such as Medicare, Medicaid, Blue
Cross/Blue Shield, private
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insurance companies, health maintenance organizations, preferred provider
organizations, alternative delivery systems, managed care systems and other
third party payors. In particular, Accounts relating to such third party payors
do not and shall not exceed amounts the Borrower and its Subsidiaries are
entitled to receive under any capitation arrangement, fee schedule, discount
formula, cost-based reimbursement or other adjustment or limitation to the usual
charges of the Borrower and its Subsidiaries.
4.24 Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any
of their respective stockholders, officers or directors have engaged on behalf
of Borrower or any Subsidiary in any activities that are prohibited under the
federal Medicare and Medicaid statutes, 42 U.S.C. (S) 1320a-7b, or the
regulations promulgated pursuant to such statutes or related state or local
statutes or regulations, including but not limited to the following: (i)
knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any applications for any benefit or
payment; (ii) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to secure such
benefit or payment fraudulently; (iv) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering to pay such
remuneration (a) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid or other
applicable third party payors, or (b) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare, Medicaid or other applicable third party payors. With
respect to this Section, knowledge by an individual director or officer of the
Borrower or a Subsidiary of any of the events described in this Section shall
not be imputed to the Borrower or such Subsidiary unless such knowledge was
obtained or learned by the director or officer in his or her official capacity
as a director or officer of the Borrower or such Subsidiary. No activity of the
Borrower or any Subsidiary shall be considered to be a breach of this Section,
except in the case of a knowing and willful violation thereof, until the
Borrower or such Subsidiary has received notification, written or oral, by a
Governmental Authority of competent jurisdiction as to any such violation.
4.25 Single Business Enterprise. The Borrower and the Guarantors have
historically operated as, and intend to continue operating as, a single business
enterprise. Although separate entities, the
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Borrower and the Guarantors operate under a common business plan. Each of the
Borrower and the Guarantors will accordingly benefit from the financing
arrangement established by this Agreement. The Borrower acknowledges that, but
for the agreement by each Guarantor to execute and deliver the Guaranty
Documents, the Borrower would not have qualified separately for the total amount
of the credit facilities established hereby.
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of all Obligations and the termination of the
Lenders' obligation to make Loans and the Issuing Bank's obligation, on behalf
of the Lenders, to issue Letters of Credit, the Borrower covenants and agrees
that:
5.1 Repayment of Obligations. The Borrower will repay the Obligations
when due, whether due by maturity, acceleration of maturity or otherwise,
including, without limitation, the amounts due under the Revolving Credit/Term
Notes, according to the terms of this Agreement and the other Loan Documents.
5.2 Performance Under Loan Documents. The Borrower will perform, and
will cause each of its Subsidiaries to perform, all obligations required to be
performed by it under the terms of this Agreement and the other Loan Documents
and any other agreements now or hereafter existing or entered into between the
Borrower or any of its Subsidiaries and the Lenders (or the Agent on their
behalf).
5.3 Financial and Business Information about the Borrower. The Borrower
shall deliver to the Agent and the Lenders:
(a) Within forty-five (45) days after the close of each of the first
three fiscal quarters of each fiscal year of the Borrower, beginning with the
current fiscal quarter, an unaudited consolidated balance sheet of the Borrower
and its Subsidiaries as of the close of such fiscal quarter and unaudited
consolidated statements of income, retained earnings and cash flows for the
Borrower and its Subsidiaries for the fiscal quarter then ended and for that
portion of the fiscal year then ended, all prepared in accordance with Generally
Accepted Accounting Principles (subject to the absence of notes required by
Generally Accepted Accounting Principles and subject to normal and reasonable
year-end audit adjustment) applied on a basis consistent with that of the
preceding quarter or containing disclosure of the effect on the financial
position or results of operation of any change in the application of accounting
principles and practices during the quarter, and certified by the Vice
President - Finance of the Borrower to be true and accurate in all material
respects (subject to normal and reasonable year-end audit adjustment);
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(b) Within one hundred (100) days after the close of each fiscal year of
the Borrower, beginning with the current fiscal year, an audited consolidated
and unaudited consolidating balance sheet of the Borrower and its Subsidiaries
as of the close of such fiscal year and audited consolidated and unaudited
consolidating statements of operations, retained earnings and cash flows for the
Borrower and its Subsidiaries for the fiscal year then ended, including the
notes to each, prepared by Coopers & Lybrand or any other independent certified
public accountant acceptable to the Required Lenders, in accordance with
Generally Accepted Accounting Principles applied on a basis consistent with that
of the preceding year or containing disclosure of the effect on the financial
position or results of operation of any change in the application of accounting
principles and practices during the year, and accompanied by a report thereon by
such certified public accountants, containing an opinion that is not qualified
with respect to scope limitations imposed by the Borrower or its Subsidiaries or
with respect to accounting principles followed by the Borrower or its
Subsidiaries not in accordance with Generally Accepted Accounting Principles;
(c) Concurrently with the delivery of the financial statements described
in subsection (b) above, a report from the independent certified public
accountant that in making its audit of the consolidated financial statements of
the Borrower and its Subsidiaries, that nothing came to their attention
regarding any Event of Default, or Default under SECTIONS 6.9 through 6.16 as of
December 31 of the fiscal year subject to audit or a statement specifying the
nature and period of existence of any such Default or Event of Default disclosed
by their examination, it being understood that such audit was not performed
primarily for the purpose of obtaining knowledge of noncompliance with this
Agreement or the Loan Documents;
(d) Concurrently with the delivery of the financial statements described
in subsections (a) and (b) above, a Compliance Certificate with respect to the
period covered by the financial statements then being delivered, attaching an
Interest Rate Calculation Worksheet and a Covenant Compliance Worksheet
reflecting the computation of the financial covenants set forth in ARTICLE VI as
of the last day of the period covered by such financial statements;
(e) As soon as practicable and in any event within thirty (30) days
after the close of each fiscal year of the Borrower, beginning with the current
fiscal year, an annual operating budget and capital budget prepared on a
quarterly basis for the Borrower and its Subsidiaries on a consolidated basis,
in form and detail acceptable to the Agent;
(f) Promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements that the Borrower or any
Subsidiary shall send or make available
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generally to its stockholders, (ii) all regular, periodic and special reports,
registration statements and prospectuses that the Borrower or any Subsidiary
shall render to or file with the Securities and Exchange Commission, the
National Association of Securities Dealers or any national securities exchange,
(iii) all material reports and other statements (other than routine reports
prepared in the ordinary course of business that would not result in any adverse
action) that the Borrower or any Subsidiary may render to or file with any other
Governmental Authority, including, without limitation, HCFA, the Environmental
Protection Agency, OSHA and state environmental and health authorities and
agencies, (iv) all press releases and other statements that the Borrower or any
Subsidiary shall make available generally to the public concerning developments
in the business of the Borrower or any of its Subsidiaries, other than press
releases or statements issued in the ordinary course of business, and (v) all
material consulting reports and other similar business reports that the Borrower
or any Subsidiary shall request of any Person from time to time, other than
routine reports received in the ordinary course of business;
(g) Promptly after review by the Borrower's Board of Directors, but in
any event within thirty (30) days after the Borrower's receipt thereof, copies
of any management letters from certified public accountants;
(h) Concurrently with each delivery of the financial statements
described in Subsections (a) and (b) an aging of the Accounts Receivable of the
Borrower and its Subsidiaries by payor class as of the end of such fiscal
quarter;
(i) Within forty-five (45) days after the end of each quarter, and not
less than three (3) days prior to any Borrowing of Revolving Credit/Term Loans
to finance a Permitted Acquisition, in form and detail acceptable to the Agent,
consolidated and consolidating patient and treatment statistics for the Borrower
and each Subsidiary, together with a Borrowing Base Certificate as of the end of
the previous month;
(j) Concurrently with the delivery thereof or immediately (but not more
than three (3) Business Days after receipt) upon the receipt thereof, copies of
any notices to or from the trustee or the noteholders delivered pursuant to the
Indenture.
(k) Upon the Agent's or any Lender's request, such other information
about the Collateral or the financial condition and operations of the Borrower
and its Subsidiaries as the Agent or any Lender may from time to time reasonably
request.
5.4 Notice of Certain Events. The Borrower shall promptly, but in no
event later than five (5) Business Days after the Borrower obtains knowledge
thereof, give written notice to the Agent and the Lenders of:
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(a) Any litigation or proceeding brought against the Borrower or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect;
(b) Any written notice of a violation received by the Borrower or any
Subsidiary from any Governmental Authority that, if such violation were
established and not promptly corrected, could reasonably be expected to have a
Material Adverse Effect;
(c) Any attachment, judgment, lien, levy or order in excess of $100,000
that may be placed on, assessed against or threatened against the Borrower or
any Subsidiary or any of the Collateral, except for Permitted Liens;
(d) Any Default or Event of Default;
(e) Any material default or event of default under any agreement or
instrument to which the Borrower or any Subsidiary is a party or by which the
Borrower or any Subsidiary, or any of their respective property, is bound, the
termination of which could reasonably be expected to have a Material Adverse
Effect; and
(f) Any other matter that has resulted in a Material Adverse Change.
5.5 Corporate Existence and Maintenance of Properties. The Borrower
shall, and shall cause each of its Subsidiaries to:
(a) Maintain and preserve in full force and effect its corporate
existence, except as otherwise permitted by SECTION 6.1, and all material
rights, privileges and franchises;
(b) Conduct its business in an orderly and efficient manner, keep its
properties in good working order and condition (normal wear and tear excepted)
and from time to time make all needed repairs to, renewals of or replacements of
its properties (except to the extent that any of such properties are obsolete or
are being replaced) so that the efficiency of its business operations shall be
fully maintained and preserved; and
(c) File or cause to be filed in a timely manner all reports,
applications, estimates and licenses required by any Governmental Authority
that, if not timely filed, could reasonably be expected to have a Material
Adverse Effect.
5.6 Payment of Debt. The Borrower shall, and shall cause each of its
Subsidiaries to, pay all Debt when due and all other obligations in accordance
with customary trade practices.
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5.7 Maintenance of Insurance.
(a) The Borrower shall, and shall cause each of its Subsidiaries to,
maintain and pay for insurance on its properties, assets and business, now owned
or hereafter acquired, against such casualties, risks and contingencies, and in
such types and amounts and with such insurance companies, as shall be
satisfactory to the Agent (and in any event in such amounts as shall be adequate
to cover the Collateral), and deliver certificates and policies of such
insurance to the Agent with satisfactory standard loss payable endorsements
naming the Agent as loss payee, additional insured and mortgagee thereunder, as
appropriate.
(b) Each such policy of insurance shall contain a clause requiring the
insurer to give not less than ten (10) days prior written notice to the Agent
before any cancellation of the policies due to nonpayment and not less than
thirty (30) days prior written notice before any cancellation of the policies
for any other reason whatsoever, and a clause that the interest of the Agent
shall not be impaired or invalidated by any act or neglect of the Borrower or
any Subsidiary or the owner of the property nor by the occupation of the
premises wherein such property is located for purposes more hazardous than are
permitted by such policy. The Borrower hereby directs, and will cause each of
its Subsidiaries to direct, all insurers under policies of property and casualty
insurance on the Collateral to pay all proceeds payable thereunder for losses in
excess of $250,000 per occurrence directly to the Agent. The Agent, on behalf of
the Lenders, shall hold all such proceeds for the account of the Borrower and
its Subsidiaries. So long as no Default or Event of Default has occurred and is
continuing, the Agent shall, at the Borrower's request, disburse such proceeds
as payment for the purpose of replacing or repairing destroyed or damaged
assets, as and when required to be paid and upon presentation of evidence
satisfactory to the Agent of such required payments and such other documents as
the Agent may reasonably request, or shall apply such proceeds in whole or in
part as a prepayment of the Loans, in such order as the Borrower may determine.
Upon and during the continuance of a Default or Event of Default, the Agent
shall apply such proceeds as a prepayment of the Revolving Credit/Term Loans in
accordance with SECTION 2.5(a). The Borrower hereby irrevocably makes,
constitutes and appoints the Agent (and all officers, employees or agents
designated by the Agent) as its true and lawful attorney (and agent-in-fact) for
the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing its name or the name of any Subsidiary on any check, draft,
instrument or other item or payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance.
(c) If the Borrower or any Subsidiary fails to obtain and maintain any
of the policies of insurance required to be maintained
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hereunder or to pay any premium in whole or in part, then the Agent may, at the
Borrower's expense, without waiving or releasing any obligation or Default by
the Borrower hereunder, procure the same, but shall not be required to do so.
All sums so disbursed by the Agent, including reasonable attorneys' fees, court
costs, expenses and other charges related thereto, shall be payable on demand by
the Borrower to the Lenders and shall be additional Obligations hereunder,
secured by the Collateral.
(d) Upon the reasonable request of the Agent from time to time, the
Borrower shall deliver to the Agent evidence that the insurance required to be
maintained pursuant to this Agreement is in effect.
5.8 Inspection. The Borrower shall, and shall cause each of its
Subsidiaries to, permit employees or agents of the Agent (or any Lender, at the
Lenders' expense), at any reasonable time during normal business hours upon
reasonable notice to inspect its properties and to examine or audit its books,
records, reports, accounts and other papers and make copies and memoranda of
them, and to discuss its affairs, finances and accounts with its officers and
employees and, upon notice to the Borrower, the independent public accountants
of the Borrower and its Subsidiaries (and by this provision the Borrower and
each Subsidiary authorizes said accountants to discuss the finances and affairs
of the Borrower or such Subsidiary), all at such reasonable times and as often
as may be reasonably requested without undue interference in the business and
operations of the Borrower and its Subsidiaries.
5.9 COBRA. The Employee Plans of the Borrower and its Subsidiaries
shall be operated in such a manner that neither the Borrower nor any Subsidiary
will incur any material tax liability under Section 4980B of the Internal
Revenue Code or any material liability to any qualified beneficiary as defined
in Section 4980B.
5.10 Payment of Taxes. The Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that the Borrower or any
Subsidiary may in good faith by appropriate proceedings and with due diligence
contest any such tax, assessment, charge, levy or claim if the Borrower or such
Subsidiary establishes any reserves reasonably requested by the Agent with
respect thereto in accordance with Generally Accepted Accounting Principles.
5.11 Compliance with Laws. The Borrower shall, and shall cause each of
its Subsidiaries to, (i) have all material licenses, permits, certifications,
approvals and authorizations required by Governmental Authorities necessary to
the ownership, occupation or
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use of its properties or the conduct of its business, including, without
limitation, certificates of need, and maintain the same at all times in full
force and effect, and (ii) comply with all Requirements of Law in respect of the
conduct of its business, the ownership of its property and the Collateral,
including, without limitation, Titles XVIII and XIX of the Social Security Act,
Medicare Regulations, Medicaid Regulations, ERISA, OSHA and the Bloodborne
Pathogens Standard, other than those the failure to comply with which would not
have a Material Adverse Effect.
5.12 Name Change. The Borrower shall notify the Agent and the Lenders at
least thirty (30) days prior to the effective date of any change of its name or
the name of any Subsidiary, and prior to such effective date the Borrower or
such Subsidiary shall have taken such actions and executed such documents as the
Agent shall reasonably require.
5.13 Creation or Acquisition of New Subsidiaries. The Borrower and its
Subsidiaries may from time to time create or acquire new Subsidiaries, provided
that, at any time promptly upon request by the Agent (and in any event, with
respect to any new Subsidiary that is created or acquired in connection with a
Permitted Acquisition or that receives proceeds of any Borrowings, prior to or
concurrently with satisfaction of the conditions set forth in clauses (y) and
(z) of clause (i) below or, if earlier, the consummation of such Permitted
Acquisition), (i) each such new Subsidiary (y) having assets with a gross value
(determined in accordance with Generally Accepted Accounting Principles) in
excess of $25,000, and (z) having commenced the conduct of an active business
(other than as a passive holding company), will execute and deliver to the Agent
(with sufficient copies for each Lender) an amendment or supplement to the
Guaranty Agreement and such other Guaranty Documents as may be requested by the
Required Lenders, each in form and substance satisfactory to the Agent, pursuant
to which such new Subsidiary shall become a party thereto, (ii) the Borrower
will execute and deliver to the Agent (with sufficient copies for each Lender)
an amendment or supplement to the Pledge Agreement, in form and substance
satisfactory to the Agent, pursuant to which all of the capital stock or other
ownership interests of such new Subsidiary that is directly or indirectly owned
by the Borrower shall be pledged to the Agent under the Pledge Agreement,
together with the certificates representing such capital stock or other
ownership interests and stock powers duly executed in blank, and (iii) the
Borrower will cause each such new Subsidiary to execute and deliver, and will
cause to be delivered, all documentation of the type described in SECTIONS
3.2.2(b), (c) and (d) as such new Subsidiary would have had to deliver were it a
Subsidiary on the Closing Date. In addition, with respect to any newly created
or acquired Foreign Subsidiary, the Borrower shall cause to be delivered an
opinion of counsel in form and substance satisfactory to the Agent and each
Lender regarding the due organization of such
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Foreign Subsidiary and the due authorization, execution and enforceability of
the Loan Documents related thereto.
5.14 Disbursement of Proceeds By the Borrower.
(a) The Borrower shall obtain Intercompany Loan Documents with respect
to advances of any portion of the Loans to any Subsidiary and such other amounts
owing from any Subsidiary to the Borrower from time to time, and shall promptly
thereafter grant to the Agent a first priority perfected security interest in
such Intercompany Loan Documents as security for the Obligations. With respect
to Subsidiaries created or acquired after January 25, 1996, the Borrower will
not be required to obtain a security interest in the assets of such Subsidiaries
to secure any amounts owing under the Intercompany Loan Documents, nor will the
Borrower be required to assign any such intercompany security interest to the
Lenders.
(b) Subject to the security interest of the Agent therein under the
Pledge Agreement, the Borrower may assign any Intercompany Loan Documents to RTC
Holdings as a contribution to capital, pursuant to the Assignment Agreement and
in accordance with SECTION 6.6. In such instance, RTC Holdings need not enter
into any Intercompany Loan Documents as a borrower thereunder in order to
evidence such assignment. For purposes of this Agreement, the receipt and
possession by Mellon, as custodian under the Notification and Consent Agreement
and pursuant to the terms thereof, of any Intercompany Loan Documents assigned
by the Borrower to RTC Holdings, shall be deemed evidence of perfection of the
assignment thereof.
(c) Should any Subsidiary become a debtor under the Bankruptcy Code, the
Agent, on behalf of the Lenders, is authorized, but not required, to file proofs
of claim on the Borrower's behalf and vote the rights of the Borrower in any
plan of reorganization. The Agent, on behalf of the Lenders, is further
empowered to demand, sue for, collect and receive every payment and distribution
on such Debt owing to the Borrower in such Subsidiary's bankruptcy proceeding.
5.15 Certain Acquisitions. Subject to the provisions of this Section and
the requirements contained in the definition of Permitted Acquisition, and
subject to the other terms and conditions of this Agreement, the Borrower may
from time to time after the Closing Date effect Permitted Acquisitions, provided
that (unless consented to in writing by the Required Lenders):
(a) With respect to each Permitted Acquisition financed, in whole or in
part, with the proceeds of Revolving Credit/Term Loans, the conditions set forth
in SECTION 2.2(a) shall be satisfied with respect to all Borrowings comprised of
such Revolving Credit/Term Loans;
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(b) With respect to each Permitted Acquisition, no Default or Event of
Default shall have occurred and be continuing at the time of the consummation of
such Permitted Acquisition or would exist immediately after giving effect
thereto;
(c) Not less than five (5) days prior to the consummation of any
Permitted Acquisition with respect to which the Acquisition Amount is $7,000,000
or more, the Borrower shall have delivered to the Agent (and the Agent shall
provide the Lenders) the following items:
(i) a reasonably detailed description of the material terms of such
Acquisition (including, without limitation, the purchase price and
method and structure of payment) and of each Person or business that
is the subject of such Permitted Acquisition (each, a "Target");
(ii) historical financial statements of each Target for the two (2) most
recent fiscal years available and for any interim periods since the
most recent fiscal year-end for which such interim statements are
available;
(iii) projected income statements with respect to each Target for the
five-year period following the consummation of such Permitted
Acquisition, in reasonable detail, together with any appropriate
statement of assumptions and pro forma adjustments; and
(iv) a certificate executed by the chief financial officer or Vice
President-Finance of the Borrower setting forth the Borrower's good
faith calculation of the Acquisition Amount (together with any
supporting calculations) and further to the effect that, to the best
of his knowledge, (A) the consummation of such Permitted Acquisition
will not result in a violation of any provision of this SECTION
5.15, (B) after giving effect to any Borrowings made in connection
therewith, the Borrower is in covenant compliance with the financial
covenants contained in SECTIONS 6.9 through 6.16 at the most recent
calculation period taking into account the Borrowing (such
calculations to be attached to the certificate) and (C) the Borrower
believes in good faith that such financial covenants will continue
to be met for the one-year period following the date of the
consummation of such Permitted Acquisition (such calculations to be
based on the projections required by subparagraph (iii) above and
attached to the certificate).
(d) Within forty-five (45) days after the end of each fiscal quarter,
the Borrower will deliver to the Agent (i) with respect to any Permitted
Acquisition during such fiscal quarter, a copy of the fully executed acquisition
agreement (including schedules and
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exhibits thereto) and (ii) with respect to any Permitted Acquisition during such
fiscal quarter with respect to which the Acquisition Amount is less than
$7,000,000, the items described in clauses (i), (ii) and (iii) of subsection (C)
above, each in form and substance reasonably satisfactory to the Agent.
The consummation of each Permitted Acquisition subject to this Section
shall be deemed to be a representation and warranty by the Borrower that all
conditions thereto have been satisfied, that the same is permitted in accordance
with the terms of this Agreement and that the matters certified to by the chief
financial officer of the Borrower in the certificate referred to in subsection
(c)(iv) above are true and correct as of the date such certificate is given,
which representation and warranty shall be deemed to be a representation and
warranty for all purposes hereunder, including, without limitation, for purposes
of SECTIONS 3.3 and 7.1.
ARTICLE VI
NEGATIVE COVENANTS
Until payment in full of the Obligations and termination of the Lenders'
obligation to make Loans and the Issuing Bank's obligation, on behalf of the
Lenders, to issue Letters of Credit, the Borrower covenants and agrees that the
Borrower will not, and will not permit any of its Subsidiaries to, individually
or in the aggregate:
6.1 Merger, Consolidation. Liquidate, wind up or dissolve, or enter
into any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another Person so long as
(x) the Borrower is the surviving corporation, (y) if such merger or
consolidation is in connection with a Permitted Acquisition, the
applicable conditions of SECTION 5.15 shall be satisfied and (z)
immediately after giving effect thereto, no Default or Event of
Default would exist;
(ii) any Subsidiary may merge or consolidate with another Person so long
as (w) the Person surviving such merger or consolidation is the
Borrower or a Guarantor, (y) if such merger or consolidation is in
connection with a Permitted Acquisition, the applicable conditions
of SECTIONS 5.13 and 5.15 shall be satisfied and (z) immediately
after giving effect thereto, no Default or Event of Default would
exist.
6.2 Debt. Create, incur, assume or suffer to exist any Debt other than:
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(i) Debt incurred pursuant to this Agreement;
(ii) Subordinated Debt;
(iii) accrued expenses, current trade payables and other current
liabilities arising in the ordinary course of business and not
incurred through the borrowing of money;
(iv) unsecured Debt (x) of any Subsidiary to the Borrower (pursuant to
Intercompany Loan Documents), (y) of any Subsidiary to a Subsidiary
and (z) of the Borrower to any Subsidiary, provided that any such
Debt under this clause (iv) is incurred in the ordinary course of
business consistent with past practice, is evidenced by one or more
promissory notes pledged to the Agent pursuant to the Pledge
Agreement or Subsidiary Pledge Agreement, is payable on demand and
is fully subordinated in right of payment to the Obligations;
(v) Contingent Obligations permitted by SECTION 6.3; and
(vi) other Consolidated Senior Debt (including, without limitation, Debt
secured by liens described in clauses (e) and (h) of the definition
of Permitted Liens and Capital Lease Obligations) in an aggregate
principal amount at any time outstanding not to exceed $20,000,000
for the Borrower and its Subsidiaries.
6.3 Contingent Obligations. Create, incur, assume or suffer to exist
any Contingent Obligation other than:
(i) endorsements of instruments or items of payment for deposit or
collection in the ordinary course of business;
(ii) Contingent Obligations incurred pursuant to the Guaranty Agreements;
(iii) customary indemnification obligations of the Borrower and its
Subsidiaries incurred in connection with Permitted Acquisitions made
in compliance with SECTION 5.15;
(iv) guarantees by the Borrower of obligations of Subsidiaries under
leases permitted hereunder;
(v) guarantees by the Borrower of any other Debt permitted under SECTION
6.2; and
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(vi) other guarantees, not covered in clauses (i) through (v) above, of
Debt of Domestic Subsidiaries in an aggregate amount not to exceed
$2,500,000 at any time.
6.4 Liens and Encumbrances. Create, assume or suffer to exist any deed
of trust, mortgage or encumbrance, lien (including a lien of attachment,
judgment or execution) or security interest (including the interest of a
conditional seller of goods), securing a charge or obligation, in or on any of
its property, real or personal, whether now owned or hereafter acquired, except
for Permitted Liens.
6.5 Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or property, including, without limitation, the
Collateral, except for (i) sales of inventory in the ordinary course of
business; (ii) the sale or exchange of used equipment, to the extent the
proceeds of such sale are applied towards, or such equipment is exchanged for,
similar replacement equipment; (iii) dispositions not exceeding $2,000,000 in
the aggregate, for the Borrower and its Subsidiaries, for any fiscal year; (iv)
the assignment of any Intercompany Loan Documents by the Borrower to RTC
Holdings pursuant to the Assignment Agreement; and (v) any sale, lease, transfer
or conveyance from one Subsidiary to another Subsidiary or to the Borrower or
from the Borrower to any, Subsidiary in accordance with SECTION 6.6, provided
that, (y) immediately after giving effect thereto, no Default or Event of
Default would exist, and (z) with respect to any transfer from the Borrower or a
Guarantor to a Subsidiary that is not a Guarantor, the Borrower shall notify the
Agent and the Lenders thereof and, at the request of the Required Lenders, shall
cause the transferee Subsidiary to comply with the provisions of SECTION 5.13.
6.6 Transactions with Related Persons. Except as otherwise permitted by
SECTIONS 5.15, 6.2 and 6.7, directly or indirectly make any loan or advance to,
or purchase, assume or guarantee any Debt to or from, any of its officers,
directors, stockholders or Affiliates, or subcontract any operations to any
Affiliate, or enter into any transaction with any Affiliate, except (a) in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and (b) upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate; provided, however, that
the provisions of this Section shall not prohibit the assignment of any
Intercompany Loan Documents by the Borrower to RTC Holdings made in compliance
with subsection (b) above.
6.7 Restricted Investments. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any Stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any
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loans, advances or extensions of credit to, or any investment in cash or by
delivery of property in, any Person, or consummate an Acquisition, or make a
commitment or otherwise agree to do any of the foregoing, except for (a)
investments in Cash Investments, (b) investments in Domestic Subsidiaries
evidenced by the Intercompany Loan Documents, (c) loans and advances to
employees for reasonable travel and business expenses in the ordinary course of
business, (d) prepaid expenses incurred in the ordinary course of business, (e)
trade accounts receivable created in the ordinary course of business, (f)
investments in corporations that are Domestic Subsidiaries in existence as of
the Closing Date or in new Domestic Subsidiaries created or acquired in
compliance with SECTIONS 5.13 and 6.19, (g) Permitted Acquisitions other than
Foreign Acquisitions in compliance with SECTION 5.15, (h) investments related to
Foreign Acquisitions or in Foreign Subsidiaries in compliance with SECTIONS
5.13, 5.15 and 6.19 in an aggregate amount for the Borrower and its Subsidiaries
on a consolidated basis not to exceed $10,000,000 at any time, (i) other
investments not covered in clauses (a) through (h) having an aggregate cost to
the Borrower and its Subsidiaries not to exceed $3,000,000 at any time.
6.8 Restricted Payments. Declare or pay any dividends upon any of its
Stock (other than dividends paid in Stock and dividends paid to the Borrower or
by a Subsidiary to another Subsidiary), or purchase, redeem, retire or otherwise
acquire for value other than Stock, directly or indirectly, any shares of its
Stock, any shares of Stock of any Affiliate or any option, warrant or other
right to acquire shares of its Stock or Stock of any Affiliate, or make any
distribution of cash, property or assets other than Stock among the holders of
shares of its Stock; provided, however, that the Borrower may make cash payments
or distributions or enter into the transactions described above so long as (a)
the aggregate amount of such payments and distributions made during any fiscal
year of the Borrower do not exceed 15% of the Consolidated Net Income of the
Borrower for such fiscal year, and (b) the Borrower shall deliver to the Agent
prior to making such payment or distribution a certificate executed by its
President or Chief Financial Officer or Vice President-Finance setting forth the
calculations necessary to demonstrate that after giving effect to such
transactions, the Borrower will be in pro forma covenant compliance with the
financial covenants contained in SECTIONS 6.9 through 6.16 and no Default or
Event of Default would exist.
6.9 Capital Expenditures. Make any Capital Expenditure not as part of
an Acquisition if, after giving effect to such Capital Expenditure, the
aggregate amount of all such Capital Expenditures made by the Borrower and its
Subsidiaries during any fiscal year, beginning with the current fiscal year,
shall exceed an amount equal to ten percent (10%) of Consolidated Net Revenue of
the Borrower for such fiscal year.
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6.10 Consolidated Net Worth. Permit Consolidated Net Worth at the end of
any fiscal quarter after the Closing Date, beginning with the current fiscal
quarter, to be less than (i) $100,000,000, increased by 80% of Consolidated Net
Income (if positive) for each full fiscal quarter after the Closing, plus (ii)
----
90% of the positive amount of all increases in capital stock and additional
paid-in capital from issuances of equity securities or other capital
investments.
6.11 [intentionally left blank].
6.12 Cash Available to Fixed Charges. Permit the ratio of Cash Available
to Fixed Charges at the end of any fiscal quarter to be less than 2.25 to 1.0.
6.13 Cash Available to Debt Service Ratio. Permit the ratio of Cash
Available to Debt Service at the end of any fiscal quarter to be less than 1.20
to 1.0.
6.14 Consolidated Senior Debt to Annualized Cash Flow. Permit the ratio
of Consolidated Senior Debt to Annualized Cash Flow as of the end of any fiscal
quarter to be greater than 3.0 to 1.0.
6.15 Consolidated Debt to Annualized Cash Flow. Permit the ratio of
Consolidated Debt to Annualized Cash Flow as of the end of any fiscal quarter to
be greater than 4.0 to 1.0; provided, however, such ratio shall not be greater
than 4.25 to 1.0 if the Borrower receives net proceeds of at least $110,000,000
from the Indenture on or before June 30, 1996.
6.16 Consolidated Debt to Consolidated Total Capital. Permit the ratio
of Consolidated Debt to Consolidated Total Capital as of the end of any fiscal
quarter to be greater than 0.65 to 1.0.
6.17 Sale and Leaseback. Except as set forth in SCHEDULE 6.17, enter
into any arrangement with any Person (other than the Borrower or any Subsidiary,
provided the provisions of SECTION 6.6 are satisfied) providing for the leasing
by the Borrower or any Subsidiary of any asset that has been sold or transferred
by the Borrower or such Subsidiary to such Person.
6.18 New Business. Engage in any business other than the business in
which the Borrower or such Subsidiary is currently engaged or a business
reasonably related thereto, including, without limitation, laboratories
predominately performing dialysis related functions, or make any material change
in any of its business objectives, purposes and operations that would be
reasonably likely to materially adversely affect the repayment of the
Obligations.
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6.19 Subsidiaries or Partnerships. (a) Become a partner or joint
venturer in any partnership or joint venture, or (b) create or acquire any new
Subsidiary; provided that the Borrower or any Subsidiary may (i) create or
acquire one or more Subsidiaries in connection with a Permitted Acquisition
consummated in compliance with this Agreement, and (ii) create a Subsidiary de
novo; provided further that, in any such instance, the created or acquired
Subsidiary complies with the provisions of SECTION 5.13. RTC Holdings S.A. will
not engage in any activities other than holding the stock of its operating
Subsidiaries and ordinary course administrative functions.
6.20 Transactions Affecting the Collateral. Enter into any transaction
that adversely affects the Collateral or the ability of the Borrower to repay
any Debt or the Obligations, commit or allow the commission of any forgiveness
or release of Collateral pursuant to the Intercompany Loan Documents or permit
or agree to any material extension, compromise or settlement or make any
material change or modification of any kind or nature with respect to any
Account (except as permitted by SECTION 6.26).
6.21 Hazardous Wastes. Permit any Hazardous Substances the removal of
which is required or the maintenance of which is restricted, prohibited or
penalized by any Governmental Authority, to be unlawfully brought on to any real
property owned or leased by the Borrower or any Subsidiary, or if so brought or
found located thereon, fail to immediately remove such materials, with proper
disposal, in accordance with required cleanup procedures under applicable
Environmental Laws.
6.22 Fiscal Year. Change its fiscal year from a December 31 year end.
6.23 Amendments; Prepayments of Debt, etc. Except with respect to the
Debt created under the Loan Documents, (a) amend or modify (or permit the
amendment or modification of) any of the terms or provisions of any Debt or any
agreement related thereto (including without limitation, the Indenture) or (b)
make any voluntary or optional payment or prepayment or redemption or
acquisition (other than for Stock) for value of (including, without limitation,
by way of depositing with any trustee with respect thereto money or securities
before due for the purpose of paying when due), or exchange (other than for
Stock), any Debt (including, without limitation, any redemption pursuant to
Article III of the Indenture or any deposit of funds by the Borrower with the
trustee pursuant to Article XIII of the Indenture). Notwithstanding the
foregoing, conversion of the Convertible Notes for Stock (and cash for
fractional shares) in accordance the terms of the Indenture shall be permitted.
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6.24 Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any
of their respective officers or directors, shall engage on behalf of Borrower or
any Subsidiary in any activities that are prohibited under the federal Medicare
and Medicaid statutes, 42 U.S.C. (S) 1320a-7b, or the regulations promulgated
pursuant to such statutes or related state or local statutes or regulations,
including but not limited to the following: (i) knowingly and willfully making
or causing to be made a false statement or representation of a material fact in
any applications for any benefit or payment; (ii) knowingly and willfully making
or causing to be made any false statement or representation of a material fact
for use in determining rights to any benefit or payment; (iii) failing to
disclose knowledge by a claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment on its own behalf or on
behalf of another, with intent to secure such benefit or payment fraudulently;
(iv) knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in
cash or in kind or offering to pay such remuneration (a) in return for referring
an individual to a person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole or in part by
Medicare, Medicaid or other applicable third party payors, or (b) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing,
leasing or order of any good, facility, service, or item for which payment may
be made in whole or in party by Medicare, Medicaid or other applicable third
party payors. With respect to this Section, knowledge by an individual director
or officer of the Borrower or a Subsidiary of any of the event described in this
Section shall not be imputed to the Borrower or such Subsidiary unless such
knowledge was obtained or learned by the director or officer in his or her
official capacity as a director or officer of the Borrower or such Subsidiary.
Neither the Borrower nor any Subsidiary shall be considered to have breached
this Section, except in the case of a knowing and willful violation thereof,
until the Borrower or such Subsidiary has received notification, written or
oral, by a Governmental Authority of competent jurisdiction as to any such
violation.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower fails to pay when due any principal, fees or interest
on the Obligations;
(b) The Borrower or any Subsidiary fails or neglects to observe, perform
or comply with any term, provision, condition or
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covenant contained in SECTIONS 2.14, 5.1, 5.3, 5.4 or 5.5 (a), 5.13, 5.15 or
ARTICLE VI;
(c) The Borrower or any Subsidiary fails or neglects to observe, perform
or comply with any term, provision, condition or covenant contained herein
except those specified in subsections (A) and (B) above (and except to the
extent that violations of any such provisions or covenants otherwise trigger an
Event of Default under any of the other subparagraphs of this SECTION 7.1,
including, without limitation, violations of SECTION 5.6 to the extent covered
by subparagraph (e) below), and the same is not cured to the Required Lenders'
satisfaction within thirty (30) Business Days after the Borrower or such
Subsidiary acquires knowledge thereof;
(d) If any representation or warranty made in writing by or on behalf of
the Borrower or any Subsidiary in this Agreement, in the other Loan Documents or
in any other agreement now existing or hereafter executed between the Borrower
or any Subsidiary and the Agent or any Lender, or in connection with the
transactions contemplated hereby or thereby, shall prove to have been false or
misleading in any material respect when made;
(e) (i) the occurrence of any payment default on the part of the
Borrower or any Subsidiary under the terms of any agreement, document or
instrument pursuant to which the Borrower or such Subsidiary has incurred any
Debt (including, without limitation, the Indenture) having an individual or
aggregate principal amount of greater than $500,000 (other than the Obligations
and Debt under the Intercompany Loan Documents), or (ii) the occurrence of any
nonpayment default or event of default on the part of the Borrower or any
Subsidiary under the terms of any agreement, document or instrument pursuant to
which the Borrower or such Subsidiary has incurred any Debt (including, without
limitation, the Indenture) having an individual principal amount greater than
$1,000,000 or aggregate principal amount greater than $2,500,000 (other than the
Obligations and Debt under the Intercompany Loan Documents);
(f) The termination of any agreement, contract or instrument to which a
Borrower or any Subsidiary is a party or by which it or any of its properties
are bound, and such termination results in a Material Adverse Effect;
(g) The occurrence of an event of default under any of the Loan
Documents or in any other agreement now existing or hereafter executed
evidencing or securing any of the Obligations;
(h) The occurrence of any material uninsured damage to or loss, theft or
destruction of the Collateral or other assets of the Borrower or any Subsidiary
that has a Material Adverse Effect;
(i) The filing by the Borrower or any Subsidiary of any voluntary
petition seeking liquidation, reorganization, arrangement, readjustment of debts
or for any other relief under
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the Bankruptcy Code or under any other act or law pertaining to insolvency or
debtor relief, whether state, federal or foreign, now or hereafter existing;
(j) The filing against the Borrower or any Subsidiary of any involuntary
petition seeking liquidation, reorganization, arrangement, readjustment of debts
or for any other relief under the Bankruptcy Code or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing, which petition is not dismissed within sixty (60)
days after the date of filing;
(k) A custodian, trustee, receiver or assignee for the benefit of
creditors is appointed or takes possession of the Collateral or any other assets
of the Borrower or any Subsidiary;
(l) The Borrower or any of its Subsidiaries (other than an immaterial
Subsidiary) ceases to be Solvent (taking into account any rights of
contribution), or ceases to conduct its business as now conducted or is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs, except as otherwise specifically
permitted under SECTION 6.1;
(m) A notice of lien, levy or assessment in excess of $500,000 is filed
of record against any portion of the assets of the Borrower or any Subsidiary by
the United States, or any department, agency or instrumentality thereof, or by
any other Governmental Authority, including, without limitation, the Pension
Benefit Guaranty Corporation, or if any taxes or debts owing at any time or
times hereafter to any one of them becomes a lien or encumbrance (other than a
Permitted Lien) upon the Collateral or any other asset of the Borrower or any
Subsidiary, and the same is not dismissed, released or discharged within thirty
(30) days after the same becomes a lien or encumbrance or, in the case of ad
valorem taxes, prior to the last day when payment may be made without penalty;
(n) The entry of a judgment or the issuance of a warrant of attachment,
execution or similar process against the Borrower or any Subsidiary or any of
their respective assets in excess of $500,000 which shall not be dismissed,
discharged, stayed pending appeal or bonded within thirty (30) days after entry
or is otherwise covered by insurance;
(o) The occurrence of any of the following events: (i) the happening of
a Reportable Event that could give rise to liability (that is not waived by the
by the Pension Benefit Guaranty Corporation or by the Required Lenders, or if
such liability can be avoided by any corrective action of the Borrower, such
corrective action is not completed within ninety (90) days after the occurrence
of such Reportable Event) with respect to any Pension Plan; (ii) the termination
of any Pension Plan in a "distress
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termination" under the provisions of SECTION 4041 of ERISA; (iii) the
appointment of a trustee by an appropriate United States District Court to
administer any Pension Plan; (iv) the institution of any proceedings by the
Pension Benefit Guaranty Corporation to terminate any Pension Plan or to appoint
a trustee to administer any such plan; and (v) the failure of the Borrower to
notify the Lenders promptly upon receipt by the Borrower of any notice of the
institution of any proceeding or any other actions that may result in the
termination of any such plan;
(p) The Borrower or any Subsidiary, to the extent presently
participating or required by law to participate, in Medicaid or Medicare
programs shall fail to be eligible for any reason to participate in Medicaid or
Medicare programs or to accept assignments or rights to reimbursement under
Medicaid Regulations or Medicare Regulations except in the case where such
failure is de minimis or immaterial;
(q) The occurrence of any Material Adverse Change; or
(r) Robert L. Mayer, Jr. shall cease (i) to be the chief executive
officer of the Borrower, (ii) to perform for the Borrower the normal and
customary duties of a chief executive officer, or (iii) to be involved in the
day-to-day operations of the Borrower, unless in any such event the Borrower
shall have hired a new chief executive officer of comparable skill and
expertise, reasonably acceptable to the Required Lenders, within ninety (90)
days of such occurrence; or
(s) The occurrence of a Change of Control (as defined in the Indenture).
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments of each Lender, and the Issuing Bank's
obligation to issue Letters of Credit, to be terminated, whereupon the same
shall terminate (provided that, upon the occurrence of an Event of Default
pursuant to SECTIONS 7.1(i), (j) or (k), all of the Commitments, together with
the Issuing Bank's obligation to issue Letters of Credit, shall automatically be
terminated);
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(b) Declare all or any part of the outstanding principal amount of the
Loans, all unpaid interest accrued thereon, and all other amounts payable under
this Agreement, the Revolving Credit/Term Notes and the other Loan Documents to
be immediately due and payable, whereupon such outstanding principal amounts,
accrued interest and other such amounts shall become immediately due and payable
without presentment, demand, protest, notice of intent to accelerate or other
notice or legal process of any kind, all of which are hereby knowingly and
expressly waived by the Borrower (provided that, upon the occurrence of an Event
of Default pursuant to SECTIONS 7.1(i), (j) or (k), all of such outstanding
principal amounts, accrued interest and other such amounts shall automatically
become immediately due and payable);
(c) Direct the Borrower to deliver (and the Borrower hereby agrees, upon
receipt of notice of such direction from the Agent, to deliver) to the Agent
from time to time such additional amount of cash as is equal to the aggregate
Stated Amount of all Letters of Credit then outstanding (whether or not any
beneficiary under any Letter of Credit shall have drawn or be entitled at such
time to draw thereunder), such amount to be held by the Agent in the Cash
Collateral Account as security for the Borrower's Reimbursement Obligations as
described in SECTION 2.17(i); and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Loan Documents and applicable law.
8.2 Right of Set-off. The Agent and each Lender may, and are hereby
authorized by the Borrower, at any time and from time to time, to the fullest
extent permitted by applicable law, without advance notice to the Borrower (any
such notice being expressly waived by the Borrower) and irrespective of demand
for payment, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held in other than a fiduciary
account and any other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any or all of the Obligations
now or hereafter existing, whether or not such Obligations have matured. The
Agent agrees to notify the Borrower after any such setoff or application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
8.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of
the Agent's and the Lenders' rights and remedies set forth in this Agreement is
not intended to be exhaustive, and the exercise by the Agent or any Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder, under the Loan Documents or under any
other agreement between the Borrower or any Subsidiary and the Agent or the
Lenders or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the
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part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or shall be construed to be
a waiver of any Event of Default. No course of dealing between the Borrower or
any Subsidiary and the Agent or the Lenders or their agents or employees shall
be effective to change, modify or discharge any provision of this Agreement or
any of the other Loan Documents or to constitute a waiver of any Event of
Default.
ARTICLE IX
THE AGENT
9.1 Appointment. The Lenders and the Issuing Bank (for purposes of this
Article, any reference to the Lenders or any Lender shall be deemed also to
include a reference to the Issuing Bank) hereby designate and appoint First
Union as Agent to act as specified herein and in the other Loan Documents. Each
Lender hereby authorizes, and each holder of any Revolving Credit/Term Note by
the acceptance of such Revolving Credit/Term Note shall be deemed to authorize,
the Agent to take such action as agent on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder, as are specifically delegated to
or required of the Agent by the terms hereof or thereof and such other powers as
are reasonably incidental thereto. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents or attorneys-in-
fact and shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact that it selects with reasonable care.
9.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Loan Documents. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it or
them as such hereunder or under any other Loan Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship in respect of any Lender or the holder of any
Revolving Credit/Term Note; and nothing in this Agreement or any other Loan
Document, express or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations or liabilities in respect of this
Agreement or any other Loan Document except as expressly set forth herein or
therein.
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9.3 Absence of Reliance on the Agent.
(a) Each Lender acknowledges that neither the Agent nor any of its
officers, directors, employees or agents has made any representation or warranty
to it and that no act by the Agent hereinafter taken, including any review of
the affairs of the Borrower and its Subsidiaries, shall be deemed to constitute
any representation or warranty by the Agent to any Lender.
(b) Each Lender acknowledges that, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed and may deem appropriate, (i) it has made its own appraisal of
and investigation into the business, prospects, operations, properties,
financial and other condition and creditworthiness of the Borrower and its
Subsidiaries in connection with its decision to enter into this Agreement and
extend credit to the Borrower hereunder, and (ii) it will continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
hereunder.
(c) Except as expressly provided in this Agreement, the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the holder of any Revolving Credit/Term Note with any credit or
other information concerning the business, prospects, operations, properties,
financial or other condition or creditworthiness of the Borrower, its
Subsidiaries or any other Person that may come into its possession, whether
before the making of the initial Loans, the participation in the initial Letters
of Loan or at any time or times thereafter.
(d) The Agent shall not be responsible to any Lender or the holder of
any Revolving Credit/Term Note for any recitals, statements, information,
representations or warranties herein or in any other Loan Document or in any
document, instrument, certificate or other writing delivered in connection
herewith or therewith or for the execution, effectiveness, genuineness,
validity, enforceability, perfection, priority or sufficiency of this Agreement
or any other Loan Document or the financial condition of the Borrower, its
Subsidiaries or any other Person, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Loan Document, or the financial
condition of the Borrower, its Subsidiaries or any other Person or the existence
or possible existence of any Default or Event of Default.
(e) The Agent shall be under no obligation or duty to take any action
under this Agreement or any other Loan Document if taking such action (i) would
subject the Agent to a tax in any jurisdiction where it is not then subject to a
tax, (ii) would require the Agent to qualify to do business in any jurisdiction
where it is not then so qualified, unless the Agent receives
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security or indemnity satisfactory to it against any tax or other liability in
connection with such qualification or resulting from the taking of such action
in connection therewith or (iii) would subject the Agent to in personam
jurisdiction in any location where it is not then so subject.
9.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until it shall have received such instructions, and the Agent
shall incur no liability by reason of so refraining. The Agent shall not be
obligated to take any action hereunder or under any other Loan Document (i) if
such action would, in the reasonable opinion of the Agent, be contrary to
applicable law or this Agreement or the other Loan Documents, (ii) if it shall
not receive such advice or concurrence of the Required Lenders as it reasonably
deems appropriate or (iii) if it shall not first be indemnified to its
satisfaction by the Lenders requesting such action against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take
any such action. Without limiting the foregoing, no Lender or holder of any
Revolving Credit/Term Note shall have any right of action whatsoever against the
Agent as a result of the Agent's acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of the
Required Lenders.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, other than any
Default or Event of Default arising out of the failure to pay any principal,
interest, fees or other amounts payable to the Agent for the account of the
Lenders, unless the Agent has received written notice from the Borrower or a
Lender describing such Default or Event of Default and stating that such notice
is a "notice of default." In the event that the Agent receives such a notice,
the Agent shall give notice thereof to the Lenders as soon as reasonably
practicable; provided, however, that if any such notice has also been furnished
to the Lenders, the Agent shall have no obligation to notify the Lenders with
respect thereto. Each Lender shall promptly give the Agent such a notice upon
its actual knowledge of a Default or an Event of Default; provided, however,
that the failure of any Lender to deliver such notice in the absence of gross
negligence or willful misconduct shall not affect its rights hereunder or under
the other Loan Documents.
9.6 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, consent, certificate, telex, teletype or facsimile message, order or
other documentary, teletransmission or telephone message believed by it in good
faith to be genuine and correct and to have been signed, sent or made by
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the proper Person. The Agent may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts selected by
it with respect to all matters pertaining to this Agreement and the other Loan
Documents and its duties hereunder and thereunder and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
9.7 Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrower, and without limiting the obligation of the Borrower to
do so, the Lenders will reimburse and indemnify the Agent, in proportion to
their respective percentages as used in determining the Required Lenders, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees and
expenses) or disbursements of any kind or nature whatsoever that may at any time
(including at any time following the indefeasible repayment in full of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan Document or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing, and in particular
will reimburse the Agent for out-of-pocket expenses promptly upon demand by the
Agent therefor; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements finally determined by a court
of competent jurisdiction and not subject to any appeal (or pursuant to
arbitration as set forth herein) to have resulted from the Agent's gross
negligence or willful misconduct.
9.6 The Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it and the Revolving Credit/Term Notes issued to
it, the Agent shall have the same rights and powers under the Loan Documents as
any other Lender or holder of a Revolving Credit/Term Note and may exercise the
same as though it were not performing the agency duties specified herein; and
the terms "Lenders," "Required Lenders," "holders of Revolving Credit/Term
Notes" and any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower or any of its
Subsidiaries or any of their respective Affiliates as if it were not performing
the agency duties specified herein, and may accept fees and other consideration
from the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
9.9 Holders. The Agent may deem and treat the payee of any Revolving
Credit/Term Note as the holder thereof for all purposes hereof unless and until
a written notice of the assignment,
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transfer or endorsement thereof, as the case may be, shall have been filed with
the Agent. Any request, authority or consent of any Person that, at the time of
making such request or giving such authority or consent, is the holder of any
Revolving Credit/Term Note, shall be conclusive and binding on any subsequent
holder, transferee, assignee or endorsee, as the case may be, of such Revolving
Credit/Term Note or of any Revolving Credit/Term Note or Revolving Credit/Term
Notes issued in exchange therefor.
9.10 Successor Agent. The Agent may resign at any time upon sixty (60)
days' prior written notice to the Borrower and the Lenders. The Agent may be
removed with or without cause by the Required Lenders (and, so long as no
Default or Event of Default has occurred and is continuing, with the consent of
the Borrower, which consent shall not be unreasonably withheld), at any time
upon sixty (60) days' prior written notice to the Borrower and the Agent. Such
resignation or removal, as the case may be, shall take effect upon the
appointment of a successor Agent as provided hereinbelow. Upon any such notice
of resignation or removal (and, in the case of removal, upon the consent of the
Borrower, if required as provided hereinabove), the Required Lenders (so long as
no Default or Event of Default has occurred and is continuing, with the consent
of the Borrower, which consent shall not be unreasonably withheld) will appoint
from among the Lenders a successor Agent. If no successor Agent shall have been
appointed within such sixty-day period, the Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders, who
shall serve as Agent until such time, if any, as the Required Lenders shall have
appointed a successor Agent as provided hereinabove. Upon the written acceptance
of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
9.11 Collateral Matters.
(a) The Agent is hereby authorized on behalf of all the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Pledge Agreements that may be necessary to perfect and
maintain perfected the liens upon the Collateral granted pursuant to the Pledge
Agreements.
(b) The Lenders hereby irrevocably authorize the Agent, at its option
and in its discretion, to release any lien granted to or held by the Agent upon
any Collateral (i) upon termination of the
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Commitments and indefeasible payment in full of all Obligations, (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with a disposition permitted hereunder, (iii) constituting property
in which neither the Borrower nor any Subsidiary owned any interest at the time
such lien was granted or at any time thereafter or (iv) if approved, authorized
or ratified in writing by the Lenders or the Required Lenders, as may be
required with respect to any such release in accordance with SECTION 10.8(b).
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release Collateral pursuant to this subsection (b).
ARTICLE X
MISCELLANEOUS
10.1 Survival. The representations and warranties made by or on behalf
of the Borrower or any Subsidiary in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document. Notwithstanding any other provision herein or anything
provided or implied by law to the contrary, no termination or cancellation
(regardless of cause or procedure) of the Commitments, this Agreement or any of
the other Loan Documents shall in any way affect or impair the rights and
obligations of the parties hereto with respect to any of the provisions of (i)
SECTION 10.3 hereof, (ii) SECTION 2.15 or (iii) this Agreement and the other
Loan Documents relating to indemnification or payment of costs and expenses,
including, without limitation, all of the provisions of SECTIONS 2.11(a),
2.11(b), 2.12, 2.13, 2.17(h), 9.7, 10.6 and 10.7, and, in each case, such
provisions shall survive any such termination or cancellation and the making and
repayment of the Loans.
10.2 Governing Law; Consent to Jurisdiction. THIS AGREEMENT HAS BEEN
EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL BE DEEMED TO HAVE BEEN MADE IN,
NORTH CAROLINA AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NORTH CAROLINA; PROVIDED THAT EACH
LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO
SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED
THEREBY, THE INTERNAL LAWS OF THE STATE OF THE DOMICILE OF THE ISSUING BANK. AS
PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, THE BORROWER HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH
CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE
OF NORTH CAROLINA
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FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, OR ANY PROCEEDING TO WHICH THE AGENT, THE ISSUING BANK,
ANY LENDER OR THE BORROWER IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING
OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE ISSUING BANK,
ANY LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT
TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED
THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF
JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO RENAL TREATMENT CENTERS, INC. AT ITS
ADDRESS SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
10.3 Arbitration; Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any of the Loan
Documents ("Disputes") between or among parties hereto or thereto shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from documents
executed in the future, or claims arising out of or connected with the
transaction contemplated by this Agreement or any of the Loan Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this arbitration
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provision does not apply to disputes under or related to any interest rate
protection agreements.
(b) Notwithstanding the foregoing, the Borrower and the Agent, on behalf
of the Lenders, agree to preserve, without diminution, certain remedies, more
particularly described below, that any party hereto may employ or exercise
freely, either alone, in conjunction with or during a Dispute; provided,
however, that the Borrower preserves its right to seek injunctive or other
appropriate judicial relief from a court of competent jurisdiction with respect
to the foregoing pending final resolution of the Dispute pursuant to subsection
(a) above. The Agent, on behalf of the Lenders, shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under any Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of any arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
The Borrower and the Agent, on behalf of the Lenders, agree that they shall
not have a remedy of punitive or exemplary damages against the other in any
Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially.
10.4 Notice. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:
If to the Borrower: Renal Treatment Centers, Inc.
1180 W. Swedesford Road
Building 2, Suite 300
Berwyn, Pennsylvania 19312
Attention: Robert L. Mayer, Jr.
President and Thomas J. Karl
Telephone: (610) 644-4796
Telecopy: (610) 889-7415
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With copies to: Duane, Morris & Heckscher
One Liberty Place
Philadelphia, Pennsylvania 11903-7396
Attention: ____________________
Telephone: (215) 979-1262
Telecopy: (215) 979-1020
If to the Agent
or the Issuing Bank: First Union National Bank of
North Carolina
One First Union Center, TW19
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Healthcare Finance Group
Telephone: (704) 383-6249
Telecopy: (704) 383-9144
with a copy to: First Union National Bank of
North Carolina
One First Union Center, TW10
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone: (704) 388-0281
Telecopy: (704) 383-0288
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
1900 Independence Center
Charlotte, North Carolina 28246
Attention: Stokely G. Caldwell, Jr.
Telephone: (704) 377-2536
Telecopier: (704) 378-4000
If to any Lender: At the address set forth on its
signature page hereto
or to such other address as any party may designate for itself by like notice to
all other parties hereto. All such notices and communications shall be deemed
to have been given (i) if mailed as provided above by any method other than
overnight delivery service, on the third Business Day after deposit in the
mails, (ii) if mailed by overnight delivery service, telegraphed, telexed,
telecopied or cabled, when delivered for overnight delivery, delivered to the
telegraph company, confirmed by telex answerback, transmitted by telecopier or
delivered to the cable company, respectively, or (iii) if delivered by hand,
upon delivery; provided that notices and communications to the Agent shall not
be effective until received by the Agent.
All wire transfers to the Agent shall be sent to First Union National Bank
of North Carolina, ABA Routing #053000219, to the credit of First Union National
Bank of North Carolina, Charlotte,
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North Carolina, Attention: Syndication Agency Services, G/L #465906, RC #5007,
RE: Renal Treatment Centers, Inc., unless otherwise instructed by the Agent.
10.5 Assignments, Participations.
(a) With the prior consent of the Agent and the Borrower, which consent
shall not be unreasonably withheld, each Lender may assign to one or more other
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
outstanding Revolving Credit/Term Loans made by it and the Revolving Credit/Term
Note or Revolving Credit/Term Notes held by it); provided, however, that (i)
First Union will retain a Commitment of at least twenty percent (20%) of the
Total Commitment (up to $20,000,000) at all times, (ii) except in the case of an
assignment to an Affiliate of such Lender or a Person that, immediately prior to
such assignment, was a Lender, the amount of the Commitments of such assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to each such assignment)
shall in no event be less than the lesser of (y) the aggregate Commitments of
such Lender immediately prior to such assignment or (z) $10,000,000, (iv) each
such assignment shall be to an Eligible Assignee and (v) the parties to each
such assignment will execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any
Revolving Credit/Term Note or Revolving Credit/Term Notes subject to such
assignment, and will pay a processing fee of $3,000 to the Agent for its own
account. Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein
(a) the assignee thereunder shall be deemed a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of such Lender
hereunder with respect thereto and (b) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree, with each
other and with the other parties hereto, as follows: (i) other than as may be
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the
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execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document or any other instrument or document
furnished hereto or pursuant thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of its Subsidiaries or the
performance or observance by the Borrower or any of its Subsidiaries of any of
their respective obligations under this Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the Financial Statements and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Agreement; (iv) such assignee will, independently and without
reliance upon the Agent, the assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents and any other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder, as are specifically delegated to or required of the
Agent by the terms hereof or thereof and such other powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent will maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower, the Issuing Bank or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Revolving Credit/Term Note
or Revolving Credit/Term Notes subject to such assignment, the Agent will, if
such Assignment and Acceptance has been completed and is in substantially the
form of EXHIBIT E, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give notice thereof to
the Borrower. Within five (5) Business Days after its receipt of such notice,
the Borrower, at its own expense,
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will execute and deliver to the Agent in exchange for the surrendered Revolving
Credit/Term Note or Revolving Credit/Term Notes a new Revolving Credit/Term Note
or Revolving Credit/Term Notes to the order of such assignee in an amount equal
to the Commitment or Commitments assumed by it pursuant to such Assignment and
Acceptance and, to the extent the assigning Lender has retained its Commitments
hereunder, a new Revolving Credit/Term Note or Revolving Credit/Term Notes to
the order of the assigning Lender in an amount equal to the Commitment or
Commitments retained by it hereunder. Such new Revolving Credit/Term Note or
Revolving Credit/Term Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Revolving Credit/Term Note or
Revolving Credit/Term Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A.
(e) Each Lender may sell to one or more other Persons participations in
any portion comprising less than all of its rights and obligations under this
Agreement (including, without limitation, a portion of its Commitments, the
outstanding Loans made by it and the Revolving Credit/Term Note or Revolving
Credit/Term Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible for the performance of such obligations, (iii) the
Borrower, the Issuing Bank, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, (iv) any such participation shall
be in an amount of not less than $5,000,000, (v) no Lender shall sell any
participation that, when taken together with all other participations, if any,
sold by such Lender, covers all of such Lender's rights and obligations under
this Agreement (including, without limitation, all of its Commitments, the
outstanding Loans made by it and the Revolving Credit/Term Note or Revolving
Credit/Term Notes held by it) and (vi) no Lender shall permit any participant to
have any voting rights or any right to control the vote of such Lender with
respect to any amendment, modification, waiver, consent or other action
hereunder or under any other Loan Document except as to actions of the type
described in SECTION 10.8(a). In the case of a participation, the participant
shall not have any rights under this Agreement or any of the other Loan
Documents, the participant's rights against the granting Lender in respect of
such participation to be those set forth in the participation agreement, and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not sold such participation; provided, however, that each such participant
shall have the rights of a Lender for purposes of SECTIONS 2.11(a), 2.11(b),
2.12, 2.13 and 8.2, and shall be entitled to the benefits thereto, to the extent
that the Lender selling such participation would be entitled to such benefits if
the participation had not been sold.
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(f) With the prior consent of the Required Lenders and the Borrower,
which consent shall not be unreasonably withheld, the Issuing Bank may assign
all, but not less than all, of its rights and obligations as Issuing Bank under
this Agreement, including, without limitation, its commitment to issue Letters
of Credit, to any Eligible Assignee, and upon acceptance of such assignment, the
successor Issuing Bank shall succeed to such rights and obligations and the
assigning Issuing Bank shall be discharged therefrom.
(g) The Agent, the Issuing Bank and each Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this SECTION, disclose to the assignee or participant, or proposed assignee
or participant, any information relating to the Borrower and its Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
assignee or participant or proposed assignee or participant agrees in writing to
the Agent, the Issuing Bank or such Lender, as the case may be, to keep such
information confidential to the same extent required of the Lenders under
SECTION 10.17.
(h) Nothing herein shall prohibit the pledging by any Lender of any
Revolving Credit/Term Note to any Federal Reserve Bank in connection with
borrowings from the Federal Reserve Bank (provided that any such pledge shall
not affect the obligations of such Lender hereunder).
10.6 Fees and Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Borrower shall be obligated:
(a) to pay or reimburse the Agent upon demand and after notice in
accordance with SECTION 10.4 for all reasonable expenses (including, without
limitation, reasonable attorneys' fees, but excluding salaries of the Agent's
regularly employed personnel and overhead) incurred or paid by the Agent in
connection with: (i) the preparation, execution, delivery, interpretation,
modification, amendment or termination of this Agreement or the other Loan
Documents or any consent or waiver requested by the Borrower hereunder or
thereunder; (ii) charges for appraisers, examiners, environmental consultants,
auditors or similar Persons whom the Agent may engage with respect to rendering
opinions concerning the financial condition of the Borrower and its
Subsidiaries; and (iii) any commercially reasonable attempt to inspect, verify,
protect, preserve, collect, sell, liquidate or otherwise dispose of the
Collateral or any other assets of the Borrower or any Guarantor;
(b) to pay or reimburse the Agent and each Lender upon demand and after
notice in accordance with SECTION 10.4 for all reasonable expenses (including,
without limitation, reasonable attorneys' fees, but excluding salaries of the
Agent's or such
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Lender's regularly employed personnel and overhead) incurred or paid by the
Agent or such Lender in connection with: (i) any litigation, contest, dispute,
suit or proceeding or action (whether instituted by the Agent, the Lenders, or
any of them, the Borrower or any other Person) in any way relating to this
Agreement or the other Loan Documents or to the Borrower's or any Subsidiary's
affairs (other than a dispute solely between or among the Lenders); (ii) any
attempt by the Agent or such Lender to enforce any of its rights against the
Borrower or any other Person that may be obligated to the Agent or such Lender
by virtue of this Agreement or the other Loan Documents; and (iii) any
refinancing or restructuring of the credit arrangement provided under this
Agreement in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding;
(c) to pay and hold the Agent and each Lender harmless from and against
any and all liability and loss with respect to or resulting from the nonpayment
or delayed payment of any and all intangibles, documentary stamp and other
similar taxes, fees and excises, if any, including any interest and penalties,
that may be, or be determined to be, payable in connection with the transactions
contemplated by this Agreement and the other Loan Documents or in any
modification hereof or thereof; and
(d) to pay and hold the Agent and each Lender harmless from and against
any and all finder's or brokerage fees and commissions that may be payable in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, other than any fees or commissions of finders or brokers engaged
by the Agent or any Lender.
10.7 Indemnification. From and at all times after the date of this
Agreement, and in addition to the costs and expenses payable under SECTION 10.6
and all of the Agent's and the Lenders' other rights and remedies against the
Borrower, the Borrower agrees to indemnify and hold harmless the Agent, the
Issuing Bank and each Lender and each of their directors, officers, employees,
agents and Affiliates (each, an "Indemnified Person") against any and all
claims, losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever, including, without limitation, attorneys' fees, costs and expenses
(collectively, "Indemnified Costs") incurred by or asserted against any such
Indemnified Person from and after the date hereof, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy under any statute or regulation, including, without limitation,
any federal or state securities laws, or under any common law or equitable cause
or otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or enforcement of this Agreement or the other Loan
Documents or any of the
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transactions contemplated herein or therein, and including, without limitation,
Environmental Claims, whether or not such Indemnified Person is a party to any
such action, proceeding or suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Person shall have the
right to be indemnified hereunder for any Indemnified Costs resulting primarily
from the gross negligence or willful misconduct of such Indemnified Person (as
finally determined by a court of competent jurisdiction or pursuant to
arbitration as set forth herein). All of the foregoing losses, damages, costs
and expenses of any Indemnified Person shall be payable by the Borrower, as and
when incurred and upon demand, and shall be additional Obligations hereunder. In
the event that the foregoing indemnity is unavailable or insufficient to hold
each Indemnified Person harmless, then the Borrower will contribute to amounts
paid or payable by such Indemnified Persons in respect of their losses, claims,
damages or liabilities in such proportions as appropriately reflect the relative
benefits received by and fault of the Borrower and such Indemnified Persons in
connection with the matters as to which such losses, claims, damages or
liabilities relate and other equitable considerations.
10.8 Amendments, Waivers, Etc. Except as may be otherwise specifically
set forth in this Agreement or the other Loan Documents, neither this Agreement
nor any other Loan Document nor any provision hereof or thereof may be amended,
modified, waived, discharged or terminated, and no consent to any departure by
the Borrower from any provision hereof or thereof may be given, except in a
writing signed by the Required Lenders; provided, however, that:
(a) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of each Lender holding Obligations directly
affected thereby, (i) reduce the principal amount of, or rate of interest on,
any Loan, or reduce any fees or other Obligations (other than fees payable to
the Agent for its own account) or any obligations of any Person now or hereafter
primarily or contingently liable with respect to the Obligations or (ii)
postpone any date fixed for any payment of principal, interest (other than
additional interest payable under SECTION 2.6(b) during the continuance of an
Event of Default), fees (other than fees payable to the Agent for its own
account) or any other Obligations;
(b) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of all Lenders, (i) increase the Commitments
of any Lender (it being understood that a waiver of any Default or Event of
Default or of any mandatory reduction in either Total Commitment shall not
constitute such an increase), (ii) change the definition of "Required Lenders"
or otherwise change the number or percentage of Lenders that shall be required
for the Lenders or any of them to take or approve, or direct the Agent to take,
any action hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to
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extend, the term of the Revolving Credit/Term Facility, (iv) affect the
obligation of the Lenders having Revolving Credit/Term Commitments to become L/C
Participants, (v) amend any provision of this SECTION, (vi) release all or
substantially all of the Collateral or (vii) consent to the assignment or
transfer by the Borrower, or by any other Person now or hereafter primarily or
contingently liable with respect to the Obligations, of any of its rights and
obligations under this Agreement or any of the other Loan Documents;
(c) no provision relating to the rights or obligations of the Issuing
Bank under this Agreement or any of the other Loan Documents may be amended,
modified or waived without the consent of the Issuing Bank; and
(d) no provision relating to the rights or obligations of the Agent
under this Agreement or any of the other Loan Documents may be amended, modified
or waived without the consent of the Agent.
10.9 Rights and Remedies Cumulative, Non-waiver, etc. The enumeration of
the Agent's and the Lenders' rights and remedies set forth in this Agreement and
the other Loan Documents is not intended to be exhaustive, and the exercise by
the Agent or any Lender of any right or remedy shall not preclude the exercise
of any other rights or remedies, all of which shall be cumulative, and shall be
in addition to any other right or remedy given hereunder, under the other Loan
Documents or under any other agreement between the Borrower and the Lenders, or
any of them (or the Agent on their behalf), or that may now or hereafter exist
in law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any of the Borrower and the Agent or the Lenders or their agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default. No notice to
or demand upon the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the right of the Agent or any Lender to exercise any right or remedy
or take any other or further action in any circumstances without notice or
demand .
10.10 Binding Effect, Assignment. All of the terms of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the Borrower, the Agent, the Issuing Bank
and each Lender; provided, however, that (i) the Borrower may not sell, assign
or transfer this Agreement or any
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portion hereof or thereof, including, without limitation, any of its rights,
title, interests, remedies, powers and duties hereunder or thereunder and (ii)
any assignees and participants and any successor Issuing Bank shall have such
rights and obligations with respect to this Agreement and the other Loan
Documents as are provided for in and pursuant to SECTION 10.5.
10.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.12 Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS
AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE SUBJECT
MATTER HEREOF EXCEPT FOR THE FEE LETTER AND ANY PRIOR ARRANGEMENTS MADE WITH
RESPECT TO PAYMENT BY THE BORROWER OF (OR ANY INDEMNIFICATION FOR) ANY FEES,
COSTS OR EXPENSES PAYABLE TO OR INCURRED (OR TO BE INCURRED) BY OR ON BEHALF OF
THE AGENT, THE ISSUING BANK OR ANY LENDER, THE PROVISIONS OF WHICH FEE LETTER
AND ANY SUCH PRIOR ARRANGEMENTS ARE HEREBY INCORPORATED INTO THIS AGREEMENT BY
THIS REFERENCE. THIS AGREEMENT, THE REVOLVING CREDIT/TERM NOTES, THE OTHER LOAN
DOCUMENTS AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.13 Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders.
10.14 Counterparts, Effectiveness. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all of
which shall together constitute one and the same instrument. This Agreement
shall become effective upon the execution of a counterpart hereof by each of the
parties hereto.
10.15 Conflict of Terms. The provisions of the exhibits and schedules
hereto and the other Loan Documents are incorporated in this Agreement by this
reference thereto. Except as otherwise provided in this Agreement and except as
otherwise provided in the other Loan Documents, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision of the
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other Loan Documents, the provision contained in this Agreement shall control.
10.16 Injunctive Relief. The Borrower recognizes that in the event it
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Agent and the Lenders. The Borrower therefore agrees that the Agent and the
Lenders, if the Agent so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages in any case
where a remedy at law, in the reasonable opinion of the Required Lenders, may
prove to be inadequate relief.
10.17 Confidentiality. Each Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all non-
public confidential information provided in connection with this Agreement or
any other Loan Document and agrees and undertakes that it shall not use any such
information for any purpose or in any manner other than pursuant to the terms
contemplated by this Agreement. Any Lender may disclose such information (i) at
the request of any bank regulatory authority or in connection with an
examination of such Lender by any such authority, (ii) pursuant to subpoena or
other court process, (iii) when required to do so in accordance with the
provisions of any applicable law, (iv) at the express direction of any agency of
any State of the United States of America or of any other jurisdiction in which
such Lender conducts its business or (v) to such Lender's independent auditors
and other professional advisors that have a reasonable need or basis for access
thereto.
10.18 Post-Closing Matters. The Borrower will, and will cause each of its
Subsidiaries to, use its best efforts to assist the Agent in the syndication of
the Facilities and the resultant addition of Lenders after the Closing Date.
10.19 Acknowledgement. The Borrower covenants and agrees that it shall
not use any credit facility provided by First Union or any affiliate thereof for
the purpose of making any payment of principal, interest or dividends on any
securities of the Borrower underwritten or privately placed by First Union
Capital Markets Corp. It is understood that it is not practical for the Borrower
to segregate or trace funds and that it does not contemplate doing so.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
RENAL TREATMENT CENTERS, INC.
By: /s/ Thomas J. Karl
----------------------------------
Thomas J. Karl, Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, AS AGENT
By: /s/ Joseph H. Towell
----------------------------------
__________________________________
Title: Joseph H. Towell,
Senior Vice President
(signatures continued)
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Joseph H. Towell
-----------------------------------
___________________________________
Joseph H. Towell,
Senior Vice President
Revolving Credit/
Term Commitment: $35,000,000
Address:
First Union National Bank
of North Carolina
One First Union Center, TW19
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Healthcare Finance Group
Telephone: (704) 383-6249
Telecopy: (704) 383-9144
Wiring Instructions:
First Union National Bank
of North Carolina
Charlotte, North Carolina
ABA #053000219
For further credit to:
Specialized Industries/Healthcare
Attn: Sue Patterson
Account #465906 0001802
Reference: Renal Treatment Centers,
Inc.
<PAGE>
CORESTATES BANK, N.A.
By: /s/ Indu Madan
----------------------------------------
Indu Madan, Assistant Vice President
Revolving Credit/
Term Commitment: $30,000,000
Address:
Corestates Bank, N.A.
1500 Market Street
West Tower FC1-3-18-6
Philadelphia, Pennsylvania 19102
Attention: Indu Madan
Telephone: (215) 786-2167
Fax (215) 973-2738
Wiring Instructions:
Corestates Bank, N.A.
Philadelphia, Pennsylvania
ABA #031000011
Attn: Tom McDermott, Commercial Loan
Account #0132-0452
Reference: Renal Treatment Centers, Inc.
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Jack Swire
---------------------------------------------
Jack Swire, Vice President
Revolving Credit/
Term Commitment: $17,500,000
Address:
PNC Bank, National Association
Broad & Chestnut Streets
MS 12-06-01
Philadelphia, Pennsylvania 19110
Attention: Jack Swire
Telephone: (215) 585-6143
Telecopy: (215) 585-6987
Wiring Instructions:
PNC Bank, National Association
Philadelphia, Pennsylvania
ABA #031000053
For further credit to:
13076 - 156 Loan Suspense
Reference: Renal Treatment Centers,
Inc.
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ GREGORY G. O'BRIEN, Managing Director
-----------------------------------------
Randall L. Wehling,
Assistant Vice President
Revolving Credit/
Term Commitment: $17,500,000
Address:
The First National Bank of Boston
100 Federal Street, 01-07-05
Boston, Massachusetts 02110
Attention: Randall Wehling
Telephone: (617) 434-0896
Telecopy: (617) 434-1279
Wiring Instructions:
The First National Bank of Boston
Boston, Massachusetts
ABA #011000390
Attn: Vincent Falcone
Reference: Renal Treatment Centers,
Inc.
<PAGE>
Exhibit 99.2
News
- --------------------------------------------------------------------------------
RENAL TREATMENT CENTERS, INC.
For Immediate Release
Contact: Frederick C. Jansen Ronald H. Rodgers, Jr.
Executive Vice President and Vice President - Finance
Chief Financial Officer (610) 644-4796
(610) 644-4796
RENAL TREATMENT CENTERS ANNOUNCES PRIVATE
PLACEMENT OF CONVERTIBLE SUBORDINATED NOTES
AND AN INCREASE TO ITS CREDIT FACILITY
Berwyn, Pennsylvania (June 10, 1996) - Renal Treatment Centers, Inc.
(NYSE:RXT) today announced the private placement of $125,000,000 of 5-5/8%
Convertible Subordinated Notes due 2006. The Notes will be convertible into
shares of the Company's Common Stock at a price of $34.20 per share. The
Company intends to use the proceeds of the offering for the repayment of
indebtness, acquisitions, development of additional dialysis centers, capital
expenditures and general corporate purposes. The offering is expected to
close this week.
The Convertible Subordinated Notes were sold under Rule 144A and
Regulation S and, therefore, have not been registered under the Securities
Act of 1933, as amended, or applicable state securities laws and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
The Company also announced that its credit facility through a
consortium of banks has been increased from $75 million to $100 million. The
Company intends to use the additional borrowing capacity to support the
Company's acquisition and development activities and general working capital
requirements. In addition, certain changes were made to the terms of the
credit facility, including amendments to certain covenants, the amortization
schedule, the interest rates and the events of default.
6
