<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number: 0-25062
ENVOY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE
(State or Other Jurisdiction of Incorporation or Organization)
62-1575729
(I.R.S. Employer Identification Number)
TWO LAKEVIEW PLACE, 15 CENTURY BLVD.
SUITE 600, NASHVILLE, TN 37214
(Address of Principal Executive Offices)
(615) 885-3700
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
SHARES OUTSTANDING AS OF NOVEMBER 14, 1996:
15,173,739
CLASS:
COMMON STOCK, NO PAR VALUE PER SHARE
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ENVOY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS: 1996 1995
--------------------------------------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 44,904 $ 222
SHORT-TERM INVESTMENTS - 5,103
ACCOUNTS RECEIVABLE-NET 17,986 7,610
INVENTORIES 3,051 2,092
DEFERRED INCOME TAXES 300 300
OTHER CURRENT ASSETS 353 465
--------------------------------------
TOTAL CURRENT ASSETS 66,594 15,792
PROPERTY AND EQUIPMENT, NET 15,468 12,768
OTHER ASSETS 50,886 1,590
--------------------------------------
TOTAL ASSETS $ 132,948 $ 30,150
======================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 4,645 $ 388
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 7,490 4,127
CURRENT PORTION OF LONG TERM DEBT 110 -
--------------------------------------
TOTAL CURRENT LIABILITIES 12,245 4,515
LONG TERM DEBT, LESS CURRENT PORTION 10,151 10,000
DEFERRED INCOME TAXES 2,556 300
SHAREHOLDERS' EQUITY:
PREFERRED STOCK-No par value;
authorized, 12,000,000 shares;
issued, 3,730,233 in 1996 40,100 -
COMMON STOCK-No par value; authorized,
48,000,000 shares; issued, 15,099,287 and
11,289,421 in 1996 and 1995, respectively 101,140 11,289
ADDITIONAL PAID-IN CAPITAL 7,155 7,155
ACCUMULATED DEFICIT (40,399) (3,109)
--------------------------------------
TOTAL SHAREHOLDERS' EQUITY 107,996 15,335
--------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 132,948 $ 30,150
======================================
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 3
ENVOY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
REVENUES $ 21,502 $ 6,321 $ 51,422 $ 19,399
OPERATING COSTS AND EXPENSES:
COST OF REVENUES 10,773 3,727 25,824 11,544
SELLING, GENERAL AND ADMINISTRATIVE 5,124 1,889 13,027 6,084
DEPRECIATION AND AMORTIZATION 5,538 673 12,908 1,805
MERGER AND FACILITY INTEGRATION COSTS 1,398 - 34,264 -
EMC LOSSES - - 540 -
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) (1,331) 32 (35,141) (34)
OTHER INCOME (EXPENSE):
INTEREST INCOME 353 175 520 251
INTEREST EXPENSE (706) (216) (2,340) (288)
------------ ------------ ------------ ------------
(353) (41) (1,820) (37)
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND LOSS IN INVESTEE (1,684) (9) (36,961) (71)
INCOME TAX PROVISION 279 - 329 -
LOSS IN INVESTEE - 320 - 695
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (1,963) (329) (37,290) (766)
DISCONTINUED OPERATIONS:
LOSS FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES - - - (2,274)
------------ ------------ ------------ ------------
LOSS FROM DISCONTINUED OPERATIONS - - - (2,274)
------------ ------------ ------------ ------------
NET LOSS $ (1,963) $ (329) $ (37,290) $ (3,040)
============ ============ ============ ============
NET LOSS PER COMMON SHARE:
CONTINUING OPERATIONS $ (0.14) $ (0.03) $ (3.04) $ (0.07)
DISCONTINUED OPERATIONS - - - (0.20)
------------ ------------ ------------ ------------
NET LOSS PER COMMON SHARE $ (0.14) $ (0.03) $ (3.04) $ (0.27)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 13,704 11,085 12,285 11,236
============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 4
ENVOY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
------------- ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 34 $ 360
INVESTING ACTIVITIES:
NET DECREASE IN INVESTMENTS 7,842 3,449
PURCHASES OF PROPERTY AND EQUIPMENT (3,240) (6,513)
PAYMENTS RECEIVED ON NOTES RECEIVABLE 334 1,833
DECREASE (INCREASE) IN OTHER ASSETS (54) 1,963
PAYMENTS FOR BUSINESSES ACQUIRED, NET OF $4,787
CASH ACQUIRED AND INCLUDING OTHER CASH PAYMENTS
ASSOCIATED WITH THE ACQUISITIONS (85,294) -
SETTLEMENT OF DISCONTINUED OPERATIONS - (14,696)
------------- ------------
NET CASH USED IN INVESTING ACTIVITIES (80,412) (13,964)
FINANCING ACTIVITIES:
PROCEEDS FROM ISSUANCE OF PREFERRED STOCK 40,100 -
PROCEEDS FROM ISSUANCE OF COMMON STOCK 88,354 454
PROCEEDS FROM DEBT 43,900 10,000
REPAYMENTS OF DEBT (43,994) (1,120)
REDEMPTION OF PREFERRED STOCK (2,100) -
PAYMENT OF DEFERRED FINANCING COSTS (1,200) -
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 125,060 9,334
------------- ------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 44,682 (4,270)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 222 4,270
------------- ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 44,904 $ -
============= ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 5
ENVOY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of ENVOY
Corporation (the "Company" or "ENVOY") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments consisting of normal recurring accruals
considered necessary for a fair presentation have been included. Operating
results for the three- and nine-month periods ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996.
These financial statements, footnote disclosures and other information should
be read in conjunction with the audited financial statements and the
accompanying notes thereto in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
Certain reclassifications have been made in the 1995 financial statements to
conform to the classifications in 1996.
B. NET LOSS PER COMMON SHARE
Net loss per common share has been computed by dividing net loss by the
weighted average number of shares of common stock.
C. ACQUISITIONS
NATIONAL ELECTRONIC INFORMATION CORPORATION ("NEIC")
On March 6, 1996, the Company's shareholders approved the acquisition of NEIC
for an aggregate purchase price of approximately $94,301,000, consisting of (i)
$86,154,000 paid to the NEIC stockholders, (ii) $2,200,000 paid to certain NEIC
stockholders on August 1, 1996 and (iii) certain other transaction and
acquisition costs of $5,947,000. The NEIC business combination was accounted
for under the purchase method of accounting, applying the provisions of
Accounting Principles Board Opinion No. 16 ("APB 16") and, as a result, the
Company recorded the assets and liabilities of NEIC at their estimated fair
values with the excess of the purchase price over these amounts being recorded
as goodwill. Based upon management's preliminary estimates, the Company
recorded $36,239,000 in goodwill and $19,600,000 of identifiable intangible
assets related to the NEIC acquisition. The actual allocations will be based
on further studies and may change during the allocation period, generally one
year following the date of acquisition. The operations of NEIC are included in
the statement of operations from the date of acquisition.
In connection with the NEIC acquisition, the Company incurred a one time
write-off of acquired in-process technology of $30,000,000 and such amount was
charged to expense in the three months ended March 31, 1996, because this
amount relates to research and development that had not reached technological
feasibility and for which there was no alternative future use. The $30,000,000
is classified as merger and facility integration costs in the statement of
operations.
The NEIC acquisition was financed through equity and debt financing. An
aggregate of 3,730,233 shares of the Company's Series B Convertible Preferred
Stock were issued to three investors for a total purchase price of $40,100,000.
Additionally, the Company issued 333,333 shares of the Company's Common Stock
(the "Common Stock") to various investors for an aggregate purchase price of
$5,000,000. The Company also entered into a credit agreement, whereby the
Company obtained $50,000,000 in bank financing in the form of a $25,000,000
revolving credit facility and a $25,000,000 term loan. An additional 840
shares of NEIC cumulative redeemable preferred stock were redeemed by the
Company on August 1, 1996 at a redemption price of approximately $2,200,000.
<PAGE> 6
TELECLAIMS, INC. ("TELECLAIMS")
On March 1, 1996, the Company acquired all the issued and outstanding capital
stock of Teleclaims in exchange for 73,242 shares of Common Stock yielding a
purchase price of approximately $1,500,000. The Teleclaims business
combination was accounted for under the purchase method of accounting applying
the provisions of APB 16 and, as a result, the Company recorded the assets and
liabilities at their estimated fair values with the excess of the purchase
price over these amounts being recorded as goodwill. Goodwill and identifiable
intangibles in the amount of $578,000 were recorded in connection with the
acquisition of Teleclaims. Also recorded as part of the Teleclaims acquisition
was a one time write-off of acquired in-process technology of $700,000 and such
amount was charged to expense in the three months ended March 31, 1996, because
this amount related to research and development that had not reached
technological feasibility and for which there was no alternative future use.
The $700,000 is classified as merger and facility integration costs in the
statement of operations. The allocation is based on management's preliminary
estimates. The actual allocations will be based upon further studies and may
change during the allocation period, generally one year following the date of
acquisition. The operations of Teleclaims are included in the statement of
operations from the date of acquisition.
Goodwill and other identifiable intangible assets acquired in the NEIC and
Teleclaims acquisitions are amortized on a straight-line basis over a period of
two to nine years depending upon the estimated remaining useful life of such
assets.
The following presents unaudited pro forma results of operations (including the
one-time write-off of acquired in-process technology) for the nine month period
ended September 30, 1996 and 1995 assuming the NEIC and Teleclaims acquisitions
had been consummated at the beginning of the periods presented (in thousands,
except per share data):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues $ 59,608 $ 48,183
Loss from continuing operations (37,806) (44,625)
Net loss (37,806) (46,899)
Loss per common share:
Continuing operations $ (3.01) $ (3.83)
Discontinued operations 0.00 (0.20)
-------- --------
Net loss $ (3.01) $ (4.03)
======== ========
</TABLE>
NATIONAL VERIFICATION SYSTEMS, L. P. ("NVS")
On September 13, 1996, the Company completed the acquisition of certain assets
and liabilities of NVS for $2,500,000 in cash. The NVS acquisition was
accounted for under the purchase method of accounting applying the provisions
of APB 16 and, as a result, the Company recorded the assets and liabilities at
their estimated fair values with the excess of the purchase price over these
amounts being recorded as goodwill. Based on managment's preliminary
estimates, the Company recorded $1,829,000 of goodwill and other identifiable
intangible assets related to the NVS acquisition. The actual allocation will
be based on further studies and may change during the allocation period,
generally one year following the date of acquisition. NVS' results of
operations are included in the statement of operations from the date of
acquisition.
D. MERGER AND FACILITY INTEGRATION COSTS
As a result of the acquisitions of NEIC and Teleclaims in March 1996, the
Company approved a plan that reorganized certain of its operations, personnel
and facilities to gain the effects of potential cost savings and operating
synergies. The cost of this plan to integrate the acquired companies is being
recognized as incurred in accordance with the guidance set forth in Emerging
Issues Task Force Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)" and are not part of the purchase price
allocation. The costs incurred in the three-and nine month periods ended
September 30, 1996 associated with this plan of $1,398,000 and $3,564,000,
respectively, represents
<PAGE> 7
exit costs associated with lease terminations, personnel costs, writedowns of
impaired assets and other related costs that will be incurred as a direct
result of the plan and are classified as merger and facility integration costs
in the statements of operations. The employee groups to be terminated are
accounting, marketing and certain areas of the systems and operations
departments. The number of employees to be terminated is approximately 120, of
which 86 employees had been terminated as of September 30, 1996. Adjustments
made to the liability as of September 30, 1996 were approximately $731,000.
The Company estimates that future costs to be charged to expense as incurred
during fiscal year 1996 will be approximately $1,000,000.
Merger and facility integration costs consist of the following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
Acquired in process technology charge-off $ 0 $30,700
Facility integration costs 1,398 3,564
------ -------
Total merger and facility integration costs $1,398 $34,264
====== =======
</TABLE>
E. EMC* EXPRESS, INC. ("EMC")
On January 28, 1995, the Company purchased 17.5% of the capital stock of EMC
for approximately $570,000. In connection therewith, the Company paid $250,000
for an option to purchase the remainder of the capital stock of EMC (the
"Option"), and also entered into a management agreement to provide management
services to EMC (the "Management Agreement"). Under the terms of the
Management Agreement, the Company agreed to fund certain operating costs of EMC
in the form of advances. The Management Agreement could be terminated by the
Company at any time on 60 days written notice, at which time the Option would
be terminated. The Company gave notice to terminate the Management Agreement
on January 31, 1996. Based on the Company's decision to terminate the
Management Agreement, the Company discontinued the equity method of accounting
for EMC and began accounting for the investment on a cost basis. Accordingly,
losses related to EMC in 1996 have been charged to operating expenses. The
Company was committed through March 31, 1996 to continue to fund certain
operating costs of EMC. The EMC losses for the three-and nine-month periods
ended September 30 were $-0- and $540,000, respectively, for 1996 and $320,000
and $695,000, respectively, for 1995.
Following the termination of the Management Agreement and the Option, the
majority shareholder of EMC filed a lawsuit in March 1996 against the Company
asserting claims for breach of contract and negligent conduct. On October 18,
1996, ENVOY settled this lawsuit and completed the acquisition of the remaining
82.5% interest in EMC for approximately $2,000,000 in cash. Settlement costs of
$300,000 associated with this litigation are included in selling, general and
administrative expenses for the three-month period ending September 30, 1996.
F. DISCONTINUED OPERATIONS
On June 6, 1995, the Company completed a merger of its financial transaction
processing business to First Data Corporation ("First Data"). Pursuant to a
management services agreement entered into in connection with the merger, the
Company is receiving a fee from First Data of $1,500,000 per annum, payable in
quarterly installments of $375,000, during the first two years following the
merger, after which period such fees are anticipated to end. Management fees
of $375,000 and $1,125,000 for the three- and nine- month periods ended
September 30, 1996 are classified in revenues in the statements of operations.
First Data has asserted certain indemnification claims against ENVOY in
connection with the First Data merger. Pending resolution of these claims,
First Data has withheld certain payments due ENVOY under the management
services agreement. ENVOY is currently evaluating the validity of such claims.
The net assets of the financial services electronic transaction processing
business were merged with and into First Data and were accounted for as
discontinued operations. Certain reclassifications were made to the statements
of operations for the three- and nine-month periods ended September 30, 1995 to
reflect such operations as discontinued operations.
<PAGE> 8
G. SECONDARY OFFERING
On August 13, 1996, the Company completed an underwritten public offering of
3,320,000 shares of the Common Stock at $26.50 per share. Of the approximately
$83,000,000 in net proceeds to the Company, the $25,000,000 outstanding under
the Company's term loan was retired and approximately $12,900,000 was used to
repay all amounts outstanding under the $25,000,000 revolving credit facility.
The remaining proceeds will be used for general corporate purposes, including
funding the increased working capital requirements of the Company generated by
the Company's growth and for possible strategic acquisitions.
H. SUBSEQUENT EVENTS
On October 31, 1996, the Company acquired all of the issued and outstanding
capital stock of Professional Office Systems, Inc., the electronic data
interchange clearinghouse for Blue Cross and Blue Shield of the National
Capital Area. The purchase price for the shares was approximately $6.4 million
in cash and the assumption of certain liabilities. The acquisition was funded
through available cash.
On November 7, 1996, the Company filed a registration statement with the
Securities and Exchange Commission covering the offering of 321,289 shares of
Common Stock pursuant to the demand of the current holders of the Company's
$10,000,000 principal amount of 9% convertible subordinated notes (the
"Convertible Notes") under a Registration Rights Agreement dated June 6, 1995.
The Company has been advised by the holders of the Convertible Notes that they
intend to convert $3,380,000 principal amount of the Convertible Notes into
321,289 shares of Common Stock so as to permit their sale pursuant to the
registration statement. The Company will not receive any proceeds from the
sale of the Common Stock offered thereunder.
On November 8, 1996, the Company amended its revolving credit facility to
increase the amount of credit available thereunder to $50,000,000. The Company
currently has no amounts outstanding under the amended credit facility. Any
outstanding borrowings made against the amended credit facility would bear
interest at a rate equal to the Base Rate (as defined in the amended credit
facility) or LIBOR. The total amount outstanding under the amended credit
facility is due and payable in full on June 30, 2000. The amended credit
facility contains financial covenants applicable to ENVOY and its subsidiaries
including ratios of debt to capital, annualized EDITDA to annualized interest
expense and certain other financial covenants customarily included in a credit
facility of this type. ENVOY and its subsidiaries also are subject to certain
restrictions relating to payment of dividends, acquisitions, incurrence of debt
and other restrictive provisions. The amended credit facility is secured by
substantially all of the assets of ENVOY and its subsidiaries.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis contains both historical and
forward-looking information. The Company undertakes no obligation to
publicly release any revisions to any forward-looking statements
contained herein to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
The forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected in the
forward-looking statements. Forward-looking statements may be
significantly impacted by certain risks and uncertainties, including,
but not limited to, transaction growth, margins and profitability,
future operations, acquisition opportunities and others as described
below.
OVERVIEW
ENVOY provides electronic processing services primarily for the health care
market. This includes submission for adjudication of insurance and other
third-party reimbursement claims for pharmacies, physicians, hospitals and
dentists and, since 1994, providing clearinghouse services for batch processing
of medical and dental reimbursement claims.
On June 6, 1995, the Company completed the sale through a merger of its
financial transaction processing business to First Data Corporation ("First
Data"). For accounting purposes, the health care transaction processing
business is treated as continuing operations, while the financial transaction
processing business is treated as discontinued operations.
During the first nine months of 1996, the Company completed three acquisitions.
In March 1996, the Company acquired Teleclaims, Inc. ("Teleclaims") and
National Electronic Information Corporation ("NEIC") and, in September 1996,
acquired National Verification Systems, L.P. ("NVS") (collectively, the
"Acquired Businesses"). These acquisitions were accounted for under the
purchase method of accounting and, as a result, the Company has recorded the
assets and liabilities of these companies at their estimated fair values with
the excess of the purchase price over these amounts being recorded as goodwill.
The financial statements presented herein reflect the operations of the
Acquired Businesses for the period subsequent to their respective dates of
acquisition.
Revenues are principally derived from (i) transaction processing services to
the pharmacy and healthcare providers which are generally paid for by the
health care providers and (ii) batch claim processing services provided to
third-party payors which are usually paid for by the payors. Revenues are
generally earned on a per transaction basis and are based upon the number of
transactions processed, rather than the transaction volume per customer. A
small portion of ENVOY's revenues are derived from the sale and lease of
point-of-sale devices, customer support, on-site training and installation, and
annual participation fees.
The table below shows transactions processed by ENVOY for the periods
represented (in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
---------------------------------- ----------------------------------
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Pharmacy 119,709 88,175 339,063 263,659
Non-pharmacy 39,324 4,411 89,046 10,586
------- ------ ------- -------
Transactions 159,033 92,586 428,109 274,245
======= ====== ======= =======
</TABLE>
The total transactions reflected above include the transactions of NEIC and
Teleclaims from the date of acquisition through the end of the third quarter of
1996. Had the acquisitions of NEIC and Teleclaims occurred as of January 1,
1995, total transactions for the nine-month period ended September 30, 1996
would have been 448.1 million compared to 336.7 million for the comparable 1995
period.
<PAGE> 10
Recent Development: On October 31, 1996, the Company acquired all of the
capital stock of Professional Office Systems, Inc., the EDI clearinghouse for
Blue Cross and Blue Shield of the National Capital Area, for approximately $6.4
million in cash and the assumption of certain liabilities. In connection with
the acquisition, the parties entered into an exclusive three-year outsourcing
services agreement for the processing of healthcare EDI transactions.
RESULTS OF OPERATIONS
Three months ended September 30, 1996 as compared with three months ended
September 30, 1995
Revenues: Revenues for the quarter ended September 30, 1996 were $21,502,000
compared to $6,321,000 for the same period last year. A portion of the increase
is attributable to revenues from NEIC and Teleclaims, which contributed
$12,690,000 to revenues in the three-month period ended September 30, 1996.
Also contributing to the revenue growth in the third quarter of 1996 was a
43.2% increase in ENVOY's pre-acquisition transaction revenue over the third
quarter of 1995 arising from the 36.6% increase in total transactions (not
including the Acquired Businesses) in the third quarter of 1996 over the same
period last year.
Cost of Revenues: Cost of revenues includes the cost of communications,
computer operations, product development and customer support, as well as the
cost of hardware sales. In addition, cost of revenues includes volume related
payments to third parties for claims submitted. Cost of revenues in the third
quarter of 1996 were $10,773,000 compared to $3,727,000 in the same quarter
last year. As a percentage of revenue, cost of revenue was 50.1% for the
quarter ended September 30, 1996 compared to 59.0% for the quarter ended
September 30, 1995. The improvement as a percentage of revenue is almost
exclusively attributable to the inclusion of the Acquired Businesses' results
in the current year period, which historically have experienced higher profit
margins than those of ENVOY's pre-acquisition business.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses include marketing, finance, accounting and
administrative costs. Selling, general, and administrative expenses for the
third quarter of 1996 were $5,124,000 compared to $1,889,000 for the third
quarter of 1995. Selling, general and administrative expenses increased as a
result of the inclusion of the Acquired Businesses and the additional costs
incurred by ENVOY in anticipation of the integration of the Acquired Business'
corporate functions into ENVOY. As a percentage of revenues, selling, general
and administrative expenses were 23.8% and 29.9% for the third quarter ended
September 30, 1996, and 1995, respectively. The improvement as a percentage of
revenue is due to the substantial increase in revenues and operating synergies
associated with the integration of the Acquired Businesses.
Depreciation and Amortization: Depreciation and amortization expense relates
primarily to host computers, communications equipment, goodwill and other
identifiable intangible assets. Depreciation and amortization expense for the
third quarter of 1996 was $5,538,000 compared to $673,000 for the same period
in 1995. The increase is primarily the result of the amortization of goodwill
and other intangibles of $4,319,000 related to the Acquired Businesses.
Merger and Facility Integration Costs: ENVOY recognized merger and facility
integration costs in the three-month period ended September 30, 1996 of
$1,398,000. The Company anticipates it will incur additional facility
integration costs of approximately $1,000,000 in the fourth quarter of 1996.
EMC Losses: The Company acquired 17.5% of the capital stock of EMC* Express,
Inc. ("EMC") in January 1995. In conjunction therewith, the Company paid
$250,000 for an option to purchase the remainder of the capital stock of EMC
and also entered into a management agreement, which required ENVOY to fund
certain operating costs of EMC. Notice was given to terminate this management
agreement and the option on January 31, 1996. In the third quarter, the
Company recognized no losses for funding EMC operations. EMC losses in the
third quarter of 1995 were $320,000. On October 18, 1996, the Company settled
a lawsuit between the Company and the former majority stockholder of EMC and
completed the acquisition of the remaining 82.5% interest in EMC for
approximately $2,000,000 in cash. Settlement costs of $300,000 associated with
this litigation are included in selling, general and administrative expense for
the quarter ended September 30, 1996. See "Legal Proceedings."
<PAGE> 11
Net Interest Expense: ENVOY recorded net interest expense for the quarter
ended September 30, 1996 of $353,000 compared to $41,000 for the third quarter
of 1995. The increase in net interest expense is the result of the borrowings
under the Company's credit facilities used to finance the purchase of the
Acquired Businesses, as well as interest associated with the $10,000,000
principal amount of 9% convertible subordinated notes issued in June 1995 (the
"Convertible Notes"). These borrowings, both the $25,000,000 term loan and
approximately $12,900,000 outstanding under the $25,000,000 revolving credit
facility, were repaid in full with the proceeds from the Company's August 1996
public offering. See - "Liquidity and Capital Resources".
Income Tax Provision: The Company's income tax provision in the third quarter
of 1996 was $279,000 compared to no provision in the same period last year. The
income tax expense recorded in the third quarter is based upon estimated
taxable income. Taxable income differs from book income as amortization of
certain goodwill and identifiable intangibles are not deductible for income tax
purposes.
Nine months ended September 30, 1996 as compared to nine months ended September
30, 1995
Revenues: Revenues for the nine-month period ended September 30, 1996 were
$51,422,000 compared to $19,399,000 for the same period last year. A portion of
the increase is attributable to revenues from NEIC and Teleclaims, which
contributed $28,225,000 to revenues in the nine-month period ended September
30, 1996. Also contributing to the revenue growth for the nine months ended
September 30, 1996 was a 20.6% increase in ENVOY's pre-acquisition transaction
revenue over the same period in 1995 arising from a 30.3% increase in total
transactions (not including the Acquired Businesses) for the same periods
presented.
Cost of Revenues: Cost of revenues for the nine-month period ended September
30, 1996 and 1995 were $25,824,000 or 50.2% of revenue and $11,544,000 or 59.5%
of revenue, respectively. The improvement is almost exclusively attributable
to the inclusion of the Acquired Businesses' results in the current year
period, which historically have experienced higher profit margins than those of
ENVOY's pre-acquisition business.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses for the nine months ended September 30, 1996 were
$13,027,000 compared to $6,084,000 for the same period in 1995. Selling,
general and administrative expenses increased as a result of the inclusion of
the Acquired Businesses and the additional costs incurred by ENVOY in
anticipation of the integration of the Acquired Business' corporate functions
into ENVOY. As a percentage of revenues, selling, general and administrative
expenses were 25.3% and 31.4% for the nine-month period ended September 30,
1996 and 1995, respectively. The improvement in selling, general and
administrative expense as a percentage of revenue is due to the substantial
increase in revenues and operating synergies associated with the integration of
the Acquired Businesses.
Depreciation and Amortization: Depreciation and amortization expense for the
nine-month period ended September 30, 1996 and 1995 was $12,908,000 and
$1,805,000, respectively. The increase is primarily the result of the
amortization of goodwill and other intangibles of $9,570,000 related to the
Acquired Businesses.
Merger and Facility Integration Costs: ENVOY recognized merger and facility
integration costs in the nine-month period ended September 30, 1996 of
$34,264,000. This represents a one-time charge for acquired in process
technology of $30,700,000 and facility integration costs of $3,564,000. The
Company anticipates it will incur additional facility integration costs of
approximately $1,000,000 in the fourth quarter of 1996.
EMC Losses: The Company recognized a loss of $540,000 for funding certain of
EMC operations for the nine-month period ended September 30, 1996. This loss
was recorded as an operating expense. EMC losses were $695,000 for the
nine-month period ended September 30, 1995. As a result of the settlement of
the lawsuit between the Company and the former majority stockholder of EMC,
settlement costs of $300,000 associated with this litigation are included in
selling, general and administrative expense for the nine months ended September
30, 1996. See "Legal Proceedings."
Net Interest Expense: ENVOY recorded net interest expense for the nine-month
periods ended September 30, 1996 and 1995 of $1,820,000 and $37,000,
respectively. The increase in net interest expense is the result of the
borrowings under the Company's credit facilities used to finance the purchase
of the Acquired Businesses, as well as interest associated with the Convertible
Notes. These borrowings, both the $25,000,000 term loan and
<PAGE> 12
approximately $12,900,000 outstanding under the $25,000,000 revolving credit
facility, were repaid in full with the proceeds from the Company's August 1996
public offering. See - "Liquidity and Capital Resources".
Income Tax Provision: The Company's income tax provision for the nine months
ended September 30, 1996 was $329,000 compared to no provision for the
nine-month period ended September 30, 1995. The income tax expense recorded is
based upon estimated taxable income. Amortization of certain goodwill and
identifiable intangibles are not deductible for income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
ENVOY has incurred operating losses since its health care transaction
processing business commenced operations in 1989. The operating losses have
resulted from ENVOY's substantial investment in its health care transaction
processing business coupled with a disproportionate amount of overhead and
fixed costs. Historically, health care losses had been funded by earnings from
the Company's more mature financial business, which had a substantially higher
transaction volume and revenue base. ENVOY believes that the additional
transaction volume from the Acquired Businesses, coupled with potential costs
savings and operating synergies that ENVOY believes it may realize from the
integration of the Acquired Businesses, will result in improved operating
results; however, there are no assurances that such cost savings or synergies
will be realized or that profitability can be obtained or maintained.
On August 13, 1996, the Company completed an underwritten public offering of
3,320,000 shares of Common Stock at $26.50 per share. Of the approximately
$83,000,000 in net proceeds to the Company, the $25,000,000 outstanding under
the Company's term loan was retired and approximately $12,900,000 was used to
repay all amounts outstanding under the $25,000,000 revolving credit facility.
The remaining proceeds will be used for general corporate purposes, including
funding the increased working capital requirements of the Company generated by
the Company's growth and for possible strategic acquisitions.
In June 1995, the Company issued the 9% Subordinated Convertible Notes. The
entire $10,000,000 principal amount of the Convertible Notes remains
outstanding and is due in June 2000. The Convertible Notes are convertible at
the election of the holders into shares of Common Stock at a current conversion
price of $10.52 per share. On November 7, 1996, the Company filed a
registration statement with the Securities and Exchange Commission covering the
offering of 321,289 shares of Common Stock pursuant to the demand of the
current holders of the Convertible Notes under a Registration Rights Agreement
dated June 6, 1995. The Company has been advised by the holders of the
Convertible Notes that they currently intend to convert $3,380,000 principal
amount of the Convertible Notes into 321,289 shares of Common Stock so as to
permit their sale pursuant to the registration statement. The Company will not
receive any proceeds from the sale of the Common Stock offered thereunder.
On November 8, 1996, the Company amended its revolving credit facility to
increase the amount of credit available thereunder to $50,000,000. The Company
currently has no amounts outstanding under the amended credit facility. Any
outstanding borrowings made against the amended credit facility would bear
interest at a rate equal to the Base Rate (as defined in the amended credit
facility) or LIBOR. The total amount outstanding under the amended credit
facility is due and payable in full on June 30, 2000. The amended credit
facility contains financial covenants applicable to ENVOY and its subsidiaries
including ratios of debt to capital, annualized EDITDA to annualized interest
expense and certain other financial covenants customarily included in a credit
facility of this type. ENVOY and its subsidiaries also are subject to certain
restrictions relating to payment of dividends, acquisitions, incurrence of debt
and other restrictive provisions. The amended credit facility is secured by
substantially all of the assets of ENVOY and its subsidiaries.
ENVOY purchases additional computer hardware and software products from time to
time as required by the growth of its customer base. ENVOY incurred capital
expenditures of approximately $880,000 and $3,240,000 in the three-and
nine-month periods ending September 30, 1996, respectively, primarily for
computer hardware and software products used for the expansion of the health
care transaction processing business. The Company anticipates that its total
capital expenditures for 1996, including amounts expended in the first nine
months of the year, will be approximately $4,500,000 to $5,000,000 primarily
for data processing equipment considered necessary because of anticipated
increased transaction volumes and to upgrade network technology.
<PAGE> 13
In connection with the acquisitions of NEIC and Teleclaims, ENVOY identified
five projects aggregating $30,700,000 that were classified as in-process
technology for which technological feasibility had not been established and
alternative future use did not exist. The cost to complete these projects into
commercially viable products is estimated at $2,200,000 and is expected to be
incurred during the next two fiscal years. There can be no assurance that
these projects can be completed during this time frame or for such amounts.
From time to time, the Company has engaged and will continue to engage in
acquisition discussions with other health care information businesses and other
companies complementary to its business. In the event the Company engages in
such other acquisitions in the future, its currently available capital
resources may not be sufficient for such purposes and the Company may be
required to incur additional indebtedness or issue additional capital stock,
which could result in dilution to existing investors.
Based on current operations, anticipated capital needs to fund known
expenditures and current acquisitions, the Company believes its available cash,
cash flow from operations and the amended $50,000,000 revolving credit facility
will provide the capital resources necessary to meet its liquidity and cash
flow requirements over the next twelve months, including the Company's current
short-term obligations. The Company believes that present funding sources will
provide the ability to meet long-term obligations as they mature.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings.
In March 1996, StellarNet, Inc., the majority stockholder of EMC
("StellarNet"), filed a lawsuit in the Superior Court of the State of
California for the City and County of San Francisco against the Company
asserting claims for breach of contract and negligent conduct relating to the
Company's termination of the management agreement and the option to purchase
the remaining shares of EMC. The Company denied each of StellarNet's claims
and filed counterclaims for fraudulent inducement and misrepresentation against
StellarNet. This lawsuit was settled in October 1996 in connection with the
completion of the acquisition of EMC.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Amended and Restated Credit Agreement, dated November 8, 1996, by
and among First Union National Bank of North Carolina, as agent,
various Lenders and the Company.
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. On July 23, 1996, the Company filed a Current Report
on Form 8-K with the Securities and Exchange Commission pursuant to Item 5
(Other Events) thereof announcing the Company's results for the quarter ended
June 30, 1996.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENVOY CORPORATION
Date: November 13, 1996 By: /s/ Fred C. Goad, Jr.
-----------------------------------------
Fred C. Goad, Jr.
President and Co-Chief Executive Officer
Date: November 13, 1996 By: /s/ Kevin M. McNamara
-----------------------------------------
Kevin M. McNamara
Vice President and Chief Financial Officer
<PAGE> 15
EXHIBIT INDEX
(a) Exhibits
10.1 Amended and Restated Credit Agreement, dated November 8, 1996
by and among First Union National Bank of North Carolina, as
agent, various Lenders and the Company.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
among
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
as Agent
VARIOUS LENDERS
and
ENVOY CORPORATION
as Borrower
$50,000,000 Revolving Credit Facilty
November 8, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ......................................................................................1
ARTICLE I
DEFINITIONS
1.1. Defined Terms....................................................................1
1.2. Accounting Terms................................................................18
1.3. Singular/Plural.................................................................18
1.4. Other Terms.....................................................................19
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans.......................................................................19
2.2. Borrowings......................................................................21
2.3. Notes...........................................................................24
2.4. Reduction of Commitments........................................................25
2.5. Payments; Voluntary, Mandatory..................................................25
2.6. Interest........................................................................26
2.7. Fees............................................................................27
2.8. Interest Periods................................................................28
2.9. Conversions and Continuations...................................................29
2.10.Method of Payments; Computations................................................30
2.11.Increased Costs, Change in Circumstances, Etc...................................31
2.12.Taxes...........................................................................33
2.13.Compensation....................................................................35
2.14.Use of Proceeds.................................................................35
2.15.Recovery of Payments............................................................35
2.16.Pro Rata Borrowings.............................................................36
2.17.Letters of Credit...............................................................36
2.18.Replacement of a Lender.........................................................41
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Closing.........................................................................41
3.2. Conditions of Loans and Advances................................................41
3.2.1. Executed Loan Documents.................................................41
</TABLE>
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<TABLE>
<S> <C>
3.2.2. Closing Certificates; Etc...............................................42
3.2.3. Real Estate Matters.....................................................43
3.2.4. Consents; No Adverse Change.............................................43
3.2.5. Financial Matters.......................................................44
3.2.6. Miscellaneous...........................................................44
3.3. Conditions to All Loans and Advances............................................44
3.4. Waiver of Conditions Precedent..................................................44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Organization and Power................................................45
4.2. Subsidiaries....................................................................45
4.3. Enforceability of Loan Documents; Compliance With Other Instruments.............45
4.4. Use of Proceeds.................................................................46
4.5. Governmental Authorization......................................................46
4.6. Financial Statements............................................................46
4.7. Solvency........................................................................47
4.8. Places of Business..............................................................47
4.9. Leased Properties...............................................................47
4.10.Realty..........................................................................47
4.11.Assets for Conduct of Business..................................................47
4.12.Insurance.......................................................................47
4.13.Ownership of Properties.........................................................47
4.14.First Priority..................................................................48
4.15.Litigation; Government Regulation...............................................48
4.16.Taxes...........................................................................48
4.17.ERISA; Employee Benefits........................................................48
4.18.Compliance With Laws............................................................49
4.19.Environmental Matters...........................................................49
4.20.Margin Securities...............................................................50
4.21.Full Disclosure.................................................................50
4.22.Contracts; Labor Disputes.......................................................50
4.23.Event of Default................................................................51
4.24.Single Business Enterprise......................................................51
4.25.First Data Subordinated Debt....................................................51
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. Financial and Business Information about the Borrower...........................51
5.2. Notice of Certain Events........................................................53
5.3. Corporate Existence and Maintenance of Properties...............................54
5.4. Payment of Debt.................................................................54
5.5. Maintenance of Insurance........................................................54
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
5.6. Maintenance of Books and Records; Inspection....................................55
5.7. Compliance with ERISA...........................................................55
5.8. Payment of Taxes................................................................56
5.9. Compliance with Laws............................................................56
5.10.Name Change.....................................................................56
5.11.Disbursement of Proceeds By the Borrower........................................56
5.12.Creation or Acquisition of New Subsidiaries.....................................56
5.13.Certain Acquisitions............................................................57
5.14.Further Assurances..............................................................58
ARTICLE VI
NEGATIVE COVENANT
6.1. Merger, Consolidation...........................................................58
6.2. Debt............................................................................58
6.3. Contingent Obligations..........................................................59
6.4. Liens and Encumbrances..........................................................60
6.5. Disposition of Assets...........................................................60
6.6. Transactions with Related Persons...............................................60
6.7. Restricted Investments..........................................................60
6.8. Restricted Payments.............................................................61
6.9. Capital Expenditures............................................................62
6.10.Annualized EBITDA to Annualized Interest Expense................................62
6.11.Consolidated Senior Debt to Annualized EBITDA...................................62
6.12.Consolidated Debt to Consolidated Total Capital.................................62
6.13.Consolidated Debt to Annualized EBITDA..........................................62
6.14.Annualized EBITDA...............................................................62
6.15.Sale and Leaseback..............................................................62
6.16.New Business....................................................................62
6.17.Subsidiaries or Partnerships....................................................63
6.18.Hazardous Wastes................................................................63
6.19.Fiscal Year.....................................................................63
6.20.Amendments; Prepayments of Debt, Etc............................................63
6.21.Location of Assets; Places of Business..........................................64
6.22.Account Documents...............................................................64
6.23.No Inconsistent Transactions or Agreements......................................64
6.24.Designation of Unrestricted Subsidiaries........................................64
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default...............................................................64
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies: Termination of Commitments, Acceleration, Etc........................67
8.2. Right of Set-off................................................................67
8.3. Rights and Remedies Cumulative; Non-Waiver; Etc.................................67
ARTICLE IX
THE AGENT
9.1. Appointment.....................................................................68
9.2. Nature of Duties................................................................68
9.3. Absence of Reliance on the Agent................................................68
9.4. Certain Rights of the Agent.....................................................69
9.5. Notice of Default...............................................................69
9.6. Reliance by Agent...............................................................70
9.7. Indemnification.................................................................70
9.8. The Agent in its Individual Capacity............................................70
9.9. Holders.........................................................................70
9.10.Successor Agent.................................................................70
9.11.Collateral Matters..............................................................71
ARTICLE X
MISCELLANEOUS
10.1.Survival........................................................................71
10.2.Governing Law; Consent to Jurisdiction..........................................72
10.3.Arbitration; Remedies...........................................................72
10.4.Notice..........................................................................73
10.5.Assignments, Participations.....................................................75
10.6.Fees and Expenses...............................................................77
10.7.Indemnification.................................................................78
10.8.Amendments, Waivers, Etc........................................................79
10.9.Rights and Remedies Cumulative, Nonwaiver, Etc..................................79
10.10.Binding Effect, Assignment.....................................................80
10.11.Severability...................................................................80
10.12.Entire Agreement...............................................................80
10.13.Interpretation.................................................................80
10.14.Counterparts; Effectiveness....................................................80
10.15.Conflict of Terms..............................................................80
10.16.Injunctive Relief..............................................................81
10.17.Confidentiality................................................................81
10.18.Post-Closing Matters...........................................................81
10.19.Amended and Restated Agreement.................................................81
</TABLE>
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<PAGE> 6
EXHIBITS
A-1 Form of Term Note
A-2 Form of Revolving Credit Note
B-1 Notice of Borrowing
B-2 Notice of Swingline Borrowing
B-3 Notice of Conversion/Continuation
B-4 Letter of Credit Request
C Compliance Certificate
Attachment A: Covenant Compliance Worksheet
Attachment B: Interest Rate Calculation Worksheet
D Assignment and Acceptance Agreement
E Financial Condition Certificate
F Form of Guaranty Agreement
G Form of Pledge Agreement
H Form of Security Agreement
I Form of Guarantor Pledge Agreement
J Form of Guarantor Security Agreement
SCHEDULES
1.1(a) Existing Liens
4.1 Foreign Jurisdiction; Names; Subsidiaries
4.3 Compliance with Other Instruments
4.5 Government Authorizations
4.6 Financial Statement Exceptions
4.8 Principal Places of Business
4.9 Leased Properties
4.10 Realty
4.12 Insurance
4.13 Title to Assets
4.15 Litigation; Government Regulation
4.16 Taxes
4.17 ERISA Matters
4.19 Environmental Matters
6.2 Existing Debt
6.6 Transactions with Related Persons
6.7 Existing Investments
-v-
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 8th day of
November, 1996 (the "Credit Agreement" or "Agreement"), is made among ENVOY
CORPORATION, a Tennessee corporation with its principal offices in Nashville,
Tennessee (the "Borrower"); the banks and other financial institutions from
time to time parties hereto (each, a "Lender," and collectively, the
"Lenders"); FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the "Agent")
and as Issuing Bank and NATIONSBANK OF TENNESSEE, N.A. as Co-Agent.
RECITALS
A. The Borrower entered into a credit agreement (the "Original
Agreement") with the Lenders dated as of March 6, 1996, pursuant to which the
Lenders provided to the Borrower (i) a term loan in the principal amount of
$25,000,000, and (ii) a revolving credit loan in the aggregate principal amount
of up to $25,000,000, to be advanced by the Lenders in accordance with the
terms thereof.
B. The Term Loans (as defined in the Original Agreement) have been
fully repaid, and the Borrower has requested that the Lenders and the Agent
amend and restate the Original Agreement to provide for, among other things, a
single revolving credit facility in the aggregate principal amount of up to
$50,000,000 and to make certain other amendments set forth herein.
C. The Borrower, the Lenders and the Agent have agreed to amend and
restate the Original Agreement to provide for a single borrowing facility and
otherwise to amend and restate the Original Agreement as set forth herein.
D. The parties acknowledge that this Credit Agreement and each of the
other Loan Documents (as hereinafter defined) have been negotiated and
delivered in Charlotte, North Carolina.
E. The Lenders are willing 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, the
Agent and the Co-Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Credit Agreement, in
addition to the terms defined elsewhere in this Credit Agreement, the following
terms shall have the meanings set forth below:
"Accounts" shall mean all "accounts," within the meaning of the
Uniform Commercial Code, of the Borrower and each of its Restricted
Subsidiaries.
"Acquisition" shall mean any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more of its Restricted Subsidiaries, or any combination thereof, of (i) all or
a substantial part of the assets, equity or a going business or division, of
any Person, whether through purchase of assets or securities, by merger or
otherwise, (ii) control of at least a majority of securities
<PAGE> 8
of an existing corporation ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors or
(iii) control of a greater than 50% ownership interest in any existing
partnership, joint venture or other Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by the Borrower and
its Subsidiaries in connection with such Acquisition, (ii) the Fair Market
Value of all capital stock or other ownership interests of the Borrower or any
of its Subsidiaries issued or given in connection with such Acquisition, (iii)
the amount (determined by using the face amount or the amount payable at
maturity, whichever is greater) of all Debt incurred, assumed or acquired in
connection with such Acquisition, (iv) all additional purchase price amounts in
the form of earnouts and other contingent obligations, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition and (vi) the aggregate fair
market value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Acquisition. All Capital Expenditures made
or projected to be incurred by the Borrower or its Subsidiaries in connection
with any Acquisition shall be included in the Acquisition Amount attributable
to such Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate 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
LIBOR 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 of its Subsidiaries, 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 agent as appointed
in ARTICLE IX hereof, and its permitted successors and assigns.
"Agreement" or "this Agreement" or "Credit Agreement" shall mean this
Amended and Restated Credit 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 EBITDA" shall mean, (a) as of the end of any fiscal
quarter ending on or before June 30, 1997, Consolidated EBITDA for the two
consecutive fiscal quarters ending on such date multiplied by two (2), and (b)
as of the end of any subsequent fiscal quarter, Consolidated EBITDA for the
four consecutive fiscal quarters ending on such date.
"Annualized Interest Expense" shall mean, as of the end of any fiscal
quarter ending on or before June 30, 1997, Interest Expense for the two (2)
consecutive fiscal quarters ending on such date multiplied by two (2), and (b)
as of the end of any subsequent fiscal quarter, Interest Expense for the four
consecutive fiscal quarters ending on such date.
"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 Debt to Annualized EBITDA calculated as
provided below:
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<PAGE> 9
<TABLE>
<CAPTION>
Ratio of Consolidated Applicable Margin Applicable Margin
Debt to Annualized EBITDA (Base Rate) (LIBOR Rate)
------------------------- ----------------- -----------------
<S> <C> <C>
Greater than or equal to
3.0 to 1.0 0.375% 1.875%
Less than 3.0 to 1.0 but
greater than or equal to
2.5 to 1.0 0.125% 1.625%
Less than 2.5 to 1.0 but
greater than or equal to
2.0 to 1.0 0.0% 1.375%
Less than 2.0 to 1.0 but
greater than or equal to
1.5 to 1.0 0.0% 1.125%
Less than 1.5 to 1.0 but
greater than or equal to
1.0 to 1.0 0.0% 0.875%
Less than 1.0 to 1.0 0.0% 0.625%
</TABLE>
From the Closing Date until the third (3rd) Business Day after delivery of the
financial statements for the fiscal quarter ended December 31, 1996 pursuant to
SECTION 5.1(A) below, the Applicable Margin shall be 0.625% for LIBOR Loans and
0.0% for Base Rate Loans. The Applicable Margins shall be reset from time to
time in accordance with the above matrix on the third (3rd) Business Day after
receipt by the Agent in accordance with SECTIONS 5.1(A) or (B) of financial
statements together with a Compliance Certificate attaching an Interest Rate
Calculation Worksheet (reflecting the computation of the ratio of Consolidated
Debt to Annualized EBITDA 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 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 D.
"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 of its Subsidiaries, any restriction or prohibition on
assignment that has not been waived or consented to by the Person for whose
benefit such restriction or prohibition exists and with respect to which the
Agent has waived the requirement of such waiver or consent.
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as amended, an
any successor statute or statute having substantially the same function.
"Base Rate" shall mean the higher of (i) the Prime 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.
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"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the Adjusted Base Rate.
"Borrower" shall mean Envoy Corporation, a Tennessee corporation, and
its respective 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 Revolving Loan or a Swingline Loan made by the Swingline
Lender, provided that Base Rate Loans incurred pursuant to SECTION 2.11(C)
shall be considered part of the related Borrowing of LIBOR Loans.
"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 or any Swap Agreement, 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 any Borrower or
any of its Restricted Subsidiaries 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.
"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 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 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 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.; (iv)
demand deposits, time deposits and certificates of deposit maturing within one
(1) year from the date of issuance thereof and issued by a Lender or 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; (v) repurchase agreements with a term not exceeding
seven days with respect to underlying securities of the types described in
clause (i) above entered into with a bank or trust company meeting the
qualifications specified in clause (iv) above.
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"Cash Management Note" shall mean the Cash Management Note, dated as
of the date hereof, made by the Borrower in favor of First Union in the
principal amount of up to $5,000,000.
"Change of Control" shall have the meaning assigned to such term in
the First Data Note Purchase Agreement.
"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 all assets, property and interests in property
of the Borrower and its Restricted Subsidiaries, whether now owned or hereafter
acquired, that shall, from time to time, directly or indirectly secure the
Obligations, including, without limitation, the assets, property or interests
in property described in the Security Agreement, the Guarantor Security
Agreement, the Pledge Agreement, the Guarantor Pledge Agreement, and the
Leasehold Deeds of Trust.
"Commitment" shall mean, for any Lender, such Lender's Revolving Credit
Commitment.
"Compliance Certificate" shall mean a fully completed certificate in
the form of EXHIBIT C.
"Consolidated EBITDA" shall mean, with respect to the Borrower and its
Restricted Subsidiaries on a consolidated basis as of the last day of any
fiscal quarter, the aggregate of (i) Consolidated Net Income for the
immediately preceding fiscal quarter then ended, plus (ii) the sum of Interest
Expense, taxes, depreciation, amortization and other non-cash expenses or
charges (including up to $4,000,000 of restructuring charges in the aggregate
in connection with the NEIC Acquisition, which shall be taken by March 31,
1997) 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).
"Consolidated Debt" shall mean, at any date, the aggregate (without
duplication) of all Debt of the Borrower and its Restricted 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 Restricted 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 of its Subsidiaries, (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.
"Consolidated Net Worth" shall mean, as of the last day of any fiscal
quarter, the net worth of the Borrower and its Restricted 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
minus Subordinated Debt outstanding at such time.
"Consolidated Total Assets" shall mean, at any time, the total assets
of the Borrower and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles.
"Consolidated Total Capital" shall mean, with respect to the Borrower
and its Restricted Subsidiaries, the sum of Consolidated Net Worth and
Consolidated Debt.
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"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 (other than a standby letter of credit
with no reasonable likelihood of draw, in the reasonable opinion of the Agent)
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, (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 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
of the primary obligor 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.
"Covenant Compliance Worksheet" shall mean a fully completed
certificate in the form of Attachment A to EXHIBIT C.
"Cumulative Positive Net Income" shall have the meaning set forth in
the First Data Note Purchase Agreement.
"Debt" shall mean, with respect to any Person, without duplication,
(i) all indebtedness of such Person for money borrowed, (ii) all matured
reimbursement obligations of such Person with respect to surety bonds, letters
of credit and bankers' acceptances, (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 under any Swap Agreement or other interest rate
protection or hedging arrangement, (viii) 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, (ix) all indebtedness referred to in clauses (i) through
(viii) above secured by any lien on any property or asset owned or 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 (x)
any Contingent Obligation of such Person.
"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.
"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
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OECD, (iv) a finance company, mutual fund, 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 any 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 of its
Subsidiaries.
"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 of its Subsidiaries 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 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 applicable 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. ss. 9601 et seq.) ("CERCLA"), the Hazardous Material
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.) ("RCRA"), the Federal Water Pollution
Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401
et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Safe Drinking Water Act (42 U.S.C. ss. 300f, 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. ss. 651 et seq.), to the extent that it regulates exposure to Hazardous
Substances, ("OSHA"), as such laws have been amended or supplemented, and
any analogous future federal or state, or present or future applicable 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 4.17); (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 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
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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.
"Facility" shall mean the Revolving Credit Facility or the Swingline
Facility, as the context may require.
"Fair Market Value" shall mean, with respect to any capital stock or
other ownership interests issued or given by the Borrower or any of its
Restricted Subsidiaries in connection with an 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 members of the board of directors of the
Borrower or such Restricted Subsidiary with no direct or indirect (other than
by virtue of being a director) economic interest in such Acquisition, in each
case effective as of the close of business on the Business Day immediately
preceding the closing date of such Acquisition.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, 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 received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
"Financial Condition Certificate" shall mean a fully completed
certificate, with the attachments required thereby, in the form of EXHIBIT E.
"Financials" or "Financial Statements" shall mean the consolidated
financial statements of the Borrower and its Subsidiaries for the fiscal
periods ended December 31, 1994 and December 31, 1995; the unaudited
consolidated interim financial statements of the Borrower and its Subsidiaries
for the 6 months ended June 30, 1996; and all other financial statements of the
Borrower and its Subsidiaries that have previously been delivered by the
Borrower, any of its Subsidiaries to the Agent or any Lender, including without
limitation interim financial statements.
"Financing Statements" shall mean financing statements approved for
filing in accordance with the applicable adopted version of the Uniform
Commercial Code and all other titles, documents and certificates that the Agent
may reasonably require from the Borrower or any Guarantor to describe and
perfect the security interests created hereunder or under the other Loan
Documents, and all assignments thereof and amendments thereto, in form and
substance satisfactory to the Agent.
"First Data Subordinated Debt" shall mean the indebtedness of the
Borrower in the original principal amount of up to $10,000,000 pursuant to the
9% Convertible Subordinated Notes Due 2000, dated as of June 6, 1995,
originally issued by the Borrower to First Data Corporation pursuant to the
First Data Note Purchase
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<PAGE> 15
Agreement and subsequently sold or assigned by First Data Corporation to
certain entities affiliated with Robert Fleming, Inc.
"First Data Note Purchase Agreement" shall mean the Note Purchase
Agreement dated as of June 6, 1995, between the Borrower and First Data
Corporation.
"First Union" shall mean First Union National Bank of North Carolina,
a national banking association, and its successors and assigns.
"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 corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor Pledge Agreement" shall mean the Guarantor Pledge Agreement
in the form of EXHIBIT I attached hereto, between the Guarantors and the Agent,
whereby the Guarantors pledge all of the Stock of their Subsidiaries 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.
"Guarantor Security Agreement" shall mean the Guarantor Security
Agreement in the form of EXHIBIT J attached hereto, between the Guarantors and
the Agent, whereby each Guarantor grants to the Agent a security interest in
certain Collateral described therein as security 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.
"Guarantors" shall mean any Restricted Subsidiary of the Borrower that
guarantees the Obligations of the Borrower and the other Guarantors.
"Guaranty Agreement" shall mean the Guaranty Agreement in the form of
EXHIBIT F attached hereto, executed by each Guarantor in favor of the Agent,
whereby each Guarantor guarantees to the Lenders the payment and performance of
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.
"Guaranty Documents" shall mean the Guaranty Agreement and the
security agreements, pledge agreements, collateral assignments of agreements
and any other documents or agreements between the Agent and any of the
Guarantors, whereby certain Guarantors have pledged Collateral to the Agent as
security for the obligations of the Guarantors under the Guaranty Agreement,
including, without limitation, the Guarantor Security Agreement and the
Guarantor Pledge 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.
"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
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<PAGE> 16
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 requires investigation
or remediation under any Environmental Law or common law; or (iv) 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.
"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.
"Interest Expense" shall mean, for any period, total interest expense
of the Borrower and its Restricted 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 Period" shall have the meaning assigned to such term in
SECTION 2.8.
"Interest Rate Calculation Worksheet" shall mean a fully completed
worksheet in the form of Attachment B to EXHIBIT C.
"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, for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next higher 1/100 of one
percentage point) obtained by dividing (a) the rate of interest determined by
Agent to be the rate for deposits in U.S. dollars for the applicable Interest
Period which appears on the Telerate Page 3750 at approximately 11:00 a.m.
London time, two (2) Business Days prior to the first date of the applicable
Interest Period, or if such rate is not available, the rate per annum at which,
in the reasonable opinion of Agent, U.S. dollars in the amount of the
corresponding Borrowing are being offered to leading reference banks in the
London interbank market for settlement at approximately 11:00 a.m. London time,
two (2) Business Days prior to the first date of the applicable Interest
Period, by (b) the percentage equal to one hundred percent (expressed as a
decimal fraction) minus the Reserve Requirement for such Interest Period. Each
calculation by the Agent of the applicable LIBOR Rate shall be conclusive and
binding for all purposes, absent bad faith or manifest error.
"Landlord Consents" shall mean (i) a waiver and consent from each
landlord with respect to the properties of the Borrower and its Restricted
Subsidiaries listed on SCHEDULE 4.9 and (ii) all other landlord consents that
the Agent or the Required Lenders may reasonably require of the Borrower or any
of its Restricted Subsidiaries from time to time in respect of amendments,
modifications or renewals of the leases referred to in clause (i) above or in
respect of any other material leases to which the Borrower or any of its
Restricted Subsidiaries is now or hereafter a party, in each case in form and
substance reasonably satisfactory
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<PAGE> 17
to the Agent, together with any amendments, modifications and supplements
thereto and restatements thereof, in whole or in part.
"Lease Expense" shall mean, for any period, all amounts paid, payable
or accrued during such period by the Borrower and its Restricted Subsidiaries
on a consolidated basis with respect to all leases and rental agreements of the
Borrower and its Restricted Subsidiaries, other than Capital Leases, determined
in accordance with Generally Accepted Accounting Principles.
"Leased Properties" shall mean the real properties leased and occupied
by the Borrower and its Restricted Subsidiaries, as of the date hereof and at
any time hereafter and consisting, as of the date hereof, of the properties set
forth in SCHEDULE 4.9 hereof.
"Leasehold Deeds of Trust" shall mean the Leasehold Deed of Trust,
dated as of March 6, 1996, between the Borrower and the Agent, in form and
substance satisfactory to the Agent and the Lenders, relating to the Lease
Agreement between the Borrower and Corporex Key Limited Partnership No. 8, as
landlord, leasing to the Borrower certain premises consisting of approximately
18,426 square feet located in Building B, Corporex Business Park, 1661
Murfreesboro Road, Nashville, Davidson County, Tennessee, together with any
modifications thereto, and, if reasonably requested by Agent, any future
leasehold deeds of trust or leasehold mortgages in favor of the Agent, for the
benefit of the Lenders, in connection with a material lease executed by the
Borrower or any of its Restricted Subsidiaries, together with any amendments,
modifications and supplements thereto and restatements thereof, in whole or in
part.
"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).
"Line of Business" shall mean the business of providing electronic
transaction processing services for the health care industry and governmental
benefits programs, including the transmission of claims and billing information
to insurers, governmental agencies and other third party payors, and businesses
ancillary to the aforesaid line of business that enhance or support it and that
either (i) are not materially different from the foregoing, or (ii) in the
aggregate do not represent more than five percent (5%) of the revenue of the
Borrower and its Restricted Subsidiaries.
"Loan Documents" shall mean and collectively refer to this Agreement,
the Notes, the Leasehold Deeds of Trust, the Security Agreement, the Pledge
Agreement, the Guaranty Documents, the Financing Statements, the Letters of
Credit, Swap Agreements (if any) between the Borrower and any Lender, and any
and all other 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 other
written matters, heretofore, now or hereafter executed by or on behalf of the
Borrower or any of its Subsidiaries and heretofore, now or hereafter delivered
to the Agent or any Lender with respect to this Agreement or with
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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
Loans and the Swingline Loans.
"Mandatory Borrowing" shall have the meaning assigned to such term in
SECTION 2.1(C).
"Material Adverse Effect" or "Material Adverse Change" shall mean, in
the reasonable 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 Restricted
Subsidiaries, taken as a whole; (b) the ability of the Borrower or any of its
Restricted Subsidiaries 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.
"Maximum Swingline Amount" shall mean $5,000,000.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any of its
Subsidiaries is required to make contributions.
"NEIC" shall mean National Electronic Information Corporation, a
Delaware Corporation.
"NEIC Acquisition" shall mean the Borrower's acquisition of NEIC
through the merger of Envoy Acquisition Corporation, a wholly owned subsidiary
of the Borrower, with and into NEIC pursuant to an Agreement and Plan of
Merger, dated November 30, 1995, among NEIC, the Borrower and Envoy Acquisition
Corporation.
"Notes" shall mean the Revolving Credit Notes and the Swingline Note.
"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).
"Notice of Swingline Borrowing" shall have the meaning given to such
term in SECTION 2.2(C).
"OECD" shall mean the Organization for Economic Cooperation and
Development and any successor thereto.
"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,
that arise under this Agreement, the Notes or the other Loan Documents, 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.
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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.
"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 of its
Subsidiaries (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 Percentage at such time.
"Permitted Liens" shall mean any of the following liens, restrictions
or encumbrances securing any liability or indebtedness of the Borrower or any
of its Restricted Subsidiaries on, or otherwise affecting, any of the
Borrower's or such Restricted Subsidiary's property, real or personal, whether
now owned or hereafter acquired.
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) 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 Restricted
Subsidiary has established reserves reasonably satisfactory to the Agent with
respect thereto;
(c) Liens upon property leased under a Capital Lease and placed upon
such property at the time of, or within twenty (20) 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 of its Restricted Subsidiaries, (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;
(d) Liens set forth on SCHEDULE 1.1(A) attached hereto, provided that
such liens are not increased;
(e) 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 of
its Restricted Subsidiaries and (iii) shall not exceed the purchase price of
such asset;
(f) Assignment Restrictions;
(g) Easements, rights of way, restrictive covenants, conditions,
zoning restrictions and other similar encumbrances on real estate that do not
materially impair the value of the property to which they relate;
(h) Carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like liens arising in the ordinary course of business that are not
overdue for a period of more than thirty (30) days, or, if overdue for more
than thirty (30) days, (i) which are being contested in good faith and by
appropriate proceedings, (ii) for which adequate reserves in accordance with
Generally Accepted Accounting Principles have been established on the books of
the appropriate Person; and (iii) with respect to which the obligations secured
thereby are not material;
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(i) Pledges or deposits in connection with workers' compensation
insurance, unemployment insurance and like matters;
(j) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(k) Liens in respect of any writ of execution, attachment,
garnishment, judgment or award in an amount less than $200,000, the time for
appeal or petition for rehearing of which shall not have expired, or in respect
of which an appeal or appropriate proceeding for review is being prosecuted in
good faith and a stay of execution pending such appeal or proceeding for review
has been secured;
(l) Liens of a lessor with respect to an operating lease of equipment
or machinery; and
(m) 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 Pledge Agreement substantially in
the form of EXHIBIT G attached hereto, between the Borrower and the Agent,
whereby the Borrower pledges all of the Stock of the Guarantors 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.
"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 Credit 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 4.6(B) 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.
"Realty" shall mean all of the right, title and interest of the
Borrower or any of its Subsidiaries in and to land, improvements and fixtures,
including any leasehold interests (whether as lessor or lessee).
"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.
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"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.
"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).
"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 60% or more of the sum of (i) the then aggregate principal amount of
the Loans then outstanding plus (ii) the then aggregate Letter of Credit
Outstandings; or, if no Loans or Letters of Credit are then outstanding, the
Lenders with 60% or more of the aggregate of all Commitments at such time. For
purposes of this definition, the Letter of Credit Outstandings shall be
considered to be owed to the Lenders according to their respective Revolving
Credit 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.
"Restricted Subsidiary" shall mean any Subsidiary that is not an
Unrestricted Subsidiary.
"Revolving Credit 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 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 Commitment," as such
amount may be reduced at or prior to such time pursuant to the terms hereof.
"Revolving Credit Facility" shall mean the revolving line of credit
established by the Lenders under SECTION 2.1(A).
"Revolving Credit Facility Maturity Date" shall mean June 30, 2000.
"Revolving Credit Facility Termination Date" shall mean such earlier
date of June 30, 2000, or termination of the Total Revolving Credit Commitment
in accordance with SECTION 2.4(A) or SECTION 8.1.
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"Revolving Credit Loans" shall have the meaning assigned to such term
in SECTION 2.1(A).
"Revolving Credit 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 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 Commitment of such Lender at such time and the denominator
of which is the Total Revolving Credit Commitment at such time; provided that
if the Revolving Credit Percentage of any Lender is to be determined after the
Revolving Credit Commitments have been terminated, then such Revolving Credit
Percentage shall be determined immediately prior (and without giving effect) to
such termination.
"Security Agreement" shall mean the Security Agreement in the form of
EXHIBIT H attached hereto, between the Borrower and the Agent, whereby the
Borrower has granted to the Agent a security interest in certain Collateral
described therein as security 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.
"Solvent" shall mean, as to any Person on any particular date, that
such Person (i) has capital reasonably 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 of
such Person 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.
"Subordinated Debt" shall mean (i) the First Data Subordinated Debt,
and (ii) any other Debt of the Borrower or its Restricted Subsidiaries to the
extent such Debt is expressly subordinated and made junior to the payment and
performance of the Obligations, evidenced by a written instrument the terms and
conditions (including, without limitation, covenants and subordination
provisions) of which are satisfactory in form and substance to the Required
Lenders in their sole discretion and are approved in writing by the Required
Lenders, and is designated in writing by the Required Lenders as Subordinated
Debt under this Credit Agreement.
"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
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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.
"Swap Agreement" shall mean all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance or other hedging arrangements and all other similar agreements or
arrangements designed to protect against fluctuations in interest rates.
"Swingline Facility" shall mean the Swingline Loans extended by the
Swingline Lender as provided in SECTION 2.1(C).
"Swingline Lender" shall mean First Union National Bank of North
Carolina, or any successor thereto.
"Swingline Loan" shall have the meaning assigned to such term in
SECTION 2.1(C).
"Swingline Note" shall have the meaning assigned to such term in
SECTION 2.3(D).
"Target" shall have the meaning assigned to such term in SECTION
5.13(C)(I).
"Taxes" shall have the meaning assigned to such term in SECTION
2.12(A).
"Total Revolving Credit Commitment" shall mean, at any time, the sum
of the Revolving Credit Commitments of all Lenders at such time.
"Total Unutilized Revolving Credit Commitment" shall mean, at any
time, the sum of the Unutilized Revolving Credit Commitments of all Lenders at
such time.
"Type" shall have the meaning assigned to such term in SECTION 2.1(B).
"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.
"Unrestricted Subsidiary" shall mean (i) a Subsidiary other than a
Wholly Owned Subsidiary that is organized by the Borrower and designated as an
"Unrestricted Subsidiary" by the Borrower in writing to the Agent within five
(5) days after the earlier of the date such Subsidiary obtains any assets or
the date such Subsidiary conducts any business; (ii) a Subsidiary other than a
Wholly Owned Subsidiary that is acquired by the Borrower pursuant to an
Acquisition that is designated as an "Unrestricted Subsidiary" by the Borrower
to the Agent in writing within fifteen (15) days after the consummation of such
Acquisition; and (iii) any other Subsidiary that is not a Wholly Owned
Subsidiary and that is designated as an "Unrestricted Subsidiary" by the
Borrower to the Agent in writing with the prior approval of the Required
Lenders; provided, however, that no Subsidiary will constitute an Unrestricted
Subsidiary at any time if at such time such Subsidiary (a) is a Wholly Owned
Subsidiary, (b) owns, directly or indirectly, more than ten percent (10%) of
the outstanding Stock or other ownership interests of any Restricted
Subsidiary, or (c) constitutes a "Restricted Subsidiary" or the equivalent
thereof, under any document or instrument evidencing or pertaining to
Subordinated Debt.
"Unutilized Revolving Credit Commitment" shall mean, with respect to
any Lender at any time, such Lender's Revolving Credit Commitment at such time
less the sum of (i) the aggregate principal amount of all Revolving Credit
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.
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"Unutilized Swingline Commitment" shall mean, with respect to the
Swingline Lender at any time, the Maximum Swingline Amount at such time less
the aggregate principal amount of all Swingline Loans that are outstanding at
such time.
"Wholly Owned Subsidiary" shall mean any Subsidiary, 90% or more of
the outstanding capital stock or other ownership interests of which is owned,
directly or indirectly, by the Borrower.
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. All references herein to the Lenders or any of them shall
be deemed to include the Issuing Bank and the Swingline Lender unless
specifically provided otherwise or unless the context suggests otherwise.
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ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans.
(a) Each Lender having a Revolving Credit Commitment severally agrees,
subject to and on the terms and conditions of this Agreement, to make Loans
(each, a "Revolving Credit Loan" and collectively, the "Revolving Credit
Loans") to the Borrower, from time to time on any Business Day during the
period from the date hereof to the Revolving Credit Facility Termination Date,
provided that (i) the aggregate principal amount of Revolving Credit Loans at
any time outstanding for any Lender shall not exceed the difference between (A)
such Lender's Revolving Credit Commitment at such time less (B) such Lender's
Pro Rata Share (calculated based on its Revolving Credit Percentage) of the
aggregate Letter of Credit Outstandings (exclusive of Reimbursement Obligations
that are repaid with the proceeds of, and simultaneously with the incurrence
of, Revolving Credit Loans or Swingline Loans) and participation in Swingline
Loans at such time and (ii) no Borrowing of Revolving Credit Loans shall be
made if, immediately after giving effect thereto, the sum of (W) the aggregate
principal amount of Revolving Credit Loans outstanding at such time plus (X)
the aggregate Letter of Credit Outstandings (exclusive of Reimbursement
Obligations that are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Credit Loans or Swingline Loans) plus (Y) the
aggregate principal amount of Swingline Loans at such time, would exceed the
Total Revolving Credit Commitment, and (iii) no Borrowing of Revolving Credit
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 and for so long as no Default or Event of Default has occurred, the
Borrower may borrow, repay and reborrow Revolving Credit Loans until the
Revolving Credit Facility Termination Date.
(b) 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.
(c) Subject to and upon the terms and conditions set forth below, the
Swingline Lender agrees at any time and from time to time during the term of
the Revolving Credit Facility, to make a loan or loans to the Borrower (each a
"Swingline Loan", and collectively, the "Swingline Loans"), which Swingline
Loans:
(i) may be borrowed, repaid and reborrowed in
accordance with the provisions hereof and of the Swingline
Note;
(ii) when combined with the aggregate principal
amount of all Revolving Credit Loans made by the Lenders
then outstanding and Letter of Credit Outstandings at
such time(exclusive of Reimbursement Obligations that are
repaid with the proceeds of, and simultaneously with the
incurrence of, such Swingline Loans) shall not exceed in
aggregate principal amount at any time outstanding, an amount
equal to the Total Revolving Credit Commitment at such time;
and
(iii) shall not exceed the Maximum Swingline Amount.
Except as otherwise provided herein, the Swingline Loans shall be
payable one Business Day after demand and shall bear, and the Borrower shall
pay, interest from the date of the Swingline Note on the unpaid principal
balance thereof outstanding from time to time at an interest rate equal to the
Adjusted Base Rate as
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in effect from time to time. Interest on each outstanding Swingline Loan shall
be due and payable (i) quarterly on the last day of each fiscal quarter, in
arrears, commencing on December 31, 1996.
Anything contained in this Agreement to the contrary notwithstanding,
any reduction of the Revolving Loan Commitments made pursuant to Section 2.4
that reduces the aggregate Total Revolving Loan Commitments to an amount less
than the then current amount of the Maximum Swingline Amount shall result in an
automatic corresponding reduction of the Maximum Swingline Amount to the amount
of the Total Revolving Loan Commitments, as so reduced, without any further
action on the part of the Swingline Lender.
On any Business Day, the Swingline Lender may, in its sole discretion,
give notice to the Lenders that its outstanding Swingline Loans shall be repaid
with a Borrowing of Revolving Credit Loans (provided that such notice shall be
deemed to have been automatically given upon the occurrence of any Event of
Default under the Swingline Note or under ARTICLE VII or upon the exercise of
any of the remedies provided in ARTICLE VIII), in which case a Borrowing of
Revolving Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day from all
Lenders on the basis each Lender's Pro Rata Share (determined before giving
effect to any termination of the Revolving Credit Commitments pursuant to
ARTICLE VIII) and the proceeds thereof shall be paid directly to the Swingline
Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each
Lender hereby irrevocably agrees to make Revolving Credit Loans upon demand,
but in any event no later than 2:00 p.m. (Charlotte time) on the next
succeeding Business Day after the day such demand is made if demand therefor is
made prior to 1:00 p.m. (Charlotte time) and no later than 2:00 p.m. (Charlotte
time) on the second succeeding Business Day if demand therefor is made after
1:00 p.m. (Charlotte time), pursuant to each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence notwithstanding (i) the
amount of the Mandatory Borrowing may not comply with the minimum amount of
Borrowings otherwise required hereunder, (ii) whether any of the conditions
specified in ARTICLES II or III are then satisfied, (iii) whether a Default or
an Event of Default then exists, (iv) the date of such Mandatory Borrowing, and
(v) any reduction in the Total Revolving Credit Commitment after any such
Swingline Loans were made.
In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower), then each such Lender agrees that it shall forthwith
purchase (as of the date the Mandatory Borrowing would otherwise have occurred,
but adjusted for any payments received from the Borrower on or after such date
and prior to such purchase) from the Swingline Lender such participations in
the outstanding Swingline Loans as shall be necessary to cause such Lenders to
share in such Swingline Loans ratably based upon their respective Pro Rata
Shares (determined before giving effect to any termination of the Revolving
Credit Commitments pursuant to ARTICLE VIII); provided that (x) all interest
payable on the Swingline Loans shall be for the account of the Swingline
Lender until the date as of which the respective participation is required
to be purchased and, to the extent attributable to the purchased participation,
shall be payable to the participant from an after such date and (y) at the time
any purchase of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay the Swingline Lender interest on the
principal amount of participation purchased for each day from and including the
day upon which such mandatory purchase was required to be made to but excluding
the date of payment for such participation, at the rate otherwise applicable to
Revolving Credit Loans maintained as Base Rate Loans hereunder for each
thereafter.
The Borrower shall pay to the Swingline Lender one Business Day after
demand the amount of such Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding Swingline
Loans. In addition, the Borrower hereby authorizes the Agent, upon one (1)
Business Day's notice to the Borrower, to charge any account maintained by it
with the Swingline Lender (up to the amount available therein) in order to
immediately pay the Swingline Lender the amount of such Swingline Loans to the
extent amounts received from the Lenders are not sufficient to repay in full
the outstanding
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Swingline Loans. If any portion of any such amount paid to the
Swingline Lender shall be recovered by or on behalf of the Borrower from the
Swingline Lender in bankruptcy or otherwise, the loss of the amount so
recovered shall be ratably shared among all the Lenders in accordance with
their respective Pro Rata Shares.
2.2. Borrowings.
(a) Whenever the Borrower desires to make a Borrowing (other than
continuations of outstanding Loans pursuant to SECTION 2.9, Mandatory
Borrowings for the purpose of repaying outstanding Swingline Loans, which shall
be made pursuant to SECTION 2.1(C), and Borrowings for the purpose of repaying
Reimbursement Obligations as provided in SECTION 2.17(E)) under the Revolving
Credit Facility, the Borrower will give the Agent written notice (by telecopier
or otherwise), prior to 1:00 p.m., Charlotte, North Carolina local 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), (ii) the proposed use of the proceeds of the Borrowing, and (iii) the
requested date of the Borrowing (the "Borrowing Date"), which shall be a
Business Day.
Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
hereunder (y) other than Mandatory Borrowings for the
purpose of repaying outstanding Swingline Loans
pursuant to SECTION 2.1(C) and Borrowings of Base Rate
Loans for the purpose of repaying Reimbursement
Obligations as provided in SECTION 2.17(E), in the case
of Borrowings comprised of Base Rate Loans, shall not be
less than the lesser of the Total Unutilized Revolving
Credit Commitment or $1,000,000 and, if greater than
$1,000,000, shall be in an integral multiple of $500,000
in excess thereof, and (z) in the case of Borrowings
comprised of LIBOR Loans, shall not be less than
$3,000,000 and, if greater than $3,000,000, shall be in
an integral multiple of $1,000,000 in excess thereof;
(ii) with respect to each individual Acquisition financed in
whole or in part with proceeds of Loans, the aggregate
principal amount of the Loans incurred to finance such
Acquisition shall not exceed $20,000,000 without the
consent of Required Lenders;
(iii) 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;
(iv) 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
month; and
(v) LIBOR Loans under the Revolving Credit Facility may not
be outstanding under more than four (4) 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 Commitment of the proposed
Borrowing, of such Lender's Pro Rata Share thereof and of the other matters
specified in the Notice of Borrowing or the Request for 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
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<PAGE> 28
in SECTION 10.4, for the account of the Borrower, in Dollars and in
immediately available funds, prior to 2:00 p.m., Charlotte, North Carolina
local 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, North Carolina local time, on the Borrowing Date.
(c) In order to make a Borrowing of a Swingline Loan, the Borrower
will give the Agent and the Swingline Lender written notice (or oral notice
promptly confirmed in writing) not later than 12:00 noon, Charlotte, North
Carolina time, on the Business Day of such Borrowing. Each such notice (each, a
"Notice of Swingline Borrowing") shall be irrevocable, shall be given in the
form of EXHIBIT B-2 (or, if oral notice is given, shall be promptly followed
with a writing in the form of EXHIBIT B-2) and shall specify (i) the principal
amount of the Swingline Loan to be made pursuant to such Borrowing (which shall
not be less than the lesser of the Unutilized Swingline Commitment or $250,000
and, if greater than $250,000, shall be in an integral multiple of $100,000)
and (ii) the requested Borrowing Date, which shall be a Business Day. Not later
than 1:00 p.m., Charlotte time, on the requested Borrowing Date, the Swingline
Lender will make available to the Agent at its office referred to in SECTION
10.4 (or at such other location as the Agent may designate) an amount, in
Dollars and in immediately available funds, equal to the amount of the
requested Swingline Loan. To the extent the Swingline Lender has made such
amount available to the Agent as provided hereinabove, the Agent will make such
amount available to the Borrower in accordance with SECTION 2.3(A) and in like
funds as received by the Agent, prior to 3:30 p.m. Charlotte, North Carolina
local time, on the Borrowing Date.
(d) Unless the Agent has received, prior to 12:00 noon, Charlotte,
North Carolina local 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 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.
(e) 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.
(f) If any Lender shall refuse to fund or otherwise default in the
funding of its Pro Rata Share of any Borrowing requested and permitted to be
made by the Borrower hereunder, and such refusal has not been withdrawn or such
default has not been cured within three (3) Business Days after the Borrower
has given such Lender written notice thereof, then, the Borrower may, so long
as no Default or Event of Default then exists, by written notice to such Lender
and the Agent given no more than thirty (30) days after such refusal or other
default, identify one or more Persons each of which must be an Eligible
Assignee reasonably acceptable to the Agent (each, a "Replacement Lender," and
collectively, the "Replacement Lenders") to replace such Lender (the "Replaced
Lender"), provided that (i) the notice from the Borrower to the Replaced Lender
and the Agent provided for hereinabove shall specify an effective date for such
replacement (the "Replacement Effective Date"), which shall be at least five
(5) Business Days after such notice is given, (ii) as
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<PAGE> 29
of the relevant Replacement Effective Date, each Replacement Lender shall
enter into an Assignment and Acceptance with the Replaced Lender pursuant to
SECTION 10.5(A) (and pay or cause to be paid the fee payable to the Agent
pursuant to SECTION 10.5(A)), pursuant to which the Replacement Lenders
collectively shall acquire, in such proportion among them as they may agree
with the Borrower and the Agent, all (but not less than all) of the
Commitments, outstanding Loans and participations in Letters of Credit of the
Replaced Lender, and, in connection therewith, shall pay to (y) the Replaced
Lender in respect thereof an amount equal to the sum as of the Replacement
Effective Date (without duplication) of (1) the unpaid principal amount of, and
all accrued but unpaid interest on, all outstanding Loans of the Replaced
Lender (including an amount equal to the Replaced Lender's Pro Rata Share of
all Revolving Loans made to fund Reimbursement Obligations payable to the
Issuing Bank and not yet reimbursed to the Issuing Bank, together with all
accrued but unpaid interest with respect thereto), and (2) the Replaced
Lender's Pro Rata Share of all accrued but unpaid fees and commissions owing by
the Borrower hereunder, and (z) the Agent (1) for the account of the Issuing
Bank, an amount equal to the Replaced Lender's Pro Rata Share of all
outstanding Reimbursement Obligations to the extent not yet funded by Revolving
Loans of the Replaced Lender, together with any amounts owing to the Issuing
Bank under SECTION 2.17(E), and (2) for its own account, any amounts owing to
the Agent by the Replaced Lender under SECTION 2.2(D) above, and (iii) all
obligations of the Borrower due and owing to the Replaced Lender (other than
those specifically described in clause (ii) above in respect of which the
assignment purchase price has been, or is concurrently being, paid) shall be
paid in full by the Borrower to the Replaced Lender on or prior to the
Replacement Effective Date. Upon the effectiveness of the respective Assignment
and Acceptances, the payment of amounts referred to in clauses (ii) and (iii)
above and, if so requested by any Replacement Lender, delivery to such
Replacement Lender of the appropriate Note or Notes executed by the Borrower,
(y) each Replacement Lender shall become a Lender hereunder and the Replaced
Lender shall cease to be a Lender hereunder, except with respect to
indemnification provisions under this Agreement and the other Credit Documents,
which shall survive as to the Replaced Lender, and (z) the Percentages of the
Lenders shall be automatically adjusted to give effect to such replacement.
(g) Notwithstanding any other provision contained herein or in any of
the other Credit Documents, any Lender that refuses to fund or otherwise
defaults in the funding of its Pro Rata Share of any Borrowing requested and
permitted to be made by the Borrower hereunder shall not, for so long as such
refusal has not been withdrawn or such default has not been cured, have any
rights of consent or approval or any voting rights whatsoever with respect to
any matter hereunder or under any of the other Credit Documents that requires
or permits the consent, approval or action of the Lenders, or any of them, and
the Commitments and the Loans of any such Lender shall not be taken into
account for purposes of determining, at any time during the continuance of any
such refusal or default, the Required Lenders or the number or percentage of
Lenders that shall be required for the Lenders or any of them to take or prove,
or direct the Agent to take, any action hereunder.
(h) With respect to any outstanding amounts owing under the Cash
Management Note, the Swingline Lender may at any time (whether or not an Event
of Default has occurred and is continuing) in its sole and absolute discretion,
and is hereby authorized and empowered by the Borrower to, cause a Borrowing of
Swingline Loans to be made for the purpose of repaying such amounts owing. Any
Borrowing pursuant to this SECTION 2.2(H) may be made notwithstanding that the
amount of such Borrowing may not comply with the minimum amount of Borrowings
otherwise required hereunder.
2.3. Notes.
(a) The Revolving Credit Loans made by each Lender shall be evidenced
by a Revolving Credit Note appropriately completed in substantially the form of
EXHIBIT A-1.
(b) The Revolving Credit Note issued to each Lender with a Revolving
Credit Commitment shall (i) be executed by the Borrower, (ii) be payable to the
order of such Lender, (iii) be dated as of the
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<PAGE> 30
Closing Date (or, in the case of Revolving Credit 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 Commitment, (v) bear
interest in accordance with the provisions of SECTION 2.6, as the same may be
applicable to the Revolving Credit 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.
(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 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.
(d) The Swingline Loans shall be evidenced by a promissory note (the
"Swingline Note") substantially in the form of EXHIBIT A-2, attached hereto,
which shall: (1) be executed by the Borrower; (ii) be payable to the order of
the Swingline Lender and be dated as of the Closing Date; (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be payable in the
principal amount of the outstanding Swingline Loans evidenced thereby from time
to time; (iv) be payable one (1) Business Day after demand; (v) bear interest
at the Adjusted Base Rate; and (vi) be entitled to the benefits of this
Agreement and the Guaranty Agreements.
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 Commitment, provided that
any such partial reduction shall be in an aggregate amount of not less than
$1,000,000 or integral multiples of $500,000. The amount of any termination or
reduction made under this subsection (A) may not thereafter be reinstated.
(b) Each reduction of the Revolving Credit Commitment under this
Section shall be applied ratably to the Revolving Credit Commitments of the
Lenders according to their respective Percentages under the Revolving Credit
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 to prepay the Loans, in whole or
in part, upon written notice to the Agent prior to 1:00 p.m., Charlotte, North
Carolina local time, (i) at least three (3) Business Days prior to each
intended prepayment of any Revolving Credit Loans that are LIBOR Loans, and
(ii) at least one (1) Business Day prior to each intended prepayment of Loans
that are Base Rate Loans. Each partial prepayment of any LIBOR Loan shall be in
an aggregate principal amount of no less than $3,000,000 or, if greater than
$3,000,000, an integral multiple of $1,000,000; each partial repayment of any
Base Rate Loan shall be in an aggregate principal amount of no less than
$1,000,000 or, if greater than $1,000,000, an integral multiple of $500,000;
each partial repayment of any Swingline Loan shall be in an aggregate principal
amount of no less than $250,000 or, if greater than $250,000, an integral
multiple of $100,000. Further, if the prepayment of any Loan that is a LIBOR
Loan occurs on a date other than the last day of an Interest Period applicable
thereto, the Borrower shall pay each Lender the compensation provided for in
SECTION 2.13. Each such notice shall specify (x) the proposed date of such
prepayment, (y) the Facilities under which such prepayment is to be made and
(z) 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
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<PAGE> 31
be irrevocable and shall bind the Borrower to make such prepayment on the
terms specified therein. Amounts prepaid under the Revolving Credit Facility or
the Swingline 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 Loans outstanding on any date plus (ii) the aggregate
Letter of Credit Outstandings as of such date (excluding the amount of any
Reimbursement Obligations to be repaid with proceeds of Loans made on the date
of determination) and (iii) the aggregate amount of Swingline Loans outstanding
at such time (excluding the amount of any Swingline Loans to be repaid with
proceeds of Revolving Credit Loans made on the date of determination) exceeds
the Total Revolving Credit Commitment as of such date (after giving effect to
any termination or reduction thereof as of such date), the Borrower will repay
the principal amount of the Revolving Credit Loans and/or the Swingline 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
Loans and the Swingline 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 Reimbursement Obligations,
as more particularly described in SECTION 2.17(I).
(c) On the date of receipt by the Borrower or any of its Subsidiaries
of any net cash proceeds aggregating in excess of $2,000,000 in any single
fiscal year of the Borrower from any sale or disposition of assets, other than
sales or dispositions permitted under clauses (i) and (iv) of SECTION 6.5, the
Borrower shall make a mandatory repayment of principal of the Revolving Credit
Loans in an amount equal to one-hundred percent (100%) of such net cash
proceeds to the extent such proceeds exceed $2,000,000, up to the aggregate
principal amount of the Revolving Credit Loans outstanding on such date plus
the aggregate Reimbursement Obligations and Swingline Loans outstanding on such
date.
(d) On the date of payment by the Borrower or any of its Subsidiaries
of any principal amounts owing on any Subordinated Debt (excluding the
conversion of such Subordinated Debt to Common Stock of the Borrower or its
Subsidiaries), the Borrower shall make a mandatory payment of principal of the
Revolving Loans in an amount equal to one-hundred percent (100%) of such
payment of amounts owing on Subordinated Debt, up to the aggregate principal
amount of the Revolving Credit Loans outstanding on such date plus the
aggregate Reimbursement Obligations and Swingline Loans outstanding on such
date.
(e) Interest accruing to the date of repayment in respect of any
principal repaid pursuant to this Section shall be paid on the earlier of (i)
the next succeeding interest payment date pursuant to SECTION 2.6 or (ii) the
full repayment of the Loans and termination of the Revolving Credit Facility.
(f) The Borrower shall repay the Revolving Credit Loans and the
Swingline Loans in full on the Revolving Credit Facility Termination Date.
2.6. Interest.
(a) Except as provided in SECTION 2.1(C) with respect to Swingline
Loans, 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, or (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
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<PAGE> 32
due (whether at maturity, pursuant to acceleration or otherwise), shall
bear interest at a rate per annum equal to the Adjusted Base 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 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 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 December 31, 1996, (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 (iii) in respect of any Loan 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 or other
charges to any Lender in an amount in excess of the maximum amount permitted by
applicable law. If the amount of interest or other charges payable for the
account of any Lender on any payment date would exceed the maximum amounts
permitted by applicable law to be charged by such Lender, the amount of
interest or other charges payable for its account on such payment date shall be
automatically reduced to such maximum permissible amounts. In the event of any
such reduction affecting any Lender, if from time to time thereafter the amount
of interest or other charges otherwise payable for the account of such Lender
on any payment date would be less than the maximum amounts permitted by
applicable law to be charged by such Lender, then the amount of interest or
other charges, as applicable, payable for its account on such subsequent
payment date shall be automatically increased to such maximum permissible
amount, provided that at no time shall the aggregate amount by which interest
or other charges paid for the account of any Lender has been increased pursuant
to this sentence exceed the aggregate amount by which interest or other charges
paid for its account has theretofore been reduced pursuant to the previous
sentence. The parties hereto understand and believe that if Tennessee law were
to apply, this lending transaction complies with the usury laws of the State of
Tennessee. If at any time, any amount of interest or other charges actually
paid by the Borrower on or with respect to any Loan is determined to be in
excess of the maximum amount permitted by applicable law, such excess amount
shall be credited as a prepayment of the outstanding principal balance of the
applicable Loan as of the date paid or, if such Loan has been paid in full,
refunded to the Borrower.
(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 Commitment, a commitment fee per annum for the period from the Closing
Date to the Revolving Credit Facility Termination
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<PAGE> 33
Date at the rate per annum as determined under the following matrix with
reference to the ratio of Consolidated Debt to Annualized EBITDA:
<TABLE>
<CAPTION>
Ratio of Consolidated
Debt to Annualized EBITDA Commitment Fee
------------------------- --------------
<S> <C>
Less than 1.5 to 1.0 .20%
Greater than or equal to
1.5 to 1.0 but less than
2.5 to 1.0 .25%
Greater than or equal to
2.5 to 1.0 .35%
</TABLE>
The applicable commitment fee shall be adjusted from time to time in accordance
with the above matrix on the third Business Day after receipt of financial
statements by the Agent in accordance with SECTION 5.1(A) or (B) together with
a Compliance Certificate attaching a worksheet (reflecting the calculation of
the ratio of Consolidated Debt to Annualized EBITDA as of the last day of the
preceding fiscal quarter or year, as appropriate) that provide for a different
commitment fee than that then in effect.
Such commitment fee shall be computed on the basis of a 360-day year and the
actual days elapsed, applied to the average daily Unutilized Revolving Credit
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, 1996, and (ii) on the Revolving Credit Facility Termination
Date;
(b) To the Agent, for the account of each L/C Participant, 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, computed on the basis of a 360-day year and the actual days elapsed on
the daily average Stated Amount thereof, payable (i) on the last Business Day
of each fiscal quarter, beginning with the last Business Day of the fiscal
quarter ending December 31, 1996, and (ii) on the later of the Revolving Credit
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, computed on the basis
of a 360-day year and the actual days elapsed, on the daily average Stated
Amount thereof, 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, 1996, and (ii) on the later of the Revolving Credit 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;
(e) To the Agent, for its own account, the fees provided in the Fee
Letter.
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<PAGE> 34
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, or three 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;
(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;
(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
a conversion to Base Rate Loans, $1,000,000 or, if greater, an integral
multiple of $500,000 and (B) in the case of a conversion to LIBOR Loans,
$3,000,000 or, if greater, an integral multiple of $1,000,000) of the
outstanding principal amount of any Loans of one Type made pursuant to one or
more Borrowings (and, in the case of LIBOR Loans, having the same Interest
Period) into a Borrowing or Borrowings of Loans 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
(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
$3,000,000, such remaining LIBOR Loans shall be converted immediately into Base
Rate Loans and may not thereafter be
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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, (iv) no conversion or
continuation under this Section shall result in a greater number of separate
Interest Periods in respect of LIBOR Loans than is permitted under SECTION
2.2(A)(IV), and (v) no such conversion or continuation shall be permitted with
regard to any Base Rate Loans that are Swingline Loans.
(b) The Borrower shall make each such election by delivering written
notice to the Agent prior to 1:00 p.m., Charlotte, North Carolina local 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-3 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
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 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, or
the Swingline Lender, as applicable (except as otherwise provided in SECTIONS
2.7(C), 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 Agent (for its own account), the Issuing
Bank or the Lenders) at the Agent's office referred to in SECTION 10.4, prior
to 2:00 p.m., Charlotte, North Carolina local time, on the date payment is due.
Any payment made as required hereinabove, but after 2:00 p.m., Charlotte, North
Carolina local 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 2:00 p.m., Charlotte, North Carolina local time, in
immediately available funds, the Agent will make available 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 2:00 p.m., Charlotte, North Carolina local time, or in other than
immediately available funds, the Agent will make available to each such Lender
such Lender's 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
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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 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 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, provided that notwithstanding the foregoing, any payments
received by the Agent under any circumstances described in this sentence shall
be applied first to repay all outstanding Swingline Loans together with all
accrued interest thereon.
(f) All computations of interest and fees hereunder 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 a 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);
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(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 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, the
adoption or modification of any applicable federal, state or local law, rule or
regulation regarding any 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 Commitment, 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 determined that Dollar deposits in the amount of any 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 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, 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 any Lender with any of such requirements, has or would have
the effect of making it unlawful for such Lender to honor its obligation to
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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 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 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 taxes imposed on net income or profits of, or any branch or
franchise taxes applicable to, 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 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. If and to the
extent that any Lender subsequently shall be refunded or otherwise recover all
or any part of such deduction, it shall refund to the Borrower the amount so
recovered.
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(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. If and to the extent that any Lender
subsequently shall be refunded or otherwise recover all or any part of such
payment of taxes, it shall refund to the Borrower the amount so recovered.
(c) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code, and such Lender claims
exemption from United States withholding tax under
Section 1441 or 1442 of the Internal Revenue 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 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 Internal
Revenue 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 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.
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(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 or for the account of any Lender pursuant to subsection
(A) or subsection (B) 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, within
fifteen (15) days after 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 $100 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 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 Loans and
the Swingline Loans shall be used by the Borrower (i) to provide for the
issuance pursuant to the Revolving Credit Facility of up to $5,000,000 in
Letters of Credit; (ii) to provide working capital for the Borrower and its
Subsidiaries; (iii) to finance Capital Expenditures and Acquisitions made in
accordance with the provisions of this Agreement and (iv) for general corporate
purposes.
2.15. Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes 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.
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(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 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 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 reasonably
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
Loans and Swingline Loans then outstanding, would exceed the
Total Revolving Credit Commitment 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; provided,
however, that a Letter of Credit may, if requested by the
Borrower, provide by its terms, and on terms acceptable to the
Issuing Bank, for renewal for successive
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periods of one year or less, 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 3.3 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 1:00 p.m., Charlotte, North Carolina local 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-4 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 reasonably 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 Revolving Credit 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 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 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(C) and (D) 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 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
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
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prior to 2:00 p.m., Charlotte, North Carolina local 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, at 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, at the Adjusted 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 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, North
Carolina local 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
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,
North Carolina local 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 Loan by such Lender (the Borrower
being deemed to have given a timely Notice of Borrowing therefor,
notwithstanding that the amount of such Revolving Credit Loan may not comply
with the minimum amount of Borrowings required hereunder) 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
Commitment immediately prior to giving effect to the application of the
proceeds of such Revolving Credit 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.
(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
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determined by a court of competent jurisdiction and not subject to any
appeal (or pursuant to arbitration as set forth in SECTION 10.3(B)), 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, 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, in determining whether to pay
under any Letter of Credit, being to examine documents required
to be delivered under such Letter of Credit in good faith and
without gross negligence to ascertain that such documents appear
on their face to comply with the terms 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) Subject to the Issuing Bank's obligation set forth in the
parenthetical in clause (v) above, 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
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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 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 difference between 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 the amount then on deposit in the Cash
Collateral Account (as hereinafter defined) 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, with such amounts
to be applied against the Obligations in such order as (x) the Borrower may
direct in the absence of a Default or an Event of Default, and (y) otherwise,
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.
(k) If the Borrower receives a demand for compensation, reimbursement
or indemnity from the Issuing Bank or an L/C Participant pursuant to subsection
2.17(b) and, in the case of a demand from an L/C Participant, the
aggregate amount of all such compensation, reimbursement or indemnity payments
made or required to be made by the Borrower pursuant to that subsection to the
L/C Participant giving notice is materially greater (as determined by the
Borrower in its reasonable judgment) than the weighted average amount of
payments made or required to be made to the other L/C Participants pursuant to
that subsection, or if the Issuing Bank fails to issue a requested Letter of
Credit pursuant to subsection 2.17(a)(iii), then so long as no Default or Event
of Default shall have occurred and be continuing, the Borrower may, within
sixty (60) days thereafter, elect to designate a new or additional Issuing Bank
(which shall become a party to and bound
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by all provisions of this Agreement applicable to the Issuing Bank and/or
replace or terminate such L/C Participant as a party to this Agreement in the
manner provided in Section 2.18.
2.18. Replacement of a Lender. If the Borrower receives (i) a notice
pursuant to SUBSECTION 2.11(D), or (ii) a demand for compensation,
reimbursement or indemnity from a Lender pursuant to SECTION 2.11 or SECTION
2.12 and the aggregate amount of all such compensation, reimbursement or
indemnity payments made or required to be made by the Borrower pursuant to
those Sections to the Lender making such demand is materially greater (as
determined by the Agent in its reasonable discretion) than the weighted average
amount of payments made or required to be made to the other Lenders pursuant to
those Sections, then, the Borrower may, so long as no Default or Event of
Default then exists, by written notice to such Lender and the Agent given no
more than thirty (30) days after such notice pursuant to SUBSECTION 2.11(D) or
demand pursuant to SECTION 2.11 or SECTION 2.12, replace such Lender with one
or more Replacement Lenders subject to the terms and conditions and pursuant to
the procedure set forth in SECTION 2.2(F).
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Closing. The closing of the transactions contemplated by this
Credit Agreement (the "Closing") shall take place at the offices of Robinson,
Bradshaw & Hinson, P.A., 101 North Tryon Street, Suite 1900, Charlotte, North
Carolina 28246 at 11:00 a.m. on November 8, 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 initial Loans under this
Agreement are subject to the satisfaction of the following conditions:
3.2.1. Executed Loan Documents.
(a) Agreement and Notes. This Agreement and the Notes 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 Notes and a copy of each other Note, and the Agent shall
have received a copy of each Note.
(b) Loan Documents. The Loan Documents contemplated by the parties to
be in effect on or as of the Closing Date, together with any contemplated
amendments or modifications thereto, shall be
in full force and effect and no Default shall exist thereunder.
(c) Guaranty Documents. Each Guarantor shall have duly authorized,
executed and delivered to the Agent and each Lender a confirmation of its
obligations under the Guaranty Agreement and the other Guaranty Documents in
form and substance satisfactory to the Lenders, each such document shall be in
full force and effect and no Default shall exist thereunder.
(d) Financing Statements. Financing Statements and all other filings or
recordations necessary to perfect the security interest of the Agent, on behalf
of the Lenders, in the Collateral shall have been filed, and the Agent shall
have received confirmation in a form acceptable to the Lenders that such
security interest constitutes a valid and perfected first priority security
interest therein, subject only to Permitted Liens.
(e) Realty. The Leasehold Deeds of Trust contemplated by the parties to
be in effect on or as of the Closing Date, together with any contemplated
modifications or amendments, shall be in full force and effect and no default
shall exist thereunder.
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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 a Co-Chief Executive
Officer or Chief Financial Officer of the Borrower, in form and substance
satisfactory to the Lenders, to the effect that, to their knowledge, (i) 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,
(ii) neither the Borrower nor any of its Subsidiaries is in violation of any of
the covenants contained in this Agreement and the other Loan Documents, (iii)
after giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing, and (iv) 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 Existence or Good Standing. The Agent and each
Lender shall have received (i) long-form certificates as of a recent date of
the good standing or existence 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 Bass, Berry & Sims
PLC, counsel to the Borrower and the Guarantors, addressed to the Agent, for
the benefit of the Lenders and the Issuing 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 any 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
5.5.
3.2.3. Real Estate Matters.
(a) Status of Title. The Borrower and each of its Restricted
Subsidiaries shall be the lessee of the Leased Properties leased by it, free
and clear of any liens, claims or encumbrances other than Permitted Liens.
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(b) Landlord Consents. If required by the Agent, a Landlord Consent
with respect to each of the Leased Properties shall have been duly authorized,
executed and delivered to the Agent by the tenant and the landlord with respect
thereto, shall be in full force and effect and no Default shall exist
thereunder, shall have been recorded, registered and filed in the appropriate
real estate records in a manner acceptable to the Agent, and the Agent shall
have received a fully executed copy thereof.
3.2.4. 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.
3.2.5. 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) Financial Condition Certificate. The Agent and each Lender shall
have received a Financial Condition Certificate together with the attachments
required thereby, all in substantially the form of EXHIBIT E.
(c) 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.
(d) Compliance Certificate. The Lenders shall have received a
Compliance Certificate, calculated as of the end of the previous fiscal quarter.
3.2.6. Miscellaneous.
(a) Disbursement Instructions. The Agent shall have received written
instructions from the Borrower to the Agent directing the disbursement of any
proceeds of Loans made hereunder that are to be disbursed 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.
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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:
(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 or occurrences permitted or contemplated
hereby or such representation or warranty relates solely to a prior date;
(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; and
(c) The security interest in the 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. 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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit 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 of its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (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 and except for Subsidiaries acquired or
created after the Closing Date in compliance with SECTION 6.15, 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.
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4.2. Subsidiaries. SCHEDULE 4.1 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 and the owner of each class of capital stock
authorized and outstanding. Except as set forth on SCHEDULE 4.1, all of such
issued and outstanding shares of capital stock of all of the Borrower's
Subsidiaries that are owned by the Borrower or its 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.
4.3. 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 enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity. Except as set forth in
SCHEDULE 4.3, neither the Borrower nor any of its Subsidiaries 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
material 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 of its Subsidiaries pursuant to any such
agreement or instrument, except for Permitted Liens.
4.4. 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.
4.5. Governmental Authorization.
(a) Except as set forth on SCHEDULE 4.5, no authorization, consent or
approval of, or declaration or filing with, any Governmental Authority is
required for the valid execution and delivery by the Borrower and the
Guarantors of the Loan Documents to which they are a party or the consummation
by the Borrower and the Guarantors of the transactions contemplated hereby and
thereby, including repayment of the Obligations or pledging the Collateral,
except for the filing and recording of the Financing Statements, and the
Leasehold Deeds of Trust. The Borrower and its Subsidiaries have, and are in
good standing with respect to, all material governmental approvals, permits,
certificates, inspections, consents and franchises necessary to continue to
conduct business as heretofore conducted and to own or lease and operate its
respective properties as now owned or leased by it. None of such material
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 its Subsidiaries, except to the extent that any such increased burden by
such term, provision, condition or limitation will not have a Material Adverse
Effect.
(b) The Borrower and each of its Subsidiaries has, to the extent
applicable, obtained (or been duly assigned) and maintains in good standing all
licenses as required by the relevant state and federal Governmental
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Authority, for the ownership and operation of its businesses as currently
operated, except to the extent that a failure to do so will not have a
Material Adverse Effect.
4.6. Financial Statements. (a) The Borrower has heretofore furnished to
each Lender copies of the Financial Statements. The Financial Statements have
been prepared in accordance with Generally Accepted Accounting Principles
(subject, with respect to the unaudited Financial Statements, to the absence of
notes required by Generally Accepted Accounting Principles and to normal
year-end audit adjustments) and present fairly the financial position 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 as fully
reflected in the most recent Financial Statements and the notes thereto, as of
the Closing Date, and taking into account the Loans to be made on the Closing
Date and the other transactions contemplated by the Loan Documents, there will
be no material liabilities or obligations with respect to the Borrower or any
of its Subsidiaries of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change, and, to the knowledge of
the Borrower, no Material Adverse Change is threatened or reasonably likely to
occur, except as set forth on SCHEDULE 4.6. Neither the Borrower nor any of its
Restricted Subsidiaries has directly or indirectly declared, ordered, paid,
made or set apart any amounts or property for any dividend, share acquisition
or other distribution, or agreed to do so, except as permitted by SECTION 6.8.
(b) The Borrower has prepared, and has heretofore furnished to each
Lender copies of, annual projected balance sheets and statements of income and
cash flows of the Borrower and its Subsidiaries for the five-year period
commencing on the date of closing of the NEIC Acquisition (the
"Projections"). In the opinion of the Borrower's management, the assumptions
used in preparation of the Projections were reasonable when made and as of
March 6, 1996. The Projections were prepared in good faith by the executive and
financial personnel of the Borrower in light of the historical financial
performance of the Borrower and NEIC and the financial and operating condition
of the Borrower and NEIC at the time prepared, give effect to the transactions
contemplated by the Loan Documents (as defined in the Original Agreement) and,
in the opinion of the Borrower's management, represented, as of March 6, 1996,
a reasonable estimate of the future performance and financial condition of the
Borrower and its Subsidiaries, subject to the uncertainties and approximations
inherent in any projections and without representation or warranty that such
projected performance and financial condition will actually be achieved.
4.7. Solvency. The Borrower and each of its Restricted Subsidiaries
(i) is Solvent, and (ii) after giving effect to the transactions contemplated
hereby, will be Solvent.
4.8. Places of Business. SCHEDULE 4.8 lists, as of the Closing Date,
(i) the chief executive office and places of business (including county or town
designation), as provided in the Uniform Commercial Code, of the Borrower and
each of its Restricted Subsidiaries, (ii) the locations at which the Borrower
and each of its Restricted Subsidiaries maintains, or presently intends to
maintain, billing and related records relating to Accounts Receivable, and
(iii) all locations where personal property valued at $25,000 or more in the
aggregate of the Borrower and each of its Restricted Subsidiaries is presently
maintained.
4.9. Leased Properties. SCHEDULE 4.9 lists, as of the Closing Date, (i)
all real property leased by the Borrower or any of its Restricted Subsidiaries,
and (ii) all personal property leased by the Borrower or any of its Restricted
Subsidiaries requiring lease payments in excess of $100,000 per year, including
in each case the name of the lessors and a description of the locations of such
property. The Borrower and each of its Restricted Subsidiaries enjoys peaceful
and undisturbed possession under all of its leases, and all such leases are
valid and subsisting and in full force and effect. The Borrower has delivered
complete and accurate copies of all such leases to the Agent and the Lenders.
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4.10. Realty. SCHEDULE 4.10 lists all real property owned as of the
Closing Date by the Borrower or any of its Restricted Subsidiaries. To the
knowledge of the Borrower, no portion of any such Realty is located either in a
flood fringe area or an unbuildable floodway area.
4.11. Assets for Conduct of Business. The Borrower and each of its
Subsidiaries possesses adequate assets, licenses, patents, copyrights,
trademarks and trade names necessary to continue to conduct its business
substantially as heretofore conducted without any material conflict with the
rights of other Persons.
4.12. Insurance. SCHEDULE 4.12 accurately summarizes all insurance
policies or programs of the Borrower and its Restricted 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.
4.13. Ownership of Properties. Except as set forth on SCHEDULE 4.13,
(a) each of the Borrower and its Restricted Subsidiaries has good and
marketable title to all real property owned by it, holds interests as lessee
under valid leases in full force and effect with respect to all leased real and
material personal property used in connection with its business, and has good
title to all of its other properties and assets, including, without limitation,
the assets reflected in the most recent Financial Statements (except as sold or
otherwise disposed of since the date thereof in the ordinary course of
business), in each case free and clear of all liens, claims or
encumbrances other than Permitted Liens; and (b) other than the Financing
Statements in favor of the Agent and protective filings with respect to
operating leases that may be filed after the Closing Date, no financing
statement that names the Borrower or any of its Restricted Subsidiaries as
debtor has been filed and is still in effect, and neither the Borrower nor any
of its Restricted Subsidiaries has signed any other financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement.
4.14. First Priority. The provisions of the Loan Documents (whether
executed and delivered prior to or on the Closing Date or thereafter), will
continue to create in favor of the Agent, for the benefit of the Lenders, a
valid and enforceable first priority perfected security interest in and lien
upon all right, title and interest of the Borrower and its Restricted
Subsidiaries in the Collateral described therein subject only to Permitted
Liens.
4.15. Litigation; Government Regulation. Except as set forth in
SCHEDULE 4.15, (a) there are no judgments, injunctions or similar orders or
decrees and no actions, suits, investigations or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries 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 (b) neither the Borrower nor any of
its Subsidiaries is in violation of or in default under any Requirement of Law
where such violation could have a Material Adverse Effect.
4.16. Taxes. Except as set forth in SCHEDULE 4.16, neither the Borrower
nor any of its Subsidiaries 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 4.16, each of the Borrower and its Subsidiaries
(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 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.
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4.17. ERISA; Employee Benefits.
(a) SCHEDULE 4.17 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 of its Subsidiaries is obligated
to contribute and separately identifies all Qualified Plans (as defined below)
and all Multiemployer Plans. The Borrower has delivered true and correct copies
of all such Plans to the Agent.
(b) Each such Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Internal 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") to the knowledge of the Borrower
qualifies under Section 401 of the Internal Revenue Code, and the trusts
created thereunder are, to the knowledge 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 material 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 of its Subsidiaries is or may be
liable), nor with respect to any Plan to which any of the Borrower or its
Subsidiaries (wherein the Borrower or any of its Subsidiaries 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
material unfunded benefit liability as defined in Section 4001(a)(18) of ERISA
(as to which the Borrower or any of its Subsidiaries is or may be liable).
(f) No Plan maintained or sponsored by the Borrower or any of its
Subsidiaries 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 or any of its
Subsidiaries or to which the Borrower or any of its 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 of its Subsidiaries may be directly or indirectly
liable, through indemnification obligations or otherwise.
(i) Neither the Borrower nor any of its Subsidiaries 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.
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(j) Neither the Borrower nor any of its Subsidiaries 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.
4.18. Compliance With Laws. The Borrower and each of its Subsidiaries
has duly complied with, and the Collateral and their business operations and
leaseholds are in compliance with, all Requirements of Law, including, without
limitation, all federal and state securities laws, OSHA, and Titles XVIII and
XIX of the Social Security Act (42 U.S.C. ss.ss. 1395 et seq. and ss.ss. 1396
et seq., respectively, as amended from time to time), except to the extent that
noncompliance will not have a Material Adverse Effect.
4.19. Environmental Matters.
(a) Except as set forth on SCHEDULE 4.19 attached hereto, (i) no
Hazardous Substances are unlawfully stored or otherwise unlawfully located on
the Realty, and neither the Borrower nor any of its Subsidiaries has
contaminated, nor the Borrower's knowledge has any other person contaminated,
any part of the Realty, including the groundwater located thereon and
thereunder, with any Hazardous Substance during the ownership, occupancy or
operation thereof by the Borrower or any of its Subsidiaries, and, to the
knowledge of the Borrower, no part of the Realty, including the groundwater
located thereon and thereunder, has been previously contaminated by any such
Hazardous Substance; (ii) no improvements on the Realty contain any friable
asbestos or substances containing asbestos and deemed hazardous by any federal,
state or local laws, regulations or orders respecting such material; (iii)
there have been no releases of such Hazardous Substances in violation of any
Environmental Law by the Borrower or any of its Subsidiaries, or to the
Borrower's knowledge by any other Person, on any Realty previously owned by the
Borrower or any of its Subsidiaries; (iv) to the Borrower's knowledge, the
foregoing statements are true and correct with respect to all of the real
property adjoining any of the Realty; (v) none of the Realty is located on a
site which, pursuant to any Environmental Law, has been placed on the "National
Priorities List" or "CERCLIS List" (or any similar state list) of hazardous
waste sites; (vi) to the Borrower's knowledge, there are no underground storage
tanks situated on the Realty and no underground storage tanks have ever been
situated on the Realty; (vii) to the knowledge of a responsible officer of the
Borrower, neither the Borrower nor any of its Subsidiaries has ever sent
Hazardous Substances to a site which, 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) which is subject to a
claim, an administrative order or other request to take "removal" or "remedial"
action (as defined under Environmental Laws) or to pay for the costs of
cleaning up such a site; and
(b) All activities and operations of the Borrower and each of its
Subsidiaries comply in all material respects with the requirements of all
applicable Environmental Laws of all Governmental Authorities having
jurisdiction over the Borrower or any of its Subsidiaries or its properties,
and neither the Borrower nor any of its Subsidiaries is involved in any suit or
proceeding or has received any written notice from any governmental agency
alleging that the Borrower or any of its Subsidiaries is a responsible party
with respect to a release of Hazardous Substances or has received written
notice of any claims from any person or entity relating to property damages or
personal injuries from exposure to Hazardous Substances.
4.20. Margin Securities. (a) Neither the Borrower nor any of its
Subsidiaries owns any "margin stock" within the meaning of Regulation U. None
of the proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock, maintaining, reducing or
retiring any Debt that was originally incurred to purchase or carry margin
stock or for any other purpose that would violate Regulation G, Regulation U,
Regulation T or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System, as the same may be in effect from time to time,
or for any purpose that would violate the Exchange Act.
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(b) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds of the Loans) will violate or
result in a violation of Section 7 of the Exchange Act. Neither the Borrower
nor any of its Subsidiaries owns or intends to carry or purchase directly or
indirectly any "margin security" within the meaning of the Exchange Act.
4.21. Full Disclosure. None of the Loan Documents or any other written
statements furnished to the Agent or any Lender by or on behalf of the Borrower
or any of its Subsidiaries in connection with the Loan Documents, contains any
untrue statement of a material fact or 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. There is no fact
known to the Borrower that it has not disclosed to the Lenders in writing that
may result in a Material Adverse Effect.
4.22. Contracts; Labor Disputes. Neither the Borrower nor any of its
Subsidiaries 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 of its Subsidiaries is a party to, and there is not pending or, to
the Borrower's knowledge, threatened, any labor dispute, strikes, lockout,
grievance, work stoppage or walkouts relating to any labor contract to which
the Borrower or any of its Subsidiaries is a party.
4.23. Event of Default. No Default or Event of Default has occurred
and is continuing.
4.24. Single Business Enterprise. The Borrower and the Guarantors
intend to operate as a single business enterprise. Although separate entities,
the 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.
4.25. First Data Subordinated Debt. The First Data Subordinated Debt is
in full force and effect and no default or event of default exists thereunder,
or will exist as a result of the consummation of the transaction contemplated
hereby. No prepayment obligations, or notices thereof, exist under the First
Data Subordinated Debt. The Obligations hereunder constitute Senior
Indebtedness under, and the First Data Subordinated Debt is fully subordinated
to the obligation the Borrower to repay the Obligations, as provided in the
First Data Note Purchase Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of all Obligations and the termination of the
Lenders' obligations 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. 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 and consolidating balance
sheet of the Borrower and its Subsidiaries and the Borrower and its Restricted
Subsidiaries as of the
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close of such fiscal quarter and unaudited consolidated and consolidating
statements of income, retained earnings and cash flows for the Borrower and its
Subsidiaries and the Borrower and its Restricted Subsidiaries for the fiscal
quarter then ended and for that portion of the fiscal year then ended, in each
case setting forth comparative figures for the corresponding fiscal quarter in
the preceding fiscal year, and comparable budgeted figures for the fiscal
quarter 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 adjustments) 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 a Chief Executive Officer or
the Chief Financial Officer of the Borrower to be true and accurate in all
material respects (subject to normal and reasonable year-end audit
adjustments);
(b) As soon as practicable and in any event within one hundred (100)
days after the close of the fiscal year of the Borrower, beginning with the
close of the current fiscal year, an audited consolidated balance sheet of the
Borrower and its Subsidiaries, and an unaudited consolidated balance
sheet of the Borrower and its Restricted Subsidiaries, as of the close of such
fiscal year and audited consolidated statements of income, retained earnings
and cash flows for the Borrower and its Subsidiaries, and unaudited
consolidated statements of income, retained earnings and cash flow of the
Borrower and its Restricted Subsidiaries, for the fiscal year then ended,
setting forth unaudited comparative figures for the preceding fiscal year and
comparable budgeted figures for the fiscal year then ended, including the notes
to each, audited (except as previously noted) by Ernst & Young, LLP or another
independent certified public accountant reasonably acceptable to the Required
Lenders, together with unaudited consolidating balance sheets and statements of
income for the Borrower and its Subsidiaries and for the Borrower and its
Restricted Subsidiaries for the fiscal year then ended, all prepared in
accordance with Generally Accepted Accounting Principles applied on a basis
consistent with those of the preceding year or containing disclosure of the
effect on the financial position or results of operations of any change in the
application of accounting principles and practices during the year, certified
by a Chief Executive Officer or the Chief Financial Officer of the Borrower to
be true and accurate in all material respects, and, with respect to audited
statements, accompanied by a report thereon by such certified public
accountants, containing an opinion that is not qualified in any respect,
including as to going concern or scope of audit;
(c) Concurrently with the delivery of the financial statements
described in subsection (b) above, (i) a letter from the independent certified
public accountants that, based on the independent certified public accountant's
examination of the financial statements of the Borrower and its Subsidiaries,
the accountants did not obtain knowledge of the occurrence or existence of any
Default or Event of Default, or a statement specifying the nature and period of
existence of any such condition or event disclosed by their examination;
provided, however, that such accountants shall not be liable to anyone by
reason of their failure to obtain knowledge of any Event of Default or Default
that would not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards; and (ii) a fully executed copy
privity letter from such independent public accountant to the Borrower;
(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,
together with 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 for the next
succeeding fiscal year, prepared on a quarterly basis, for the Borrower and its
Subsidiaries on a consolidated basis and for the Borrower and its Restricted
Subsidiaries, in form and detail acceptable to the Agent;
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(f) Promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements that the Borrower or any of
its Subsidiaries shall send or make available generally to its stockholders,
(ii) all regular, periodic and special reports, registration statements and
prospectuses that the Borrower or any of its Subsidiaries 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 of its Subsidiaries may render to or file with any other
Governmental Authority, including, without limitation, the Environmental
Protection Agency, OSHA and state environmental and health authorities and
agencies, and (iv) all press releases and other statements that the Borrower or
any of its Subsidiaries 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;
(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 of the Borrower
and its Restricted Subsidiaries as of the end of such fiscal quarter;
(i) Promptly upon the reasonable request therefor, copies of any annual
report required to be filed under ERISA in connection with any Employee Plan
and such other additional information about any Employee Plan as may be
reasonably requested;
(j) 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.
5.2. Notice of Certain Events. The Borrower shall promptly, but in no
event later than seven (7) Business Days after the Borrower obtains knowledge
thereof, give written notice to the Agent and the Lenders of:
(a) Any litigation or proceeding brought against the Borrower or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect;
(b) Any written notice of a violation of a Requirement of Law received
by the Borrower or any of its Subsidiaries 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 $200,000
that may be placed on, assessed against or threatened against the Borrower or
any of its Subsidiaries or any of the Collateral, except for Permitted Liens;
(d) Any Default or Event of Default;
(e) Any default or event of default under any lease relating to the
Leased Properties under which the Borrower or any Restricted Subsidiary is
lessee;
(f) Any default or event of default under any agreement or instrument
to which the Borrower or any of its Restricted Subsidiaries is a party or by
which the Borrower or any of its Restricted Subsidiaries, or
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any of their respective property, is bound, the termination of which could
reasonably be expected to have a Material Adverse Effect;
(g) The acquisition of assets by a Restricted Subsidiary that is not a
Guarantor (including the proceeds of a loan, investment, or other distribution
from the Borrower or another Subsidiary) with a value (as determined in
accordance with Generally Accepted Accounting Principles) exceeding $25,000
less the value of such Subsidiary's assets prior to such acquisition of assets;
(h) The occurrence of a Change of Control (such notice being sent to
the Agent and Lenders no later than five (5) Business Days after the Borrower
obtains knowledge of a transaction or transactions that could cause a Change of
Control in the future or, if the Borrower has no knowledge, no later than five
(5) Business Days after the Change of Control);
(i) Notice to the holder or holders of the First Data Subordinated Debt
of a Change of Control; and
(j) Any other matter that has resulted, or is likely to result, in a
Material Adverse Change.
5.3. Corporate Existence and Maintenance of Properties. The Borrower
shall, and shall cause each of its Restricted 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; provided, however, that the Borrower may
permit the dissolution of any of its Restricted Subsidiaries (and any such
Restricted Subsidiary may suffer such dissolution) if, at the time of such
dissolution, such Restricted Subsidiary has no assets, engages in no business
and otherwise has no activities other than activities related to the
maintenance of its corporate existence and good standing;
(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.
5.4. Payment of Debt. The Borrower shall, and shall cause each of its
Restricted Subsidiaries to, pay all Debt thereof when due and all other
obligations in accordance with customary trade practices.
5.5. Maintenance of Insurance.
(a) The Borrower will, and will cause each of its Restricted
Subsidiaries to, maintain and pay for insurance upon all of its assets and
properties, including the Collateral, wherever located, and all real property
owned by it, covering property and casualty, commercial general liability,
product liability, professional liability, business interruption, flood (if any
of such properties or assets are located in a flood hazard area), boiler,
fidelity and such other risks, and in such amounts and with such insurance
companies, as shall be reasonably satisfactory to the Agent (and in any event
in such amounts as shall be adequate to cover the Collateral), and will, at the
Closing, deliver certificates of such insurance to the Agent with satisfactory
loss payable endorsements naming the Agent as an additional loss payee,
additional insured and/or mortgagee
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thereunder, as its interests may appear, as appropriate. As soon as
practicable after the Closing Date, the Borrower shall deliver to the Agent
certified copies of the original policies of all insurance on the Collateral.
(b) Each such policy of insurance shall contain a clause requiring the
insurer to give not less than thirty (30) days' prior written notice to the
Agent before any cancellation of the policies for any 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 of its Restricted Subsidiaries 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 Restricted
Subsidiaries to direct, all insurers under policies of property and casualty
insurance on the Collateral to pay all proceeds payable thereunder directly to
the Agent. The Agent, on behalf of the Lenders, shall hold all such proceeds
for the account of the Borrower and its Restricted 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 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;
otherwise, the Agent may 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 Loans in accordance with
SECTION 2.5(A) (first to Base Rate Loans and then to LIBOR Loans). 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 agent (and
attorney-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 of its Restricted Subsidiaries fails to
obtain and maintain any of the policies of insurance required to be maintained
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.
5.6. Maintenance of Books and Records; Inspection.
(a) The Borrower shall, and shall cause each of its Restricted
Subsidiaries to, maintain adequate books, accounts and records, and prepare all
financial statements required under this Agreement in accordance with Generally
Accepted Accounting Principles and in material compliance with the regulations
of any Governmental Authority having jurisdiction over it.
(b) The Borrower shall, and shall cause each of its Restricted
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
authorizes and agrees to cause each of its Restricted Subsidiaries to authorize
said accountants to discuss the finances and affairs of the Borrower or such
Restricted 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.
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5.7. Compliance with ERISA. The Borrower shall, and shall cause each of
its Subsidiaries to: (i) make timely payment of contributions required to meet
the minimum funding standards set forth in ERISA with respect to any Employee
Plan and (ii) not take any action or fail to take action, the result of which
action or inaction could be a material liability of the Borrower or any of its
Subsidiaries to the Pension Benefit Guaranty Corporation or to a Multiemployer
Plan. Borrower shall not, nor shall it permit any of its Subsidiaries to,
participate in any Prohibited Transaction that could subject the Borrower or
any of its Subsidiaries to any material civil penalty under ERISA or material
tax under the Internal Revenue Code. The Employee Plans of the Borrower and
each of 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.
5.8. 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 of its
Subsidiaries may in good faith by appropriate proceedings and with due
diligence contest any such tax, assessment, charge, levy or claim if the
Borrower or Subsidiary establishes any reserves reasonably requested by the
Agent with respect thereto in accordance with Generally Accepted Accounting
Principles.
5.9. 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 use of its properties or the conduct of its
business, and maintain the same at all times in full force and effect, except
to the extent that a failure to have or maintain the same would not have a
Material Adverse 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, other than those the failure to comply with which would not have a
Material Adverse Effect.
5.10. Name Change. The Borrower shall notify the Agent and the Lenders
at least fifteen (15) days prior to the effective date of any change of the
name of the Borrower or any of its Restricted Subsidiaries, and prior to such
effective date the Borrower or such Subsidiary shall execute any amended or new
Financing Statements and other Loan Documents necessary to maintain and
continue the perfected security interest of the Agent in all of its Collateral
and shall take such other actions and executed such documents as the Agent
shall reasonably request.
5.11. Disbursement of Proceeds By the Borrower.
(a) At the request of the Agent, the Borrower shall obtain an
intercompany promissory note with respect to advances of any portion of the
Loans to any Restricted Subsidiary of the Borrower and any other amounts owing
from any Restricted Subsidiary of the Borrower to the Borrower from time to
time, and shall promptly thereafter grant to the Agent a first priority
perfected security interest in such promissory note as security for the
Obligations.
(b) Should any Restricted 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 with respect to such intercompany Debt on
behalf of the Borrower 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 Restricted Subsidiary's bankruptcy
proceeding.
5.12. Creation or Acquisition of New Subsidiaries. The Borrower and its
Subsidiaries may from time to time create or acquire new Subsidiaries, provided
that (i) each new Restricted Subsidiary having assets with
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a gross value (determined in accordance with Generally Accepted Accounting
Principles) in excess of $50,000 (or upon obtaining assets, including but not
limited to the proceeds of investments, loans, or other contributions from the
Borrower or another Subsidiary, in excess of $50,000 in the case of an existing
Subsidiary which previously had assets with a gross value less than $50,000)
will execute and deliver to the Agent (with sufficient copies for each Lender)
an amendment or accession to the Guaranty Agreement, in form and substance
satisfactory to the Agent, pursuant to which such new Restricted Subsidiary
shall become a party thereto, as well as an amendment or accession to the
Guarantor Security Agreement and the Guarantor Pledge Agreement and Financing
Statements, each in form and substance satisfactory to the Agent, pursuant to
which such new Restricted Subsidiary shall secure its obligations under the
Guaranty Agreement by first priority, perfected security interests in all of
its assets, subject only to Permitted Liens, (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 Restricted 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 Restricted Subsidiary to execute and deliver, and will
cause to be delivered, all documentation of the type described in SECTIONS
3.2.2(B) through (G) as such new Restricted Subsidiary would have had to
deliver were it a Restricted Subsidiary on the Closing Date.
5.13. Certain Acquisitions. (a) Not less than ten (10) days prior to
the consummation of any Acquisition for an Acquisition Amount greater than
$5,000,000, the Borrower shall deliver to the Agent and each Lender, in form
and substance reasonably satisfactory to the Agent, an officer's certificate
executed by a Chief Executive Officer or the Chief Financial Officer of the
Borrower, accompanied by detailed calculations, that (i) the consummation of
such Acquisition will not result in a violation of any provision of this
Agreement and no Default or Event of Default exists or will exist as a result
of such Acquisition, and (ii) confirming compliance with the covenants
contained in SECTIONS 6.9 through 6.14, inclusive, for the most recent
calculation period ended immediately prior to the date of such Acquisition, on
a pro forma basis as if such Acquisition had occurred on the first day of such
period.
(b) Within ten (10) days after the closing of each Acquisition for an
Acquisition Amount in excess of $5,000,000, the Borrower will deliver to the
Agent and each Lender
(i) a reasonably detailed description of the nature and line of
business, and the material terms of such Acquisition
(including, without limitation, the purchase price and method
and structure of payment) of each Person or business that is
the subject of such Acquisition (each, a "Target");
(ii) to the extent available, 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; and
(iii) projected income statements with respect to each Target for the
two-year period following the consummation of such Acquisition,
together with any appropriate statement of assumptions and pro
forma adjustments.
(c) Within ten (10) days after the closing of each Acquisition, the
Borrower will deliver to the Agent and each Lender a copy of the fully executed
acquisition agreement (including schedules and exhibits thereto).
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(d) Within thirty (30) days after the closing of a Acquisition for an
Acquisition Amount less than $5,000,000, but greater than $2,000,000, the
Borrower shall deliver to the Lenders the information listed in subsection B(I)
above.
(e) Acquisitions involving Borrowings may be effected by the
Borrower and its Restricted Subsidiaries in compliance with Section 2.2(a)(ii)
hereof.
(f) The consummation of each 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 no default or Event of Default
exists or will exist as a result of such Acquisition, that any applicable
conditions of SECTION 5.12 have been satisfied, that the same is permitted in
accordance with the terms of this Agreement and that the information submitted
by the Borrower pursuant to subsection (A) above, if any, is 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.
5.14. Further Assurances. The Borrower shall, and shall cause each of
its Subsidiaries to, make, execute, endorse, acknowledge and deliver to the
Agent and the Lenders any amendments, restatements, modifications or
supplements hereto and any other agreements, instruments or documents, and take
any and all such other actions, as may from time to time be reasonably
requested by the Agent or the Lenders to effect, confirm or further assure or
protect and preserve the interests, rights and remedies of the Lenders and the
Agent under this Agreement and the other Loan Documents.
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:
6.1. Merger, Consolidation. Except as permitted by SECTION 5.3, the
Borrower will not, and not permit or cause any of its Restricted Subsidiaries
to, 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 an
Acquisition, the applicable conditions of SECTION 5.13 shall be
satisfied, and (z) immediately after giving effect thereto, no
Default or Event of Default would exist;
(ii) any Restricted 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 an Acquisition,
the applicable conditions of SECTIONS 5.12 and 5.13 shall be
satisfied, and (z) immediately after giving effect thereto, no
Default or Event of Default would exist.
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6.2. Debt. The Borrower will not, and will not permit or cause any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Debt other than:
(i) Debt incurred pursuant to this Agreement and the other Loan
Documents;
(ii) Debt existing, or relating to commitments existing, on the date
hereof, all as set forth in SCHEDULE 6.2 attached hereto, and
any extensions, refundings or renewals thereof on the same
terms or other terms satisfactory to the Required Lenders;
provided, however, that neither the principal amount thereof
nor the interest rate thereon shall be increased, nor shall the
amortization schedule thereof be shortened;
(iii) Debt under leases not constituting Capital Leases;
(iv) accrued expenses, current trade payables and other current
liabilities arising in the ordinary course of business and not
incurred through the borrowing of money;
(v) unsecured intercompany Debt (x) of any Restricted Subsidiary to
the Borrower (subject to SECTION 6.7(G) hereof), (y) of any
Subsidiary to a Restricted Subsidiary, and (z) of the Borrower
to any Subsidiary, provided that any such Debt under this
clause (v), if requested by the Agent, is evidenced by one or
more promissory notes pledged to the Agent pursuant to the
Pledge Agreement, is payable on demand and, as to Debt
described in clause (z), is fully subordinated in right of
payment to the Obligations;
(vi) Contingent Obligations permitted by SECTION 6.3;
(vii) Debt of the Borrower under any Swap Agreement with a Lender
relating to the Debt incurred under this Agreement; provided
that the notional amount of all such agreements at any time
shall not exceed the aggregate amount of the Commitments at
such time;
(viii) Debt assumed or incurred in connection with any Acquisition
(excluding Debt incurred pursuant to this Agreement and the
other Loan Documents as set forth in SECTION 6.2(I)), to the
extent approved in writing by the Required Lenders in
connection with such Acquisition;
(ix) Subordinated Debt; and
(x) other Debt (including, without limitation, Debt secured by
liens described in clause (E) of the definition of Permitted
Liens) in an aggregate principal amount at any time outstanding
not to exceed $10,000,000 for the Borrower and its Restricted
Subsidiaries.
6.3. Contingent Obligations. The Borrower will not, and will not
permit or cause any of its Restricted Subsidiaries to, 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 Loan Documents;
(iii) customary indemnification obligations of the Borrower and its
Restricted Subsidiaries incurred in connection with
Acquisitions made in compliance with SECTION 5.13;
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(iv) Contingent Obligations consisting of the indemnification by the
Borrower or any of its Restricted Subsidiaries of (x) the
officers, directors, employees and agents of the Borrower
or such Restricted Subsidiary, to the extent permissible under
the corporation law of the jurisdiction in which the Borrower or
such Restricted Subsidiary is organized, (y) commercial banks,
investment bankers and other independent consultants or
professional advisors pursuant to agreements relating to the
underwriting of the Borrower's or such Restricted Subsidiary's
securities or the rendering of banking or professional services
to the Borrower or such Restricted Subsidiary and (z) landlords,
licensors, licensees and other parties pursuant to agreements
entered into in the ordinary course of business by the
Borrower or such Restricted Subsidiary;
(v) Contingent Obligations owed to a seller in an Acquisition that
(x) relate to customary post-closing adjustments with respect
to accounts receivable, accounts payable and similar items
typically subject to post-closing adjustments in similar
transactions, and (y) are outstanding for a period of one (1)
year or less following the creation thereof;
(vi) Debt with respect to financed insurance premiums not past due;
(vii) amounts payable under earnouts and other contingent
obligations, subordinated on terms acceptable to the Required
Lenders, incurred by any Borrower or any Restricted Subsidiary
in connection with an Acquisition, whether or not earned or
matured;
(viii) obligations under Letters of Credit issued under SECTION 2.17;
(ix) guarantees by Borrower or any of its Restricted Subsidiaries of
obligations of the Borrower or its Restricted Subsidiaries under
leases permitted hereunder; and
(x) guarantees by Borrower or any of its Restricted Subsidiaries of
any other Debt permitted under SECTION 6.2.
6.4. Liens and Encumbrances. The Borrower will not, and will not cause
or permit any of its Restricted Subsidiaries to, 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. The Borrower will not, and will not cause
or permit any of its Restricted Subsidiaries to, 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 of worn out or obsolete equipment for fair
market value or the exchange of used or obsolete equipment for replacement
equipment; (iii) dispositions not otherwise permitted by this SECTION 6.5, not
exceeding five percent (5%) of Consolidated Total Assets in the aggregate, for
the Borrower and its Restricted Subsidiaries, for any fiscal year; and (iv) any
sale, lease, transfer or conveyance from one Subsidiary to any Restricted
Subsidiary or to the Borrower, or from the Borrower to any Restricted
Subsidiary, provided that, immediately after giving effect thereto, no Default
or Event of Default would exist.
6.6. Transactions with Related Persons. Except as set forth on SCHEDULE
6.6 or as permitted by SECTIONS 5.13, 6.2, 6.5 and 6.7 or otherwise
contemplated by this Agreement, the Borrower will not, and will not cause or
permit any of its Restricted Subsidiaries to, 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 other transaction with any
Affiliate, except
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upon fair and reasonable terms no less favorable to the Borrower or such
Restricted Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate.
6.7. Restricted Investments. Except as otherwise permitted in SECTIONS
6.2 and 6.9, the Borrower will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, purchase, own, invest in or
otherwise acquire any capital stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or become a
partner or joint venturer in any partnership or joint venture, or
consummate an Acquisition, or make a commitment or otherwise agree to do any of
the foregoing, other than:
(a) Cash Investments;
(b) loans and advances to employees for reasonable travel and
business expenses in the ordinary course of business;
(c) Accounts owing to the Borrower or any of its Restricted
Subsidiaries created in the ordinary course of business and
payable in accordance with customary terms prevailing in
the industry;
(d) prepaid expenses incurred in the ordinary course of business;
(e) existing investments in corporations that are Subsidiaries as of
the date hereof;
(f) investments in Restricted Subsidiaries and Acquisitions made in
accordance with terms of this Agreement, including SECTIONS 5.12
and 5.13;
(g) investments in and loans to Unrestricted Subsidiaries and other
Persons (including joint ventures and partnerships), provided
that the sum of (i) the aggregate amount of cash paid or loaned
by the Borrower and its direct and indirect Restricted
Subsidiaries in connection with such investments and loans,
and (ii) the aggregate fair market value of all other
consideration (other than Stock or other equity or ownership
interests) given by the Borrower and its Restricted Subsidiaries
in connection with all such investments and loans shall not at
any time exceed ten percent (10%) of Consolidated Total Assets
on the Borrower's most recent quarterly or annual financial
statements;
(h) investments by any Borrower under any Swap Agreement with a
Lender relating to the Debt incurred under this Agreement;
provided that the notional amount of all such Swap Agreements
at any time shall not exceed the aggregate amount of the
Commitments at such time;
(i) investments existing as of the Closing Date as described in
SCHEDULE 6.7;
(i) loans or advances from a Subsidiary to the Borrower or to
another Subsidiary; and
(j) any other investments, not to exceed $3,000,000 in the
aggregate.
6.8. Restricted Payments. The Borrower will not and will not permit
any Restricted Subsidiary to:
(a) Except as permitted by SECTION 6.20 hereof, declare or pay any
dividends upon any of its Stock (other than dividends paid in
Stock of the Borrower and dividends paid or payable by a
Subsidiary to the Borrower or a Restricted Subsidiary); or
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(b) Except as permitted by SECTION 6.20 hereof, purchase, redeem,
retire or otherwise acquire, 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 (other than purchases, redemptions,
retirements and other acquisitions by a Subsidiary of shares,
options, warrants or other rights issued thereby held by the
Borrower or a Restricted Subsidiary); or
(c) make any distribution of cash, property or assets other than
Stock among the holders of shares of its Stock (other than
distributions made by Subsidiaries to the Borrower or a
Restricted Subsidiary); or
(d) enter into or amend any agreement relating to any of the
foregoing (excluding agreements relating only to Subsidiaries
with the Borrower or a Restricted Subsidiary).
6.9. Capital Expenditures. Except for Capital Expenditures allowed
pursuant to SECTION 5.13, the Borrower will not, and will not cause or permit
any of its Restricted Subsidiaries, to make any Capital Expenditure if, after
giving effect to such Capital Expenditure, the aggregate amount of all such
Capital Expenditures made by the Borrower and its Restricted Subsidiaries
during each of the fiscal years 1997 and 1998, shall exceed an amount equal to
12% of the total revenue of the Borrower and its Restricted Subsidiaries for
such fiscal year, and thereafter, shall exceed an amount equal to 10% of the
total revenue of the Borrower and its Restricted Subsidiaries for such fiscal
year.
6.10. Annualized EBITDA to Annualized Interest Expense. The Borrower
will not, and will not cause or permit any of its Restricted Subsidiaries to,
permit the ratio of Annualized EBITDA to Annualized Interest Expense to be less
than 3.5 to 1.0 as of the end of any fiscal quarter.
6.11. Consolidated Senior Debt to Annualized EBITDA. The Borrower will
not, and will not cause or permit any of its Restricted Subsidiaries to, permit
the ratio of Consolidated Senior Debt (excluding Contingent Obligations unless
otherwise required to be included in accordance with Generally Accepted
Accounting Principles) to Annualized EBITDA to be greater than 2.5 to 1.0 as of
the end of any fiscal quarter.
6.12. Consolidated Debt to Consolidated Total Capital. The Borrower
will not, and will not cause or permit any of its Restricted Subsidiaries to,
permit the ratio of Consolidated Debt (excluding Contingent Obligations unless
otherwise required to be included in accordance with Generally Accepted
Accounting Principles) to Consolidated Total Capital to be greater than 0.55 to
1.0 as of the end of any fiscal quarter.
6.13. Consolidated Debt to Annualized EBITDA. The Borrower will not,
and will not cause or permit any of its Restricted Subsidiaries to, permit the
ratio of Consolidated Debt (excluding Contingent Obligations unless otherwise
required to be included in accordance with Generally Accepted Accounting
Principles) to Annualized EBITDA to be greater than 3.5 to 1.0 as of the end of
any fiscal quarter.
6.14. Annualized EBITDA. The Borrower will not, and will not cause or
permit any of its Restricted Subsidiaries to, permit Annualized EBITDA to be
less than $15,000,000 as of the end of any fiscal quarter.
6.15. Sale and Leaseback. The Borrower will not, and will not cause or
permit any of its Restricted Subsidiaries to, enter into any arrangement with
any Person (other than the Borrower or any of its Subsidiaries, provided the
provisions of SECTION 6.6 are satisfied) providing for the leasing by the
Borrower or any of its Restricted Subsidiaries of any asset that has been sold
or transferred by the Borrower or such Restricted Subsidiary to such Person.
6.16. New Business. The Borrower will not, and will not cause or
permit any of its Restricted Subsidiaries to, engage in any business other than
businesses primarily within the Line of Business or make
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any material change in any of their business objectives, purposes and
operations that would be reasonably likely to materially adversely affect the
repayment of the Obligations.
6.17. Subsidiaries or Partnerships. Except in compliance with the terms
of this Agreement (including but not limited to Sections 5.12, 5.13 and 6.7
hereof), the Borrower will not, and will not cause or permit any of its
Restricted Subsidiaries to (a) become a partner or joint venturer in any
partnership or joint venture, or (b) create or acquire any new Subsidiary.
6.18. Hazardous Wastes. The Borrower will not, and will not cause or
permit any of its Subsidiaries to, 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 onto or
located on any Realty owned or, to the extent the Borrower or any of its
Subsidiaries is in possession or control of same, leased by the Borrower or any
of its Subsidiaries, except in material compliance with all applicable
Environmental Laws; and if any Hazardous Substance is brought or found located
thereon in material violation of any applicable Environmental Law, it shall be
promptly removed, with proper disposal, and all required environmental cleanup
procedures shall be diligently undertaken pursuant to all such Environmental
Laws, and the obligations hereunder with respect to any such materials brought
or located thereon while the Borrower or any of its Subsidiaries owned or
leased any such real property shall survive any foreclosure of the Leasehold
Deeds of Trust, and other deeds of trust or mortgages. THE BORROWER HEREBY
ACKNOWLEDGES THAT FOR SO LONG AS THE LENDERS HAVE NOT FORECLOSED AND TAKEN
TITLE TO, AND POSSESSION AND CONTROL OF, THE REALTY, ALL HAZARDOUS WASTE
HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE
RESPONSIBILITY OF THE BORROWER AND ITS SUBSIDIARIES AND THE BORROWER HAS FULL
DECISION-MAKING POWER WITH RESPECT THERETO. THE BORROWER FURTHER ACKNOWLEDGES
THAT NEITHER THE AGENT NOR ANY LENDER IS AN ENVIRONMENTAL CONSULTANT, ENGINEER,
INVESTIGATOR OR INSPECTOR OF ANY TYPE WHATSOEVER. NO ACT (OR DECISION NOT TO
ACT) OF THE AGENT OR ANY LENDER RELATED TO THIS AGREEMENT OR ANY LOAN DOCUMENT
SHALL GIVE RISE TO ANY OBLIGATION OR LIABILITY ON THE PART OF THE AGENT OR ANY
LENDER WITH RESPECT TO ENVIRONMENTAL MATTERS UNLESS SUCH ACTION IS AFTER THE
LENDERS HAVE FORECLOSED ON AND TAKEN POSSESSION AND CONTROL OF THE SUBJECT
PROPERTY AND SUCH ACTION PROXIMATELY RESULTS IN SUCH CONTAMINATION. IN NO EVENT
SHALL ANY INFORMATION OBTAINED FROM THE AGENT OR ANY LENDER OR THEIR RESPECTIVE
AGENTS PURSUANT TO THIS AGREEMENT OR ANY LOAN DOCUMENT CONCERNING THE
ENVIRONMENTAL CONDITION OF THE REALTY BE CONSIDERED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES (OR ANY OTHER RECIPIENT OF SAID INFORMATION) AS CONSTITUTING
LEGAL OR ENVIRONMENTAL CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING
ADVICE, AND NEITHER THE BORROWER NOR ANY OF ITS SUBSIDIARIES (NOR ANY OTHER
RECIPIENT OF SAID INFORMATION) SHALL RELY ON SAID INFORMATION. THE
RESPONSIBILITY FOR COMPLIANCE WITH VARIOUS FEDERAL, STATE AND LOCAL
ENVIRONMENTAL, HEALTH OR SAFETY LAWS AND REGULATIONS RESTS SOLELY WITH THE
BORROWER AND ITS SUBSIDIARIES FOR SO LONG AS THE LENDERS HAVE NOT FORECLOSED
AND TAKEN TITLE TO, AND POSSESSION AND CONTROL OF, THE REALTY.
6.19. Fiscal Year. The Borrower will not, and will not cause or
permit any Subsidiary to, change its fiscal year from a calendar year ending
December 31.
6.20. Amendments; Prepayments of Debt, Etc. The Borrower will not,
and will not cause or permit any Subsidiary to (a) amend in any respect its
certificate or articles of incorporation, except to the extent required in
connection with transactions permitted by SECTIONS 5.3 and
6.1, provided that any such
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amendment does not create any changes in violation of SECTION 6.8 hereof; or
(b) except with respect to the Debt created under the Loan Documents, (i) amend
or modify (or permit the amendment or modification of) any of the terms or
provisions of any Subordinated Debt or any agreement related thereto (other
than amendments that do not affect payments, prepayments, subordination, the
definition of Senior Indebtedness, information requests, affirmative covenants,
negative covenants, defaults or other provisions the modification of which
could adversely impact the Lenders); (ii) make any voluntary or optional
payment or prepayment or redemption or acquisition 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, any Debt (other than Subordinated Debt) if the same would cause an
Event of Default; or (iii) make any voluntary or optional payment or prepayment
or redemption or acquisition 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, any Subordinated
Debt (specifically including the First Data Subordinated Debt); provided,
however, that the Borrower may make a voluntary or optional payment or
prepayment of Subordinated Debt, in accordance with the terms thereof, if at
the time of such payment or prepayment there exist no outstanding Loans,
Reimbursement Obligations, Letter of Credit Outstandings, interest or fees
under this Agreement.
6.21. Location of Assets; Places of Business. Without thirty (30) days'
prior written notice to the Agent and the filing of Financing Statements
reasonably satisfactory to the Agent, the Borrower will not, and will not cause
or permit any Restricted Subsidiary to (i) maintain any Inventory or Equipment
at any location other than the locations set forth on SCHEDULE 4.8 or (ii)
change its principal place of business to a location other than that set forth
on SCHEDULE 4.8.
6.22. Account Documents. Without thirty (30) days' prior written notice
to the Agent and the filing of Financing Statements reasonably satisfactory to
the Agent, the Borrower will not, and will not cause or permit any Restricted
Subsidiary to, remove the billing and related records relating to Accounts from
the locations set forth on SCHEDULE 4.8.
6.23. No Inconsistent Transactions or Agreements. The Borrower will
not, and will not cause or permit any Restricted Subsidiary to enter into any
transaction or agreement, or enter into any amendment or other modification to
any currently existing agreement, that by its terms prohibits or materially
restricts the ability of the Borrower to pay the principal of or interest on
the Loans.
6.24. Designation of Unrestricted Subsidiaries. The Borrower shall not
designate any Subsidiary as an Unrestricted Subsidiary unless either (a) the
First Data Note Purchase Agreement is no longer in effect, or (b) the Borrower
has obtained an effective waiver of any default that would arise under the
First Data Note Purchase Agreement by virtue of provisions of this Agreement
applicable to Unrestricted Subsidiaries that conflict with applicable
limitations of the First Data Note Purchase Agreement.
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;
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(b) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained in SECTIONS 2.14, 5.1, 5.2, 5.3(A) or 5.5, 5.12, 5.13 or ARTICLE VI;
(c) The Borrower or any of its Subsidiaries 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
the same is not cured to the Required Lenders' satisfaction within thirty (30)
days after the earlier of (i) written notice to the Borrower of the existence
of such Default, or (ii) the date on which 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 of its Subsidiaries in this Agreement, in the other Loan
Documents or in any other agreement now existing or hereafter executed between
the Borrower or any of its Subsidiaries 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) The occurrence of any default or event of default on the part of
the Borrower or any of its Restricted Subsidiaries (including specifically, but
without limitation, defaults due to nonpayment) under the terms of any
agreement, document or instrument (including without limitation any Swap
Agreement) pursuant to which the Borrower or such Restricted Subsidiary has
incurred any Debt, specifically including the First Data Subordinated Debt and
any other Subordinated Debt in excess of $250,000 (other than the Obligations),
which default or event of default would permit acceleration of such Debt and
which is not cured within any applicable grace or cure period;
(f) The termination of any agreement, contract or instrument to which
the Borrower or any of its Restricted Subsidiaries 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, taking into account any
applicable grace or cure provisions thereof;
(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 of its
Restricted Subsidiaries that has a Material Adverse Effect;
(i) The filing by the Borrower or any of its Restricted Subsidiaries
(with assets having a value of $50,000 or more) of any voluntary 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;
(j) The filing against the Borrower or any of its Restricted
Subsidiaries (with assets having a value of $50,000 or more) 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 of its Restricted Subsidiaries (with assets
having a value of $50,000 or more);
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(l) The Borrower or any of its Subsidiaries (with assets having a value
of $50,000 or more) (i) ceases to be Solvent (taking into account any rights of
contribution), or (ii) except as otherwise permitted by SECTIONS 5.3 and 6.1,
ceases to conduct its business substantially 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 and, if such event has occurred with
respect to a Subsidiary, such event reasonably can be expected to have a
Material Adverse Effect; provided that for the purposes of this Event of
Default, a Material Adverse Effect shall be deemed to have occurred if the
foregoing cessation or prevention of conduct of business affects the operations
of the Borrower or any of its Subsidiaries accounting for greater than 7% of
Consolidated Total Assets, individually or in the aggregate, and such cessation
or prevention continues for seven days or more;
(m) A notice of lien, levy or assessment which, together with all other
liens, levies and assessments of record, is in excess of $200,000 is filed of
record against any portion of the assets of the Borrower or any of its
Restricted Subsidiaries 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 of its Restricted Subsidiaries, and the same is
not dismissed, released, bonded 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 and, if bonded, such
bond (or a replacement bond) shall not continue in effect at all times until
such judgment is dismissed or discharged;
(n) The entry of a judgment or the issuance of a warrant of attachment,
execution or similar process against the Borrower or any of its Restricted
Subsidiaries or any of their respective assets in excess of $200,000 which
shall not be dismissed, discharged, stayed pending appeal or bonded within
thirty (30) days after entry and, if bonded, such bond (or a replacement bond)
shall not continue in effect at all times until such judgment is dismissed or
discharged;
(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
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 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) (i) The guaranty given by any Guarantor under the Guaranty
Agreement shall, for any reason other than the satisfaction in full of all
Obligations and termination of this Agreement or the release of such Guarantor
from its Obligations under the Guaranty Agreement in accordance with the terms
thereof, cease to be in full force and effect at any time or is declared to be
null and void or (ii) any such Guarantor denies that it has any further
liability under the Guaranty Agreement or gives notice to such effect, and such
denial or notice is not revoked within one Business Day after the earlier of
(A) receipt by the Borrower of notice from the Agent or any Lender of such
denial or notice or (B) the Borrower becomes aware of such denial or notice
being made or given, as the case may be; or
(q) The occurrence of a Change of Control.
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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);
(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 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
difference between 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) and the amount then
on deposit in the Cash Collateral Account, 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 of its Restricted Subsidiaries 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
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
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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 of its
Restricted Subsidiaries 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 Note by the acceptance of such
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 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.
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 Note with any credit or other
information concerning the business, prospects, operations, properties,
financial or other condition or
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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 Credit, or at any time or
times thereafter.
(d) The Agent shall not be responsible to any Lender or the holder of
any 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
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 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 the
proper Person. The Agent may consult with legal
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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 in SECTION 10.3(B)) to have resulted from the Agent's
gross negligence or willful misconduct.
9.8. The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it and the 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 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 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 Note as the
holder thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person
that, at the time of making such request or giving such authority or consent,
is the holder of any Note, shall be conclusive and binding on any subsequent
holder, transferee, assignee or endorsee, as the case may be, of such Note or
of any Note or 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
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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 that may be necessary to perfect and maintain perfected the
liens upon the Collateral granted pursuant to the Loan Documents.
(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 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 of its
Subsidiaries 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).
9.12. NationsBank of Tennessee, N.A. has been designated Co-Agent
hereunder and in such capacity shall have no additional rights, responsibilities
or obligations. The Co-Agent shall be entitled to all rights of exculpation and
indemnification of the Agent hereunder.
ARTICLE X
MISCELLANEOUS
10.1. Survival. (a) The representations and warranties made by or on
behalf of the Borrower or any of its Subsidiaries 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, (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.
(b) The Borrower, the Agent and the Lenders agree that: (i) ARTICLES IV
and V and the other applicable provisions of this Credit Agreement are intended
as the Agent's (on behalf of the Lenders) written request for information (and
the Borrower's response) concerning the environmental condition of the real
property; and (ii) each provision in this Credit Agreement (together with any
indemnity applicable to a breach of any such provision) with respect to the
environmental condition of the Realty is intended to be an "environmental
provision" and as such it is expressly understood that the Borrower's duty to
indemnify the Agent and the Lenders hereunder shall survive: (x) any judicial
or nonjudicial foreclosure under the Leasehold Deeds of Trust or transfer of
any Realty in lieu thereof; (y) the release and reconveyance or cancellation of
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the Leasehold Deeds of Trust; and (z) the termination or cancellation of the
Commitments or this Agreement 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 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 ENVOY CORPORATION 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
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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 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 facsimile transmission) and mailed,
telecopied or delivered to the party to be notified at the following addresses
(provided, however, that Syndication Agency Services of First Union National
Bank of North Carolina will not receive copies of regular financial reports and
the attorneys listed below will receive neither regular financial reports nor
the business information submitted to the Agent and the Lenders):
If to Borrower: Envoy Corporation
Two Lakeview Place
15 Century Boulevard
Suite 600
Nashville, Tennessee 37214
Attention: Kevin M. McNamara,
Chief Financial Officer
Telephone: (615) 885-3700
Telecopy: (615) 231-4994
with a copy to: Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238-2700
Attention: Bob F. Thompson
Telephone: (615) 742-6262
Telecopy: (615) 742-6293
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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: 704/374-7121
Telecopy: 704/383-9144
and
First Union
Capital Markets Group
150 Fourth Avenue North
Nashville, Tennessee 37219-0674
Attention: Carolyn Hannon
Telephone: 615/251-9374
Telecopy: 615/251-9461
and
First Union National Bank of
North Carolina, Attention: Syndication
Agency Services
301 South College Street TW10
Charlotte, North Carolina 28288-0608
Telephone: 704/383-0281
Telecopy: 704/383-0288
with a copy to: 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
Telecopy: 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, postage prepaid, (ii) if transmitted by overnight delivery service or
telecopied, when delivered for overnight delivery or transmitted by telecopier,
respectively, with appropriate confirmation of delivery, 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, North Carolina, Attention:
Syndication Agency Services, G/L #465906, RC#5007, RE: Envoy Corporation,
unless otherwise instructed by the Agent.
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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 Loans made by it and the Note or Notes held by it); provided,
however, that (i) each such assignment shall be of an equal, pro rata
percentage of such Lender's rights and obligations (including its Commitments)
under each Facility, (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) $5,000,000, (iii) each such assignment shall be
to an Eligible Assignee, and (iv) 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 Note or 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 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 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 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 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").
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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 Note or Notes subject to
such assignment, the Agent will, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT D, (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, will execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, to the extent the assigning Lender has retained its Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the
forms 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 Commitment, the
outstanding Loans made by it and the Note or 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 $3,000,000,
(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 Note or Notes held
by it), (vi) each such participation shall be of an equal, pro rata percentage
of such Lender's rights and obligations (including its Commitment) under each
Facility, (vii) 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), and (vii) the parties to each such participation shall pay a
processing fee of $3,000 to the Agent for its own account. 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.
(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
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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.
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, the Co-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 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, the Co-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;
(d) to pay and hold the Agent, the Co-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, and
(e) to reimburse the Co-Agent upon demand and after notice in
accordance with Section 10.4 for up to $3,000 of its reasonable attorneys' fees
and expenses incurred or paid by the Co-Agent in connection with the
preparation or closing of this Agreement.
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
Co-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
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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 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 in SECTION 10.3). Without limiting the generality of
the foregoing, the Indemnified Costs with respect to Environmental Claims shall
include, without limitation, amounts paid in settlement of claims, all
consultant and expert fees and expenses of any Indemnified Person incurred in
connection with any investigation of site conditions, any abatement, cleanup,
remediation, removal or restoration work, or liability for any damages or
injuries of any Person or to land, air, water or other natural resources. 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 taking action to extend, the term of the Revolving Credit
Facility, (iv) affect the obligation of the Lenders having Revolving Credit
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;
-76-
<PAGE> 83
(c) no provision relating to the rights or obligations of the Issuing
Bank or the Swingline Lender under this Agreement or any of the other Loan
Documents may be amended, modified or waived without the consent of the Issuing
Bank or the Swingline Lender, as applicable; 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 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 of the Lenders
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, ORAL 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 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.
-77-
<PAGE> 84
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 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 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. Amended and Restated Agreement. This Credit Agreement amends,
restates, supersedes and replaces the Original Agreement in its entirety. From
and after the Closing Date, any Revolving Credit Loans (as defined in the
Original Agreement) outstanding under the Original Agreement shall be deemed to
be Revolving Credit Loans (of the same Type) outstanding under this Credit
Agreement.
-78-
<PAGE> 85
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.
ENVOY CORPORATION
By: /s/ Kevin McNamara
------------------------------
Title: Chief Financial Officer
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, AS AGENT
AND AS ISSUING BANK
By: /s/ Joseph H. Towell
---------------------------
Joseph H. Towell,
Senior Vice President
NATIONSBANK OF TENNESSEE, N.A.,
AS CO-AGENT
By: /s/ John M. Hall
-----------------------------------
John M. Hall, Senior Vice President
(Signatures Continued)
<PAGE> 86
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Joseph H. Towell
---------------------
Joseph H. Towell,
Senior Vice President
Revolving Credit
Commitment: $25,000,000.00
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) 383-7121
Telecopy: (704) 383-9144
Wiring Instructions:
First Union National Bank
of North Carolina
Charlotte, North Carolina
ABA #053000219
G/L 465906, RC 5007
Attention: Syndication Agency Services
Reference: Envoy Corporation
<PAGE> 87
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ John M. Hall
-----------------------------------
John M. Hall, Senior Vice President
Revolving Credit
Commitment: $25,000,000.00
Address:
NationsBank of Tennessee, N.A.
One NationsBank Plaza, 2nd Floor
Nashville, Tennessee 37239
Attention: John M. Hall or Lara C. Myatt
Telephone: (615) 749-4141
Telecopy: (615) 749-4762
Wiring Instructions:
NationsBank of Tennessee, N.A.
Nashville, Tennessee
ABA #064000020
For further credit to:
Commercial Loan Services
Attn: Linda Hall
Account: 0136621082
Reference: Envoy Corporation
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