EXHIBIT 10.14
US Oncology, Inc.
$100,000,000
8.42% Senior Secured Notes due November 2006
__________________
NOTE PURCHASE AGREEMENT
__________________
Dated November 24, 1999
TABLE OF CONTENTS
1. AUTHORIZATION OF NOTES............................................. 1
2. SALE AND PURCHASE OF NOTES......................................... 1
3. CLOSING............................................................ 2
4. CONDITIONS TO CLOSING.............................................. 2
4.1 Representations and Warranties..................................... 2
4.2 Performance; No Default............................................ 2
4.3 Compliance Certificates............................................ 2
4.4 Opinions of Counsel................................................ 3
4.5 Purchase Permitted By Applicable Law, etc.......................... 3
4.6 Sale of Other Notes................................................ 3
4.7 Payment of Special Counsel Fees.................................... 3
4.8 Private Placement Number........................................... 4
4.9 Changes in Corporate Structure..................................... 4
4.10 Proceedings and Documents.......................................... 4
4.11 Execution and Delivery of Security Documents....................... 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 4
5.1 Organization; Power and Authority.................................. 4
5.2 Authorization, etc................................................. 5
5.3 Disclosure......................................................... 5
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates... 5
5.5 Financial Statements............................................... 6
5.6 Compliance with Laws, Other Instruments, etc....................... 7
5.7 Governmental Authorizations, etc................................... 7
5.8 Litigation; Statutes and Orders.................................... 7
5.9 Contracts.......................................................... 8
5.10 Licenses; Approvals................................................ 8
5.11 Labor Matters...................................................... 9
5.12 Taxes.............................................................. 9
5.13 Title to Property; Leases.......................................... 9
5.14 Intellectual Property.............................................. 10
5.15 Compliance with ERISA.............................................. 10
5.16 Private Offering by the Company.................................... 11
5.17 Use of Proceeds; Margin Regulations................................ 11
5.18 Existing Indebtedness; Future Liens................................ 12
5.19 Foreign Assets Control Regulations, etc............................ 12
5.20 Status under Certain Statutes...................................... 12
5.21 Environmental Matters.............................................. 12
5.22 Solvency of the Company............................................ 13
5.23 Year 2000 Compliance............................................... 13
5.24 No Defaults........................................................ 13
6. REPRESENTATIONS OF THE PURCHASER................................... 14
6.1 Purchase for Investment............................................ 14
6.2 Source of Funds.................................................... 14
7. INFORMATION AS TO THE COMPANY...................................... 15
7.1 Financial and Business Information................................. 15
7.2 Officer's Certificate.............................................. 18
7.3 Inspection......................................................... 18
8. PREPAYMENT OF THE NOTES............................................ 19
8.1 Required Prepayments............................................... 19
8.2 Optional Prepayments with Make-Whole Amount........................ 19
8.3 Allocation of Partial Prepayments.................................. 19
8.4 Maturity; Surrender, etc........................................... 20
8.5 Purchase of Notes.................................................. 20
8.6 Make-Whole Amount.................................................. 20
8.7 Change in Control.................................................. 21
9. AFFIRMATIVE COVENANTS.............................................. 22
9.1 Compliance with Law................................................ 22
9.2 Insurance.......................................................... 23
9.3 Maintenance of Properties.......................................... 23
9.4 Payment of Taxes and Claims........................................ 23
9.5 Corporate Existence, etc........................................... 23
9.6 Additional Subsidiaries............................................ 24
9.7 Notes to Rank Pari Passu........................................... 24
9.8 Notices Regarding Company Affiliated Physician Groups.............. 24
10. NEGATIVE COVENANTS................................................. 24
10.1 Transactions with Affiliates....................................... 24
10.2 Merger, Consolidation, etc......................................... 25
10.3 Sale of Assets..................................................... 25
10.4 Conduct of Business................................................ 26
10.5 Liens.............................................................. 26
10.6 Maintenance of Consolidated Net Worth.............................. 28
10.7 Limitation on Debt................................................. 28
10.8 Minimum Fixed Charge Coverage...................................... 28
10.9 Restricted Payments................................................ 28
10.10 Permitted Investments.............................................. 28
10.11 Priority Debt...................................................... 29
10.12 Subsidiary Debt.................................................... 30
10.13 Hospital Joint Venture............................................. 30
11. EVENTS OF DEFAULT.................................................. 31
12. REMEDIES ON DEFAULT, ETC........................................... 33
12. Acceleration....................................................... 33
12.2 Other Remedies..................................................... 34
12.3 Rescission......................................................... 34
12.4 No Waivers or Election of Remedies, Expenses, etc.................. 34
13. INTENTIONALLY OMITTED.............................................. 34
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...................... 34
14.1 Registration of Notes.............................................. 34
14.2 Transfer and Exchange of Notes..................................... 35
14.3 Replacement of Notes............................................... 35
15. PAYMENTS ON NOTES.................................................. 36
15.1 Place of Payment................................................... 36
15.2 Home Office Payment................................................ 36
16. EXPENSES, ETC...................................................... 36
16.1 Transaction Expenses............................................... 36
16.2 Survival........................................................... 37
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT....... 37
18. AMENDMENT AND WAIVER............................................... 37
18.1 Requirements....................................................... 37
18.2 Solicitation of Holders of Notes................................... 38
18.3 Binding Effect, etc................................................ 38
18.4 Notes held by Company, etc......................................... 38
19. NOTICES............................................................ 39
20. REPRODUCTION OF DOCUMENTS.......................................... 39
21. CONFIDENTIAL INFORMATION........................................... 39
22. SUBSTITUTION OF PURCHASER.......................................... 40
23. MISCELLANEOUS...................................................... 41
23.1 Successors and Assigns............................................. 41
23.2 Payments Due on Non-Business Days.................................. 41
23.3 Severability....................................................... 41
23.4 Construction....................................................... 41
23.5 Counterparts....................................................... 41
23.6 Governing Law...................................................... 42
23.7 Waiver of Trial by Jury............................................ 42
US ONCOLOGY, INC.
16825 Northchase Drive, Suite 1300
Houston, Texas 77060
8.42% Senior Secured Notes due November 2006
November 24, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A
Ladies and Gentlemen:
US Oncology, Inc., a Delaware corporation (the "COMPANY"), agrees with you
as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $100,000,000 aggregate
principal amount of its 8.42% Senior Secured Notes due November 2006 (the
"NOTES"), such term to include any such notes issued in substitution therefor
pursuant to Section 14 of this Agreement or the Other Note Agreements (as
hereinafter defined). The Notes shall be substantially in the form set out in
Exhibit I, with such changes therefrom, if any, as may be approved by you and
the Company. In connection with the issuance and sale of the Notes, the Company
and certain of its subsidiaries will execute and deliver a Security Agreement, a
Guaranty Agreement and a Guarantors' Security Agreement, all as further
specified herein. Certain capitalized terms used in this Agreement are defined
in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements identical with this Agreement
with each of the other purchasers named in Schedule A (the "OTHER PURCHASERS"),
providing for the sale at such Closing to each of the Other Purchasers of Notes
in the principal amount specified opposite its name in Schedule A (each other
Note Purchase Agreement is collectively referred to herein as the "OTHER NOTE
AGREEMENTS"). Your obligation hereunder and the obligations of the Other
Purchasers under the Other Note Agreements are several and not joint obligations
and you shall have no obligation under any Other Note Agreement and no liability
to any Person for the performance or non-performance by any Other Purchaser
thereunder.
3. CLOSING
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Locke Liddell & Sapp LLP, 2200 Ross
Avenue, Suite 2200, Dallas, Texas 75201, at 10:00 a.m., local time, at a closing
(the "CLOSING") on November 24, 1999 or on such other Business Day thereafter on
or prior to November 30, 1999 as may be agreed upon by the Company and you and
the Other Purchasers. At the Closing the Company will deliver to you the Notes
to be purchased by you in the form of a single Note (or such greater number of
Notes in denominations of at least $100,000 as you may request) dated the date
of the Closing and registered in your name (or in the name of your nominee),
against delivery by you by wire transfer of immediately available funds for the
account of the Company to account number 2000001210622 at First Union National
Bank, Charlotte, North Carolina, ABA No. 053000219 of the amount set forth
opposite your name on Schedule A. If at the Closing the Company shall fail to
tender such Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement shall be
correct when made and at the time of the Closing.
4.2 PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.17), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since June 30, 1999 that would have been prohibited by Section 10
hereof had such Section applied since such date.
4.3 COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
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(b) Secretary's Certificate. The Company and each Subsidiary (other than the
Excluded Subsidiaries) shall have delivered to you a certificate certifying
as to the resolutions attached thereto and other corporate proceedings
relating to the authorization, execution and delivery of the Notes, the
Other Note Agreements and the Security Documents.
4.4 OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing (a) from Bass, Berry & Sims PLC, counsel for the
Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company hereby instructs its counsel to
deliver such opinion to you) and (b) from Locke Liddell & Sapp LLP, your special
counsel in connection with such transactions, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
4.5 PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation G, T or
X of the Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
4.6 SALE OF OTHER NOTES.
Contemporaneously with the Closing, the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7 PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 16.1, the Company shall have paid
on or before the Closing the fees, charges and disbursements of your special
counsel referred to in Section 4.4(b) to the extent reflected in a statement of
such counsel rendered to the Company prior to the Closing.
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4.8 PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National Association
of Insurance Commissioners) shall have been obtained for the Notes.
4.9 CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.9, the Company shall not have changed its
jurisdiction of incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.10 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
4.11 EXECUTION AND DELIVERY OF SECURITY DOCUMENTS.
The Company and the Subsidiaries (other than the Excluded Subsidiaries and
AOR Synthetic Real Estate, Inc.) shall have executed and delivered to the
Collateral Agent, for your benefit and for the benefit of the Other Purchasers,
the Security Documents, to the extent a party thereto, and such agreements shall
be in full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement, the Other Note Agreements, the Notes and the Security
Documents and to perform the provisions hereof and thereof.
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5.2 AUTHORIZATION, ETC.
This Agreement, the Other Note Agreements, the Notes and the Security
Documents have been duly authorized by all necessary corporate action on the
part of the Company and each Subsidiary (other than the Excluded Subsidiaries),
and this Agreement and the Other Note Agreements constitute, and upon execution
and delivery thereof each Note and Security Document will constitute, a legal,
valid and binding obligation of the Company or its Subsidiaries (other than
Excluded Subsidiaries), as the case may be, enforceable against the Company or
such Subsidiary, in accordance with its terms, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3 DISCLOSURE.
The Company, through its agents, Banc One Capital Markets, Inc. and First
Union Capital Markets Corp., has delivered to you and each Other Purchaser a
copy of a Confidential Offering Memorandum, dated August 1999, which is deemed
to incorporate the most recent periodic and current reports filed under the
Exchange Act (the "MEMORANDUM"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its
Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the Other
Note Agreements, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since January 1, 1999, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company, any Subsidiary or, to the knowledge of the Company,
any Company Affiliated Physician Group, except changes that individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that it expects to have a
Material Adverse Effect that has not been set forth herein or in the Memorandum
or in the other documents, certificates and other writings, delivered to you by
or on behalf of the Company specifically for use in connection with the
transactions contemplated hereby.
5.4 ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the percentage
of shares of each class of its capital stock or
Page 5
similar equity interests outstanding owned by the Company and each other
Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries, and (iii)
of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
(e) Schedule 5.4 sets forth each physician group or entity with which
the Company or any of the Subsidiaries is affiliated, either through a
management or service agreement or other arrangement (the "Company Affiliated
Physician Groups"). To the knowledge of the Company, Schedule 5.4 also sets
forth the number of physicians employed by each such Company Affiliated
Physician Group as of July 31, 1999 (collectively, the "Company Affiliated
Physicians" and, together with the Company Affiliated Physician Groups, the
"Company Affiliated Providers"). The Company has made available to you and the
Other Purchasers true and correct copies of the material documents (i) by which
each Company Affiliated Physician Group became affiliated with the Company or
one of its Subsidiaries and (ii) that currently define and set forth the
material terms of affiliation between the Company or one of its Subsidiaries and
each Company Affiliated Physician Group.
5.5 FINANCIAL STATEMENTS.
The Company has delivered to you and to each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the
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respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
5.6 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company and its Subsidiaries
of this Agreement, the Other Note Agreements, the Notes and the Security
Documents (to the extent a party thereto) will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
(except for the Liens granted pursuant to the Security Documents) in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company, any Subsidiary or, to the knowledge of the Company, any Company
Affiliated Physician Group or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the
Company, any Subsidiary or, to the knowledge of the Company, any Company
Affiliated Physician Group.
5.7 GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required on the part of the
Company or any Subsidiary in connection with the execution, delivery or
performance by the Company and its Subsidiaries of this Agreement, the Other
Note Agreements, the Notes or the Security Documents (other than the filing of
UCC-1 financing statements, as contemplated by the Security Documents).
5.8 LITIGATION; STATUTES AND ORDERS.
Except as disclosed on Schedule 5.8,
(a) There are no actions, suits, proceedings or governmental investigations
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Subsidiary or any property of the Company or any Subsidiary in
any court or before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect nor are there any facts, conditions or
incidents that are reasonably likely to result in any such action, suit,
proceeding or investigation. In addition, there is no action, suit, proceeding,
claim, investigation or hearing pending, or to the knowledge of the Company,
threatened against or affecting any Company Affiliated Physician Group or
Company Affiliated Provider, or any of their respective assets that has or that
individually or in the aggregate could be reasonably expected to have a Material
Adverse Effect. Neither the Company, nor any Subsidiary nor, to the knowledge
of the
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Company, any Company Affiliated Physician Group is subject to or in default with
respect to any writ, order, judgment, injunction or decree that has or that,
individually or in the aggregate, would have a Material Adverse Effect.
(b) Except as would not be reasonably expected to have a Material Adverse
Effect, neither the Company nor any Subsidiary nor, to the knowledge of the
Company, any Company Affiliated Physician Group, has engaged in any prohibited
activities under or is in violation or has received any notices, written or
oral, of violations of, federal, state or local laws, regulations or ordinances
relating to its business and operations, including, without limitation, the
Occupational Safety and Health Act, the Americans with Disabilities Act, the
applicable Medicare and Medicaid statutes and regulations and ordinances
promulgated thereunder, including, without limitation, the Anti-Fraud and Abuse
Amendments to the Medicare and Medicaid statutes, any applicable state or
federal physician self-referral laws, and any state prohibited corporate
practice of medicine or fee-splitting laws or regulations, and no written notice
of any pending inspection or inquiry of a violation of any such law, regulation
or ordinance has been received by the Company or any Subsidiary or, to the
knowledge of the Company, any Company Affiliated Physician Group.
5.9 CONTRACTS.
Except as disclosed on Schedule 5.9, all contracts, leases, agreements and
arrangements, material to the operation and business of the Company, to which
the Company or any of the Subsidiaries or, to the knowledge of the Company, any
Company Affiliated Physician Group is a party, including, but not limited to,
management services agreements with Company Affiliated Physician Groups and
covenants not to compete with Company Affiliated Providers, are legally valid,
binding and enforceable in accordance with their terms and are in full force and
effect. The Company, each Subsidiary and, to the Company's knowledge, each
Company Affiliated Physician Group, has complied and, to the knowledge of the
Company, all other parties to such contracts, leases, agreements and
arrangements have complied with the provisions of such contracts, leases,
agreements and arrangements, and to the knowledge of the Company, no party is in
default thereunder, and no event has occurred which, but for the passage of time
or the giving of notice or both, would constitute a default thereunder, except,
in each case, where the invalidity of the lease, contract, agreement or
arrangement or the default or breach thereunder or thereof, as applicable, would
not, individually or in the aggregate, have a Material Adverse Effect.
5.10 LICENSES; APPROVALS.
The Company and each Subsidiary and, to the knowledge of the Company, each
Company Affiliated Physician Group, hold all licenses, permits, certificates of
need and other regulatory approvals required or necessary to be applied for or
obtained in connection with their businesses as presently conducted or as
proposed to be conducted, except where the failure to obtain or hold such
license, permit, certificate of need or regulatory approval would not have a
Material Adverse Effect. All such licenses, permits, certificates of need and
other regulatory
Page 8
approvals related to the business, operations and facilities of the Company and
each Subsidiary and, to the knowledge of the Company, each Company Affiliated
Physician Group, are in full force and effect, except where any failure of such
license, certificate of need or regulatory approval to be in full force and
effect would not have a Material Adverse Effect. Any and all past litigation
concerning such licenses, certificates of need and regulatory approvals,
including all claims and causes of action raised therein, has been finally
adjudicated. No such license, certificate of need or regulatory approval has
been revoked, conditioned (except as may be customary), limited or restricted
(except as may be customary), and no action (equitable, legal or
administrative), arbitration or other process is pending or, to the knowledge of
the Company, threatened which in any way challenges the validity of or seeks to
revoke, condition or restrict any such license, permit, certificate of need, or
regulatory approval. To the knowledge of the Company, the Company Affiliated
Physician Groups, where applicable, have current valid provider contracts with
both Medicare and Medicaid. The Company is not aware of any reasons why the
Company, the Subsidiaries or (without independent investigation) any Company
Affiliated Physician Group would be prevented from participating in the Medicare
or Medicaid Programs.
5.11 LABOR MATTERS.
Neither the Company nor any of its Subsidiaries nor, to the knowledge of
the Company, any Company Affiliated Physician Group is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any such Subsidiary or any Company Affiliated
Physician Group, and, to the knowledge of the Company, there are no activities
or proceedings of any labor union or any such employees to organize any such
employees.
5.12 TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of federal, state or
other taxes for all fiscal periods are adequate. The federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1998.
Page 9
5.13 TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and marketable title to their
respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.
5.14 INTELLECTUAL PROPERTY.
Except as disclosed in Schedule 5.14,
(a) The Company and its Subsidiaries own or possess all franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others;
(b) To the knowledge of the Company, no product of the Company infringes in
any material respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any other
Person; and
(c) To the knowledge of the Company, there is no Material violation by any
Person of any right of the Company or any of its Subsidiaries with respect to
any patent, copyright, service mark, trademark, trade name or other right owned
or used by the Company or any of its Subsidiaries.
5.15 COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA
Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in Section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence
of any such liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning
Page 10
specified in section 4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT
VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement, the Other Note
Agreements, the Security Documents and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the prohibitions
of section 406 of ERISA or in connection with which a tax could be imposed
pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the
Company in the first sentence of this Section 5.15(e) is made in reliance upon
and subject to (i) the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you and (ii) the assumption, made solely for the purpose of making such
representation, that Department of Labor Interpretive Bulletin 75-2 with respect
to prohibited transactions remains valid in the circumstances of the
transactions contemplated herein.
5.16 PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the Notes or
any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
person other than you, the Other Purchasers and not more than 50 other
Institutional Investors, each of which has been offered the Notes as a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
5.17 USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set forth in
Schedule 5.17. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 10% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will
Page 11
constitute more than 10% of the value of such assets. As used in this Section,
the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the
meanings assigned to them in said Regulation U.
5.18 EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Schedule 5.18 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its Subsidiaries
as of August 31, 1999, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Indebtedness of the Company or its Subsidiaries. Neither the Company nor
any Subsidiary is in default and no waiver of default is currently in effect, in
the payment of any principal or interest on any Indebtedness of the Company or
such Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.18, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
5.19 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.20 STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal
Power Act, as amended.
5.21 ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any contamination of the environment or violation
of any Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
Page 12
(a) neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
the Company or any Subsidiary or to other assets or their use, except, in each
case, such as could not reasonably be expected to result in a Material Adverse
Effect;
(b) neither the Company nor any of Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any of
them in a manner that is in violation of Environmental Laws and has not disposed
of any Hazardous Materials in a manner contrary to any Environmental Laws in
each case in any manner that could reasonably be expected to result in a
Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated by
the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
5.22 SOLVENCY OF THE COMPANY.
The Company and each Significant Subsidiary is solvent, and the Company and
all of its Subsidiaries collectively are solvent, in each case prior to and
after giving effect to the issuance and sale of the Notes, and after taking into
account any Indebtedness owing to the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries, upon giving effect to the
transactions contemplated hereby, will be engaged in any business or
transaction, or about to engage in any business or transaction, for which it has
an unreasonably small capital, and the Company has no intent (a) to hinder,
delay or defraud any entity to which it is, or will become, on or after the
Closing, indebted, or (b) to incur debts that would be beyond its ability to pay
as they mature. For purposes of this Section 5.22, a "Significant Subsidiary"
shall mean any Subsidiary that accounts for 5% or more of the Company's revenues
on a consolidated basis.
5.23 YEAR 2000 COMPLIANCE.
All computer hardware, computer software and other systems or equipment that
rely on, utilize or perform data or time processing that are owned or leased by
the Company or any of its Subsidiaries Material to the business of the Company
or any of its Subsidiaries will at all times function accordingly and in
accordance with its specifications in processing time and date data prior to,
during and after the calendar year 2000 and such hardware, software and systems
will not cease to function, function abnormally or provide invalid or incorrect
results as a result of processing time and date data, with values before, during
and after calendar year 2000 including time and date data which represent or
reference different centuries or more than one century ("Y2K Compliance") except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect. The Company has made inquiries of each of its and its
Subsidiaries, Material vendors and other parties with which it has Material
dealings regarding their Y2K
Page 13
Compliance and the Company does not expect that any such noncompliance would
have a Material Adverse Effect.
5.24 NO DEFAULTS.
At the time of the Closing, there exists no Default or Event of Default.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account or for
one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control, subject to the provisions of Section 14.2 hereof.
You understand that the Notes have not been registered under the Securities Act
and may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such exemption is required by
law, and that the Company is not required to register the Notes.
6.2 SOURCE OF FUNDS.
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a "SOURCE") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source is an "insurance company
general account," as such term is defined in Department of Labor Prohibited
Transaction Class Exemption 95-60 (issued July 12, 1995) ("PTCE 95-60"), and
there is no employee benefit plan, treating as a single plan all plans
maintained by the same employer (and affiliates thereof as defined in section
V(a)(1) of PTCE 95-60) or by the same employee organization, with respect to
which the amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceeds 10% of the total reserves
and liabilities of such general account as determined under PTCE 95-60
(exclusive of separate account liabilities) plus surplus, as set forth in the
National Association of Insurance Commissioners Annual Statement filed with your
state of domicile; or
(b) the Source is either (i) an insurance company pooled separate account,
within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued
January 29, 1990), or (ii) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
Page 14
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part 1(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5 % or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN," "GOVERNMENTAL
PLAN," "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO THE COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an Institutional
Investor:
(a) Quarterly Statements -- within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
Page 15
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements -- within 120 days after the end of each fiscal year
of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries, for such
year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default and, if they are aware
that any such condition or event then exists, specifying the nature and
period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit), such certificate to be in the form of Exhibit
VI hereto,
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in
Page 16
accordance with the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate described in
clause (B) above, shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement sent by
the Company or any Subsidiary to its public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
Page 17
(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
7.2 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of
a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.6 through Section 10.12 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3 INSPECTION.
The Company shall permit the representatives of each holder of Notes that is
an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to
annually visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company's officers, and (with the consent of the Company, which consent will not
be unreasonably withheld) its independent public accountants, and (with the
consent of
Page 18
the Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the expense
of the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1 REQUIRED PREPAYMENTS.
On November 24, 2002 and on each November 24 thereafter to and including
November 24, 2005 the Company will prepay $20,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or purchase of the Notes
permitted by Section 8.5 or 8.7, the principal amount of each required
prepayment of the Notes becoming due under this Section 8.1 on and after the
date of such prepayment or purchase shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a result of
such prepayment or purchase. The entire outstanding principal amount of the
Notes shall be due and payable on November 24, 2006.
8.2 OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, in an amount not less
than 5% of the aggregate principal amount of the Notes then outstanding in the
case of a partial prepayment, at 100% of the principal amount so prepaid plus
the Make-Whole Amount determined for the prepayment date with respect to such
principal amount plus accrued interest on the Notes to be prepaid through the
date of payment. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice was the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior
Page 19
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
8.3 ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes pursuant to Section 8.2,
the principal amount of the Notes to be prepaid shall be allocated among all of
the Notes at the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.4 MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to the extent the same is to be prepaid shall
mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and canceled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
8.5 PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes. The Company will promptly cancel all
Notes acquired by it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.
8.6 MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such
Page 20
Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to
the Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display
designated as the "PX Screen" on the Bloomberg Financial Market Service (or
such other display as may replace the PX Screen on the Bloomberg Financial
Market Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, plus 50 basis points or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, plus 50 basis points.
Such implied yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the actively traded U.S.
Treasury security with the maturity closest to and less than the Remaining
Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has
Page 21
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
8.7 CHANGE IN CONTROL.
(a) Notice of Change in Control or Control Event -- The Company will,
within five (5) Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written notice of
such Change in Control or Control Event to each holder of Notes. In the case
that a Change in Control has occurred, such notice shall contain and constitute
an offer to prepay the Notes as described in subparagraph (b) of this Section
8.7 and shall be accompanied by the certificate described in subparagraph (e) of
this Section 8.7.
(b) Offer to Prepay Notes -- The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.7 shall be an offer to prepay, in accordance
with and subject to this Section 8.7, all, but not less than all, the Notes held
by each holder (in this case only, "holder" in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the "Proposed Prepayment
Date") that is not less than 30 days and not more than 60 days after the date of
such offer (if the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the 60th day after the date of such
offer).
(c) Acceptance; Rejection -- A holder of Notes may accept the offer to
prepay made pursuant to this Section 8.7 by causing a notice of acceptance to be
delivered to the Company at least 10 days prior to the Proposed Prepayment Date.
A failure by a holder of Notes to respond to any offer to prepay made pursuant
to this Section 8.7 shall be deemed to constitute a rejection of such offer by
holder.
(d) Prepayment -- Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at 100% of the outstanding principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment. The
prepayment shall be made on the Proposed Prepayment Date.
(e) Officer's Certificate -- Each offer to prepay the Notes pursuant to
this Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.7; (iii) the principal amount of such Note offered to be prepaid; (iv)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date; (v) that the conditions of this Section 8.7 have
been fulfilled; and (vi) in reasonable detail, the nature and date of the Change
in Control.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Page 22
9.1 COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, Medicare laws and
Medicaid laws and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
9.2 INSURANCE.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles, co-
insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
9.3 MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4 PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment
Page 23
of all such taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
9.5 CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.2 and 10.3, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.
9.6 ADDITIONAL SUBSIDIARIES.
In the event that the Company establishes any Subsidiaries after the
date hereof (whether by formation or acquisition or otherwise), the Company
shall (i) cause such Subsidiary to execute and deliver to the Collateral Agent,
for the benefit of the holders of the Notes, counterparts of the Security
Documents and (ii) pledge the stock or other securities of such Subsidiary to
the Collateral Agent for the benefit of the holders of the Notes (including
delivery of the certificates therefor), and in each case execute instruments and
certificates as the Collateral Agent may request with respect thereto; provided,
that any new Subsidiary that is a single purpose entity created solely for the
purpose of a Permitted Asset Securitization will not be subject to (i) above.
9.7 NOTES TO RANK PARI PASSU.
The Notes and all other obligations under this Agreement of the Company
are and at all times shall remain direct and secured obligations of the Company
ranking pari passu as against the assets of the Company with all other Notes
from time to time issued and outstanding hereunder or under the Other Note
Agreements without any preference among themselves and pari passu with all other
present and future senior secured Indebtedness (actual or contingent) of the
Company which is not expressed to be subordinate or junior in rank to any other
unsecured Indebtedness of the Company (other than Indebtedness incurred pursuant
to ELLF (as such term is defined in the Bank Loan Agreement)).
9.8 NOTICES REGARDING COMPANY AFFILIATED PHYSICIAN GROUPS.
The Company will promptly, and in any event within 30 days after
becoming aware thereof, notify the holders of any noncompliance of laws,
ordinances or regulations by any Company Affiliated Physician Group or Company
Affiliated Provider that could reasonably be expected to have a Material Adverse
Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Page 24
10.1 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any Subsidiary to, enter
into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable arm's-
length transaction with a Person not an Affiliate.
10.2 MERGER, CONSOLIDATION, ETC.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case may
be, shall be a solvent corporation organized and existing under the laws of the
United States or any state thereof (including the District of Columbia), and, if
the Company is not such corporation, such corporation (i) shall have executed
and delivered to each holder of any Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement, the
Other Note Agreements, the Notes and the Security Documents and (ii) shall have
caused to be delivered to each holder of any Notes an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with their
terms and comply with the terms hereof;
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(c) immediately after giving effect to such transaction, the Company or the
surviving corporation would be permitted under this Agreement to incur at least
$1.00 of additional Indebtedness.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under this Agreement, the Other Note
Agreements, the Notes or the Security Documents.
10.3 SALE OF ASSETS.
The Company shall not, and shall not permit any Subsidiary to, sell,
lease, transfer or otherwise dispose of assets and/or the capital stock of any
such Subsidiaries, other than in the
Page 25
ordinary course of business or in connection with a transfer which constitutes a
Permitted Asset Securitization, if the aggregate amount of such assets disposed
of exceeds 15% of Consolidated Total Assets of the Company in any given fiscal
year, unless such proceeds from the disposition are used:
(a) to purchase or be committed to purchase other property of a similar
nature within 365 days of such sale; or
(b) to repay Indebtedness ranking pari passu with the Notes (other than
Indebtedness owing to the Company or any of its Subsidiaries or Affiliates),
provided that in connection with any prepayment of Indebtedness under a
revolving credit or similar credit facility providing the Company or any of its
Subsidiaries with the right to obtain loans or other extensions of credit from
time to time, the availability of credit under such credit facility is
permanently reduced by an amount not less than the amount of such proceeds
applied to the payment of such Indebtedness.
10.4 CONDUCT OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than business engaged in by it on the date hereof, other
businesses or activities substantially similar or related thereto, and other
lines of business consented to by the Required Holders.
10.5 LIENS.
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, create, assume, incur or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any property or asset
(including without limitation any document or instrument in respect of goods or
accounts receivable) of the Company or any such Subsidiary, whether now owned or
held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except:
(a) Liens for the benefit of the holders of the Notes and the Banks
pursuant to the Intercreditor Agreement;
(b) Liens for taxes, assessments or other governmental charges which are
not yet due and payable or the payment of which is not at the time required by
Section 9.4;
(c) Any attachment or judgment Lien, unless the judgment it secures shall
not, within sixty (60) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within sixty (60) days after the expiration of any such stay;
(d) Other Liens incidental to the normal conduct of the business of the
Company or any Subsidiary or the ownership of its property which are not
incurred in connection with the
Page 26
incurrence of Indebtedness and which do not, in the aggregate, materially impair
the use of such property in the operation of the business of the Company and its
Subsidiaries taken as a whole or the value of such property for the purposes of
such business;
(e) Liens existing at the time of the issuance of the Notes as set forth on
Schedule 10.5 hereto;
(f) the extension, renewal or refunding of any Lien permitted by Section
10.5(e) or (g) in respect of the same property subject thereto (without any
increase of the principal amount of the Indebtedness secured thereby from the
amount outstanding as of the time of such extension, renewal or refunding),
provided that at the time of such extension, renewal or refunding (and after
giving effect thereto) no Default or Event of Default exists (or would result
therefrom);
(g) Any lien created to secure all or any part of the purchase price, or to
secure Indebtedness incurred or assumed to pay all or any part of the purchase
price or cost of construction of property (or any improvement thereon) acquired
or constructed by the Company or a Subsidiary after the date of the Closing,
provided that
(i) any such Lien shall extend solely to the item or items of such
property (or improvement thereon) so acquired or constructed and
the proceeds from the sale of such property and, if required by
the terms of the instruments originally creating such Lien, other
property (or improvement thereon) which is an improvement to or
is acquired for specific use in connection with such acquired or
constructed property (or improvement thereon) or which is real
property being improved by such acquired or constructed property
(or improvement thereon),
(ii) the principal amount of the Indebtedness secured by any such Lien
shall at no time exceed an amount equal to the lesser of (A) the
cost to the Company or such Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the fair
market value (as determined in good faith by the board of
directors of the Company) of such property (or improvement
thereon) at the time of such acquisition or construction, and
(iii) any such Lien shall be created contemporaneously with, or
within one hundred eighty (180) days after, the acquisition or
construction of such property;
(h) any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Company or any Subsidiary at the time such property is so acquired (whether or
not the Indebtedness secured thereby shall have been assumed), provided that (i)
no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person's becoming a Subsidiary or such
acquisition of
Page 27
property, and (ii) each such Lien shall extend solely to the item or items of
property so acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is acquired for
specific use in connection with such acquired property;
(i) Liens on property or assets of the Company or any of its Subsidiaries
securing Indebtedness owing to the Company or any of its Subsidiaries; and
(j) any Liens on the assets that are the subject of and related to a
Permitted Asset Securitization.
10.6 MAINTENANCE OF CONSOLIDATED NET WORTH.
The Company shall not, at any time, permit its Consolidated Net Worth to be
less than the sum of (a) $500,000,000, plus (b) 50% of its Consolidated Net
Income (but, in each case, only if Consolidated Net Income is greater than or
equal to $1.00) for each completed fiscal quarter beginning with the fiscal
quarter ended September 30, 1999.
10.7 LIMITATION ON DEBT.
The Company shall not permit the ratio of Consolidated Total Debt to
Consolidated Operating Cash Flow (which shall include Consolidated Operating
Cash Flow of any Person acquired by the Company or a Subsidiary which becomes a
Subsidiary as if the acquisition occurred at the beginning of the applicable
calculation period) to exceed 3.25 to 1.00.
10.8 MINIMUM FIXED CHARGE COVERAGE.
The Company shall not permit, as at the end of each fiscal quarter, the
ratio of Consolidated Income Available for Fixed Charges (measured on a rolling
four quarter basis) to Consolidated Fixed Charges to be less than 1.75 to 1.00.
10.9 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries to, at
any time, declare or make, or incur any liability to declare or make, any
Restricted Payment unless immediately after giving effect thereto:
(a) the aggregate amount of Restricted Payments of the Company and its
Subsidiaries declared or made during the period commencing on November 1, 1999,
and ending on the date such Restricted Payment is declared or made, inclusive,
would not exceed the sum of
(i) $50,000,000, plus
Page 28
(ii) 50% of Consolidated Net Income for such period (or minus 100% of
Consolidated Net Income for such period if Consolidated Net Income for
such period is a loss), plus
(iii) the aggregate amount of Net Cash Proceeds of Capital Stock for
such period; and
(b) no Default or Event of Default would exist.
10.10 PERMITTED INVESTMENTS.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any Investments other than the following:
(a) Investments in property to be used in the ordinary course of business
of the Company and its Subsidiaries;
(b) Investments in current assets arising from the sale of goods and
services in the ordinary course of business of the Company and its Subsidiaries;
(c) Investments existing as of the date hereof as set forth on Schedule
10.10 hereto;
(d) Investments in or advances to one or more Subsidiaries or any Person
that concurrently with such Investment becomes a Subsidiary;
(e) Investments in certificates of deposit or banker's acceptances issued
by an Acceptable Bank, provided that such obligations mature within 365 days
from the date of acquisition thereof;
(f) Investments in commercial paper given the highest rating by a credit
rating agency of recognized national standing, and maturing not more than 270
days from the date of creation thereof;
(g) Investments in United States Governmental Securities, provided that
such obligations mature within 365 days from the date of acquisition thereof;
(h) Investments in Repurchase Agreements;
(i) money market preferred stock rated "A" or above by Standard & Poor's
Corporation or Moody's Investors Services;
(j) Investments in tax-exempt obligations of any state of the United
States, or any municipality of any such state, in each case rated "AA" or better
by S&P, "Aa2" or better by Moody's or an equivalent rating by any other credit
rating agency of recognized national standing, provided that such obligations
mature within 365 days from the date of acquisition thereof;
Page 29
(k) money market funds organized and existing under the laws of the United
States and investing primarily in investments described in clauses (e) through
(j) above; and
(l) other Investments not to exceed, in the aggregate, 15% of the Company's
Consolidated Net Worth; provided, that Investments in Hospital Joint Ventures
shall not exceed 10% of the Company's Consolidated Net Worth.
10.11 PRIORITY DEBT.
The Company shall not, and shall not permit any of its Subsidiaries to, at
any time permit Priority Debt to exceed 15% of Consolidated Net Worth as of the
then most recently ended fiscal quarter.
10.12 SUBSIDIARY DEBT.
The Company shall not at any time permit any Subsidiary to, directly or
indirectly, create, incur, assume, guarantee, have outstanding, or otherwise
become or remain directly or indirectly liable with respect to, any Indebtedness
other than:
(a) Indebtedness of a Subsidiary outstanding on the date of Closing, as set
forth on Schedule 10.12 hereto, and any extension, renewal or refunding thereof,
provided that there is no increase in the principal amount thereof from the
amount outstanding as of the time of such extension, renewal or refunding, and
that at the time of such extension, renewal or refunding (and after giving
effect thereto) no Default or Event of Default exists (or would result
therefrom);
(b) Indebtedness of a Subsidiary owed to the Company or a Wholly-Owned
Subsidiary;
(c) Indebtedness of a Subsidiary in connection with a Permitted Asset
Securitization program, which program shall not exceed $150,000,000;
(d) Indebtedness of a Subsidiary in addition to that otherwise permitted
under clauses (a) through (c) of this Section 10.12, provided that on the date
the Subsidiary incurs or otherwise becomes liable with respect to any such
additional Indebtedness and immediately after giving effect thereto,
(i) no Default or Event of Default exists, and
(ii) the total amount of Priority Debt does not exceed 15% of the
Company's Consolidated Net Worth.
Page 30
10.13 HOSPITAL JOINT VENTURE.
Notwithstanding anything in this Agreement or any of the Other Note
Agreements, in no event shall a Hospital Joint Venture be considered a
Subsidiary for any purpose under this Agreement or any Other Note Agreement, nor
shall any Hospital Joint Venture be required to become a Guarantor or enter into
the Guarantors' Security Agreement except that (a) each Hospital Joint Venture
shall be deemed a Subsidiary for purposes of Sections 10.3, 10.4, 10.5, 10.6,
10.7, 10.8, 10.10, 10.11 and 10.12 and (b) the amount or value of any
Distribution or payment by a Hospital Joint Venture that constitutes a
Restricted Payment shall be included in the calculation of the total amount of
Restricted Payments made for purposes of Section 10.9, but in no event shall any
Hospital Joint Venture be prevented or otherwise restricted from making any
Restricted Payment if such payment is required to be made under an agreement to
which such Hospital Joint Venture is a party or under such Hospital Joint
Venture's relevant organizational documents, provided that no such agreement or
other organizational documents shall require or permit the distribution of
Restricted Payments by any Hospital Joint Venture in any manner other than in
direct proportion to the respective ownership interests of the joint venture
partners in such Hospital Joint Venture ("Pro Rata Distribution"). In no event
shall a Default or Event of Default occur as a result of any such Restricted
Payment made by a Hospital Joint Venture except in violation of the requirement
for Pro Rata Distribution. The Company's Hospital Joint Ventures as of the date
hereof are listed on Schedule 10.13.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any term
contained in Section 10; or
(d) the Company defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and (c) of
this Section 11) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such default
and (ii) the Company receiving written notice of such default from any holder of
a Note (any such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with
Page 31
the transactions contemplated hereby proves to have been false or incorrect in
any material respect on the date as of which made;
(f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or Make
Whole Amount or interest on any Indebtedness that is outstanding in an aggregate
principal amount of at least $5,000,000 beyond any period of grace provided with
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Indebtedness
in an aggregate outstanding principal amount of at least $5,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has
become, or has been declared due and payable before its stated maturity or
before its regularly scheduled dates of payment, or (iii) as a consequence of
the occurrence or continuation of any event or condition (other than the passage
of time or the right of the holder of Indebtedness to convert such Indebtedness
into equity interests), the Company or any Subsidiary has become obligated to
purchase or repay Indebtedness before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $5,000,000; or
(g) the Company or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company or any of its Subsidiaries, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in
excess of $25,000,000 are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
Page 32
(j) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $1,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect; or
(k) for any reason (i) any Security Document shall cease to be in full
force and effect at any time or is declared to be null and void with respect to
any material portion of the collateral thereunder, (ii) the Collateral Agent
ceases to have a perfected, first priority security interest in any material
portion of the collateral (subject to Permitted Liens), (iii) the Company denies
that it has any further liability under any applicable Security Document or
gives notice to such effect or (iv) any Subsidiary denies that it has any
further liability under the Guarantors' Security Agreement or the Subsidiary
Guarantee 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 Company
of notice from the Collateral Agent or any holder of any Note of such denial or
notice or (B) the Company becomes aware of such denial or notice being made or
given, as the case may be.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 35% in principal amount of the Notes at the time
outstanding may at any
Page 33
time at its or their option, by notice or notices to the Company, declare all
the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section 11
has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes plus (x) accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2 OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3 RESCISSION.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the holders of not less than 66% in principal
amount of the Notes then outstanding, by written notice to the Company, may
rescind and annul any such declaration and its consequences if (a) the Company
has paid all overdue interest on the Notes, all principal of and Make-Whole
Amount, if any, on any Notes that are due and payable and are unpaid other than
by reason of such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 18, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
Page 34
12.4 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 16, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. INTENTIONALLY OMITTED.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1 REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer pursuant to Section 14.2
below, the Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the Company
shall not be affected by any notice or knowledge to the contrary. The Company
shall give to any holder of a Note that is an Institutional Investor promptly
upon request therefor, a complete and correct copy of the names and addresses of
all registered holders of Notes.
14.2 TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the Company
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit I. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$500,000 original principal amount, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one
Page 35
Note may be in a denomination of less than $500,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.2.
14.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof,
a new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated the
date of such lost, stolen, destroyed or mutilated Note if no interest shall have
been paid thereon.
15. PAYMENTS ON NOTES.
15.1 PLACE OF PAYMENT.
Subject to Section 15.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in Houston,
Texas at the principal office of the Company in such jurisdiction. The Company
may at any time, by notice to each holder of a Note, change the place of payment
of the Notes so long as such place of payment shall be either the principal
office of the Company in such jurisdiction or the principal office of a bank or
trust company in such jurisdiction.
15.2 HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by
Page 36
the Company pursuant to Section 15.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 14.2. The Company will afford the
benefits of this Section 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 15.2.
16. EXPENSES, ETC.
16.1 TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated, the
Company will pay all costs and expenses (including reasonable attorneys' fees of
special counsel for the Purchasers as a group and, if reasonably required, local
or other counsel for the Purchasers as a group) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Other Note Agreements, the Notes or the Security Documents
(whether or not such amendment, waiver or consent becomes effective), including,
without limitation: (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
this Agreement, the Other Note Agreements, the Notes or the Security Documents
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
16.2 SURVIVAL.
The obligations of the Company under this Section 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement, the Notes or the Security Documents, and the
termination of this Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement, the Notes and the Security Documents,
the purchase or transfer by you of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any subsequent
holder of a Note, regardless of any investigation made at any time by or on
behalf of you or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall
Page 37
be deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement, the Notes and the Security
Documents embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1 REQUIREMENTS.
This Agreement, the Notes and the Security Documents may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, (but excluding a waiver of a breach
of a representation and warranty in Section 5) 6, 22 or 23.7 hereof, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 18 or 21.
18.2 SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 18 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
Page 38
18.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 18 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
18.4 NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of L. Fred Pounds, or at such other
address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 19 will be deemed given only when actually received
or rejected.
Page 39
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 20
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly available or otherwise known to you
prior to the time of such disclosure, (b) subsequently becomes publicly
available through no act or omission by you or any person acting on your behalf,
(c) otherwise becomes known to you other than through disclosure by the Company
or any Subsidiary with no known breach of any confidentiality agreements or (d)
constitutes financial statements delivered to you under Section 7.1 that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 21, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 21), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 21), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that
Page 40
requires access to information about your investment portfolio or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal process, (y)
in connection with any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes
and this Agreement. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits of this
Section 21 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 21. The parties acknowledge that all
information provided by the Company to Purchasers prior to the date hereof
(other than information previously filed with the Securities and Exchange
Commission and other publicly available information) is deemed Confidential
Information.
22. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 22), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
22), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
23. MISCELLANEOUS.
23.1 SUCCESSORS AND ASSIGNS.
All covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent holder of
a Note) whether so expressed or not.
23.2 PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the
Page 41
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day.
23.3 SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
23.4 CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
23.5 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6 GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Texas
excluding choice-of-law principles of the law of such state that would require
the application of the laws of a jurisdiction other than such state.
23.7 WAIVER OF TRIAL BY JURY.
THE PARTIES TO THIS AGREEMENT HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER
OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE SECURITY DOCUMENTS, OR IN
ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE
PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE SECURITY
DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT AGREE THAT ANY SUCH
CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A
Page 42
JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 23.7 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY OR PARTIES HERETO TO WAIVER OF THE RIGHT TO TRIAL BY JURY.
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
US ONCOLOGY, INC.
By:
--------------------------
[Title]
The foregoing is hereby agreed to as of
the date thereof.
[PURCHASER]
By:
-----------------------------
[Title]
Page 43
SCHEDULE A
PURCHASERS
----------
Amount Purchaser
------ ---------
JOHN HANCOCK:
$ 2,000,000 John Hancock Mutual Life Insurance Company
$ 19,500,000 John Hancock Mutual Life Insurance Company
$ 500,000 John Hancock Variable Life Insurance Company
$ 500,000 Investors Partner Life Insurance Company
$ 2,500,000 The Northern Trust Company, as Trustee of The
Lucent Technologies, Inc. Master Pension Trust
ALLSTATE:
$ 7,000,000 Allstate Life Insurance Company
$ 5,000,000 Allstate Life Insurance Company
RELIASTAR:
$ 3,000,000 ReliaStar Life Insurance Company
$ 2,000,000 ReliaStar Life Insurance Company of New York
$ 2,000,000 Security Connecticut Life Insurance Company
CIGNA:
$ 5,200,000 Connecticut General Life Insurance Company
$ 3,800,000 Connecticut General Life Insurance Company
$ 3,000,000 Connecticut General Life Insurance Company
$ 2,000,000 Connecticut General Life Insurance Company
$ 1,000,000 Connecticut General Life Insurance Company
GE FINANCIAL
ASSURANCE $ 7,000,000 General Electric Capital Assurance Company
$ 3,000,000 First Colony Life Insurance Company
$ 2,000,000 Colonial Penn Insurance Company
$ 1,000,000 Union Fidelity Life Insurance Company
MASS MUTUAL $ 8,000,000 Massachusetts Mutual Life Insurance Company
$ 3,250,000 Massachusetts Mutual Life Insurance Company
$ 3,250,000 Massachusetts Mutual Life Insurance Company
$ 500,000 C.M. Life Insurance Company c/o
Massachusetts Mutual Life Insurance Company
NATIONWIDE $ 7,000,000 Nationwide Life Insurance Company
$ 1,000,000 Nationwide Life and Annuity Insurance Company
OHIO NATIONAL $ 5,000,000 Ohio National Life Insurance Company
SCHEDULE B
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"ACCEPTABLE BANK" means any bank or trust company (i) which is organized
under the laws of the United States of America or any state thereof, or Canada
or any province thereof (ii) which has capital, surplus and undivided profits
aggregating at least $100,000,000, and (iii) whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of the bank holding
company owning all of the capital stock of such bank or trust company) shall
have been given a rating of "A" or better by S&P, "A2" or better by Moody's or
an equivalent rating by any other credit rating agency of recognized national
standing.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural person (i)
which is registered as a broker or dealer pursuant to the Exchange Act and (ii)
whose long-term unsecured debt obligations shall have been given a rating of "A"
or better by S&P, "A2" or better by Moody's or an equivalent rating by any other
credit rating agency of recognized national standing.
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"BANK DEBT" means the Indebtedness owing from the Company to the Banks
pursuant to the Bank Loan Agreement.
"BANKS" means each financial institution that is a signatory to the Bank
Loan Agreement.
"BANK LOAN AGREEMENT" means that certain Fourth Amended and Restated Loan
Agreement among First Union National Bank, as Administrative Agent, Banc One
Capital Markets, Inc., as Syndication Agent and the Company dated May 14, 1999,
as the same shall be amended from time to time in accordance with the terms of
the Intercreditor Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banks in Houston, Texas or New York City are required or
authorized to be closed.
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"CAPITALIZED LEASE" means any lease of property which in accordance with
GAAP should be capitalized on the lessee's balance sheet.
"CAPITAL RENTALS" means as of the date of any determination the amount at
which the aggregate rentals due and to become due under all Capitalized Leases
under which the Company or any Subsidiary is a lessee would be reflected as a
liability on a consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP.
"CHANGE OF CONTROL" means if any person (as such term is used in section
13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the
Closing) or related persons constituting a group (as such term is used in Rule
13d-5 under the Exchange Act), become the "beneficial owners" (as such term is
used in Rule 13d-3 under the Exchange Act as in effect on the date of the
Closing), directly or indirectly, of more than 50% of the total voting power of
all classes then outstanding of the Company's Voting Stock.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COLLATERAL AGENT" means First Union National Bank, a national banking
association, or such successor Person designated by the Required Holders
pursuant to the Intercreditor Agreement.
"COMPANY" means US Oncology, Inc., a Delaware corporation.
"COMPANY AFFILIATED PHYSICIAN GROUP" is defined in Section 5.4.
"COMPANY AFFILIATED PROVIDER" is defined in Section 5.4.
"CONFIDENTIAL INFORMATION" is defined in Section 21.
"CONSOLIDATED FIXED CHARGES" means for the immediate past four fiscal
quarters the sum of consolidated interest expense (which includes capitalized
interest and the interest component of Capitalized Leases) plus actual rent
payments under operating leases.
"CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means with respect to any
period, Consolidated Net Income for such period plus (to the extent deducted in
calculating Consolidated Net Income):
(a) all provisions for income taxes;
(b) Consolidated Fixed Charges for such period; and
(c) for the quarters ending June 30, 1999 and September 30, 1999, non-
recurring expenses relating to the merger of American Oncology Resources,
Inc. and Physician Reliance Network, Inc. in an aggregate amount not to
exceed $30,000,000.
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"CONSOLIDATED NET INCOME" means the net income (or loss) of the Company and
its Subsidiaries for such period (taken as a cumulative whole), as determined in
accordance with GAAP, excluding (to the extent added or deducted in calculating
net income):
(a) extraordinary gains and losses; and
(b) any equity interest of the Company on the unremitted earnings of
any corporation that is not a Subsidiary.
"CONSOLIDATED NET WORTH" means the stockholders' equity of the Company
determined in accordance with GAAP.
"CONSOLIDATED OPERATING CASH FLOW" means Consolidated Net Income for the
immediately preceding four fiscal quarters plus (to the extent deducted in
calculating Consolidated Net Income):
(a) provisions for federal, state and local income taxes;
(b) interest expense;
(c) nonrecurring items to the extent deducted in calculating
Consolidated Net Income;
(d) for the quarters ending June 30, 1999 and September 30, 1999, non-
recurring expenses relating to the merger of American Oncology Resources,
Inc. and Physician Reliance Network, Inc. in an aggregate amount not to
exceed $30,000,000;
(e) depreciation and amortization;
all determined in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means the total assets of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT" means without duplication, all Indebtedness of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"CONTROL EVENT" means:
(i) the execution by the Company or any of its Subsidiaries or
Affiliates of any agreement or letter of intent with respect to
any proposed transaction or event or series of transactions or
events which, individually or in the aggregate, may reasonably be
expected to result in a Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in
Control, or
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(iii) the making of any written offer by any person (as such
term is used in section 13(d) and section 14(d)(2) of the
Exchange Act as in effect on the date of the Closing) or related
persons constituting a group (as such term is sued in Rule 13d-5
under the Exchange Act as in effect on the date of the Closing)
to the holders of the common stock of the Company, which offer,
if accepted by the requisite number of holders, would result in a
Change in Control.
"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes or (ii) 2% over the rate of interest publicly announced by Chase
Bank, N.A. in New York, New York as its "base" or "prime" rate.
"DISTRIBUTION" means, in respect of any Person:
(a) dividends or other distributions or payments on capital stock or
other equity interest of such Person (except distributions in such stock or
other equity interest); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or
other equity interests) unless made, contemporaneously, from the net
proceeds of a sale of such stock or other equity interests.
"ENVIRONMENTAL LAWS" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXCLUDED SUBSIDIARIES" means Cancer Treatment Associates of Northeastern
Missouri, Ltd., Southeast Texas Cancer Centers, L.P., Aurora Cancer Centers, LLC
and any other Person that constitutes a Hospital Joint Venture.
"FAIR MARKET VALUE" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any state or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"GUARANTIES" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property or
assets constituting security therefor;
(b) to advance or supply funds (x) for the purchase or payment of such
Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation;
(c) to lease property or to purchase property or services primarily
for the purpose of assuring the owner of such indebtedness or obligations
of the ability of the primary obligor to make payment of the indebtedness
or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation of
the primary obligor against loss in respect thereof. For the purposes of
all computations made under this Agreement, a Guaranty in respect of any
indebtedness for borrowed
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money shall be deemed to be indebtedness equal to the principal amount of
such indebtedness for borrowed money which has been guaranteed, and a
Guaranty in respect of any other obligation or liability or any dividend
shall be deemed to be indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend.
"GUARANTORS" shall mean each party to the Subsidiary Guarantee, their
successors and assigns, each future direct or indirect Subsidiary of the Company
and any other Person that guarantees the Notes and the obligations of the other
Guarantors under the Subsidiary Guarantee.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
14.1.
"HOSPITAL JOINT VENTURE" shall mean any Person that is a Subsidiary of the
Company, but not a Wholly-Owned Subsidiary, without giving effect to Section
10.13 and which (a) is formed for the purpose of (i) providing medical
equipment, office space or management services to a physician, physician group
or other medical provider or (ii) providing medical services; (b) is owned by
the Company or a Subsidiary of the Company and by a hospital, medical provider
or other medical organization; and (c) the Company's interest in which is
treated as an Investment under Section 10.10(l) hereof.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) liabilities for the deferred purchase price of property acquired
by such Person (excluding accounts payable arising in the ordinary course
of business, but including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Rentals under any Capitalized Lease;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or become liable for such liabilities);
(e) all liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks or
other financial institutions (whether or not representing obligations for
borrowed money);
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(f) all Guaranties by such Person with respect to liabilities of the
type described in (a) through (e) herein.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (a) through (f) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement in the form of
Exhibit V attached hereto.
"INVESTMENTS" means any direct or indirect advance, loan, guarantee of
Indebtedness or other extension of credit or capital contribution to, or any
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities (including derivatives) or evidence of Indebtedness issued by any
other person.
"KNOWLEDGE" means to the knowledge of the Company after reasonable inquiry
and investigation.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor lessor, lender or other secured party to or of such person under
conditional sale or other title retention agreement or Capitalized Lease with
respect to any property or asset of such person.
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
and its Subsidiaries to perform their respective obligations under this
Agreement, the Other Note Agreements, the Notes or the Security Documents, or
(c) the validity or enforceability of this Agreement, the Other Note Agreements,
the Notes or the Security Documents.
"MEMORANDUM" is defined in Section 5.3.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
B-7
"NET CASH PROCEEDS OF CAPITAL STOCK" means, with respect to any period,
cash proceeds (net of all costs and out-of-pocket expenses in connection
therewith, including, without limitation, placement, underwriting and brokerage
fees and expenses), received by the Company and its Subsidiaries during such
period, from the sale of all capital stock (other than Redeemable capital stock)
of the Company, including in such net proceeds:
(a) the net amount paid upon issuance and exercise during such period
of any right to acquire any capital stock, or paid during such period to
convert a convertible debt Security to capital stock (but excluding any
amount paid to the Company upon issuance of such convertible debt
Security); and
(b) any amount paid to the Company upon issuance of any convertible
debt Security issued after November 1, 1999 and thereafter converted to
capital stock during such period.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"OTHER NOTE AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED ASSET SECURITIZATION" means any transaction or series of related
transactions (including extensions and increases in the amount of the financing)
providing for the financing of receivables and/or other assets through one or
more securitizations of the receivables and/or other assets of the Company and
its Subsidiaries up to a maximum aggregate capital or other equivalent principal
amount of $150,000,000; provided, in all cases, that such securitization is (i)
priced at Fair Market Value and (ii) non-recourse to the Company and its
Subsidiaries.
"PERMITTED LIENS" means those Liens permitted pursuant to Section 10.5.
"PERMITTED SUBORDINATED DEBT" means (i) any Indebtedness of the Company or
any of its Subsidiaries incurred in respect of a transaction relating to the
acquisition of assets from, or entering into a long term management agreement
with, any physician or physician group, which Indebtedness is subordinated to
the payment and performance of the Company's or such Subsidiary's obligations
under the Notes, this Agreement, the Other Note Agreements and the Security
Documents on terms substantially similar to those set forth on Schedule B-1 and
(ii) any other subordinated debt approved in writing by the Required Holders.
"PERSON" an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
B-8
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PRIORITY DEBT" means the sum, without duplication, of (i) Indebtedness of
the Company secured by Liens not otherwise permitted by clauses (a) through (i)
of Section 10.5; and (ii) Indebtedness of Subsidiaries not otherwise permitted
by clauses (a) through (c) of Section 10.12 (but excluding the Indebtedness
evidenced by the Subsidiary Guarantees).
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"REDEEMABLE" means, with respect to the capital stock of any Person, each
share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or otherwise
retired or extinguished, or convertible into Indebtedness of such Person
(i) at a fixed or determinable date, whether by operation of sinking fund
or otherwise, (ii) at the option of any Person other than such Person, or
(iii) upon the occurrence of a condition not solely within the control of
such Person; or
(b) convertible into other Redeemable capital stock.
"REPURCHASE AGREEMENT" means any written agreement
(a) that provides for (i) the transfer of one or more United States
Governmental Securities in an aggregate principal amount at least equal to
the amount of the Transfer Price (defined below) to the Company or any of
its Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer
against a transfer of funds (the "Transfer Price") by the Company or such
Subsidiary to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a
simultaneous agreement by the Company or such Subsidiary, in connection
with such transfer of funds, to transfer to such Acceptable Bank or
Acceptable Broker-Dealer the same or substantially similar United States
Governmental Securities for a price not less than the Transfer Price plus
a reasonable return thereon at a date certain not later than 365 days
after such transfer of funds;
(b) in respect of which the Company or such Subsidiary shall have the
right, whether by contract or pursuant to applicable law, to liquidate
such agreement upon the occurrence of any default thereunder; and
B-9
(c) in connection with which the Company or such Subsidiary, or an
agent thereof, shall have taken all action required by applicable law or
regulations to perfect a Lien in such United States Government Securities.
"REQUIRED HOLDERS" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED PAYMENT" means
(a) any Distribution in respect of the Company or any Subsidiary of
the Company (other than on account of capital stock or other equity
interests of a Subsidiary of the Company owned legally and beneficially by
the Company or another Subsidiary of the Company), including, without
limitation, any Distribution resulting in the acquisition by the Company
of Securities which would constitute treasury stock; and
(b) any payment, repayment, redemption, retirement, repurchase or
other acquisition, direct or indirect, by the Company or any Subsidiary
of, on account of, or in respect of, the principal of any Subordinated
Debt (or any installment thereof) prior to the regularly scheduled
maturity date thereof (as in effect on the date such Subordinated Debt was
originally incurred).
For purposes of this Agreement, the amount of any Restricted Payment made
in property shall be the greater of (x) the Fair Market Value of such
property (as determined in good faith by the board of directors (or
equivalent governing body) of the Person making such Restricted Payment)
and (y) the net book value thereof on the books of such Person, in each
case determined as of the date on which such Restricted Payment is made;
provided, however, that any payment in respect of originally scheduled
installments of principal and/or interest on Permitted Subordinated Debt
made at the time such payment is scheduled to be made shall not constitute
a Restricted Payment.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITY" has the meaning set forth in section 2(l) of the Securities Act.
"SECURITY DOCUMENTS" means the Security Agreement in the form of Exhibit II
attached hereto, the Guaranty Agreement in the form of Exhibit III attached
hereto, the Guarantors' Security Agreement in the form of Exhibit IV attached
hereto, UCC-1 financing statements to be filed with respect to the collateral
identified in the Security Agreement and the Guarantors' Security Agreement, and
each other Security Agreement, Guaranty Agreement, Guarantors'
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Security Agreement or UCC-1 financing statement executed and delivered pursuant
to Section 9.6.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SUBSIDIARY" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTEE" means, the Subsidiary Guaranty Agreement executed by
the Subsidiaries (other then the Excluded Subsidiaries) in favor of the
Collateral Agent for the benefit of Purchaser and the Other Purchasers.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation of, or
obligation guaranteed by, the United States of America, or any agency controlled
or supervised by or acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of the full
faith and credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of America.
"VOTING STOCK" means capital stock of any class or classes of a corporation
having power under ordinary circumstances to vote for the election of members by
the board of directors of such corporation, or person performing similar
functions (irrespective of whether or not at the time stock of any of the class
or classes shall have or might have special voting power or rights by reason of
the happening of any contingency).
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.
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